MEPs laid into top European Central Bank and European Commission staff over the working methods of the ECB/Commission/IMF "Troika" at Tuesday's Economic and Monetary Affairs Committee meeting. They demanded details of how Troika decisions were taken and what lessons had been learnt. They also sharply criticised the often mistaken economic forecasts behind the economic reform programmes demanded of Greece, Cyprus, Ireland and Portugal.
Kicking off their preparatory work for the committee's inquiry into the Troika’s role and operations, MEPs quizzed Commission Deputy Director General Servaas Deroose, ECB Head of EU Countries Division Klaus Masuch, and academics on the effects of reforms in the “crisis countries” and the inner workings of the Troika.
Many MEPs were particularly incensed by the opening observations of the ECB and Commission officials. "It is like hearing the spokespersons of Alice in Wonderland! Your forecasts have been worse than the worst weather forecast I ever heard", commented Dirk Jan Eppink (ECR, BE).
"It is true that our forecasts have not been perfect, but circumstances made predictions extremely difficult", replied Mr Deroose. Mr Masuch blamed the discrepancy between forecasts and outcomes on failures to put economic reforms into practice quickly and collapsing confidence.
Asked what regrets, if any, and with hindsight, the Commission and ECB had about the design of the reform programmes, both officials broadly defended the original designs but accepted that some things could have been done differently.
Mr Deroose highlighted the need for a stronger focus on improving competitiveness. Mr Masuch admitted that the Troika had underestimated the resistance put up by the better-off vested interests.
Othmar Karas (EPP, AT) asked for an explanation of the various levels of responsibility of the three institutions (ECB, Commission, IMF) within the Troika and their relationship with the Eurogroup.
Mr Masuch laid the responsibility at the Eurogroup's door - "It is the Eurogroup that decides the terms of the programmes". To this Philippe Lamberts (Greens, BE) replied, "You (the ECB) are not just technicians. Do not simply point us to the Eurogroup".
Various MEPs also reminded Messrs Deroose and Masuch that the goal of the programmes should not only be to return economies to health. "How are you taking account of the need for political and social stability, and are you factoring serious unrest into your plans?" asked Anni Podimata (S&D, EL).
Both officials sought to reassure MEPs that social and political difficulties were being taken into account and that this was reflected in the flexibility which was built into each programme.
Parliament’s top body is expected very shortly to officially approve the setting up of an inquiry into the workings of the Troika. This inquiry will be led by Othmar Karas (EPP, AT) and Liem Hoang Ngoc (S&D, FR) who are expected to finalise a report towards the end of the Parliament's legislative mandate.