FORMER TAOISEACH John Bruton has taken issue with European Commission chief José Manuel Barroso for pinning blame for Ireland’s financial crisis on Irish institutions without recognising any failings by the EU institutions.
In Strasbourg last week, Mr Barroso responded to taunts from Socialist MEP Joe Higgins by saying Europe was “part of the solution” for Ireland and did not create the country’s problems.
Mr Bruton, a former EU ambassador to the US, said in a letter to Mr Barroso that his criticism of Irish failings was “fully justified” but did not reflect the entire story.
“You were right in the European Parliament to remind the Irish people of their recent policy failings, but you should tell the whole story, not just one side of it,” he said.
Mr Barroso should acknowledge that non-Irish central banks must share some responsibility for the debacle and that non-Irish commercial banks were being spared losses because Irish taxpayers were bailing them out, he wrote.
“I agree the main responsibility does rest with Irish institutions, the Irish Government, the Irish Central Bank, the Irish banks and the Irish individuals who borrowed irresponsibly,” he wrote.
It was also the case, however, that British, German, Belgian, American, French and banks of other EU countries lent irresponsibly to Irish banks in the hope that they too could profit from the construction bubble.
Mr Bruton’s letter – published on his website, johnbruton.com – said such banks had available to them all information about spiralling house prices in Ireland yet they still lent money.
“These banks . . . were supervised by their home central banks, who seemingly raised no objection to this lending, which was so ill-advised.”
Mr Bruton said the commission had some responsibility for supervising the Irish economy and that it too had full information.
“You ought to have acknowledged that responsibility of your own institution, which the commission shares with Ecofin,” he said, referring also to the European Council of finance ministers.
“What did the commission do at the time about the Irish housing bubble? What did the ECB do? Nothing very effective, it seems. Some reflection on that would be appropriate to accompany your fully justified criticism of Irish failings.”
He continued: “The fact also is that interest rates in Ireland were too low in the first years of the euro. They were kept low by the ECB because of the needs of other EU countries, which were not booming in the 2002 to 2007 period as Ireland was.
“That is also, in part, a European responsibility, although, of course, the Irish authorities should have found other measures to compensate for the fact that the ECB was pursuing interest rate policies that were unsuitable to Ireland.”
Ireland’s bank guarantee may have prevented a Europe-wide banking collapse in 2008, Mr Bruton wrote. “You did not refer to that possibility at all. Do not forget Credit Anstalt in 1931, or Lehman Brothers in 2008.”
A spokesman for Mr Barroso declined to comment.