posted on 30 March 2016
by Yanis Varoufakis
Cross posted from the author's website where it appeared 30 March 2016.
The Eurozone is the largest and most important macro-economy in the world.
And yet, this gigantic macro-economy features only one institution that has legal status: the European Central Bank, whose charter specifies what powers the Frankfurt-based institution has in its pursuit of a single objective: price stability.
Which leaves the questions begging:
The Eurogroup is not subject to European Law
Most people believe that the answer is: the Eurogroup. Indeed, it is in the Eurogroup where the crucial decisions are reached on which the present and future of Europe depend. Except that the Eurogroup does not exist in European law!1 Without written rules, or legal process, the Eurogroup makes important decisions that are subsequently rubber-stamped, without any serious debate, at the EU's Economic and Financial Affairs Council (Ecofin).2
The lack of written rules or legal procedures is not the only problem. There are two other problems that Europeans should know about. One is that the troika dominated the Eurogroup and imposes a decision-making process in which the finance ministers are neutered, forced to make decisions on the basis of next-to-no information. The other is the outrageous opacity of the Eurogroup's proceedings.
The troika dominates the Eurogroup
Every Eurogroup discussion, in every meeting, proceeds in the following order:
First up (whatever the topic under discussion; e.g. the Greek 'bailout', the French national budget) the representatives of the troika speak, beginning with the EU's Economic and Financial Affairs Commissioner (Pierre Moscovici), moving to the President of the ECB (Mario Draghi, or Benoît Cœuré in Draghi's absence) and finishing off with the representative of the International Monetary Fund (Christine Lagarde, or Poul Thomsen in her absence). Only then do finance ministers get an opportunity to speak (with the minister of the member-state whose 'case' is under discussion going first). This means that, before any of the finance ministers speak, the troika has already shaped the 'climate'.
Remarkably, when the ministers get to speak, they do so without a single sheet of A4 in front of them containing information, data, briefings etc. on the issue under discussion. For example, while discussing the Greek crisis, during the meetings in which I represented the Greek government, I was not even allowed to email to my fellow finance ministers our proposals. They, therefore, passed judgment on the Greek proposals without ever having seen them. All they had was what the troika representatives said and what I had said. Their word against mine!
After the first Eurogroup I ever attended (which lasted ten hours, all of which were focused on Greece), I asked my secretary for the transcripts of the meeting, so that I could remind myself of who-had-said-what-when, before I could brief the rest of my government. To my horror she came back to me with the extraordinary news that:
This was unbelievable. The room in which the Eurogroup meetings are held is full of microphones, cameras and screens reproducing every speech made in real time. That there was no record of the meeting is both unbelievable and scandalous.
Is it any wonder that the economic crisis of the Eurozone is still in full swing six years after it began?
In 2009 unemployment jumped from an average of around 5% to 12% both in the United States and in the Eurozone. In the US it has fallen back to where it was then. In the Eurozone it is stuck at 12%.
An important reason why the Eurozone has failed to recover is the way that the Eurogroup is run.
The domination of a troika more interested in preserving its power over Europeans (than in Europe's recovery) and the complete lack of transparency in the decision-making process (which allows for the reproduction of failed policies by an unfettered troika) is what makes the Eurogroup a clear and present danger for Europe's future.
What can be done?
The first step must be to lift the veil of secrecy, so that Europeans have the chance to determine if the Eurogroup is working in their favour. Please sign and share DiEM25's petition to let light in!
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