20 March 2014

EP President Schulz on European Semester / Troika

European Semester

We are convinced of one thing: if there is a lesson to be learnt from the crisis, it is that we need better economic policy coordination. The European Semester represents a step in that direction, albeit a tentative one. What we want to avoid at all costs, therefore, is that the Semester comes to be seen as just one more bureaucratic procedure among many.

Closer economic coordination should instead be seen as a necessary first step towards closer Economic and Monetary Union. If this exercise is to be a success, two preconditions must be met:

Firstly, each country must sign up to the programmes. Since this will be impossible without democratic accountability, parliaments must be involved at all levels. The European Parliament has always sought to play an active role in this process. We have developed the fruitful economic policy dialogue with the national ministers responsible and, at the same time, stepped up dialogue with the national parliaments.

Secondly, if the Semester is to be a success, compliance must be improved. I realise that putting the idea of the Semester into practice is a real challenge for the Member States. Nevertheless, too often Commission recommendations have simply been disregarded.

We do of course welcome the fact that in the 2014 growth report the Commission identifies sustainable, smart and inclusive growth as the number one priority. But there is a question we should be asking ourselves: is all this not too little, too late? And, more importantly: are we creating the right instruments and are we really endowing ourselves with the means to achieve such ambitious objectives? What we can all see taking shape is a failure to meet the EU 2020 objectives – it will simply be the Lisbon Strategy all over again.

Troika

Last week the European Parliament adopted a ground-breaking report on the Troika by an overwhelming majority. That overwhelming majority shows that support for the report cut across party-political lines. I would therefore encourage you to read the report, which does not engage in Troika bashing. Our intention is very different: we want to make the Troika accountable to the directly elected representatives of the people.

We are convinced that reform processes can succeed only if they are accepted by the public as necessary and legitimate. The prerequisites for that acceptance are transparency and democratic accountability, that is to say public debates on the programmes in parliaments, and the endorsement of the representatives of the people.

Four years ago, the Troika was set up hastily in order to prevent the collapse of the euro. Four years ago, the Troika probably helped us to avoid a repeat of the catastrophic depression triggered by the 1929 crash. Nevertheless, we must all concede that some things could have been done better. A lack of transparency meant that fundamental differences of opinion – the disputes between the Commission and the IMF are notorious – were played out in arguments conducted behind the closed doors of Eurogroup meetings.

The EU Treaties are not binding on the Troika, nor are the Charter of Fundamental Rights, the judgements of the European Court of Justice or EU law in general. It is high time, therefore, that we made the EU Treaties the legal basis for the work of the Troika, so that it is subject to democratic scrutiny and is democratically accountable, not least because we are convinced that these design flaws have contributed to the poor macro-economic results of the Troika’s work.

Given that we are dealing with four very different countries, facing different circumstances and different problems, the ‘one-size-fits-all’ approach simply won’t work. There has never been a plan B, to be used if that approach fails, for example because it damages the fabric of our societies or because it makes life more difficult for ordinary people.

The European Parliament is proposing the following short-term measures in an effort to remedy some of the design flaws which have hampered the Troika’s work:

• establish greater clarity and transparency by drawing up publicly accessible rules to govern relations between the institutions involved;
• make the Commission accountable to the European Parliament on the basis of an interinstitutional agreement;
• adopt in the near future directives which lay down joint standards on democratic accountability and transparency.

In the long term, we see no alternative to changes to the Eurogroup’s remit and modus operandi: the Eurogroup’s increased power must be offset by more stringent accountability. Like the ESM, the Eurogroup must be integrated into the Community institutional structure. This will improve economic policy coordination and make the eurozone more crisis-resilient in future.

Full speech

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