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5th Dec 2022

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

  • Stubb: 'We understand the demand our government has posed is not easy for others to accept' (Photo: consilium.europa.eu)

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.

Speaking to EUobserver by phone on Wednesday (31 August), EU affairs and trade minister Alexander Stubb said the wealthy northern country's demand for Greece to give guarantees for Finland's part in the second Greek bailout is not down to fear of losing money.

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"It isn't a question of the money. It's a question of principle. It reflects a sentiment that we have that you should not be rewarded for lax public finances. That's the whole point of being in the euro ... people have to be responsible about their public finances," he said.

He noted that Helsinki's motives are not entirely pure, however.

The anti-EU True Finns party won 20 percent of votes in recent elections after bashing Helsinki's earlier pay outs to Greece, Ireland and Portugal. Eurosceptic sentiment also led the Social Democrat party, which shares power with Stubb's National Coalition party, to promise voters it would get collateral for the new Greek loan.

"Our domestic agenda is part of our election result, which gave us a mixed bag. Unfortunately there are forces surrounding the True Finns which have influenced general thinking and political thinking in the way we have seen here," Stubb explained.

Helsinki believes that its demand for guarantees falls within the letter of a July eurozone agreement on the new rescue package.

But its tough line has prompted Austria, Malta, the Netherlands, Slovakia and Slovenia to insist that if Finland gets guarantees, then they should get them as well. With financial markets watching the talks for any sign of new risk to euro stability, the dispute threatens to delay plans to implement the new bailout by the end of September.

Stubb said he is "confident" and "optimistic" that a compromise can be reached. But he added: "If we don't find a deal, then we'll see what happens ... We understand the demand our government has posed is not easy for others to accept."

As previously reported by EUobserver, Helsinki has abandoned its original pact with Greece, under which Athens was to put around €600 million of cash into an escrow account in case it defaults.

Sources in eurozone finance ministries told this website the new deal is likely to see all 16 eurozone lenders get the option to ask for collateral if they want. The guarantees could be in the form of Greek Central Bank gold reserves or state-owned shares in banks.

One contact said lenders will be discouraged from taking advantage of the option by being forced to pay a related "cost" if they do.

Another source said there could be a "gentleman's agreement" that few, if any, countries actually trigger the option. "I have the feeling that this [the collateral dispute] is beginning to go away and is becoming less important. What we are looking for is a face-saving solution for everybody involved," the source noted.

Senior finance ministry officials from the 17 euro-using countries are currently holding almost-daily telephone conferences on the subject. A contact from a large eurozone country said there is hope of a breakthrough early next week, when treasury chiefs from all 27 EU members come to Brussels for the first post-vacation meeting of the Economic and Financial Committee.

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