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MEPs take aim at troika

Report will criticise lack of transparency

MEPs on Thursday (16 January) will scrutinise the European Union’s policy of bail-outs and austerity as parliamentarians seek to establish a role for themselves in dealing with the sovereign-debt crisis.

A draft report is expected to criticise the EU’s response as lacking in transparency and accountability and for operating outside of EU procedures. Among several recommendations, it is likely to call for European Commission officials involved in implementing bail-out packages to be required to appear before Parliament and regularly report to MEPs.

Its publication follows two weeks of high-profile hearings and visits, focusing in particular on the so-called troika, an ad-hoc group of officials from the European Central Bank (ECB), the European Commission and the International Monetary Fund (IMF) that devises and monitors the implementation of austerity measures and reforms for countries receiving a bail-out.

MEPs on the Parliament’s economic and monetary affairs committee will hear from Olli Rehn, the European commissioner for economic and monetary affairs, on Monday (13 January) and Klaus Regling, the head of the eurozone’s bailout fund, on Wednesday (15 January).

A delegation – led by Othmar Karas, an Austrian centre-right MEP and Liem Hoang Ngoc, a French centre-left MEP – visited Lisbon in Portugal early this week (6-7 January) and will visit Cyprus on Friday and Saturday (10-11 January), and Ireland next week (16-17 January), all nations in receipt of a troika-sponsored bail-out. A trip to Greece this week, which would have coincided with the celebrations of the launch of that country’s rotating presidency of the Council of Ministers, was cancelled.

Within the Parliament, it took more than a year for the inquiry to get off the ground, with opposition in particular from MEPs whose national parties were instrumental in creating the troika and supporting its work, and from MEPs who did not want to cause alarm with Europe still struggling to recover from the economic crisis.

More attention

A draft of the report “deplores” what it describes as the troika’s “over-optimistic assumptions” regarding growth and the political reaction that the reforms would generate, saying the troika should have paid more attention to “alleviating the negative impact of adjustment strategies”. Noting that EU law lacked an appropriate legal basis for the troika, the draft report flags up possible conflicts of interest relating to the Commission and the European Central Bank’s roles within the troika and their treaty role. It suggests that the ECB may be breaking the treaties. But the report recognises the “considerable time pressure” and “difficult political environment” under which the troika was operating.

Evangelos Venizelos, Greece’s deputy prime minister, said that it was “an institutional problem” to have the IMF “at the heart of the eurozone” as part of the troika of international lenders. “It’s a problem of democracy and of legitimacy. This is something that the European Parliament is now examining,” he said.

In November, MEPs questioned Servaas Deroose, a deputy director-general at the Commission, and Klaus Masuch, a senior official at the ECB, over the two institutions’ role in the response to the crisis, both of whom accepted that with hindsight certain things could been done better.

There are, though, critics of the Parliament’s investigation. They argue that MEPs are merely looking to gain greater power over the process and accuse them of grandstanding ahead of elections.

Elections

The questionable state of Europe’s economy, with only slow growth foreseen for next year and unemployment at 27% in Greece and 26% in Spain, is boosting Eurosceptic parties as well as parties on the extreme left and right ahead of European Parliament elections in May.

A Eurobarometer survey in December found Greeks were the most negative, with 33% finding that the European economy was in a “very bad” state and 30% saying that the financial situation of their household was “very bad”. Cypriots, the Portuguese and the Irish were similarly negative.

Equally concerning for EU policymakers and pro-EU parties ahead of the European Parliament elections is how widespread dissatisfaction with the EU’s economic governance is proving. The survey found that 86% of Italians considered the European economy to be in a “rather bad” or “very bad” state, with 78% of French citizens and 77% of Spaniards arriving at the same conclusion.

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