Portugal's finance chief wins race to head eurogroup

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Portugal's finance chief wins race to head eurogroup

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Latvia's Finance Minister Dana Reizniece-Ozola, 2nd right, Slovakia's Finance Minister Peter Kazimir, left, Luxembourg's Finance Minister Pierre Gramegna, 2nd left, and Portugal's Finance Minister Mario Centeno pose for photographers as they arrive for a meeting of eurozone finance ministers at the Europa building in Brussels on Monday, Dec. 4, 2017. Eurozone finance ministers meet Monday to elect a new president for the club of 19 nations that share the euro currency. (AP Photo/Geert Vanden Wijngaert)

Portuguese Finance Minister Mario Centeno has won the race to become the top official of the 19-country eurozone, the body which has been at the forefront of the single currency bloc's crisis-fighting efforts in the past few years.

Centeno said that his peers elected him as the eurogroup's new president and that he would take up his post Jan. 13.

He had been overwhelming favorite to win the race to succeed Dutchman Jeroen Dijsselbloem, who has been at the helm for nearly five crisis-ridden years, largely centered on cash-strapped Greece. He defeated Luxembourg's Pierre Gramegna, Slovakia's Peter Kazimir and Latvia's Dana Reizniece-Ozola.

Centeno takes over at a time when the eurozone is in far better shape than it has been for years — the economy is growing strongly, while worries over Greece's future in the bloc have subsided and the country is poised to exit its bailout era next summer.

Centeno's victory has the potential to symbolize a new era for the eurozone, all the more so as he comes from less-wealthy southern Europe.

While eurozone governments still insist that countries must keep their public finances in shape, there's a greater acknowledgement that the austerity of the past few years has taken a heavy toll on people, particularly in countries like Portugal and Greece.

Following the recent departure of long-time German Finance Minister Wolfgang Schaeuble, considered the high priest of austerity in the eurozone, a Centeno victory encapsulates that shift.

Portugal was one of four eurozone countries that had to be bailed out during the region's debt crisis. In 2011, the country required a 78-billion-euro ($93 billion) rescue after its budget deficit grew too large and bond market investors asked for hefty premiums to lend to the government. In return for the financial lifeline, Portuguese governments had to enact a series of spending cuts and economic reforms. Portugal exited its bailout program in 2014.

Though the strategy may have worked in bringing Portugal's public finances into better shape, austerity accentuated a deep recession and sharply raised unemployment. Following a backlash against austerity, the Socialist Party came to power in December 2015, with Centeno, a former Bank of Portugal analyst, taking the post of finance minister.

Before Monday's vote, Centeno said that his aim would be to "generate consensus" in the "challenging" period ahead.

Achieving that consensus isn't always easy given that the governments of the eurozone come from a variety of political traditions with differing mandates and economic agendas.

Dijsselbloem was considered a skilled operator in bridging differences and maintaining a consensus over austerity. That was especially the case during the Greek crisis of 2015, which saw the country nearly crash out of the euro before the newly elected left-led government in Athens agreed to a last-minute international bailout.

Dijsselbloem's Labor Party fared poorly in Dutch elections this year and is no longer part of the coalition government, meaning he can't remain in the eurogroup.

Before Monday's meeting, he said that keeping the eurogroup "together and united" should be the primary purpose of the next eurogroup president.

"It's the only way we take decisions in the eurogroup," he said.

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Pan Pylas reported from London.

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