Euro zone woes face new Finnish PM
HELSINKI (Reuters) - Jyrki Katainen, set to be Finland's next prime minister, faces the task of keeping on a pro-Europe course while heeding voter discontent which turned the populist, euro-skeptic True Finns party into a major force.
Katainen, 39, has had challenges before: as finance minister in the coalition before Sunday's election he steered Finland through a recession.
He also has steadily moved his center-right party closer to the center and has now given it the leadership of government for the first time in 20 years.
But forming a new coalition which matches his europhile inclinations with the more euro-skeptic stance of True Finns leader Timo Soini will be hard.
Katainen, who grew up in a small town in central Finland and was a part-time teacher before entering local politics in his early 20s, noted that Finnish parties had always worked for compromises.
"It is our duty to form a majority government," he said on Sunday.
The election result showed Katainen's National Coalition Party narrowly won the election, gaining 43 seats in parliament, just topping the main opposition Social Democratic Party's 42 seats. The True Finns won a hefty 39 seats.
The biggest party in the outgoing coalition, the Center Party, suffered a big defeat and said it would go into opposition. Katainen will likely turn to the True Finns and the Social Democrats when he tries to build a new coalition.
Strongly pro-European, Katainen is a vice president of the European People's Party (EPP), a grouping of center-right parties in the European Parliament.
His party wants a cut in corporate tax to help create jobs and boost economic activity. It is also the most eager to promote nuclear power projects in the Nordic country.
As Finland's public debt is set to rise, the party is seeking to stabilize long-term finances by reforms such as raising the retirement age and halving the number of municipalities.
Retirement is a likely deadlock, since Social Democrats have said they will not enter a government that plans to raise the minimum age.
Tax cuts will be difficult to agree with both the Social Democrats and True Finns.
In talks with fellow finance ministers to create a stability mechanism for Europe, Katainen had to balance between Europe's hopes to lean more on triple-A-rated countries including Finland, and growing euro-criticism at home.
Since taking the party helm at age 32, Katainen has led the National Coalition, traditionally Finland's conservative party with ties to business, in a more liberal direction, winning new supporters among younger middle-class voters.
He cuts an image of a clean living and energetic family man and father of two. His dapper appearance is in stark contrast to the burly and folksy Soini.
Because of his schoolboy looks, Katainen has had to endure the nickname "Jyrki-boy" borrowed from a popular Finnish song and struggle to emerge from the shadow of former party leader and presidential candidate Sauli Niinisto and his cohorts.
He came into his own as party leader in 2008 when he sacked his foreign minister, Ilkka Kanerva, a National Coalition veteran politician, after Kanerva's text messages to an erotic dancer were splashed over the Finnish press.
Katainen replaced Kanerva at the foreign ministry with Alexander Stubb, another of a younger generation of media-savvy liberal internationalists in the National Coalition.
The two close friends smiled while checking Sunday's results together from an iPad at party celebrations.
But with Katainen as prime minister and Stubb as a possible foreign minister again, their balancing act with EU and domestic pressure is going to get trickier than before.
(Editing by Michael Roddy)