Brussels, 18/04/2011 (Agence Europe) - Finland has generated a new obstacle to the EU's strategy for dealing with the eurozone sovereign debt crisis. Despite the increase in good eurozone economy countries of opposition to the bailing out of highly indebted countries and despite increasing resentment of struggling countries at the austerity packages accompanying the bailouts, the European Commission is steaming ahead. A Commission spokesperson said on Monday 18 April that the Commission was listening to the signals from the member states but the recommended measures are intended to get the countries in question back on the straight and narrow in terms of economic growth and job creation.
Last weekend's general elections in Finland were characterised by a strong rise in support for Eurosceptic parties opposed to the bailing out of countries in the eurozone. An example of the rise of voters' discontent, the True Finns party has become the third largest party in Finland, gaining 19% of the vote and may well form part of the new government coalition or at the very least, have a lot of influence in the Finnish parliament's decisions about the size and powers of the EU bailout fund used to provide cash to Ireland (and soon Portugal as well). The elections were won by the pro-European National Coalition centre-right party headed by the finance minister, Jyrki Katainen.
Refusing to pre-empt the talks in Finland on the setting up of a new coalition, the European Commission said on Monday 18 April that the election results in Finland would not alter the timing of aid for Portugal. Early this month, negotiations started with the Portuguese government over a new economic adjustment programme in return for which Portugal will receive a financial aid package (see EUROPE 10355). The talks are expected to conclude at the ECOFIN Council of 17 May in order to enable the first batch of cash to arrive in the middle of June this year. The European Commission says it is fully confident that like other member states, Finland will honour its commitments, pointing out that the Finnish government was part of the talks on the timing of aid for Portugal at the recent ECOFIN Council in Gödöllõ. In March 2011, the eurozone summit decided to increase the lending capacity of the EFSF bailout fund to €440 billion (see EUROPE 10355) but it has yet to be decided exactly how this increase will be divided up. It will probably be through doubling the guarantees provided by the member states, but the decision will not be taken until June. The caretaker Finnish government said at the end of March that it would not be able to decide on the issue.
Greece. On Monday, the European Commission denied that any talks had taken place on restructuring Greece's sovereign debt, commenting that such a move was not on the cards. It praised the ambitious updated austerity programme presented last week by the Greek government to help it meet its budget objectives. The new programme includes cuts in military spending, the restructuring of state companies, pay cuts and a longer working week in the civil service and a vast privatisation programme to raise €50 billion by the end of 2014. On the fringes of the G20 finance summit in Washington (see separate article), the chair of the Eurogroup, Jean-Claude Juncker, said the rumours of talks about restructuring Greece's debt were unfounded. A few days earlier, Germany's finance minister, Wolfgang Schäuble, said that further measures would need to be taken to support Greece if the current aid package were unable to put Greece in a position to raise cash from the money markets itself by the end of next year (see EUROPE 10359). (M.B./transl.fl)