EU's crisis-fighting mechanism needs true democratic accountability, clear channels of responsibility, more consideration of social consequences, and an ability to correct policy recommendations when they prove inadequate, MEPs have said.
Commenting on the first conclusions of draft report analysing the operations of the Troika, the European Parliament plenary criticised the Troika for failing to correct its recommendations when they proved inadequate and detrimental.
The draft report presented at the European Parliament yesterday points out that a Memorandum of Understanding (MoU) is an agreement between the Member State concerned and the Troika under which a Member State undertakes to carry out a number of actions in exchange for financial assistance.
The Troika, consisting of the European Commission, the European Central Bank
(ECB) and the International Monetary Fund (IMF), resulted from a decision on March 25, 2010 by eurozone leaders to provide conditional bilateral loans to Greece. It has since also been operational in Portugal, Ireland and Cyprus.
“At the beginning of the EU-IMF assistance programme in 2013, speculation about the systemic instability in the Cypriot economy had been ongoing for a long time, owing inter alia to the exposure of Cypriot banks to overleveraged local property companies, the Greek debt crisis, the downgrading of Cypriot government bonds by international rating agencies, the inability to refund public expenditure from the international markets, and the initial reluctance of the government to restructure the troubled financial sector.”
It is also noted that although the initial request for financial assistance was made by Cyprus on June 25, 2012, differences of positions as regards the conditionality, as well as the rejection of an initial draft programme by the Cypriot Parliament, delayed the final agreement on the EU-IMF assistance programme until April 24 (EU) and May 15, 2013 (IMF), respectively, and on April 30, 2013 the Cypriot House of Representatives finally endorsed the ‘new’ agreement.
In addition, the European Parliament deplores that since 2008 the income distribution inequality has grown above average in the four countries and that cuts in social benefits and rising unemployment are raising poverty levels.
Meanwhile, it also points to the unacceptable level of youth unemployment in the four Member States under assistance programmes and especially to the sharp increase in youth unemployment in Cyprus, Greece and Portugal.