Germany says Finland needs Plan B on Greek collateral

24th August 2011, Comments 0 comments

Germany Wednesday stressed its opposition to Finland's bilateral deal with debt-mired Greece to obtain collateral in exchange for loan guarantees, saying the eurozone must find an alternative.

Government spokesman Steffen Seibert told a regular press briefing that "other means must be found to reassure Finland" that its contribution to a European rescue package will be secure apart from cash guarantees.

"When a country obtains this kind of guarantee, it comes at the expense of others," he said. "A collegial solution must be found," adding that despite the dispute, "it is not Finland against the rest" of the eurozone.

He welcomed remarks by Finland's EU minister earlier saying that Helsinki aims to forge a deal on Greek debt collateral that is acceptable to other eurozone nations and so ensure the bloc can stick to its timetable for the rescue package.

Germany has expressed fears that such a collateral deal could snowball, leading one country after another to demand similar guarantees amid rampant jitters within the eurozone.

During negotiations in Brussels in July to hammer out a 159 billion euros ($230 billion) second rescue for Greece, Finland maintained that it would only agree to back the loan in exchange for collateral.

Last week, Helsinki announced it had reached a deal with Athens for Greece to deposit an unspecified amount of money into Finland's accounts which, along with the interest accrued, would match the loan guarantees Helsinki offered.

The agreement sparked swift criticism from Germany, the eurozone's paymaster, and raised fears it could lead the rescue package to unravel.

© 2011 AFP

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