The troika faced an “immense challenge” in dealing with the euro crisis but the adjustment programs it helped implement in Greece and other countries lacked transparency and were not fully adapted to those states, according to a European Parliament committee, which recommended on Tuesday the International Monetary Fund’s involvement in future bailouts be “optional.”
The Economic and Monetary Affairs Committee in Brussels approved on Tuesday by 31 votes to 10 the findings of a report compiled after several weeks of visits to program countries and hearings in the Belgian capital.
The MEPs acknowledged the pressurized conditions in which the bailouts were put together but their report “denounces the lack of transparency” in negotiations and “deplores the sometimes over-optimistic assumptions made by the troika.” It also “regrets that the programs are not bound by the Charter of the Fundamental Rights of the European Union and the Treaties.”
Apart from accusing the troika of “weak democratic accountability,” the troika inquiry also highlights that national parliaments were given short shrift during negotiations. “When consulted, national parliaments were faced with the choice of eventually defaulting on their debt or accepting memoranda of understanding negotiated between the troika and national authorities,” the report said.
The MEPs were also critical of the role of eurozone finance ministers, saying that the Eurogroup had overstepped its authority despite “not being an official institution of the European Union.”
The report calls for the eurozone to rethink the way it administers bailouts in the future. Apart from limiting the role of the IMF, the MEPs also recommend that the European Central Bank should only be present as a “silent observer” and that the European Commission’s role should be adopted by a “European Monetary Fund.” The parliamentarians call for a proposal for the establishment of the EMF to be made by the Commission before the end of this year.
Future bailouts should also “take into account the quality of employment, social protection, health and education and ensure access for all to the social systems.”
With regards to Greece, the MEPs ask the troika “to address the need to reduce the Greek public debt burden as well as the severe capital outflows from Greece which contribute significantly to the vicious circle of the current economic depression in the country.” Apart from a haircut for Greek bonds, the report highlights other options for restructuring the country’s debt, such as “bond swapping, extending debt maturities and reducing coupons.”
The findings of the European Parliament’s troika inquiry will be put to a plenary vote next month.