20th Aug 2022

Germany: No need to get rid of troika

  • The troika has become synonymous with austerity and opaque decision-making (Photo: Bundesregierung)

Germany has snubbed both EU commission chief Jean-Claude Juncker and Athens by saying it sees no need to put an end to the troika of international creditors in Greece.

The troika - comprising the European Commission, the European Central Bank and the International Monetary Fund - has become a synonym for austerity policies and non-transparent decision making for bailed-out countries.

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Juncker pledged in his election programme to have it replaced by a "more democratically legitimate and accountable structure based around EU institutions with enhanced parliamentary control".

The European Parliament last year had also called for the replacement of the troika with an EU body. And the new Greek government has said it does not want to deal with the representatives from the troika.

But Berlin is refusing to consider a different body.

"The troika is basically an instrument allowing EU member states' programmes to be evaluated in the Eurogroup, giving a basis for decisions on how to deal with these programmes further," a spokeswoman for German chancellor Angela Merkel said Monday (2 February) in Berlin.

"From the point of view of the German government, there is no need to deviate from this established mechanism - evaluation by the troika and subsequent decisions on a political level," spokeswoman Christiane Wirtz said.

"Within the German government there is also no indication whatsoever that the EU commission should take distance from this established mechanism," she added.

EU commission spokesman Margaritis Schinas on Monday said there are currently no concrete plans to scrap the troika and said that any such move would have to be agreed by all 19 eurozone states. But he repeated Juncker's pledge made last year to replace it with a more EU-based body "in the future", without giving any timeline for it.

As for the Greek government's ideas on how to deal with the country's debt, Schinas said Juncker will discuss them wit Greek Prime Minister Alexis Tsipras on Wednesday in Brussels.

Berlin meanwhile is still in wait-and-see mode ahead of an EU summit next week. It is insisting that Greece has only been given until the end of February to strike a deal with its creditors - not May as Athens has been hoping for.

A spokeswoman for German finance minister Wolfgang Schaeuble said that her boss congratulated his new Greek counterpart, Yanis Varoufakis, but said no concrete date has yet been set for a meeting between the two.

Varoufakis was in London on Monday after a stop in Paris on Sunday as he seeks allies on giving Greece more time to sort out a deal.

In an interview with the Financial Times, Varoufakis backed down from the initial idea of 'debt forgiveness' and is now promoting a "menu of debt swaps", linking debt repayments to economic growth.

This idea is backed by the Bank of England, the IMF and Yale University. But investors are sceptical the scheme can work without "significant compensation", Reuters reports, quoting three debt brokers.

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