Anger over Finnish deal on Greek bailout

BRUSSELS — A little-noticed deal requiring Greece to put up collateral in order to receive a bailout loan from Finland triggered similar requests from several other eurozone countries Thursday, complicating a broader 109 billion euro ($157 billion) Europe-wide bailout of Greece.

The Netherlands, Slovenia, Austria and Slovakia said that they were also demanding collateral from Greece.

Such deals could undermine the Europe-wide bailout by forcing Greece to spend part of that money on the collateral instead of servicing its debts, paying workers’ salaries and meeting other financial obligations.

Greece on Tuesday agreed to deposit several hundred millions of euros in a Finnish state account, a sum that will eventually generate enough interest to fully secure Finland’s contribution to the second Greek bailout.

Finland insisted on the collateral in order to get its parliament to sign off on its share of the second European bailout of Greece, which was left unable to pay its bills after investors worried about its massive national debt began demanding extremely high interest rates on Greek bonds.

A provision for such added security was included in the July 21 agreement by eurozone leaders on providing a second rescue package for Greece.

Estonian Finance Minister Jurgen Ligi blasted Finland’s agreement with Greece on Thursday, calling it “a deviation from the common policy of the eurozone.”

In an interview with the Baltic News Service, Ligi also said Finland should have kept other eurozone members updated on its plans.

A European Union official warned that the Finnish deal “creates asymmetries in the support provided to Greece and it opens the door” for special requests from other countries.

The official was speaking on condition of anonymity because discussions on the rescue package are still ongoing.

Harald Waiglein, a spokesman for the Austrian finance ministry, said it was politically not viable to give a collateral deal to one country but not others.

He said that the cost of providing collateral for the contributions of small countries whose banks don’t have a big exposure to Greece should be “manageable” but conceded that it could drive up the overall bailout sum.

Slovenia’s finance ministry spokeswoman Irena Ferkulj said in a written statement to the AP that Slovenia is currently negotiating “possible guarantees” and will strive to get them for the complete sum that it pledged for Greece.

Slovak government spokesman Rado Bato said Slovakia had also demanded collateral.

Bato said that the plan was for Finland to negotiate its condition with Greece first, and the others act after Finland makes a deal. Bato said the Finance Ministry is analyzing the current situation but the analysis has not been completed yet.

Dutch Finance Ministry spokesman Niels Redeker said that his country had always “indicated in discussions in Brussels that if Finland would get a collateral agreement that we also want a collateral agreement.”