By Judith Ugwumadu | 25 February 2014

The troika-led programmes that bailed out the economies of Greece, Cyprus, Ireland and Portugal lacked scrutiny and democratic accountability, according to the European Parliament’s economic and monetary affairs committee.

A report on the committee’s inquiry into the workings of the troika, drafted by Austrian MEP Othmar Karas and French MEP Liem Hoang-Ngoc, was approved by 31 votes to 10.  The report highlighted many weaknesses and recommended urgent improvements of the four bail-out countries.  

MEPs said that the troika of three independent institutions – European Commission, European Central Bank and International Monetary Fund – had an ‘uneven distribution’ of responsibilities between them. 

‘[This was] 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,’ the report stated.

Additionally, the national parliaments of the bailed-out countries were too often left out of the equation. 

‘When consulted, national parliaments were faced with the choice between eventually defaulting on their debt or accepting memoranda of understanding negotiated between the troika and national authorities.’

The MEPs added that European guidelines should be established to ensure appropriate democratic control of such measures. 

Also criticised was the troika’s ‘one-size fits all’ approach, which did not adapt or take due consideration of differing circumstances on the ground. 

EU finance ministers, particularly in the Eurogroup, were at fault for failing to give clear and consistent political pointers to the commission in terms of the aims sought in return for financial assistance, the MEPs said.

The report condemned the fact that EU institutions were made a ‘scapegoat’ for the adverse effects of reforms, ‘even though it is finance ministers who should bear political responsibility’ for the bailout programmes. 

Looking ahead, the report recommended a radical rethink of institutions’ roles. The IMF should be used only ‘if strictly necessary’, the ECB present only as a ‘silent observer’ and the commission’s role taken over by a ‘European Monetary Fund’. 

A proposal for the establishment of an EMF should be tabled by the commission by the end of 2014, by the MEPs added.