True Finns set for government, see EU bailout changes

By @ibtimes on

The True Finns, the anti-euro party voted into a powerful role in the Helsinki parliament at the weekend, expect the European Union to change plans for a bailout of Portugal, its leader said on Monday.

Of course there will have to be changes, Timo Soini, told reporters a day after the party more than quadrupled its share of the vote to turn Finland's traditionally pro-EU politics on their head.

True Finns came third in Sunday's election with 19 percent of the vote, taking its number of seats in the 200-strong parliament to 39 from 5 in the 2007 election. [nLDE73H0J6]

Finland's parliament, unlike others in the euro zone, has the right to vote on EU requests for bailout funds.

Soini said he expected to be in touch with other parties this week about forming a coalition government.

We need a majority government. That seems to require maybe the three biggest parties. If that doesn't work, then maybe it will be a four to five-party government, Soini told reporters.

The right-leaning National Coalition, which won the election with 20.4 percent, will launch negotiations under its leader, outgoing Finance Minister Jyrki Katainen.

The European Commission said it expected Finland to honor its commitments to the euro zone bailout fund.

Representatives of the commission, European Central Bank and International Monetary Fund were meeting Portuguese officials in Lisbon on Monday to set the terms for the bloc's third rescue in a year after bailouts for Greece and Ireland.

However, there is growing speculation that Greece will restructure its debt and there is mounting pressure on other so-called euro zone peripheral countries, with Spanish 10-year bond yields pushing toward record highs near 5.6 percent.

Rising political populism around Europe, driven by public anger over the impact of the financial crisis, threatens to make solving the euro zone's debt woes increasingly difficult.

In Finland it remains unclear how far a new coalition will incorporate True Finns ministers or their views on EU aid for heavily indebted member states. The government is expected to be formed by mid- to late May.

But the True Finns are sure to gain a bigger say. Analysts say there is a strong chance of the National Coalition joining with the left-leaning Social Democratic Party, which came in second, and also with the True Finns.

BIG CHANGE

This is a big, big bang in Finnish politics. This is a big, big change, said University of Helsinki professor Jan Sundberg.

Saxo Bank chief economist Steen Jakobsen said a coalition with the Social Democrats and/or True Finns would make it hard for the government to fully support the Portugal bailout without a schedule for how Greece is to restructure.

The Social Democrats support the EU but have criticized the bailout, saying private investors and banks should shoulder more of the responsibility.

The strong showing for the populist True Finns reflects growing public frustration about footing the bill for weaker economies such as Greece, Ireland and Portugal, and anxiety over unemployment and pension cutbacks.

Finland's rebound from the global financial crisis has done little to boost jobs. Its flagship company, Nokia, is struggling to compete with Apple Inc and Asian handset makers, and is expected to cut jobs soon.

Finland has neglected many domestic issues in all this EU twaddle. Of course the troubled countries should be helped somehow, but the terms have to be tight, said a public servant, 37, who gave his name as Jari. He voted for the True Finns.

Some voters also cited a distrust of incumbent politicians. Prime Minister Mari Kiviniemi's Center Party, hit by a political funding scandal, suffered the biggest setback, losing 16 of 51 seats in parliament. She said it would go into opposition.

The National Coalition, Social Democrats and True Finns have starkly different agendas, although Finland's tradition of broad coalitions may make it possible for them to work together.

It would be a very heterogenous, very difficult coalition, said Sixten Korkman, managing director at the Research Institute of the Finnish Economy. In terms of European Union policies, Finland will become a more difficult partner.

(Additional reporting by John Acher; Writing by Ritsuko Ando; Editing by Janet Lawrence)

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