The proposals are part of a longer-term solution to the debt worries of Ireland and other hard-pressed countries, along with the threat to the future of the euro.
But the price they will demand will have to be negotiated over the next few weeks, despite Ireland not having a government in office to defend the country’s interests.
Germany and the euro area’s other Triple A countries are ready to increase the amount of money available in the EU’s rescue fund, according to sources in Berlin.
They are also warming to the idea of making money available to buy back country’s debts which would effectively reduce the amount of money to be paid back.
Furthermore, the main players are looking at a number of ways of making it easier for Ireland and Greece to pay back the money they now owe the EU-IMF rescue funds.
European Central Bank member and head of the German Central Bank, Axel Weber, has already floated the idea of extending the loans to 30 years while reducing the 6% interest rate Ireland is paying for its €67.5 billion loan.
In exchange, the Germans are seeking a competitivity pact and have the support of France for many of its elements.
This would include, for example, raising the pension age to eventually reach 75 years of age, and harmonising tax rates across the 17 country bloc.
“There is a deal in principle between Germany and the other countries with top credit ratings to increase the fund, but they want concessions that they believe will help make the whole euro area more competitive and foster greater growth and job creation while reducing debts,” said an EU official.
There is a lot of work still to be done on the details. “This is just the start of the process”, the source said.
Plans for much greater control over national budgets by Brussels are well under way and member states will be tied into spending money on education, research and development to increase growth while being forced to cut their budget overruns.
An extraordinary meeting of leaders of the eurozone countries will be held in mid-March when more details will be thrashed out. And a final package should be agreed by the leaders of the EU 27 on March 25.