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Negotiations drew to a close today with agreement that a cash collateral will be deposited in Finnish bank accounts by Greece in return for Finland’s participation in the second Greek bailout, according to a WSJ report.Finland had vowed not to participate in the bailout without collateral, motivated by steep domestic dissatisfaction in the country’s continued participation in bailout efforts.
At one point during bailout negotiations last month, Finland allegedly demanded that Greece offer up the Parthenon, the Acropolis, and its islands as a guarantee for the return of its loans.
The success of these collateral negotiations are troubling, if only because they suggest that future joint measures taken to stem the burgeoning sovereign debt crisis could be crippled by unending negotiations between specific countries about how to protect their investments in recovery.
New measures to expand the European Financial Stability Facility could stave off mounting troubles in Italy and Spain in the short term, but long-term suggestions about eurobonds and more drastic ECB intervention have dominated debate recently.
These solutions could provide a permanent solution to the eurozone’s problems, but domestic political opposition in countries like Finland could stymie these plans.