(This article was written by Derk Jan Eppink and appeared in Wynia’s Week. Klaas Knot past als ECB-baas in het Europese plaatje – mits Emmanuel Macron niet van gedachten verandert)

French President Emmanuel Macron threw a spanner in the works with the idea that the president of the European Central Bank (ECB), Christine Lagarde, would step down early. The chickens scattered in all directions. Every candidate vying for Lagarde’s position began calculating. Among them was the former president of De Nederlandsche Bank (DNB), Klaas Knot (58), who nowadays holds a less prominent position as envoy for the development of the Lelylijn, with multiple routes being explored.

The number of routes to a high position in the European Union network is typically limited. A candidacy must certainly not be launched too early, because political sharpshooters are lurking in every corner. First, sufficient support is needed from the major member states, especially France and Germany, which requires careful maneuvering. Moreover, the most promising candidate must also fit into a ‘system of balances,’ in short, the European top positions picture.

Knot knows these ground rules better than anyone else. As president of DNB, he sat for fourteen years on the Governing Council of the ECB in Frankfurt, first in a modest building but later in an enormous headquarters that towers far above Frankfurt – like a Tower of Babel. And far above the headquarters of the German central bank, the Bundesbank.

In 2019, many in Brussels noted Knot’s interest in the ECB presidency, but that hope was dashed by the same Macron. He launched a ‘nomination package’ with the three top positions: Ursula von der Leyen as president of the European Commission, Belgian Charles Michel as president of the European Council, and Christine Lagarde as president of the ECB. Macron, then still promising, surprised everyone, including German Chancellor Angela Merkel. Knot, as an opponent of Eurobonds (the EU independently issuing common debt on the capital market), did not make it onto Macron’s list: game over.

Now the cards are laid out differently. Macron is no longer the promising president but a grumpy old man on his way out, in his final year. The French president appears clownish and his power is waning, yet he wants to protect his ‘legacy’ at any cost, with an unparalleled move.

In the French presidential elections of April 2027, there is a possibility that the candidate of the Rassemblement National (RN) – Marine Le Pen (57) or her replacement Jordan Bardella (30) – will become president. Macron wants beforehand to shield his supposed successes by having Lagarde, whose term ends in October 2027, step down early and be replaced. Lagarde’s succession will thus be settled well before the French presidential elections. A possible President Le Pen or Bardella will be left empty-handed.

It is a remarkable move to solve French political problems at the European level like this. But France does see the EU as a continuation of itself. Macron surprises Europe with this idea, and therein lies precisely the opportunity for Knot who, knowing his associates, has adjusted his position over the years in the direction of France.

Particularly regarding Eurobonds, Knot has stated that he sees them as an instrument for financing defense spending. In the Second Chamber there is no majority for Eurobonds, but Knot claims that the Dutch parliament is ‘hyperventilating.’ This of course goes down well in France. At the same time, he says that Eurobonds should not be used to repay government debts of other countries. The ‘new geopolitical situation’ offers Knot the chance to curry favor in Paris. The most important thing at the beginning of his strategy must be: to prevent a French ‘non.’

Then the question follows: what does Germany think? The current coalition in Berlin of Christian Democrats and Social Democrats is wavering. Chancellor Friedrich Merz (CDU) wants to move right, but he is chained to the left by the German Social Democrats (SPD). In any case, the ruling coalition in Berlin is against Eurobonds.

Since Germany cannot put forward a candidate for the ECB because Ursula von der Leyen is already president of the European Commission, the Germans often see an alternative in a Dutchman. The first ECB president was not coincidentally Wim Duisenberg (PvdA). He was succeeded by Frenchman Jean-Claude Trichet. So far, ‘candidate’ Knot fits well into the picture.

Then come the bumps in the ‘system of balances.’ What do other countries think? Since January 1, 2023, the eurozone has consisted of twenty countries. The Eurogroup, an informal body of finance ministers, is chaired by Greek minister Kyrjakos Pierrakis, naturally a strong supporter of Eurobonds. Eurogroup meetings consist of informal deliberations. The Greek presidency is mainly a sign that the eurozone once again has confidence in Greece. The opinion of the Greek minister is personal. He should already be happy to be there, after all the Greek fraud in the past. Italy typically keeps its cards close to the chest to get the most out of the situation, through ‘quid pro quo.’ With Italians it is pleasant to dine.

With Spaniards it is different. They bang their fist on the table and make a lot of noise, as if a big bull could appear at any moment. Spain thus demanded the presidency of the European Investment Bank (EIB) in Luxembourg, with candidate Nadia Calviño, former Spanish minister of Economic Affairs and a former senior official at the European Commission. The opposing candidate was Danish Margrethe Vestager, former EU Competition Commissioner. Spain found a strong ally in France, which well remembered how Vestager blocked a merger between French Alstom and German Siemens. A European Commissioner for Competition makes, if done properly, many enemies. But for Vestager, that was one too many. Result: a resounding ‘non.’

Knot must of course avoid such a situation, although Spain has a competing candidate up its sleeve in the person of Pablo Hernández de Cos, former governor of the Spanish central bank (2018-2024) and since last year director general of the Bank for International Settlements (BIS) in Basel. Spain, particularly the current socialist government, will begin to ‘push’ again, even though it has already secured a high position with Calviño.

Premier Pedro Sánchez admittedly talks big but does nothing for Ukraine, while he legalizes 500,000 illegal immigrants in Spain, to the horror of other European countries. These people are free to travel through the ‘Schengen area.’ Spain does not deserve gifts for this. Ultimately, the European system will have to put a ‘compensation’ on the table for Spain, if only to save Spanish honor. But the gift will not meet the standards of Saint Nicholas. As long as Germany supports Knot, and France is not against him, lesser deities can be ‘bribed.’

Under Knot as well, the ECB will continue to develop into a European ATM, instead of its original task: a strict supervisor of stable monetary policy. Conclusion at this moment: Knot fits, in the current situation, into the monetary picture as regards Eurobonds; he remains standing in the Franco-German balance of power system and he should be able to overcome remaining hurdles, such as those of Spain.

Yet a profit warning applies. Knot cannot praise the day before evening, because any day Macron could decide not to do it after all.

Derk Jan Eppink is a Distinguished Fellow (Honorary) at the Gold Institute for International Strategy, a Washington D.C.-based foreign policy and defense think tank.