European Union

In this video-interview, Clare Castillejo, senior researcher at FRIDE, analyses the roots of state fragility around the world and explains why this is a particularly urgent challenge for EU foreign policy.

Dijsselbloem, left, with Spanish rival de Guindos during a eurogroup meeting in December

The second quarter of 2015 will not only bring a crescendo in the ongoing Greek crisis for the 19 eurozone finance ministers who make up the eurogroup, which must ultimately decide whether Athens gets the bailout funds it needs to avoid bankruptcy. It will also trigger something nearly as closely-watched by EU insiders: an active race to head the group.

Jeroen Dijsselbloem, the Dutch finance minister who was the surprise pick to preside over the powerful committee when he was plucked from obscurity just weeks after national elections pushed his party into government in late 2012, will see his two-and-a-half year term end in July.

Unusually for such high-profile EU posts, both Dijsselbloem and his leading challenger, Spanish finance minister Luis de Guindos, have publicly declared their interest in the job. Indeed, de Guindos received a very public, full-throated endorsement from his prime minister, Mariano Rajoy, at last month’s EU summit in Brussels.

Although the politicking hasn’t really begun in earnest yet – the group is somewhat preoccupied with Greece at the moment – the Brussels Blog has talked to a handful of insiders to gauge where the race stands. Most believe it will come down to a political showdown between the EU’s two main pan-European party groups, the centre-right European People’s Party and the centre-left Party of European Socialists.

Here’s how most are handicapping it now – plus a few dark horses who could emerge if the two men cancel each other out.

With 35 days to go, Labour and the Tories remain neck-and-neck in the polls, to the internal frustration of some Labour politicians, who recognize that the party should be faring much better by now, given the persistence of its anti-austerity rhetoric.

As such, it continues to be clear that neither main party will secure enough votes to form a majority government-paving the way for small parties to hold the balance of power on May 8th.  It’s all going to come down to a numbers game, and a confidence and supply arrangement between Labour and the Scottish Nationalist Party (SNP) remains a very real option.

The possibility of any such formal arrangement caused significant controversy few weeks back, amidst revelations that some Labour strategists are in favour of a permanent alliance with the SNP after the election. The prospect of a Labour-SNP coalition was widely perceived as a threat to the unity of the country, and the news was met with calls for Labour to confirm that no electoral pact with the SNP would be made in the event of a hung Parliament, putting the Leader of the Opposition under pressure to declare there would be “no SNP ministers in any government I lead.”

The SNP currently has only six MPs at Westminster, but is predicted to significantly increase its number at the general election, possibly winning up to 50 of the 59 Scottish parliamentary constituencies. Feeling emboldened by the opinion polls, Alex Salmond, the party’s former leader, declared in a New Statesman interview last week that the SNP would block a minority Conservative government by voting down its Queen’s Speech. This would effectively result in a vote of no confidence against a minority conservative government, and provide Labour with the chance to form a stable government.

His comments may be bold, but Alex Salmond has good reason to feel smug. This week’s Guardian/ICM poll confirmed SNP’s lead at 43% of the of the predicted vote-a whole 16% ahead the Scottish Labour party. Considering how unlikely it is that Labour and the Liberal Democrats alone will be able to scrape together the 326 MPs needed to form an overall majority, these numbers indicate just how likely it is that the SNP will remain central to any post-election negotiations. It’s worth remembering that the SNP brought down a government in 1979- there’s every chance it could do so again.

Salmond’s comments were of course met with fierce criticism from the Conservatives who accused the ex-SNP leader of “trying to sabotage the democratic will of the British people”.  It is highly likely that the ex-Scottish First Minister will play a big role post-election despite no longer being the leader of the SNP, and such rhetoric is being used to portray Miliband as a weak leader who is dancing to Alex Salmond’s tune.

There is much uncertainty around this election, and the aftermath is set to throw up even more uncertainty, especially for business.  Any confidence and supply arrangement between Labour and the SNP would result in large cash transfers to Scotland, and potentially another referendum on independence. This would lead to a climate of uncertainty for business, and result in a potentially dramatic drop in foreign investment. The other potential scenario, which would see an SNP surge north of the border, could cost Labour enough seats to put the Conservatives into power, bringing with it the dread of an EU referendum in 2017. This situation could prove equally disastrous in the economic sense, and result in just as much business uncertainty and fear of investment.

It’s going to be a tight race, and it remains to be seen whether the SNP will succeed in persuading enough Scottish voters that they are the magic solution that will both keep the Conservatives out of Westminster and protect Scottish interests; or whether Labour’s message that a vote for the SNP means a vote for Cameron, will finally resonate. Either way, the possible economic impact of each outcome appears worryingly bleak.

James Dowling