EU's Rehn says Ireland, Greece need cheaper loans

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 recognised 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 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 eurozone'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 eurozone 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 eurozone 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.