MEPs questioned EU bailout fund chief as part of the inquiry into the role of the Troika into the involved Member States. “When the crisis will be left behind, treaty should be modified”
“We are mere executors, conditions are laid down by others” replied to the critics of the ECB, IMF, EU Commission.
“For the future, I think the ESM should be integrated into the EU treaties through a treaty change.” The current crisis requires immediate action, but in the future there would be no room for doubts or criticism, with a new community structure. It will be necessary to give the European Stability Mechanism more power, as requested not only by circumstances but also by Eurozone governments. Klaus Regling, currently ESM chief and previously EFSF chief, was supposed to be questioned about the role of the Troika in Portugal, Ireland, Greece, Spain and Cyprus, but ended up outlining future scenarios for the euro area. First, as he stated beforehand, “the ESM is not part of the Troika hence I’m not representing it,” then because the ESM is mere operational arm of the ECB, IMF, EU Commission and actor of last resort, there’s not much to say.
“The ESM can act last resort lender, but we are not the ones negotiating the conditions. When the Eurogroup comes to a decision, we just have to proceed with a payment.” Please, send your complaints to someone else, in other words. This was the implicit – still very clear – message given to MEPs belonging to the Economic and Monetary Affairs Committee.
True, admitted Regling, “the balance between the measures could have been different,” but it was necessary to act fast, and there had been no alternative in any case. “The interested Member States and the Eurozone as a whole were involved in an unexpected and unprecedented situation,” which had created sort of a parallel structure to the EU in some aspects. At the beginning, we all thought the crisis was limited to Ireland, but then it was clear it was not like that. “Initially there was no need for the Troika, but when it became clear that several member states were in trouble the solution was to call experts from the EU Commission and the IMF.” In addition to this, the creation of the EFSF, the European Financial Stability Facility, in 2010 – which was supposed to be a temporary fund – replaced in 2012 by the ESM acting as permanent fund.
The ESM is a proper European Institution, which on the other hand is not considered in any EU treaty. Having a main role in the EU Eurozone, the situation has to change: “Treaties has to be amended, once the crisis is over.” Hence, the ESM will be given more power and a raison d’être especially in a view of banking union. The ESM could be among the main characters in the Single Resolution Mechanism, but first it needs a true legal status in order to get a clear and unmistakable role. It is time to start thinking about these issues, according to Mr. Regling, even though the European Parliament is currently investigating the management of the crisis in the five Member States involved. “Growth and higher employment rate are inevitable results of this kind of programmes, given that the implemented reforms improve the economic situation,” said Mr. Regling, reflecting Troika’s approach. “Remedial strategies often have negative effects as well, and I do not want to minimize them, but it is in the EFSF and ESM’s interest to have them working properly – interests have to be repaid, in the end.”
European solidarity does not come free, and this is one of the condition to accept when in trouble. However, Mr. Regling stressed that the ESM was not the ruler: it had been up to states in the programme to choose the appropriate solutions.
Renato Giannetti
