3rd Newsletter from TroikaWatch

In this newsletter you can read about:

Overall situation

Similar to the last few months, the European context is characterized by governments doing window dressing, while the situation for more and more people gets worse. After Ireland, Portugal is likeliest to be the second country to leave the umbrella of the Troika, in May. However, this is unlikely to better the living conditions for the people there, because austerity will continue for years and whether the level of debt can really get reduced without considerable debt relief is more than questionable.


European level

In many countries the investigation of the European Parliament into the Troika [en] [nl] [fr] [de] [el] [it] [pt] [sl] [es] made it into the headlines. This investigation stated quite clearly, like we already reported, that the Troika broke European law several times. Unfortunately, the opinion of the European Parliament on the Troika is at the moment quite irrelevant, because the Parliament has no right to decide on any policy measure of the Troika.

Therefore, this investigation also has to be seen in light of the power play between the different European institutions. While it is worth supporting more power shifting on the European level from the Commission and the Council to the Parliament, we doubt that this would lead to a major change of European politics – main decisons are still taken behind closed doors.

TroikaWatch has written an article on the report of the Parliament investigation into the Troika, that can be read here [en] [fr] [de] [sl].

A new report by Caritas Europe, entitled ‘The Impact of the European Crisis’, finds that the failure of the EU and its Member States to provide concrete support on the scale required to assist those experiencing difficulties, to protect essential public services and create employment, is likely to prolong the crisis. The report can be downloaded from the website of Social Justice Ireland [en].

Next to the Troika, breaking the rules seems to be the new mode of operation on other EU issues as well. As the European Council and the German government continuously try to sideline the European Parliament in the setup of a new single resolution mechanism (SRM) for bankrupt banks, the Green fraction in the German Parliament published a study [de], which concludes that implementing such a mechanism without a proper vote in the European Parliament would be another breach of European law. The report draws the same conclusion as a short study [en] presented earlier this year by Green MEP Sven Giegold.

However, when corporate interests are affected, powerful players know how to get their “rights”. The report ‘Profiting from Crisis – How corporations and lawyers are scavenging profits from Europe’s crisis countries[en], recently published by CEO and TNI, exposes a growing wave of corporate lawsuits against Europe’s struggling economies. The report argues that these lawsuits provide a salutary warning of the potential high costs of the proposed trade deal between the US and the EU.

Further details about this deal, the Transatlantic Trade and Investment Agreement (TTIP), can also be found in a report [en] published by the European office of the Rosa Luxemburg Foundation.

But civil resistance continues. During the latest round of negotiations between the EU and the US on the free trade agreement TTIP, D19-20, Alter Summit, Blockupy Europe, S2B Network and the European ATTAC Network organised a protest in Brussels on March 13.

The European Trade Union Confederation (ETUC) started a new campaign “A new path for Europe[en] [fr] and plans in this context a European demonstration in Brussels on the 4th of April 2014.

More protests on a European-wide scale are planned for May, before the European elections. In several countries, citizen’s groups call for European days of action from the 15th to the 25th of May [en]. On the 15th of May, the 15M movement in Spain celebrates its 3rd birthday and on the 17th of May, the Blockupy coalition [en] [de] plans protests in Berlin, Düsseldorf, Hamburg and Stuttgart in Germany.



The committee of the European Parliament that is investigating the work of the Troika finally visited Greece at the end of January. The original date was postponed to not interfere with the celebrations at the start of the Greek presidency of the European Union. Othmar Karas, the Conservative part of the two man leadership of the committee, has opened a polemic with Greek opposition leader Alexis Tsipras, alleging that Tsipras has not presented any alternative proposals to the policy pursued by the Troika in Greece. This was later denied by French Socialist MEP Liêm Hoang Ngoc, accompanying him in this visit as the other half of the leadership of the committee.

Meanwhile SYRIZA, for which recent polls show a clear lead in forthcoming elections, has made the position it transmitted to the committee also publicly available in the “Black Book of Troika[en] [el].

While on the one hand financial results for 2013 announced by the Greek government at the beginning of February were better than expected (recession at -3.7 percent, positive balance of payments and primary balance, while total deficit would be at less than 3 per cent), on the other hand the price for that is worse than expected: unemployment at 28 percent (and 60 percent for the young), and debt has reached unsustainable high levels (over 170 percent).

