Saturday

4th Dec 2021

MEPs point to conflicts of interest within troika

  • The European Parliament wants to have a say in the appointment of troika experts (Photo: Luc Mercelis)

The European Commission and the European Central Bank had conflicting interests when they acted within the troika of international lenders in bailed out countries, MEPs say.

Othmar Karas and Liem Hoang Ngoc, the two MEPs tasked with looking at the problems surrounding the work of the so-called troika (EC, ECB and International Monetary Fund) in Greece, Portugal, Ireland and Cyprus have submitted their first draft of the report, due to be voted in the European Parliament in March.

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According to the draft, "due to its ad hoc nature there was no appropriate legal basis for setting up the troika on the basis of Union primary law."

This led to several potential legal and accountability problems.

The European Commission acted "both as an agent of member states and EU institution," with MEPs warning that "conflicts of interests may exist inside the commission between its role in the troika and its responsibility as a guardian of the treaties, especially in policies such as competition and state aid."

For its part, the ECB also may have been in a conflict of interest when acting both as creditor for bailed-out countries and as "technical advisor" within the troika.

With the ECB legal mandate limited to monetary policy, any involvement in budgetary, fiscal and structural policies is "on uncertain legal ground," MEPs say.

Another issue is the approval - both by the commission and the ECB - of policy measures which were struck down by national constitutional courts, for instance in Portugal.

The deputies say the accountability of the EU commission should be increased by allowing its troika representatives to be heard in the European Parliament before taking up duties and regularly reporting to MEPs.

They also want the legally binding reform plans connected to bailouts (memorandum of understanding) to be drafted with "appropriate democratic accountability" both at national and EU level, meaning the involvement of parliaments.

"The Troika is a stop-gap. It is based on the collaboration of governments, but not in Union law. In the future, transparency, parliamentarian scrutiny and democratic legitimacy must be guaranteed", Karas said.

The European Parliament also plans to send a delegation of MEPs to Portugal, Greece, Cyprus and Ireland in January and hold hearings with the economics commissioner, Olli Rehn, the former ECB chief, Jean-Claude Trichet, and the head of the eurozone bailout fund, Klaus Regling.

The MEPs sent a questionnaire to the programme countries' governments, the commission and the ECB.

The ECB would not comment on the draft report. A spokesman for the Frankfurt-based bank told this website all answers will be sent to the European Parliament.

The EU commission said the same, but added that it was EU leaders who gave it this mandate in 2010 with the first Greek bailout and then reconfirmed it in May 2013.

"In other words, our role in the design and oversight of programmes is enshrined in EU law," Simon O'Connor, spokesman for economics commissioner Rehn, told EUobserver.

As for the constitutional challenges, the EU commission "of course carefully examines measures to assess compliance with EU law, but it is up to the national authorities to assess whether they are line with their own constitutional legal framework. That is not our role," he added.

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