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21 March 2014

Questions about the legality of the Troika

Troika austerity

Since the outset of the financial and economic crisis, some EU Member States, under the pressure of the ‘Troika’ composed of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), have been pursuing a strict retrenchment or austerity policy on the basis of Memoranda of Understanding (MoUs).

These MoUs, negotiated by the Troika, contained detailed timetables for austerity measures and structural reforms, to which the countries had to adhere in order to receive the relevant credit tranches.

The legal basis for this action by the European Commission and the ECB, as part of the Troika, is debatable. Indeed, is European law applicable to the financial crisis emergency? Are the European institutions in signing these MoUs bound by the fundamental (social) rights the European Union, according to its Treaties, adheres to and which fundamental and human rights, if any, are affected by the MoUs?

These fundamental questions are at the heart of the legal opinion delivered by Prof. Fischer Lescano from the University of Bremen, on the request of the Labour Chamber Wien, ÖGB, the ETUC and the ETUI. A sound legal investigation brings clarification of the respective responsibilities and accountability. It further demonstrates that EU institutions are fully bound by Union law and that within the framework of the Troika they are obliged to act in accordance with fundamental rights, which, under Article 51 of the Charter of Fundamental Rights of the European Union, apply at all times.

This legal opinion reiterates the concerns expressed by the ILO Committee of Freedom of Association as well as the European Committee of Social Rights of the Council of Europe, who, having examined complaints on austerity measures taken in Greece within the framework of the international loan mechanism agreed upon with the Troika, both concluded upon the violation of a range of fundamental social rights as anchored in the ILO Conventions and in the Revised European Social Charter.

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