The time for the troika is over, says EU Commission VP Viviane Reding
By Nikos Chrysoloras
“European citizens do not trust the troika, and they are right,” says Viviane Reding, the Vice-President of the European Commission. In an interview with Kathimerini, the Luxembourg politician directs strong-worded criticism at the current decision-making process in the eurozone countries that have been bailed out. “Fundamental decisions, for example on whether to fire tens of thousands of public employees, should not be taken behind closed doors,” she argues. Greece is set to receive the next tranche from the EU-IMF backed bailout mechanism after it agreed to a troika demand to put several thousand public servants into a “mobility scheme” that will eventually result in thousands of dismissals. Reding, who many in Brussels believe is a candidate for a top EU post in 2014, sets a three year timeframe for the phasing out of the troika regime, underlining, nonetheless, the need for Greece to “to stick to the path of reform.”
You recently suggested that the troika structure should be phased out. Why do you think that? After all, it was Europe that asked IMF participation in the adjustment programs…
When the crisis struck Europe, we had to act very quickly. We decided to call in the International Monetary Fund (IMF) because it has the experience and expertise to deal with difficult situations like the one Greece is facing. And we are grateful for the IMF's contribution to the various stabilization programmes in Europe. But this set-up has now run its course. This is no longer an emergency. By now, the EU has the right tools to cope with its own problems. That is why I say: The time for the troika is over.
In the past couple of years, we Europeans have worked tirelessly to set up mechanisms and create instruments which will allow us not only to tackle possible future crises, but to prevent problems from escalating in the first place. There is now for example much greater control over member states' budget plans. And in the worst case there is the European Stability Mechanism with a firepower of 500 billion euros. With the European Stability Mechanism, Europe actually now has its own European Monetary Fund. And Europe is prepared and willing to solve its problems on its own – in the European way, with proper democratic control and accountability.
Because this is also a question of democratic legitimacy. European citizens do not trust the troika. And they are right: Fundamental decisions, for example on whether to fire tens of thousands of public employees, should not be taken behind closed doors. They should be debated in the directly elected European Parliament. The European Commission should also play a prominent role. All the commissioners are voted in by the European Parliament, and are accountable to it throughout their mandate.
Finally, think about where the IMF's money comes from. Countries like Brazil and India pay part of it. Countries whose citizens are so much poorer than us Europeans. Yet they are forced to pay for Europe. This is absurd and we cannot feel comfortable with it. We have to solve our problems ourselves. And we can.
Do you think that this suggestion is realistic in the near future? I am asking you because, first of all, Vice President Olli Rehn seems to disagree with you, and second, the IMF is contributing money to four adjustment programs, so I guess we can’t just ask them to leave.
This is of course not a matter of weeks or months. When we make this important change, we have to do it properly, and it will take some time to get this right. In the coming year, we will push forward the debate about the future of Europe. That includes the completion of the economic and monetary union. And in that context we will have to take decisions on how to prepare ourselves for and deal with future crises. That will be the time to make a choice on when to end the troika and put in place a more democratic, European solution. Vice President Rehn actually agrees with this.
Let me maybe put it differently and in an easier to understand way: The euro was 10 years old when the crisis started. At such an age, you need a helping hand. Now, the euro has turned 15 years old, and as it is with 15-year-olds, you can and want them to start walking on their own. I expect that by the time the euro will turn 18, it will no longer need to rely on external help.
Even those who support the adjustment program in countries like Greece, Portugal or Cyprus, are worried about their social consequences. Especially in Greece, poverty and unemployment have led to a rise in political extremism. Do you think that there should be an EU response to this phenomenon? Are you worried about the political positions of specific parties in Greece?
