Finland Likely to Pass Expanded Rescue Fund, Urpilainen Says
“It would show Finland in a very bad light if Finland rejected the measures used to counter the crisis,” she told reporters today, after giving a speech at a tax event hosted by the Chamber of Commerce in Helsinki. Passing the measures is the “responsible” thing to do, she said.
Finland’s insistence that it get collateral in exchange for its contribution to a second Greek bailout has threatened to derail Europe’s crisis-fighting efforts and roiled European financial markets. The yield on Greece’s two-year notes soared to more than 65 percent this week.
Talks on collateral among European Union countries should end as soon as possible, Urpilainen said, without providing details. The Greek government is seeking to accelerate budget cuts to ensure the next tranche of an international rescue package is delivered in October to stave off default.
Spain, France, Italy, Belgium and Luxembourg have already approved the enhanced powers for the 440 billion-euro ($601 billion) fund. All euro-region nations need to approve the plan adopted by European leaders on July 21.
Under its expanded powers, the European Financial Stability Facility would take over bond buying responsibilities from the European Central Bank and be able to lend to nations before they need a bailout.
Slovenia’s minority government headed by Prime Minister Borut Pahor was toppled in a confidence motion over pension changes yesterday, potentially delaying the vote on the EFSF.
A delay in Slovenia would slow the whole ratification process, since Slovakia, where one of the ruling parties, Freedom and Solidarity, opposes a more powerful EFSF, has already made it clear that it wants to be the last euro-region member to vote on the issue, Michal Dybula, an economist at BNP Paribas in Warsaw, wrote in a note to clients.
Finland’s six-party government, which has a majority in parliament, might collapse if it doesn’t deliver a collateral accord, according to Timo Tyrvaeinen, chief economist at Aktia Oyj. (AKTAV)
The collateral dispute reflects the bailout fatigue that is spreading in Europe’s more fiscally prudent countries, fueling support for political parties opposed to aiding the region’s more profligate members. In Finland, the anti-bailout party, which calls itself “The Finns” after changing its name on Aug. 22 from “The True Finns,” campaigned against the rescues, forcing other parties to address voter concerns by seeking to cap Finland’s liabilities.
National politics is increasingly at odds with efforts to forge European unity, complicating a comprehensive response to the debt crisis that now threatens Spain, Italy and France.
Finland’s legislature is scheduled to vote on the amendments to the EFSF on Sept. 28.
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