ECB letter to Lenihan likely to be published

Michael Noonan has signalled that a 2010 ECB letter reportedly forcing a bailout upon Ireland will eventually be published.

The letter to Mr Noonan’s predecessor as finance minister, the late Brian Lenihan, was sent on Nov 19 of that year — just two days before the then government accepted the EU-IMF-ECB bailout.

In the letter, the then ECB president Jean Claude Trichet is said to have threatened the withdrawal of liquidity assistance from Irish banks unless the government entered such a programme.

The ECB has since refused to release the letter, as has the Department of Finance, and attempts to secure it through Freedom of Information legislation have failed.

Pressure has been growing on the Government in recent weeks to release the letter, after leading economists argued it should be in the public domain.

Mr Noonan has now signalled that he favours the letter’s release to the likely banking inquiry that will be established in the coming months.

“The banking inquiry that has been signalled to me seems like an appropriate place to release this letter, which I’m sure would be very helpful to it,” Mr Noonan told the Sunday Independent. The minister said he had seen the letter, that it was “very direct”, and had left Mr Lenihan with “little or no option” but to accept a bailout.

Fianna Fáil finance spokesman Michael McGrath welcomed Mr Noonan’s comments but called on him to publish the letter immediately.

“Minister Noonan should now press ahead and publish it. I understand the letter was interpreted as a threat to the late finance minister Brian Lenihan that the emergency liquidity assistance being extended by the ECB to the Irish banks would be withdrawn if a bailout was not accepted.

“The terms of this bailout included an ECB insistence that senior bondholders would not lose one cent on the tens of billions of euro they were owed by bust Irish banks. Essentially, we had a situation where the central bank of the 17 member-state eurozone was pointing a loaded gun at the Irish government in order to get its way.”

Mr McGrath said for that reason, “the role of the ECB must be examined” in any banking inquiry.

“In particular, the insistence of the ECB that senior bondholders bear no losses whatsoever was a critical policy intervention which cost this State dearly.”

Prior to his death, Mr Lenihan told a BBC documentary that the ECB had threatened him into accepting the €85bn bailout.

Former FF ministers have spoken of the massive pressure the ECB exerted on the government at the time, but the contents of the letter remain a secret to the public.

When journalist and blogger Gavin Sheridan sought the letter, the ECB made clear it had been a “strictly confidential communication” which it had no intention of releasing.

“[The letter] concerns measures addressing the extraordinarily severe and difficult situation of the Irish financial sector and their repercussions on the integrity of the euro area monetary policy and the stability of the Irish financial sector,” the ECB said.

“The ECB must be in a position to convey pertinent and candid messages to European and national authorities in the manner judged to be the most effective to serve the public interest as regards the fulfilment of its mandate.

“If required and in the best interest of the public also, effective informal and confidential communication must be possible and should not be undermined by the prospect of publicity.”

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