Relaxation of austerity measures in the countries where Memorandum is applied, such as Greece, is “demanded” by the authors of the European Parliament report regarding the works and the time spent of Troika in Greece, Ireland, Portugal and Cyprus.
According to the draft of this report that was published by “Kathimerini”, the creation of a European Monetary Fund (leading to a gradual departure of IMF), strengthening of the democratic accountability of Troika and changing the processes of decision-making of Eurogroup, are recommended.
Although the draft report will be amended during the discussion process in the relevant committee, it is clear that the report’s authors (Othmar Karas and Liem Hoang Ngoc) believe that many things need to change regarding Troika’s work procedure.
Especially in the case of Greece, in the draft is noted:
1. The author’s ‘sorrow’ because a “lack of progress” has been observed, despite the reforms that took place.
2. The “fraud” in the statistics was prevailed, even before the implementation of the Memorandum.
3. “Coordinate bankruptcy” was not avoided despite the financial help given. More generally, it is argued that the programs do not ensure that there will be “a badly organized bankruptcy” or an exit of any country from euro in the long term.
Generally, concerning all countries that implemented the Memorandum, we can see the following findings in the report :
1.There were overoptimistic estimates for GDP growth in each country by Troika and the result was for the relative fiscal adjustment and growth to be affected and, by extension, its fiscal targets were not achieved (the issue of not calculating correctly the fiscal multipliers).
2.The program has not led to a reduction of countries’ debt. On the contrary, it has been increased “abruptly”.
3.IMF’s aim on the programs was from the beginning the internal devaluation, while EU’s aim was the fiscal adjustment.
4.’Very little ‘ attention was given to the treatment of the negative consequences of Memorandums.
5.There was no legal basis on Troika’s creation, in accordance with European law.
6.Troika’s ‘ democratic accountability ‘ is weak.
7.‘It can see’ the political influence in the decisions of the European Support Mechanism (ESM) by the finance Ministers, States Leaders and national parliaments.
Under the above findings – and not only-, the authors of the report also include in their proposals:
1. The requirement that Troika should take into account the debate on the fiscal multipliers and proceed to change the terms of Memorandums, having regard the recent empirical examples. Basically, relaxation of austerity measures is asked. It is recalled that in the case of Greece, everybody admitted that the fiscal multipliers were not calculated correctly.
2. Reassessment of the decision-making process of Eurogroup regarding the Memorandums for countries receiving financial assistance, so that ‘democratic accountability’ will be included in a national and European level. Also, they seek to ensure “democratic control” by the countries on the measures’ application .
3. The probability of a change in the European Treaty should be considered, aiming at the creation of a European Monetary Fund “as an alternative to IMF.”Moreover, the involvement of European Central Bank in the programs evaluation, and the “mandatory involvement of IMF” in financial aid programs should be re-examined.
4. The involvement of social partners in the formulation of programs (both existing, and future ones).
5. European Parliament should be updated by the Commission representatives of Troika.
