Parliament argues over giant loan to Greece

Opposition calls for banks to be brought to book for reckless lending

Jyrki Katainen

Raimo Vistbacka

Jutta Urpilainen

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The EUR 1.6 billion loan that is to cover Finland’s contribution to the Greek rescue package led to a fierce debate in Parliament on Tuesday.
     
Minister of Finance Jyrki Katainen (National Coalition Party) said that the proposed loan is the only alternative in this dilemma. However, the opposition party, the Social Democrats, said that another alternative would be to demand that the financial institutions that granted credits to Greece should assume greater responsibility for the country’s financial distress.
      Prime Minister Matti Vanhanen (Centre) expressed concern over how well the protesting Greek people could commit themselves to a massive streamlining programme in the public sector.
     
     
Who is guilty?
     
Who is actually guilty for the Greek distress? This was one question to which Parliament was trying to find an answer on Tuesday.
      Minister of Finance Jyrki Katainen announced right away that the culprits can be found only in Greece.
      He said that the guilty party must be among irresponsible politicians and the coalitions of various colours of recent years.
     
A large group of MPs wanted to blame the distress on Greek and European banks which have been granting Greece loans on very high rates of interest.
      ”We are now rescuing the banks that have given Greece loans at high interest rates, while impoverishing the Greek people”, argued Esko-Juhani Tennilä (Left Alliance).
      Like many others, Tennilä was also puzzling over how Greece would ever be able to pay back its debts - especially as it is now forced to adopt a severe emergency action plan.
     
The Finnish MPs feel that stepping in with financial backing to buoy up Greece in practice means that even Finns will take part in supporting the banks that have given loans to Greece.
      ”Profits are privatised while losses are socialised”, the opposition SDP Chairman Jutta Urpilainen (SDP) commented acidly, while even Ben Zyskowicz (National Coalition Party) was horrified and infuriated over the fact that the country’s budget deficit would have to be paid in part by Finnish tax-payers.
      Some MPs blamed even ordinary Greeks for the financial crisis, saying that the country has clearly been living beyond its means.
      In other words, ordinary voters should have demanded budgetary discipline from their politicians.
      However, Paavo Arhinmäki (Left Alliance) said that it is needless to blame the Greek distress on low-salary Greeks, when there is no doubt that the culprits are the country’s political élite, together with banks and financial institutions.
     
     
Was there any alternative?
     
The representatives of the parliamentary parties see no alternative to the Greek aid package, even though Finns feel that lending money to Greece to rescue the country from its current financial crisis is repugnant.
     
Nevertheless, the MPs also discussed whether or not it would have been sensible to let Greece to become insolvent.
      However, Minister of Finance Katainen said that such a situation would provoke an immediate crisis even in other countries.
      It could even sink some financial institutions, which might eventually have serious consequences here in Finland, too.
      ”The loan option is also like a leap in the dark. There is no 100% guarantee that this bailout package will be enough to rescue Greece”, Katainen noted.
      Erkki Tuomioja (SDP) asked whether European finance ministers really believe that Greece could avoid insolvency.
      ”The bailout package might just buy them more time”, Tuomioja argued.
      Even other opposition members were horrified at the lack of alternatives, though some suggested the radical step of expelling Greece from the eurozone and letting its currency devalue.
     
     
What will happen next?
     
Many MPs called for thorough changes to the support and follow-up systems within the European Union.
      Jyrki Katainen, who claimed he was himself less than well-pleased at having been obliged to get on board with the rescue package, brought up for example the possibility of freezing structural fund payments to a member-state that does not comply with the EU directives.
      The Finance Minister said that he believes that Greece would pay the money back, as if it failed to pay back its loans it would no longer have any friends in the entire universe. ”With the exception of Finland”, someone shouted derisively to Katainen.
     
Parliament also debated how committed Greek people are to the emergency action plan that their politicians have now signed up to.
      Prime Minister Matti Vanhanen (Centre) regarded this as the key question. ”Will this go through in Greek society?” he asked, saying that the streamlining programme will be extremely hard for the Greek people.
     
In fact, the tough cuts are already meeting fierce public resistance.
      Tens of thousands of Greek citizens have already been protesting in anticipation of the aid deal.
      On Wednesday morning, young communist agitators were seen distributing leaflets in order to encourage Greeks to go on strike to protest the deal.

More on this subject:
 Väyrynen - Finland could still opt out of rescue package

Previously in HS International Edition:
  Greek bailout sparks criticism in Finland (3.5.2010)
  Finnish government sees no alternative to Greek aid package (4.5.2010)

See also:
  Finland wants Greece to pay adequate interest on any emergency loans (26.3.2010)
  EU urges Greece to enact more spending cuts (16.2.2010)

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