A Finnish man smokes a cigar as he sits with his dog near the campaign office of the National coalition, a liberal conservative political party in Finland, in Helsinki on April 14, 2011.JONATHAN NACKSTRAND
Strange as it may seem, the debt crisis in Portugal couldn't have come at a better time for the True Finns.
Finland's anti-immigrant, right-wing populist party has vowed to oppose the euro zone bailouts, along with any increases in contributions to the temporary and permanent European Union stability funds.
Finns, like Germans, are getting tired of rescuing their downtrodden neighbours to the south. And so the True Finns have risen on a wave of public frustration that began with the EU's bailout of Greece, then Ireland and now, just in time for Sunday's general election, Portugal.
After withering in the 2007 election with just 4.1 per cent of the vote, the party now enjoys 16.9 per cent support, according to one poll. That's enough to place it among the four most popular parties and make its involvement in a coalition government a real possibility.
An unco-operative Finnish government would be bad news indeed for the EU, which needs the borrowing power of its triple A credit rating as well as its political support to pass any crisis measures.
"If a member state rejects the reform of the bailout mechanism, the deal itself could be in jeopardy, as it requires euro zone unanimity," writes Tiina Helenius, Handelsbanken's head of economic research for Finland.
"Could we see the bigger EU picture being compromised by domestic politics in fiscally conservative countries?"
Finland is no stranger to economic hardship. In the early 1990s it endured a severe economic downturn caused in part by the collapse of the Soviet Union, derailing a lucrative oil-for-exports trading relationship. The Finns had just come off a long economic boom featuring bloated public sector spending, excessive lending and a housing bubble. When the crisis hit, GDP contracted for three years, interest rates spiked 20 per cent and the government was forced to rescue its banks.
What followed was a painful decade of tax hikes and severe cuts to social welfare programs. The banking system was overhauled and fiscal policies were reformed. No one bailed the Finns out.
"I have been asked if the 1990s crisis is behind the current feelings toward the EU and I think there is some truth to it," Ms. Helenius said. "It is still very fresh in many people's memories."
It was partly due to fiscal policies imposed in the 1990s that Finland managed to weather the 2008 financial crisis relatively well. Its debt now sits at less than 50 per cent of GDP while its deficit is 2.5 per cent.
Still, a hard stance on euro zone bailouts could be a dangerous move for the nation of 4.5 million. Finland is an export-driven economy with 55 per cent of its goods destined for the European Union. Without a mechanism to stop the debt contagion from spreading from Portugal to Spain, the fallout could be serious.