Ireland's new prime minister in waiting pleaded with fellow European conservative leaders on Friday for easier terms on Dublin's financial bailout loans, but was told there would be no free lunches.
Enda Kenny acknowledged that many European governments opposed his wish to make senior bondholders in shattered Irish banks share with taxpayers the massive losses that forced his predecessors to seek an IMF/EU rescue last November.
If that's not to be a focus of action, then there has to be another measure of flexibility shown, Kenny told the national broadcaster RTE in Helsinki on the sidelines of a meeting of the center-right European People's Party.
German Chancellor Angela Merkel, in Helsinki for the meeting, said any action by European authorities could not be one-sided, benefiting one member state alone.
It will be always about taking and giving. It does not make sense to help one country if there are no new conditions on another issue, Merkel told reporters.
Ireland's attempts to ease its interest rate burden have clouded efforts by European states to forge a common position on how to address the debt crisis and boost competitiveness.
Host Finland said the common will was there for European leaders to agree a pact, possibly this month, that would call on member states to enact national legislation on debt.
We agreed we need a stronger debt rule. We need to give a numerical target (for) how fast the debt needs to be cut, Finnish Finance Minister Jyrki Katainen told a news conference.
Earlier in the week, Merkel had questioned the idea of changing the terms of an 85 billion euro ($119 billion) Irish package, saying interest rates could not be cut artificially.
Katainen told Reuters before the meeting that the European Union should not loosen conditions on rescue loans for Ireland.
There are no free lunches, Katainen said in an interview.
Of course we have to take care that the Irish package really works, because it is in all our interests to ensure that Ireland will recover ... Therefore we have to look at the debt sustainability.
Ireland argues that the 5.8 percent interest rate set on euro zone rescue fund loans will worsen its debt woes.
European Commission President Jose Manuel Barroso told reporters: I am sure Ireland will come out of this crisis stronger, but there are some painful measures to be taken. That is reality.
Officials in Helsinki said no one had directly criticized the Irish position, but no one had expressed support either.
Merkel said earlier that European leaders must deliver a convincing response to the euro zone's debt crisis, regardless of a European Central Bank threat to raise interest rates.
European Central Bank President Jean-Claude Trichet shocked markets on Thursday by saying the ECB may increase rates as early as April due to inflation risks.
Regardless of the question of the ECB and interest rates, we know that we need to put a joint package for the euro zone on the table, Merkel told a joint news conference.
She stressed Germany's priorities to strengthen fiscal discipline and boost economic competitiveness in the 17-nation single currency area, but did not rule out letting the euro zone's temporary rescue fund buy government bonds.
Germany, the EU's main paymaster, has made no commitment so far to increasing the lending capacity of the European Financial Stability Facility or letting it help countries more flexibly.
Merkel's center-right coalition parties and the Bundesbank have publicly opposed allowing the EFSF to buy bonds or lend money to fund debt buy-backs by states in difficulty.
EU diplomats say Germany is waiting to see what commitments other countries are prepared to give at a March 11 euro zone summit before showing its hand on the rescue fund and whether to boost it to allow its full 440 billion euros to be lent out.
Analysts said the ECB move raised the pressure on EU leaders to agree on decisive action at this month's summits.
Failure would risk a fresh market attack, probably first against Portugal, which is seen as the likeliest candidate to follow Greece and Ireland in needing a bailout.
Intentionally or otherwise ... the ECB's change of stance would also appear to send a timely signal ahead of (the) summit that it is not prepared to set monetary policy purely to support the region's weaker economies while European policymakers dither over a solution to peripheral debt crisis, Jonathan Loynes of Capital Economics wrote in a research note.
The ECB did agree to keep offering banks unlimited liquidity until mid-year, something Portuguese banks have relied upon.
Prime Minister George Papandreou of Greece warned of a bond market backlash if European leaders failed to act decisively.
If our decisions in the EU are not brave and effective, markets will react very quickly and we will find ourselves at the negotiating table again. he said in a speech to his Socialist party's national council in Athens.
European Monetary Affairs Commissioner Olli Rehn, speaking in Paris, cautioned that a successful outcome to the sovereign debt crisis is by no means guaranteed.
In one sign of possible trouble ahead, Fitch Ratings revised down its sovereign credit rating outlook for Spain to negative from stable on Friday, citing the long-term impact of restructuring its savings banks.