As euro zone ministers discussed easier terms and a second bailout for Greece, they also considered relaxing the terms under which Ireland must repay its own package of rescue loans.
Reuters reported on Tuesday that, according to officials, the European Union was considering lowering interest rates for Ireland's rescue loans within weeks—this despite Prime Minister Enda Kenny's refusal to consider changing the nation's corporate tax rate to satisfy Germany and France.
Ireland's corporate tax rate is the lowest in the euro zone, and Berlin and Paris view it as creating unfair competition within the 17-nation zone. Dublin has thus far refused to consider any modification in its rate, saying that it is necessary for any possible recovery by Ireland. Dublin has also blocked with a veto a vote on harmonizing the corporate tax base in Europe, and in return France and Germany have refused to allow its bid for lower interest rates to succeed.
Still, the executive European Commission is expected to act quickly to make Ireland's debt more sustainable, whether Dublin cooperates or not. A spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn was quoted in the report saying, "The Commission is clearly in favor of a rate cut. The Commission is against debt restructuring."
That’s good news for Kenny, who was reported to have told parliament that without a resumption of strong economic growth, "questions of sustainability will remain" about Ireland’s debt. "There is no doubt that a reduction in the interest rate on the moneys we are borrowing from Europe would be a meaningful and appreciated measure," he said in the report, and indicated that such news might come as early as next week at a euro zone finance ministers meeting.