By Antti Kerppola

HELSINKI (MNI) – Domestic political concerns in Finland could make
it difficult or impossible for EU leaders to get a final agreement at
their summit meeting later today on raising the lending capacity of the
Eurozone’s temporary bailout fund, the European Financial Stability
Facility, to its full capacity of E440 billion.

Finland is one of the six AAA-rated countries expected to double
their guarantees to the EFSF in order to allow the EFSF to lend more and
still retain its own triple A rating. In Finland’s case that would lift
its level of guarantees to E16 billion from the current E8 billion.

In normal circumstances, the traditional pro-EU Finnish might be
expected to approve the increase without any question. But it’s not so
straightforward this time.

With parliamentary elections coming up on April 17 and a populist,
anti-EU party — the True Finns — gaining strength, the old calculus
has been upended for now. As an anti-Europe wind fills the sails of this
upstart party, more traditional political groups are rethinking their
positions — or at least their strategies — with regard to Finland’s
contribution to the bailout fund.

Finland’s Prime Minister Mari Kiviniemi, leader of the Center
Party, said last week that while a decision has been taken to increase
the overall capacity of the EFSF, “no actual decision has been made
about increasing [Finnish] guarantees to the fund.” Mrs. Kiviniemi did
not, however, offer an alternative solution for raising the EFSF’s
capacity.

The Center Party and the National Coalition, another governing
party, are being pushed on the issue by the rise of True Finn and by the
opposition Social Democratic Party, which was formerly pro-EU but has
become less sympathetic towards Brussels in the current election
campaign.

The Social Democrats have been riven by internal conflicts since
they dropped out of government in 2007, and the quick rise of True Finns
is casting an even bigger shadow on them. So the Social Democrats are
also putting pressure on the government in the domestically heated
debate about Finland’s guarantees to the EFSF.

The chairwoman of the Social Democrats, Jutta Urpilainen, has said
her party would not support any mechanism in which banks and investors
did not contribute their fair share to the capital of the fund. This is
not a realistic demand given how the EFSF has been structured.

The True Finns, on the other hand, are more overtly anti-European
in their approach. They are known for declaring, for example, that
Finland would be better off without the EU and that the country’s former
currency, the Finnish mark, would be better suited to its needs.

The strategy of the governing groups, the National Coalition and
the Center Party, is mainly to delay negotiations on the EFSF with their
EU counterparts until a more propitious time, namely after the April 17
elections.

EU leaders will meet in Brussels this afternoon and this evening,
with the summit continuing into Friday. It’s unclear how much they will
even discuss the issue of EFSF guarantees, given the political impasse
in Finland and, perhaps more importantly, the new crisis that has arisen
with the collapse of Portugal’s government Wednesday.

Finland’s Finance Minister Jyrki Katainen, leader of the
center-right National Coalition, conceded that Finland has requested a
delay on deciding the EFSF issue, with the justification that the
election would give the Finnish people a chance to weigh in on the
decision process.

A TNS Gallup published last week showed that the True Finns have
reached second place in the polls. This is a grave threat to government
parties and it shows that the True Finn party must be taken seriously,
even if the messages of its leader, Timo Soini, consist mainly of
EU-skepticism and phrases like, “one cannot fit the same size hat on
melons and apples” — his explanation as to why Finland should not
support the allegedly wreckless behavior of other Eurozone nations.

Luckily for governing parties, and the EFSF, the True Finns’
popularity has usually been much higher in polls than at the actual
voting stations. But even if the party’s current 18.4% draw in opinion
surveys is unlikely to materialize fully in the election, it will still
undoubtedly improve significantly on the 4% of votes it drew in the last
parliamentary elections in 2007. This would make it a big winner in the
elections.

Walking into the EU summit today, Prime Minister Kiviniemi will not
have a mandate from Finland’s parliament to raise Finnish guarantees for
the EFSF. She has stated repeatedly that it is in the interest of
Finland to stabilize the Eurozone and that her government will act
accordingly. However, these ideals are unlikely to be converted to
action this week in Brussels.

To dodge the bullet of the political opposition, and especially the
True Finns, the Finnish government will try either to postpone any kind
of EFSF decision until next month or agree to some vague summit wording
that would be clarified at a later date. The latter option seems the
most probable outcome.

The leading Finnish daily newspaper, Helsingin Sanomat, wrote in
its Wednesday edition that the values of the two governing parties have
not become more euro-skeptic. Finland will most likely end up increasing
it’s guarantees to the EFSF after the election, the paper said — “as
long as the next government doesn’t turn out to be totally different in
its [European] integration policy.”

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