BACKGROUND:Minister was reasoned and philosophical as he bowed to the inevitability of a bailout, writes HARRY McGEE
THE LETTER, which is considered and reasoned, was sent on Sunday, November 21st, the day the Irish government finally bowed to the inevitable and acknowledged that Ireland could no longer exercise its sovereignty but had taken the “grave and serious decision” to accept a bailout.
It is clear that its author, the late Brian Lenihan, put a lot of thought into it. Its publication by the online news site thejournal.iegives new insight and a full picture of all the events that surrounded that traumatic moment for the country.
Early last month, the political editor of this newspaper, Stephen Collins, published details of the other side of the equation, a series of three letters from then president of the European Central Bank Jean-Claude Trichet to Lenihan, applying extraordinary pressure on the government.
The final letter of November 19th insisted that Ireland should apply for a bailout or risk the country’s banks being cut off from access to support. At that stage it was academic for, notwithstanding the government’s increasingly frantic denials, the governor of the Central Bank Patrick Honohan had intervened to say that Ireland would apply for a bailout.
Still, Lenihan’s letter amounts to a strong defence of all the actions the government had taken since the banking crisis first erupted here in September 2008. He seems to place the blame for the final descent on extraneous events – the Greek debt crisis; sluggish global recovery – which all conspired to drive market sentiment into negative overdrive, especially about countries such as Ireland that had been left exposed by the banking crisis.
In an explanation of how it all came to a head that November, Lenihan becomes partly philosophical: “There comes a point at which negative sentiment starts to feed on itself, even independently of underlying realities, and we are clearly at that point,” he wrote.
The Department of Finance has refused to release some of the other correspondence relating to this period under Freedom of Information laws. With so much now released into the public domain, the case for releasing the remaining correspondence is strong.