BERLIN (Reuters) - Countries that share the euro currency must grant debt-strapped Greece and Ireland easier terms on loans they have provided, European Monetary Affairs Commissioner Olli Rehn told a German newspaper.
In comments to be published in Monday’s edition of Handelsblatt business daily, Rehn recognized appeals from both countries that conditions on financial bailout loans be eased.
“There is a danger we could overburden both countries with overly strict credit conditions ... (The euro zone must) lower interest on loans for Greece and Ireland,” he said.
The time frame of loans to Greece should also be doubled to seven years from three-and-a-half years, he added.
Ireland’s attempts to ease its interest rate burden have clouded efforts by European states to forge a common position on how to address the debt crisis and boost competitiveness.
On Friday, Ireland’s new prime minister in waiting pleaded with fellow European conservative leaders for easier terms on Dublin’s loans, but was told there would be “no free lunches.”
Prime Minister George Papandreou of Greece warned of a bond market backlash if European leaders failed to act decisively.
Turning to the euro zone’s rescue fund in general, Rehn appealed to Germany’s lower house of parliament, the Bundestag, to soften its opposition to expanding the fund’s powers to combat Europe’s debt crisis.
“I urge the Bundestag not to lose sight of the continuing difficulties in financial markets... several euro zone states are still in danger,” he said.
The Bundestag has forwarded a motion to be voted on in mid-March that seeks to rule out bond buybacks by the euro zone’s permanent rescue fund after 2013.
It also takes a hardline stance against most potential solutions to the debt crisis that could make it harder for Chancellor Angela Merkel to compromise with her euro zone partners in upcoming talks on the matter.
Germany, the EU’s strongest economy, has made no commitment so far to raising the lending capacity of the European Financial Stability Facility or letting it help countries more flexibly.
EU diplomats say Berlin is waiting to see what commitments other countries are prepared to give at a March 11 euro zone summit before showing its hand on the rescue fund and whether to boost it to allow its full 440 billion euros ($614.6 billion) to be lent out.
Writing by Brian Rohan; editing by Keiron Henderson