Home » Troika abandoned as EU seeks a way out

Troika abandoned as EU seeks a way out

3 February 2015

The European Central Bank, Frankfurt. Photo shutterstock.com.

In a graphic illustration of the weakness of the European Union, Commission President Jean-Claude Juncker has signalled his willingness to end the “troika”, the unholy trinity of the European Commission, the International Monetary Fund and the European Central Bank. The troika had assumed control of the Greek economy along with that of Spain, Portugal, Cyprus and (until recently) Ireland.

Juncker’s willingness to back down on the troika principle is one of the most graphic consequences of Syriza’s victory in the Greek general elections at the end of January. Syriza publicly declared that it would no longer deal with the troika, only with Greece’s creditors – and the EU has had to retreat, not least because the troika had no legal standing.

Unfortunately for the Greek people, EU control of their economy is likely to continue as long as the country is part of the euro – and Syriza, along with most Greek voters, currently seems wedded to the euro.

Dimitros Papadimoulis, a Syriza MEP and vice-chair of the European Parliament, said in December that Greece should “be a respectable member of the European Union and the euro zone”.

He went even further, saying “there is absolutely no case for a Grexit” [the term for a Greek exit from the euro]. “Those who invoke such a possibility play a propaganda game against the Greek and European economy.”

Nothing in Syriza’s attitude to the euro has changed since.

‘A mutual desire to do something – anything – to avert total chaos.’

Time will show whether Greece will be able in the short term to remove some of the sting of “austerity” [capitalism’s word for “impoverishment”] and the debt burden and at the same time remain within the euro. Not for nothing is Brussels called the capital of political fudge.

Greece’s proposal on 2 February for a debt swap agreement and the initial welcome given to it by some in finance capital indicate a mutual desire to do something – anything – to avert total chaos. But in the longer term, as long as Greece remains in the euro it will have its budget controlled by the EU.

Brussels still in control

Back in 2011 Brussels used the economic crisis it helped to make to set up new rules allowing it to pore over national budgets in great detail and force countries to follow its “recommendations”. It called this structure the “European semester”.

The European Union has a distinctive way with language. It takes a word you think of as meaning one thing, and uses it to mean another. “Semester”– to most people a university term – has become something completely different: it is now the EU’s principal mechanism for extending its control of national budgets well beyond the limits set in European treaties. 

The process starts in November each year, and it works like this. First the European Commission presents its Annual Growth Survey, defining its economic priorities for the coming year. Then the European Parliament and the Council of Europe have their say, so that in March they set overall “policy orientations”. 

In April national governments submit their plans to the Commission, which responds with country-specific recommendations on all budget areas, including those like health (and education) that are not supposed to be part of the EU’s remit. 
Only then, and only after they have done the EU’s bidding, are Eurozone governments allowed to submit their plans to their own parliaments.

Britain, being outside the zone, still has to submit its plans, but not before parliament has looked at them. And while Eurozone countries that seek to ignore the recommendations can be forced to adopt them, Britain does not have to. But Greece most definitely does.