Saturday

16th Feb 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.

News in Brief

  1. Spain's Sanchez calls snap election on 28 April
  2. 15,000 Belgian school kids march against climate change
  3. May suffers fresh Brexit defeat in parliament
  4. Warning for British banks over Brexit staff relocation
  5. Former Italian PM wants Merkel for top EU post
  6. Antisemitic incidents up 10% in Germany
  7. Italy's asylum rejection rate at record high
  8. Hungary will not claim EU funds for fraudulent project

Opinion

Eastern Europe Matters

The foreign ministers of Sweden, Poland and the Czech Republic reflect on 10 years of the Eastern Partnership with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Latest News

  1. Sluggish procedure against Hungary back on table
  2. Could Finnish presidency fix labour-chain abuse?
  3. Brexit and trip to Egypt for Arab League This WEEK
  4. Belgian spy scandal puts EU and Nato at risk
  5. EU Parliament demands Saudi lobby transparency
  6. Saudi Arabia, but not Russia, on EU 'dirty money' list
  7. EU agrees draft copyright reform, riling tech giants
  8. Rutte warns EU to embrace 'Realpolitik' foreign policy

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  4. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. Nordic Council of MinistersThe Nordic gender effect goes international
  6. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Join EUobserver

Support quality EU news

Join us