Germany said Monday that a deal Finland struck with debt-wracked Greece for Athens to provide collateral in exchange for loan guarantees required the consent of all 17 eurozone members. The agreement "must be approved by the other eurozone member countries," a finance ministry spokesman told a regular government press briefing.
"Such a bilateral accord may not be agreed to the detriment of the others," he said, referring to the other countries coming to the aid of Greece. Government spokesman Steffen Seibert said the arrangement "required discussion" within the crisis-rocked eurozone.
"This accord must be explained to the other eurozone countries," he said, adding that Berlin had not yet received a copy of the pact between Greece and Finland, which is contributing an estimated two percent of the total rescue. Seibert said any discussion about possible guarantees should be conducted "not in the media but in eurozone institutions."
Finland, one of only six EU nations with a top AAA credit rating, warned it would seek collateral for its portion when eurozone leaders agreed a second, 160-billion-euro ($230 billion) rescue plan for Greece in July. Germany is the biggest contributor to the package.
Helsinki hammered out a deal with Athens last week, raising immediate objections from Slovenia, Slovakia, Austria and the Netherlands who said they would seek the same guarantees for their portion of the loan. Greece called on the European Union to show leadership to stem a growing row over the deal. The eurozone "should send a clear and firm message ... that we want a solution that permits Finland to participate [in Greek bailout loans] but the most important thing is to not disturb the relations of the eurozone with the market, to not raise doubts about the credibility and efficacy" of the rescue plan, Greek Finance Minister Evangelos Venizelos told a news conference on Monday. On Friday, Venizelos told an Athens radio station that it would be up to eurozone finance ministers to find a solution if there were requests for collateral from any other country.
Austria has suggested that countries with little exposure to Greek debt receive guarantees while heavyweights such as Germany, whose banks have heavily invested in Greece and thus have a stake in a rescue, do without. Seibert declined to comment on the proposal on Monday. Analysts said the dispute over demands for collateral do not bode well for the second Greek rescue package and that unresolved conflicts within the eurozone could force Athens to leave one day. "We estimate that if all five economies demand the same deal ... Greece might have to set aside up to 13 billion euros of its new 109 billion euros loan package as collateral. Unsurprisingly, this led Greek (bond) yields to rise sharply," Capital Economics said in a note.