Finland throws support behind Greek bailout it says won’t work
A third Greek bailout won’t work and will only prolong the difficulties plaguing the euro area, according to Finnish Foreign Minister Timo Soini.
But his party, the euro-skeptic the Finns, is ready to discuss another rescue package because allowing Greece to fail would only add to Europe’s costs, he said.
“Truth is the strongest force,” Soini said in an interview on Saturday. “We should admit that this isn’t going to work.”
Soini shares the skepticism of Greece’s ruling Syriza party, which despite its opposition to further austerity measures, is seeking 86 billion euros ($93 billion) in international loans to stay afloat. Greece is struggling to strike a deal with its creditors as 3.2 billion euros in debt to the European Central Bank falls due on Aug. 20.
The Finns party, which in April became part of a ruling coalition for the first time, has no choice but to support a bailout since not doing so would cause the three-party government to collapse. That would only open the door for the left-wing opposition, Soini said.
“I kept my party in the opposition for four years because of this subject,” he said. “But with this government structure we can’t block the program alone and we’d be replaced.”
Hard Bargain
While Finland drove a hard bargain during Greece’s second bailout, it may no longer have the clout to block a deal. Finland has already made its 1.44 billion-euro contribution to the permanent European Stability Mechanism. Should Europe decide that the future of the euro zone is at stake, a bailout won’t require unanimous backing from members; 85 percent is enough.
Even without an imminent bailout agreement, a European fund deployed in July to help Greece clear arrears contains about 5 billion euros and could be tapped again for a bridge loan.
According to Soini, bridge financing will do little to solve the long-term fiscal plight Greece faces.
“This bridge funding isn’t going to be final solution,” he said. “There’s no solution for this particular problem that doesn’t cost Finnish taxpayers. If Greece collapsed and Grexit would be tomorrow’s reality, we would lose 3-4 billion euros more or less at once. So I hope that the EU and euro zone, that in due course, we can face the facts and say enough is enough and that we must do something else.”
A future “red line” in EU policy that the Finns won’t accept is common debt, a common budget, a common finance minister and a common finance policy, Soini said.
“That will be the end of European Union,” he said.
[Bloomberg]
