Finnish election has implications for euro crisis

Commission notes that Finland is already committed to Portugal bailout

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The result of Sunday’s Parliamentary elections in Finland pushed the country into the centre of the crisis of the euro zone.
Much could be riding on Finland. If the new Finnish government and Parliament do not give their backing to the EUR 80 billion loan package approved for Portugal, the whole bailout plan will collapse.

The rules of the temporary crisis fund, the European Financial Stability Facility (EFSF), are clear: A decision on providing funding for a euro country in trouble – Portugal in this case – needs to be made unanimously.
The European Commission noted on Monday that Finland is already committed to helping Portugal. Finland gave its political commitment to using the EFSF at a meeting of EU ministers of finance just over a week ago in Gödöllö in Hungary.

According to the European Commission’s main spokeswoman, Pia Ahrenkilde Hansen, the Commission has full confidence that Finland will meet its obligations.
“Nothing has changed from our point of view”, Ahrenkilde Hansen said in response to speculation that there may be a contingency plan.

Finland needs to clear up its view on helping Portugal by mid-May at the latest. It is at that time that the EU foreign ministers are to agree on the Portuguese bailout package and how it is to be financed.
Special arrangements to accommodate Finland are not in the cards. If Finland does not start helping Portugal along with the others, it will cost Finland dearly in political capital.
On Monday, the Commission and the euro zone countries were careful not to add to pressure on Finland. Ahrenkilde Hansen, who serves as the spokeswoman Commission President José Manuel Barroso, a Portuguese citizen himself, said that Finland should first draw up a government programme.

Economic and Monetary Affairs Commissioner Olli Rehn will have his work cut out for him after the surprising result of the Finnish elections.
Last week, Rehn had said in Washington that the rescue operation for the euro zone is practically a done deal.
However, the success of the True Finns and the Social Democrats in the elections changed the situation overnight. The uncertainty was reflected on financial markets as well.

It will now depend on Finland if the negotiation results are implemented in the summer.
Wilfred Martens, chairman of the European Peoples Party, said on Monday that he is sure that Finland is, and will remain committed to European and Nordic values. Shortly before that, he had expressed regret over the success of the True Finns.
Fifteen of the EU’s heads of government are members of the centre-right EPP. If Jyrki Katainen of the National Coalition Party becomes Prime Minister, the number will be 16.