24 MAR 2011
By Arthur Beesley | Irish Times
THE ROLE OF FINLAND: THE RISE of a populist anti-EU party in Finland’s general election campaign has derailed plans for this summit to secure final agreement on the overhaul of the European Financial Stability Facility (EFSF), the single currency’s temporary bailout fund.
After an agreement on a permanent fund, the expansion of the EFSF’s lending capacity is one of the last outstanding issues in the effort to reinforce the rescue net for euro countries.
The EFSF is backed by €440 billion worth of guarantees from euro zone countries but its lending power is limited to €250 billion as a condition of the triple-A credit rating it relies on to secure favourable borrowing rates. This is because only six of the 17 euro zone countries – including Germany and Finland – are beneficiaries of AAA rating.
EU leaders want to increase its lending capacity to €440 billion as part of a new “grand bargain” for the euro zone and most of them, particularly the triple-A countries, agree this should be done by increasing the fund’s guarantees.
But Finland’s centre-right government, under pressure as support rapidly grows for the Eurosceptic True Finns, has refused to increase its guarantees and is not expected to agree an increase at this summit.
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