Merkel optimistic on Finland collateral deal

13th September 2011, Comments 0 comments

German Chancellor Angela Merkel said Tuesday she was optimistic a deal could be clinched on a Finnish request for collateral that threatens to hamper a European Union deal on aid for Greece.

"I think that we want to find a way and we will find a way that also meets Finland's expectations ... I am optimistic that that will work," Merkel said after a meeting with Finnish Prime Minister Jyrki Katainen.

Katainen did not comment on the issue.

On Monday, Finland's European affairs minister said he hoped a deal on Helsinki's demands for Greece would be clinched at a meeting of European Union finance ministers on Friday and Saturday.

On July 21, the 17 eurozone countries agreed on a new rescue package for Greece worth nearly 160 billion euros ($218 billion) in government and private aid, but Finland said it would only agree to back a portion of the loans in exchange for some form of collateral.

A bilateral deal with Greece on cash collateral, announced August 16, fell apart after scathing criticism from several eurozone countries and appeared to put the bailout at risk.

Finland's demand for collateral arises from the rise of anti-EU sentiment during general elections in April which saw the deeply anti-EU Finns Party surge from being the smallest party to the country's third largest on the back of growing public discontent over bailouts.

Even though the Finns Party is not in government, the debate forced some other parties to take a more critical approach, and resulted in the collateral clause becoming a prerequisite for guaranteeing Greece's loans.

© 2011 AFP

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