Finland Vote 100% In; Anti-Bailout Block In Majority; Coalition Math

The results of this weekend's election in Finland are in. The current pro-euro, pro-bailout government has been ousted and a coalition of other parties will rule.

There are 18 parties in Finland in the recent election. Many of them are fringe parties, but the splitting of the vote is such that the winner barely exceeded 20% of the vote.

Voters in the US may be interested to see what something other than a two-party system looks like.

Finland General Election Results



The first eight parties got all but one seat.

My friend Tero who lives in Finland has been updating me on the results. A couple days ago Tero wrote ...

I'm glad to see that our Finnish stance at the Euro region bailout has been noted by you. Most people here just don't see the point of throwing good money after bad when we know it will not do any good. Eventually it would put us in the same position where Greece is now. We've been there ourselves in the early 90's and the solution was debt restructuring which was done by currency devaluation which obviously is not an option anymore. An average Joe here understands that we would be only bailing out German and French banks.

That is why I'd like to vote for the party you call "True Finns". However, I can't. Other than that one position, the whole party is a big mess. They might make decisions that would be catastrophic for Finland.

By the way, "True Finns" does not describe the party or its name. It doesn't translate into English very well but "regular", "basic" or "average" would be closer than "true". Best translation I can come up with is "common Finns".

A few hours ago Tero wrote ...

The negotiations to form the government are going to be very interesting. There are many possible combinations. This is the first time in history of Finland that the National Coalition Party is the biggest party.

Because of the surge in the "True Finns" and the position of the Social Democrats, expect very tough terms set for the bailouts if they don't get vetoed outright.

It will be interesting to see how the market reacts next week.

Voters Protest Against Bailouts

Bloomberg reports Finland’s Euro-Skeptics Set for Government After Election Upset

Finland’s euro-skeptic bloc is poised to form a government with the pro-Europe National Coalition led by Finance Minister Jyrki Katainen after voters used yesterday’s election to protest against funding bailouts.

The True Finns, whose leader Timo Soini says taxpayers shouldn’t have helped rescue Greece or Ireland, jumped almost 15 points to 19 percent, the Justice Ministry said. Katainen’s National Coalition won 20.4 percent to become Finland’s biggest party for the first time. Prime Minister Mari Kiviniemi’s Center Party got 15.8 percent and the Social Democrats, which also opposed bailouts for Greece and Ireland, won 19.1 percent. Kiviniemi will lead her party in opposition after its “huge defeat,” she told broadcaster YLE.

“If Finland doesn’t ratify the package, either Portugal won’t pay its debts or some other package must be drawn up for them,” said Pasi Kuoppamaeki, chief economist at Sampo Bank, a unit of Danske Bank A/S, after the final count was published. “I’m afraid this will cause some anxiety in the financial markets.”

Soini’s campaign to protect taxpayers from rules made in Brussels has won support from voters who endured their most recent recession without blowing the budget. The Social Democrats have argued Europe’s rescue measures don’t push enough of the cost onto investors.

The election results, which come 11 days after Portugal became the third euro member to seek a bailout, threaten to disrupt efforts to push through Europe’s crisis-handling measures. Should AAA rated Finland withdraw its support, Europe’s principle of solidarity “would have failed,” said Frank Engels, an economist at Barclays Capital, in an April 14 note. Any steps need the approval of all 17 euro members.

“Portugal’s situation is getting very tough,” Kuoppamaeki said. “They have large loans maturing in June, so something has to be done.”

Will Politicians Get the Message?

The current prime minister's party came in 4th place proving that voters are fed up with bailouts. The question is: will politicians get the message?

Note that Katainen, the National Coalition party leader supports the euro area’s rescue tools.

“Finland has always been a responsible European Union country,” he told supporters. “I’m convinced the new government, whoever is in it, will want to continue this policy.”

My math says that 20.4% + 15.8% = 36.2%, not enough to insist on a policy continuation. Note that the True Finns plus Social Democratic party total is 38.1%.

Additional Math

Please consider Nationalists enjoy surge in support in Finnish elections

The nationalist and euroskeptic party, True Finns, made big gains in Finland's general election on Sunday, emerging as the third largest party.

The True Finns ranked third behind the winning conservative National Coalition party, whose leader Jyrki Katainen is set to become the country's next prime minister, and the second-place opposition Social Democrats.

The surge in the share of the vote for the True Finns - up to 19 percent from 4.1 percent in 2007 - alters the country's political landscape dramatically, with power traditionally shared between the three main parties.

The True Finns' success could also have a resonance throughout the European Union, as the party could potentially disrupt an EU bailout of Portugal. Opposition to such rescue packages has been central to the party’s campaigning, as well as tougher immigration rules.

National Coalition minister Jan Vapaavuori dismissed fears of a new euroskeptic government on Friday, saying that any new government coalition would inevitably be pro-EU.

The True Finns, he said, would probably tone down its rhetoric as a condition of joining the government. The Social Democrats, who are critical of the bailout plan but supportive of the EU, would be even easier to get on board, he said.

"Either it's a pre-condition for them to support Portugal in the next government, or at least not to vote against it," Vapaavuori said. "I'm sure that Finland will be in line with other European countries in the next government."

Center Party Drops Out of Coalition

The New York Times reports Anti-Bailout Party Gains in Finland

Finnish voters dealt a blow Sunday to Europe's plans to rescue Portugal and other debt-ridden economies, ousting the pro-bailout government and giving a major boost to a euroskeptic nationalist party.

With all ballots counted, the biggest vote-winner was the conservative National Coalition Party, part of the outgoing center-right government and a strong advocate for European integration.

But its main ally, the Center Party led by Prime Minister Mari Kiviniemi, said it would drop out of the government after falling behind two opposition parties that have challenged eurozone bailouts.

The anti-immigration and staunchly euroskeptic True Finns don't see why Finland should rescue Europe's "squanderers," while the Social Democrats have called for changes to how they are funded.

The outcome means conservative leader Jyrki Katainen will have to invite at least one of them to coalition talks, raising questions about Finland's support for rescue packages that need unanimous approval in the 17-member eurozone.

"This result will give Europe gray hairs," political analyst Olavi Borg said. "It will cause them problems over the bailout funds."

"We can work with any party, as long as the election result and government program make it possible," said Katainen, the conservative leader.

Asked if he can strike a deal with the True Finns on aid to Portugal, Katainen said: "When responsible people sit at the table and discuss matters with Finland's interests at heart then solutions always will be found."

The biggest loser was Kiviniemi's Center Party, dropping 15 seats and a quarter of the support it had in the last election in 2007.

"It would appear to be a crushing defeat for us," the prime minister said, adding her party would go into opposition.

Finland has pledged about euro8 billion ($11.5 billion) in guarantees of a total euro440 billion ($634 billion) in the eurozone's main bailout fund. But those likely will increase significantly as the currency union completes a promised boost of the fund's lending capacity.

"We are five-and-a-half million people," said Tuula Kuusinen, a True Finn candidate campaigning in Helsinki. "We have to stop giving money to every other country. We just can't afford it."

If the Center Party does indeed drop out of any coalition prospects, the math changes substantially. The Nationalists will have to deal with either the True Finns, or the Social Democrats (or both) and both oppose bailouts.

Note that even a coalition of the Nationalists and the Social Democrats is still 10.5% short of a majority.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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