Opinion Shane Ross

Saturday 25 May 2019

Haughty, contemptuous: that's the ECB for you

REWRITING HISTORY: As long as the ECB is looked after and small EU states hung out to dry, Mario Draghi (left) and his predecessor Jean-Claude Trichet are happy
REWRITING HISTORY: As long as the ECB is looked after and small EU states hung out to dry, Mario Draghi (left) and his predecessor Jean-Claude Trichet are happy

Shane Ross

Margaret Thatcher would have been proud of Mario Draghi last Thursday.

Back in 1984 the Iron Lady famously dismissed all Irish proposals for a Northern Irish solution, rejecting each possible solution with the contemptuous words: "Out, out, out."

At a press conference in Frankfurt on Thursday the long-winded ECB chief was equally dismissive of questions about Ireland and its relationship with the ECB.

The icy Italian was not as colourful as Thatcher. And yet his demeanour was equally haughty.

After we had heard RTE's Emma McNamara tell us that ECB chiefs hate answering "country-specific" questions, we should have known that we were not likely to receive much information.

We didn't. Instead, we were bombarded by an avalanche of contempt.

When Draghi was asked if his predecessor, Jean-Claude Trichet, had put a gun to Ireland's head in his infamous letter of November 19, 2010 to Brian Lenihan, he looked witheringly at the assembled group of reporters.

Draghi insisted - with a straight face - that it was an Irish government decision to seek a bailout and denied that the ECB had forced them to stoop to the role of supplicant.

It was a puzzling response.

Trichet's letter specifically lays down as a first condition for the 2010 bailout that the "Irish government shall send a request for financial support to the Eurogroup".

In the preceding paragraph, Trichet is equally blunt. He tells the late minister for finance Brian Lenihan that there will not be another red cent for Ireland unless he meets this and other conditions.

The unwritten threat - on that dark Friday evening in November 2010 - was that the Irish banks would not be able to open on Monday morning. Trichet even ominously mentions that a response is needed "before markets open next week".

Lenihan capitulated.

Last Thursday Draghi tried to paint this surrender to pressure as some sort of voluntary application.

The ECB chief's rewriting of history was downright misleading.

His answer to a follow-up question about the ECB's threat to withdraw funding was evasive. He gave the journalists a short lecture about not looking at the past "through today's eyes".

The ECB is all right, Jack. Ireland has pulled through. Mario wants to forget the shameful events of 2010. He thinks that we should forget about them too.

Yet there is a problem for us.

For us the past is the present: the debt burden will last with us for generations. The ECB can merely turn to its next austerity victim. Problem solved.

In answer to a third question about Ireland, Draghi justified the ECB's dictatorial demands back in 2010 by pointing to Ireland's subsequent economic performance as " extraordinary", insisting that we will soon have the highest growth rate of any European country.

Bully for the ECB. They were right to put us into penury.

The conclusion we were meant to draw was that Mario and Jean-Claude are responsible for Ireland's growth.

Mario omitted to mention that our growth (if it meets current highly ambitious targets) will be due to our unique trading relationship with the UK and the US. Neither nation is in Draghi's clutches as neither is a member of the shrinking eurozone.

It was a trite, patronising riposte from a bureaucrat whose utterings are - at the least - expected to be evidence-based.

Finally Mario hardly concealed his contempt for irritable smaller countries when asked if the ECB would attend our banking enquiry.

First he ducked the question by claiming that the Council had not looked at it, but his follow-up was revealing. He loftily pleaded that the mighty ECB was only accountable to the European Parliament.

Frankfurt does not deal with pygmies, let alone help out with their little enquiries.

A pity that Jean-Claude did not take the same attitude in 2010 when he was deciding for Brian Lenihan how to micromanage the Irish economy.

The Frankfurt oligarchs were big players in Ireland's banking collapse. No doubt they have a good case for their behaviour. No doubt they could be helpful. We are entitled to expect them to throw light on our history.

The banking enquiry is still destined to be a domestic political charade - but the attendance of Trichet or Draghi could lift it to a higher plain than the inevitable political scrap.

We may need to widen its terms of reference (which have not yet been passed by the Dail), but if we learn how our banks and governments interact with the ECB it could yet do the State some service.

The tone of the Trichet letters begs serious questions about how a European Central Banker can dictate economic and banking policy to a finance minister and a sovereign government. They suggest that Ireland may have been the guinea pig for a series of similar later encounters between the ECB, Cyprus and Portugal.

We were a wonderful guinea pig. We bottled it when debt forgiveness was on the table. We took our medicine. We pleaded guilty and accepted our punishment. Our attempt to negotiate a better deal was pathetic.

Instead Brian Lenihan, a man patently ill and abandoned by many colleagues at the time, was reduced to writing a letter to Trichet asking for political help!

Our finance minister's response to an earlier (October 15) letter of warning from Trichet was a thinly disguised plea for the Central Banker to put a muzzle on both Merkel and Sarkozy.

Lenihan felt that the German chancellor and French president were pursuing an agenda that had caused a run on Irish bonds. And Lenihan was right.

But why did he write to unelected European Central Banker Jean-Claude Trichet to ask him to intervene?

Did the Irish government make direct representations to the two democratically elected heads of Europe?

Or are we now so cowed by Franco- German hegemony that we can only approach them by the back door?

At the least, the Lenihan letter to Trichet reveals where he believes the real financial muscle lies in Europe. Central bankers rule OK? And they are not used to being challenged.

The exchange of letters between Lenihan and Trichet should be seen in tandem with Draghi's press conference on Thursday. Nothing has changed. Small nations are an irritant, at the back of the queue. The interests of the larger nations and their banks must be protected.

That pattern is continuing. Last month, France and Italy, the second and third biggest economies in Europe, brazenly submitted budgets that breached European deficit rules to the European Commission. Such trivia is for the little nations.

The openly contemptuous disregard for the deficit regulations, from the two giant economic basket cases was not fully accepted by the European Commission. Instead, a fudge has been cooked up to fit the figures into the guidelines. Such leeway would never have been accorded to Ireland.

In return for our docile acceptance of decades of debt, we are being rewarded. We are receiving pats on the head from Merkel. We are receiving token chunks of cheap loans from German bank KFW for our small businesses. We are enduring backhanded insults from Draghi when he congratulates us on complying with their wishes and clobbering our citizens. His patronising plaudits on our compliance are like a Roman governor telling early Christian martyrs that they had a good crucifixion.

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