The European Union is considering lowering the interest rates on bailout loans for both Greece and Ireland, and is also putting together a second rescue package for Greece in an effort to stave off debt restructuring.
The move comes in the wake of a report in the German magazine Der Spiegel, denied by Athens and EU ministers alike, that Greece was considering leaving the euro zone. Reuters reported that the discussion over lower rates came after a small group of top euro zone ministers met in Luxembourg on Friday evening to discuss measures to combat the ongoing debt crisis.
There is by no means unanimity on the issue, however; at a news conference, While German Finance Ministry spokesman Martin Kotthaus was quoted as saying, "There is no discussion at the moment about extending the payment schedule or lowering the interest rates for Greece," the executive EC said Monday that it hoped a decision would be reached within weeks on lowering the interest rate on Irish debt. A spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn was quoted as saying, "The Commission is clearly in favor of a rate cut. The Commission is against debt restructuring."
While the new Irish government has been pushing for a rate cut, Germany and France have opposed any such measure, wanting to push Dublin into either raising its own corporate tax rate or voting for a harmonization of the corporate tax rate across Europe. On the other hand, a senior lawmaker in German Chancellor Angela Merkel's party said that if Greece put in place more measures to reduce its debt risk, an additional interest rate concession would be appropriate.
The limited number of attendees at the Friday meeting brought angry comments from nations not included, and a spokesman from the German Finance Ministry denied that the meeting was in any way an attempt to create a two-class euro zone. At the talks, Greek Finance Minister George Papaconstantinou said his country might require alternative funding, since its ability to return to capital markets next year was doubtful, and Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, said there was a consensus that Greece would require another rescue.
After meeting with Spain, Italy, France, Germany, Olli Rehn and Jean-Claude Trichet, president of the European Central Bank (ECB), Juncker said, "We think that Greece does need a further adjustment program." However, he gave no details on what that program might entail.