Cicero/amo provides insight into Commissioner-designate Mairead McGuinness, sets out her key priorities in her portfolio, and looks at what the appointment means for Ireland.
It has certainly been a difficult period in Irish politics with the ongoing health and economic impacts of COVID-19, Brexit, and the controversial start to the new government. Within the first two months of the new Irish administration and after almost five months without a government, we witnessed the sacking and resignation of two agriculture ministers and the resignation of the country’s EU Commissioner. The latter was because Phil Hogan, the said Commissioner, was perceived to have breached COVID-19 guidelines after attending a parliamentary golfing event and travelling through locked-down areas. Some now believe if the former Commissioner had been as good at delivering apologies as he was a politician he may have just survived.
The ramifications of these critical appointment changes are significant, but it seemed like the realities of the former EU Commissioner for Trade, Phil Hogan’s resignation only dawned on the Irish public and government in recent days, as speculation mounted that, as a result, Ireland would almost certainly lose the crucial trade portfolio.
Commentators agreed that the President of the Commission Ursula von der Leyen could not justify reappointing an Irish nominee to the trade position. With von der Leyen’s clear request for a female and male nomination, and with the Minister for Foreign Affairs, Simon Coveney withdrawing from the race, the path for Irish MEP Mairead McGuinness was almost clear.
This morning, Mairead McGuinness was declared the Commission’s choice, following a competition with Andrew McDowell. If ratified, Ms. McGuinness will be Commissioner for Financial Services, Financial Stability and Capital Markets Union.
While the circumstances that led to her nomination are less than favourable and losing trade was a blow, acquiring the financial services brief has been widely welcomed by both government and industry. Since Brexit, Dublin has been positioning itself as an alternative financial capital with many UK firms relocating there in recent years. As a country, Ireland has a lot to be gained from this portfolio and from ensuring favourable financial trading regulations transpire post-Brexit.
The appointment also sends a positive, but cautious, signal to the UK’s financial services industry given Ireland’s historic alignment to the UK’s regulatory approach to the sector.
A strong figure in European politics and well regarded in Ireland, Ms. McGuinness is no stranger to the limelight receiving international headlines in recent months for her work in the European Parliament – most notably for muting Nigel Farage when she was in the Chair, telling him to leave and take his flags with him after he and his MEPs stood and waved their British flags on their last day in Parliament. While her opinions on Brexit will have to be subdued, she will undoubtedly be a formidable Commissioner that will have Ireland’s best interests at heart.
Our analysis below will look at specific areas that fall within her remit and key initiatives on the agenda, as well as what this new position means for Ireland.
About Commissioner-designate Mairead McGuinness
Mairead McGuinness, a long-standing MEP since 2004 and poll-topper for the Midlands-North-West constituency in Ireland, made it known early that she was contesting the position, and began her campaign almost immediately after Phil Hogan’s resignation. The Louth native was put forward as a candidate alongside Andrew McDowell, former vice-president of the European Investment Bank, and was subsequently selected by President Ursula von der Leyen following interviews with both candidates.
Ms. McGuinness studied agricultural economics in University College Dublin and has extensive journalistic experience with RTÉ, the farmers’ journals and as editor of the Irish Independent.
Ms. McGuiness has served as First Vice-President of the European Parliament since 2017 and is a member of the Committee on Agriculture and Rural Development. She also sits on the European Parliament’s delegation responsible for inter-parliamentary relations with Iceland, Switzerland, and Norway and for oversight of the EEA Agreement.
She was her party’s lead negotiator in the European Parliament on reform of the EU’s Common Agriculture Policy (CAP) and has raised concerns around cuts to the CAP budget. Ms. McGuiness is also a substitute member of the Environment, Public Health and Food Safety Committee where she has raised issues of peatlands and the need for a more holistic farm advisory system that looks at production and environment together, rather than independently.
As a strong ally to the farming community, Ms. McGuiness has advocated for access to new technologies and better supports that would support farmers to transition to a more sustainable and environmentally-friendly supply chain and has encouraged collaboration between the Commission and farmers in the Farm to Fork Strategy.
