April 19, 2011 / 12:19 PM / 9 years ago

Finnish PM-elect seeks to soothe EU bailout fears

HELSINKI (Reuters) - Finland’s likely next prime minister ruled out proposing major changes to a bailout package for Portugal, seeking to soothe concerns that the Nordic country’s new government could block EU plans and upset markets.

Chairman Timo Soini of the True Finns celebrates with supporters after hearing the results of first preliminary votes of Finnish parliamentary elections at the party's reception in Helsinki April 17, 2011. Finns went to the polls in parliamentary elections on Sunday. REUTERS/Martti Kainulainen/Lehtikuva

But Jyrki Katainen, leader of the National Coalition party that won Sunday’s election, also acknowledged that talks to form a new government would take a long time because his party disagrees with anti-euro True Finns party over the bailout plan.

Finland’s parliament, unlike others in the euro zone, has the right to vote on the European Union’s requests for funds.

Strong gains by the True Finns party, which came third in Sunday’s vote and may join the next government coalition, have raised concerns it could delay shoring up Portugal.

“Finland must for its own good to create a smart and responsible government program, which maximizes our influence in all international forums. I’m convinced we can find such policy,” Jyrki Katainen told reporters on Tuesday.

He said all parties in the next government must back a government program and added that there was little chance that a meeting of European finance ministers would accommodate major changes to the bailout that the True Finns have called for.

Asked what changes Finland might propose at the Ecofin meeting in mid-May, Katainen told reporters: “We’ll see what is possible, but anyway, the changes would not be very big.”

Katainen has said the new government would most likely be based on a coalition including the National Coalition, the True Finns and the Social Democrats.

The Social Democrats, the main opposition party, said on Tuesday it wanted private investors to shoulder more liability in the EU’s bailout plans, despite broadly supporting them.

LONG, TOUGH TALKS AHEAD

Katainen said he was prepared long discussions as he tried to form a majority bloc in parliament. Analysts say it will be difficult, with significant compromises required from the diverse parties.

“The government talks will be tough. The National Coalition party and ... the True Finns, have, on many issues, opposite opinions and values,” said Ville Pernaa, director for parliamentary studies at Turku University.

Sixten Korkman, managing director for the Research Institute of the Finnish Economy, said it was hard to predict how the parties would come to an agreement in the Portugal package.

“(True Finns leader Timo) Soini took a particularly tough line on this during the election campaign so it must be difficult for him to walk away from this issue, and many people in his party would have great difficulties in accepting.”

The National Coalition may have to compromise and take a tougher stance against Brussels to heed popular discontent.

The True Finns’ tough line against bailouts has resonated among many voters who feel their famously high taxes are helping bail out irresponsible governments.

“The countries that have been scrupulous should not do all the work. I am critical about these bailout packages,” said one pensioner, Helja Ketola, although she voted for the Leftist Alliance rather than the populist party.

Some, however, worried that the True Finns’ rise could lead the country off its track as a pro-Europe player, the only country in the Nordics to adopt the single currency.

“It’s shocking that the True Finns got such a large amount of votes, and I wonder what impression they’ll give abroad,” said Tiina Siirama, a 35-year-old saleswoman who voted for the National Coalition party.

The True Finns won 19.0 percent of the vote in the election, securing 39 of parliament’s 200 seats, up from five in 2007. The National Coalition, which won with 20.4 percent, has 44 seats while the Social Democrats, on 19.1 percent, have 42 seats.

Katainen said he expected the other three parties in the incumbent government — Center party, Greens and Swedish People’s Party —- to vote in favor of the Portugal bailout.

The Center and Green parties have said they will likely be in the opposition, while it’s unclear what the Swedish People’s party will do.

Additional reporting by John Acher; Writing by Ritsuko Ando; Editing by Alison Williams

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