Everybody for themselves and God for us all: a story on idiocy to the third degree in the European Union.

The Finnish government shocked the other Euro-zone members last Tuesday by asking a collateral of €1 bln, stored at a trusted third party, in return for their share of the emergency loan to Greece. When this loan would not be paid back by the Greek, the collateral would be handed over to the Finns.

The Finnish collateral clause was  negotiated earlier in the preparation phase of the July 26, EU-meeting. For Finland this was a ‘take it or leave it’-clause. To prevent the other Euro-zone members from reading about it, the clause was hidden in paragraph 9 of the July 26 agreement on Greece, far away from the always vigilant eyes of a.o. Dutch Finance Minister Jan-Kees de Jager.

And of course, De Jager was shocked to hear of this Finnish deal, but instead of accusing the Finns of treachery or loansharking (in of course more diplomatic terms), he decided: ‘If Finland wants a collateral, we want it too’. 

And Austria, Slovenia and Slovakia all screamed in harmony: ‘We also want a collateral’.

It is like ‘Snow White and the Seven Dwarfs’: if you give money to one dwarf, the rest will follow. And the Greek get stuck in the situation that they receive ‘promises of money’ in one hand and hand out real money with the other. ‘Everybody for themselves and God for us all’, is the Dutch proverb that says it all.

It is the utter stupidity of EU politics, enough to keep the financial markets sleepless at nights. And at the same time, politics is blubbering about the financial markets that don’t understand the political process. Yeah, right.

The Financial Times writes on this shocking story. Here are the pertinent snips:

Greek rescue package faces further hurdles

Two of the eurozone’s key creditor countries said on Thursday that their backing for Greek bail-out loans may be contingent on securing concrete collateral from Athens, a move that would create fresh hurdles to the new €109bn Greek rescue that may be difficult to surmount. 

The announcements by Austria and the Netherlands, two of the eurozone’s six triple A rated members, follow a tentative deal reached on Tuesday between Athens and Finland, another triple A eurozone country which for months has demanded collateral in return for its support for the bail-out. 

The Greek bail-out deal reached last month allowed for such bilateral agreements as a way to placate the Finnish government. Senior eurozone finance ministry officials started a two-day meeting to review the deal in Brussels on Thursday. 

But approval of the Finnish side agreement now appears set to open a Pandora’s box, with as many as four other countries that face a bail-out backlash at home seeking to strike similar deals with Athens. 

According to Jutta Urpilainen, the Finnish finance minister, Greece agreed to make a cash deposit to Helsinki matching the size of Finland’s loan guarantees in the new bail-out, money that would then gather interest after being placed in highly secure investments. 

Ms Urpilainen’s Social Democratic party campaigned against another Greek bail-out during this spring’s national elections. It only agreed to join the governing coalition after Jyrki Katainen, the new Finnish prime minister, agreed to make such collateral arrangements a prerequisite to Helsinki’s support. 

Harald Waiglein, a spokesman for the Austrian finance ministry, said that while Vienna did not view a collateral deal as a prerequisite for its support, it would seek such an agreement if the Finnish plan was approved. 

“There cannot be a model just for one state,” Mr Waiglein said. A spokesman for the Dutch finance ministry said that The Hague would request the same if the Finnish deal was approved. 

Other smaller countries are expected to follow suit. European diplomats said Slovenia had indicated during technical discussions that it might seek a collateral deal, and the finance minister of Slovakia, which opted out of the first Greek bail-out, told a press conference Thursday that he would also request a bilateral agreement. 

The broadening demands for side deals could siphon away much-needed cash from Athens as it attempts to meet tough debt and deficit targets in its bail-out programme. In addition, further delay in finalising the Greek rescue could wreak havoc with what has already been a highly fraught process. European officials have been pushing for the new deal to be in place before Greece’s next aid payment, a €8bn ($11bn) loan due late next month.

If I would be the Greek Prime-Minister Giorgios Papandreou, I would say: ‘Shove this emergency money. We don’t want it anymore. Instead, we decide to pay only 50% on every sovereign bond at maturity’. 


Because it seems that Greece is playing a losing ball game anyway. And then at least, they can decide to play it according to their own rules.