Wednesday 20 April 2011

Finland: Eurozone shockwaves

The epicentre of the devastating 1755 Lisbon earthquake was much closer to Portugal than Helsinki, but how shattering are the shockwaves from Finland going to be? .

The pro-European PM-elect Jyrki Katainen is determined to shoulder responsibility in defence of the eurozone, but two out of the three likely main coalition partners are not.

Katainen will probably have to form a government with the Social Democrats who demurred on a Portuguese bailout in the election campaign and the True Finns who rode to a historic victory on outright rejection of everything which smacks of European integration.

Thus, participation by Finland in the eurozone bailout is no foregone conclusion. Finnish participation without changes is highly unlikely.

The unanimity requirement exposes how brittle eurozone structures are, indeed the state of European solidarity.

We mix media reports available in English with our own comments.

Election result

In the 17 April 2011 general election distributed the 200 seats of the Parliament of Finland, according to a proportional system of representation. The three political parties to come out on top:

National Coalition Party (European People's Party EPP) 44 (party leader Jyrki Katainen)
Social Democratic Party (Party of European Socialists PES) 42 (Jutta Urpilainen)
True Finns (EFD Group) 39 (Timo Soini)

The populist and nationalist True Finns sensationally added 34 MPs to their group of five.

Helsingin Sanomat depicted the astounding election victory of the True Finns, translated for the International Edition: Editorial: Timo Soini rewrote the electoral history books.

We note that the Centre Party (European Liberal Democrat and Reform Party ELDR) led by outgoing prime minister Mari Kiviniemi suffered heavy losses, bringing it down to 35 seats, as did the Green League (European Green Party EGP) led by Anni Sinnemäki, reducing the current government party to 10 parliamentarians. Both leaders have stated that they head for the opposition.

Consensus politics

On Left Foot Forward, Taneli Heikka discusses Finnish consensus politics in wider and more personal terms: What really happened in the Finnish elections.

New government

The will of the electorate and the mathematics leave few options for a majority government.

Reuters provides a schedule for the government negotiations: Factbox: How Finland's next coalition govt will be formed.

The biggest Finnish daily, Helsingin Sanomat, discusses the options in its International Edition: Government of three largest parties envisioned.

YLE (Finnish public broadcasting corporation) news in English: Urpilainen: SDP To Join Government Negotiations.

The SDP is going to participate in government negotiations, but they know that they are practically indispensable if the Centre Party and the Greens stay on the sidelines.

Under long time party chairman and prime minister Paavo Lipponen, the Social Democratic Party was a staunchly pro-EU party. Under the second leader since then, Jutta Urpilainen, it is hard to foretell the future of the SDP as a European party.


Few international pundits are interested in Finland as such, but the repercussions for the eurozone and the European Union have turned the Finnish election result into a notable event in European and financial capitals.

NCP leader Jyrki Katainen wants to prevent panic, but his party is not going to form a majority in the next government. The coalition agreement is going to be a tough nut to crack, without scuppering euro area unanimity for stability actions.

See, for instance:

Helsingin Sanomat International Edition: Finnish election has implications for euro crisis.

YLE (Finnish broadcasting corporation) news in English: Katainen Believes in Finnish Support for Portugal Bail-out Package.

Reuters: Finnish PM-elect seeks to soothe EU bailout fears.


If events in Finland can influence the fate of the eurozone and the EU, mismanagement in Ireland, Greece and Portugal has caused a political tsunami in Finland.

Interdependence is stronger than ever, however voters act.

Ralf Grahn

P.S. The Internet-Law blog, written by Thomas Stadler, is an active source of fact and opinion in German on IT and intellectual property law.

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