The Eurogroup Made Simple

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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 question begging:

“What about economic goals, beyond price stability, like development, investment, unemployment, poverty, internal imbalances, trade, productivity?”

“Which EU body decides the Eurozone’s policies on these?”

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!

Outrageous opacity

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: “There are no minutes, records or transcripts.”

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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3 Comments

  • Eurogroup is a monster using the common currency to enslave Europeans in another version of the Holy Roman Empire and more recently economic ideas stemming from Nazi Germany transformed into a false ‘democracy’ to be palatable to foolish people. Democratizing a tyranny like this is fruitless. The Euro System and European Union is simply not sustainable in open transparency. Historically all these kinds of centralized systems eventually collapsed under their own weight. Often as a Hail Mary, they attempted reforms, but opening the system will only accelerate the collapse, which is why the resistance will be formidable.

    Further the fundamentals right now are just awful with the end of the globalization cycle, the China bubble bursting and Central Banks at the end of the road. The political system lives in the past narrative, rigid and incapable of changing. Greek politicians have staked their whole careers on the economic nonsense of Eurogroup ‘reforms’ and can only sustain themselves on Ponzi bailouts. The EU buys out the conscience of national politicians. They do not care about their country or their people. Their career and success depends on how Brussels see them and reward them. Not very different from the Soviet Gulag or Greece under Nazi occupation and the Rallis government. What Rallis, what Alexis or Koulis??? They are simply puppets.

    Only sound path that the Greek people have the courage to revolt and choose Golden Dawn to clean up the mess, default on the debt, rebuild a sound national economy based on local production and a national currency. Perhaps BREXIT – f it happens in June – will give the Greeks the courage finally to take back their country and liberate themselves from EU tyranny. I am not optimistic after 40 years of lies and brainwashing for demoralization and destruction of national identity. There are cowardly quisling on every corner in Greece of which the Greek Left is the worst example, but ND with the Mitsotakis family and history of collaboration with the Germans puts the Greeks between Scylla and Charybdis.

    I would agree with your past observations, that Greece is heading for another Kosovo-like black hole, which is about all that the EU can bring to small countries.