Friday

21st Sep 2018

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 18 year's of archives. 30 days 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.

Sefcovic launches bid to be EU Commission president

Europe must have a robust foreign policy and nurture high-tech industries, Slovak EU commissioner Maros Sefcovic has said in his bid to succeed Jean-Claude Juncker as the next EU commission president.

'Every group split' ahead of EU copyright vote

Political groups in the European Parliament are split about how to vote for a directive that would reform the EU's copyright regime - amid warnings that freedom of expression and creators' rights are at risk.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. Brexit and MEPs expenses in the spotlight This WEEK
  2. Wake-up call on European Day Against Islamophobia
  3. Sound of discord at 'Sound of Music' Salzburg summit
  4. Salzburg summit presses for bigger Frontex mandate
  5. UK's post-Brexit plan 'will not work', EU says
  6. Airbnb agrees to clarify pricing for EU
  7. Libya keeps coast guards rejected by the EU
  8. EU divisions on menu at Salzburg dinner

Join EUobserver

Support quality EU news

Join us