Monday

12th Nov 2018

EU brushes off 'democratic scandal' of Greek bailout

  • Greece continues to struggle under a mountain of debt (Photo: Denis Bocquet)

The European Commission has defended its role in the Greek bailout despite Pierre Moscovici, the EU finance commissioner, having called the Eurogroup "a democratic scandal."

The Eurogroup is a club of eurozone states' finance ministers presided over by Dutch finance minister Jeroen Dijsselbloem but dominated in practice by his German counterpart, Wolfgang Schaeuble.

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  • Moscovici (l) reportedly caved into Dijsselbloem demands on the Greek bailout (Photo: eu2017mt/Flickr)

It imposed its will on Greece when the country was teetering on the verge of economic collapse and a eurozone exit in 2015, in exchange for access to bailout funds from the European Commission, the European Central Bank, and International Monetary Fund.

A Commission spokesperson on Tuesday (5 September) noted that the EU executive had "invested a lot of time and effort and resources to keep Greece in the eurozone."

But Pierre Moscovici, the EU finance commissioner, took a more critical line.

Over the weekend, he described the Eurogroup as a "democratic scandal", given that its talks are held behind closed doors and without any public accountability.

"Let's face it, the Eurogroup as we know it is rather a pale imitation of a democratic body," he said in his blog on Saturday (2 September).

Moscovici said the governance behind the EU's economic and monetary union had also lacked proper democratic oversight.

"Sometimes in the past, when we look at Greece, it has been close to a democratic scandal," he said.

Double standards

Moscovici's admission is all the more striking given the recent publication of a book by Greece's former finance minister, Yanis Varoufakis.

Varoufakis, who steered Greek talks at the Eurogroup until his resignation in July 2015, provides a detailed account of the Commission's double-standards during the initial rounds.

He said that Moscovici would agree in private to easing the austerity measures but, in the Eurogroup, the Commission's representative would then reject everything in favour of harsh measures driven by Dijsselbloem and Schaeuble.

In one private meeting in Dijsselbloem's office, Varoufakis said that Moscovici had even capitulated to Dijsselbloem, despite having previously agreed to concessions that would render the Greek programme more flexible.

Dijsselbloem refused to agree to the measures proposed by the Commission. Varoufakis said that Moscovici had responded to Dijsselbloem with "whatever the Eurogroup president says" in a voice that quavered with dejection.

"During the Eurogroup meeting, whenever I looked at him [Moscovici] I imagined the horror Jacques Delors or any of the EU's founding fathers would have felt had they observed the scene in Jeroen's [Dijsselbloem's] office," writes Varoufakis.

Greece is now facing years of austerity as its international creditors continue to dispute how to grapple the recession-hit country's mountain of debt.

The International Monetary Fund, one of Greece's three creditors, is pushing for concessions for debt relief against a resistance led by Germany and some other EU states.

Most of the bailout funds have gone towards paying off international loans and proved beneficial to German and French banks that were massively exposed to Greek public debt in the lead up to the financial crisis.

According to one study, Germany had also ended up with large profits, yielding interest savings on German bonds of more that €100 billion during the period of 2010 to 2015 from the Greek debt crisis.

Greece looking at bond market return

Greece could issue 3-year bonds as early as this week, for the first time in three years, amid mixed signs from its creditors and rating agencies.

Varoufakis back in push for ECB transparency

The former Greek finance minister Yanis Varoufakis and German left-wing MEP Fabio De Masi want to know whether the European Central Bank overstepped its powers when putting capital controls on Greek banks in 2015.

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