The Greek Finance Minister said he was expecting these figures and rejected for that reason the demand for three billion euros in austerity measures made by the Troika in November, blocking the negotiations [en] for the release of the tranche of loans initially planned for end 2013 and thus obliging Greece to issue short term bonds to overcome this delay.

Meanwhile Troika inspectors returned to Athens for their inspection related to the release of a tranche of 8,8 billion of loans required to pay loans and interests due by end of May, before the European elections. To approve the release of this tranche, the Troika requires measures that the Greek government hoped to postpone: an additional amount of 12,500 layoffs of civil servants, improving ‘competition’ by following the more than 300 recommendations made in a recent OECD report [en], as well as the reduction of social contributions of employers and of several other taxes. The tax cuts will provoke new gaps in Greek accounts and a new round of social budget cuts later in the year – which the government wanted to avoid -, while at least one of the measures included in OECD report could threaten the survival of Greek milk industry [en].

The Greek government is expected to accept these conditions in the coming weeks to receive the promised amounts of money, in order to use part of them for electoral concessions to targeted groups of voters. The hope is to limit the expected weak performance of the ruling coalition’s parties in both the local and European elections, coming in May. But despite debates going on within the German government about announcements that could help the thin coalition governing Greece to face these elections better, the question of Greek debt will only be addressed after the elections [en].

A major political battle could once again break out after these elections, between the IMF and other ‘pragmatists’ who wish to reduce or delay Greece’s debt burden, continue the reforms and then call it ‘forgiveness[en] and those who do not believe that the whole reform project is under threat and for political reasons (especially true of northern European countries) do not wish to be seen to be helping Greece in any way.

The apparent German government side response is to impose at that stage a new memorandum on Greece [en] to extend Troika’s power over the country in exchange for a new bail-out; this will put Greek debt at more than 180 per cent of GDP while providing an extension of the payback period 30 to 50 years.

The IMF, more pragmatically than its Troika partners, has advocated further financial support to Greece [en] in the past as the only sustainable way to maintain the ideological commitment to austerity. This claim for debt reduction when debt goes up, is motivated by the need IMF has to provide a justification for the continuation of austerity, despite its effects on job figures and the collapse of economy it provokes. Thus eventually, IMF agrees that if a new ‘bailout package’ is considered as necessary by both Greece and its lenders, further drastic and strict measures will be asked for in return.

Others, like SYRIZA, but also including a German economist, a member of the Troika’s Task Force in Greece until recently, Jens Bastian [en], have pledged for a resolution according to the rules decided on by the international summit in 1952 to handle the German post-war debt – “to give Greece a better future”.



Also Ireland was visited by a delegation of the committee of the European Parliament, which investigates the work of the Troika. During their visit, Social Justice Ireland made a 22 page submission to the Troika. The main points of their conclusion about the work of the Troika are:

  • The austerity approach followed by the Troika in Ireland and other bailout countries had an unsound academic basis, was a failure in practice, and was morally unethical because poor and middle-income people have borne an unfair share of its consequences;
  • While taking a draconian approach to public finances the European Commission has failed to introduce sufficiently rigorous regulation of the financial sector;
  • All future Troika bailout programmes should be bound by the Charter of Fundamental Rights of the European Union and the Treaties.

Here you can download the full report [en].

While the Irish Minister for Social Protection sees Ireland’s employment figures as evidence that the economic situation in the country is back to normal, Michael Thaft took a closer look and found out that since the outbreak of the crisis in 2008 the average number of emigrants per year has more than doubled (to 133.7 per cent), compared to the years before the crisis. Thaft found even more dramatic figures for Spain, where emigration has increased to 274 per cent. You can read the full article ‘Normal Euro zone Countries Don’t Export Their People[en] in the Irish Left Review.

Morgan Kelly, economist at the University College Dublin and according to the Irish Times “the first economist to predict the likely scale of the Irish banking collapse”, recently warned in a speech before the UCD Economics Society, that the “real crisis for the Irish economy may not yet have happened[en]. If the banking stress tests would be too tough, they would lead to a credit crunch, which could be followed by the bankruptcy of thousands of small and medium sized enterprises.

