True Finns seen in government, but Finland to back bailouts

Reuters News
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Posted: Apr 20, 2011 9:57 AM
True Finns seen in government, but Finland to back bailouts

By Terhi Kinnunen and Jussi Rosendahl

HELSINKI (Reuters) - The Eurosceptical True Finns party will join the next coalition government after its stunning election gains but Finland will still support EU plans for helping weak euro members, a poll of 12 leading academics and analysts showed on Wednesday.

Although the fluid nature of Finland's political system makes it possible for the True Finns to be left out, all 12 respondents in the survey said they expected the party would be included in the government.

The poll sampled views from experts at major universities, research groups and financial firms in Finland, and included one Finland-watcher at a Swedish think-tank.

They said the ballot-topping conservative National Coalition party will have little choice but to heed a clear message from voters that they want the populist party represented.

But that will not ultimately mean Finland abandons support for European Union plans to assist weaker euro members such as Portugal, the poll found.

Nine respondents said the next government would eventually support bailouts and one said "no." Two said they could not answer.

The National Coalition, headed by current Finance Minister Jyrke Katainen, has been supportive of EU efforts to quell the euro zone debt crisis, including financial assistance for weaker members.

But many Finnish voters, who pay some of the highest taxes in the world, are outraged at the idea of bailing out countries that have had loose fiscal policies.

The True Finns, who railed against bailouts in the election campaign, won 39 of the 200 seats in parliament, up from five seats at a 2007 election.

The Eurosceptical party's success has sparked concerns that EU efforts to address the crisis could become much more difficult. The Finnish parliament, unlike others in the euro zone, has to approve all requests for EU bailout funds.

"The result of the election was really historical, so I would expect this result will have to be respected and it would really look odd if they (the True Finns) didn't enter the government," said Pasi Sorjonen, economist at Nordea.

CRYSTAL CLEAR

Lauri Karvonen, professor at Abo Akademi, echoed that, saying the True Finns had to be included. "It would be hard to leave them out because the election result was absolutely crystal clear. They won and basically every one else lost."

Pasi Kuoppamaki, chief economist at Finnish insurer Sampo, said the National Coalition, True Finns and left-leaning Social Democrats would probably all be in the coalition.

The True Finns could use the bailout issue as a bargaining chip on issues such as taxes and the retirement age, he said. "But I still see it as the main scenario that the government will back the Portuguese bailout."

Asked whether the new government would push for changes in EU bailout policies, 10 respondents said "yes" and none said "no." Two said they could not say.

One question the government will face is whether to raise the retirement age from 63. A European blueprint for addressing long-term structural issues plaguing the euro zone calls for member countries to adjust retirement ages in line with demographic trends.

But the Social Democrats and the True Finns are against a higher retirement age.

One respondent said the age would be raised while eight said it would not, and three said they did not know.

Analysts from the following institutions were polled: Abo Akademi, Finnish Social Science Data Archive, Government Institute for Economic Research (VATT), Helsinki University, Lapland University, National Institute of Economic Research (NIER), Nordea, OP-Pohjola, Research Institute of the Finnish Economy (ETLA), Sampo and Turku University.

All but Sweden's NIER were located in Finland.

(Additional reporting from Stockholm newsroom; editing by Paul Taylor)