Lenihan: “if the banking problems in the country are too big for this small country to manage…”

The EU finance ministers meeting in Brussels have denied holding detailed discussions on a potential bail-out for Ireland.  From the BBC report

[Belgian finance minister] Didier Reynders, who chaired the talks, said the situation was not addressed because the Irish government had not requested financial help.

“There’s no reason to ask all the participants for an answer because we did not receive a question,” he said.

And why would they discuss it?  The detailed discussions will be held tomorrow in Dublin.

The European Union Commissioner for Economic and Monetary Affairs Olli Rehn has said the technical talks due to get under way in Dublin tomorrow between the Irish International Monetary Fund, the European Central Bank, the European Commission and the Government, will focus on two main areas.

The first area is the fiscal position and the second is the banking sector and the need for restructuring.

And with the fear of contagion dominating the thinking in Europe, the Irish Finance Minister, Brian Lenihan, may have let the cat out of the bag.

Speaking on RTÉ radio this morning, Mr Lenihan said it would work with its EU partners to address structural problems in the Irish banking system, but he refused to set a deadline for the end of talks, which are set to begin tomorrow.

He said a “short focused consultation” with officials from the European Central Bank (ECB), EC, and International Monetary Fund (IMF) would start in Dublin tomorrow.

Mr Lenihan insisted Europe stood “shoulder to shoulder” with Ireland and that the ECB was “fully behind” the Irish banking system.

“Despite a large range of measures adopted by the Government, Ireland is a small country, and if the banking problems in the country are too big for this small country to manage, Europe is making it clear that they will help and help in every possible way to secure the system,” he said. [added emphasis]

But why wouldn’t the Irish Government already know how big the problem was?

In the Guardian’s second day of live-coverage of the crisis, a short note from Henry McDonald may have hinted at the answer

10.04am: Henry McDonald, our Ireland correspondent, has also been in touch with some worrying news. He’s hearing that the Irish banking sector might be in even worse shape than thought.

From Henry :

“Irish government sources said today that the size of the rescue package for Ireland’s banking system has been underestimated because one of the Irish banks had undervalued the amount of money needed to save it.

“They said the scale of the cash injection needed to shore up the Allied Irish Bank was even greater than what the financial institution had first told the government.

“It was the mounting costs of the bank rescue plan that have alarmed international bond markets and prompted the European Union towards a bail out which Ireland has been resisting, they said.”

Although I’m not sure if that means it’s in even worse shape than the Irish government have admitted so far…

Still everyone’s hero, Robert Peston has been looking at the potential international damage.

, , , , , , , , , ,

  • White Horse

    I suppose the request for help if it comes will diminish sovereignty a little. But so what, worse things have happened in Irish history. This time the Irish have friends to rely on rather than the British imperialist market forces caste who let them starve to death, their mouths green with eating grass, in the 1840s.

    Indeed the North has been bailed out since its inception. Its hardly talking from a position of stength.

  • bob wilson

    Those evil Tories are at it again:

    Chancellor George Osborne said the UK was “ready to support Ireland”, as he arrived for the Ecofin meeting.

    “We’re going to do what is in Britain’s national interest,” he said.

    “Ireland is our closest neighbour and it’s in Britain’s national interest that the Irish economy is successful and we have a stable banking system.”

  • Driftwood

    technical talks due to get under way in Dublin tomorrow between the Irish Monetary Fund, the European Central Bank, the European Commission and the Government, will focus on two main areas.

    What is the ‘Irish Monetary Fund’? or is that a typo?

  • Anon

    Key line there is “We’re going to do what is in Britain’s national interest,”, Bob. An Irish default would cause problems in the UK, and while unlikely to be fatal they might well total more than 7 billion.

  • pippakin

    You don’t think Osbourne was covering his back because he knows any money given to the EU, which is presumably where it will go, would not go down well in the Euro sceptic UK.

    I heard there were rumours of the British helping in some other way has anyone else heard anything firmer?

  • Pete Baker

    It was a typo in an earlier RTÉ report.

    They’ve corrected it now. And I’ve edited the original post.

  • pippakin

    You don’t think Osborne was covering his back because he knows any money given to the EU, which is presumably where it will go, would not go down well in the Euro sceptic UK.

    I heard there were rumours of the British helping in some other way has anyone else heard anything firmer?

  • fin

    Calculated guess sez the cost of having a united Ireland would be less than the cost of bailing out the Banks.

    Various sluggerites always tell us with confidence, we couldn’t afford a UI and/or no-one down South is interested in financing it.

    If Ireland pulls this one off 2016 could be back on.

    If Ireland doesn’t pull this one off 2016 could be back on (nothing like banging the nationalist drum to take the voters minds of things)

    As GB makes money out of the South and loses money on the North, could a GB package involve a UI with the cash thrown in for a few years?

  • dodrade

    The longer the Irish government denies it needs a bailout, the more they remind me of Michael Palin’s protestations in the “dead parrot” sketch.

  • pippakin

    fin

    I’m deeply suspicious of the tories, they don’t like Europe, they’re not keen on us and there are rumours of ‘another way’.

    It is possible, look at Barclays et al profits, that a deal could be done, hard to see how it could be much worse than the catastrophe we’re facing.

    I don’t think they will part with the north in lieu as attractive as that might seem to them: the banks wouldn’t like it.

  • White Horse

    It’s like the attitude of a spoiled child to someone else’s discomfort. “I’m going to do what is in my interest.”

    Typical British Tory – they did what was in their interest in the 1840s too, only then it amounted to letting men, women and children starve to death.

    One has to remark that the Open Book Bible readers of the unionist community – the friends of the Tories – cannot fail to see that the morality of the National Interest is the basis of Old Testament morality and has no support in the New Testament. Jesus Christ was crucified in the national interests of the Jewish state (according to Caiaphas) and Christianity is an opposing morality of the heart.

    The Tories have no heart. The unionists follow suit. The heart feeds the world, the individual feeds himself.

    Unionists should try to be Christians.

  • becky

    they only have to hang on another wee bit.sure gerrys on his way hel sort it

  • Driftwood

    Can’t remember the guys name, paraphrasing-

    They came for the Greeks
    and I didn’t speak up because I wasn’t a Greek.

    Then they came for the Irish,
    and I didn’t speak up because I wasn’t Irish.

    Then they came for …….

    the simple fact is that nation states are now mere regions of a currency exchange that is subject to the whims of global speculators. Sovereignty is an extremely recent concept that may have had a short lifespan on the pale blue dot.
    Pike Bishop- ‘The Wild Bunch’- “We need to start thinking beyond our guns”
    But it didn’t end so good.
    maybe Deke Thornton-“What I like and what I need are 2 different things” is a better analogy.

  • Georgia

    LOL
    Nationalists (including RTE who have yet to report the UK offer) just cannot get their heads around it!
    The Brits are offering to help the Irish Govt to avoid capitulating the the EU and surrendering their low Corporation Tax.
    They could let it crash and pick up the pieces but are offering to use British taxpayers money to rescue the Irish banking system.

  • pippakin

    Georgia

    Are the Brits offering to help? it is said they will help within EU terms and there are rumours, what did Lenihan and Osborne talk about at lunch today? but that is all. At the moment nothing is clear and everyone would be well advised to stop laughing at wherever the ‘help’ comes from, and read the small print, very carefully.

  • Mack

    That would be fantastic Georgia, but I don’t think that is what is happening. Feel good sound bites for what Britain has already commited to do via the EFSF (to which Ireland also contributed for Greece)…