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Sombre warnings from Greek Troika

ECON EMPL Press release - Economic and monetary affairs / Employment policy27-03-2012 - 20:39
 

Top representatives of the Greek "Troika" stoutly defended the focus of the Greek bailout programme on Tuesday and insisted that Greece must raise its game on economic reforms, political unity and tackling vested interests, or risk failure. MEPs advocated a socially fairer and more growth-oriented programme and asked about contingency plans.


In this rare in-depth debate on the Troika's actions in Greece, jointly organised by Parliament's Economic and Monetary Affairs and Employment and Social Affairs committees, it was immediately clear that all Troika representatives had come armed with warnings. 


"It is not fair to fair to put blame for the problems Greece is facing on those who have come to help after the damage was done...  at the end of the day, it is the Greeks themselves who need to take the action to reform their country and carry the responsibility for it", Commissioner Olli Rehn said in his opening remarks.


IMF deputy director Poul Thomsen, and ECB Executive Board Member Jorg Asmussen also reiterated that the ball was firmly in the Greek authorities' court, and that major structural reforms and wage reductions are the only option.


Plan B


MEPs asked for more information on a "plan B" to cope with a possible failure of the programme.


"Are we not denying reality by not planning contingencies?" asked Philippe Lamberts (Greens, BE).  Similarly, Jean Paul Gauzès (EPP, FR), asked how the scenario would look if the Greek elections  provided only a slim majority in favour of the reforms.


"It is best to think about our plan A and stick to it" Mr Asmussen replied, openly conceding however that "there is no guarantee that the programme will work... we face an exceptionally high implementation risk with this programme." 


Mr Thomsen suggested a possible fallback would be that the EU would "continue standing by Greece provided that the right efforts were made".


A more intelligent programme


Many MEPs argued that the programme needed a stronger social and growth dimension.


Robert Goebbels (S&D, LU), led a large group of MEPs calling for a better balance between growth and fiscal consolidation: "A more intelligent policy mix is needed.  Until now the programme is strong on consolidation but weak on growth", he said. 


Various other MEPs also did not take kindly to the Troika representatives' comments on the need to cut wages further, with Nicolaos Chountis (GUE, EL), accusing the programme of "reducing Greeks to South East Asian conditions".  Finally, many MEPs called for specific actions on education and employment.  Nadja Hirsch (ALDE, DE), warned that a generation of youth risked being lost.


All Troika representatives defended the programme's social and growth credentials, but insisted that  recovery depended on tough reforms.  "There are no more easy measures left for Greece.  It is time for deep structural reform", Mr Thomsen said. 


Mr Asmussen also stressed that it was crucial to weed out vested interests from the economic system.  All argued that wage reductions were the best way to ensure competitiveness while remaining within the Eurozone.  Mr Thomsen did admit, however, that the programme had to be better than its predecessor at spreading the burden fairly.


A question of democratic accountability


Both committee chairs highlighted the need for accountability.  "This meeting should help in providing some accountability and transparency which has often been lacking" said Sharon Bowles (ALDE, UK). 


"If actions in this area are not transparent and cannot be evaluated they will never work", warned Pervenche Berès (S&D, FR), adding that open discussions should have been held before the programme was formulated.


In the chair:

Sharon Bowles (ALDE, UK)

Pervenche Beres (S&D, FR)

REF. : 20120326IPR41841
Updated: ( 27-03-2012 - 20:44)
 
 
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