Juncker Unlikely to be Unseated Despite 'Tax Haven' Scandal

Juncker
The European Commission's new President Jean-Claude Juncker rings the bell as he chairs the first official meeting of the EU's executive body at the EU Commission headquarters in Brussels November 5, 2014. Francois Lenoir/Reuters

Like Nigel Farage, some of the charm of Jean-Claude Juncker (sometimes known as ‘Johnny’), lies in his declining to speak like a politician. That, however, is where the similarities between the UK Independence Party leader and European Commission president end. 

“I’m for dark, secret debates,” said Juncker in 2011, as leader of the Eurogroup, the Eurozone finance ministers trying to secure the fate of the common currency. Ahead of France’s referendum over the EU constitution in 2005, he declined to fret: “If it’s a yes, we will say ‘On we go’, and if it’s a no we will say ‘We continue’.” And last spring he corrected an earlier quip, that European heads of government “all know what to do [to solve the Euro crisis], we just don’t know how to get re-elected after we’ve done it.” This time he joked, “For a long time, we didn’t know what to do, and we still weren’t re-elected.”

But if his critics see Juncker as the ultimate anti-democratic Brussels bureaucrat – and, indeed, he’s long been a European fixture, a well-known name across the continent since the 1990s – it seems politics is protecting him now.

For more than a fortnight, Juncker has been under pressure over a trove of leaked documents showing the degree to which Luxembourg aided and abetted corporate tax avoidance over the past 20-some years. A system of privately made, individually tailored deals granted more than 340 companies tax rates as low as 1% if they based themselves in the Royal Duchy, helping the 500,000-citizen country to become a world-leading financial and investment hub over the course of about 30 years– and robbing other countries of billions in tax revenues.

Juncker was Luxembourg’s prime minister and finance minister during the two decades when these deals grew rampant. He has bragged about the role he played in luring corporations to the Duchy. And yet he is now leading the very institution meant to be probing the legality of these schemes and spearheading international agreements that would quash such practices. Newspapers across Europe have called on him to resign and politicians from the left and right are backing inquiries into the role he played in the tax arrangements. But European government leaders are another story: not one has suggested it is time for him to go. That is in part thanks to Juncker’s network of personal contacts, built during a period of huge flux in Europe. He played a central role in drafting the Maastricht treaty and continued over the next decades to support European integration and introduction of the Euro, often as an informal diplomat brokering deals between other European leaders. His friends and allies come from across the political spectrum.

But Janis Emmanouilidis, director of studies at the European Policy Centre, argues reluctance among EU leaders to push out Juncker is also down to the sort of political pragmatism he himself is known for. “No one has the appetite to find a new Commission president.” Juncker’s nomination this summer was contentious, not least because of David Cameron’s vociferous but ineffective protests against it. But it also had the feel of inevitability. In the past, the EU heads of government nominated a candidate independent of the outcome of the European parliamentary elections. Angela Merkel, for one, maintained that right – until doing so started to look rather backward amid a push toward a more democratic EU, wherein Commission presidents were put forward by the party controlling parliament. Following the 2013 parliamentary elections, centre-right parties won a majority and going against Juncker – the European People’s Party’s chosen candidate – started to feel rather anti-democratic.