Finland sceptical of boosting eurozone firewall
(SAARISELKAE) - Finland said Saturday it was sceptical about increasing the eurozone's rescue fund despite calls from the European Commission and the European Central Bank to prevent a worsening of the debt crisis.
"We have not decided yet within the Finnish government what our policy lines are but we're a bit sceptical (about) how big the rescue fund should be," Finnish Prime Minister Jyrki Katainen said on the sidelines of an informal meeting with European officials in the northern Finnish town of Saariselkae.
"We have already decided that the ESM (European Stability Mechanism) should start a bit earlier than expected and should be capitalised faster than scheduled," he said, questioning whether it was necessary to go beyond that and further increase the eurozone firewall's resources.
The issue is sensitive in Finland, where providing aid to EU countries experiencing budget woes has proved controversial, and Helsinki is, along with Berlin, one of the most reticent capitals when it comes to doling out more money.
A eurozone consensus is needed, but with Germany and Finland dragging their feet the European Central Bank (ECB) has urged eurozone members to step up efforts to reach an agreement.
"The ECB's position on this is clear. We think that even if the crisis is now a little bit calmer we still think it's necessary to increase the European firewalls (so) that our international partners at the G20 will also do their (part)," ECB official Joerg Asmussen of Germany said.
"We need all partners on board," he added.
The European Commission has been pushing the same line for months.
EU Economics Affairs Commissioner Olli Rehn said there was "no room for complacency," adding: "We are for the moment in a milder recession but it can be short-lived."
He urged the eurozone "to conclude the comprehensive crisis response by reinforcing the euro area financial firewall" and said he was confident a "satisfactory compromise" could be reached at a eurozone finance ministers meeting in Copenhagen next Friday and Saturday.
The 500 billion euro ($660 billion) European Stability Mechanism (ESM) is a permanent rescue fund that is due to enter service in July. It is expected to run for at least one year in parallel with the temporary rescue fund called the European Financial Stability Facility (EFSF), set up in May 2010.
As it stands now, the money already pledged by the EFSF -- some 192 billion euros -- will be deducted from the ESM, which would reduce the eurozone's firewall to 308 billion.
Eurozone finance ministers must therefore decide whether to boost the ESM.
One option would be to not deduct the EFSF pledges from the overall sum, thus giving the eurozone a balance of some 700 billion euros.
Text and Picture Copyright 2012 AFP. All other Copyright 2012 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.