Saturday

17th Aug 2019

EU parliament to probe bailout troikas

  • The European Parliament wants to scrutinise the work of bailout troikas (Photo: europarl.europa.eu)

MEPs dealing with economic affairs are to launch an inquiry into the "non-transparent" work of EU Commission, European Central Bank and International Monetary Fund officials overseeing spending cuts in bailout countries.

After more than three years since the first 'troikas' were sent to Greece and Ireland to "advise" the governments and oversee implementation of promised budget cuts, the European Parliament is seeking to shed some light on the work of these non-elected officials.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The coordinators of the main groups in the European Parliament's economics committee on Monday (28 October) agreed to launch an inquiry into the work of the troika in Greece, Portugal, Ireland and Cyprus.

"The troikas of ECB, EU commission and IMF are playing a key role in the eurocrisis. Their work continues to be non-transparent to a large extent," said German Green MEP Sven Giegold, the main force behind the initiative.

He explained that the inquiry would consist of hearings of troika officials as well as independent economic studies challenging the assumptions of the troika - assumptions that were proved to be wrong in all bailed-out countries.

Unemployment turned out to be higher, the economy shrunk more dramatically and public debt rose more than predicted by the troika in the four countries.

"That is why many European citizens are expecting a comprehensive probe into why these dramatic results came about. We need to look carefully at potential breaches of law or abuses," Giegold added.

The political groups are still negotiating the exact scope of the inquiry, which needs the overall approval of group leaders and committee chairs early next month. According to parliament sources, the centre-right EPP group wants to water down the probe, simply listing what the troikas had recommended throughout the years.

The query will be led by Austrian EPP MEP Othmar Karas and his Social-Democratic colleague from France Liem Hoang Ngoc, while Belgian MEP Philippe Lamberts from the Greens and his Dutch colleague Derk Jan-Eppink from the Conservatives will be "shadow rapporteurs."

One area that may come under scrutiny is the work of private consultancies involved with the troika.

The role of consultancies

The most recent bailed-out country, Cyprus, is currently in turmoil after leaked documents showed that the central bank governor approved a "success fee" of 0.10 percent for the New York-based private consultancy Alvarez and Marsal out of the entire recapitalisation sum for the Cypriot banking sector.

The consultancy is advising the central bank on restructuring the Bank of Cyprus.

The fee, almost €5 million, would have included private deposits above €100,000 from the defunct Laiki bank and the Bank of Cyprus. These deposits were seized as part of the "bail-in" required by the troika in return for the €10 billion worth of loans from the EU and IMF.

Members of the central bank's board said they were unaware of the fee, agreed by the governor, Panicos Demetriades.

For his part, Demetriades claimed he was forced into agreeing to it. He said the consultancy threatened to quit one day before Cypriot banks re-opened after a week of bailout negotiations.

The Cypriot authorities have launched criminal proceedings into the matter.

The US consultancy meanwhile has said it is up to the Cypriot central bank to decide if and how much to pay as a "success fee."

"Alvarez and Marsal has also informed the Central Bank of Cyprus that, in their opinion, the events that have arisen during the past few days concerning the recapitalisation fee are unfortunate," the firm, who is also involved in the Spanish bank restructuring, said in a press release.

Opinion

How about a social troika?

Picture the scene: Troika members go to a member state and are greeted with enthusiasm.

Exclusive

Brexit row delays financial products transparency review

A European financial regulatory body set up after the financial crisis is at loggerheads with the European Commission over whether to carry out a transparency review of certain financial products. The reason: Brexit.

News in Brief

  1. Trump turned down: Greenland not for sale
  2. UK Libdems would back Clarke or Harman as new PM
  3. Six countries agree to take 'Open Arms' ship migrants
  4. Gibraltar judge: Iranian ship should be released
  5. Increasing fears of a global recession
  6. Far-right hate crimes on the rise in Germany
  7. EU steel tariffs have 'worked well' so far
  8. Italian court: Migrant rescue ship can enter Italian waters

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. Selmayr did not keep formal records of lobby meetings
  2. EU asked to solve migrant rescue deadlock
  3. Internal EU paper: Second Brexit vote was no longer 'distant dream'
  4. EU has 'zero incentive' to break open 'trilogue' deals
  5. Denmark plans import ban on EU-approved pesticide
  6. US offers Johnson helping hand on Brexit
  7. Italy: New government without Salvini in the making
  8. Brexit row delays financial products transparency review

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Join EUobserver

Support quality EU news

Join us