Senior Finnish MPs at odds on push for collateral

Reuters News
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Posted: Jul 13, 2012 2:45 AM
Senior Finnish MPs at odds on push for collateral

HELSINKI (Reuters) - Finland should consider dropping its demand for collateral from Spain, a senior member of prime minister Jyrki Katainen's party said on Friday, prompting an official from coalition partners the Social Democrats to warn of a political crisis in the offing.

The demand for collateral by one of the euro zone's four AAA-rated countries is one of the outstanding issues hanging over a deal struck two weeks ago to take more aggressive action in the sovereign debt crisis.

Talks with the Spanish government are ongoing on the issue, which is also written into the coalition deal between the two Finnish parties.

Jan Vapaavuori, the parliamentary leader of Katainen's National Coalition party, questioned whether the country's hard line on the issue was doing it more harm than good.

"Is it so that because the collateral demand was written in the government program, we fight tooth and nail to keep it without considering all the consequences it may have on Finland's international position," Vapaavuori said in an interview in Finnish daily Helsingin Sanomat on Friday.

His opposite number at the Social Democrats, Jouni Backman, said the government would not have been formed without including the collateral demand in the agreed program.

"If we will slip from that (program), in additional to a European crisis we will soon also have a domestic government crisis," he said, responding in the paper to Vapaavuori's comments.

The Social Democrats leader, Finance Minister Jutta Urpilainen, is leading talks with Spain on collateral. Finland has said it will not participate in the bloc's planned aid for Spanish banks unless it and Spain reach a deal.

(Reporting by Terhi Kinnunen; editing by Patrick Graham)