Monday

10th May 2021

Finland abandons Greek collateral deal under German pressure

  • Finnish far right politicians have pushed for guarantees. But others fear the deal could erode good will in Brussels (Photo: GregHickman)

Helsinki has abandoned a loan collateral deal with Athens after fellow eurozone countries said it threatened to undo the EU's second Greek bailout.

A contact in Finnish finance minister Jutta Urpilainen's office, speaking on condition of anonymity, told EUobserver on Friday (26 August): "The solution with Greece that we had last week is not valid any more but negotiations are ongoing for another solution."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The decision comes after German Chancellor Angela Merkel on Wednesday said eurozone countries "should not take unilateral steps in the Greek crisis". Austria and the Netherlands also said they would block the Finnish-Greek deal unless they got similar treatment.

Under the terms of a 21 July pact on the new Greek bailout, all 17 euro-using countries must give consent for any top-up bilateral arrangements.

Finland had originally agreed that Greece would place up to €600 million in an escrow account in case it could not pay back the full amount of Finland's €1.4 billion part of the rescue package. Urpilainen back in July indicated that Finland might accept Greek state-owned property instead of cash as a form of guarantee.

Eurozone countries are racing to implement the 21 July deal - which also covers new bond-buying powers for the EU crisis fund, the EFSF - by the end of September in order to restore market confidence in the single currency.

The currency club suffered another setback on Wednesday when the Cypriot parliament's finance committee declined to back government tax hikes.

The committee asked Nicosia's finance minister Kikis Kazamias for more time to prepare amendments.

The development comes as Cyprus risks joining Greece, Ireland and Portugal in seeking eurozone financial support after an explosion at a power plant last month blew a hole in the country's budget.

Opinion-makers have in recent days heaped scorn on the EU's attempts to contain the crisis.

Former German chancellor Helmut Kohl said Merkel has undermined Berlin's "dependability." One-time EU commission president Jacques Delors said the euro is "on the brink" and former US treasury chief Alan Greenspan said it is "breaking down."

For his part, French President Nicolas Sarkozy talked up the euro on a trip to China on Thursday.

"[Chinese President] Hu has made a very definitive declaration about the confidence that he has in the eurozone and in the euro," he told press.

Chinese state media ahead of the French visit described the euro crisis as a new form of Black Death - an epidemic which decimated medieval Europe.

"We are certainly worried about the West's economic difficulties," Chinese deputy foreign minister Fu Ying said in a statement posted on the foreign ministry's website last week. "If European countries can hand-in-hand resolve the problems, the EU will continue to progress and further integrate, otherwise the euro zone could collapse."

Finland puts Greek bailout package under pressure

The eurozone's second bailout for Greece, agreed in July, already looks in trouble as a series of smaller EU countries demands that Athens puts up collateral in return for national loans.

Eurozone bank buys record €22bn in bonds to contain euro crisis

The European Central Bank last week spent a record €22bn buying eurozone government bonds in a bid to prevent the eurozone debt crisis spreading, a move that is likely to fuel debate on the creation of eurobonds. Details of the buying spree came on the eve of a meeting between the French and German leaders in Paris.

Barroso raises alarm about severity of euro crisis

EU commission chief Barroso has indicated that market developments on Italy and Spain threaten the survival of the euro, amid fresh talk of increasing the EU's €440 billion bailout pot.

Finland on Greek collateral: 'It's not about the money'

Finnish minister Alexander Stubb has said his country's demand for Greek collateral is meant to defend the eurozone principle of financial responsibility. But he admitted that Finnish eurosceptics have played their part in the initiative.

Brussels tight-lipped on fresh austerity demands amid row with Athens

The European Commission is remaining tight-lipped over whether Greece will be forced to embrace still deeper cuts and further-reaching restructuring after EU, IMF and European Central Bank inspectors abruptly ended a review mission to Athens on Thursday evening.

News in Brief

  1. Lukashenko amends emergency transfer of power
  2. German centre-left picks Scholz as would-be chancellor
  3. EU has not ordered AstraZeneca vaccines beyond June
  4. Macron: Pandemic showed need for more EU integration
  5. Election win fuels Scottish nationalists' referendum plan
  6. Surge in migrant arrivals to Italian island
  7. EU embassy pays bail for Georgia opposition leader
  8. British aristocrats caught peddling Kremlin ties

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. EU and US urge Israel to defuse Jerusalem violence
  2. Frontex 'mislabelling minors as adults' on Greek islands
  3. Has Albania really met the 15 tests to join the EU? No
  4. Vaccine fairness plus Russia on table This WEEK
  5. EU ambassadors flock to Red Square for Putin's parade
  6. MEPs win battle for bigger citizens' voice at Conference
  7. Hungary gags EU ministers on China
  8. Poland and Hungary push back on 'gender equality' pre-summit

Join EUobserver

Support quality EU news

Join us