Finland’s Stubb Rules Out Greek Debt Reduction

The Finnish prime minister says a “resounding no” to forgiving Greek loans from other eurozone countries.

Finnish prime minister Alexander Stubb ruled out reductions in Greece’s debt this week, setting up his small but wealthy eurozone country for a possible standoff with Greece if the far-left Syriza party wins the election there next week.

Stubb told the Financial Times, “It is clear that we would say a resounding ‘no’ to forgiving the loans” of Greece, especially given that Finland itself is “struggling at the moment.”

Finland has seen three years of economic contraction. Industrial output has recently been hit by Western sanctions against Russia for its continued meddling in Ukraine. Russia is Finland’s biggest trading partner. Consumer spending has been depressed by austerity measures enacted to bring down Finland’s deficit. Unemployment stood at 7.9 percent last month.

Stubb said he did not want to influence the Greek vote but added, “I think it’s fair to Greeks and Finns to say out loud that some of the statements by Greek parties and their presentations and ideas about the current programs are simply unacceptable for Finland.”

Syriza wants to tear up Greece’s bailout agreements, stop budget consolidation and write off part of the country’s debt. The party has led Prime Minister Antonis Samaras’ conservative New Democracy in the polls for months.

Since a restructuring of its privately-held debt in 2012, Greece owes some 90 percent of its debt to official creditors, mainly other eurozone governments.

Finland contributed around €4 billion (2 percent of its GDP) to the €240 billion in financial support Greece has received from other European countries and the International Monetary Fund since 2010.

The bailouts were conditioned on budget consolidation and liberal economic reforms. Greece repeatedly missed its targets and deadlines for both. Syriza pledges to reverse the adjustment program altogether.