Jean-Claude Trichet and the Irish bailout: A timeline
From moment of bank guarantee, Ireland’s economic fate was tied to troika
Former taoiseach Brian Cowen and then minister for finance Brian Lenihan at a briefing on public spending measures in Dublin in 2008. Photograph: Matt Kavanagh/The Irish Times
September 29th-30th 2008:
With Anglo Irish Bank and Irish Nationwide Building Society on the brink of collapse, and liquidity in the wider Irish banking system drying up, the government puts in place a “guarantee arrangement” to safeguard all deposits, covered bonds, senior debt and dated subordinated debt with Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.
October 2nd 2008:
All government ministers are ordered to come up with additional cuts in departmental spending following the publication of official figures showing a continuing collapse in tax revenues. The exchequer deficit has reached €9.4 billion and the tax take is behind projections made at the start of the year. Taoiseach Brian Cowen says the government will make the necessary decisions to stabilise the public finances or there will be “catastrophic consequences”.
February 26th 2009:
European Central Bank (ECB) president Jean-Claude Trichet says “hard decisions” will have to be taken to overcome the “severe challenges” facing the Irish economy. During a visit to Dublin, he says he is “optimistic” about the prospects for the Irish economy, but cautions that the government must adopt an economic policy that “convincingly reduces future public deficits” and recovers lost competitiveness.
January 14th 2010:
While praising the government’s efforts to stabilise the economy to date, Trichet says further action is required to recalibrate the economy and reinforce competitiveness. He singles out Ireland and Greece as countries in which more structural reforms are required to foster employment and growth.
September 2nd 2010:
Trichet says the Irish government alone is responsible for dealing with the mounting costs of supporting the now nationalised Anglo Irish Bank. He declines to discuss escalating concern that the rising cost of the Anglo bailout, which stands at €25 billion, is creating an intolerable burden on taxpayers and undermining market confidence in the government’s overall economic plan.
September 27th 2010:
The ECB declines to comment on a report in a leading German business newspaper that says the bank considered activating a rescue scheme for Ireland but decided against going down that road. A spokesman for the Department of Finance dismisses the report, saying it has no basis whatsoever in fact.
November 4th 2010:
Trichet moves to shore up confidence in the government’s economic plan as Irish borrowing costs spike to a new record. He tells reporters the Cabinet’s decision to front-load the €15 billion four-year austerity plan with a €6 billion package next year is of “extreme importance”, and emphasises the requirement for the Irish authorities “to be alert permanently” as they try to balance the books.
November 13th 2010:
The government again insists it neither needs nor is discussing financial aid and denies reports the European Union and Germany are pressing it to accept emergency funding.
November 18th 2010:
EU and IMF negotiators arrive in Dublin to intensify talks on a rescue plan for Ireland. As pressure builds from Europe for an immediate application for external aid, Dublin campaigns to minimise any funding it draws down in a bid to ensure the terms are not too onerous. Negotiators on the other side are keen to determine the exact scale of the funding requirement for the banks.
November 19th 2010:
Trichet writes to Brian Lenihan and explicitly threatens to cut off emergency funding from the Irish banking system unless Ireland immediately applies for a bailout and agrees a programme of austerity and bank recapitalisation.
November 21st, 2010:
Brian Lenihan writes to Trichet, the IMF and the European Commission “to formally apply for financial assistance in the context of a joint EU-IMF programme”. He says: “The external assistance sought is made under the terms of the European Financial Stability Mechanism, the European Financial Stability Facility, and the IMF assistance programme.”
November 29th 2010:
Ireland enters the bailout programme as the EU and the government announce they have agreed the State will be provided with €85 billion in financial support.
February 3rd 2011:
Trichet urges Irish political leaders to proceed with the agreed terms of the rescue plan. His comments come as Fine Gael and Labour say they want to renegotiate key elements of the deal. Trichet says the ECB view is that the execution of the rescue package is absolutely essential for Ireland’s credibility.
April 22nd 2011:
Brian Lenihan claims the ECB forced Ireland into taking a bailout and rejects claims by a senior ECB figure that the bank warned Ireland in mid-2010 of the dangers it faced.
July 21st 2011: Taoiseach Enda Kenny announces the cost of Ireland’s international bailout is to drop by up to €800 million after euro zone leaders agree a larger cut than anticipated in the interest rate on rescue loans.
September 8th 2011:
Trichet rules out supporting Minister for Finance Michael Noonan in his push to avoid repaying some of the debt owed by Anglo Irish Bank and Irish Nationwide Building Society.
September 16th 2011:
EU finance ministers sign off on a package of interest rate cuts on Ireland’s bailout which deliver savings of up to €10 billion.
October 6th 2011:
Trichet chairs his final rate-setting meeting of the ECB before handing the keys over to the Italian Mario Draghi. Trichet says of his time: “We were never in calm waters.”
September 4th 2012:
Trichet, now former ECB chief, challenges the argument that the bank pushed Ireland into its bailout programme against the wishes of the then government. “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,” he says.
October 13th 2013:
As Ireland nears the end of the bailout programme, ECB president Mario Draghi praises the State’s efforts to repair its public finances and banking sector saying the country has improved “on all fronts” since the financial crisis.
December 15th 2013:
Taoiseach Enda Kenny marks the end of the State’s three-year troika bailout programme in a televised address to the nation. The State received the last tranche of funds from the €85 billion loan two days earlier when Michael Noonan branded Irish citizens as the “real heroes and heroines” of the story.
November 6th 2014:
The Irish Times publishes the letter from Trichet to Lenihan in which the ECB explicitly threatens to cut off emergency funding from the Irish banking system unless Ireland immediately applies for a bailout.