VIEW IN BERLIN:GERMANY HAS said the "chances are slim" of agreement on the standoff over Ireland's corporate tax at the EU summit which begins in Brussels today.
Other items on the agenda include a request by Chancellor Angela Merkel to extend the pay-in time to the permanent euro zone rescue fund (ESM) agreed earlier this week.
The German leader insisted yesterday that no country could expect solidarity without conditions.
“We are still in talks with Ireland, the principle of give and take has to be observed,” she said in Frankfurt.
Senior government sources said in Berlin yesterday that there had been little progress in talks with Dublin over the conditions attached to reducing the interest rate on Irish EU-IMF loans.
“At the moment I cannot recognise that the situation has changed significantly on the meeting 10 days ago,” said a senior government source. “The ball is in the court of the Irish Government: how they view the situation and what they can foresee doing. My expectation is that the chances are slim of an agreement” at this summit.
Elsewhere in Berlin, government sources said they were ready to hear Irish proposals on a way out of the stand-off.
“And it doesn’t have to be the corporate tax rate,” one official conceded, warning that France felt differently on this point.
Meanwhile, Germany is seeking a readjustment of the terms of the ESM bailout fund agreed by finance ministers earlier this week.
Dr Merkel has expressed unhappiness with the payment plan for Germany’s €22 billion contribution to the €80 billion cash component of the €700 billion fund.
Rather than pay half in 2013, the first year of the fund’s operation, and the rest later, Berlin would like to make five equal payments of around €4.4 billion each.
Berlin agrees that its wish will only be implemented if the ratings agencies agreed the fund would still retain its top triple-A rating.
“We are speaking internally with partners and this issue plays a big role. We don’t want to take a position that risks creditworthiness rating. We are well aware of this concern.”
Separately, Greek prime minister George Papandreou told Stern magazine that “German taxpayers” will get more money back than they lent Greece.
“Germany will get its money back, with high interest,” said Mr Papandreou. However, he warned that a possible restructuring would not be without casualties.
“A restructuring would possibility bring with it the collapse of Greek banks. But German banks too could collapse,” he said.
Senior European diplomats in Brussels said Dr Merkel’s request to extend the payment schedule was being treated as a significant one given the importance attached to the EU’s deadline for the agreement of a “grand bargain” to reinforce the battle against the debt crisis by tomorrow.
Diplomatic sources attributed the manoeuvres in Germany to domestic political concerns but said they had clear potential to undermine the agreement put in place by finance ministers last Monday.