Trichet insists Irish agreed bailout

Wed, Sep 5, 2012, 01:00

FORMER EUROPEAN Central Bank chief Jean-Claude Trichet has challenged the argument that the bank pushed Ireland into its bailout programme against the wishes of the then government.

Amid controversy over the ECB’s actions in the run-up to the rescue two years ago, Mr Trichet said yesterday that all people in the top echelon of the government at that time recognised the requirement for external aid.

Mr Trichet was speaking on CNN television in response to an interviewer who said it was clear that he and ECB believed Ireland needed a bailout in light of its increased exposure to the Irish banking system.

“I think that the overall sentiment of all the responsible persons in Ireland, those who were at the helm, was that they really were needing some help in terms of help of the IMF and help of the other Europeans,” Mr Trichet said.

His remarks came days after The Irish Times disclosed new information about the pressure the bank brought to bear on the government, which culminated in an insistence that it apply for a bailout or risk losing emergency support for Irish banks.

He wrote three letters to the late Brian Lenihan, then finance minister, and spoke with him directly more than a week before the Fianna Fáil-Green coalition applied to the EU and International Monetary Fund for the bailout in November 2010.

Before his death last year, Mr Lenihan claimed that the ECB had betrayed Ireland by bouncing the government into the rescue programme.

Mr Trichet has already rejected that, saying in previous comments that the ECB sided with Ireland and provided unprecedented support for the country’s banks.

Although he was not asked by CNN about the perceived threat to cut emergency bank support, he said the letters to Mr Lenihan were part of a “permanent” correspondence with all euro zone governments.

“We had problems with a number of other countries, not only Ireland of course, but Greece, but Portugal and so forth, Italy, Spain.”

Mr Trichet said the letters to Dublin reflected the position of the ECB’s decision-making governing council and suggested they were similar to his contacts with the French, Italian and German governments when they breached EU budget rules in the last decade.

Asked whether he would agree to the release of the letters, he said there was nothing more to say than that they were confidential at the moment they were sent.

“These are not the only messages, as you might know, that the ECB from my voice – but it was the position of the governing council – sent to all governments,” said Mr Trichet.

“We were very, very uneasy with the position of France, Italy and Germany in 2003-2004 and I was privately very, very strong on that and also public.”