Finland must decide Portugal's fate in May: Rehn

21st April 2011, Comments 0 comments

Finland's yet unshaped new government must decide whether to back a Portugal bailout before mid-May, EU Economic Affairs Commissioner Olli Rehn said in an interview published on Thursday.

"Finland's new government ... can form an opinion ... on whether Finland is part of the EU's common line to prevent Portugal's insolvency, or whether Finland will stay out of the solution and accept all the consequences," Rehn told the country's biggest daily Helsingin Sanomat, adding a decision needed to be made before an EU meeting on May 16.

Rehn, a Finn, stressed the decision was urgent since Portugal must make payments by mid-June on loans it currently cannot afford.

Finland's support for Portugal's bailout was thrown into doubt when the nationalist, virulently anti-EU True Finns party surged in weekend elections to become the country's third-largest, after campaigning on utter rejection of the bloc's bailout packages.

The True Finns are expected to be invited to join the next coalition government, headed by election winner the conservative and pro-EU National Coalition Party, but it remains unclear if the populist party will modify its bailout position in exchange for a seat at the table.

The government negotiations are expected to be difficult and drawn-out, with no new coalition likely in sight until the first week of May.

Outgoing Finnish Finance Minister Jyrki Katainen, the head of the National Coalition and most likely the next prime minister, will be attending the meeting of EU finance ministers starting May 16.

Even if Katainen signs off on Portugal's rescue package, the decision will still need a green light from the 200-seat parliament which after Sunday's vote saw the number of True Finn MPs jump from six to 39.

Analysts have meanwhile pointed out that the populist party only holds a fifth of parliament and even with some support from other parties is unlikely to override the National Coalition's support for the EU's temporary and permanent financial stability mechanisms.

© 2011 AFP

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