The name ‘Troika’ originally refers to the Russian word for a carriage with three horses, but can be used to describe any type of collaboration of three. In the context of the European crisis, the Troika includes three institutions:
the European Commission (EC)
the European Central Bank (ECB)
and the International Monetary Fund (IMF)
Basically, what the Troika does, is monitoring countries in severe economic trouble that are receiving financial loans provided for by the EU and the IMF. These loans, although they have a lower interest rate than the ones on the capital market, are hardly meant to help the economies of suffering countries to recover.
While there are reasons for the economic difficulties of those countries at the national level – such as underrating of corruption and extremely low taxes – that should not be underestimated, the Troika solely focuses on national causes, whereas systemic issues on the European and global level are more important. Besides, the preferred targets for the Troika are wages, working hours, and social expenditure – again preserving the interests of the richest.
Furthermore, the interests of private creditors, banks and other financial institutions are fostered by passing the debt onto public hands, while consolidating and raising it to unsustainable levels and demanding economic reforms and austerity measures on an extremely harsh level.
These measures and reforms, the conditions that countries have to fulfil to continue receiving money, are established in a sort of contract, called a Memorandum of Understanding (MoU). The Troika organises review missions in which it visits the countries it has a MoU with; if it concludes that a country has not done enough in exchange for the money, it can decide to postpone payment of the next tranche. The Troika thus has a very strong influence on the national economic and financial policies of the countries that are under its rule.
The Troika acted for the first time in 2010, in Greece. It appeared that Greece’s economical and financial situation was not as bright as it had seemed in former years, and as a final resolution, the country asked for financial assistance from the international institutions in May 2010. The EC, ECB and IMF undertook a joint mission to Athens and a few days later, a financial package was put on the table together with the first MoU. This started a downward spiral of pension reductions, wage cuts, higher taxes, lay offs and privatisations: the Troika had entered.
After Greece, three other European countries were placed under scrutiny of the Troika: Ireland in December 2010 (in December 2013, it left the Troika program, at least formally), Portugal in May 2011 and Cyprus in April 2013. Spain has an MoU, which includes only conditions for the banking sector, but it is also forced into austerity by other measures. Other countries, such as Italy, are not officially brought under the yoke of the Troika, i.e. they do not have a MoU with it, but are also severely pressured to push through reforms and austerity measures.
Essentially, the Troika ensures that the small woman and small man in the street pays for systemic problems in the economy and mistakes made by financial institutions, which are the real causes of the crisis. At the same time, in the past few years, European lawmakers have continuously been reducing the rules and controls on those financial institutions and big businesses. Seems illogical? Indeed, but from the neoliberalist point of view, it makes perfect sense.
Therefore, it is important to see the Troika and its neoliberal policies not as a stand-alone issue, but rather as an instrument in times of a systemic crisis that fits within a general push towards neoliberal measures and reforms everywhere in Europe. These measures and rules, together described by the term ‘economic governance’, are gradually imposing more and more neoliberal control, favouring big businesses and financial markets while attacking hard-fought social rights and democratic values.