The Minister for Finance will consult Government colleagues within days to find a safe candidate for the position of vice-president of the European Investment Bank. This follows Mr Hugh O'Flaherty's dramatic decision to withdraw his candidacy last night.
Mr O'Flaherty's request to Mr McCreevy to withdraw his name came at the 11th hour as the management committee of the EIB was set to meet today and tomorrow to reconsider the nomination with little prospect of being in a position to ratify it.
An EIB spokesman confirmed to The Irish Times that at the close of business yesterday Mr O'Flaherty still did not have the support of a majority of the 25 EIB directors to have his nomination ratified.
Leading Government figures immediately tried to distance themselves from the latest development in an attempt to put the most bruising, albeit self-inflicted, controversy to engulf the Government behind them.
The nomination of the former Supreme Court judge, against whom the Government had initiated impeachment proceedings last year, was challenged in the courts by a Limerick lecturer, Mr Denis Riordan.
It also revived unanswered questions about the Philip Sheedy affair.
The withdrawal of Mr O'Flaherty's candidature was announced in a statement from Mr McCreevy at around 8 p.m., accompanied by a letter to him from Mr O'Flaherty.
Senior Government sources had come to accept yesterday evening that there was a clear lack of support from EIB directors for their nominee to permit the appointment to go head.
McCreevy said he had received a letter from Mr O'Flaherty stating that he wished to withdraw his candidature for nomination as vice-president of the EIB.
He had, with regret, accepted this and was advising the EIB accordingly.
He added that he was "disappointed at the decision" but understood why Mr O'Flaherty had taken this course.
In his letter to the Minister, headed "At Cahirsiveen, Co Kerry" and dated yesterday, Mr O'Flaherty asked "that you withdraw my name for submission as a vice-president" of the EIB.
"I am eternally grateful to you, the Taoiseach, Tanaiste and members of the Government, as well as those who favoured me in the recent Dail vote. The decision to make this request is mine and mine alone," he said.
After the announcement, the Tanaiste, Ms Harney, said it was the right thing to do. The controversy which had arisen was regrettable "and it would not have been desirable to have had a divisive vote at the EIB".
However, the Opposition parties showed no signs of allowing the controversy to close. The Fine Gael spokesman for finance, Mr Michael Noonan, said the decision ended the ordeal for Mr O'Flaherty and his family but not for the Government or the State.
He repeated his party's call for a sworn public inquiry into the Sheedy affair, adding that only the resignation of Mr McCreevy would show the public that the Government understood the constitutional principle of ministerial accountability."
The Labour leader, Mr Ruairi Quinn, said Mr O'Flaherty's decision to withdraw his name was the right thing to do. The credibility and political judgment of the Government was "in tatters", he said.
A spokeswoman for the Minister for Finance said Mr McCreevy would be consulting with colleagues and Greek and Danish counterparts on the board of the EIB about the nomination of a new candidate for the vice-presidency in coming days.
She said there had been contact between officials and Mr O'Flaherty over the last number of days with assessments of the voting position in the EIB but no pressure that she was aware of had been put on Mr O'Flaherty to withdraw his name.