German Chancellor Angela Merkel told lawmakers she would back lower interest rates for emergency loans if Greece agrees to sell state assets and Ireland backs a common corporate tax base in the euro region.
Merkel briefed a closed-door parliamentary session today in Berlin on her position as European Union leaders seek to break a deadlock on reinforcing their bailout plan and coordinating economic policies, said four lawmakers who attended the session of the body's European Affairs Committee.
Her willingness to back what she called a moderate reduction in the cost of the rescue loans sought by Greece and Ireland marked a turnaround one day before a meeting of EU leaders in Brussels. The comments followed the first acknowledgement by Merkel's government today that an expansion of the European Financial Stability Facility to lend its full capacity was on the table.
"It is a difficult negotiation and the negotiations are not over," Greek Prime Minister George Papandreou told reporters in Paris today after meeting with French President Nicolas Sarkozy.
Merkel won't support bond buying in the secondary market by the EFSF and the future permanent rescue fund, she told lawmakers. The post-2013 ESM can only be allowed to dispense aid as a last resort, she said.
To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Rainer Buergin at rbuergin1@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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