Recent revelations about the way Greece was handled by the 'Troika' of international lenders – the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC) – has re-ignited the debate on the democratic accountability of the ad hoc institution. There was no clear legal basis when the Troika acted in bailout countries, and they did not even know where they stood, argues Liêm Hoang Ngoc in an interview with the EURACTIV Network.
Liêm Hoang Ngoc is a French member of the European Parliament for the Socialist and Democrat group (S&D). He spoke to EURACTIV Greece’s Sarantis Michalopoulos and EURACTIV France’s Cécile Barbière, at the Assembly's plenary session in Strasbourg.
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The implementation of the troika’s programme had disastrous effects on Greek society in the past years. What measures can the Greek government now take, together with the European Commission and European Central Bank (ECB), to solve issues like the growing poverty?
I have been calling, together with colleagues in the party of European socialists, for a reorientation of economic policy throughout Europe, not just in Greece. Austerity does not work.
The adjustment programmes in Greece and other countries under the supervision of the troika are not delivering on their promises: public debt keeps increasing and competitiveness has not been restored. Greece is also suffering from austerity implemented elsewhere in Europe, because it limits its ability to export.
There needs to be more time for decreasing deficits. More effort need to be done to support consumption and public investment must be safeguarded. In the current troika setting, Greece sadly has very little room to manoeuvre. Our investigation has revealed that national governments have tried to propose more pragmatic measures, such as the introduction of a minimum wage negotiated with social partners in Portugal.
But the troika refused – it is captured in a dogmatic approach. To be able to change course in Greece, Portugal and Cyprus, we must first and foremost dismantle the existing setting of the troika.
Hannes Swoboda recently stressed that, if the Greek Presidency is to achieve a real victory, it has to abolish the troika. What’s your opinion?
The troika in its current form must be dismantled. This is the message that I have been pushing in negotiations with the EPP in Parliament. This means preventing the ECB from intervening in fiscal and budgetary matters and forcing the Commission to comply with basic democratic principles, at both national and EU level.
We also need to bear in mind that as long as there will be external financing coming from the International Monetary Fund (IMF), we need to keep a structure of coordination, but this would have to be the opposite of the troika. It would need to be transparent and accountable.
The Greek Finance Minister, Yiannis Stournaras, recently told the Financial Times that he resisted pressure from the IMF to accept a 'haircut' for Greek bondholders. He said the German Finance Minister, Wolfgang Schäuble, told him: “Forget it”. How do you think this is best dealt with?
This episode is very representative of the reasons why a thorough enquiry of the troika is needed : the discussion presumably happened behind the closed doors of the Eurogroup, beyond the reach of parliamentary control.
What is a stake is crucial: whether or not public creditors of Greece would accept to take a loss in order to give room to Greece, and whether or not one member state can pre-emptively bloke any debate about it. If it was confirmed that such an important matter had been dealt with in such a careless and undemocratic way, it would be cause for revolt. The quote can only strengthen my believe that we cannot go on like this. That transparency and the respect of citizens must be placed back at the forefront of the European Union.
What do you think of the argument of Commissioner Olli Rehn saying that the legal basis of the troika is based on the "two-pack" legislation?
The two pack was only enacted in May 2013, that is after the troika had started its operations in all four member states we are looking into. So Mr Rehn indirectly confirms that there was no clear and transparent legal basis for the troika when it was used in Greece, Portugal, Ireland and Cyprus. This means we did not really know what the troika's powers and responsibility were, and that the Commission, IMF and ECB did not really know were they stood as well.
The two pack has brought some clarification, but we are still a long way to go. We still lack essential principles to frame the democratic accountability and legitimacy of the troika. There is no satisfactory basis for the involvement of the ECB in fiscal and budgetary affairs. An there is no clear criteria to define when the IMF help is needed.
In France, we have a socialist government since June 2012. While questioning the economic governance of EU, the Elysée still remains quiet on the role of the troika. Why?
Francois Hollande has widely commented the economic and social situation in Europe, and especially in the countries under supervision of the troika. He always called for more solidarity between member states. But the decisions of the troika are formally under the responsibility of the ECOFIN Council at the European level and the Finance Minister, Pierre Moscovici, at the French level. On the key question of parliamentary control, I wish that France would take the side supporting a community method.