27 APR 2011
By Dan O'Brien | Irish Times
OPINION: The ECB deal can probably be justified. But the drastic way it achieved it cannot
MUCH REMAINS unknown despite recent interviews with all the main players involved in Ireland’s EU-International Monetary Fund bailout that cast new light on the extraordinary events of last November. Among the many questions and concerns that linger are issues surrounding the way in which the European Central Bank (ECB) acted and its lack of accountability more generally.
Since the euro zone crisis erupted last year, the power of the ECB, and the manner in which it has wielded that power, has been striking. Although it was well-known it had taken a leading role in the sudden precipitation of the Irish bailout in November, none of the actors involved had been willing to say as much on the record until Brian Lenihan was interviewed for last Sunday’s BBC documentary, Bailout Boys Go to Dublin.
In that interview with me, he also spoke of the uncontrolled and damaging way members of the bank’s governing council briefed the media. He effectively accused a member of its executive board of not telling the truth. He spoke of his view that the bank had misdiagnosed Ireland’s economic problems and of the limited engagement it had with the Irish authorities on addressing those problems before the bailout. This led, among other things, to ill-thought-out measures being included in the package that were “unimplementable”.
If the things Lenihan had to say about the ECB are true – and many of them are almost certainly true – they raise serious and worrying questions about how the bank exercises its power and the very limited checks and balances to which it is subject. Such concerns have been heightened by the ECB’s central role – by most accounts – in the events leading up to Portugal’s recent bailout.
It is abundantly clear that the bank believes it should act quickly, decisively and without much consultation with other actors, including national governments, if it decides the wider European interest is best-protected by bringing countries into bailouts.
Can this by justified? The answer is a tentative Yes.
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