Monday

26th Jun 2017

NGO calls for more accountable euro bailout fund

  • Jeroen Dijsselbloem (l) has been president of the Eurogroup since 2013 and Klaus Regling (r) is the current and first managing director of the European Stability Mechanism. (Photo: Council of the EU)

The €80 billion bailout fund for the euro area should become more accountable and transparent, according to Transparency International (TI).

In a report published on Monday (6 March), the NGO said that the European Stability Mechanism, (ESM) "performs well on financial auditing and integrity, but falls short on accountability".

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As a remedy, it "should be integrated into the EU treaties as soon as possible, embedding it into the EU’s wider accountability framework with a whole range of EU bodies and institutions" - such as the European Court of Justice, the European Ombudsman and the European Data Protection Supervisor.

The ESM is not formally an EU institution, but instead an international body, governed by a treaty signed by the 19 countries whose currency is the euro.

The Luxembourg-based fund is made up of financial contributions from the 19 euro area members. It can lend to countries experiencing "severe financing problems, in exchange of comprehensive structural reforms" – as is currently the case for Greece.

Integration into the EU treaties has always been a long-term objective of the ESM, which, until now, has failed to materialise.

Independence from the Eurogroup

The accountability of the ESM could also be strengthened by making it more independent from the Eurogroup. Up to now, the ESM is governed by a board made up of the euro area finance ministers, who are also members of the Eurogroup.

That means that “the collective will of the (ESM's) board of governors is already formed in the Eurogroup before the board takes its formal decisions", according to Transparency International.

In its report, TI went on to state that “discussions at board meetings are not very long, because it is an implementation of the decision of the Eurogroup”.

A Eurogroup spokesperson declined to comment on relations between the ESM and the Eurogroup.

Rolf Strauch, a member of the ESM management board, defended his institution, saying it is already “accountable”.

He pointed to the fact that institutional or treaty changes are beyond the ESM's competences. He also said that Klaus Regling, the ESM's managing director, always accepts to meet the European Parliament when asked, even if he has no legal obligation to do so.

Transparency push

The report recommends significantly strengthening the ESM's transparency, by publishing the minutes of the board of governors' meetings, by making its economic models public, and by obliging its managing director to publish a public declaration of financial interests. These actions could be followed up by the ESM on its own initiative.

The ESM said it will comply with the financial interests declaration, but remained unclear as to whether it will follow the other recommendations.

It said it will “consider publishing on its website” information related to economic models and assumptions regarding the debt sustainability analysis. “We already publish a great deal on information on our website”, said Strauch.

The report recognises that the Eurogroup improved the state of play last year, thanks to a “transparency initiative”, which led to the publication of a few ESM and Eurogroup documents.

“This improves the situation”, says TI, but it is still not enough to “allow citizens to find out what arguments and trade-offs compelled a change in position of their finance minister”.

Two European sources said that publishing the minutes of the board should not be a problem, under the condition that no market-sensitive information is made public – for example, details about a bank going into recapitalisation. Making other information public would have to be discussed, such as the need to name any particular country.

But a third source played down the whole issue, saying that “the minutes of the boards meetings are very short, since the decisions are always taken in the Eurogroup”.

"So the real point is changing the treaty, to ensure another ESM/Eurogroup configuration”.

ESM bank bailouts will not happen soon, says Schaeuble

German finance minister Wolfgang Schaeuble Monday reiterated that no bank recapitalisation could take place until the EU's planned banking union is up and running but admitted "Spain can't wait that long".

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