Tuesday

22nd Aug 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.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

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.

Airbnb too 'different' to pay EU tax

US home rental firm said its “model is unique” because most of the money stays in pockets of local people, as France and Germany prepare EU tax crackdown.

EU cautious with German diesel plan

The European Commission welcomed the German carmakers' pledge to update software in diesel cars, but is waiting for details on how emissions will be reduced.

News in Brief

  1. US will ask Nato allies to send more troops into Afghanistan
  2. Greece to be absent at event on Communism and Nazism
  3. Czechs want observer status in Eurogroup meetings
  4. Putin sends EU-blacklisted ambassador to US
  5. Austria has begun checks at Italian border
  6. Slovenian PM: Brexit talks will take longer than expected
  7. Merkel backs diesel while report warns of economic harm
  8. UK to publish new Brexit papers this week

Stakeholders' Highlights

  1. European Jewish CongressEuropean Governments Must Take Stronger Action Against Terrorism
  2. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  3. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  4. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  5. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  6. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  7. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  8. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  9. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  10. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  11. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  12. ACCAAnnounces Belt & Road Research at Shanghai Conference