EU lawmakers put the Troika under the microscope this week, wanting to know how and why the trio of international creditors imposed eurozone debt bailouts at such high cost to the ordinary public.
Transparency, accountability, why were forecasts missed and more austerity imposed when unemployment was soaring, European Parliament deputies asked at a series of sometimes testy hearings with top Troika officials.
“For many people in Europe, the Troikas measures were imposed by outsiders … that is why there needs to be more transparency,» said Martin Schulz, the Social Democrat head of Parliament.
The Troika of the European Commission, the EUs executive arm plus the European Central Bank and the International Monetary Fund came together in 2010 to run a first bailout for Greece.
In exchange for about 110 billion euros ($150 billion) in aid, Athens had to accept radical spending cuts, tax hikes and reforms which stoked record unemployment and growing social upheaval.
Worse still, the measures failed — the Troika had to arrange another more costly, more stringent rescue in 2011 which brought down one government and sparked huge anti-austerity demonstrations.
Today, Greece appears to have scraped through the crisis but at the price of an unemployment rate of more than 27 percent and a lost under-25 generation of which more than half cannot find a job.
Finance Minister Yannis Stournaras last week chided the «maximalist approach» of the Troika and warned that Greece country do no more.
For EU Economic Affairs Commissioner Olli Rehn, a key figure in the debt bailouts for Greece, Ireland, Portugal and Cyprus, the Troika proposed measures but it was ultimately up to governments to choose and implement them.
As for forecasts and estimates falling short, Rehn told Parliament’s Economic and Monetary Affairs Committee that that was to be expected in such turbulent times when the eurozones future was at stake. The events had shown «the limits of economics,» he said.
“The Troika does not impose (measures); the decisions are made with the countries concerned,» said Klaus Regling, head of the European Stability Mechanism, the eurozones rescue fund set up at the height of the crisis.
Fench Socialist MEP Liem Hoang-Ngoc charged the Troika with being accountable to no-one even as it took decisions affecting the daily lives of millions.
“We do not know how its decisions are taken,» Liem said.
“Who decides that wages in Greece must be cut? Do you know? Did Parliament decide that?”
Former ECB Jean-Claude Trichet, who stepped down in November 2011, argued that in unprecedented circumstances, the Troika had done its best.
Without the bold action taken, the situation could have been much worse, perhaps a repetition of the disastrous Great Depression of the 1930s, Trichet said.
The key problem was governance — many member states had ignored the EUs economic rules and so ran into growing debt and deficit problems which blew up with the global financial crisis in 2008.
“The governance issue is absolutely fundamental,» he said.
Now with the rules tightened up to prevent any repetition of the crisis, Trichet said he hoped «the concept of the Troika will gradually disappear.”
MEPs concede that there were exceptional circumstances during the debt crisis but insisted this did not excuse the Troika.
A Parliament summary after Regling’s session on Wednesday said that MEPs wanted to know «if other, better designed options could have been envisaged.”
The need to «minimise negative social consequences and ensure national ownership of remedial measures should have been higher on the decision makers’ agenda,» it said.
The Troika in practice had «in effect become an enforcer of reforms» since bailed-out governments «had no room to deviate from (its) advice,» the summary said.