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BackAs already reported on several occasions, the Committee on Economic and Monetary Affairs (ECON) of the European Parliament is currently reviewing the role of the so-called “Troika” (Commission, ECB, IMF) with regard to implementing the drastic austerity programmes in those Member States, which required financial aid from their European partners during the crisis. Having heard the EU Commissioner for Economic and Monetary Policy Olli Rehn, the former President of the ECB Jean-Claude Trichet and ESM Director Klaus Regling over the past few days, MEPs now want to draw political conclusions. The hearings clearly show that from the MEPs’ point of view the often voiced criticism, according to which the Troika is lacking in democratic legitimacy and transparency, seems to be justified.
“… but it happens”
The representatives of the Troika did everything during the hearings to disassociate themselves from the responsibility. From their point of view, the Troika would not have a political role; it would only provide the states affected with advice on issues concerning financial and economic policy. Hence, the responsibility for the disastrous social and economic policy in Greece, Ireland, Portugal and Cyprus would lie with the governments of these states, as well as with the Finance Ministers of the Eurogroup, who would decide the release of loans. The countries concerned obviously take a completely different view. An ECON delegation for example learned from representatives of the Portuguese social partners that an agreement between employers and employees on cutting the minimum wage had been overturned by the Troika, as it regarded the cuts not being deep enough. It is therefore quite obvious that the Troika directly intervenes in the social systems of the states affected. At the same time, its work remains completely non-transparent for the outside world.
In particular the reply of Klaus Regling, Managing Director of the European Stability Mechanism ESM, when asked about the injustice of the adjust programmes, which have serious implications for the population at large, whilst the affluent and those who caused the crisis emerge unscathed, was characteristic. Regling had to admit that the adjustment programmes affect large parts of the population whilst the rich would go into tax exile to escape higher taxation. This situation would make the programmes unfair indeed. He acknowledged this circumstance with the cynical statement: “Nobody likes that but it happens”. Statements like these explain the widespread criticism of the Troika’s approach. Instead of making cuts that only affect the population, a targeted and fair European policy should at last make large companies and wealthy people pay up.
Troika succession
Following the conclusion of the hearings, the ECON Committee will now prepare a report, which will also contain proposals for a reform of the Troika model. Three variants are currently under consideration: either the IMF runs the programmes on its own or the Commission assumes this thankless task. The third variant is that the ESM relief fund will at last be integrated in the European legal framework and is converted to become a European Monetary Fund. Whatever shape a reform of the Troika will take, one thing is clear - it has to be democratically controlled in future and its decisions have to be transparent. However, from an employee’s point of view, in particular one point is crucial: the economic measures imposed by the Troika so far have failed and must be completely reconsidered. There must be at last an end to the practice to have exclusively employees foot the bill of the crisis.
The representatives of the Troika did everything during the hearings to disassociate themselves from the responsibility. From their point of view, the Troika would not have a political role; it would only provide the states affected with advice on issues concerning financial and economic policy. Hence, the responsibility for the disastrous social and economic policy in Greece, Ireland, Portugal and Cyprus would lie with the governments of these states, as well as with the Finance Ministers of the Eurogroup, who would decide the release of loans. The countries concerned obviously take a completely different view. An ECON delegation for example learned from representatives of the Portuguese social partners that an agreement between employers and employees on cutting the minimum wage had been overturned by the Troika, as it regarded the cuts not being deep enough. It is therefore quite obvious that the Troika directly intervenes in the social systems of the states affected. At the same time, its work remains completely non-transparent for the outside world.
In particular the reply of Klaus Regling, Managing Director of the European Stability Mechanism ESM, when asked about the injustice of the adjust programmes, which have serious implications for the population at large, whilst the affluent and those who caused the crisis emerge unscathed, was characteristic. Regling had to admit that the adjustment programmes affect large parts of the population whilst the rich would go into tax exile to escape higher taxation. This situation would make the programmes unfair indeed. He acknowledged this circumstance with the cynical statement: “Nobody likes that but it happens”. Statements like these explain the widespread criticism of the Troika’s approach. Instead of making cuts that only affect the population, a targeted and fair European policy should at last make large companies and wealthy people pay up.
Troika succession
Following the conclusion of the hearings, the ECON Committee will now prepare a report, which will also contain proposals for a reform of the Troika model. Three variants are currently under consideration: either the IMF runs the programmes on its own or the Commission assumes this thankless task. The third variant is that the ESM relief fund will at last be integrated in the European legal framework and is converted to become a European Monetary Fund. Whatever shape a reform of the Troika will take, one thing is clear - it has to be democratically controlled in future and its decisions have to be transparent. However, from an employee’s point of view, in particular one point is crucial: the economic measures imposed by the Troika so far have failed and must be completely reconsidered. There must be at last an end to the practice to have exclusively employees foot the bill of the crisis.