TAOISEACH BRIAN Cowen was told by a journalist last Friday that the Government had applied to the EU and the IMF for a bailout, Mr Cowen told the Dáil yesterday.
“It was not true,” he said yesterday. “I am not responsible for the rumour mill,” he argued yesterday during Leaders’ Questions in the Dáil.
Nonetheless, Mr Cowen, Minister for Finance Brian Lenihan and other senior Ministers spent a good deal of the weekend and Monday trying to dampen the rumour mill. The Government spent much of the weekend refuting the claims; countering spin against Ireland (which some some Ministers believed originated in the ECB) and discussing strategy for last night’s meeting of EU finance ministers.
The latest crisis began on Friday when the president of the European Commission José Manuel Barroso rang Mr Cowen after the G20 meeting in Seoul.
Mr Cowen maintained yesterday that the call was a positive one. He said a key point was the confirmation by Mr Barroso that private-sector holders of sovereign bonds would not be asked to take a haircut until after 2013.
Nonetheless, Mr Cowen and Mr Lenihan met on Saturday for a meeting lasting several hours. It had been arranged to discuss the four-year plan but the discussions turned to the monetary crisis and the pressure on Ireland.
A number of sources said neither the Taoiseach nor Mr Lenihan was in contact with any senior European official or political figure on Saturday. However, by Sunday, contacts at senior official level were ramped up.
“There was a feeding frenzy. There was lots of noise and something was going to have to give,” said one source. “Senior officials began contact and discussions began.
“The Minister for Finance was not directly involved in any of those negotiations. He was not in contact with the EU until Monday,” added the source.
Another source within Government claimed that Mr Lenihan, at one stage, had threatened to resign in a telephone conversation with a senior EU official over the course of the weekend on the basis that a forced bailout would make the four-year plan and budget meaningless. That was denied yesterday by others.
The strategy, adopted by all Ministers on Sunday, was to emphasise that no application had been made by Government for assistance. Minister for Justice Dermot Ahern went so far on Sunday as to say that it was a “fiction”, a strategy that was considered as going too far by others, as it was clear that the ECB in particular was pressing for it.
Publicly the language was more cautious. Mr Cowen gave a very guarded interview to RTÉ on Monday evening. Fine Gael’s Michael Noonan accused him of talking in riddles.
Mr Lenihan made no public comments. On Monday, he had several “political contacts” with counterparts abroad. It is believed he spoke to the commissioner for economic and monetary affairs Olli Rehn, whom sources said continued to be supportive.
Some senior Ministers privately argued until yesterday that no concession should be made and the Government should resist giving any sovereignty. “We need to go into the meetings playing hardball,” one senior Minister told The Irish Times night. “If they [the ECB] want to let our banks collapse, let them. They could never stand for that. We are going to fight it all the way.”
