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Lenihan U-turn on Martin bailout blame

FINANCE Minister Brian Lenihan backed away yesterday from blaming Fianna Fail leader Micheal Martin for the disastrous communication of the EU-IMF bailout talks to the public.

Last November, senior ministers repeatedly denied that any bailout negotiations were taking place -- only for the EU and IMF to arrive in Dublin to sign the €85bn deal a week later.

But yesterday, Mr Lenihan backed away from his hint during last month's Fianna Fail leadership challenge that Mr Martin had been well informed about the discussions with the EU and the European Central Bank (ECB) in Brussels.

"I don't think the Minister for Foreign Affairs at the time, Micheal Martin, was present during some of the crucial cabinet meetings. But clearly his department would have been aware in a general sense of what was going on," he said.

At Fianna Fail's headquarters in Dublin yesterday, Mr Martin confirmed he had missed some of the cabinet meetings in the run-up to the bailout deal as he took time out following the death of his seven-year-old daughter Leana.

"For weeks prior to that, I was not at the Cabinet for reasons that were quite obvious, for personal reasons," he said.

The Government's disastrous communications strategy in the run-up to the EU-IMF bailout was personified by former Justice Minister Dermot Ahern describing reports of bailout talks as "fiction".


He and other ministers privately blamed Mr Lenihan afterwards for not briefing them properly about what was going on. The controversy was seen as one of the reasons the Finance Minister failed to win the Fianna Fail leadership contest.

However, Mr Lenihan yesterday said events had moved rapidly and that "elements" in the ECB had leaked their position regarding a possible bailout deal to the media.

"When you're dealing with matters of seriousness, where any comment can affect the bond prices and the prices of the State's own paper in international markets, great caution has to be used," he said.

Mr Lenihan confirmed his view that it would be possible to reduce the price paid to senior holders of Irish bank debt not covered by the state guarantee -- estimated to be worth €25bn at face value.

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"Clearly these matters in the eurozone have to be settled in the eurozone and with the European Central Bank."

He denied the country was losing out because it was being represented in crucial discussions by an interim government. He insisted EU leaders were impressed with the way the Irish Constitution allowed a quick change of government.