Finland insists on Greek debt collateral: source

(HELSINKI) - Finland will insist on having collateral in exchange for backing Greece's latest debt rescue package, government sources said Friday, rejecting reports to the contrary.

"Finland will insist on collateral, it is still the criteria for supporting the Greek rescue package. This is non-negotiable," a government source told AFP.

The source said a report published Friday by online news source Eurobserver.com, which claimed that Helsinki had given up its demand under pressure from Germany, had misinterpreted Finland's position, and that the government was only willing to negotiate on what form the collateral would take.

Helsinki and Athens came to an agreement last week on providing Finland with cash collateral for its part of the Greek bailout plan announced in July but the accord was sharply criticised by Germany, Austria, the Netherlands, Slovakia and Slovenia.

Government ministers, including Prime Minister Jyrki Katainen, said this week Finland is open to negotiating a collateral scheme that would be acceptable to the rest of the eurozone nations but that some form of collateral was necessary.

Finance Minister Jutta Urpilainen told a meeting of her Social Democratic Party on Thursday that the demand for collateral will not be relinquished, adding that a provision for collateral was written into the rescue package at Finland's insistence.

"Finland's demands for collateral should not have come as a surprise to anyone," she said.

Finland's collateral policy was written into the government programme in June and ratified by the parliamentary committee that oversees EU policy, which means neither Katainen nor Urpilainen can unilaterally change position on the issue.

Helsinki's contribution to the loan guarantees is estimated to be only around two percent of the total rescue worth 109 billion euros ($156 billion) in direct aid plus another 50 billion euros from private sector.

But growing public opposition to bailouts and the stunning rise of the anti-EU Finns Party, formerly known as True Finns, in April's elections forced even the traditionally pro-EU Social Democrats to adopt a more critical stance.

Urpilainen was the primary driver of the collateral clause, even refusing to take her party into the government without assurances from the prime minister.