Saturday

24th Jun 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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

News in Brief

  1. Merkel and Macron hold symbolic joint press conference
  2. Juncker has 'no' clear idea of kind of Brexit UK wants
  3. Belgian PM calls May's proposal on EU citizens 'vague'
  4. UK lacks support of EU countries in UN vote
  5. Spain to command anti-smuggler Mediterranean force
  6. Estonia confirms opposition to Nord Stream 2 pipeline
  7. Ireland and Denmark outside EU military plan
  8. EU leaders renew vows to uphold Paris climate deal

Stakeholders' Highlights

  1. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  2. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  3. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  4. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  5. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  6. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  7. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  8. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  9. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  10. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  11. Malta EU 2017End of Roaming Charges: What Does It Entail?
  12. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move

Latest News

  1. Macron’s investment screening idea watered down by leaders
  2. Leaders unimpressed by May’s offer to EU citizens
  3. New Irish PM praises unscripted nature of EU summits
  4. EU extends sanctions on Russia
  5. UK's universities set 'Brexit wish list'
  6. Decision on post-Brexit home for EU agencies postponed
  7. May's offer on citizens’ rights dismissed as ‘pathetic’
  8. 'Historic' defence plan gets launch date at EU summit