Watch his full speech here:



From June 2011 to December 2013, the level of public debt increased from 172.3 billion euros to 204.3 billion euros. Following the new accounting rules, which will be adopted by Eurostat in September 2014, and the inclusion of other hidden debt, Portugal‘s total debt could reach even 242 billion euros.

At the end of last year the number of employed people in Portugal had decreased from 4.635 million a year ago to 4.513 million; the unemployment rate standing at 15.3 per cent, 34.7 per cent youth unemployment.

Since the beginning of the presence of the Troika in Portugal, wages have decreased by 5 per cent; that happened in a country where the average wage is only about 700 to 800 euros. Not surprisingly then, approximately 265,000 Portuguese have emigrated since the signing of the first Memorandum of Understanding with the Troika, robbing Portugal of a key part of its workforce as it seeks to recover growth.

The better results in the balance of payments derive from exceptional facts: a deep fall in investment (e.g. imported machinery, raw materials) and the effects of the fall in purchasing power (as people become poorer) on imported consumer goods.

Some 53 per cent of the stock of foreign investment (IDE) in Portugal is in financial and real estate sectors, both of which are no longer highly productive sectors, if they ever were. A significant part of IDE comes from the Netherlands and Luxemburg where big Portuguese enterprises transferred their headquarters for tax reasons; so for instance their supermarkets in Portugal are now counted as foreign investment, which also exaggerates the extent to which these figures reveal a positive recovery story of overseas investors returning to Portugal.

A possible sense of relief after the Portuguese constitutional court rejected the proposed Troika measure to implement a 10 per cent cut in the public sector pensions was quickly ruined when the government decided to take new measures [en], to compensate for the money lost by not implementing the pension cuts: people will now have to contribute 3.5 per cent instead of 2.5 per cent to the social security system, and extraordinary contributions now also need to be paid by workers earning more than 1,000 euros instead of 1,350 euros a month.

In an additional attempt to save money, the government plans to close dozens of courts and tax offices in peripheral areas where there is not enough economic activity and people live on subsistence agriculture (i.e. farmers that produce only what is needed to feed themselves and their families), small shops and income of pensions.

Portugal’s 78-billion euros bailout program will end on May 17, which means that the Troika will probably leave the country – however, the European Commission will continue to monitor the financial budget for many upcoming years.

Next to that, with or without Troika, austerity will continue: international creditors have called on Portugal’s parties and citizens to support “a few more years[en] of austerity measures, and the latest IMF report concludes that “in addition to continued fiscal consolidation, a continued transformation of the economy going well beyond the program period is required”; “Portugal continues to confront major economic challenges” and “Risks to attaining the objectives of the program remain high”.

In the beginning of February, trade union CGTP organised a demonstration in several Portuguese cities, that was attended by thousands. Protesters demanded an end to the austerity measures, and suggested that the formation of a new government will be necessary to do so.

Next to that, on the 7th of March, several thousand policemen demonstrated against cuts in wage and pensions in front of the Portuguese Parliament. Ten people got injured during the protests.

In an attempt to capture three years of austerity in Portugal in images and video, nine Portuguese photographers launched the crowd-funding initiative Projecto Troika [en] [pt]. Before the end of September, they want to raise 15,000 euros for their project, to publish a book and release a website and a DVD that collects the images that reflect the suffering of the country’s people due to Troika measures – ‘a document for future memory’.



The Troika policy in Cyprus has provoked a recession of 5.3 per cent in 2013 and according to forecasts, the recession will continue in Cyprus in 2014. Despite that, positive harmonics are also being played over Cyprus’ ‘recovery’, and the positive coordinated messaging from Troika partners seems designed to give a sense of ‘back to normal’ for the Cypriot economy, while the austerity measures continue.

February saw strikes and mass protests against a plan to privatize the Cyprus telecom company CyTA, several ports and the electricity company, which is a demand of the Troika required to pay out the next tranche of the bailout of 236 million euros. The first bigger protest took place at the 8th of February in front of the finance ministry, the labour ministry and the House of Europe.

However, the demonstration could not stop the government from approving this plan on the 13th of February.

There were also a lot of strikes in the companies endangered to get privatized [en]. When the Parliament started to debate the privatizations plan, protesters and the police clashed in front of the Parliament building.

