With Greek bailout deal, Europe's east and north flex their muscles

Germany may have been the driving force behind Greece's punishing third bailout deal, but it couldn't have done it without the support of smaller countries like Finland, which have little sympathy for the Greeks.

Francois Lenoir/Reuters
Finland's Finance Minister Alexander Stubb (l.) listens to his German counterpart Wolfgang Schaüble during a eurozone finance ministers meeting in Brussels on Monday.

On the geographic fringes of the European Union, having long been under the shadow of Russia, Finland doesn’t always take center stage.

But as the world looked to Europe as it scrambled to avert economic collapse in Greece, it was the bloc’s northernmost member that emerged the protagonist, leading the push for the toughest bailout deal possible. Its politicians are still grumbling that the deal doesn’t go far enough and are threatening not to back when they vote on it, if Greece’s parliament votes to accept the deal.

While Germany, the economic powerhouse of Europe, is seen as the driver of austerity measures that have defined Europe since its sovereign debt crisis, it is tiny nations like Finland, Latvia, and Slovakia that have emerged as even more hardline in their positions against Greece. Such countries share the German preference for frameworks and frugality, and also resent the idea of poorer EU nations like Latvia bailing out those like Greece that are comparatively richer.

And these smaller nations are not just speaking up on Greece, but are increasingly taking stances that are shifting the European direction on everything from Russia to refugees – and in ways that do not always square with established European values. 

While the expanded EU may have brought these nations "into the western fold," says Petr Kratochvil, director of the Institute of International Relations in Prague, "at the same time it does so by negating some of the values in the EU … refusing migration, refusing solidarity, refusing to help the weakest ones” – in other words, he says, those new countries have not grasped the responsibilities that come with their new EU clout.

Pride and responsibility

On Greece, many of these countries squarely align with German Chancellor Angela Merkel. But that has less to do with the European ideals that Ms. Merkel espouses, and rather has been often driven by the rise of euroskeptic parties that are setting national agendas.

Nowhere is that clearer than in Finland, whose hardline stance has been steered by Foreign Minister Timo Soini’s right-wing populist Finns Party.  Heading into negotiations over the requested third bailout from Greece, just days after Greece held a referendum rejecting an extension of a previous package, Mr. Soini told Finnish television without mincing words: “Usually someone in debt does not set conditions, but rather pays his debt.”

The Finnish position also stems from the country's own financial woes, as it enters its fourth year of recession. According to a recent YouGov poll, only 14 percent of Finns supported renegotiating Greek debt, in no small part because they are feeling the pinch themselves.

"It won't be long until we are just like Greece, if we keep bailing them out," says frustrated taxi driver Seppo Kansikas, in the economically hard-hit Kymenlaakso region in southern Finland.

There is also a historic reason why Finns are so reluctant to help Greece: their own success.

Founded as an independent state in 1917, Finland endured decades of grinding poverty and bloody wars with a Soviet aggressor, and emerged as one of the strongest economies in the world. Today, Finland is considered to be one of the least corrupt and among the most fiscally responsible EU countries. It is the 26th richest nation in the world per capita.

And it became so while insisting on paying back every single cent of the millions it owed to the United States, borrowed to address acute food shortages in the post World War I era. Finland takes an enormous amount of pride in the fact that it was the only country in that era that paid off not only the principal, but all the interest payments, in full.

The sentiment that Greeks aren’t willing to do the hard work that others before them have runs from the Baltics to the Balkans. A pensioner from Lithuania lives on far less than a pensioner in Greece, they argue. “[The Baltic states] have a lower GDP per capita and a worse social welfare system than Greece,” says Katharina Gnath, an economist at the Bertelsmann Stiftung think tank in Germany. “For them being austere is also a matter of fairness.”

Their willingness to publicly imagine a eurozone without Greece – as opposed to France, which calls such a scenario a humiliation for Europe – is also a way to secure their own stability in a currency that offers more than just economic gain.

“Being part of the euro is for them a further step towards the core of Europe, and that is all the more important now that they have increased geopolitical problems with Russia,” Ms. Gnath says. “The euro is the highest symbol of European integration.”

'Utilitarian rhetoric'

But if that puts them on the same page as Germany on economic policy, they’ve also played against Berlin on some of the other big issues of the day.

After Russia’s annexation of Crimea, the Baltic countries fought for the toughest stance possible against President Vladimir Putin. Others in Central and Eastern Europe showed much more ambivalence.

And in the midst of Europe’s unprecedented refugee crisis, the failure of the EU to create a mandatory quota scheme that would see most countries take in a share of asylum seekers was due in no small part to the protest in Central Europe, from countries like Poland, Slovakia, and Hungary who have largely been traditional sources of emigration.

Martina Sekulová, a research fellow at the Institute for Public Affairs in Bratislava, Slovakia, where two anti-immigration marches have already been staged this summer, says countries are not showing solidarity with the rest of the EU – or remembering the welcome they themselves have received.

Many Finnish citizens, particularly on the left, have noticed a corresponding change in tone on immigration. “With the 2011 elections, when the Finns Party came to power, they started to change Finnish attitudes toward immigrants,” says Paavo Arhinmäki, a Finnish parliamentarian and chairman of the Left Alliance. “They legitimized language against immigrants that would have previously been called racist or neo-Nazi. Now we hear it in the streets and grocery stores every day.”

But Mr. Kratochvil in Prague says the rhetoric, especially in Europe’s central and eastern countries, transcends ideology. He calls it “utilitarian rhetoric” – decisions made on the basis of how it affects the bottom line, not on European values.

“On the discussion about Russian sanctions, no one cares about the principled position, only about the impact on their national economy all the time,” he says. “Citizens have been fed this narrative of being in the EU because it pays off.”

Daniel Mosseri contributed reporting from Berlin.

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