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INTERVIEW-UPDATE 1-Germany: Irish must do more to soften bailout

Published 03/29/2011, 03:19 PM
Updated 03/29/2011, 03:20 PM
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* Schaeuble says Ireland must present more measures

* Minister sees G20 progress on global monetary system

* Wants China, BRIC states' help in G7 interventions (Adds quotes and details from wide-ranging interview)

By Annika Breidthardt

BEIJING, March 29 (Reuters) - Germany's finance minister told Reuters on Tuesday that Ireland must present more savings measures, as Greece did, if it feels the need to renegotiate the terms of its bailout from the European Union and IMF.

"If Ireland sees the need to renegotiate the conditions, then, as we told Ireland on March 11, it has to show first what additional measures it can take itself," Wolfgang Schaeuble told Reuters in an interview en route to China.

"Greece did that and therefore was honoured with a change in the conditions. Ireland hasn't done that so far," he said. "I don't want to criticise, the Irish government has only been in office shortly, but it is a clear precondition."

Ireland's new government has been seeking a reduction in the interest rate it pays on loans under the 85 billion euro rescue package it sought late last year to prop up its failing banks after being frozen out of debt markets.

"The ball is now in Ireland's court," said the minister. He would not comment on Germany's proposals that Ireland increase its low corporate tax rate as a condition for easier terms.

Another struggling euro zone member, Portugal, was deemed by the European Union at a March 11 summit to have drawn up tough enough austerity measures to preclude the need for a bailout and that assessment had not changed yet, Schaeuble said.

Portuguese Prime Minister Jose Socrates resigned last week after parliament failed to endorse his reform programme to cut the budget deficit.

"If Portugal sticks to its commitments, independently of new elections, that would be the right path," said Schaeuble, whose boss, Angela Merkel, strongly backed Socialist Socrates' reform package and chided Portugal's parliament for not supporting him.

Even so, Schaeuble said, the risk of contagion in the euro zone had been reduced since one year ago, and there would be no impact on the stability of Merkel's coalition or its euro-zone policy from an election setback last weekend in a German state.

CHINA, BRIC STATES MUST HELP

The German minister spoke on his way to a high-level G20 meeting on currency reform and said there would be "concrete movements" on this issue this year, while the group would also be giving more importance to energy and commodity policy to help guard against speculation.

Schaeuble said there would also be a push to help developing countries build up their capital markets with adequate rules so they can "reduce ... dependency on speculative developments."

The German minister said exclusive reliance on the dollar was "not especially helpful for the dollar nor for the rest of the world and a somewhat more balanced situation would naturally be in everyone's interests."

The recent G7 currency intervention to stabilise the Japanese yen after the earthquake, tsunami and nuclear crisis had proved helpful because of the agility of this mechanism by a small group of nations, Schaeuble said.

"But in the future it would be important for other strong states to contribute, especially China and the other BRIC states," he said, using the acronym for the fast-developing economies of Brazil, Russia, India and China. (Reporting by Annika Breidthardt via Berlin Newsroom; writing by Stephen Brown; Editing by Kenneth Barry)

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