ECB bailout pressure details belong in public domain

In her review of O’Rourke’s book in last Saturday’s Irish Times, Geraldine Kennedy dismissed O’Rourke’s assessment that there was “a potential conflict of interest between what was good for Ireland and what was good for the ECB”. In so doing Kennedy was too hasty. It may not sit comfortably with the embedded notions of the heroes and the villains in these events but it requires further consideration.

For my own part, as someone who spoke to Lenihan about the political dimensions of these events, I would make the following observations.

Lenihan had long foreseen that Ireland was likely to require some kind of bailout and expected it would come in spring or summer 2011. He and then taoiseach Brian Cowen were subject to intense private pressure from the ECB in the lead-up to Friday, November 12th, 2010. This pressure came in the form of the letters published recently by Stephen Collins in this newspaper.

However, it also came in a series of at times heated telephone conversations. Lenihan and Cowen resisted this pressure, arguing that the ECB should do its job as bank of last resort and that the worsening European crisis should be addressed by a European-wide response.

Having failed to force the Irish government’s hand privately, the ECB leaked the suggestion that Ireland would go into a bailout in order to publicly bounce it into doing so.

Although recognising the inevitable, Lenihan resisted pressure for an express acknowledgment of this in order to shore up Ireland’s already weak negotiating position. In particular he was anxious to ensure that the troika would accept the Irish government’s four-year recovery plan.

He expressly cautioned some of the ministers doing media that weekend to be careful how they dealt with the question of whether Ireland would seek a bailout.

Lenihan strongly resented Honohan’s actions in putting himself on Morning Ireland “announcing” the bailout application. He saw it as being in the ECB’s interests but not to the benefit of Ireland’s position.

After he left office in the spring of 2011 Lenihan rejected suggestions from some that he should get his version of these events and the relevant documents into the public domain either on or off the record.

He was anxious to do nothing that would strain relations between the new government and the ECB.

At this stage, however, as the Government seeks to renegotiate our bank debt, the extent to which Ireland was pressurised into a bailout in November 2010 is very relevant. Those who know the full circumstances should put them in the public domain.