Political situation in Finland problematic for EU

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Economic and Monetary affairs Commissioner Olli Rehn was in an uncharacteristically tense on Monday.
      After speaking at a seminar of the European Commission and the European Central Bank in Brussels, Rehn left immediately after his presentation, refusing to answer any reporters’ questions on the Portugal bailout issue.
     
Rehn is dealing with the same problem that is facing the leaders of the euro zone: what to do if Finland rejects the EUR 80 billion bailout package for Portugal, which was ironed out by EU finance ministers in Hungary last month?
      Rehn is under considerable pressure now to find a solution to the issue. The chairman of the euro group, Luxembourg’s Jean-Claude Juncker and EU President Herman Van Rompuy will have to consider alternate plans, which do not yet officially exist.
     
For Portugal to get credit from the temporary financial stability facility, the decision needs to be unanimous.
      Some of the credits for Portugal need to come from a fund supported by the Commission and some from the International Monetary Fund. However, the assets of the Commission’s fund are not sufficient on their own, and the IMF does not want to offer credit to Portugal without the participation of the euro zone countries.
     
If consensus is not reached, the euro countries – with the exception of Finland and the crisis countries benefitting from the bailout – can agree on the Portugal bailout by making a series of bilateral agreement. However, there is considerable resistance to this.
      Finland is currently in the midst of government formation talks, and the True Finns, one of Finland’s three largest parties and the big winner of the elections, is adamantly opposed to participation in the bailout plan.
      Finland still lacks a clear stand on what its future policy on Portugal will be. The deadline is the 16th of May, but in practice, it needs to be set by the end of this week.


Previously in HS International Edition:
  Commissioner Rehn warns Finland of consequences of rejecting Portuguese bailout (21.4.2011)
  Katainen and Kiviniemi disagree on how to proceed in Portugal bailout issue (20.4.2011)

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