Posted on 08/18/2011 3:34:52 PM PDT by DeaconBenjamin
Austrian minister suggests his country might ask for same agreement with Greece
Austria opposes Finland's deal with Greece on collateral for loans and will demand collateral as well if eurozone countries approve Finland's deal, a spokesman from Austrian finance ministry was quoted in a newspaper report as saying.
"The collateral model has to be open to all the euro zone countries. We will figure out if that's the case," Harald Waiglein from the finance ministry told Finland's biggest newspaper Helsingin Sanomat in a phone interview.
Earlier this week Finland reached a deal with Greece on collateral, its key condition for joining to help the debt-burdened country.
The agreement between Finland and Greece will allow the southern European nation to deposit cash in a state account that Finland will invest in AAA rated bonds. The interest generated will raise the amount to match the required collateral. Finland will return the money, plus interest, once the bailout loan is repaid, Finance Minister Jutta Urpilainen said.
If Greece is unable to pay back its loans to the temporary stability mechanism, Finland would take possession of the capital put up by Greece following a procedure agreed upon in advance.
If Greece pays off its debt, it would get back the money that it put up as collateral, as well as the income derived from it.
Details on the timing and exact amount are still to be determined after the extent of private participation in the bailout has been hammered out on the European level, Urpilainen said, likening the timeframe to the 15 to 30 years discussed for the private sector’s role.
“The collateral will be invested to bring the highest possible return,” she said. “We will have a central role, as this arrangement will take place under Finnish law. We will consult Greece on deciding which securities the funds will be invested in.”
Hmm ~ maybe something like exclusive access to Agean Sea beaches for an extended period ~ in the Winter!
The Netherlands, Slovenia, Slovakia and Austria want same terms as Finland
The eurozone assistance package for Greece agreed last month is in danger of being undermined after four more countries suggested on Thursday they want Athens to provide collateral, as it did in a separate agreement with Finland, for it to receive their share of the 109-billion-euro bailout.
The requests from Austria, the Netherlands, Slovakia and Slovenia led to Finance Minister Evangelos Venizelos coming under attack from New Democracy, which claimed he had “opened Pandora’s box” by coming to an arrangement with Finland.
The first country to object to the Greek-Finnish deal was Austria. “If there is a model for collateral, Austria would also make a claim,” said Finance Ministry spokesman Harald Waiglein.
Slovakia followed this train of thought, arguing that Finland should not have different lending terms from other eurozone members. “I consider it unacceptable for any country to not have the collateral if other countries have it,” said Finance Minister Ivan Miklos. “Because if this is a loan, and that is what everyone is calling it, the debtor should have no problem offering collateral for the loan.”
Even though Finland had been the only eurozone member to make it clear at the July 21 summit in Brussels, where the deal for Greece was agreed, that it wanted collateral to form part of the agreement, the Netherlands and Slovenia added their voices yesterday to those calling for guarantees from Greece. The five countries’ combined contribution amounts to 10 percent of the 109 billion euros Athens is due to receive.
Athens made it clear to Finland that it was not willing to provide state assets as collateral, resulting in a rather complicated deal being agreed. Greece will deposit cash equivalent to a large chunk of the money it is to receive from Helsinki in a state account that Finland will use to invest in AAA-rated bonds. The interest generated will raise the amount to match the required collateral. Finland will return the money, plus interest, once the bailout loan is repaid, Finance Minister Jutta Urpilainen said.
Greek Finance Minister Evangelos Venizelos said that this deal still had to be approved by the other eurozone members. New Democracy slammed his handling of the affair, claiming that the minister had celebrated the eurozone deal too early and had not heeded the conservatives’ warnings. “He does not know how to react or what to say,” said ND spokesman Yiannis Michelakis.
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