Eurogroup chief Jeroen Dijsselbloem took responsibility for the rejected Cypriot bailout plan, adding that it was a “joint decision” in the Economic and Monetary Affairs Committee on Thursday. He also told MEPs he doubted that there really was a possible ‘Plan B’. MEPs were severely critical of the way in which events had panned out over the weekend, with most insisting that that it was preposterous to tax small savers and that mistakes had been made on all fronts.
In a meeting that had long been planned as the new Eurogroup President’s first hearing in the European Parliament, MEPs focused almost exclusively on developments in Cyprus. Mr Dijsselbloem was however also asked about his plans to address Eurozone imbalances, the role of parliaments in the EU’s new economic governance, and whether he would be as tough on larger countries flouting the EU fiscal rules as the Eurogroup seemed to be on smaller ones.
Committee chair Sharon Bowles (ALDE, UK), opened the questioning by asking when it had first become clear to Mr Dijsselbloem that the deal being proposed to Cyprus was a bad one. She also asked for a clear rundown of how events between Friday evening and Saturday morning.
Harshest of all was Nikolaos Chountis (GUE/NGL, EL) who asked Mr Dijsselbloem, “Is the Eurogroup simply incompetent, or does it have ulterior motives behind what it did regarding Cyprus?”
The only positive certainty is gone
Many MEPs said the Cypriot decision to reject the plan had severely affected people’s confidence in the only certain element throughout the banking crisis. “The guarantee of €100,000 was the only source of hope for people in this crisis. This confidence has been shaken”, said Elisa Ferreira (S&D, PT). Dirk-Jan Eppink (ECR, BE) asked who exactly had sought the contribution from small savers.
Mr Dijsselbloem reiterated that the plan did not legally undermine the deposit guarantee scheme, because it was a tax. Jean-Paul Gauzès (EPP, FR) took the same line, arguing that this had been badly communicated. Mr Dijsselbloem did admit that “We should have spent more time on Saturday morning planning how to communicate this better”. MEPs insisted that the perception was now “out there”, the guarantee scheme was in danger and legalistic arguments would help little.
“I take responsibility for the levy but in the end it was also a joint decision”, Mr Dijsselbloem replied. “This levy made sense because other alternatives would have made Cyprus’ debt unsustainable”, he added. Bas Eickhout (Greens, NL) said that even if a compromise had to be reached, it should have been Mr Dijsselbloem’s responsibility to prevent a levy on deposits below €100,000.
Mr Dijsselbloem also explained at length that the levy on deposits proposed for Cyprus would not become a template. “The problem in Cyprus is very, very specific”, he said.
Bank crisis turns geo-political
“A Russian solution would not be a good one”, warned Corien Wortmann Kool (EPP, NL). This view was shared by many MEPs and also Mr Dijsselbloem, who said that more Russian money now would not help Cyprus in the long run. Other MEPs warned against underestimating Russia’s ulterior motives for stepping in.
“What is your reaction to the ECB’s ultimatum that, with no deal by Monday, it would stop providing emergency liquidity assistance to Cypriot banks?” asked Sophie Int’Veld (ALDE, NL), referring to an ECB statement on Thursday.
“This is not a question of threats. The ECB is doing all it can within its mandate. It can only provide assistance to banks if there is a programme”, Mr Dijsselbloem replied.