Trichet: I did not force bailout on you

Former European Central Bank president Jean-Claude Trichet has insisted he did not “blackmail” Ireland into the November 2010 bailout, claiming he “simply gave advice” that, if the move was rejected, vital funding would immediately dry up.

The former high-ranking official also denied telling the late Brian Lenihan or current Finance Minister Michael Noonan that under no circumstances should they burn the bondholders, and insisted he has “no memory” of ordering Mr Lenihan not to let any bank fail before the September 2008 guarantee.

Mr Trichet made the comments at a hotly anticipated meeting with the Oireachtas banking inquiry, which has been dogged by controversy due to the fact that he refused to meet the cross-party group at Leinster House.

Instead, the meeting was held at the Institute of International and European Affairs in Dublin during a separate lecture on Ireland’s recovery, with inquiry members asked to join the audience and limited to eight minutes of questioning each. — including questions which Mr Trichet had in advance.

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Speaking at the meeting, the ECB head from 2003 to 2011 repeatedly contradicted previous comments from Mr Lenihan and Mr Noonan that Ireland was effectively forced into a series of financial measures throughout the economic crisis.

He told Labour and Fianna Fáil senators Susan O Keeffe and Marc MacSharry he has “no memory” of leaving a voicemail for Mr Lenihan two days before the September 29, 2008, bank guarantee in which the late former finance minister said he was told “no bank should fail”.

Mr Lenihan previously revealed the phone call in a TV interview before his death. However, Mr Trichet said “there was no call from me to Brian” and that “it would not have been in line with what we were doing at the time”.

He said he only found out about the bank guarantee “through the media” and while he understood it was necessary the ECB wanted a “political” and not a “legal” guarantee.

On whether Ireland was forced into the November 2010 bailout, Mr Trichet said this was not within the ECB’s power and he simply informed Mr Lenihan in a letter that funding would immediately dry up if Ireland did not accept the move.

He said this was “advice”, and denied Socialist Party leader Joe Higgins claim it amounted to “blackmail”.

“Sir, we helped Ireland more than any other institution. What we have done for Ireland was far more than any other country. Brian was thanking me for the help, it was the contrary of what you have said,” he said.

Mr Trichet also denied claims that he prevented Finance Minister Michael Noonan from burning the bondholders, saying there was a “broad consensus” against such a move and that doing so would have made the Irish situation even worse — confirming he said a fiscal bomb would go off in Dublin if the step was taken.

Mr Noonan has repeatedly said Mr Trichet blocked the move.

Senator Sean Barrett (Ind), said Mr Trichet’s evidence was “an unacceptable shirking of responsibility”.

However, the former head of the ECB issued a staunch defence of the bailout, saying it was not possible to continue to give Ireland unlimited credit — which at its peak was the equivalent of 100% of the country’s GDP.

He said the bailout caused the “rapid rebound in confidence in the Irish economy” and has made Ireland the “major success of the very traumatic adjustment countries had to go through”.

READ MORE: Trichet regrets nothing about ECB ‘advice’ during crisis

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