Juncker set for re-election as Eurogroup chief

(BRUSSELS) - It's clearly a consolation prize after a failed bid to secure the European Union's first full-time presidency, but Europe's longest-serving leader will almost certainly win a new mandate to lead the Eurogroup on Monday.

Barring a last-minute shock, Luxembourg Prime Minister Jean-Claude Juncker is the only candidate for the job of co-ordinating policy for the 16 countries that use the euro currency, and therefore set to win a 30-month mandate when finance ministers vote on his candidacy in Brussels.

Already in charge of the grouping in its semi-informal guise since 2005 -- 10 years after Juncker took power in Luxembourg -- the Eurogroup has acquired formal recognition under the Lisbon Treaty that entered into force in December.

It is also facing some of the most difficult economic and political challenges imagined since the currency came into being a decade ago, with a seemingly impenetrable Greek debt crisis and fears over wider foreign exchange fluctuations driven by Washington and Beijing.

The principal obstacle to Juncker's re-election vanished last week when Italy's Finance Minister Giulio Tremonti, long cited as a potential runner, ruled himself out of the running for the job.

Juncker has also obtained the support of the EU's current, six-month Spanish presidency, whereas at one stage France's Christine Lagarde had expressed interest were Juncker to leave the post.

Without doubt, the job lacks sheen compared to the top Brussels post which went to Belgium's Herman Van Rompuy in late November.

According to Juncker's entourage, French President Nicolas Sarkozy blocked the inveterate chain-smoker's bid for the job of glad-handling A-list foreign leaders while presenting a united European image.

Sarkozy blamed Juncker for not acting quickly enough when the global financial crisis first hit home in 2008, as well as his reluctance to change Luxembourg's banking secrecy laws.

Juncker has said that "certain leaders didn't want to give me their trust," admitting a "certain disappointment."

But he met Sarkozy face-to-face last week for the first time since those tensions surfaced, and said that "after everything that has happened, the atmosphere was good."

The atmosphere on the ground, of course, looks anything but good, with most of the euro countries -- like their broader EU partners -- carrying large public deficits well beyond proscribed limits.

France and other European nations, including Spain, want to promote the idea of stronger economic governance across the bloc, without anyone as yet being willing to talk specifically about 'sanctions' for fiscally-wayward members.

Germany, on the other hand, is opposed to such a policy direction, fearing for the independence of the European Central Bank in Frankfurt.

Juncker spelled out to Sarkozy "in detail" his ideas on this subject, with the French president "declaring himself in agreement with the grand lines" for the coming years.

One idea being actively pursued by many including the incoming EU economic and monetary affairs commissioner, Olli Rehn, is for the Eurogroup to seek its own seat at G20 and International Monetary Fund meetings.

Juncker spoke of Sarkozy's desire for the body to be "more pro-active in external matters," which notably revolves around currency concerns.

He may need to move quicker this time around with his initiatives if those seeking to impose a more sharply political agenda are not to leave him standing in their wake.