A EUROZONE rescue plan devised at last week’s crunch summit has been thrown into doubt, after the Finnish government said it would block the move along with the Dutch authorities.
Leaders from the single currency area had announced that rescue funds could be used in a “flexible and efficient manner” to mitigate pressure on troubled states – believed to be a reference to purchasing of bonds on the secondary market.
But yesterday in Helsinki the Finnish government told its parliament that it would seek to prevent the European Stability Mechanism (ESM) – the planned new bailout fund – from being used to hoover up debt.
Meanwhile a spokesman from the Dutch finance ministry reiterated that his government also did not like the bond purchasing plan.
“The Prime Minister said last Friday he is not in favour of buying up bonds – it will be expensive and can only be done if there is unanimity [among member states],” the spokesman, Niels Redeker, warned. “That means the Netherlands would need to vote in favour.”
However, a get-out clause in the ESM’s rules could allow the measure to be waved through, even if Finnish and Dutch opposition persists. If the European Central Bank and European Commission feel the Eurozone is under threat, they can action the rescue fund on the basis of an 85 per cent majority vote.
Finland, which enjoys stronger public finances than most other Eurozone states, has proved a leading cynic against a range of short-term measures to bail out indebted member states.
Meanwhile, Germany’s constitutional court yesterday announced that it would begin a hearing on 10 July to determine whether the country’s involvement in the ESM is permitted by its constitution.