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27th Feb 2024

EU leaders under fire over Cypriot 'fiasco'

  • The Irish EU presidency said Cyprus will never happen again (Photo: EUobserver)

EU leaders were in the firing line in Strasbourg on Wednesday (17 April), as MEPs accused them of "grave mistakes" over the Cypriot bailout.

Hannes Swoboda, the Austrian leader of the Socialist and Democrat group, accused German finance minister Wolfgang Schauble of "neocolonial behaviour" in terms of forcing Cyprus to seize money from some wealthy bank depositors' accounts.

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He also called on the European Commission to disband the troika - a partnership between the commission, the European Central Bank and the International Monetary Fund which oversees the negotiation and implementation of bailout packages.

In a broadside aimed at EU economic commissioner Olli Rehn, Swoboda said the Rehn should "never have agreed to the attack on the deposits below €100,000, it has destroyed confidence and trust."

The first bailout model, rejected by Cypriot MPs, was to see seizures of money from small savers also despite EU laws saying deposits below €100,000 are sacrosanct even if a bank is going bust.

For his part, Guy Verhofstadt, the Belgian leader of the Liberal group, called on MEPs to set up a committee of inquiry into the Cypriot bailout talks.

"What went wrong in the Eurogroup? Who proposed the levy on small depositors," he asked, referring to the club of euro-using countries' finance ministers chaired by Dutchman Jeroen Dijsselbloem.

Eurozone finance ministers signed off of the final-model rescue package in Dublin last week, with the EU and IMF to loan €10 billion and Cyprus expected to raise additional funds of up to €13 billion through the levy on wealthy savers, as well as privatisations and cuts to public spending.

The first tranche of cash to the Mediterranean Island is expected to be paid out in mid-May.

Defending the deal, Rehn told MEPs on Wednesday the bailout package would "enable Cyprus to avoid a disorderly default." He added that leaders had "had to find unique solutions to exceptional problems … under enormous time pressure."

Dijsselbloem also came in for criticism.

The spokesman for the centre-right EPP group, Jean Paul Gauzes, described Dijsselbloem's handling of the bailout negotiations as a "fiasco."

He added that "the Eurogroup's communication was [also] very poor," with bits of news leaking out and with Dijsselbloem making statements to press that he later took back or "clarified."

For her part, the Irish European affairs minister Lucinda Creighton, speaking for the EU presidency, described the Cypriot situation as "extremely regrettable" and "the human consequences are the most regrettable of all."

She added that what happened on Cyprus "was and is exceptional."

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