Inquiry to make decision over ECB letter

Tue, Aug 28, 2012, 01:00

MINISTER FOR Finance Michael Noonan has said it will be for a forthcoming parliamentary inquiry into the financial crisis to decide whether to publish a letter from November 2010 in which the European Central Bank raised the prospect of Ireland seeking a bailout.

The letter to the late Brian Lenihan from then ECB chief Jean-Claude Trichet is known to have contained at least an implicit threat that ECB support for Ireland’s banks would be at risk if the Fianna Fáil-Green coalition did not immediately seek an EU-IMF rescue.

Although EU leaders were already making preparations for an Irish bailout at that time, the then government believed Mr Trichet’s letter narrowed its options considerably.

In Mr Lenihan’s account, the letter “raised the question about whether Ireland would be participating in a [bailout] programme at that stage”. Mr Lenihan claimed the ECB betrayed Ireland, which the bank strongly rejected.

The ECB, which is opposed to the public release of the letter, declined to comment yesterday on Mr Noonan’s declaration that the Government will give it to the inquiry.

The Government will initiate the inquiry this autumn, but Mr Noonan said there was no decision yet on which Oireachtas committee would conduct it or whether an “entirely new committee” would be established.

“All documents will be provided to whatever group or unit or individuals that are conducting that inquiry and again in the usual way it will be a matter for that inquiry to decide what documents they would subsequently publish with that report,” he said.

Asked about demands for the immediate release of the letter, he said Fianna Fáil had plenty of opportunities to publish it when in government.

Mr Trichet’s letter led to heightened tension with Dublin as the then taoiseach Brian Cowen had been urging the ECB to buy Irish bonds to calm market turmoil.

The ECB refused and, amid anxiety about its own exposure to Ireland’s banks, was concerned that the Cowen administration was not facing up to its problems.

In a letter last February to journalist and blogger with thestory.ieGavin Sheridan, Mr Trichet’s successor Mario Draghi said publication was not in the public interest.

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