Former EU health commissioner John Dalli addresses reporters after his October resignation
It may not be as sexy as then-EU industry commissioner Günter Verheugen getting photographed on a nude beach with his female chief of staff. Or as consequential as research commissioner Édith Cresson getting caught putting her dentist on the EU payroll, which led to the entire Santer Commission stepping down. But the bribery scandal leading to the forced resignation of health commissioner John Dalli in October seems unwilling to go away.
The latest wrinkle in the affair – in which a close friend of Dalli’s has been accused of soliciting a €60m bribe on Dalli’s behalf – was sparked by Malta Today, the island’s weekly newspaper, which obtained the confidential report on the Dalli investigation conducted by Olaf, the EU’s anti-fraud office, and posted it on its website.
Although the report, which Commission officials confirm is authentic, says Olaf found “no conclusive evidence” of Dalli’s direct participation “as instigator or as mastermind” of the bribery scheme, it is full of ill-timed phone calls and secret meetings between Dalli and Silvio Zammit, his friend and accused bribe solicitor – enough, Olaf found, to conclude he may have violated the code of conduct for European commissioners:
[T]here are a number of unambiguous and converging circumstantial pieces of evidence gathered in the course of the investigation indicating that Commissioner John Dalli was indeed aware of the machinations of Mr Silvio Zammit and the fact that he was using his name and position to gain financial advantages.
Cypriot European Parliament member Takis Hadjigeorgiou protests during the bailout debate
Connoisseurs of the Brussels Blog, Cyprus and various forms of edible fruit will remember a tempest in a teapot that erupted last week over leaked documents we posted which appeared to show the total cost of the Cypriot bailout growing from €17bn to €23bn after the chaos following rejection of the first €10bn programme.
The dispute centred on whether the €17bn figure, used to determine the amount of new money Cyprus needed to pay for government operations and shoring up its teetering banking sector on the night the first bailout was agreed, was comparable to the €23n figure, which was included in documents produced after the second deal was signed.
Famously, Olli Rehn, the EU’s economic chief, said comparing the two numbers was akin to “comparing apples with pears and coming up with oranges”. But he didn’t detail what the reason for the discrepancy was. We took another look at the documents and figured that, if you compare apples to apples, the new figure was probably €20.6bn, for a €3.6bn difference.
Well, thanks to a senior European Commission official who walked us through the numbers – and the Dutch finance ministry, which recently posted updated programme documents on their website here, here and here – it turns out we were close. It’s actually €20.2bn. How do they get there? A quick rundown: Read more
France's Laurent Fabius, left, and Britain's William Hague co-authored the letter to Cathy Ashton.
[UPDATE] During Monday’s appearance with Kerry, which includes a town hall meeting with European Commission staff, Barroso is expected to announce a new “comprehensive package” of EU humanitarian aid for Syrian refugees, according to officials briefed on the initiative.
This weekend’s announcement by John Kerry, the US secretary of state, that Washington is prepared to double the amount of non-lethal aid it is sending to the mainstream opposition in Syria kicks off what is expected to be a busy week in Brussels on the issue.
Kerry is due in the Belgian capital for this week’s Nato foreign ministers’ meeting, where Syria will be debated, and officials familiar with Kerry’s schedule said there was even a discussion of his attending the EU foreign ministers’ meeting in Luxembourg on Monday. That has since been ruled out – though Kerry will meet with José Manuel Barroso, the European Commission president, on Monday ahead of the Nato ministerial.
Still, the Monday EU foreign ministers’ meeting will be the latest venue in the ongoing Franco-British effort to lift the EU’s arms embargo on the Syrian opposition. EU diplomats said they do not believe a definitive decision will be made at the meeting, but it comes just weeks before the entire sanctions regime is set to expire at the end of next month, so the deliberations are likely to become even more spirited.
For those looking to read up on the topic ahead of the Monday meeting, Brussels Blog has got its hands on the joint letter Laurent Fabius, the French foreign minister, and his British counterpart William Hague sent to Catherine Ashton, the EU foreign policy chief, last month arguing for a change in policy – we’ve posted it here, in both French and English. Read more
Rehn: critics of Cyprus bailout are "comparing apples with pears and coming up with oranges."
During a debate in the European Parliament this morning, Olli Rehn, the European Commission’s economic chief, got roughed up by MEPs lambasting the handling of the €10bn Cypriot bailout by the so-called “troika” of international lenders, of which the Commission is a member.
Jean-Paul Gauzés, the French conservative who led the debate for centre-right parties, called it “disastrous”; his centre-left counterpart, Austrian Hannes Swoboda, dubbed it “neo-colonial” and called on Rehn to disband the troika altogether.
In his response, Rehn chose instead to focus on remarks by Philippe Lamberts, a Belgian Green, who questioned why the size of Cyprus’ funding needs had risen by €6bn over the nine days between the first botched bailout agreement and the second, final deal struck the following weekend:
A month before this famous weekend, €17bn was necessary in order to render Cypriot debt sustainable. Now we found at last week it’s €23bn. Just a slight mistake, a comma here or there. Those who carry out the forecasts and estimates for you, are they incompetent…or was it: well, we’ll play around with the figures to make sure reality looks better than it really is?
Google’s three year tussle with Brussels over its search business is almost over. Our report today outlines the substance of its pre-charge settlement with the European Commission. Once formally adopted, it will allow Google to avoid a fine, any admission of guilt and a lengthy legal battle. But the price is accepting legally binding restrictions on how it can present its search results. Google has never yielded ground to a regulator on its prized core business before.
