Finance Minister: Finland “Will Not Hang Itself to the Euro at Any Cost”

Finnish Finance Minister Jutta Urpilainen

Creative Commons photo

The “Fixit” scenario in which Finland grows tired of German efforts to bail out other eurozone countries got a boost today from Finnish Finance Minister Jutta Urpilainen, who told a Finnish business paper in an interview that Finland “will not hang itself to the euro at any cost and we are prepared for all scenarios” and that Finland won’t endorse mutualization of debts:

She also insisted that a proposed banking union would not work if it were based on joint liability.

“Collective responsibility for other countries’ debt, economics and risks; this is not what we should be prepared for,” Urpilainen said.

To review the political situation in Finland, right now the government is a grand coalition being led by the main center-right party. The coalition is broad in order to exclude the far-right euroskeptical True Finns party. But unlike in most other European countries, Finland features a mainstream euroskeptical party called the Center Party (which is rooted in rural interests and, as per the name, isn’t strongly ideological). Urpilainen is the leader of the Social Democrats. One conceivable way for the Social Democrats to get back into power would be to wait for some “bridge too far” European measure to come on the table and use it as a pretext to bust up the coalition and try to create a Social Dermocrat-led coalition joined by the Center on a euroskeptical platform.

Economically and geographically, as we’ve seen before, Finnish membership in the eurozone is a bit odd, as Finland’s neighbors and main trade partners—Sweden and Russia—aren’t on the euro anyway. The Netherlands is in a somewhat similar political situation but a very different geographical one. The offsetting factor is that eurozone membership serves, for Finland, as a kind of ersatz NATO membership, but Finnish foreign policy is a whole complicated story.