Helsinki insisted Wednesday it could forge a deal on Greek collateral acceptable to its eurozone partners, as analysts said Finland’s pro-EU government was unlikely to pull out from the Greece bailout.
“We will not damage the European Union, the euro, or the interests of any member state,» Minister for European Affairs and Foreign Trade Alexander Stubb told AFP.
“If we are in a position that we can’t persuade our European Union partners (to approve Finland’s bilateral deal to obtain collateral from Greece in exchange for loan guarantees), we will be looking at finding a creative solution,» he said, insisting the EU needed «to stick to the timetable that has been put forward in the rescue package.”
When asked if Finland might still withdraw from the Greek bailout package if it does not get some form of collateral, as hinted by Prime Minister Jyrki Katainen Tuesday, Stubb did not provide a clear answer.
Instead, he reiterated that the Nordic country would work to find a collateral deal acceptable to the bloc.
During negotiations in Brussels in July to hammer out a 159-billion-euro ($230-billion) second rescue for Greece, Finland maintained that it would only agree to back bailout loans in exchange for collateral.
But Helsinki’s deal for a cash collateral mechanism, agreed with Athens last week and submitted to the EU for approval, was swiftly met with criticism from Germany, the Netherlands, Austria, Slovenia and Slovakia, and appeared to put the debt bailout at risk.
On Wednesday, a German government spokesman insisted «other means must be found to reassure Finland» that its contribution to a European rescue package will be secure apart from cash guarantees.
Stubb and other government members have said they are willing to renegotiate the collaterals deal, but have stopped short of saying the collateral requirement could be dropped.
Reijo Heiskanen, the chief economist of the OP-Pohjola Group, meanwhile told AFP Wednesday Finland had no choice but to re-negotiate the terms of collateral if it wanted to keep the bailout on schedule.
“Finland’s agreement for a cash collateral simply won’t work for every country. It doesn’t make sense. They’ll have to think of some other way to provide collateral,» he said, adding he did not think Finland would opt out of the bailout.
“Katainen has insisted the Finland does not want to rock the EU’s boat, and that he will find a solution to keep Finland involved,» he said.
Stubb said he understood why there was «an element of frustration» in the EU, but insisted Finland was committed to solving problems, not creating them.
Finland’s demand for collateral was written into the government programme in June and ratified by the parliamentary committee that oversees EU policy, which means Katainen cannot unilaterally sidestep the issue.
Helsinki’s contribution to the loan guarantees is estimated to be only around two percent of the total rescue, but the issue has become deeply political in Finland, where the question of EU bailouts became a hot debate leading up to general elections in April.
The stunning rise of the anti-EU Finns Party (formerly known as True Finns) coloured the entire debate, and pundits say it forced even the traditionally pro-EU Social Democrats to adopt a more critical stance as public opinion mounted against the bailouts.
SDP chair Jutta Urpilainen, who took over the finance ministry after the elections, was the primary driver of the collateral clause, even refusing to take her party into the government without assurances from the prime minister.
Political analyst Teija Tiilikainen, who heads the Finnish Institute of International Affairs, said that although Katainen’s government was caught between domestic politics and the EU it was unlikely he would let the Greek bailout fail.
“Katainen has said the collateral issue is important, but he has insisted that Finland is not going to be a problem… I do not think he wants to see the package fail,» she told AFP.
During election campaigning, Katainen, the head of the conservative National Coalition Party, was among the most vocal supporters of EU bailouts, and on Tuesday he said Finland would seek a compromise that is «acceptable and tolerable» to other EU nations.
Stubb, a fellow conservative, said the government was well aware of the bigger picture: ending the debt crisis and encouraging growth.
“It is not in our interest, nor in the interest of the European Union that the euro is unstable,» he said.