Trichet reiterates opposition to Irish debt restructuring

 

EUROPEAN CENTRAL Bank (ECB) chief Jean-Claude Trichet has reiterated his opposition to any debt restructuring by Ireland, saying the terms of the EU-IMF bailout plan for the State have been approved by “the entire world”.

Mr Trichet’s remarks before a committee of the European Parliament come against the backdrop of demands for the renegotiation of key elements of the deal by Fine Gael and Labour, which hope to be in government within weeks.

The ECB president is a powerful figure in the Irish scene in light of the bank’s huge financial support for Ireland’s mostly nationalised banks and for the National Asset Management Agency (Nama).

Responding to an MEP’s question after making a presentation in his capacity as chairman of the newly established European Systemic Risk Board, Mr Trichet said the requirement on the Irish authorities to “apply the programme” as agreed has not changed.

As top ECB officials closely observe the Irish election campaign, this was the second time in five days that Mr Trichet made the case against any restructuring of Ireland’s debt. He relayed the same message last Thursday immediately after the monthly meeting of the bank’s governing council.

In Brussels yesterday, Mr Trichet said the Irish rescue plan and that of Greece did “not comprehend” the notion of bondholders being compelled to take a “haircut” on their investments.

Ireland entered an €85 billion EU-IMF programme last November and Greece was bailed out to the tune of €110 billion last May.

“We have plans. The plans have to be executed, have to be implemented in the best fashion possible as has been the case the world over and it is very, very important in my opinion not to confuse things,” he said.

“Those plans have been approved. They have to be implemented and I expect that the working assumption of the international community, not only the European, according to which they will demonstrate their capacity to adjust, after having behaved in a very improper manner, will be progressively convincing.”

Mr Trichet said it would take time for both countries to restore their credibility on the markets and added that investors who make bets against the euro zone should not be rewarded.

“Modern markets are made of investors that are long and investors that are short. The investors that are long, private sector investors, are losing money when you practice this haircut you have mentioned. Those investors that are short are making money, so this is also something that one must have in mind when reflecting on this very, very important issue.”

It was for both countries to prove, quarter after quarter, that they were executing their commitments.

“The message is very simple: apply the programme, as is being done all over the world in many, many, many numerous cases. It is the message we have for the Greek government. In Ireland, it’s exactly the same,” he said.

“We have a programme, approved by the international community, approved by the IMF board, the entire world, approved by the European [Union], approved and financed by the IMF and the European [Union].