Financial Services, Financial Stability, Capital Markets Union – key priorities
Commissioner-designate Mairead McGuinness’ portfolio covers financial services, financial stability, and the development of the Capital Markets Union. Given von der Leyen’s trademark focus on stability and continuity and Ms. McGuinness’ lack of financial services experience, the Commission’s priorities in these sectors are not likely to change following her appointment, not least because a significant amount of drafting has already been completed for several of the initiatives that are expected in a proposal-heavy Q3-4.
Looking further ahead, under Ireland’s direction the EU may take a more free-market, global approach to international financial services policy. Had a more protectionist Member State, such as France, taken over financial policy we could have expected to see a greater change in policy direction.
The first few months in the portfolio will be difficult for Ms. McGuinness, as she will have a lot of catching up to do to reach her predecessor’s level of financial services expertise. She will have to reply on her civil service officials (DG FISMA) to do most of the heavy lifting until she gets up to speed. Her long career in the European Parliament does however place her in a strong position to navigate through the politics of interinstitutional negotiations – Commissioners are after all first and foremost politicians rather than technicians.
The European Commission is preparing for a slew of financial services proposals this autumn – below we look in more detail at what is first on the agenda for Ms. McGuinness:
Sustainable Finance – The European Commission has just completed its first wave of green finance initiatives and is now preparing for the publication of its renewed sustainable finance strategy. This is an important building block of one of the two major pillars of the von der Leyen Commission – the green and digital transitions. The Commission completed its consultation on the strategy over the summer and is now expected to produce the final piece in Q4 2020. In the statement following her nomination, Ms. McGuinness highlighted the role of sustainable finance in delivering the EU Green Deal. In her role as a MEP, she was the EPP Group lead negotiator on the EU Climate Law, and experience that will stand her in good stead for the effective implementation of any upcoming green finance initiatives.
Digital Finance – Several proposals are expected under President von der Leyen’s other political priority, the digital transition. The COVID-19 pandemic saw an increase in online payments and cashless transactions, which strengthens the EU’s view strengthens the EU opinion that digital finance rules are needed that protect customers and allow fintech businesses to innovate and grow. To that end, a new Strategy on Digital Finance will be published at the end of October, together with a Strategy on an integrated EU payments market and, for the first time, rules on crypto assets.
Capital Markets Union – Alongside the green and digital transformations, Ms. McGuinness’ biggest project will be the implementation of the Capital Markets Union (CMU) action plan (expected to be published 28 October). Following the publication of the Final Report of the High-Level Forum on the CMU and the Commission’s summer roadmap, the Commission is now ready to present its proposal, giving Ms. McGuinness less than two months to prepare. In the even shorter-term, as Commissioner she will have to lead the ongoing negotiations over the EU’s Capital Markets Recovery Package, a set of ‘quick-fixes’ to help the EU’s capital markets overcome the consequences of COVID-19. With Member States already divided on many issues in the proposals, her experience in EU decision-making will prove vital.
Finally, Ms. McGuinness will also lead on the review of MiFID II, the Benchmarks Regulation, and the Alternative Investment Fund Managers Directive (AIFMD), all initiatives central to the EU’s financial services regulatory framework.
Why was Ireland rewarded with such an important portfolio?
At a domestic level, it is believed that Ms. McGuinness was delegated such an important portfolio for a number of reasons including the Commission not wanting to punish the Irish government too extensively for how it managed the events that led up to the resignation of Phil Hogan.
Capabilities aside, Mairead McGuinness is a member of the European People’s Party (EPP), she is an extremely competent female politician and it is believed is an acquaintance of President Ursula von der Leyen, who is also a member of the EPP. We know von der Leyen was eager to appoint a woman and achieve full balance and appointing Ms. McGuinness to a senior portfolio sends out the message that it was based on her ability and not on a desire to reach a quota.
From a macro political point of view, some analysts point to Brexit and suggest the appointment is the EU ensuring once again that Ireland has significant influence and that the government feels supported. Perhaps the recent reports that the UK may renege on its obligations within the Withdrawal Agreement influenced von der Leyen’s decision in awarding Ireland the financial services portfolio. Perhaps the Commission felt this was an area in which Ireland could excel considering its recent success in growing Dublin as a financial service hub and considering its history of mirroring UK regulation in this area, a.k.a financial equivalence.
