Third Bailout Tough Sell in Northern Creditor States

Voters in Finland, Germany and the Netherlands would rather Greece left the euro.

European Council president Donald Tusk listens as German chancellor Angela Merkel addresses a meeting of European People's Party leaders in Brussels, July 12
European Council president Donald Tusk listens as German chancellor Angela Merkel addresses a meeting of European People’s Party leaders in Brussels, July 12 (EPP)

The €82 to €86 billion bailout European leaders agreed to give Greece on Sunday — provided it enacts far-reaching economic reforms — could be a tough sell in those creditor states that have taken the hardest line in recent negotiations.

Two of the three right-wing parties in Finland’s ruling coalition voted against Greece’s second bailout in 2012 when they were in opposition. Neither is particular sympathetic now that Greece has canceled some of the reforms it was committed to undertake and has a far-left government that was elected on a promise to end austerity.

Prime Minister Juha Sipilä’s Center Party is wary of continuing to help Greece when Finland has made cuts of its own year after year to keep its deficit under the European 3 percent treaty limit and maintain a pristine credit rating. But like former premier and incumbent finance minister Alexander Stubb’s conservative National Coalition, it is unlikely to break with Germany and its chancellor, Angela Merkel, who reluctantly backed another bailout on Sunday.

The nationalist Finns Party, led by Timo Soini, might care less about European unity. In a recent interview, Soini accused the Greeks of running a pyramid scheme and said, “Usually someone in debt does not set conditions but rather pays his debt, so this arrangement is a bit upside-down.”

Greek prime minister Alexis Tsipras demanded both debt relief and a relaxation of the austerity measures his country has struggled to implement under two rescue plans, totaling €240 billion.

After a marathon session of eurozone leaders on Sunday, Tsipras apparently gave in and agreed to enact the reforms he previously described as “absurd” and “humiliating.” Other countries conditioned a third bailout — which Greece needs to avoid bankruptcy and a possible ejection from the euro — on the Greek parliament voting in favor of the reforms beforehand.

The antics of the Tsipras government, which waited until the last minute to compromise after calling a referendum on its lenders’ terms, the outcome of which it first hailed as a victory for democracy and then ignored, have exhausted the patience of many Northern Europeans.

The Finns are wariest of all. A YouGov poll shows only 14 percent in favor of Greek debt relief, the lowest ratio in the six countries polled.

The Dutch are hardly more forgiving. Prime Minister Mark Rutte was forced to admit on Monday that his support for another Greek bailout would violate his 2012 election promise to the contrary. “I don’t like it and it’s a bad situation,” he said.

Opposition parties were critical. The Christian Democrats said they had “serious doubts” about another bailout. The nationalist Freedom Party accused Rutte of making budget cuts at home while subsidizing the Greeks. Small Christian parties said the Balkan nation would be better off leaving the euro. The far-left Socialists and Greens criticized austerity and the demand for privatizations in Greece.

Without the support of at least one other party, Rutte’s liberals and his Labor Party allies would be unable to get another Greek bailout through the Dutch parliament. The ruling parties can count on the support of the pro-European liberal Democrats but the three lack a majority in the upper chamber.

An RTL poll conducted earlier this month revealed that 54 percent of the Dutch want Greece out of the euro. Just 30 percent said the country ought to stay in the currency union.

The Germans are a little more sympathetic. 47 percent want Greece out, according to the YouGov poll, down from 58 percent last month.

Yet two of the country’s three most powerful politicians seem ready to let Greece go. Economy minister Sigmar Gabriel, who leads the junior Social Democrats in Chancellor Merkel’s coalition government, said another bailout was “barely conceivable” after 60 percent of Greeks voted against austerity in a referendum two weeks ago and pledged, “We will not let the exaggerated electoral pledges of a partly-communist government be paid for by German workers and their families.”

Wolfgang Schäuble, the hawkish finance minister, even suggested this weekend that Greece take a five-year holiday from the euro.

But Merkel balked in the end, fearing the political and geopolitical repercussions a Greek exit from the single currency would have. It could be seen as a failure of her strategy: demanding reforms to boost Greek competitiveness in return for financial aid. It would demonstrate that European integration is not irreversible after all. And it could push Greece into the arms of Russia.

Given the overwhelming majority the two ruling parties enjoy in the Bundestag, a vote on a third bailout there is unlikely to go against Merkel. But some of her conservatives may well abstain or even vote “no”. Merkel’s Bavarian sister party, the Christian Social Union, is especially critical and the right-wing anti-euro party Alternative für Deutschland has been rising in the polls.

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