Finnish contribution rendered void

Greece and Finland agreed on Tuesday to virtually cancel the latter?s participation in the former?s second bailout package, following three days of negotiations between Finance Minister Evangelos Venizelos and his Finnish counterpart Jutta Urpilainen.

Finland?s share in the 109-billion-euro package amounts to about 1 billion, which Helsinki will pay to Greece but Athens will repay it through a new loan contract to be signed for this purpose and which will be valid for the next 25 years (likely to be the maturing period of the new loans, too).

This means in practice that Finland?s contribution to the new package will be returned in full and deposited in a special account to be created by the Finnish government.

The 1 billion euros will be returned by 2036 with full interest provided Greece meets its targets, otherwise the 1 billion will automatically revert to Finnish possession.

The reason for the agreement was the considerable opposition in Helsinki to the supply of any kind of financial assistance to Greece, after the Finnish government was elected on its pledge to secure collateral from Greece for any new loans.

Urpilainen confirmed yesterday that the two countries came to an agreement on the supply of collateral, which will need approval from European Union officials. Sources suggested that as Greece did not want to supply collateral such as state properties to get new loans, Venizelos proposed the creation of the aforementioned scheme, which in effect disengages Finland from its pre-election pledge regarding Greece?s package. Greece, for its part, may be losing out on 1 billion euros but does not run the risk of a rejection of the eurozone summit decisions from July 21, which could have stalled the whole package.

Venizelos stated that the scheme created ?does not include any assets,? adding that the details will be sorted out toward the end of the week by the representatives of Eurogroup ministers, known as the Euro Working Group.

Meanwhile Athens is continuing to apply pressure on other eurozone governments in order to secure the fastest approval possible for the July 21 decisions, regarding the expansion of competences of the European Financial Stability Facility (EFSF), with Venizelos speaking on the phone to a number of his colleagues, including Germany?s Wolfgang Schaeuble.