European Commission Vice-President Viviane Reding’s recent comments that the Troika’s time under its current shape is over has reignited the debate in Europe over whether the IMF and the Commission/ECB should head their own ways.
In the UK, some economists have been discussing such a prospect for some time now. Last month, Wolfgang Münchau of the Financial Times wrote that "the Fund is clearly not comfortable with its relegation to the position of a junior partner, considering that it is the only organisation in the Troika with any know-how in crisis resolution."
Commenting on the IMF`s "mea culpa" regarding the handling of the crisis in Greece, he added that "if the IMF is serious about its own analysis – and it should be – it should either force a policy change, or be ready to leave the Troika."
Speaking to the Cyprus News Agency, Vincenzo Scarpetta of London-based Open Europe highlighted changes already occurring within the troika. "Germany and other northern Eurozone countries are keen to keep the IMF in. However, the IMF and the European Commission remain fundamentally opposed on some key issues, particularly the need for further debt write-downs in the Eurozone. Some balance could probably be struck, with the IMF remaining in the Troika in the medium term, but taking on a progressively reduced role and committing less cash. We have already seen the start of this in Cyprus," said the Italian political analyst.
LSE Professor of Finance Dimitri Vayanos believes that we are still away from any dramatic changes. "Europeans need the IMF because they don’t have its experience and know-how. The Fund is also accountable to countries that do not belong in Europe and this fact secures bigger impartiality in providing support, reducing political considerations. Maybe at some point the EU will set up those structures needed for rescuing countries without any IMF intervention, but we still have a long way to go until then," he said.
Scarpetta also referred to the non-European element of the IMF as a factor that could have a bearing in the Troika’s future: "Pressure is increasing from within the IMF with several emerging market members keen to limit the IMF’s involvement – both in terms of time and money – in what is already a very rich area of the world."
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