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by Euro Reporter
2011-04-19 08:48:02
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Frustrated Finland

Solutions to the eurozone’s sovereign debt and banking crisis were proving elusive, to put it mildly, even before Sunday’s general election in Finland. But the task facing Europe’s leaders has become much more difficult after the extraordinary success at the ballot box of the True Finns, a populist party opposed to the eurozone financial rescues of Greece and Ireland, and determined not to contribute to a third such operation for Portugal. The rise of the True Finns illustrates that it is not just in the eurozone’s weakest states, mired in debt and austerity programmes that popular frustrations are simmering. The rich and powerful are getting fed up, too – Germany, France, Austria, the Netherlands and Finland. The longer such disunity persists, the more uncertain financial markets will become about the ability of eurozone leaders to tackle their debt and banking problems in a timely fashion.

The True Finns are sure to play a big role in the negotiations that Finland’s political parties will open soon on forming a coalition. Indeed, their increased share of the vote was so spectacular – up to 19 per cent from 4 per cent in 2007 – that they are perfectly entitled to enter the next government. The True Finns are now Finland’s third-largest party, slightly behind the pro-European National Coalition party and the Social Democrats. To their credit, the mainstream parties recognise that any attempt to treat the True Finns as political polecats too odious to be entrusted with a share of power would be a betrayal of democracy. From a European perspective, the trouble is that the True Finns show every sign of sticking to their line that “the Finnish cow should be milked in Finland” and no Finnish money should be used to help weaker eurozone states. The Social Democrats took a similarly critical stance in the election campaign. If neither party relents, Finland may find it hard to approve the €80bn rescue of Portugal that European leaders want to complete next month. It may also prove difficult to muster cross-party support for the planned expansion of the European Union’s temporary rescue fund to €440bn.

Finland is a mature democracy with a strong sense of its international responsibilities. But it now contains a party that has tasted triumph as a result of serving up simple answers to complex questions. If the eurozone is to emerge from its crisis, Finnish and other politicians must do a better job of confronting such opponents and winning the difficult arguments.

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Will Finland oppose Portugal bail-out?


Tough talks have been under way in Lisbon to secure a bail-out for Portugal. Officials from the International Monetary Fund, European Central Bank and European Commission are likely to push for radical reforms, in return for more than 80bn Euros.

That deal will need approval from the 17 European nations that form the eurozone.  Finland is one of those nations. An election there over the weekend saw huge gains for parties that oppose the bail-outs.  Daniel Gros at the Centre for European Policy Studies says he does not think the Finnish election would complicate negotiations in Portugal.

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Finland’s anti-Euro mood may upset global investors

International investors underestimate the deepening anti-euro mood in Finland that risks producing a government opposed to measures needed to quell the euro area’s fiscal crisis, a top Finnish civil servant said. Martti Salmi, a European policy adviser in the Finance Ministry, said the region “should not take for granted” Finnish support for crisis-fighting tools. The latest poll before Finland’s April 17 election showed combined 47.3 percent support for parties against a bailout for Portugal and a reinforcement of the temporary aid mechanism, he said.

“It is a very distinct possibility that the next government and parliament of Finland will not want to agree to the things that the current government has signed up for, namely supporting Portugal and agreeing to the permanent and temporary crisis mechanisms,” Salmi, speaking in a personal capacity, said in a telephone interview from Helsinki yesterday. Finns go to the polls as euro leaders hammer out an 80 billion-euro ($116 billion) aid package for Portugal amid speculation that Greece, the trigger of the fiscal crisis, won’t manage to pay back its debts.

Salmi, 39, is deputy head of the Finance Ministry’s division for European Union and international affairs. A career civil servant, he said he has no party affiliation and will stay at his post regardless of the election outcome. As one of the euro area’s six AAA rated states, Finland would shoulder an above-average burden in offering guarantees to meet the EU goal of bringing the temporary aid facility up to its full capacity of 440 billion euros, something the EU has pledged to do by June.


          
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