In late 2013, the European Parliament launched an inquiry into the work that was carried out by the Troika in Greece, Cyprus, Portugal and Ireland both during and after the European economic crisis. The information obtained has led the EP to come up with a set of proposals to reorganize the Troika's structure in an attempt to improve transparency and make it more democratic, as well as to address lingering negative social implications that resulted from some of the policies.
Both the Committee on Economic and Monetary Affairs and the Committee on Employment and Social affairs started
working on this report in the month of November.
The Troika is made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). During the crisis, the Troika was put in charge of coming up with solutions to the above countries' economic problems. It is important to highlight, however, that the Troika was not granted the ability to take decisions. The only entity with the ability to take decisions is the Eurogroup.
The Troika was the only group of lenders capable of addressing the economic emergency present at that time. If money had been pumped into failing countries without encouraging sound reform, efforts intended to prevent further deterioration would have proved futile.
Although its ability to prevent an economic catastrophe has been recognized by both committees, criticism directed towards its modus operandi abound. In Parliament, some see the Troika as no more than an interim solution. This is due to the groups' intergovernmental nature and lack of Community law-based foundations. Several EU officials believe that creating a European Monetary Fund grounded on Community law will provide a more sustainable mechanism to future economic emergencies.
The motion for resolution originated from the Parliament's desire to evaluate the functioning of the three institutions that are part of the Troika and build up a set of recommendations to increase "transparency, democratic legitimacy, and Parliamentary scrutiny". Stronger Parliamentary control of the emissaries of the donors in the bailed-out countries will increase accountability and ensure that reform and austerity decisions are taken in a more democratic manner.
A series of public debates highlighting EU citizens' experiences and opinions on the work carried out by the Troika have been key in the information-gathering process conducted by the European Parliament. Finding a balance between "fiscal consolidation, structural reform and incentives for growth and employment" has been identified as one of the main challenges ahead.
Other important problems that were evaluated and discussed in parliament include the unequal division of responsibility among the Troika's three members, problems posed by the groups' different mandates, unclear assessment of policy impacts on citizens, and an overall lack of democratic accountability.
The role played by the EU finance ministers, especially those in the Eurogroup was a main point of discussion. This group was found guilty of failing to provide the Commission with a clear sense of direction, as well as for "failing to shoulder their share of responsibility in their capacity as final decision-taker." The proposals that were approved by the EP last week outline both short and long term potential solutions to these problems.
In the short-term, MEPs seek to redefine the Troika's internal rules of procedure to increase the transparency of decision-making. In the long-term, the creation of a new European Monetary Fund has been deemed the best solution to the Troika's interim problem-solver status.
The aim is to build a future where the European Monetary Fund will take over the role of the European Commission, the ECB will become a “silent observer”, and the IMF’s participation will become “optional”. The creation of an EU-designed fund based on Community law will guarantee an increase in transparency and that all actions are taken with both the community's and all taxpayers' best interests in mind.
The proposals also cover ways to increase effective communication and establish rules guiding interactions between members of the Troika.
At the time of the crisis, there existed no set EU procedures which outlined the actions that needed to be taken in such a situation, or an institution which could take on a problem of that magnitude by itself. The Troika served its purpose at the time in a manner that did help limit the consequences of the economic crisis. A new Fund will seek to increase citizens' approval of any actions taken by ensuring that decisions on reform and aid programmes are "democratically legitimised and subject to parliamentarian scrutiny."