Oberndorfer, L. (2015) “How The Troika Breaches EU Law“, Social Europe Journal, 18 March.
How did the troika come about formally?
In 2010 it became apparent that the European constitution offers no clues as to how one should handle financial crises on this scale. So, instead of setting in train the democratic procedures designed to do this, EU law swiftly went out of the window and one seized on international law instead. The troika is a construct that came about via regulations in international law concerning rescue mechanisms.
What would have been the right way to proceed?
An amendment to the EU treaties foreseeing the early involvement of the European Parliament. The Parliament would have had a veto right via a convention and the “new” amended treaties would have to have been ratified by national parliaments as well according to individual countries’ constitutional procedures.
Would that also have meant, on the other hand, that an individual country would have had a right of veto and could have stopped the whole thing?
Precisely.
How are the agreements put into effect?
Here there’s a very clear division of labour: The Eurogroup is really only there to co-ordinate things – even if it has lots of power in real terms, legally it can’t decide anything. In rescue politics as such, the “programme” countries. e.g. Greece or Portugal, reach deals with the troika known as programmes – aka “memoranda of understanding.” These programmes prescribe conditions. If the conditions are met, then money is transferred from the rescue funds. But then ratification in the relevant rescue funds is required. Right now, that’s the European Stability Mechanism or ESM, which foresees a governing body having to take a unanimous vote on each programme as it comes up.
Who sits on this governing body?
The finance ministers of the countries in the euro.
What did the troika programmes of recent years prescribe?
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Relevant posts:
- Spiegel, P. (2015) “Will the “troika” return to Athens?”, Financial Times, 09 March.
- Mitchell, B. (2015) “Don’t mention the war! er the Troika…“, Bill Mitchell Blog, 26 February.
- Wolff, G., De Sousa, C., Sapir, An., and Terzi, Al., (2014), “The Troika and financial assistance in the euro area: successes and failures”, Bruegel, 19 February.