No one should underestimate the importance of the International Monetary Fund’s report criticising its own conduct and that of the European Union in dealing with the Greek debt crisis.
It is bad enough that the IMF admits that it bent its own rules to contribute to the bail-out despite “misgivings” over the ability of Greece ever to pay back the money. This gamble with taxpayers’ funds involves £1.4bn in British contributions – hardly small change.
However, at least the IMF has acknowledged “notable failures” in policy. There is no room for such self-criticism or honest reflection in Brussels or Frankfurt, where the big decisions that set the course of Europe’s economy are taken.
The report, and the response to it, tells us much – none of it good – about how EU and eurozone institutions operate in denial of the facts and without any accountability for decisions.
At this point it is worth remembering that the travails of the eurozone are far from over and that in the eyes of the IMF and others, the EU’s flawed single currency area still poses the biggest risk to the global economy.
The market turmoil may have subsided but eurozone unemployment is at a record high and imposition of more austerity measures is becoming intolerable for millions of Europeans.
Over the past three years of crisis and recession, the European Commission has been given new powers to enforce economic reforms on the countries that belong to the single currency. There is talk of banking and fiscal union, even a Federal Europe.
With all this ambition and newly accumulated powers, the acknowledgment of facts and questions of basic accountability should assume an importance they have never done before.
But the EU is in denial.
The IMF’s criticism is substantial and backed by a legion of facts: the EU ducked tough decisions, shilly-shallying that drove a “dramatic” economic contraction and put taxpayers throughout Europe “on the hook” for risks taken by banks that had bought Greek bonds. In the politics of nations or in national institutions of state, a leader or minister in charge of such a debacle would feel obliged, or would be summoned, to account for himself.
On charges this grave, they may well have to resign and voters would certainly feel inclined to get rid of them at the next election.
Not so in the unaccountable EU.
Olli Rehn, the unelected commission vice-president responsible for economic and monetary affairs, is nowhere to be seen. He hasn’t yet accepted any need to comment.
Eurozone and EU institutions are oblivious to facts and unaccountable to voters. That poses a clear and present danger to the world economy.
Network Rail in line for more criticism
It has not been a great few weeks for Network Rail and the publication of the company’s latest figures will do little to pacify its critics.
The company, which is responsible for the country’s track infrastructure and stations, has two simple tasks: run the trains on time and keep the kit in good working order.
Over the past month or so there have been suggestions that it has not been doing either job very well.
Not only did punctuality fall but the Office of Rail Regulation (ORR) has been unimpressed with the company’s overall stewardship of the network.
The latest spat with the ORR should add a little spice to next month’s discussions over the proposed long-term incentive scheme for the five top directors. When Network Rail’s members meet they will be asked to approve a “double your money” scheme which could be worth £577,000 for chief excecutive Sir David Higgins.
The directors took a substantial hit on their annual bonus a few weeks ago but, despite this, it is no formality that the regulator will approve the scheme.
Even if the proposals are given the green light, the new long-term bonus scheme, covering 2012-15, hinges on the directors hitting key targets. Top of the list is delivering value for money for the taxpayer, accounting for 50pc of the bonus.
In its remarks on the accounts, Network Rail admitted that even the current efficiency targets were “stretching”. These targets have clearly become a bit more demanding, given that the ORR is also insisting it wants the company to tackle under-performance in asset management.
In years to come, Network Rail may look fondly on the current difficulties as a stroll in the park compared with the challenge ahead of meeting Sir Roy McNulty’s demand for sweeping efficiencies.
WPP right to take full advantage of Twitter
Sir Martin Sorrell is a confessed “old fart” when it comes to Twitter but Thursday’s announcement of WPP’s global deal with the social network endorses its growing importance to the advertising and marketing sectors.
Twitter’s role in future will extend beyond merely acting as yet another way for advertisers to reach consumers by paying to promote and target commercial tweets.
WPP will be doing more of that as part of its new deal with Twitter, and selling advertising is important to the service’s growth and alleged $10bn stock market potential.
However, the data that will travel in the other direction are arguably more important.
WPP will integrate into its market research products the data contained in more than 500m 140-character tweets per day, giving instant insights into consumer attitudes. It will quickly go beyond assessing the response to a brand or event and into more complicated questions about where people are buying, when they are buying and why.
By luck at least as much as design, Twitter is the best-placed social network to exploit this giant opportunity. Almost all conversations are public and users more frequently discuss and interact with brands and events than they do on Facebook, where things are more personal.
Crucially, it is the real-time social network: tweets are usually about what is happening now, not what happened last weekend or about summer plans. Learning from that data, which have never been available before, is a challenge but one that even a Twitter sceptic like Sir Martin knows offers massive opportunities.