If that is the case, Ireland has not done too badly considering the Commission’s trade department is not deeply involved in the Brexit negotiations, given the leading role of Michel Barnier’s task force, and that the EU has already aligned itself with Ireland throughout the negotiating period. Now Ireland holds a key portfolio for all markets and may have more influence on ensuring financial equivalence than it did with former Commissioner Hogan.
In Brussels, the appointment is seen as a very political choice from Commission President von der Leyen. Ireland was unable to retain the trade portfolio given the political nature of Phil Hogan’s resignation, but could have expected to be dealt a worse hand than financial services. Given the EU’s response to the pandemic has at times been fractured, the wave of policy proposals expected over the coming months, and the need for the Commission to appear strong in the finalisation of the Multiannual Financial Framework (MFF), President von der Leyen wanted the issue to be dealt with as quickly and cleanly as possible. The President is not keen on disruption and does not want to distract attention from the policy agenda – or incidentally, her first State of the European Union speech taking place next week. By making an almost straight swap between Ireland and Lithuania’s portfolios she avoids a more comprehensive reshuffle.
The appointment maintains a delicate political and gender balance in the Commission, with a precedent-breaking 13 female Commissioners. Replacing Commissioner Hogan with Vice-President Dombrovskis also keeps two heavyweight departments, trade and finance, within von der Leyen’s own group, the EPP.
Ms. McGuinness has a longstanding career in the European Parliament and is well respected as a Vice President. Given the Parliament asserted itself strongly during the initial College appointments, with the rejection of French nominee Sylvia Goulard, the fact that Ms. McGuinness comes from ‘inside the house’ is optimal. This may also be key in the negotiations between the Parliament and the Commission on the final EU Recovery Package and the MFF.
Finally, considering Commissioners are usually politicians and not bureaucrats, it is expected that Ms. McGuinness’ straight-talking presence, media-savvy nature and previous experience will serve her well.
What does the appointment mean for the Irish government and industry?
One would imagine a huge sigh of relief echoed through government buildings in Ireland this morning at 9.30am, as the Taoiseach Micheál Martin must have taken comfort in knowing that Ireland would still maintain significant influence in the Commission as he looks down the barrel of the final Brexit hurdle.
Ireland was in a sort of ‘catch-22’ following the controversial Oireachtas Golf Society dinner that ultimately led to this morning’s announcement. The Taoiseach came under intense pressure to make it known to the EU Commission President that he and his Tánaiste Leo Varadkar felt Mr. Hogan should resign from his position. However, he also went to pains to ensure the Irish public knew he did not try and influence the President of the Commission and that ultimately it was her decision.
Ms. McGuiness taking over the financial services portfolio is significant for Ireland for many reasons: it is a position of importance, it sends a message that perhaps the Irish government was not wrong in how they handled Phil Hogan, and it cements Ireland’s position as leader in financial service regulation at a European level.
If you consider the title of this analysis, Ireland has now truly set its mark internationally as a force to be reckoned with in terms of the European Union’s financial service regulation. The recent election of Ireland’s Minister for Finance Paschal Donohoe as President of the Eurogroup, a grouping of EU financial services ministers with a statutory footing, along with Irish civil-servant John Berrigan’s current position as Director General of DG FISMA, will mean that Ireland will have significant control over the bloc’s finance priorities once Ms. McGuiness is approved.
From a domestic policy point of view, Ireland’s major financial services strategy Ireland For Finance has clear alignments to EU policy, for example in areas such as digital, payments and fintech. It has clear objectives to engage further on the Capital Markets Union, on cross-border payments and in areas of innovation and technology.
Since Brexit, many of the new financial services players in Ireland have already begun to see the opportunity to engage and influence at an EU level through Ireland. This will most certainly be heightened in the years to come as Ireland becomes the most formidable team in financial services in Europe.
The road to confirmation for Commissioner-designate Mairead McGuinness
*As there has been a substantial change to his portfolio, Executive Vice President Valdis Dombrovskis is also expected to have a confirmation hearing with the INTA Committee to test his competence to take on the trade portfolio.
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