As eurozone countries prepare to cough up the necessary funds for Greece’s bailout, the news that just one country — Finland — has struck a side deal with Athens to ensure Greece does not default on Finnish loans threatens to shake up the entire bailout. The FT reports:
The Greco-Finnish collateral deal, reached last week between the countries’ two finance ministers, would force Athens to deposit millions of euros in cash into an escrow account, as insurance that Greece would not default on Helsinki’s portion of the rescue.But the deal – tacitly allowed by eurozone leaders at their emergency summit last month – has reopened the debate over the entire bail-out, with some countries, including Austria, Slovenia and Slovakia, insisting they want similar deals.
The cluelessness of Europe’s leaders never ceases to amaze — and at this point, to frighten. Of course when the Finns get collateral, voters in every other European country wonder why they can’t have some too. And any signs that the Greek bailout will have to be renegotiated yet again will spook markets. As Moody’s put it: “The message sent by the calls for such agreements confirms that Europe is conflicted over the very decision to provide financial support to its members.”The tightfisted Dutch have no faith in Greece’s ability to repay, and under strong popular pressure the Dutch government is threatening to block the deal if the Netherlands can’t get the same treatment as the Finns. Since all eurozone countries must sign their approval of the deal, the Finnish side agreement threatens to kill it all off.Americans disappointed by the mess in Washington should look across the Atlantic. Compared to the clown college in Europe, American politicians these days look like the Founding Fathers.Unfortunately, we are all in the same boat, and a leak in the European end of the lifeboat is bad news for the passengers on the American end as well.