A few days later, when Parliament, accompanied by further protests, voted on the plan, workers could celebrate a small victory: the government had no majority and for the moment the privatization was brought to a halt. However it was expected that the government will try to find ways to secure a majority for a further voting and so it did.

Civil resistance to Troika measures has been very present in Cyprus in the last month; apart from the conflict about privatizations, there was a bigger protest of bondholders [en] in front of the head quarters of the Bank of Cyprus and a strike of locally employed civil servants of British Forces Cyprus against austerity measures [en] on that military base.



Since in 2012 Luis de Guindos and Olli Rehn (EC) signed the MoU (Memorandum of Understanding), which imposed “strict conditions” to the Spanish state, the deficit has soared to 7.3 percent last year (coming from a record number of 10.6 per cent), the public debt has amounted to 93.9 percent according to Eurostat, and unemployment now exceeds 26 percent.

In an act of window dressing, the government of Rajoy announced that the Spanish ‘rescue’ had ended (if, according to the president, it ever existed). What is not said is that both the conditions and the monitoring will continue until the last euro cent with interest is returned, which will not happen before 2027. So as much as is said about the Troika leaving Spain, the EC and the ESM monitor will continue for years – just as it will for Ireland and Portugal.

Spanish society continues to argue that this is not their debt and that therefore “we don’t owe, we won’t pay” an authentic citizen uprising to defend rights and social services.

And this fight is achieving results, for example with regard to the hospital privatization plan [en] [nl] [fr] [de] [el] [it] [pt] [es] in Madrid.

The resistance continues with mobilisations against the recent reform of the Spanish abortion law, the most restrictive law of Spain’s democracy, which will push thousands of women into clandestine abortion again. And under the call ‘Madrid 22-M, Marches for Dignity’ (organised by the Andalusian Workers Trade Union, the Dignity Camps of Extremadura and the Civic Front We are Majority, amongst others groups), marches will head to the capital from various points of the country and will culminate on March 22nd in Madrid. Their demands are collected in a manifest [en] [fr] [de] [el] [es].



The Italian public debt to GDP ratio remains at 133.3 per cent, the second highest of the entire European Union (an absolute value of more than 1,500 billion euros), while the Eurozone average rests at 92.7 per cent. Despite the fact that all appointed governments of the last three years – the technical government of Monti, the government of Letta and the newly appointed of Renzi – were supposed to reduce the public debt, its percentage increased from 126 per cent of GDP at the end of 2011 to more than 133 per cent at the present time.

Renzi, the newly elected secretary of the Democratic Party, represents the most conservative wing of the center left. More than half of the Italian people have expressed a positive opinion of his government and are persuaded that it could last a long time.

Unfortunately, it does not stand for the real change that the Italians hope for, because first and foremost, it represents the Italian and European economic and financial lobbies. It is to be seen as a continuation of the former technocratic administrations. One example for this is the new minister of economics, Giancarlo Padoan, who is a former executive director of the IMF and vice secretary at the OECD.

Among the measures Renzi announced, is the so called ‘Job Act’, which goes in the same direction as the ‘European strategy on Employment’. This project aims to solve unemployment through the legitimization of new forms of precarious contracts. The unemployment rate is with 12 per cent (about 3.3 million people) at its highest level since 1977, for the young aged 14 to 24 it is even at 42.4 per cent.

On February 22nd, the national day against high-speed trains (NO TAV), thousands of people gathered in the most important Italian cities, struggling against the economic and financial lobbies pushing for the realization of those projects that put into danger health and the environment in the involved areas.



Slovenia is still facing over-indebtedness of banking and private sectors, and severe pressure from the EU to impose Troika-like measures. One of the Troika-like models exported to the country, besides the required privatizations, is the ‘Bad Bank’ model; in Slovenia named the Bank Asset Management Company (DUTB [en] [sl]) and was founded in 2013.

The idea of DUTB is “to strengthen financial capacity and sustainability of system banks, and consequently promote economic growth”. In this way, commercial banks should transfer part of their non-performing loans accumulated before the crisis to DUTB. After that, the banks would be able to perform the function of lending to the economy again, while the European Commission (EC) and international financial investors control the entire process.

