Cyprus Mail
Cyprus

EP team probes troika legality

EP Vice President Othmar Karas

By Stefanos Evripidou

A DELEGATION of the European Parliament (EP) arrived yesterday as part of a probe into the legality, democratic legitimacy and impact of the troika of international lenders tasked with bailing out troubled members of the Eurozone.

Members of the EP Committee on Finance are visiting all the bailed-out countries of the Eurozone made to implement adjustment programmes (Ireland, Portugal, Greece and Cyprus), in a bid to compile a report proposing changes for the future.

In statements made to the European People’s Party EPP TV on Wednesday, EP Vice President and co-rapporteur Othmar Karas said the problem with the troika, made up of the European Commission, European Central Bank (ECB) and the International Monetary Fund, is that it is “not based on community law”.

It’s the role of the EP to say very clearly that no European decisions should be taken “without the European Parliament which is the chamber of the citizens”, he said.

The aim is for the EP to reach its conclusions on the troika’s involvement in the handling of the Eurozone crisis by March, ahead of the EP elections in May.

Karas said the report will make a good basis for treaty changes in the future.

“We need a balance more than we have; a balance between fiscal consolidation, structural reforms and incentives for growth and employment,” said the Austrian MEP, noting that this was the EU’s social model.

To achieve that, the EU needs time, European instruments, a better and more efficient Europe, more responsibility and solidarity, and a Treaty change, he argued.

The delegation also includes Socialist MEP Liêm Hoang Ngoc, Liberal MEP Nils Torvalds and United Left MEP Jurgen Klute. They will have meetings with House President Yiannakis Omirou and the parliamentary committees on foreign and European affairs and on finance and budgetary matters.

The delegation is also due to meet with central bank governor Panicos Demetriades, undersecretary to the president Constantinos Petrides, former finance ministers Michalis Sarris and Vassos Shiarly, members of the committee of inquiry on the economy as well economists, representatives of the banking and business sectors and former depositors and shareholders of the Bank of Cyprus (BoC) and Laiki (Popular) Bank.

The EP delegation has already visited Lisbon, while after its visit to Nicosia it will travel to Athens and Dublin.

Meanwhile, the EP has called EU Commissioner for Economic and Monetary Affairs Olli Rehn to speak before the parliament next week, as well as former head of the ECB Jean-Claude Trichet and head of the European Stability Mechanism Klaus Regling.

Cyprus agreed with international lenders on a €10bn bailout last March, which featured a haircut of 47.5 per cent on deposits over €100,000 in the BoC and a near wipe out of uninsured deposits in Laiki, in a bid to cover the capital shortfall of the island’s two largest banks.

The BoC, the island’s largest lender, absorbed the “good part” of Laiki, as well as Laiki’s €9bn debt to the ECB. The Co-operative Movement, on the other hand, was able to use €1.5bn of the Cyprus bailout money to meet its own recapitalisation needs.

The bailout also introduced capital controls for the first in the Eurozone.

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