Skip to content. | Skip to navigation

Personal tools
Sections
You are here: Home Breaking news Finland hails collateral deal but experts call it a 'farce'

Finland hails collateral deal but experts call it a 'farce'

(HELSINKI) - Finland's Finance Minister Jutta Urpilainen hailed the deal struck in Luxembourg allowing her country to secure collateral on new bailout loans to Greece, but analysts Tuesday described the deal as a "farce".

"Finland is getting good collateral, and with this the taxpayers' risk is limited," Urpilainen told reporters in Luxembourg after the long-awaited deal was reached Monday night at a meeting of eurozone leaders.

"That's been the idea behind the demand all along," she was quoted by the STT news agency as saying, noting the deal secures 880 million euros' ($1.2 billion) worth of collateral from Greece.

Vesa Puttonen, an investment expert at Aalto University, meanwhile told public broadcaster YLE the whole collateral debate had been a "farce", and the deal reached was simply a way for Urpilainen, who has been the driving force behind Finland's collaterals demand, to save face.

OP-Pohjola Group chief economist Reijo Heiskanen meanwhile told AFP it was too early to calculate whether collateral, which comes at a heavy price, will ultimately be a good deal for Finland.

"This has fundamentally been about domestic politics and not euro-politics," Heiskanen said, adding that "for Finland, the principle of collaterals" was more important than the economics behind them.

During general elections in April, and amid rising Finnish animosity toward bailing out countries that mismanaged their finances, Urpilainen's Social Democratic Party campaigned heavily on the collateral clause, and demanded it be written into the government agenda before agreeing to take part in Prime Minister Jyrki Katainen's coalition.

But while Monday's deal hands Urpilainen a political victory, the conditions are so stringent that no other eurozone country is likely to touch them.

"There is a price to be paid," Klaus Regling, the head of the European Financial Stability Facility (EFSF), said at a press conference.

First, Finland will have to pay its share of the EFSF's post-2013 successor, the European Stability Mechanism, in one lump sum instead of over five years.

It will also have its share of the profit from the EFSF significantly reduced, and if Greece defaults, the collateral will only be paid out once the EFSF loans mature in 20 to 30 years.

"It's clear that if Greece pays back its loans, Finland loses out. This makes Finland the only country that will lose money no matter what Greece does," said analyst Heiskanen.

But many experts in Finland are simply relieved that the standoff has been resolved, paving the way for the adoption of a second bailout package for debt-ridden Greece.

Political analyst Petri Sajari from the country's leading daily Helsingin Sanomat wrote Tuesday the only good thing to emerge from the Luxembourg meeting was an end to the bickering over collateral.

He lambasted Finland's leadership for focusing on such an "insignificant tangent to the historic catastrophe" that is the European debt crisis.

"Is there any sense in these collateral? It's doubtful," he said.

Council confirms agreement on economic governance


Document Actions