Troika (European Commission, ECB and IMF)
트로이카 (유럽연합·유럽중앙은행·IMF)
The arrangement in the European debt crisis by which the European Commission, the European Central Bank and the International Monetary Fund (IMF) acted as a single decision group managing the bailouts of Greece, Ireland, Portugal and Cyprus. In return for loans it set conditions such as cuts in government spending and the liberalisation of labour markets in memoranda of understanding, and reviewed their implementation. Created outside the European treaties, it was criticised for its weak legal basis and democratic legitimacy. The name comes from the Russian word for a carriage drawn by three horses.
In depth
The origin of the Troika goes back to the Greek loan package of May 2010 and the European Financial Stability Facility (EFSF). Article 125 of the Maastricht Treaty, the "no bail-out" clause, together with Article 123, kept other member states, the European Central Bank and EU institutions from supporting a eurozone country in financial trouble. So the heads of state and government agreed by a statement to set up a joint programme and give Greece conditional bilateral loans, and the Troika was the ad hoc body that carried this out. For this reason it fell outside the scope of European law. The money itself came from separate mechanisms such as the EFSF, the European Financial Stabilisation Mechanism (EFSM) and later the European Stability Mechanism (ESM).
The three institutions had distinct roles: the IMF co-financed the Greek loans, the ECB dealt with the banking system and the Commission worked out economic reforms with the IMF. There were objections at first to bringing in the IMF, an "outsider" to the EU whose help would be an admission of the eurozone's failure, but it was eventually drawn in as an organisation with experience of highly indebted countries. The governments of Cyprus, Greece (three times), Ireland and Portugal signed memoranda of understanding with the Troika for three-year financial aid programmes conditioned on far-reaching austerity to cut government expenditure. For the creditor countries one of the most important conditions was the liberalisation of production and the labour market in Greece. The Troika aimed to cut the Greek deficit from 15 to 5 percent of GDP.
The word was widely used in Greece, Cyprus, Ireland, Portugal and Spain, and came to stand for the whole set of policies demanded in return for the bailouts. In the Greek negotiations of 2015 the creditors were called "the institutions", and the third bailout was agreed with a "quartet" of the EU, the ECB, the ESM and the IMF. Greece completed its programmes on 20 August 2018.
Criticism came from inside and outside the European institutions. The European Parliament, excluded from the negotiations, set up a committee of inquiry under Othmar Karas into the Troika's accountability, which found a highly asymmetric distribution of responsibilities among its members. The MEP Sharon Bowles observed that the response to the crisis lacked transparency and credibility. The Troika underestimated the impact of austerity on growth, and while the IMF advocated more robust debt relief, the European institutions sought to avoid debt restructuring. Scholars accused it of using immense power to pursue fiscal conservatism and concluded that austerity in Greece was harsher than in Ireland, with consequences for unemployment, emigration and health. Yanis Varoufakis and Noam Chomsky were among its critics.
Before the Treaty of Lisbon of 2009 the word also named the triumvirate that represented the European Union in external relations. It is a different term from the troika of Soviet history, the three-member special tribunal of the NKVD.