Finland’s Prime Minister Jyrki Katainen said Wednesday Helsinki may opt out of its share of a second rescue package for Greece if it is denied collateral on the money.
The warning comes even though Katainen had said earlier in the month that he would work to find a solution that is mutually acceptable to his own government and to other euro members and creditors, the issue has not been resolved and threatens to scuttle the whole deal.
Bloomberg reported Katainen saying on Wednesday, “The collateral issue is a small detail in a larger package. We’re looking for a solution. But we can’t wait forever, as the issue must be resolved in the next few days.” The possibility that Finland would refuse to contribute a share to the rescue loans if it is not given collateral “remains a possibility,” he said. Finland has a Triple-A credit rating and it wants additional assurances that any money it contributes to the bailout loans will be repaid.
Helsinki had to abandon an earlier agreement with Athens that would have provided cash collateral in exchange for the loans. Now it is struggling to find another way to collateralize its share without endangering the participation of all other nations involved in the bailout and that protects the International Monetary Fund’s (IMF) priority creditor status. The IMF will oppose any arrangement that endangers that status.
Although European Union leaders permitted the clause on collateral in July 21 talks on the form of the bailout package, criticism has flown over its execution. Austrian Finance Minister Maria Fekter said that if Finland took advantage of it, it would “blow up” the rescue mechanism, and Michael Meister, senior finance spokesman for German Chancellor Angela Merkel’s Christian Democrats, called collateralization “fatal” for the package.