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Luxembourg Prime Minister Jean-Claude Juncker is also the president of the Eurogroup, which represents the 17 countries that share the euro. (GEORGES GOBET/GEORGES GOBET/AFP/GETTY IMAGES)
Luxembourg Prime Minister Jean-Claude Juncker is also the president of the Eurogroup, which represents the 17 countries that share the euro. (GEORGES GOBET/GEORGES GOBET/AFP/GETTY IMAGES)

Global Exchange

Eurogroup chief vexes partners as crisis rages Add to ...

He may not be one of the world's most recognisable leaders, but when Luxembourg Prime Minister Jean-Claude Juncker speaks, global financial markets listen, and with increasing wariness.



As president of the Eurogroup, which represents the 17 countries that share the euro, Mr. Juncker has led the response to the region's debt crisis over the past 18 months, as Greece, Ireland and now Portugal have succumbed to market pressure and been forced to ask the EU and IMF for emergency loans.



Grey-haired and quick-witted, with a gravelly voice from heavy smoking, he is the first official to brief the press when monthly gatherings of euro zone finance ministers in Brussels break up, making him one of the most important communicators on the bloc's crisis strategy.



But lately, some of his late-night comments, and others made as the region's debt crisis deepened, have raised doubts about Mr. Juncker's judgment and sparked questions from partners about whether he is completely aligned with the officials for whom he so often speaks.



This has added to concerns in financial markets and among policymakers in Asia and the United States about how Europe is handling a crisis in which rhetorical missteps can send bonds, stocks and the single currency itself spiralling lower.



"The French in particular have found Juncker lacking in his ability to provide leadership during the crisis," said Charles Grant, director of the Centre for European Reform in London. "When he does talk it has added to the sense of disarray."



Questions were raised last month when Mr. Juncker told a conference in Brussels that he sometimes lied when asked about policies relating to the bloc's debt crisis, telling his audience that he favoured "secret, dark debates".



The comments went largely unnoticed at the time, but two weeks later, on May 6, Mr. Juncker came under the spotlight when German magazine Der Spiegel reported that finance ministers from the euro zone were holding a secret meeting in Luxembourg to discuss Greece's predicament.



Reached by telephone, Mr. Juncker's spokesman for the past 16 years, Guy Schuller, dismissed the report, saying: "I totally deny that there is a meeting. These reports are totally wrong."



Of course the meeting did take place, with Mr. Juncker hosting the finance ministers of Germany, France, Italy, Spain and Greece, and speaking to the press that night when it ended.



Mr. Schuller later admitted that he had been told to lie about the meeting, because, he said, the bloc had "certain necessities to consider."



These incidents alone, in a career spanning 22 years in high office -- including six years as head of the Eurogroup -- may not be enough to tarnish Mr. Juncker's reputation as a quick thinker and crafty negotiator on economic and financial policy.



But other episodes suggest the 56-year-old, who is revered by many voters in Luxembourg, can be too quick to speak, and often does so without the full backing of his European colleagues.



In 2004, shortly after he was reelected, Mr. Juncker announced to reporters at an EU summit that Palestinian leader Yasser Arafat had died, only to retract the statement minutes later after his advisers told him there had been a misunderstanding.



Last week, after another meeting of euro zone finance ministers, Mr. Juncker surprised markets by admitting that Greece may have to proceed with a "soft restructuring" of its debt, the first time any senior official had acknowledged the possibility.



A European Commission source said he had been "amazed" at Mr. Juncker's remarks, which shocked EU economic and monetary affairs commissioner Olli Rehn and others, and came so soon after the embarrassing secret-meeting-denial episode.



"It was a complete surprise for everybody," the source said. "In a few years time we will look back and laugh about it, but right now I can tell you from inside that it is just amazing how things are sometimes being handled."



Mr. Juncker's comments were not out of line with market thinking at the time, but sent the euro down and the cost of insuring against a Greek debt default higher. They sparked vigorous denials from European Central Bank (ECB) officials and some of Mr. Juncker's own colleagues within the Eurogroup.



On Monday, at a meeting with German Chancellor Angela Merkel in Berlin, he was cautioned not to stray from the party line on a Greek restructuring in the future, according to one official.







Those who see Mr. Juncker regularly in Luxembourg say the demands of the debt crisis have taken a toll, with his face all the more lined by the constant pressure and his small, unpretentious office even more untidy than usual.



A down-to-earth man who enjoys a drink and a cigarette, Mr. Juncker -- one of the world's longest-standing heads of a democratic government, having taken office in 1995, after six years as Luxembourg's finance minister -- recently told friends that he had begun a new exercise programme to keep healthy.



With such a high-profile position in managing the region's debt problems, it is not surprising that Mr. Juncker, the leader of a country of just 500,000 people that is not immediately affected by the crisis, occasionally comes in for criticism.



France, which has bridled in the past at what it perceived to be Juncker's closer allegiance to Germany, sometimes acts as if it wants to cut him and his off-hand manner down to size.



But Mr. Grant, of the CER in London, says Juncker does not deserve all the blame for the mixed messages coming out of the euro zone, nor the stop-start response to the bloc's crisis.



"You have the (euro zone) patient in its sick bed, but there is no agreement on the nature of the disease, let alone what medicine is required," Grant said. "This is not a PR problem but one of fundamentals. It's not his fault that key players don't agree."



That is a line several senior finance officials dealing with the crisis supported. As one said about Mr. Juncker, he is often right, even if he does not always say the right things.



"When it comes to times of crisis, one should always speak the truth," the euro zone official said. "But not everything that is true must be spoken."



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