MEPs clash over actions and future of the troika

MEPs have clashed over the role of Europe's troika, with some parliamentarians blaming the programme's austerity measures for "worsening the effects" of the economic crisis, while others have branded the accusation a 'scapegoating' of the institutions.

By Kayleigh Rose Lewis

17 Mar 2014

The European parliament last week voted in favour of two reports which evaluate the role of the troika - the European central bank (ECB), the European commission and the international monetary fund (IMF).

But, despite the large majority in favour of the reports in plenary, opinion among many MEPs regarding the actions of the institutions remains deeply divided.

EPP deputy Othmar Karas, a co-rapporteur, said, "The troika must not be made the scapegoat for the problems. She prevented a disaster. For the future she must be made better, more transparent and more democratic."

As well as reflecting on the actions of the troika so far, the reports also included proposals to replace the troika with a European monetary fund, and outlined plans for a recovery programme to repair social damage caused by the institution's actions.

Karas continued, "In the short-term, the troika needs internal rules of procedure to increase the transparency of decision-making. In the long-term, troika's work should be carried out by a new European monetary fund on the basis of EU law. This ensures that European decisions on the reform and aid programmes are democratically legitimised and subject to parliamentarian scrutiny. Only in this way will the citizens' acceptance increase.

"We were facing the biggest economic crisis since the second world war. Without the troika, some countries would be completely broke. It is out of the question to abolish the troika now," explained the Austrian MEP.

ALDE member Nils Torvalds, agreed that the "troika was necessary to avoid financial collapse", however, he emphasised, "That doesn´t mean no mistakes were made".

He said that there were "lessons to be learned", and echoed Karas' sentiments, saying, "I deplore the way the EU institutions are being portrayed as the scapegoat, when political responsibility lies with the EU finance ministers and national governments."

His ALDE colleague Sylvie Goulard said, "This evaluation has been useful to start democratising the current process that people identify with the troika. This process was indeed necessary, but prepared in response to an emergency and does not represent a considered mechanism to address macro-financial difficulties in the countries in question.

"The situation in 2010-11 was dramatic but it does not mean that we need to continue with this intrusive policy without questioning and reviewing it. Without restoring democratic legitimacy and accountability we will contribute to citizens wrongly blaming Europe for the effects of the crisis", she argued.

But some parliamentarians were more critical of the troika's actions, with GUE/NGL president Gabi Zimmer slamming the institutions, saying, "The humungous costs of austerity in terms of mass unemployment, cuts to public services and the violations of democratic procedures have come largely as a result of troika policies.

"Troika interventions broke EU law and breached the charter of fundamental rights. The latest Eurostat figures show that youth unemployment now stands at 59 per cent in Greece, the country worst affected by the troika's austerity prescription.

"There are alternatives to austerity, it is not unavoidable; it is a political choice. The crisis has been used cynically to dismantle the European social model in the interests of global competitiveness. We need fundamentally different policies based on solidarity - ending austerity, taxing those who can afford to pay, and investing in jobs and social services. An end to anti-democratic decision making is similarly imperative."

She also condemned the report itself, saying, "This report isn't a real critique of the troika. The troika, as established by the governments, is undemocratic; it failed economically and burdened the most marginalised with the costs of the crisis: the sick, the old, and the young.

"The parliament needs to clearly state that and stop trying to misrepresent an abysmal - and sadly persistent - chapter in EU history."

Although Dutch deputy Marije Cornelissen criticised the actions of the troika, she welcomed the report, saying, "The European parliament has today highlighted the disastrous social consequences of the fiscal programmes insisted on by the troika.

"These programmes, with their one-sided focus on fiscal consolidation, have placed an excessive burden on the most vulnerable members of society. This can clearly never be allowed to happen again but remedial steps must also be immediately taken to address the devastating consequences."

Her Greens/EFA colleague Philippe Lamberts shared her sentiments, saying, "The [European parliament's] inquiry has uncovered unacceptable complacency, with assistance programmes based on overoptimistic and half-baked forecasts. It has also highlighted potential conflicts of interest and the worrying lack of democratic accountability of the troika.

"This must be redressed. Assistance programmes should be subject to democratic scrutiny by the European parliament," he added.

Meanwhile, French S&D MEP Liêm Hoang Ngoc, who co-drafted one of the reports with Karas, also commented, saying, "Mistakes, disagreements, as well as a lack of legitimacy and accountability have characterised the work of the troikas. The structure, policies and working methods of the troikas were all wrong.

"When disagreements occurred between the members of the troika, they were solved behind closed doors in the Eurogroup. But the Eurogroup is an informal forum of eurozone finance ministers which is not accountable to anyone.

"We need another system for the future that is accountable and legitimate. The European stability mechanism should evolve into a proper EU institution - a European monetary fund - accountable to the European parliament," he concluded.

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