Although Greece and its creditors have yet to begin even negotiating Athens’ third bailout in five years – a three-year programme worth up to €86 bn – Finland already represents a problem as Helsinki may deny its pro-European finance minister, Alex Stubb, a mandate to agree to the deal.
Finland is very much on the side of the Germany-led fiscal hawks and is more of a problem than before because the nationalist anti-EU Finns party did well in elections in April and its leader, Timo Soini, is foreign minister.
Soini is opposed to taking part in a new bailout and could bring down the government and force new elections if his views are ignored.
The eurozone can get round the Finnish problem if it needs to, although officials involved in planning the new bailout do not expect too much trouble. “No one is losing too much sleep over this,” said one.
To launch the negotiations with Greece later this week, the Eurogroup committee of eurozone finance ministers has to decide unanimously to start talks on a programme under the European Stability Mechanism (ESM), the permanent bailout fund which has €500bn to lend. Before the talks can start, various parliamentary procedures in the member states need to take place.
When negotiations are concluded – and they are likely to take up to a month – the board of governors of the ESM (the same people who are in the Eurogroup committee) then also need to decide unanimously to endorse the bailout.
This is where the Finnish veto could arise. If that were to happen, the European Central Bank and the European commission could then rule that Greek meltdown imperils the stability of the eurozone and the ESM could invoke emergency procedures to launch a bailout through an 85% majority vote. Finland could not block that.
This has never happened. And no one expects it to happen. In the end the decision to grant Greece a third bailout will be political.
