ECONOMY

Merkel pulls brake on hopes of lowering Greek aid cost

German Chancellor Angela Merkel said that the European Union cannot commit to lower interest rates on bailout loans for victims of the debt crisis, in a rebuff to Greece and Ireland.

Merkel said that the two countries had signed up to conditions when accessing aid.

She was speaking at a joint press briefing in Berlin late on Wednesday with Portuguese Prime Minister Jose Socrates.

“We cannot artificially reduce interest rates. Ireland and Greece have taken aid,» she said, noting that the Irish package was only a few months old.

“Today, I cannot say if we will have to change the package.”

Greece pays about five percent for European aid. In May last year, the country was provided with a 110 billion euro EU-IMF aid package that runs until 2013.

With the European Union nearing its deadline for a reinforced plan to aid debt-strapped countries, some analysts interpret Merkel?s comments as a sign that Germany is stepping back from a willingness to forge a grand bargain to protect the euro.