Friday

9th Dec 2022

Troika bullied Cyprus and Portugal, MEPs say

  • Some of the seized deposits above €100,000 were to be used as pensions in Cyprus (Photo: Berge Gazen)

The troika of international lenders "held a gun to the head" of Cyprus and Portugal and showed little sympathy for social measures, an MEP looking into its work has said.

"Both countries had very little room for manoeuvre in negotiating the terms of the bailouts. What they said basically was that 'a gun was held to our head', especially in Cyprus," Juergen Klute, a left-wing German MEP, told this website.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"And the troika had very little interest in social measures, they were only concerned about cutting back the deficit," he added.

The German politician said his four-member European Parliament delegation found there was a lack of democratic oversight when it came to the work of the troika - made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund.

"We are not saying that the reforms imposed on these countries were not needed, but we are criticising the way it was done - with basically no involvement of national parliaments or social partners," Klute said.

In Cyprus, the bailout also included the seizure of deposits above €100,000 in the country's two largest banks.

But the social impact was neglected in the German-led rush to hit "Russian oligarchs" who held deposits in the banks, Klute said.

He noted that the current economic situation differs greatly to what the troika and member states predicted when they imposed the bail-in on Cypriot banks.

"There are big problems in Cyprus with liquidity shortage as a consequence of the bail-in. Unemployment has spiked from three to 17 percent, people don't have money to pay for their loans and mortgages," Klute said.

He explained that unlike Germany or France, Cyprus does not have a strong social system and people on the island used to put money in the bank to pay for t’heir children’s university studies, for healthcare or to use in retirement.

"A lot of people had relatively large sums of money saved up - €300,000 or €400,000 - to act as pensions or health insurance. Now half of it is gone if it was in Bank of Cyprus or everything if the deposits were in Laiki," Klute said.

Another grievance of Cypriot depositors is that bank bonds from these two financial institutions have been wiped out.

"So people who had put part of their savings in bank bonds have lost that money for good," the German MEP explained.

Finnish Liberal MEP Nils Torvalds, who also travelled to both countries, told this website that local politicians' failure should be taken into account.

"There is a political inability to face the problems when they occur. But this is a tendency all over Europe - in Finland too - that we have a political system which is dragging its feet, not take responsibility when it should,” he noted.

Eurozone member states are also partly to blame for ignoring Greece's problems and rigged deficit figures for too long.

"This forced all the players to be harsher in the next phase. And this led to Cyprus being treated more roughly than it should have been," Torvalds said.

The European Parliament this week will hold hearings with the European Commission's top official in charge of bailouts - economics commissioner Olli Rehn - as well as the former head of the ECB, Jean-Claude Trichet, and the head of the eurozone bailout fund (ESM), Klaus Regling.

Further trips of the troika delegation are scheduled to Ireland at the end of this week and to Greece at the end of the month.

Cyprus central bank governor resigns

The governor of the Cypriot central bank has resigned after being investigated over a secret deal he negotiated with an American consultancy firm in connection with his country's bailout.

MEPs redouble attack on bailout 'troikas'

MEPs investigating the troika of lenders in bailout countries have said it was marred by conflicts of interest, but a better model could take years to create.

Opinion

No, Bosnia and Herzegovina is not ready for the EU

The European Commission has asked the member states' leaders assembling in Brussels next week for the customary end-of-year European Council to approve EU candidate status for Bosnia and Herzegovina. Doing so would be a mistake.

Exclusive

Borrell gets pension from MEP fund set for taxpayer bailout

Josep Borrell, the EU's foreign policy chief, is currently drawing a pension from a European Parliament fund that is some €400m in debt and may require a taxpayer bailout at a time of rising inflation and high energy costs.

Stakeholders' Highlights

  1. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  2. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  3. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. A plea to the EU from inside Tehran's Evin jail
  2. EU lets Croatia into Schengen, keeps Bulgaria and Romania out
  3. Energy crisis costs thousands of EU jobs, but industrial output stable
  4. Illegal pushbacks happening daily in Croatia, says NGO
  5. No, Bosnia and Herzegovina is not ready for the EU
  6. EU takes legal action against China over Lithuania
  7. EU Commission shoring up children's rights of same-sex parents
  8. The military-industrial complex cashing-in on the Ukraine war

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online

Join EUobserver

Support quality EU news

Join us