BUSINESS

Finnish finance minister says she doesn't see solution on Greek collateral issue at meeting

09/16/2011 03:03 EDT | Updated 11/15/2011 05:12 EST
WROCLAW, Poland - Finland's finance minister said she doesn't see Friday's meeting of eurozone finance ministers finding a solution to the dispute over her country's demand for collateral for loans to Greece — a delay that is set to add to concerns over the currency union's unity.

Finland's demand for collateral to back its contribution to a second, €109 billion rescue package for debt-ridden Greece has harrowed negotiations over the implementation of that deal since it was agreed at a summit on July 21. The small Nordic country's demand has triggered similar requests from several other states, including Austria and the Netherlands.

If the requests were fulfilled, providing the collateral could shave off hundreds of millions of euros from the overall bailout sum.

"Unfortunately I don't see that we can find a solution tonight," Finance Minister Jutta Urpilainen said as she arrived in for a meeting of eurozone finance ministers in Wroclaw, Poland.

The dispute has unsettled markets, as it is yet another sign of divisions between the 17 countries that use the euro over whether they can actually save Greece.

The rescue faces several other challenges. Greece's international debt inspectors interrupted their most recent review mission two weeks ago after they discovered that Athens was set to miss its budget targets. Since then, Greece has announced a special property tax, which the government says should cover the revenue shortfall.

Meeting strict budget, privatization and reform targets set out in Greece's deal for a first €110 billion rescue package is a prerequisite for receiving the next aid installment, which is due by the end of the month. Without the €8 billion tranche from the other eurozone nations and the International Monetary Fund, the country would run out of money by mid-October, forcing it to stop paying salaries and eventually default on its massive debts.

However, Austria's Finance Minister Maria Fekter, traditionally a hard-liner when it comes to sticking to the bailout conditions, said she was "very optimistic that the next tranche can be paid out to Greece."

Friday meeting comes after several turbulent weeks on global financial markets, triggered by fears over a potential Greek default, its repercussions for European banks, and a slowdown of the world economy. U.S. Treasury chief Timothy Geithner, who has been pushing Europe to finally sort out the debt crisis which has dragged on for close to two years, also arrived in Wroclaw and was to join the ministers after first meeting with his Polish counterpart.