Finland approves increase in EU bailout fund
(HELSINKI) - Finland's parliament on Wednesday approved strengthening the European Union's debt bailout fund but Helsinki's unresolved demand for collateral still threatened the second lifeline for Greece.
"The result of the vote is -- 'Yes' 103, 'No' 66, with 30 absent," parliamentary speaker Eero Heinaeluoma said after the vote in the 200-seat legislature.
The speaker of parliament does not cast a vote.
The approval was essentially a foregone conclusion, since Prime Minister Jyrki Katainen's conservative National Coalition Party and its coalition partners had pledged to push it through.
It was nonetheless significant, since Finland, which is locked in a row over its demands for collateral in exchange for Greek loan guarantees, was seen as a potential stumbling block to implementing changes to the European Financial Stability Facility (EFSF) drafted at a July 21 eurozone summit.
The changes need to be approved by all 17 eurozone nations.
The July 21 agreement expands the EFSF, set up after the Greek May 2010 debt crisis, increasing its effective lending capacity to 440 billion euros ($599 billion).
The Finnish parliament's green light effectively commits the Nordic country to doubling the amount of bailout loans it will guarantee to 14 billion euros ($19 billion).
The changes are part of a wider accord on a second debt bailout for Greece after the May 2010 agreement proved inadequate to stabilise the country's strained public finances and faltering economy.
However, Finland's ratification of the deal and its participation in the second Greek bailout remains clouded by its continued demands for collateral, even after its attempt to bilaterally agree on guarantees with Greece was torpedoed by other EU member states last month.
That collateral dispute was sparked during Finland's April general elections, when the EU bailout packages became the top issue and voters flocked to parties that embraced a more eurosceptic attitude.
The vehemently anti-EU Finns Party went from being the smallest party to third-biggest and Katainen's unstable six-party coalition had to make collateral an absolute condition of any further bailouts.
Finland fought to have a clause included in the July agreement allowing collateral "where appropriate."
Wednesday's vote was therefore taken under the assumption that other eurozone member states will in the end agree to the collateral demand, Tampere University political analyst Pami Aalto told AFP.
"If the demand for collateral falls through completely, then the whole question of whether to support the EFSF is wide open again," said Aalto.
Without a compromise, said Aalto, Katainen's government had a hard time presenting the EFSF changes "as a good deal even to their own people."
Finland's approval Wednesday brings to 10 the number of countries that have so far ratified the EFSF changes, while the crucial German vote is scheduled for Thursday and the Austrian parliament will on Friday. Cyprus will follow next week.
Remaining eurozone members Estonia, Malta, the Netherlands and Slovakia will vote in October.
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