Friday

28th Feb 2020

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

Support quality EU news

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

... or join 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.

This is the (finally) approved European Commission

MEPs gave the green light to the entire new European Commission during the plenary session in Strasbourg - but with the abstention of the Greens and a rejection by the leftist group GUE/NGL.

Magazine

Welcome to the EU engine room

Welcome to the EU engine room: the European Parliament (EP's) 22 committees, which churn out hundreds of new laws and non-binding reports each year and which keep an eye on other European institutions.

Stakeholders' Highlights

  1. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  2. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  3. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  4. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  5. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  6. Nordic Council of MinistersNordic Climate Action Weeks in December

Latest News

  1. WHO on coronavirus in Europe: 'be prepared'
  2. Frontex hits activist pair with €24,000 legal bill
  3. Turkish jets keep violating Greek airspace
  4. 'Fragmented' Slovakia goes to polls amid corruption woes
  5. EU development policy needs a fresh start
  6. EU critical of China on Swedish dissident publisher
  7. NGOs urge EU to tackle meat consumption 'problem'
  8. Coronavirus: voices from a quarantined Italian town

Join EUobserver

Support quality EU news

Join us