Thank you for your letter of yesterday concerning the negotiations on Greece’s programme of financial assistance. As I have recalled to you at our meetings, Ireland itself experienced a very difficult economic period and worked its way through a programme of assistance and has great empathy for Greece and its people.
We will continue to support the objective of a sustainable and mutually beneficial agreement, acceptable to all concerned, which will, as you say, return Greece to growth within the Eurozone.
It had very much been my hope that, in line with the approach agreed at the Euro Summit of 22 June, and confirmed at the European Council on 25/26 June, agreement would have been achieved at the Eurogroup meeting on 27 June on the basis of the negotiations between your government and the institutions.
Unfortunately, your decision to break off these negotiations meant that this was not possible at that time, as set out in the Eurogroup statement of 27 June.
I hope now that it will be possible to return to negotiations as quickly as possible. For me, and I am sure for all our colleagues, the door remains open to dialogue in a spirit of solidarity and responsibility.
I am happy to acknowledge your stated commitment to Greece’s EMU membership.
Text of a letter Taoiseach Enda Kenny sent to Greece’s Prime Minister Alexis Tsipras last night.
Mr Kenny sent the letter in response to a letter from Tspirias in which he requested support from Ireland for an extension of its bailout programme for one month.
Meanwhile, in today’s Irish Times, Fintan O’Toole writes:
““The Pride of Europe” is a makey-up story that is intended to take the place of the realities it displaces. It’s not a stand-alone narrative. It has an evil twin: Greece. It belongs to a particular genre of fiction: the morality tale. Ireland is the pride of Europe because it is the anti-Greece. We are good because we play along with the bigger stories of the euro zone crisis. Greece is evil because it stopped doing so.”
“One of those stories is that the crisis had nothing to do with reckless lending (by, for example, German state banks) and was created purely by reckless borrowing. The other, even more fantastical, is that so-called austerity (in reality a programme of sucking citizens dry to transfer their resources to private banks) produces economic growth.”
“These stories are as patently false as Enda’s fairy tale, but Ireland is the pride of Europe because it has gone along with them and Greece is the shame of Europe because it has not been able to sustain the suspension of disbelief.”
… It is the position of the [ECB] Governing Council that it is only if we receive in writing a commitment from the Irish government vis-a-vis the Eurosystem on the four following points that we can authorise further provisions of ELA [emergency liquidity] to Irish financial institutions:
1) The Irish government shall send a request for financial support to the Eurogroup;
2) The request shall include the commitment to undertake decisive actions in the areas of fiscal consolidation, structural reforms and financial sector restructuring, in agreement with the European Commission, the International Monetary Fund and the ECB;
3) The plan for the restructuring of the Irish financial sector shall include the provision of the necessary capital to those Irish banks needing it and will be funded by the financial resources provided at the European and international level to the Irish government as well as by financial means currently available to the lrish government, including existing cash reserves of the Irish government;
4) The repayment of the funds provided in the form of ELA shall be fully guaranteed by the Irish government, which would ensure the payment of immediate compensation to the Central Bank of Ireland in the event of missed payments on the side of the recipient institutions.
I am sure that you are aware that a swift response is needed before markets open next week, as evidenced by recent market tensions which may further escalate, possibly in a disruptive way, if no concrete action is taken by the Irish government on the points I mention above.
Portion of a letter sent to then Finance Minister Brian Lenihan from ECB President Jean Claude Trichet on November 19, 2010
You may recall a post from last week in relation to Cork developer Michael O’Flynn and how his loans are being sold by Nama to global private equity firm Blackstone.
It has been reported that Mr O’Flynn owed his banks €1.8 billion when he entered Nama in 2009, and has now left Nama owing Blackstone €1.1 billion.
Mr O’Flynn also remains in control of his property business.
Further to this, Business Editor of the Irish Times, John McManus recalls how Nama was pitched to the Irish electorate back in 2009 – suggesting that the late former Finance Minister Brian Lenihan and former Taoiseach Brian Cowen either didn’t understand how Nama would work or deliberately misled the Irish public.
It’s pretty clear that the two men [Cowen and Lenihan] either did not understand what Nama was and how it was going to work or instead played fast and loose with the truth in order to get the Nama legislation over the over the line. One suspects it was the latter.
…what did turn out to be at best a fib was the claim that Nama would operate in a way that would make it impossible for the developers who took out the loans to benefit from the writedowns. The Nama legislation did include a clause that the developers could not buy their loans back from Nama but, as we have seen, it was not possible to prevent them having a continued interest in the underlying business and assets once the debt had been written down and sold off by Nama.
Ireland received a significant boost in its bid to seek an extension to the maturities of its bailout loans last night after finance ministers of the countries that share the euro currency backed the deal.
Finance ministers from all 27 EU states will consider the issue at a scheduled meeting in Brussels this morning, which is being chaired by Minister for Finance Michael Noonan.
EU commissioner for economic and monetary affairs Olli Rehn said he expected an arrangement to be concluded by next month’s meeting of finance ministers, which is scheduled to take place in Dublin.
Yum. Tasty carrot.
While agreement has been reached in principle to extend the maturities, the scope and technical detail of how the extension of maturities will be implemented have yet to be worked out. If agreed by European finance ministers today, it will fall to the bailout troika to devise the technical details of the proposal.
Eurogroup chairman Jeroen Dijsselbloem declined to comment on the scale of the adjustments or whether new conditions would be imposed on Ireland and Portugal as a result of any deal.
The government has said it is working on a strategy with the European Union to exit Ireland’s rescue programme at the end of next year without a second bailout.
Mr Noonan said he was very confident Ireland would exit the programme by the end of next year “in all circumstances”, irrespective of getting relief on the historic cost of bank recapitalisation.
Mr Howlin pointed out that Ireland had drawn down 80 per cent of the €67 billion loan from the troika and had fulfilled 160 conditions.
“We are the most successful programme country. We have hit all the targets,” he said.
Separately, a highranking member of Germany’s central bank warned against using Europe’s nascent banking union to deal with “past sins”. Andreas Dombret, a Bundesbank executive director, argued in an interview with The Irish Times against the ESM fund taking on legacy banking assets. He insisted he was nottrampling over Irish hopes for debt relief but said people should be “particularly realistic” about what was doable or not.
The possibility of German, Finnish or Dutch MPs disputing a new debt deal for Ireland is emerging as a prime concern among European negotiators as preparations advance for a review of the Irish bank bailout.
Although EU leaders have given the go-ahead for a fundamental revision of the rescue scheme in the autumn, parliamentary approval will be needed in many countries for an extension of European aid to Ireland.
EU economics commissioner Olli Rehn said after a meeting last week of euro zone finance ministers that the EU-IMF “troika” will table a formal proposal in September in anticipation of a final deal in October.