HELSINKI (Reuters) - Finland's leaders dismissed a suggestion from within the prime minister's own party that the country should consider dropping its demand for Spain to provide collateral in return for its banking bailout.
The demand for guarantees by one of the euro zone's four AAA-rated countries is an outstanding issue hanging over a deal struck two weeks ago to take more aggressive action to fix the sovereign debt crisis in the euro zone.
One of the conditions for the Social Democrat party's participation in Prime Minister Jyrki Katainen's coalition government was that Finland demand collateral for loans to debt-burdened countries.
Jan Vapaavuori, the parliamentary leader of Katainen's National Coalition party, had questioned whether the country's hard line on the issue was doing it more harm than good.
"Is it so that because the collateral demand was written in the government programme, we fight tooth and nail to keep it without considering all the consequences it may have on Finland's international position," Vapaavuori said in an interview in Finnish daily Helsingin Sanomat on Friday.
Prime Minister Katainen subsequently reiterated Finland must secure collateral for its portion of loans to Spain.
But Jutta Urpilainen, leader of the Social Democrats and also Finance Minister, demanded that the party clarify its stance, according to news agency STT. She is currently leading talks with Spain over the collateral.
Vapaavuori's opposite number at the Social Democrats, Jouni Backman, said the government would not have been formed without including the collateral demand in the agreed programme.
"If we will slip from that (programme), in additional to a European crisis we will soon also have a domestic government crisis," he said, responding in the paper to Vapaavuori's comments.
Finland has said it will not participate in the bloc's planned aid for Spanish banks unless it and Spain reach a deal.
(Reporting by Terhi Kinnunen; editing by Patrick Graham)
