Friday

23rd Jun 2017

MEPs: Troika undemocratic, European Monetary Fund needed

  • MEPs want the troika to accept that 'economy serves people, not the other way around' (Photo: europarl.europa.eu)

The European Parliament is calling for the creation of an EU monetary fund to replace the "undemocratic" troika of international lenders.

In a non-binding report voted Thursday (13 March) in Strasbourg, MEPs set out the creation of a European Monetary Fund as a "long-term goal" that will require a change of the EU treaties.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

They argue this is needed because the 'troika' of lenders (European Commission, European Central Bank and International Monetary Fund) was an "ad-hoc" set-up with no clear legal basis and with no democratic scrutiny from the European Parliament.

In addition to the internal divergences and finger-pointing within the troika, an extra layer of unaccountability was added by the Eurogroup of finance ministers - also an informal formation with no legal basis - who were the main decision-makers on the size of the bailouts and the austerity programmes attached.

"The troika is a bit like the Three Musketeers - they were four. The Eurogroup is the fourth and main decision-maker," said French MEP Sylvie Goulard on Wednesday during a debate about the troika.

Her colleague Liem Huang Ngoc, who co-authored the parliament's report, also noted that it was the Eurogroup, "where Germany's voice held sway," which took all the big decisions.

The report "calls on the Eurogroup, the Council and the European Council to assume full responsibility for the operations of the troika.” It asks for the head of the Eurogroup to be heard before the European Parliament and the national parliaments concerned before a country is granted financial assistance.

They also call for a "transparent evaluation of the awarding of contracts to external consultants, the lack of public tenders, the very high fees paid and the potential conflicts of interests."

EUobserver last year reported that a handful of big consultancy and audit firms were hired on secretive multi-million contracts in connection with the troika, often without public tenders and regardless of their potential conflicts of interests.

Social adjustments

MEPs want the EU commission to review its activities within the troika and to present a report by the end of 2015 on the "economic and social consequences of the adjustment programmes" in Greece, Portugal, Ireland and Cyprus.

The report calls for new debt restructuring for Greece and a fairer debt deal for Ireland, who at the time it bailed out its banks was not allowed to make bondholders pay - a principle that has since been scrapped.

The report "considers that too little attention has been paid to alleviating the negative economic and social impact of adjustment strategies in the programme countries."

MEPs say they are "alarmed" after hearing from ex-Eurogroup chief Jean-Claude Juncker - now a candidate for the EU commission top post - that the Eurogroup "endorsed the recommendations of the troika without extensive consideration of their specific policy implications."

"This admission sheds a worrying light on the blurred scope of the 'technical advising' and 'Eurogroup agency' roles devolved to both the Commission and the ECB in the framework of the design, implementation and assessment of assistance programmes," MEPs said.

Alejandro Cercas, a Spanish MEP who looked at the social impact of the troika and drafted a parallel report, said the troika "destroyed" in a few months what decades of labour bargaining had achieved.

"We need to change the economic dogma of the troika - looking only at the impact on markets. The economy should serve the people, not the other way around," he said.

MEPs redouble attack on bailout 'troikas'

MEPs investigating the troika of lenders in bailout countries have said it was marred by conflicts of interest, but a better model could take years to create.

End-of-troika debate amplifies ahead of Greek elections

A legal opinion by the EU top court and comments by the EU economics commissioner about the end of the bailout troika have come just days before elections in Greece, where troika-imposed austerity is a central issue.

Row between EU ministers halts e-book tax rate

A bill to reduce VAT rates on e-books and e-publications has become the latest victim of a row between the Czech Republic and its partners over its own plan to collect VAT.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

News in Brief

  1. EU leaders renew vows to uphold Paris climate deal
  2. US issues warrant for VW managers, German media say
  3. EU extends sanctions against Russia
  4. Merkel denies Franco-German deal on EU agencies
  5. Dutch PM: Turkey is upholding migration deal
  6. Britain to outline rights of UK-based EU citizens
  7. Tusk can 'imagine' the UK still remaining in EU
  8. Norway offers more blocks for Arctic oil exploration

Stakeholders' Highlights

  1. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  2. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  3. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  4. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  5. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  6. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  7. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  8. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  9. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  10. Malta EU 2017End of Roaming Charges: What Does It Entail?
  11. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move
  12. European Social Services ConferenceDriving innovation in the social sector – 26-28 June

Latest News

  1. Decision on post-Brexit home for EU agencies postponed
  2. May's offer on citizens’ rights dismissed as ‘pathetic’
  3. 'Historic' defence plan gets launch date at EU summit
  4. EU pressures firms to tackle online terrorism
  5. Lack of eligible candidates dogs EU relocation scheme
  6. Border management going virtual
  7. Tusk hints UK could stay in EU, if it wanted
  8. Merkel, Orban and the not quite closed Balkan route