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Updated 3.25pm
THE EUROPEAN CENTRAL Bank told Ireland to take a bailout or face losing emergency funding, according to a four-year-old letter published for the first time today.
The 2010 letter from then-European Central Bank president Jean-Claude Trichet to then-Finance Minister Brian Lenihan is carried in today’s Irish Times.
Sent on 19 November 2010, it says that the ECB would only continue to fund Ireland if they received “in writing a commitment” that Ireland would apply for a bailout.
The ECB has this afternoon published four previously unreleased letters between the ECB and Lenihan, including the 19 November 2010 one, following a meeting of its governing council.
In a statement the ECB claims that the letters and documentation show that it was not the Trichet letter that “pushed Ireland into the programme” but rather it was the scale of the domestic financial crisis.
“The documentation also shows that in the run-up to the application for support and throughout the Irish programme, the ECB has continued to support the Irish banking system and the Irish economy in an unprecedented manner,” the ECB said.
The letter from Trichet to Lenihan came just a day after Irish Central Bank governor Patrick Honohan had gone on Morning Ireland to say Ireland had no choice but to apply for a bailout.
It finishes by pressing Lenihan for a “swift response” before markets opened the following week.
The assessment of the Governing Council on the appropriateness of the Eurosystem’s exposure to Irish banks will essentially depend on rapid and decisive progress in the formulation of a concrete action plan in the areas which have been mentioned in this letter and in its subsequent implementation.
Speaking at a press conference earlier, current ECB president Mario Draghi, insisted: “The decision to ask for a programme was the government’s decision, it was not the ECB forcing the government to do this.”
“I think the four letters show exactly the sort of dialogue that took place between the government and the then president of the ECB Jean Claude Trichet. So for me there is very little to add to that.”
Up to now, requests to release the letter under the Freedom of Information act – including one made by TheJournal.ie – had been rebuffed by both the Department of Finance and the ECB.
On his way into a meeting of the Economic Management Council this morning, the Finance Minister Michael Noonan told reporters that the letter would be “vital” for the forthcoming banking inquiry.
Public Expenditure and Reform Minister Brendan Howlin said that the letter “will come as a shock to many people”.
Speaking today at Government Buildings, the Taoiseach Enda Kenny said that by the time the letter had been sent in November 2010, the country was already off track.
“I think that the root of our problem began at the 1997 election. At that stage, the country was lean, competitive and had a good cost base. But all was let go to the wind by the assumption that the country could be run on taxes from property.
“By the time the letter was sent, the government of the day and the central bank had been on Irish radio saying the IMF were in Ireland.
The die had been cast.”
Kenny said that the letter was a reminder of how far the country has come.
Tánaiste Joan Burton said that the letter was a reminder of the deceased Lenihan, whom she called “a personal friend”. She added: ”It brings it back in a very poignant way.”
At Leaders’ Questions, in the Dáil the independent TD Catherine Murphy claimed that the release of the Trichet letter was designed to ”knock Irish Water off the front pages of the newspapers”.
Burton said she hoped the release of the Trichet letters will “free up” some witnesses at the forthcoming banking inquiry “to speak more freely”.
Speaking to reporters at Leinster House, Fianna Fáil’s finance spokesperson Michael McGrath said the correspondence was a “clear, direct threat” from the ECB.
“What we had here was a powerful European institution in my view exceeding its mandate and essentially bullying a sovereign government into accepting bailout,” he said.
He said that the government should used the now-released correspondence “to strengthen our hand” in negotiations on seeking retrospective recapitalisation of Irish banks.
- additional reporting by Hugh O’Connell
First published 7.20am
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Meanwhile life goes on at Fukushima.
Only a matter of time when we will rue the day of nuclear power
I think the people of Pripyat already do.
Someday they will learn to handle it properly and safely…
“Someday they will learn to handle it properly and safely” — but what will the consequences be,
when they learn that?
It’s no trick being safer than coal. But what if it becomes safer than natural gas to provide the same power? Safer than natural-gas-plus-wind-turbines? It’s already less radioactively polluting than those systems.
When that superior safety shall be fact, a government that wants to take a billion dollars in natural gas severance taxes and/or royalties and/or import duties will have to accept the loss of some citizens to gas disasters in the bargain. If it allows nuclear energy to be used instead, those lives will be saved, but the billion will, from a civil service point of view, be lost: it will remain in private hands.
No-one will forthrightly deplore that result. Everyone’s official position will be that however good a few million dollars in tax revenue may be, it doesn’t justify an innocent citizen’s death.
But perhaps there will come to be a huge industry of denying that nuclear energy is a lifesaver, and of calling nuclear wrecks that harm no-one “nuclear disasters”.
Perhaps, eh?
Perhaps when the media makes accuracy the priority over profits.. but the scary word “nuclear” sells very well. The headline “Radiation from Fukushima has not caused any health effect” may be true, but it won’t catch peoples attention or sell advertising. They definitely don’t want people to know that fear of Fukushima radiation caused much more harm than the radiation itself, then they might be held accountable…….
Not a single person was killed when the water hit the Fukushima nuclear plant, in fact I have not heard of anyone even cutting their finger there. In comparison around 18,000 people from the surrounding area were swept away never to be seen again. But here on the Journal Fukushima is remembered as a a nuclear disaster. In the press hysteria trumps fact every time.
The tsunami left the enormous death toll,19000, not the incident at the nuclear power plant. The wording of this item is rubbish.
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