Business Irish

Saturday 19 October 2019

Trichet talks 'verbal discipline' after Leo's gaffe


Laura Noonan

TRANSPORT Minister Leo Varadkar would do well to give Frankfurt a wide berth for the next couple of months, judging by yesterday's comments from European Central Bank (ECB) president Jean Claude Trichet.

Asked about the "wisdom" of Leo's recent public admission that Ireland could need a second bailout, Mr Trichet did what he does best -- he began by insisting he would say nothing on the matter, before leaving the assembled media in no doubt of his true feelings.

"I will not comment on Ireland," he said in his dulcet francophone tones. "(But) . . . verbal discipline is appropriate in the present circumstances, speaking on the euro area as a whole."

Trichet-speak for -- "Leo, shut it and stick to your portfolio".

The message is likely to be put considerably more bluntly when the ECB rock into town in July for the next review of Ireland's programme.

Indeed, some in Frankfurt are now of the view that only three figures (Enda Kenny, Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin) should be allowed to talk publicly about the bailout at all, such is the alarm at the fracas Leo's comments triggered in the debt markets.

The relationship between Ireland and the ECB is a particularly delicate one -- the ECB claims it's giving Ireland "unprecedented" support by letting the banks borrow €160bn of cheap cash, yet the Frankfurt powerhouse is regularly lambasted for exacerbating Ireland's plight by preventing us from sharing bank losses with the private sector.

Gaffes like Leo's don't exactly grease the wheels of diplomacy, to put it mildly.

That said, Trichet struck a relatively amicable tone towards Ireland yesterday.

At last month's ECB press conference, 'le president' became visibly agitated when asked about former finance minister Brian Lenihan's claim that the ECB had "bounced" Ireland into a bailout.


Yesterday, it was all sweetness and light as Trichet threw his weight behind the Government's efforts to lower wages in key sectors, and praised the progress Ireland was making in implementing the bailout programme.

Next month, though, is likely to be a different story, with Mr Trichet once again emerging as the villain of the piece as the ECB unleashes another interest-rate hike to the detriment of Irish mortgage-holders.

The timing is somewhat unfortunate for the dozen or so ECB staffers who'll be in Ireland reviewing the bailout when the interest-rate hike is announced, but at least they'll have someone to share their unpopularity with.

Central Bank Governor Patrick Honohan recently admitted that he would "wear a European hat" for interest-rate decisions and "not pay too much attention" to conditions in Ireland . . .

Irish Independent

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