Saturday 24 February 2018

Lenihan gets frosty EU reception over bailout

European Central Bank Jean-Claude Trichet is believed to have been supportive of the Irish stance. Photo: GERARD CERLES/AFP/Getty Images
European Central Bank Jean-Claude Trichet is believed to have been supportive of the Irish stance. Photo: GERARD CERLES/AFP/Getty Images

Fionnan Sheahan in Luxembourg

FINANCE Minister Brian Lenihan received a frosty reception from his European colleagues last night in the wake of the Government's €400bn bailout for Irish banks.



Mr Lenihan was on the receiving end of what was described as "muted criticism" at a meeting of finance ministers from eurozone countries.

And Foreign Affairs Minister Micheal Martin is also understood to have come under fire over the bailout in a private meeting with European Commission president Jose Manuel Barroso in Brussels. The Government isn't flavour of the month in Europe after breaking ranks to bring in the €400bn state guarantee on all deposits and loans.

Since then though, several other countries, most notably Germany, have taken action to protect their banking system.

Guarantee

The bigger countries in the EU, including Britain and Germany, are putting the squeeze on the European Commission to clamp down on Ireland for breaching EU competition laws with the bailout.

The EU is unlikely to come up with any joint plan to tackle the banking crisis, apart from getting every country to raise their deposits guarantee for customers to at least €100,000.

Asked if he was worried about the other countries' reaction on arrival in Luxembourg, Mr Lenihan said: "Not at all, as you can see countries throughout the EU are taking action."

The minister also said he would be "explaining what the Irish position is" and listening to the options being set out.

Inside the meeting, his reception was said to have been less than cordial, although European Central Bank Jean-Claude Trichet is believed to have been supportive of the Irish stance.

Mr Lenihan's arrival provoked a flurry of activity among the international media, indicating the level of interest across Europe following the Irish Government's actions last week.

Mr Lenihan will come face to face with the most vocal opponent of the Irish move, his British counterpart, Chancellor Alistair Darling, this morning. All the EU finance ministers are expected to agree at a meeting that every country puts a state guarantee on all deposits up to €100,000, but this won't affect Ireland as this provision was already in place before last week's banks bailout.

The prospects of the establishment of a European Union-wide rescue fund for the banking system are pretty slim.

Mr Darling told the House of Commons yesterday that Mr Lenihan's actions had had a "knock-on effect" in Britain.

But the Chancellor was muted in his criticism of the Finance Minister, having had two heated phone calls with Mr Lenihan last week.

Understand

Mr Lenihan's move led to huge cash inflows at Irish bank branches in Britain -- and has since been copied to various extents by Greece and Germany.

Mr Darling told the Commons of his phone conversations with Mr Lenihan, in which the latter said he had taken his decision in defence of the Irish banking system. "I understand that, but it does demonstrate the problems that arise when member states take unilateral action," Mr Darling said, "because it does have knock-on effects on other member states.

"It does emphasise the need for us all to work together. It is very important that every nation works together," he added.

Meanwhile, in his meeting with Mr Barrosio in Brussels, Mr Martin is believed to have been on the receiving end of some displeasure. The EC president had come to the meeting fresh from a summit of the big four European powers -- France, Britain, Germany and Italy.

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