Monday 23 October 2017

Brian keeps them waiting but Trichet still calls the shots

Finance Minister Brian Lenihan arrives at a eurozone finance ministers' meeting at the European
Union Council in Brussels yesterday evening
Finance Minister Brian Lenihan arrives at a eurozone finance ministers' meeting at the European Union Council in Brussels yesterday evening

Emmet Oliver in Brussels

AS he arrived in Brussels last night for arguably the most important meeting of his career, Brian Lenihan made one bad move and one good move, before joining Europe's elite finance ministers gathered inside.

Bad move -- being late by at least an hour and leaving the media outside in the freezing cold.

Good move -- arriving from the airport in a black Audi, one of Germany's most celebrated brands.

Lenihan, apparently delayed by fog at Brussels airport, wasn't the only minister arriving after the punctual Germans.

There seemed to be a link between being late and the health of your economy as Lenihan and Greek finance chief George Papaconstantinou arrived almost rudely late and dashed inside.

While Lenihan was arriving ostensibly to negotiate, the presence of Klaus Regling, head of the EU's bailout fund, at the top table must have given him a sense of a stitch up, although this was denied by all sides.

The only minister smiling before the meeting was French finance minister Christine Lagarde, who seemed sympathetic to the Irish position and deliberately sought out Irish journalists to make a statement.

"It's a mechanical problem," she mysteriously said of our economic predicament.

Her warm manner contrasted with the rather blunt approach of the Dutch finance minister, Jan Kees de Jager, who said whatever assistance Ireland might get would have to come with strict conditions (known in euro speak as 'conditionality') and IMF involvement.

The mood during the day in Brussels reflected the mood back home -- grim. Earlier in the day two key figures, Olli Rehn, EU commissioner for economic and monetary affairs and eurogroup chairman Jean Claude Juncker arrived, looking very solemn.

But veteran Brussels watchers reported they tended to appear excessively serious all the time, such is the weight of their respective offices on their shoulders.

Juncker, for whom the phrase stony-faced could have been invented, preferred to stay tight-lipped, but Rehn admitted that there was a "serious problem" in the Irish banking system, the nature of which he declined to discuss.

The immediacy of this problem is what forced the ministers to move with such unusual urgency for Europe and while they may be prepared to wait for a new Irish Budget in December, the banking problem needs to be solved as soon as possible.

Corporate, interbank and retail deposits are becoming harder to retain and now some bondholders are calling in their debts earlier than the banks would like.

However, European sources dismissed talk of any one particular bank having a problem and said the funding issues were across the system.

The tragedy from Lenihan's point of view is that he had hoped in September that the banking problem was finally solved, but in fact it was only getting worse. It was during this month that the funding issues became very intense and dependence on the ECB escalated rapidly.

On the premises yesterday in Brussels was the paymaster general for the Irish banks, Jean Claude Trichet, but it was no surprise that he was not available for comment.

While Rehn and Juncker are key influencers of Ireland's fate, Trichet is said to have unprecedented influence over the thinking of eurozone finance ministers.

What Trichet says, he doesn't always get, but his record in swaying the finance ministers isn't bad either.

If he believes Ireland's debts to the ECB are becoming too large, the likes of Lagarde and Wolfgang Schaeuble, Germany's finance minister, have to pay huge attention to his views -- he is their central banker ultimately.

They clearly listen to Lenihan, of course, but Trichet is the kingmaker and he outranks Lenihan by a huge distance.

While winning over the Germans, as Europe's largest contributor to the bailout fund makes sense (that Audi car could become important) the real man Ireland should fear at this point is arguably Mr Trichet, who seems, like many in Europe, to be running out of patience with us.

Irish Independent

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