Austrians join Finns seeking security over Greek bailout

Austria is insisting it will seek collateral from Greece for participating in its bailout as long as Finland has the same deal, adding uncertainty to the fate of Europe’s plan to rescue Athens.

The Finns last week struck a deal to secure cash guarantees from Greece to back the country’s contribution to a second €109 billion (£96bn) rescue package for Athens.

Other eurozone nations, including Germany, oppose the deal, since it would be financed through the new bailout loans. The Netherlands, Slovenia, Slovakia and Austria, meanwhile, have warned they will press for similar terms if Finland’s deal is not dropped or changed. Together they account for around 11 per cent of the rescue package, or some €10bn.

Though its own share of the package is small, Finland punches above its weight because of its top-flight credit rating – which it shares with Austria and the Netherlands – and the fact that its parliament is empowered to vote on funding issues.

Austrian finance minister Maria Fekter has said that she will ask EU finance ministers to make sure the same collateral terms apply to all countries shouldering the Greek financial burden. Finland’s deal needs approval from all the member states.

But Finland’s finance minister, Jutta Urpilainen, said her government will not back down.

“Our position has been very consistent and we have informed the other eurozone countries about it,” Ms Urpilainen told a Finnish broadcaster. “We won’t be in the next bailout package if we don’t get guarantees.”

The topic is a sensitive issue in Germany, the main bankroller for rescue efforts.

“These modalities that were negotiated between Finland and Greece have not met with approval in the eurogroup,” said Steffen Seibert, spokesman for chancellor Angela Merkel. “Germany will, speaking in very general terms, not be able to approve a solution that benefits a single country in relation to all others.”

“We will now – within the eurogroup and in collegial understanding – have to think among ourselves about other ways to accommodate the Finnish concerns,” Mr Seibert said at a news conference.

As German unease at funding eurozone rescue schemes grows, polls are showing public dissatisfaction with Mrs Merkel’s management of the euro crisis.

The Bundesbank issued a sharp criticism of Europe’s – and by default Mrs Merkel’s – crisis management on Monday, saying there was a risk of the currency bloc becoming a “transfer union” in which Germany pays for its partners’ fiscal indiscipline.

Finnish premier Jyrki Katainen said his government was open to changing details of the deal, which would see Greece depositing hundreds of millions of euros in a Finnish account to ensure the Nordic country won’t make a loss in the case of a default.

The cash, together with the interest it would generate, would back Finland’s contribution.

Mr Katainen said the 17 eurozone members were continuing talks about the exact terms of the Greek bailout.

“We’re trying to find a solution with everyone that won’t worsen their situations or harm them – a solution that won’t shake the stability of the euro,” he said yesterday. “Finland is very dependent on a stable euro.”

Athens, which clinched a new rescue package at a eurozone summit in July covering its borrowing needs up to mid-2014, is scheduled to receive the next €8bn tranche from its first bailout package in September.