Brussels, 17/04/2013 (Agence Europe) - In a debate on Wednesday 17 April 2013, MEPs had little positive to say about the troika (European Commission, ECB and IMF) or Eurogroup, strongly criticising the way they have dealt with Cyprus. Some MEPs focussed on the lack of transparency about decision-making and the incoherent messages. Others highlighted the lack of democratic legitimacy in the process itself. Yet others expressed astonishment at how long it took to deal with the situation.
French MEP Jean-Paul Gauzès, a spokesperson for the EPP on economic and financial issues, opened fire by criticising the lack of vigilance by the European institutions, although he said the current situation was also due to excessive risk-taking by Cypriot banks and lack of effective intervention to prevent or restrict the foreseeable dangers of an unbalanced economy being created by the bloated banking sector. The chair of the European Parliament's economic and monetary affairs committee, Sharon Bowles (ADLE, UK), agreed, saying that the alarm bell should have been rung when the cash flow of just one bank was as big as the country's GDP. The fact that the ECB lent the country's second-biggest bank, Laiki, which has now been dissolved, €9 billion in emergency cash, was criticised by Guy Verhofstadt (ADLE, Belgium). At the request of the Liberals, a special hearing of the troika and the head of the Eurogroup, Jeroen Dijsselbloem, will be held on Thursday 25 April.
Hannes Swoboda (S&D, Austria) spoke plainly, saying that the troika should be got rid of because it wasn't needed. He criticised the IMF and the behaviour of countries like Germany, which was acting in an almost “colonial” way. He said Cyprus must be helped, not dominated.
Resentment in Cyprus. Cypriot MEPs expressed resentment. Eleni Theocharous (EPP) said she was disappointed with the solidarity that never arrived for Cyprus, while Antigoni Papadopoulou (S&D) said the solution decided upon was punishment described as aid for reconstructing the economy. How on earth can growth in Cyprus be sustainable without the country's biggest source of growth, asked Kyriacos Triantaphyllides (GUE/NGL). The Cypriot economy is based on its financial industry, which is about to be slashed back. Daniel Cohn-Bendit (Greens/EFA, Germany) said that the Cypriot bailout was an opportunity to re-unite the island and said that gas reserves could provide a solution.
Just a symptom? A number of MEPs said the Cypriot crisis was simply a symptom of a wider illness within the eurozone. The euro's troubles are far from over, warned Laurence Stassen (non-attached, Netherlands), pointing to the low growth forecasts and regretting the way European leaders refused to admit that the problem lay within the euro itself.
The MEPs urged the European Commission to come up with proposals to do more to tackle the crisis and to give the EU the tools it needs to prevent and respond to bank crises. Calling for permanent solutions, Verhofstadt said a bank resolution system was needed, based on an EU bank resolution fund financed by the banks themselves so that taxpayers would not be expected to fork out again in the future. Gauzès called for the introduction of a genuine banking union. EU Internal Market Commissioner Michel Barnier said the right lessons had to be learnt because the Cypriot crisis had been caused by not enough supervision of the banks.
Euro Commissioner Olli Rehn echoed comments by Cypriot Finance Minister Harris Georgiades that the blame game had to end, but admitted that mistakes had been made. He said the Commission's preferred scenario was a gradual adjustment of Cyprus' bank system and economy, but this had faced financial constraints because the eurozone had refused to lend any more than €10 billion in order to be sure it would get its money back.
Rehn said that the Commission had warned Cyprus in 2011 that international financial aid would probably be necessary, but Nicosia waited until June 2012 before asking for help. He said the solution decided upon would help the country return to economic health and create a more sustainable economic model. The Commission says it will do all in its power to ease the negative social impact of the economic crisis, added Rehn. (EL/transl.fl)