Germany “taken by surprise” by collateral deal
Deputy Foreign Minister fears collateral dispute could cause problems for approval of Greek bailout in German Parliament
Germany’s Deputy Foreign Minister Werner Hoyer is worried that Finland’s agreement with Greece on cash collateral for bailout loans could make it harder for the German government to get the approval of the country’s Bundestag, or Parliament for the Greek bailout package.
Helsingin Sanomat interviewed Hoyer on Monday as he attended a meeting held in the Finnish Parliament on issues related to the Baltic Sea.
At what point did Germany learn about the collateral agreement between Finland and Greece?
“We knew that Finland had decided in its government programme to get collateral. However, it came as a complete surprise that Finland and Greece agreed on cash as collateral. We thought that it would involve real property. The idea of Finland getting cash collateral is very, very difficult for us.”
How did Finnish decision-makers explain why Finland should get collateral, while the others should not?
“In normal circumstances, demanding collateral is quite usual. But now Greece has put the ball back in Finland’s court by saying that Finland will get the cash collateral from the other euro countries.”
“The stabilisation agreement between Finland and Greece is, in practice, an agreement to the detriment of the third party. That will naturally not do. In other euro countries people are asking that if Finland can do it, then why can’t we?”
If Finland got real property collateral from Greece, then wouldn’t it still be in a better position than the other euro countries?
“Yes. We want to avoid that, but only through constructive dialogue.
Finnish Prime Minister Jyrki Katainen (Nat. Coalition Party) said that “everyone nodded” at Finland’s demand for collateral when the new Greek support package was agreed upon in July. Are you aware of the nods?
“Nobody sitting around that table imagined that cash collateral would be involved. In practice the money would go from one country supporting Greece to another, and reduce the total amount of aid.”
“Reacting to a domestic policy situation is justified, as long as the most important issues are not put in jeopardy – the euro and solidarity among the EU countries – solidarity both between those who are providing aid and those receiving it, as well as among the helpers.”
“Finland and Germany are among the greatest beneficiaries of the euro. If the currency were to collapse, the German mark would shoot up to the sky and Germany’s export-driven economy would plummet. The same would happen to Finland, or even worse.”
Does the collateral issue affect relations between Finland and Germany?
“No, but it would be terrible if Germany and Finland had to clean up the mess caused by the collapse of the euro.”
Are there any changes in how Finland is viewed within the EU?
“Saying even one word about that would affect Finnish domestic politics, so it is not my business to comment.”
Have the collateral talks jeopardised the support package for Greece?
“What is most important is that we should finally get the required majority in the German Parliament behind the Greek bailout. On Wednesday the government will decide on the main points of the proposal, and by that time we should know what the other countries plan to do. Questions are certainly being asked in Parliament on why some get special treatment. Every news item that erodes the unity of countries supporting Greece will cost us votes in Parliament. I am worried.”
On Monday Jean-Claude Juncker, the Prime Minister of Luxembourg, who chairs meetings of the ministers of finance of the eurozone countries, said that the countries are very near a solution in ironing out the final details of the support package for Greece. In his view, the collateral controversy will not prevent the implementation of the Greek subsidies. Juncker said that the euro group of countries is currently developing a collateral solution that will hopefully satisfy all euro countries.
Juncker says that partly to blame for the confused situation is the confusing final document of the July summit, on whose basis Finland and Greece started to negotiate on collateral.
Previously in HS International Edition:
Finland, Austria, and The Netherlands consider options for joint collateral for Greek loan guarantees (26.8.2011)
German Chancellor opposes Finnish demands for collateral for Greek loan guarantees (24.8.2011)
Finland and Greece agree on bailout terms (17.8.2011)
Euro countries angered at Finland for secrecy over Greek collateral pact (29.8.2011)