JEREMY HOBSON: In recent weeks the focus of the European cash crunch has been Portugal which is currently negotiating the terms of its bailout.
But today — it’s all about Finland. The country held elections over the weekend and the results will make bailouts a lot harder to hammer out.
Christopher Werth reports from London.
CHRISTOPHER WERTH: Finland isn’t one of the countries you hear about when you hear about the European debt crisis. That’s because it’s not indebted like other countries like Greece and Portugal. And it’s not as rich as Germany. But it is a creditor country that ponies up money for the bailouts. Only perhaps not for long.
Yesterday a fringe party called the True Finns came from nowhere to win 19 percent of the vote in part by vowing to block the bailout of Portugal.
Daniel Gros is with the Centre for European Policy Studies. He says this is part of a much broader trend.
DANIEL GROS: The broader trend is that the richer countries, those who give the credit, now have a population which is now more and more opposed to further bailouts, and the tension is going to mount.
Which means Finland could be just the tip of the iceberg. The key country, of course, is Germany. Gros says that if German political parties take a queue from Finland, that could spell the end of the end of the bailouts in Europe.
That, in turn, could force a restructuring of the much of the debt European countries owe — a move that would ripple through the global economy. Remember, the U.S. was almost sent into a double-dip recession when the European debt crisis began.
In London, I’m Christopher Werth for Marketplace.
STEVE CHIOTAKIS: Today’s Financial Times reports European leaders are privately drawing up plans for Greece to default on its debts. The country got a $150 billion European bailout almost a year ago. But bailouts for other countries may not be an option going forward because of politics in the rest of Europe.
Reporter Christopher Werth is here to explain this morning. Good morning Christopher.
CHRISTOPHER WERTH: Good morning Steve.
CHIOTAKIS: So first Greece and then Ireland now Portugal. Where’s the danger coming from next?
WERTH: Not where you might think. It’s Finland.
CHIOTAKIS: Finland? I didn’t know they were in financial trouble.
WERTH: They’re aren’t. The country is actually in pretty good shape. But the people of Finland went to the polls yesterday and essentially said no to ponying up their own money to pay for bailouts in other parts of Europe.
I spoke with Daniel Gros at the Centre for European Policy Studies. He said this is part of a much broader trend.
DANIEL GROS: The broader trend is that the richer countries — those who give the credits — have now a population which is more and more opposed to further bailouts. And that tension is going to mount.
WERTH: Which means Finland could just be the tip of the iceberg. The key country of course of Germany. Gros says that if German voters take a cue from Finland that could spell the end of these bailouts. And that could force a restructuring of much of that debt. Which, put simply, would just slash the amount European countries owe. And that could ripple through the global economy. Remember, the U.S. was almost sent into a double dip recession when the European debt crisis began.
CHIOTAKIS: All right. Reporter Christopher Werth in London. Christopher thanks.
WERTH: Thank Steve.
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