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Saturday 23 August 2014

Confidential: US worries about Irish bailout revealed

INDEPENDENT.IE REPORTERS

Published 11/01/2012 | 09:54

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US Treasury Secretary Timothy Geithner. Photo: Getty Images

OFFICIALS in the US Treasury department were concerned that the Irish bailout could be derailed by poor growth and the Government’s inability to spend, it was revealed today.

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Confidential documents released to RTE News by the US Government disclose that US Treasury Secretary Timothy Geithner used a meeting with Finance Minister Michael Noonan to assess domestic threats to the bailout.

Mr Geithner was acutely aware of the allegations that he had personally halted plans to burn Irish bank bond holders, according to the documents.

He had two separate meetings with Taoiseach Enda Kenny and Mr Noonan last year to assess the risks “both domestic and external” to the bailout.

His officials noted that the Fine Gael/Labour coalition had campaigned on promises to renegotiate the bailout.

Briefing notes record that officials were aware that the bailout success depends on export growth and they encouraged Mr Geithner to press Mr Noonan on how the Irish economy could grow when our main trading partners were also in recession.

They also noted that the size of the Government deficit meant that stimulus spending was not an option and that the euro has appreciated against the dollar and pound sterling.

They had questions on how the government planned to finance the banking system and the notes told Mr Geithner to expect questions from Mr Noonan about his contact with the IMF vetoing plans to burn the bondholders.

The documents also reveal that US Senators wrote to the Treasury Secretary over concerns that the US might be lending to a country that had behaved irresponsibly and that Ireland might default on its IMF loans, according to RTE News.

Mr Geithner told them that the US taxpayer had never lost a cent from an IMF loan and he was confident Ireland would repay the bailout in full.

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