WIREDGOV

On Monday evening MEPs welcomed the Commission's readiness to collaborate with Parliament in its inquiry into the operations of the Troika but were left underwhelmed by Commissioner Olli Rehn's answers to some of their questions, particularly on accountability, apportioning of responsibility and the reasons for repeated overly optimistic forecasts.

Mr Rehn was the first to address the economic and monetary affairs committee, ahead of former ECB President Jean-Claude Trichet, who will be quizzed on Tuesday, and Klaus Regling, the European Stability Mechanism's managing director, who will be heard on Wednesday.

The co-rapporteurs for the inquiry, Othmar Karas (EPP, AT), and Liem Hoang Ngoc (S&D, FR), kicked off the questioning, with Mr Karas asking how accountability could be improved and Mr Ngoc asking whether the alleged Commission/IMF dispute on fiscal multipliers was now resolved.

Other MEPs returned repeatedly to the issue of accountability and also sought a breakdown of how decisions were taken within the Troika system and who was ultimately responsible for the different decisions regarding economic reform, budget cuts and Greece's debt restructuring.  Other questions concerned specific events and decisions related to the bailed-out countries.

Political resistance underestimated

Asked why the Commission had so greatly underestimated the negative impact of budget cuts (fiscal multipliers) and had developed forecasts which proved far more optimistic than the reality, Mr Rehn singled out the lack of national political will to carry out the reforms. The wrong forecasts "show the limits of economics and econometrics", Mr Rehn said, arguing that lack of political will was the main problem.

When asked if he had "any regrets" concerning the Greek programmes, Mr Rehn said the task force, devised to help push through reforms, should have been set up earlier to avoid the initial lack of progress.

Underwhelming replies

In his replies, Mr Rehn repeatedly stressed that the conditions under which the Troika operated were particularly difficult and that this had to be kept in mind.

He attributed much of the responsibility for the actual reforms and cuts to the governments of the bailed-out countries, saying that the final decisions on the reforms and cuts were ultimately taken by them..  He also admitted that although the Troika was able to take decisions, this process was often hampered by having "three institutions (ECB, IMF, Commission) with independent philosophies" at the table. 

Mr Rehn also defended the accountability credentials of the Troika, describing how each of the three institutions was accountable, albeit to different bodies, in different ways.

Next steps

Meetings continue throughout the week.  A delegation of MEPs will then visit Dublin to hear authorities and other actors on the ground on 16 and 17 January and will do likewise in Athens on 29 and 30 January.  A report with findings will be adopted by Parliament in April.