– Revealed – the Troika threats to bankrupt Ireland (The Irish Independent, Sep 28, 2014):
Honohan: ECB officials agreed to threaten Ireland with bankruptcy if the government tried to burn bondholders
The threat was made at a high-level teleconference meeting, details of which have been revealed for the first time by the Central Bank governor, Dr Patrick Honohan.
Mr Honohan, who famously told the nation Ireland would be entering the Troika bailout programme live on radio as government ministers were publicly denying it, also revealed he was kept out of loop about the meeting.
In a new book about the late Brian Lenihan, Mr Honohan said he only found out about the meeting after the Troika delivered the ultimatum to Mr Lenihan on November 26, 2010.
“The Troika staff told Brian in categorical terms that burning the bondholders would mean no programme and, accordingly, could not be countenanced,” Dr Honohan writes. “For whatever reason, they waited until after this showdown to inform me of this decision, which had apparently been taken at a very high-level teleconference to which no Irish representative was invited.”
Dr Honohan’s revelations will add more fuel to claims that Ireland was “bullied” into the bailout.
They are also likely to lead to growing demands here for former ECB president Jean-Claude Trichet, who played a central role in the Irish bailout and the handling of the Eurozone crisis, to appear before the banking inquiry over the coming months.
The ECB last week came under renewed criticism for failing to publish a letter sent by Mr Trichet to Mr Lenihan during the same period of November 2010, despite a request from the European Ombudsman, Emily O’Reilly.
ECB president, Mario Draghi, last week told Irish MEP Brian Hayes the bank would discuss the question of Mr Trichet’s possible appearance before the banking inquiry, and that he could have a response by November. Mr Hayes subsequently said that if Mr Trichet cannot attend the banking inquiry, the ECB should “provide documentation and, where relevant, officials” to assist the inquiry.