Eurozone governed by an obscure body and gray procedures

Christine Lagarde, Managing Director of the IMF (on the left),  Jeroen Dijsselbloem, President of the Eurogroup. 15/03/2013 (Council of the European Union, photographic library).

Christine Lagarde, Managing Director of the IMF (on the left), Jeroen Dijsselbloem, President of the Eurogroup. 15/03/2013 (Council of the European Union, photographic library).

The Eurogroup, the crucial European decision-making body, regrouping the 17 EU ministers of Finance of the countries using the euro, which has led the south of Europe to the worst economic recession after WWII and introduced the haircut on bank deposits, the until this week most secure financial asset, is an informal forum, who’s decisions have to be officially approved by the ECOFIN, the Council of the 27 EU ministers of Finance. It is questionable how and when Eurogroup’s latest decisions on Cyprus, were approved by the ECOFIN.

The Eurogroup meets regularly once a month in the night of the day before ECOFIN is convened, usually Monday and Tuesday at the beginning of every month. This is so, exactly because the Eurogroup is not an official EU body and its decisions have to be approved the next day by the ECOFIN, in order to become legal. The problem is however that all those draconian decisions formulated this week by the Eurogroup on Cyprus, have not been approved by the ECOFIN, at least not yet.

How Eurozone is governed

In short the tormented island is now suffering with no official EU decision taken. The same was true in all the previous urgently taken crucial decisions on Greece, Spain, Ireland and Portugal. Actually on many decisive moments the Eurogroup met over the internet in a teleconference, a fact that didn’t impede it to take very important decisions. Those decisions were later on legalised in the ECOFIN, where some ministers of Finance were obviously annoyed to play a role of walkon.

Of course the problem described here is not a procedural or bureaucratic one, but a deeply political issue. In the face of it however, all those crucial Eurogroup decisions were undersigned by the ECOFIN only at a later stage. This was the case for the Memorandums of Understanding agreed between the troika of EU-ECB-IMF and the three Eurozone programme countries. With those MoUs Greece, Ireland and Portugal introduced unheard before austerity programmes, which drove them to a vicious cycle of debt and recession. The same is true for Italy and Spain where austerity was not typically imposed by the troika but it was rather self-imposed.

It is also true that in practice, even within this informal forum that the Eurogroup is, not all of its 17 member ministers of Finance are playing an active role. As a matter of fact persons like the general manager of IMF, Christine Lagarde, and the governor of ECB, Mario Draghi, both of whom do not hold a permanent position in the Eurogroup, the two of them however play not only an active role in the discussions and the decision-making, but their opinion is pivotal in the dealings.

At the same time most of the 17 Eurozone ministers of Finance are not even present in the crucial meetings. They drink coffee outside. It was very characteristic that in the most important meeting of Friday night and Saturday morning on 15-16 March, some ministers of Finance were not even allowed to be present while the ‘inner circle’ was negotiating with the Cypriots. Actually there were a lot of grievances over this. Many ministers of Finance complained openly that the ‘inner circle’ wanted them just to approve what was already decided.

Who dictates the decisions

It is easy to imagine that the inner circle is made up by Wolfgang Schauble, the German Federal minister of Finance, Mario Draghi, governor of the ECB, Christine Lagarde, Managing Director of IMF, Jeroen Dilsselboem, President of Eurogroup and minister of Finance of Holland, Olli Rehn, Vice President of the European Commission, plus the French minister of Finance Pierre Moscovici and of course the until recently President of Eurogroup, Jean-Claude Juncker, Prime Minister and minister of Finance of Luxembourg.

Apart from those key figures, the participation of some more ministers may be considered at times as necessary and those are the Austrian minister of Finance Maria Fekter, the Finnish minister of Finance Jutta Urpilainen, the Spanish minister of Finance Luis De Guindos, the Irish minister of Finance and currently president of ECOFIN Michael Noonan and the Greek minister of Finance Yiannis Stournaras. This is probably the whole list. As for the ministers of Slovakia, Slovenia, Malta and Estonia their presence is rather nominal.

In such an obscure and precarious context were formulated Eurogroup’s crucial decisions during the last two years, which drastically changed the face of the Eurozone’s economy. Simply they have been dictated by the inner circle. The rest of the participants played a secondary role, even when those decisions concerned them directly. The interesting thing is that the decision-making process is neither institutional nor legitimised by the European Parliament. In the best of cases the programmes are at a later stage approved by the EU Summit of the 27 leaders and voted for by the legislatives, national and European.

