Germany ready to revisit Irish bailout terms

Germany signalled it would be ready to adjust the Irish and Portuguese programmes once the second bail-out deal for Greek is finalised.

But eurozone finance ministers put off agreeing the new €130bn deal until Wednesday, but is still far from guaranteed.

Despite Athens agreeing an extra €3.3bn worth of cuts, the eurogroup said the parliament must vote it through on Sunday and coalition government leaders must each sign up to them. They are also demanding a further €325m in cuts.

Making it clear that they do not trust Greece to deliver on the commitments, the European Commission is to put additional staff into Athens to oversee action and reforms including in tax collection and privatisation of state assets.

The Greek government will not be given direct access to the new money as it will be put into an escrow account to meet debt commitments first and only then to fund the state.

Eurozone ministers will meet again on Wednesday when analysts will have calculated how much the total package of cuts and private sector involvement is worth. The question of the ECB taking a cut will then be discussed.

But while Greek finance minister Evangelos Venizelos said the atmosphere was terrible and that he had to put up with insults, the atmosphere was different for Ireland and Portugal. EU sources said Germany indicated they were open to adjusting the programmes for the two countries, once Greece was finalised.

What form this would take was not clear but it could mean a new longer term loan to replace the €32bn of Anglo Irish Bank promissory notes, or extending the repayment period of the bailout loans. It might also involve the ECB foregoing profits on the bonds it is holding of the programme countries.

Finance Minister Michael Noonan on his way into last night’s meeting said getting the Greek issues resolved was important to stabilise the eurozone and important for Ireland. “It might give us an opportunity to advance the separate negotiations that are ongoing on the promissory note,” he said.

Mr Noonan appeared more confident about lowering the cost of the €32bn worth of Anglo Irish Bank promissory notes which will cost the country €3.1bn a year over the next 10 years, saying they were now “negotiating an alternative”.

He added: “We would be watching very carefully the elements of the Greek programme to see if there was flexibility in the ECB.”

The European Central Bank is expected to use the profit of €11bn they expect to make on the €42bn of Greek bonds they hold to help defray Greek debt.