Monday

23rd Oct 2017

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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

"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.

Court battles intensifies on MEPs' 'private' expenses

The EU parliament said the public does not have a right to monitor the public role of MEPs, says Natasa Pirc Musar, a lawyer representing journalists, in a transparency battle against the assembly.

EU agencies defend research ahead of glyphosate vote

As the renewal of the weedkiller glyphosate is a hot potato on the EU agenda, with a vote in the Parliament on Thursday, the role of two closely-involved EU agencies has come under scrutiny.

Stakeholders' Highlights

  1. Mission of China to the EUPresident Xi Jinping Proposes Stronger Global Security Governance at Interpol Assembly
  2. European Friends of ArmeniaEU Engagement Could Contribute to Lasting Peace in Nagorno-Karabakh
  3. UNICEFViolence in Myanmar Driving 12,000 Rohingya Refugee Children Into Bangladesh Every Week
  4. European Jewish CongressBulgaria Applauded for Adopting the Working Definition of Antisemitism
  5. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  6. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  7. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  8. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  9. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  10. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!
  11. European Entrepreneurs CEA-PMEMobiliseSME Exchange Programme Open Doors for 400 Companies Across Europe
  12. CECEE-Privacy Regulation – Hands off M2M Communication!