Business Irish

Wednesday 28 June 2017

Lenihan's remarks on ECB bailout dismissed as 'subjective'

'Loan request came from the Government he was part of'

Laura Noonan

Laura Noonan

BRIAN Lenihan's claim that the European Commission was "more relaxed" about Ireland's bailout than the ECB was last night dismissed as "very subjective" by Brussels sources.

The comments come after the former Finance Minister told the BBC that the Frankfurt-based ECB "bounced" Ireland into a bailout while the commission took a more laid-back approach.

"That is really very subjective," said a Brussels source close to the bailout negotiations.

"It is Mr Lenihan's comments after leaving office on an issue that could have been perceived differently by every single player involved.

"At the end of the day, the request (for a bailout) came from the former Irish Government and Mr Lenihan was a part of that."

Mr Lenihan's comments mirror remarks from former Justice Minister Dermot Ahern, who accused the ECB of "bouncing" Ireland into the €67bn bailout in the immediate aftermath of the deal's agreement.

Mr Ahern's outburst provoked outrage in Frankfurt, but Mr Lenihan's contribution is likely to prove less offensive since he is no longer in government and is unlikely to be seen as 'speaking for Ireland'.

Others pointed out that Mr Lenihan's comments won't threaten Ireland's negotiations with the ECB as the new Government has already gotten Frankfurt to commit to continue to provide massive amounts of short-term cash to the banks and to ease collateral requirements for accessing those funds.

An ECB spokeswoman yesterday said the bank had "no comment" to make on Mr Lenihan's claims, but several ECB executives have publicly rejected the charge that the bank pushed Ireland into the bailout.

On the same BBC programme that featured Mr Lenihan's comments, the ECB's Klaus Masuh, who heads up the bank's mission to Ireland, insisted his institution had not forced the bailout on Ireland.

In a recent interview with the Irish Independent, ECB executive board member Jürgen Stark also rejected Mr Ahern's suggestions, saying it was a "normal human reaction to be in a state of denial" when a country "runs into difficulty".

Mr Lenihan's recent interview also criticised the ECB for failing to publicly confirm its liquidity supports for the Irish banks and instead "engaging in the language of panic", which helped spook the markets.

Crisis

At the time, the ECB was extending about €130bn of short-term loans to the Irish banking system, but was also speaking publicly about the need to wind down crisis-time liquidity supports.

A spokeswoman for the ECB declined to comment on whether there was an opportunity for the bank to "be more forthcoming publicly" on its support for the Irish banking system.

The ECB has been trying to wean eurozone banks off liquidity supports introduced at the dawn of the crisis and the institution has repeatedly insisted it can not tailor-make policies to suit individual countries.

After the latest banking restructuring announcements on March 31, the ECB confirmed it would "continue to provide liquidity to banks in Ireland" but stopped short of delivering the "medium-term liquidity solution" the Government had been calling for.

Irish Independent

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