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EU lawmakers take ‘Troika’ to task

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EU lawmakers took the 'Troika' to task Tuesday, seeking answers about how the controversial trio of international creditors ran painful eurozone debt bailouts which encouraged austerity instead of growth.

European Parliament deputies asked who among the European Union, the European Central Bank and the International Monetary Fund should be held to account for the policies followed since 2010.

They were also keen to hear how economic forecasts, key to the bailout programmes and aid payments, fell short, especially in the case of Greece which required a second massive rescue marked by even more tough austerity provisions.

Former ECB Jean-Claude Trichet, who stepped down in November 2011 after Greece, Ireland and Portugal had been bailed out, said the EU had experienced the "worst crisis since World War II ... and we are still in crisis."

But Trichet told Parliament's economic and monetary affairs committee the situation could have been much worse.

"Had central banks not been very bold ... had governments not been very bold we would have seen the worst crisis since World War I ... worse than in 1929," he said.

Former European Central Bank (ECB) president Jean-Claude Trichet speaks during an interview in Paris...
Former European Central Bank (ECB) president Jean-Claude Trichet speaks during an interview in Paris on October 18, 2013
Eric Piermont, AFP Photo/File

"We avoided the Great Depression ... not the Great Recession," he added.

"This is something fundamental," he said as part of a series of committee hearings this week on the Troika's role.

Trichet said the key problem was that some EU member states had not followed the rules on economic governance -- since tightened up sharply in response to the crisis to prevent any repeat of the imbalances which nearly sank the eurozone.

"The governance issue is absolutely fundamental," he said.

Trichet said that during the crisis, "we had to constantly invent things" to cope with the situation but now he hoped "the concept of the Troika will gradually disappear."

"What we are trying to demonstrate now is that we are moving away from these problems" and that in the future the focus will be on preventing a country slipping back into the old way of doing things rather than on picking up the pieces.

EU Economic Affairs Commissioner Olli Rehn said that the fact that growth estimates sometimes fell short simply showed "the limits of economics."

Rehn said governments had often proved unwilling to implement the rescue packages for political reasons.

But, he said, it was also governments who were ultimately responsible for the harsh measures taken -- they made the choices on the ground.

EU lawmakers took the ‘Troika’ to task Tuesday, seeking answers about how the controversial trio of international creditors ran painful eurozone debt bailouts which encouraged austerity instead of growth.

European Parliament deputies asked who among the European Union, the European Central Bank and the International Monetary Fund should be held to account for the policies followed since 2010.

They were also keen to hear how economic forecasts, key to the bailout programmes and aid payments, fell short, especially in the case of Greece which required a second massive rescue marked by even more tough austerity provisions.

Former ECB Jean-Claude Trichet, who stepped down in November 2011 after Greece, Ireland and Portugal had been bailed out, said the EU had experienced the “worst crisis since World War II … and we are still in crisis.”

But Trichet told Parliament’s economic and monetary affairs committee the situation could have been much worse.

“Had central banks not been very bold … had governments not been very bold we would have seen the worst crisis since World War I … worse than in 1929,” he said.

Former European Central Bank (ECB) president Jean-Claude Trichet speaks during an interview in Paris...

Former European Central Bank (ECB) president Jean-Claude Trichet speaks during an interview in Paris on October 18, 2013
Eric Piermont, AFP Photo/File

“We avoided the Great Depression … not the Great Recession,” he added.

“This is something fundamental,” he said as part of a series of committee hearings this week on the Troika’s role.

Trichet said the key problem was that some EU member states had not followed the rules on economic governance — since tightened up sharply in response to the crisis to prevent any repeat of the imbalances which nearly sank the eurozone.

“The governance issue is absolutely fundamental,” he said.

Trichet said that during the crisis, “we had to constantly invent things” to cope with the situation but now he hoped “the concept of the Troika will gradually disappear.”

“What we are trying to demonstrate now is that we are moving away from these problems” and that in the future the focus will be on preventing a country slipping back into the old way of doing things rather than on picking up the pieces.

EU Economic Affairs Commissioner Olli Rehn said that the fact that growth estimates sometimes fell short simply showed “the limits of economics.”

Rehn said governments had often proved unwilling to implement the rescue packages for political reasons.

But, he said, it was also governments who were ultimately responsible for the harsh measures taken — they made the choices on the ground.

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