Given the space confines, we didn’t lay out all the details of the pact in the news piece. Some of it, as will become clear, is highly technical and not ideal weekend reading. For specialists we thought it would be useful to run through the full settlement taking each of the Commissions four concerns in turn:
THE SEARCH BUSINESS:
The concern: The Commission investigators provisionally concluded that Google was potentially diverting traffic to its own specialist, or vertical search services — like Google’s finance, news, shopping and weather sites — potentially to the detriment of consumers. Brussels alleged it 1) did not to inform users clearly when it was favouring its own in-houses services and 2) did not give proper visibility to rival search engines that may provide more relevant results.
The solution: As a principle Google promises to ensure its own in-house services are clearly labelled and demarcated from the general search results. Users should be “clearly aware” they are Google in-house services, not natural search results. Read more
Nicos Anastasiades, the Cypriot president, leaving bailout negotiations in March.
Remember when accusations of money laundering appeared to be Cyprus’ biggest problem? It was only a few weeks ago that Nicosia was pressured into agreeing an outside auditor to poke around its banks to ensure they are not havens for questionable Russian deposits.
Given the fact Cyprus’ two main banks have been either shuttered or drastically restructured as part of its €10bn bailout, it may now seem a moot point, but the 34-page draft “memorandum of understanding” between Cyprus and bailout lenders (a copy of which we’ve gotten our hands on and posted here) is holding Nicosia to the promise.
On page 6 of the MoU, Cyprus agrees to go forward with the audit, as well as an “action plan” to make clearer just who is behind the “brass plate” shell companies that offshore entities use to take advantage of the island’s low corporate tax rates: Read more
Prime minister Pedro Passos Coelho addresses the nation Sunday on Portugal's faltering bailout.
Although Cyprus has pushed its way back into the news, the main event at Friday’s meeting of eurozone finance ministers in Dublin is expected to be a decision on whether to give Ireland and Portugal more time to pay off their EU bailout loans.
We at Brussels Blog got our hands on the 12-page options paper prepared for the ministers by the so-called “troika” of international lenders – European Commission, European Central Bank and International Monetary Fund – and staff of the eurozone’s €440bn bailout fund, and have posted it here. The document contains five different options: extend the payment schedule a few months; by 2.5 years; 5 years; 10 years or more; or a compromise of 7 years.
As we reported earlier in the week, the debate is now centred on the document’s recommended option, the 7-year extension plan, though there are still reservations in Berlin about moving forward.
Beyond the options themselves, however, the document contains a very revealing analysis on the state of Portugal’s €78bn bailout, which has recently suffered some setbacks. As one official who will participate in Friday’s meeting put it, the topic of Portugal will be “more exciting than would have been a week ago”.
Although the document doesn’t address it directly, it makes clear that Portugal will have a very hard time avoiding a second bailout, since its financing needs in 2014 and 2015 – its first years after bailout funding runs out in July 2014 – will be substantially higher than they were during the pre-crisis period. Read more
At Friday’s gathering of eurozone finance ministers in Dublin, the so-called eurogroup is expected to give a “political endorsement” of the details of Cyprus’ €10bn bailout programme, according to a senior EU official.
Ahead of that meeting, documents related to that sign-off have begun to leak out, including the always-interesting “debt sustainability analysis” (which Brussels Blog got its hands on and posted here) and an equally intriguing document titled “assessment of the actual or potential financing needs of Cyprus”, which we’ve also posted here.
As our friends and rivals at Reuters first reported, the most unexpected thing in the documents is the revelation that Nicosia will help reduce its debt burden by selling off “the excess amount” of gold reserves held by the Cypriot central bank, which is expected to raise €400m.
But the details of the rest of what will be the “contribution by Cyprus” to the bailout may be more significant. It is spelled out in detail on page four of the second document and makes clear just how damaging the mishandling of the first bailout agreement was.
Originally, Cyprus was to contribute €7bn (€5.8bn from the now-infamous bank levy and the rest from a new withholding tax on investment profits) to the €17bn total cost of the bailout. Just over a week later, the amount Nicosia will contribute almost doubled, to €13bn, and the total price tag had increased to €23bn. Read more
Dijsselbloem, centre, at a press conference Monday announcing the €10bn Cyprus bailout.
The joint FT-Reuters interview with Dutch finance minister and eurogroup president Jeroen Dijsselbloem after the all-night talks to secure Cyprus’ €10bn bailout has caused a lot of discussion and debate. Dijsselbloem issued a statement after we published saying Cyprus is “a specific case with exceptional challenges” and that “no models or templates” will be used in the future.
To clarify what Dijsselbloem said, we’ve decided to post a transcript of the portion of the interview dealing with how the eurozone might deal with bank failures in the future in light of the Cyprus example.
The interview we conducted alongside Brussels bureau chief Luke Baker of Reuters lasted about 45 minutes, and the portion on bank resolution lasted for about 10 of those minutes. The interview started out with some Cyprus-specific questions – like how capital controls might work, whether Dijsselbloem had learned any lessons form the Cyprus experience – and then shifted to a discussion about whether north-south relations were hampering EU decision making.
That’s when Baker asked the first question about whether Cyprus set a precedent for future bank rescues:
Q: To what extent does the decision taken last night end up setting a template for bank resolution going forward?
A: What we should try to do and what we’ve done last night is what I call “pushing back the risks”. In times of crisis when a risk certainly turns up in a banking sector or an economy, you really have very little choice: you try to take that risk away, and you take it on the public debt. You say, “Okay, we’ll deal with it, give it to us.”