Lenihan

Lenihan warned EU about social unrest

Brian Lenihan has claimed that he warned the European Union's institutions of the risk of social unrest in Ireland if the budgetary adjustments were too severe.

In a wide-ranging, two-hour interview with the Irish Times on the events surrounding Ireland's EU-IMF bailout, the former minister for finance said: "I thought that Europe was pushing matters where they could push people beyond the brink if they weren't careful."

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He said that this concern "wasn't really accepted."

On his time leading the Department of Finance, Lenihan said, "I felt as minister for finance, we'd lost our sovereignty virtually from the moment I was appointed in May 2008 because of the difficulties in the banking and public finances.

"I mean sovereignty is your right to choose different options. I didn't find as minister for finance very many options open to me."

On the signing of the bailout terms, he said, "Ireland was officially in a situation where it was no longer in control of its own destiny."

He also claims there had been pressure from the European Central Bank prior to November to put money from the National Pension Reserve Fund into Anglo Irish Bank.

"There were sources within the bank arguing that this money should be spent on Anglo Irish Bank, this money should be spent on the bank support which the European Central Bank was giving," he said. "So the existence of the Irish reserves was in itself a source of friction with the bank.

Not with the other community institutions, but with the bank." During the bailout talks in November, Lenihan said the government sought to impose losses on banks' senior bondholders.

He described it as "the one issue on which there was a considerable amount of dialogue and argument".

But the option was ruled out by the troika, he said.

"I discussed the matter with Dominique Strauss-Kahn himself and Monsieur Trichet , but it was clear to me there was no budge on this whatsoever in the discussions."