* Britain must remain at heart of EU - Finnish PM
* Problem with Irish, Spanish banks will be dealt with by
By Luke Baker
BRUSSELS, Jan 16 The European Union without
Britain would be like "fish without chips", the prime minister
of Finland said on Wednesday as he made a detailed case for
Britain remaining a strong and influential player in Europe.
Speaking two days before Prime Minister David Cameron
delivers a much-anticipated speech setting out how he wants to
change Britain's relationship with the European Union, Jyrki
Katainen said he was sure the British would not abandon Europe.
"We all need a strong Britain in the EU," he told a small
group of journalists in an interview in Brussels.
"I'm quite confident that major British politicians and the
people think that they should be at the heart of Europe," he
said, adding: "The EU without Britain is pretty much the same as
fish without chips. It's not a meal anymore."
Katainen listed Britain's competitive economy, its role in
shaping the single market, its strong free-trade history and its
broader global influence as reasons why the country was an
essential part of the European project.
But he also cautioned that Cameron could not expect to pick
and choose which pieces of EU legislation he wanted to adopt and
which pieces he did not like.
"When being a member in the European Union and especially in
the single market, you cannot pick the raisins from the bun," he
said, adding that it was not clear to him which issues Britain
could easily drop and which it was ready to keep.
"It's very difficult to say what could be the competencies
that could be repatriated. I don't know exactly what they could
be," he said.
"When looking at Britain and its role in the world, it has
benefited a lot from an integrated Europe, and I'm really sad
that the debate has gone so far in the UK that some people there
are seriously thinking of leaving the EU."
Katainen also addressed an issue close to Finland's heart
that has proved a stubborn sticking point for the euro zone
since June last year: how to treat "legacy" banking problems in
countries such as Ireland and Spain.
Euro zone countries have agreed that problem banks in euro
zone countries can be directly recapitalised by the region's
bailout fund once the European Central Bank (ECB) is fully
established as the single supervisor for the whole banking
But Finland, in a position that has drawn support from the
Netherlands and Germany, has argued that existing problems
should not fall under the new regime, which would apply only to
countries that have banking problems in the future.
That would mean Spain and Ireland would not be able to
recapitalise their banks from the ESM permanent bailout fund.
"I just try to find solutions on what to do with the legacy
assets, but as we have said earlier we don't like the idea that
we changed the rules of the game in the middle of the game,"
Katainen said, when asked about the "legacy assets" issue.
"This is an issue that will be dealt with by the summit in
June this year," he said. Asked if Germany and the Netherlands
still stood close by Finland on the issue, he replied:
"We have not been talking with the two other countries on
the Irish case or more generally legacy assets.
"But I think we are very close to each other, direct
capitalisation can be used only once the European banking
supervision is up and running, but as I said this is an issue
which will be dealt with later on this year."
Katainen also emphasised the need for a strong and
comprehensive system for resolving bad banks in Europe, saying
the mentality of leaders had to shift from bailing out banks to
ensuring that investors and owners of banks were 'bailed in'.
Only then would taxpayers be protected from having to carry
the cost of bailouts, and the link could be broken between the
debts of problem banks and the debts of sovereign countries.
"Most of the future bank crises, we could solve with the
bail-in principle. The investors and owners of the banks must be
in the first row of being responsible for the banking trouble.
"This should be a kind of normal rule and only in rare,
exceptional occasions should public money be used."