Tiny Finland Could Complicate New Greek Bailout Deal

A nationalist party in Finland is determined to see Greek left out of the eurozone.


As the showdown over Greece’s future in the eurozone neared its climax this weekend, French and Italian officials pressed Angela Merkel to relent on her hardest austerity line to date. With an assist from an ally who has been quietly pushing to kick Athens out of the euro for months, however, Merkel got her way.

Finland, the northernmost euro zone member, repeatedly refused to give in to Greek Prime Minister Alexis Tsipras’s request for debt relief during a 17-hour emergency meeting that ended early Monday. Along with the German chancellor and her finance minister, Wolfgang Schaeuble, Finnish Finance Minister Alex Stubb said there would be no more cash for Athens unless it gave in to Europe’s demands for massive pension overhauls, spending cuts, and new taxes, and that the well of trust had been poisoned between Greece and its European partners.

Some lawmakers in Finland are so opposed to allowing Greece to stay in the euro that their government was reportedly close to collapse when emergency talks resumed Saturday in Brussels. Timo Soini, the nationalist Finns Party leader who also serves as the Finnish foreign minister, is leading critics of the bailout in Helsinki, and lawmakers there have promised to vote down the austerity package when it gets to review it down the line.

“Usually someone in debt does not set conditions, but rather pays his debt, so this arrangement is a bit upside-down,” Soini said in a July 7 interview with the Finnish national broadcaster, Yle. “This is a moral hazard and a pyramid scheme that will continue as long as the milkmaid has a cash cow to milk.”

Finland isn’t powerful enough to sink the deal on its own. But its growing resistance to the agreement reflects a larger sentiment in Germany and among some eastern European nations that will be expressed when individual parliaments get a chance to review the deal down the line: Greece does not deserve to use the euro. If lawmakers from Finland ultimately vote no to the bailout, it would mean that Helsinki wouldn’t take part in the effort to save Greece and serve as the most tangible display to date of the deep divide running through the EU over the bailout and any future assistance to Athens.

In Germany, polls of both German citizens and businesses show that many want Greece out. Slovak Prime Minister Robert Fico has also repeatedly said his country’s money would to be used to bailout Athens a third time.

The hardline taken by Finnish officials also reflects the will of its people. A survey conducted July 6 to 10 by the international polling institute YouGov found that only 14 percent of Finns were in favor of renegotiating the terms of Greece’s debt.

The Finns and Germans got what they wanted when Tsipras agreed to a laundry list of spending, tax, pension, and other government reforms “without delay.” If the Greek parliament can’t get these changes approved, Athens will not get its hands on a third bailout of between 82 billion and 86 billion euros — or $91.5 and $96 billion — from its creditors at the International Monetary Fund, the European Commission, and the European Central Bank.

“The sooner it ends the better,” Richard Byfält, the secretary general of eurosceptic EUD Alliance from Finland, told FP recently. “The money was lost in 2010 and those who flaunted the treaties will not be held to account politically, but, on the contrary, have advanced.”

Resistance to another bailout for Greece is strident in the Finns Party, and the most vocal opponent is the foreign minister, Soini. Last week, he accused Greece of running a con on Europe.

His stance reflects a growing nationalist streak in Finland, a country of 5.5 million with a 2014 GDP of $270 billion, according to the World Bank, the EU’s 12th largest. The Finns party won 38 seats in April’s parliamentary elections, and is in a ruling coalition with the Centre Party of Prime Minister Juha Sipilä. It’s also fiercely anti-immigrant, and advocates only allowing members of the European Union who bring economic benefits to come to Finland.

Opposition like this is just one of the huge challenges to keeping Greece in the eurozone. Even if Tsipras manages to get the austerity measures he’s promising through parliament, there is still strong opposition to the deal at the national level in places like Finland and Germany. In Berlin, members of Merkel’s ruling coalition are also lining up to oppose the new deal.

“I don’t think the Finns parliamentary group will vote for any loans to Greece,” Byfält said.

Photo Credit: Antti Aimo-Koivisto/Getty Images

David Francis was a senior reporter for Foreign Policy, where he covered international finance. @davidcfrancis

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