Luxembourgish Prime Minister Jean-Claude Juncker is considering stepping down from his post as head of the 16-nation euro-group, according to a report in a German newspaper.
The Handelsblatt newspaper, citing talk in Brussels diplomatic circles, said Mr Juncker, who is also finance minister of the Grand Duchy, may resign as a result of the series of run-ins he has had with EU heavy-weights France and Germany, most recently over tax havens.
A government spokesperson denied the report, saying it was "totally nonsense."
He said that the only mention Mr Juncker has made about the length of time he would stay in the post was last year when he was re-elected to be head of the eurogroup. At that time he said he may not be able to serve out his mandate because the country faces elections on 13 June.
"If he is no longer finance minister after the election, then obviously he cannot be head of the eurogroup," said the spokesperson.
The rumours have been sparked by the deteriorating relations between Mr Juncker and his French and German counterparts, Nicolas Sarkozy and Angela Merkel.
Once a firm friend of Paris and Berlin under previous leaderships, and regularly used as a friendly mediator between the two, Mr Juncker has increasingly been at loggerheads with the two capitals.
The latest point of conflict concerned the OECD putting Luxembourg on a 'grey list' of countries considered not to be fully implementing international tax standards.
The list was made public at a meeting of G20 countries in London last month, after Germany and France lobbied strongly to make cracking down on tax havens a key feature of the meeting. Fellow EU member states Belgium and Austria also made it to the list.
The move prompted fury in Luxembourg particularly because a March gathering of EU leaders reached agreement that no member state would appear on the list.
The spokesperson denied that relations have become frosty and pointed out that tax issues and the G20 "have nothing to do with the eurogroup."
Another flash-point touches economic governance. Since coming to power in 2007, Mr Sarkozy has strongly argued for greater economic governance in the eurozone and threatened to have eurozone issues discussed as EU-leader level in special summits, something that would undermine the Mr Juncker's eurogroup of finance ministers.
So far, Mr Juncker has fended off the calls from Paris on this issue, mainly because German Chancellor Angela Merkel also does not think it is a good idea.
But while Berlin and Luxembourg agree on this point, they have not always seen eye-to-eye on how best to help struggling eurozone countries to weather the current economic crisis.
The rift on both fronts may have damaged the future political chances on a European stage for Mr Juncker, one of the bloc's most experienced politicians.
Early last year, he was one of the strongest names tipped to become the first president of the European Council, a post that will be created if the Union's new institutional rules – the Lisbon Treaty – come into force.
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