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Troika

Brussels, 16/01/2014 (Agence Europe) – MEPs agree that, in the past, there was no alternative to the troika of lenders (the European Commission, European Central Bank and International Monetary Fund) to countries in receipt of financial aid.

The IMF did not have enough money to bail out all the countries, and the Commission was simply not prepared for the job either institutionally or politically, explained one of the two co-rapporteurs of the European Parliament's investigation into the troika, Austria's Othmar Karas (EPP) during an EP committee debate on Thursday 16 January.

The Commission has learned a lot since then and how has preventative instruments available, and the eurozone itself now has a backstop, the European stability mechanism (ESM). The other co-rapporteur, Liêm Hoang-Ngoc (S&D, France), said that, in time, one could imagine that the instruments available in the EU would be sufficient and the IMF could depart from the troika.

Three options. Karas presented three options. The IMF acts alone, the Commission acts alone or the ESM becomes a European monetary fund. He prefers the third option, as long as the process is based on the Community method because the current legal basis is problematic. Belgium's Philippe Lamberts (Greens/EFA) said the real problem wasn't the legal basis but the fact that some institutions exceeded their mandate. This was underscored by Portugal's Marisa Mattias (GUE/NGL), who said the EU was no more prepared to manage the crisis now than it had been in the past.

Lamberts likes the idea of the process focussing on the Commission, which would be given a negotiating mandate by the EP, and the ESM would then implement the decisions. The EP would reserve the right to reject a negotiated agreement if necessary. Would the EP's involvement lead to less austerity? Not necessarily, said Hoang-Ngoc, because the majority of MEPs are Liberal or Conservative so it would probably have voted in favour of the austerity measures, but at least that would have conferred democratic legitimacy. Karas said strings would remain attached to aid plans because a blank cheque would simply make things worse, as was seen with the Russian loan to Cyprus in 2011. The EPP and S&D disagree on the timing of when the IMF should leave the troika. Karas said it could not interrupt its work in countries where it is already active. Last week, the head of the S&D Group, Austria's Hannes Swoboda, said that getting rid of the troika would be great victory for the Greek Presidency.