europe pressured to revise irish and greek "bailouts"

Reuters | The European Union is under pressure to renegotiate its financial bailouts of Ireland and Greece after an Irish minister said any concessions given to Athens should mean better terms for Dublin as well.

The 110-billion-euro ($157 billion) rescue of Greece, agreed in May last year, and the 85-billion-euro scheme for Ireland, put together in November, were meant to be the cornerstones of the euro zone's response to its sovereign debt crisis.

The fact that both may now be revised, in Greece's case perhaps radically, underlines how they so far have failed to convince markets that the problems are in hand, and suggests Europe may be on the hook to supply fresh aid for years to come.

Irish Minister for Energy Pat Rabbitte told state broadcaster RTE on Sunday he would like to see a rescheduling of the emergency loans extended to Ireland under the bailout by the European Union and the International Monetary Fund.

"Quite frankly the (interest) rate on Ireland must be reduced and in my own view the debt must also be rescheduled but that's another issue," Rabbitte said.

He said Ireland intended to continue negotiating improvements in the bailout terms throughout the scheme's three-year life.

Rabbitte said this would make sense in light of the situation in Greece. After a secretive meeting of top euro zone finance officials in Luxembourg on Friday night, Jean-Claude Juncker, chairman of the zone's finance ministers, said there was consensus that Greece needed a new plan.

"We think that Greece does need a further adjustment programme," Juncker said after talks with the finance ministers of Greece and the zone's biggest economies: Germany, France, Italy and Spain.

"This has to be discussed in detail and will be taken up at the next Eurogroup meeting on May 16," Juncker said, referring to a conference of finance ministers of all 17 euro zone states.

British finance minister George Osborne agreed on Sunday that Greece might need additional aid but said Britain, which is outside the euro zone, should not have to provide any. He acknowledged that markets doubted Greece could meet the requirements of its current rescue plan.

"The market is quite skeptical about that happening and I suspect a lot of my time over the next few weeks is going to be with other European finance ministers talking about how we try to help the Greeks get through this situation," he told the BBC.

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Any renegotiation of the financial terms or economic targets in the Greek and Irish schemes could complicate the rescue of Portugal, which last week became the third euro zone state to agree on an EU/IMF bailout.

Portugal's main political parties have committed themselves to supporting the 78-billion-euro plan after elections on June 5 produce a new government. But if Greece and Ireland are allowed to renegotiate their bailouts, it may be hard to deny Portugal the same opportunity if a future government in Lisbon decides that is necessary.

A revised Greek plan could include pushing further into the future the targets for Greece to cut its budget deficit, easing the terms of its emergency loans, and giving it additional money, EU official sources and analysts say.