EU Troika: examining the examiner

Members of European Parliament have called the Troika “catastroika”.

The mechanism created to fix austerity policies for EU’s states which were on the verge of bankruptcy- Greece, Ireland, Portugal and Spain- imposed some measures that have not contributed to improve neither these countries’ financial resorts nor real economies.

Furthermore, the ECB, IMF and EC’s living together within this common device was proved not to be peaceful. None of the three institutions truly wanted the model to survive and finally the European executive decided to review their working methods as well as their measures’ social impact.

The Austrian Popular Party’s MEP Othmar Karas and French socialist Liêm Hoang-Ngoc were responsible to perform the fisrt part of Troika’s evaluation, while the Employment and Social Affair Commision conducted the second report. The conclusions over the Troika’s behaviour may seem to come too late as the international organisation itself, particularly Lagarde’s IMF has already recognized their severe mistakes during financial rescues of Greece and Portugal, but they underline not only the device’s internal problems but also the fact that measures taken were not adapted to the bailed-out states’s circumstances.

The responsibilities, decision taking’s structures and transparency of ECB, IMF and EC are not equivalent, thus if a new financial rescue was needed and a new tool replaced the Troika at the end it would have to respect the EU’s laws and basic principles.

“Policy options will have to be carefully debated and chosen by elected representatives in the member state concerned and at EU level. This is why we are calling for both the EP and national parliaments to be properly involved in the design, approval and monitoring of the programmes. The policy recommended must be economically efficient and socially fair,” Mr Liêm Hoang-Ngoc said.

He also talked about a State Bankruptcy Prevention Law to directly prevent member states coming even close to bankruptcy. Despite their mistakes, the Troika’s inquirers believe it must terminate the on-going rescue programmes.

Regarding social impact of the Troika’s initiatives, the report is also very critic, pointing out that “adjustment programmes can not undermine collective agreements signed by social partners, cut or freeze minimum wages and pensions systems putting them below the poverty threshold, or make access to basic medical and pharmaceutical products and to affordable housing harder.”

Ten of thousands of Spaniards gathered last Saturday in Madrid’s Dignity Marches in order to protest once more against the government’s austerity policies. Platforms for this Dignity Marches have been organised in dozens of Spanish cities, towns and neighborhoods across the country to bring together at the capital city.

“We come here to get rid of capitalist friends of Troika,” some of demonstrators shouted.

However, the so-called Troika’s men in black seem to have ignored Spanish protesters’ slogans and are scheduled to visit Madrid again this week.

This will be its first time in Spain after January’s bail-out end report. The European Commision, the central bank as well as the European Stability Mechanism, which will participate as an observer, are to evaluate the Spanish banking sector’s state and also the country’s economic and budgetary situation. With this aim, they will meet with Bank of Spain, FROB and SAREB’s managing team as well as with the entities that were given public help. The Troika’s surveillance performing will finish with a conclusions’ report that will be followed by two annual missions until Spain reimburse 70% of their financial rescue.

Neither the Spanish government nor Brussels or the institutions within the Troika itself have fixed a deadline for the mechanism’s exit from Spain. Considering that neighbour Portugal’s PM Cavaco Silva has recently said the Troika will remain watching the country’s economy until 2035, Spaniards can feel sort of lucky at the moment.

About the Author

Julia Pastor
Julia Pastor has broad experience in business writing for Consejeros Media Group at Consejeros, Consenso del Mercado and The Corner. Previously, she worked for the financial news agency GBA and contributed to El País Business. She holds a Master's in Financial Journalism and a degree in English from the Complutense University in Madrid.

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