A crack on the Troika’s surface


It is unfortunate that the International Monetary Fund on Wednesday gave no response to the challenge almost everyone in finance and politics has opined about. Or rather, it proves European Commission vice-president Viviane Reding’s point: the members of the Eurozone austerity and reform program watchdog, known as Troika, have a less friendly relationship than we thought.

On Tuesday, while holding a citizens’ dialogue meeting in Heidelberg with the Minister-President of the state of Baden-Württemberg Winfried Kretschmann, Reding threw a stone into the so far calm waters of the Troika pond–the Troika group is formed by the European Commission, the European Central Bank and the IMF–with the unequivocal intention of at least breaking the ice. “The Troika’s time is over,” were her words, “Europe has to be able to solve its problems on its own.” Reding said this amid comments on more democracy and more integration in Europe. The context here matters.

She went further: “The Troika has to be replaced by systems that we have in Europe that comply with what our treaties lay out, social economy and market economy. Solidarity and solidity need to be combined.”

It’s too easy to read between lines. On one hand, there is the usual discourse about a forceful, more resolute and united European Union. But Reding, and she was talking as representative of the European Commission, also seemed to have made hers mounting criticisms throughout Eurozone countries against the lack of accountability and the punishing terms of conditions (and errors) that accompany each bailout.

Following the answers of Reding in the public meeting in Germany, the obvious conclusion is that the European institutions within the Troika share values–welfare state, Europe being more than a currency union and an economic area–that the IMF doesn’t.

If this ends up as a populist attempt to pass the bucket on to the IMF, Reding must be told to stop: a less credible Troika will spark even more investor distrust and bomb the one piece in the euro jigsaw that brings market confidence.

Yet, if the European Commission truly believes the IMF should leave it to European institutions, it must demonstrate it has grown up after five years of continuous crisis. Europeans cannot stand any more bureaucratic parlance. It’s time to take the responsibility of denouncing those governments in the Eurozone that aren’t implementing needed reforms, and press ahead towards a banking union, a fiscal union and an actual democratic European governance.

About the Author

Victor Jimenez
London contributor at thecorner.eu, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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