Finland had an election on Sunday and, to the chagrin of many in this Northern European nation, a nationalist party called the True Finns made huge gains, winning 34 new seats for a total of 39 in parliament. The shockwave reached to the other side of the European Union today as negotiations got underway in Lisbon to nail down the specifics of a bailout for Portugal. But how does a parliamentary election in Finland affect a bailout in Portugal so significantly?
It comes down to a combination of two factors: Finland is one of six AA-rated euro-zone countries that would have to approve a bailout for Portugal (and anybody else), and it holds the unique distinction of being the only euro-zone country in which the decision to approve a bailout must go before the parliament. Normally, the country votes to approve bailouts, but that started changing last month as the True Finns appeared to be gaining power. The Financial Times noted that the country "was playing the unusual role of 'troublemaker.' "
The True Finns are euro-skeptic and anti-bailout. With the party taking some 19 percent of the vote, the True Finns will likely become a member of Finland's ruling coalition. It was third overall in the election, behind the ruling National Coalition Party and the opposition Social Democrats. Party leader Timo Soini told Reuters that electoral success meant the party would "get an invitation to talks" on forming a new government.
Even if True Finns aren't included in a new government, they still have a strong presence in Parliament. And because of Finland's unique relationship to euro-zone bailouts, that means they'll still get a say on Portugal's. Soini has been outspoken from the start in saying that his party would oppose such bailouts. "The True Finns leader told Reuters his aim was for Finland to 'pay less to Brussels'. 'It is a bad deal,' he said of the Portugal plan."
But there is no formal Portugal deal. That's what leaders from the European Commission, European Central Bank and International Monetary Fund are meeting about in Lisbon today. With a Portuguese election due June 5, those working out the bailout deal will have to sell it to the existing Portuguese government as well as the EU before then or start again after the vote. And if the True Finns wanted to rock the boat, they would have some weight to throw around before a bailout could go through.