MEPs questioned EU bailout fund chief Klaus Regling on Wednesday as part of their inquiry into the anti-crisis role and operations of the European Central Bank/IMF/EU Commission "Troika". Mr Regling recognised that the remedies had created hardship, but stressed that the severity of the crisis had made the decisions taken necessary. He also said that he envisaged a system without the IMF in the near future.
MEPs acknowledged that tough decisions had been necessary but questioned whether the "Troika" set up was indeed unavoidable and asked if other, better designed, options could have been envisaged. They stressed that the need to minimise negative social consequences and ensure national "ownership" of remedial measures should have been higher on the decision makers' agenda.
They also disputed Mr Regling's statement that the Troika had only provided advice, arguing that since programme country governments had no room to deviate from this advice, the Troika had in effect become an enforcer of reforms, without proper democratic safeguards. They also asked how a possible future system could be made more accountable, transparent, and socially considerate.
The two co-rapporteurs, Othmar Karas (EPP, AT) and Liem Hoang Ngoc (S&D, FR) will present their first findings on Thursday morning, at a special meeting of the Economic and Monetary Affairs Committee.
Member states had opted for the intergovernmental approach to solving the crisis and for the "Troika" solution, said Mr Regling. At that time, there had been no alternative, economically or institutionally, to the Troika, he added, stressing that there could haven been no "painless" escape from the crisis.
Mr Regling also stressed that Troika actions had produced positive effects, citing Ireland, which had left the programme and successfully sold government bonds, and Portugal, which had restored its competitiveness, boosted its exports and regained access to the financial markets.
Left-of-centre MEPs pointed to the huge social costs, excessive burdens borne by the poor, weakened social services, and the way in which wealthy vested interests had been able to avoid much of the hardship. Economic conditionality had been "like a gun pointed at the country's head", they said.
Legitimacy and ownership
Mr Regling admitted that the balance between the measures could have been different, but reiterated that the Troika had only offered advice – it had been up to states in the programme to choose the appropriate solutions.
MEPs pointed out that remedial strategies would work best where they had the benefit of popular acceptance and a sense of national ownership.
For the future, Mr Regling proposed that more use should be made of European Commission expertise. He also mentioned giving the bailout fund, the European Stability Mechanism (ESM), more power through a treaty change.