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Troika made mistakes but was necessary for Greece, says MEP heading inquiry

By Tom Ellis

Mistakes have been made but the troika was necessary and it managed to prevent the bankruptcy of a number of European countries, Ottmar Karas, a European Parliament vice president and one of the MEPs leading an inquiry into the troika, tells Kathimerini.

“We had to repair the boat during the storm. The storm is not yet over. But we have saved the boat – that is what everybody has to acknowledge,” says the Austrian politician, who is in Athens with his colleagues this week on a fact-finding mission. He adds that the lack of the necessary mechanism in the European Union meant that the involvement of the International Monetary Fund, and its expertise, in the bailouts was unavoidable.

Karas is due to meet members of the Greek government, including Finance Minister Yannis Stournaras, as well as representatives of labor unions and business groups.

What is your assessment of how the troika has functioned so far?

The troika has been an interim solution. It was necessary to have an instrument like the troika. It prevented the bankruptcy of several countries. Without it, the situation today would be much worse. But this does not mean that every single decision and the decision procedures have been perfect. The current crisis in Europe has been the biggest crisis since World War II. Nobody, no country, no institution was prepared for such a situation. We had to repair the boat during the storm. The storm is not yet over. But we have saved the boat – that is what everybody has to acknowledge. But now we have to ask what can be done in a better way in similar situations in the future.

As the first country where the troika implemented a program, some say that Greece was the victim of experimentation and too many mistakes.

Our meetings in Athens on Wednesday and Thursday will also help to look into this question. Most countries in Europe have internal instruments for a situation when a local government is threatened by insolvency. In my home country, in such a case, the regional governor sends a state commissioner to the ailing town and the commissioner takes over the bookkeeping. Every state in Europe has such mechanisms. On an EU level, we do not have such an instrument yet. The troika was the stopgap. And, of course – I use the same picture again – if you repair the boat during the storm at sea, it is clear that everybody gets a good shaking. Of course such a ride is bumpy. The storm showed in which areas the EU was not capable of acting properly. That is why we must learn now from this experience to be better prepared in the future.

Should and will there be accountability for the troika's actions?

I want solidarity within the EU. But we need instruments to organize the solidarity in a better way. The instruments of solidarity need transparency and democratic legitimacy and parliamentarian scrutiny. If the community helps an ailing member, those who help must be sure that their help is used properly and those who receive help have the right to be better informed. Only if the process is transparent, only if the parliaments are involved, will both sides – those who help and those who receive help – agree to make considerable efforts.

Should the programs be the result of solely technocratic analyses or should they take into account the social reality and political repercussions?

Any sound political decision needs these two eyes. You cannot do politics if you are not based on an accurate analysis of the facts. Anything else is wool-gathering. But you also cannot do politics if you do not pick people up where they are. If people do not understand what you do, they do not follow you. That is why parliaments have been invented: to create a space for public debate and to build a consensus, maybe not of everybody, but of a majority. That is why I want parliaments involved in the troika's decisions.

The IMF has accepted making a mistake with the multipliers. Were the measures proposed and implemented in Greece the correct ones?

The focus of the European Parliament is not to judge this or that particular measure in the past, but to propose options how to organize the troika better in the future. And again, repairing a boat in the storm is a shaky endeavor. That is why we have to learn the right lesson now.

Were you satisfied with the answers given by European Commission Vice President Olli Rehn, former European Central Bank President Jean-Claude Trichet and EU bailout fund chief Klaus Regling during your recent hearings in Strasbourg?

Our evaluation of the work of the troika is trying to take many different aspects into account. The hearings with Mr Rehn, Mr Trichet, Mr Regling and others, but also the missions on the ground in Portugal, Cyprus, Ireland and now in Greece are important to get a full picture. I am thankful to everybody who collaborated with Parliament's evaluation work. But I do not want and cannot anticipate the final result of our evaluation report, which will be voted by the European Parliament, probably in March.

Should the IMF have been invited to participate in programs for European countries?

The help of the IMF was indispensable. At the beginning of the crisis, the EU did not have the expertise the IMF had. The IMF has organized help programs for ailing states for many decades now. Since every single EU member state is a member of the IMF, we also had the legal right to call for the IMF's help. But it is also true that the share of IMF money in the programs decreased from a third at the beginning to less than 10 percent now.
We are now discussing three different options for how the work of the troika could be organized differently in the future: The IMF does it all alone, or the European Commission – which has acquired the necessary expertise by now – takes over and does it all alone, or the European Stability Mechanism ESM evolves into an European Monetary Fund. My personal preference is the third option, but we need further discussions in the Parliament.
 

ekathimerini.com , Tuesday Jan 28, 2014 (22:23)  
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