Brussels, 07/05/2013 (Agence Europe) - The European Parliament's economic and monetary affairs committee was left disappointed on Tuesday 7 May after the hearing of the head of the Eurogroup, Dutch Finance Minister Jeroen Dijsselbloem, who had come to be quizzed about the eurozone's treatment of Cyprus.
As far as Dijsselbloem is concerned, the bailout of Cyprus set up by the eurozone and International Monetary Fund (IMF) would help the island put its economy on a sound basis and return to growth. Jean-Paul Gauzès (EPP, France) said that hearing the Dutch minister talk, it was as if everything had been totally predictable and there hadn't been any “collateral” damage.
The MEPs were also critical of the timing and delays in dealing with Cyprus. Markus Ferber (EPP, Germany) said that waiting until a country is on the brink of collapse and unable to pay before reacting certainly didn't look to him like a long-term strategy. Commenting on this, Dijsselbloem admitted that a large number of problems could and should have been dealt with earlier. When the problems first arose in 2011, it hadn't been possible to come up with a programme because the Cypriots had managed to get a loan from Russia, he said, and this situation had given Cyprus some breathing space to protect themselves against any bailout programme, but a programme finally had to be imposed in 2012. Sylvie Goulard (ADLE, France) tartly told him that mutual surveillance had been part of the EU rules “for years now”.
Leonardo Domenici (S&D, Italy) wanted to know what the eurozone was doing in practice to re-build the Cypriot economy. Dijsselbloem said this question must be the priority for the Cypriot government with the help of the European Commission, and that a more gradual restructuring of Cypriot banks, which would have had less of a negative impact on the real economy, would have been “more complicated”.
Dijsselbloem said the bailout programme was the nub of the problem and the eurozone had felt that the problem should be addressed where it had arisen, with the banks. The two biggest Cypriot banks had big problems and the cost of bailing them out was beyond Cyprus' means. The head of the Eurogroup said that, if the eurozone had given Cyprus a bigger loan, then the island would have found itself dependent and would never have been able to pay off the loan. The raid on savings of above €100,000 would then have been needed - the very people who had benefitted from the risks taken by the banks.
Asked whether Cyprus should be given some compensation for the losses it had suffered from the writedowns of the Greek debt, Dijsselbloem said no, adding that the Cypriot bank system had been trying to make big profits from very risky deals.
Banking union. Learning from the crisis, the Eurogroup head called for banking union to be put into practice. If it had existed a few years ago, he said, then Cyprus' problems could have been avoided. Gauzès said that the European Parliament had suggested this back in 2010 and it had been the ministers who had rejected it!
Bringing the hearing to a close, the committee chair, Sharon Bowles (ADLE, UK), regretted that Dijsselbloem hadn't answered all the questions posed by MEPs, warning him that they would keep on asking the same questions. It will be the turn of Euro Commissioner, Olli Rehn, and ECB member Jörg Asmussen, to be grilled by the same EP committee on Wednesday. (EL/transl.fl)