Besides having a Troika-member institution governing Slovenia’s financial sector and determining its national economy, it is even more worrisome to have foreign managers in control who have an obvious connection to the Troika. Examples for this are Lars Nyberg, Arne Berggren and Carl-Johan Lindgren, who are members of the board of DUTB. Lars Nyberg is closely linked to the ECB; he was president of the ECB crisis management group and member of the ‘de Larosière group’ (a high level expert group on financial supervision in the EU). Arne Berggren was a member of the IMF ‘Troika’ team in Spain and his colleague Carl-Johan Lindgren worked for IMF as well. It is not a surprise that the founding of DUTB was welcomed by IMF, since it was considered a significant step towards solving the toxic assets problem.

On 17 January, Slovenian government nominated a new non-executive director of the board of DUTB, Mitja Mavko, from the Ministry of Finance. He is the Head for International Financial Relations and his main obligations have been to maintain relations with international financial institutions, besides being a Deputy Governor for Slovenia in the World Bank Group. DUTB was also strongly supported by the Bank of Slovenia, by Governor Boštjan Jazbec, who previously worked as a consultant for the IMF in Kosovo and Surinam. In this respect, Slovenia is facing severe pressure to impose Troika-like measures just by itself, with no public control and adopting its inappropriate structures.

There is a great concern that DUTB could mean that taxpayers will pay for all financially suspect aspects of the bank’s inheritance, while the ‘good parts’ of the banks will be sold to foreign banks and investors. Taxpayers will pay 3 billion euros to cover the financing gap. Moreover, critical voices also spoke out because of DUTBs costs, which amounted to 5 million euros, where most of the contracts, worth the amount of 2.5 million euros, were given to the foreign consulting company Quartz&Co, whose partner Torbjörn Månsson is DUTB’s interim director. The question of DUTB’s costs and its relations with Quartz&Co was commented on by Lars Nyberg on Slovenian national television. You can watch his interview (minutes 20:15-27:00) in English here.

Finance Minister, Uroš Čufer, has admitted that Slovenia is in a difficult financial situation, and that it depends strongly on foreign markets and will have to continue borrowing for some years. Slovenia sold $3.5 billion of dollar bonds after a rebound; an overhaul of the nation’s banking industry last year helped reduce the risk of a bailout. A sale arranged by Barclays Plc, Goldman Sachs Group Inc. and JPMorgan Chase & Co. cost over 5 million euros. “This is the biggest book order for a syndicated issue of government bonds in eastern and central Europe, the Middle East and Africa in 2014,” said Irena Ferkulj, a spokeswoman of the Finance Ministry.

However, Slovenia’s government does not want to go public with the information on who the buyers of its bonds were. Moreover, the fact is that “Slovenia has in recent years increased its public debt from around 20 to 25 percent to almost 73 percent of GDP[en], said Čufer. Once the latest dual-tranche dollar bond issue has been analyzed, preparations will start for a new one, he said in a televised interview. And as it is estimated, this will again increase the Slovenian public debt to around 77.7 percent of GDP [en].


From our side

The TroikaWatch team is still growing: a member from newly founded Attac Ireland will in the future report for us about Ireland’s situation. And thanks to Andreja, a graphical designer from Slovenia, we now also have our own logo and banner. If you want to help us in making our newsletter known all over Europe, you can place our banner to your homepage. You find it in several sizes here.

TroikaWatch is created by a diverse group of people: some of us work for civil society organisations like the Bretton Woods Project [en] [es] [fr] [el], CEO [en], CADTM [en] [fr] [es] [pt], Humanitas [en] [sl] or TNI [en] [es], others are activists in networks such as Attac [en] [fr] [de] [es] [pt] [it] [el], ICAN [en] [fr] [es], the Forum per una Nuova Finanza Pubblica e Sociale [it] or the Spanish 15M social movement.

We plan to publish this newsletter once or twice a month in English [en], Dutch [nl], French [fr], German [de], Greek [el], Italian [it], Portuguese [pt], Slovenian [sl] and Spanish [es]. You can subscribe to this newsletter at www.troikawatch.net/lists/?p=subscribe&id=1 and contact us by sending an email to info@troikawatch.net. On Twitter, you can follow the debate by using hashtag #TroikaWatch.

Greetings from Amsterdam, Athens, Barcelona, Berlin, Bruxelles, Dublin, Florence, Frankfurt, Kopenhagen, Liège, Lisbon, Ljubljana, London and Thessaloniki.
The TroikaWatch Team


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