Finnish PM says open to altering Greece deal for eurozone OK

08:44 | 24/08/2011
Finland is open to modifying a criticised collateral deal with Greece to win eurozone acceptance, but if that fails could withdraw from the bailout to the debt-saddled country, Helsinki hinted Tuesday.

An escalating dispute between eurozone countries over the collateral deal has raised concern the agreement on a second Greek debt bailout worth 159 billion euros ($229 billion) could unravel or its approval may be delayed.

"Our responsibility is to seek a solution which will be acceptable and tolerable to other eurozone nations," Prime Minister Jyrki Katainen said in a speech at a meeting of his conservative National Coalition Party colleagues in the southern town of Tampere, according to the Helsingin Sanomat daily's website.

An aide to the premier, Juha Kirstilae, told AFP that Katainen's comments did not mean Finland was considering giving up on the collateral deal, but that "there could be negotiations on the model of collateral, if the model agreed upon with Greece falls through due to opposition from other countries."

When asked whether this meant that Finland could refuse to support the second Greek bailout, Kirstilae stressed that "according to Finland's government programme, collateral is a prerequisite for Finland's participation in supporting Greece."

Last week the finance ministry announced it had agreed with Greece on a mechanism for putting up collateral to secure Finland's sovereign guarantee that will be used to raise the bailout funds.

Since then, however, Austria, the Netherlands, and Slovakia have sharply criticised the agreement, while Germany reiterated Monday that all 17 eurozone members must approve the agreement for it to go through.

"If there is collateral for one country, then all others must be treated the same way too," Austrian Finance Minister Maria Fekter said in Vienna on Tuesday.

Finland's deal with Greece was "not a suitable approach, she added.

The deal between Helsinki and Athens would have Greece deposit funds with Finland to cover the amount of the loan guarantee, a model with critics says negates the assistance to be provided.

Eurozone heads of state and government had mentioned the possibility of collateral agreements when approving the second Greek bailout in July.

Finnish Finance Minister Jutta Urpilainen has acknowledged that the deal will need the approval of its eurozone partners.

"We have found with Greece a technically suitable model and now the question is what kinds of political will there is to support this model," Katainen said Tuesday.

Finland has said for months that it would require collateral in exchange for extending guarantees to help cover Greece's second bailout package, and the issue was a hot-button topic ahead of Finland's general elections in April.

Urpilainen's Social Democrats, the second-largest party, insisted they would not be part of a government that approved loans without collateral, and parliament ratified the demand as criteria for extending guarantees before eurozone leaders met in July to forge the rescue plan.

AFP

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