Voice, Exit and Coalition-Building inside the Troika

The Troika – that is, the institutional arrangement that brings together the EU Commission, the ECB and the IMF – has been established to manage the negotiations for financial assistance between the official lenders and the governments of recipient countries in the Eurozone. Far from proving a united front, the activity of the Troika has been fraught with political tensions. These tensions first burst into public view over the handling of the €110bn bailout for Greece in 2010. They were revamped in 2012 on the issue of private sector involvement with Greek sovereign debt restructuring and have flared once again in 2013 over Cyprus bail-out. The paper examines these cases of inter-institutional political conflict pursuing a twofold objective. First, the paper provides an accurate account of what officials in the three institutions wanted. Second, it assesses the process through which divergent preferences were reconciled (or only partly reconciled) with a view of establishing the mechanisms that empower each of the three Troika agencies. In particular, using Hirschman’s well-known argument, the paper tests whether a common position emerged because of the power of advocacy (voice) or of the power of the exit threat. The influence exerted by the political alliances among the Troika members will also be assessed. By putting the spotlight on the IMF-ECB-EU Commission relationship, the findings of the paper also speak to other cases of inter-institutional cooperation in global economic and financial governance.