It is infuriating that secret communications in 2010 on the eve of Ireland’s bailout from the IMF, ECB and EU which were closely guarded back then and whose disclosure in response to Freedom of Information requests has been strongly resisted, are now dropped into conversations as if they were everyday and mundane. We learned during the week that the IMF mission chief to Ireland in 2010, Ashoka Mody outlined three options for Ireland in 2010 – burning bondholders, extending our debt or getting lower interest rates or austerity and the last Government plumped for austerity.
Today, on RTE Radio’s This Week programme, Fianna Fail’s TD Billy Kelleher (pictured above) who was a junior minister for trade and commerce between 2009 and when FF lost the February 2011 election, blithely commented that back in 2010 the ECB threatened Ireland that if we didn’t enter a bailout programme, then the ECB would withdraw €100bn of lending to our banks. The podcast of the programme should be available in a couple of hours, but there is little to add, and the former junior minister wasn’t challenged about the remarks by the presenter or by the Fine Gael deputy, Paschal Donohoe.
What the former minister stated in a matter-of-fact manner has always been suspected, but the best we could get from current finance minister Michael Noonan was that “a nod is as good as a wink to a blind horse” but even Minister Noonan has been careful to say Ireland was never threatened – “No, no there’s no threat and they never threaten” is what Minister Noonan said in June 2011. Even the plain-speaking and preemptive governor of the Central Bank of Ireland, Patrick Honohan would only refer to the “influence” of the ECB – no suggestion of any threat from Governor Honohan either. Even the Dan O’Brien “the Bailout Boys go to Dublin”, the 28-minute radio programme for BBC Radio 4 available here from Youtube, doesn’t capture the explicit threat by the ECB and indeed the ECB representative to Ireland’s bailout Klaus Masuch, whom Vincent Browne monstered at that Troika news conference last year, asserts it was Ireland that made the bailout choice and there was no pressure from the ECB.
Now we have a minister telling us the ECB threatened to withdraw funding to our banks if we didn’t enter a bailout, which has subsequently seen 10s of billions shoveled into banks and paid to bondholders. Because Deputy Kelleher wasn’t pressed, we don’t know the nature of the threat and how it was treated.
NAMA Wine Lake 
I thought what he said was that “they had held a gun to our head, and threatened to withdraw €140bn of liquidity.” I was surprised too, I hadn’t heard this before, and it seemed pretty shocking to hear it stated so crisply. I’m sure the troika would deny it. Remember though, this is Fianna Fáil, and they like to make things up.
@NWL
Nobody should be in the least surprised at Billy Kelleher’s admission of the ECB threat.
Less than one month ago they threatened to withdraw funding from all Cypriot banks, if Cyprus did not toe the line. That particular line among other things included;
Stealing depositors funds, at first pass the ECB/EZ didn’t give 5uck whose funds.
Put depositors funds beyond reach.
Destroy their financial services industry.
The confusion is in the terminology the ECB use. They don’t ‘threaten’, they simply say that under their selective, unpublished and ever changing rules, they will not be able, regrettably, to provide liquidity.
Like Tommy Cooper, its the way they tell ’em.
The ECB effectively is the Luca Brassi of German monetary policy.
Ireland could have its brains (if present at all) or its signature on the bail-out agreement.
In the Cyprus case, they offered the same alternative, but they knee capped Cyprus as well, just to make sure Cyprus understood the message.
Sooner or later the Euro will sleep with the fishes…
“burning bondholders, extending our debt or getting lower interest rates or austerity and the last Government plumped for austerity”
I dont think Ashoka said anything about the Irish government “plumping” for this from the three options available, I think he said that the IMF etc did the “plumping” for them.
Could it be that he is talking out of his arse? In an effort to muddy the tracks left by his fellow travellers who, as you point out in Mr. Mody’s comments, chose the path of austerity…
See last year’s Kennedy ‘Summer’ School around September I think.
Noel Whelan and Mary O’Rourke both said there are more details “then they are prepared to let on at this juncture”. No bother to anyone else.
Easily be FF minding itself of course but this dance has went on long enough.