EU study criticises troika role in crisis

The troika, set up to oversee austerity programmes in Ireland and other crisis countries, could not get its own house in order and was reluctant to adapt to differing conditions in its client countries, a European Parliament study found.

It recommends scrapping the troika and setting up a European Monetary Fund team taking over the role of the experts in the European Commission, with the ECB present as a silent observer and the IMF being optional.

Any austerity measures should be accompanied by a growth task force and the impact of any measures on all parts of society should be properly considered.

The findings were warmly welcomed by Labour MEP Phil Prendergast, but she decried the fact that so many of the centre-right and right-wing members of the parliament were still insisting that public debt was to blame for the euro crisis, rather than the banks.

“This belief led to a punitive austerity strategy that the European Central Bank helped impose on national governments, when it should have no business dictating budgetary policy,” she said, adding it explained why the EU leaders have failed to deliver on their promise to lighten Ireland’s bank bailout legacy costs.

While the final reports have been toned down somewhat from the interim findings that the troika was acting as debt collectors for the financial institutions, a highly critical version was still passed by the majority of Parliament members.

It found that the body had helped Ireland, Portugal, Cyprus and Greece through the crisis but its flawed structure and methods were not transparent or democratically accountable.

It painted a damning picture of the troika’s organisation and said that national parliaments were left out all too often. “The three independent institutions of the troika had an uneven distribution of responsibility between them, coupled with differing mandates, as well as negotiation and decision-making structures with different levels of accountability, all resulting in a lack of appropriate scrutiny and democratic accountability as a whole,” it said.

It was accused of adopting a “one-size fits all” policy, and was often reluctant to depart from this despite the circumstances differing widely in the countries concerned. But it also pointed out that making the troika the scapegoat for the adverse effects of the cutbacks and changes was unfair and was a result of the EU’s finance ministers and especially those in the euro, evading their responsibilities.