MEPs: Troika helpful for States under programme, but created social unease

The Parliament inquiry talks about “immense” challenges tackled, which have avoided the worst in Greece, Portugal, Ireland and Cyprus, yet it blames austerity measures for bringing about poverty and unemployment

The measures taken by the “Troika” helped four EU countries under programme, yet its structure and working methods shall be revised. MEPs passed today the results of the inquiry by the Parliament into the workings of the institutions composed of European Commission, International Monetary Fund and European Central Bank in Greece, Ireland, Portugal and Cyprus, with two resolutions – one knock on the hoop and another on the barrel. The first is on the Economic and Monetary Affairs Committee’s inquiry into the workings of the Troika, drafted by Othmar Karas (EPP) and Liem Hoang-Ngoc (S&D), which was approved by 448 votes to 140, with 27 abstentions. The other is the Employment and Social Affairs Committee’s resolution, drafted by Alejandro Cercas (S&D), which was approved by 408 votes to 135, with 63 abstentions.

The first inquiry resolution acknowledges that the immediate aim of avoiding disorderly defaults was achieved and that the challenges that the Troika was set up to tackle were “immense.” Furthermore, it deplores the fact that EU institutions were made a scapegoat for the adverse effects of reforms while, according to MEPs, it is finance ministers who should bear political responsibility for the Troika and its workings.

In the meantime, the other resolution highlights that the conditions imposed in return for the financial assistance have jeopardised the social objectives of the Union, notably because little time was allowed to implement the measures; in addition, there was no proper assessment of their likely impact on various social groups. Unemployment has increased, particularly among the young (which often led to their emigration), many small enterprises were shut down; furthermore, poverty rates have risen, including among the middle class. “Austerity measures and structural reforms as imposed by the Troika created a real Tsunami into the society,” said Cercas.

As first step, MEPs now call for the introduction of clear, transparent and binding rules of procedure for the interaction of the Troika institutions, which regulate the allocation of tasks between them. For the medium term, the inquiry resolution recommends a radical overhaul of the Troika, in which IMF involvement would become “optional,” the ECB would be present only as a “silent observer,” and the European Commission’s role would be taken over by a “European Monetary Fund.”

“Troika cannot be a scapegoat” because “it avoided the worst possible outcome,” even though “it has to be improved, it shall be more transparent and democratic,” said Karas. He also explained that the project of substituting it with a new “European Monetary Fund” in the long term is based “on the European law,” and will guarantee “European decisions of reform and financing programmes to be legitimized, and to be subject to the control of the Parliament.”

According to Nils Torvalds (ALDE), “the Troika was necessary to avoid the financial collapse, but this does not mean it was flawless.” However, “the fact that EU institutions were made a scapegoat for the adverse effects of reforms, even though it is finance ministers who should bear political responsibility for them,” has to be deplored, he added.