Finland: No compromise on Greek collateral issue
Austria, Estonia criticise arrangement
Minister of Finance Jutta Urpilainen (SDP) is expecting the other euro countries to take a stand on the agreement reached between Finland and Greece on monetary collateral that Greece should provide for Finland’s loan guarantees. Officials of the ministries of finance of the euro countries will discuss the Greek bailout in Brussels on Thursday and Friday.
Although the implementation of the agreement requires the approval of the other euro countries, Finland is adamant that it will not discuss any changes to the package.
Jussi Lindgren, Financial Secretary at the Finnish Ministry of Finance says that if the agreement does not suit the other countries as is, then Finland cannot take part in guaranteeing the bailout loans for Greece.
As Finland sees it, participation in the guaranteeing of the loans of the temporary European Financial Stability Facility and the agreement between Greece and Finland are two legally distinct matters.
According to Finland, other countries cannot interfere in a legal agreement between two independent countries.
Finance Minister Urpilainen says that she has kept close contact with her European colleagues in the matter. However, she adds that Finland has not sought advance approval for the agreement.
“There is no information on how the other countries will act”, Urpilainen said on Wednesday during preparations for the next national budget.
Austria has said that it cannot accept the special conditions negotiated between Finland and Greece, and that it wants the same kinds of considerations if the deal is accepted by the eurozone countries
“The model has to be open to all euro countries. We plan to find out if this is the case”, said Austrian Finance Ministry spokesman Harald Waigelin in a telephone interview with Helsingin Sanomat on Wednesday.
Representatives of the eurozone countries are meeting today and tomorrow to discuss a number of issues, including the collateral arrangements between Finland and Greece. Waigelin says that Austria is not the only eurozone country that wants collateral from Greece if Finland gets it.
“We have information that many other countries take the same view, for instance Slovenia and Slovakia. The Netherlands have said something similar at some meetings. However, I don’t know if these are official points of view that would hold throughout the end.”
Austria says that it understands Finland’s demands from a political point of view, but from a purely economic basis, they are more difficult to understand, Waigelin says.
“As Greece cannot afford the collateral, the EU needs to help. Ultimately, it is the other member states that will pay. We cannot see how this would be fair. Austria has done much and paid much, and now it’s supposed to finance the collateral that Finland gets. There is no sense in this”, he observes.
If all of the euro countries start demanding collateral like Finland, little would be left of the emergency package. Every piece of cash collateral would diminish the money that Greece so urgently needs.
Waigelin says that Austria plans to propose a compromise in which certain countries would be offered more collateral than others. Under the proposal, countries like Finland and Austria, whose banks are not owed much money by Greek lenders, would be entitled to more collateral.
“Some countries are benefitting quite nicely from collateral on the private side [received by their banks]. Perhaps we could find a model in which these states would get less [public] collateral”, Waigelin explains.
Estonia’s minister of Finance Jürgen Ligi also criticised the agreement reached between Finland and Greece, saying that it deviates from the policy line taken by the euro group.
Ligi said that the collateral that Finland is demanding of Greece should have been discussed among the euro countries.
The European Commission also commented on the issue Wednesday. The view of the institution led by Economic and Monetary Affairs Commissioner Olli Rehn was typically non-committal.
The Commission notes that on July 21st, the euro countries agreed that collateral arrangements would be launched when it is appropriate to do so. The euro countries now have to examine the outcome of bilateral negotiations between Finland and Greece in light of this agreement.
Helsingin Sanomat also spoke with representatives of the Dutch and Estonian ministries of finance. However, the two countries do not want to say anything about the matter before the upcoming eurozone meeting.
Meanwhile, the German newspaper Die Welt quotes a spokesman for the Greek Ministry of Finance as saying that no agreement yet exists between Finland and Greece, because the EU finance ministers will not decide on the principles of the decision until next week.
“The Finns are acting as if an agreement had been made to calm public debate, as public opinion in Finland is opposed to participation in the aid to Greece.”
Previously in HS International Edition:
Finland and Greece agree on bailout terms (17.8.2011)
Katainen rejects opposition accusations of overstepping authority in euro crisis (3.8.2011)
Greek Finance Minister: Finland will be repaid (31.5.2011)