FINLAND HAS postponed a decision on whether to back the European Union bailout for Portugal, casting fresh doubt over the chances of unanimous approval for the €78 billion deal when EU finance ministers meet in Brussels next week.
Negotiations between Finnish leaders ended without agreement yesterday after the Social Democratic party, which has a crucial role in the decision, renewed its demand that private investors must share the burden with taxpayers in EU bailouts.
Senior Finnish officials said they were hopeful lawmakers would give their backing to the Portuguese deal in time for it to be authorised when EU finance ministers meet on May 16th and 17th.
But the Social Democratic party said its support would be conditional on Finland pushing for changes to the bailout to take account of widespread anger among Finnish voters over the wave of taxpayer-funded rescues in the euro zone.
Finnish politics has been in turmoil since the eurosceptic True Finns party won nearly a fifth of the vote in last month’s general election, throwing into doubt Helsinki’s reputation as one of the EU’s most compliant members.
Unlike other euro zone countries, Finland requires approval from parliament to take part in EU bailouts. This has left the Portuguese deal at the mercy of Finnish lawmakers because it needs unanimous EU support to go through.
Jyrki Katainen, leader of the centre-right National Coalition party, which won the biggest share of the vote in the election, has pushed for lawmakers to approve the bailout this week before a new Finnish government has been formed. But a vote on the issue by parliament’s grand committee, previously expected today, has been postponed until Friday because of disagreement among the parties.
Kimmo Sasi, chief negotiator for the National Coalition party on the Portugal issue said the prospects for Finnish approval this week were still “fairly good”.
Olli Rehn, Europe’s economics commissioner, gave a cautious reply when asked if a country could force changes to the Portuguese bailout programme. The bailout required unanimous approval, he said “which means that every member state counts”. – (Copyright The Financial Times Limited 2011)