The initial ‘no’ of the Cypriot Parliament perturbed the entire Eurogoup. Later on the Cypriot legislators got ‘wise’ and passed the seven laws to confiscate the bank deposits. In every case though all the basic ingredients of the decisions have been formulated by the inner circle of the atypical Eurogroup. It’s the triumph of power over fairness, in a procedure where the European Union institutions and procedures melt down before the political and economic might. Understandably that’s why the Eurogroup remains an atypical forum. The powerful ones don’t like institutions and standard procedures.






the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

World Health Organisation and medical students: is there any room for improvement?

This plastic-free bag dissolves in water

The UK is on a record-breaking run of coal-free power

Why collective action is the key to saving our forests

The issues of practicing medicine in Pakistan

A male gynecologist in Iraq: red line violated

New Syria fighting represents ‘giant powder keg’, warns aid veteran, as he leaves UN stage

ECB guarantees the liquidity of the Atlantic financial volume

Security of 5G networks: EU Member States complete national risk assessments

South Sudan’s women caught up in ‘futile man’s war’ UN gender equality chief

Digital Single Market: Cheaper calls to other EU countries as of 15 May

Road safety: Data show improvements in 2018 but further concrete and swift actions are needed

How blockchain can cut the cost of new medicine

Why trade wars have no winners

UN ‘comes together in sadness and solidarity’ to honour staff who died on board Ethiopian Airlines flight

In visit to hurricane-ravaged Bahamas, UN chief calls for greater action to address climate change

The challenges of Chinese investment in Latin America

A new crop of EU ‘Boards’ override the democratic accountability and undermine the EU project

These charts show where the world’s refugees came from in 2017 – and where they’re heading

Parliament votes for €1 billion in aid to Ukraine

A Europe that delivers: EU citizens expect more EU level action in future

Can we balance conservation and development? Science says yes

Medschool 4.0: how to succeed in the smart revolution of healthcare

EU job-search aid worth €9.9m for 1,858 former Air France workers

UN Human Rights chief urges Venezuela to halt grave rights violations

A new catastrophic phase in the Syrian carnage

Questions directors need to ask in the age of stakeholder capitalism

EU Commission: a rise in wages and salaries may help create more jobs

Climate crisis could see ‘collapse’ of some economies without diversification, warns UN trade chief

‘Proving our worth through action’: 5 things Guterres wants the UN to focus on in 2019

Should Europe be afraid of the developing world?

Alice in Colombia

Eurozone bank rescues ‘a la carte’ until 2015 then only bail-ins

Tsipras bewildered with Berlin’s humiliating demands; ECB expects political sign to refinance the Greek banks

5 challenges for government adoption of AI

5 key themes for reforming the EU, as elections loom

Gender parity can boost economic growth. Here’s how

Social, cultural diversity ‘an enormous richness, not a threat’ Guterres declares calling on investment for a harmonious future

Do you dare to go to China?

Mental Health: starting with myself

UN chief ‘commends’ leadership of Greece and former Yugoslav Republic of Macedonia, as name dispute draws to final close

“None of our member states has the dimension to compete with China and the US, not even Germany!”, Head of EUREKA Pedro Nunes on another Sting Exclusive

Good grub: why we might be eating insects soon

How data can empower patients to personalize and improve their cancer treatment

‘Still time’ to stop a ‘bloody battle’ for Libya’s capital, insists Guterres

Going climate-neutral: expert-group recommendations to help energy-intensive industries contribute to the EU’s 2050 target

World Food Day: here’s what the UN is doing to fix ‘intolerable’ wrong of hunger

Afghan refugees: €21 million in humanitarian aid for host communities and vulnerable populations in Pakistan and Iran

World food security increasingly at risk due to ‘unprecedented’ climate change impact, new UN report warns

FROM THE FIELD: ‘Race is on’ to halt biodiversity loss in Indonesia

World Mental Health Day is a chance to listen to those with the condition – the biggest experts of all

90% of fish stocks are used up – fisheries subsidies must stop

Progress made at COP25, despite lack of agreement to increase climate ambition

Medical Doctors in Industry 4.0: pure science fiction

Will Eurozone be able to repay its debts? Is a bubble forming there?

Humanitarian Aid: EU announces €18.5 million additional package for Latin America and the Caribbean

Digital Single Market: EU negotiators agree to set up new European rules to improve fairness of online platforms’ trading practices

Radioactive material ‘a magnet for groups with malicious intent’, warns UN nuclear watchdog chief

Female leaders warn about the erosion of women’s rights

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s