The best EU response is action. Europe is not for politicians, it is for the citizens. We need to show them that we are working for them – when we create the opportunity for young people to study abroad with our Erasmus program, when we make it cheaper to use mobile phones abroad and when we protect people from nasty surprises when they buy package holidays. The EU is also acting for example to help young unemployed people – a problem that has reached a shocking dimension in Greece. Sixty percent of young Greeks are out of work. The EU is contributing by more than 500 million euros to the action plan of the Greek government to strengthen youth employment and entrepreneurship. We cannot afford to lose this generation. That is why European leaders have reaffirmed their commitment to the Youth Guarantee that the European Commission proposed: No person under 25 should have to wait more than four months for a job, a traineeship or an apprenticeship. The EU is providing more than 6 billion euros, and the Commission has proposed that this money is available already as of next year. What is important now is that national governments provide concrete proposals so that money can start flowing.
In addition, the EU is helping people to get primary healthcare services: EU funds will co-finance free access to doctors, medical examinations, pharmaceutical treatment and hospital treatment for unemployed and uninsured citizens in Greece. This will include free vaccinations for children.
Of course, at times of crisis it is easy to give in to populism. But populism and shallow nationalism are not the solution to Greece’s problem. History shows that these are not the way to deal with our collective challenges. We have to stick to our values more than ever. And countries like Greece have to stick to the path of reform. Sometimes it takes time for the results to show, but it is important to hang on. Greece's budget deficit for instance is shrinking dramatically.
Greece’s judicial system is notoriously slow, thus undermining economic recovery and violating the rights of the country’s citizens. Has the Commission offered specific recommendations to Athens on this issue?
A well-functioning judicial system is an essential precondition for economic growth. Only when countries ensure fast, fair and predictable procedures and judgments will investors and entrepreneurs have the necessary confidence to start businesses and hire employees. The cumbersome and long duration of clearing cases in Greece not only frustrates business. It also threatens social cohesion, creating a deep sense of injustice.
Various reforms have been set out in the economic adjustment program for Greece. To avoid duplication, the Commission has not added any specific measures as part of its country-specific recommendations for the country. It is, however, helping Greece with reforms it has already agreed to undertake, such as the promotion of mediation for example. This will help parties settle their disputes without resorting to the court system, thereby clogging it up even further. This is a crucial step toward creating an environment that attracts investment. Another priority is the completion of the land registry, to which the European Commission gives support. It is essential to allow fair and effective tax collection.
Do you think that Europe’s response to the US surveillance case was strong enough? And what can we do to avoid similar cases in the future?
I wish national governments would have reacted at least as strongly and loudly as the European Commission and the European Parliament did! It was the European Commission which was the first to say that "Partners do not spy on each other" - a sentence that has then be repeated by national politicians across Europe. And let me remind you that it was EU Home Affairs Commissioner Cecilia Malmström and I who have called for a renegotiation of all the existing data transfer agreements with the US (like the Pssenger Name records, the SWIFT and the Safe Harbour Agreement).
The Commission has also tabled the legal response to all the data spying scandals: the EU's data protection reform that is on the table since January 2012. The data protection Regulation is an 'Anti-PRISM Regulation.' The strong rules will offer citizens the high level of data protection they expect.
The recent scandals are a wake-up call. And Europe is responding. It is good to see that Germany and France at the last Justice Council in Vilnius (on July 19) have reaffirmed that we need a high level of data protection in Europe and that they have committed to adopt the reform proposals swiftly. There was a strong political signal: All European institutions agree that we have to join forces to secure Europeans' privacy. This is a fundamental right in the EU. Words now have to be put into action: We need to adopt the reform proposals before the European elections in May 2014. By acting swiftly, politicians can regain citizens' trust that has been lost because of these scandals.
The rules we have put on the table are strong. They will ensure that companies that offer their products and services to European customers will have to play by European rules – even if they're based in the US or India or somewhere else. And national data protection authorities will be able to sanction those firms that violate the rules with fines of up to 2 per cent of annual worldwide turnover.
There is a lot of speculation about your political future. Would you like to clarify if you are interested in serving as Commission president after 2014, or for another top EU post?
While some like to speculate, I prefer to get my work as Commissioner for Justice, Fundamental Rights and Citizenship done. And there is still a lot to do - as the PRISM scandal shows.