UPDATE 1-Kenny to press Irish case on debt costs with Merkel

Thu Mar 3, 2011 8:04am EST

Related Topics

* Kenny says interest rate issue will be raised in Helsinki

* Kenny expects to have private meeting with Merkel

* German govt source says bilateral meeting might not happen

(Adds comment from German government source)

DUBLIN, March 3 (Reuters) - Ireland's prime minister in-waiting Enda Kenny will again press for a cut in the cost of an EU rescue package when he meets with German Chancellor Angela Merkel this week.

Merkel on Wednesday cast doubt on the incoming Irish government's hopes of significantly renegotiating the terms of an 85 billion euro rescue it received from the European Union and the International Monetary Fund in December. [ID:nLDE72126Z]

Merkel said Europe could not "artificially reduce interest rates".

But Kenny told Reuters on Thursday that he would raise Dublin's concerns about the average 5.8 percent rate on some 40 billion euros plus of EU loans at a meeting of EU leaders who belong to the European People's Party in Finland this week.

"Obviously we'll be dealing with that in Helsinki on Friday," Kenny said on his way to talks between his centre-right Fine Gael party and the centre-left Labour party over forming a coalition government.

Merkel said on Wednesday that if Ireland had problems with the interest rates, she would consider the issue, but there were benchmarks. Dublin could not expect to pay less for rescue loans than Portugal paid to refinance itself in the market, she said.

Kenny, who paid pre-election visits to Merkel and the head of the European Commission President Jose Manuel Barroso, said Ireland's European partners were aware of Dublin's concerns over the terms of the bailout.

"We made our position very clear to President Barroso and the Chancellor."

Kenny said he expected to have a private meeting with Merkel on the sidelines of the EPP summit in the Finnish capital.

"I'll certainly get a few minutes," he said.

However, a German government source cautioned that a one-on-one meeting might not be possible given tight schedules.

"In Helsinki there is very little time for any bilateral meeting. So it is not certain that a meeting with Kenny will be possible," said the source.

(Reporting by Carmel Crimmins; editing by Ron Askew)

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