The Dutch finance minister, who announced a tax on depositors in Cyprus, suggested as much on Thursday. Under a barrage of questions from puzzled and attention-seeking lawmakers in the European Parliament, he accepted blame for the agreement on the tax.
The decision to impose the levy on small depositors “was not stopped by me because it was a compromise which brought together the different interests and the different goals that we share,” said Jeroen Dijsselbloem, president of the group of finance ministers whose 17 countries use the euro. “As the Eurogroup president, I will take responsibility,” he said, but added that the levy was “a joint decision.”
“Whether we are incompetent or not, I’ll leave up to you to judge,” he told lawmakers at a scheduled hearing that turned into an accounting for the turmoil after the announcement, which frightened savers by proposing to tax their deposits and raised additional doubts about the viability of the euro currency.
Further complicating matters, Nicos Anastasiades, the newly elected Cypriot president, involved in negotiations last Friday night, blocked a proposal to lower the tax on small depositors, fearing that a higher tax on bigger depositors would cause them to flee and hollow out the island’s vital financial services sector.
Mr. Dijsselbloem said that he should have “communicated more right from the start” on why the levy — particularly on deposits of less than 100,000 euros, or $130,000 — should not be seen as a threat to savers across Europe. He insisted that there had not been “a huge loss of confidence” in a blocwide rule that guarantees deposits up to 100,000 euros.
As the Cypriot Parliament postponed until Friday a vote on fresh proposals, Mr. Dijsselbloem said that a levy on deposits was inevitable to help cover the cost of a bailout, but that a revised arrangement should put a greater burden on richer depositors.
Mr. Dijsselbloem, 46, was elected just two months ago as president of the euro zone group, succeeding Jean-Claude Juncker, the prime minister of Luxembourg and a seasoned participant of European politics, who had held the post since 2005. He cuts a youthful figure among the graying cadre that keeps the machinery of the European Union running.
Dutch officials characterize Mr. Dijsselbloem as a gutsy and gracious politician. He remained cool Thursday under a sustained attack. But he has had little experience at the top levels of government or European affairs, having assumed the finance portfolio, his first Dutch cabinet post, late last year.
Mr. Dijsselbloem, whose Eurogroup term lasts two and a half years, immediately quickened the metabolism to the group by announcing meetings on his Twitter account and calling ministers to Brussels earlier in the day with the goal of ending meetings earlier.
The initial results were mixed.
The decision on the levy was announced after what participants characterized as a rancorous and chaotic 10-hour meeting that also involved the European Central Bank and International Monetary Fund — two members of the so-called troika that includes the European Commission and helps set the terms of euro zone bailouts.
Sharon Bowles, a British member of the European Parliament who leads its Economic and Monetary Affairs Committee and introduced Mr. Dijsselbloem on Thursday, said she did not want to go “too much on a witch hunt,” but demanded to know how plans to tax small depositors had gotten so far.
“I know that you can get around it, calling it a wealth tax, or a levy or whatever,” Ms. Bowles said. But, she said, many citizens across the European Union had “a lot of concern” and wanted to know: “Is this a new tool in the toolbox? Are they safe? And what is to be expected?”
She suggested that Mr. Dijsselbloem’s presentation had been clumsy and should have included “more sensitivity” to concerns about whether the 100,000-euro deposit guarantee was still valid. She noted that he had waited two days to issue a second, clarifying statement.
Mr. Dijsselbloem conceded errors.
“Of course we should have spent more time, more wording, right from the start, on the distinction between a one-off wealth tax, a contribution, etc., which is a completely different thing” from the blocwide deposit rule, he said.
In seeking a solution for Cyprus, Mr. Dijsselbloem has faced the reluctance of Northern European nations, including his own, to give money to a divided island in the eastern Mediterranean and to save a banking system that has long benefited Russian investors. Many lawmakers, particularly in Germany, suspect those investors of involvement in money laundering.
The Cypriots have stoked concerns by seeking to protect a banking sector that José Manuel Barroso, the president of the European Commission, said Thursday was based on “an unsustainable financial system that is basically eight times bigger than” the island’s gross domestic product.
Derk Jan Eppink, a Dutchman elected to the European Parliament from Belgium, needled Mr. Dijsselbloem over allowing the Russians to help decide the fate of Cyprus.
Tens of thousands of Russian citizens live on Cyprus, and Moscow has a strategic interest in the island because of its proximity to its ally Syria and because of newly discovered offshore gas reserves.
The danger now is that “Putin is going to keep you dangling,” Mr. Eppink said, referring to the Russian president, who denounced the weekend bailout proposal. Now, Mr. Eppink warned, “Russia will exert influence over Cyprus.”
Article source: http://www.nytimes.com/2013/03/22/business/global/eurogroup-chief-takes-some-blame-for-cyprus-crisis.html?partner=rss&emc=rss
