February 20, 2015

EU Membership Has Been Good for Finland

Finland's Prime Minister Alexander Stubb (R) speaks as his Estonian counterpart Taavi Roivas looks on during their joint news conference at the Prime Minister's official residence Kesaranta in Helsinki November 17, 2014.
Finland's Prime Minister Alexander Stubb (R) speaks as his Estonian counterpart Taavi Roivas looks on during their joint news conference at the Prime Minister's official residence Kesaranta in Helsinki November 17, 2014.

The Benefits of the European Union Have Become Self-Evident for the Young.

In Finland, it is difficult to speak about European Union membership without speaking about the European Economic Area first—such is the extent to which they have been intertwined.
The proposal by European Commission President Jacques Delors in 1989 to the countries of the European Free Trade Association (EFTA) to establish the European Economic Area (EEA) seemed an ideal solution to Finland. We had the opportunity to join Europe’s internal market, which is based on cooperative structures, on equal terms, without committing ourselves to extensive political integration. From the economic viewpoint, a necessary solution was offered in a way that was consistent with Finland’s international status.
The negotiations over the EEA began, but they progressed with difficulty and deadlines were repeatedly postponed, due to both the EFTA countries and the European Community (EC), as it then was. During the negotiations, Austria and Sweden submitted requests to join the EC in 1990 and 1991 respectively. The general opinion in Finland was still that the EEA agreement met our interests and that Finland worked hard to conclude the negotiations.
At the same time, the situation in Europe was changing. In Central Europe, the winds of freedom were blowing increasingly strongly. In the spring of 1991, Esko Aho’s newly appointed government left the various alternatives for integration open. This was a change compared to the past: EC membership was no longer ruled out. The Soviet Union was starting to crumble even more. An attempted coup in August 1991 failed, and the Soviet Union began to collapse. Estonia, Latvia and Lithuania acted fast and restored their independence.
President Mauno Koivisto showed a green light to explaining the effects resulting from membership of the EEC. The time for a decision regarding the membership application was ripe and, in essence, it was made after the end of the year, and was officially announced in March 1992. Finland managed to catch the departing train at the last moment and began accession talks with the European Community together with Austria and Sweden on 1 February 1993.
Negotiations over the EEA ended in the autumn of 1991 and the agreement entered into force in 1994. Thanks to the efficient preliminary work of the EEA Agreement, the accession talks with the EC progressed rapidly. The last, dramatic stage of the negotiations has been etched into Finnish minds: difficulties in the final stage, a tight schedule and tired negotiators at times threatened to ruin the discussions. Despite the difficulties, the negotiations were concluded on 1 March 1994. The result of the referendum held in October 1994 was clear: 57% of the population voted for membership. Austria, Sweden and Finland became members on 1 January 1995.

The Maastricht Treaty Establishes the European Union

The European Community was transformed into the European Union in November 1993 with the entry into force of the Maastricht Treaty. The treaty included regulations about the development of a joint foreign and security policy, preparations for the third stage of Economic and Monetary Union and the establishment of the area of freedom, security and justice. Qualified majority voting was extended considerably and the European Parliament was given more power by the “codecision” procedure. There were now two equal decision-making bodies in the European Union: the Council of Ministers, representing the member states, and the European Parliament, representing the citizens. The European Commission remained the only organ able to initiate legislation.
These reforms were also significant for Finland. Within a few years, Finland had moved from being on the edge of Europe to being a member of the European Union sitting behind the decision-making table. This major change encouraged us to use new opportunities actively for our benefit. In Finland, we had carefully researched the recent history of the EU, how the institutions operated, how decisions were made and what the role of the small member states was in all of this.
The principles of our activity quickly became clear. Finland wished to be an active, constructive, pragmatic and results-oriented member state. We deemed it important to strengthen the institutional structure and, particularly, the central role of the Commission. It was important to act on the basis of cooperation: the Commission makes proposals and the Council and Parliament decide upon these, at first separately and then together. We wanted to move away from intergovernmental cooperation, in which the opinion of the larger member states carried most weight.
After the Maastricht Treaty a new intergovernmental conference was convened. Finland took part in the reform process as a fully-fledged member, and was in favour of increasing the competences of the European Union, extending qualified majority voting and strengthening the Common Foreign and Security Policy. In 1997, the work accomplished with the Treaty of Amsterdam reassured us that our voice would thenceforward also be heard in the EU.
However, the situation changed during the subsequent talks concerning amendments to the founding treaty. In 2000, the Nice European Council almost exclusively discussed questions regulating the power relations between member states—most notably the number of votes in the Council of Ministers and the distribution of seats in the European Parliament. In such a situation, the large member states set the pace. Finland and other small member states had to compromise to achieve their objectives. When the Constitutional Treaty was negotiated a few years later, Finland and other small member states continued the reforms from a defensive position. Finland’s initial enthusiasm for driving integration forward had been at least partly replaced with caution.

Finland: One of the First to Join EMU

The Maastricht Treaty had paved the way to the third stage of European Economic and Monetary Union (EMU). Finland joined the eurozone among the first group of member states in 1999, and adopted the new coins and banknotes in 2002.
This, however, was a bit of a rocky road. Even to this day, it is disputed whether joining the eurozone should have required a referendum. The government led by prime minister Paavo Lipponen considered that the referendum of 1994 approved both the development of the EU and Finland joining the eurozone. Parliament eventually made a favourable decision on membership. In this regard, the trade union movement expected the establishment of buffer funds that would even out the impact of cyclical economic fluctuations. These funds were, indeed, established.

Disciplined policy was required to meet all the criteria to be among the first to join the eurozone. This was difficult in the years following the deep economic crisis that struck Finland in the early 1990s. Nevertheless, the stabilisation of the economy succeeded to the extent that accession became possible. At the same time, this was a manifestation of the second objective of Paavo Lipponen’s two governments (1995–2003): Finland had to get to the heart of all decision-making bodies.
Compared to other member states, Finland’s economy had been more unstable, and was barely a decade on from the previous devaluation. The country’s export structure was still one-sided, even though the success of Nokia was changing this. It was feared that the cyclical economic fluctuations would hit Finland hard and disproportionately.
Despite these fears, the Finnish euro journey began on a positive note: the economy started to grow, interest rates were low, and inflation remained under control.
Alarm bells began to ring when France and Germany breached the Stability and Growth Pact budget deficit rules in the early 2000s. Infringing rules that had been collectively agreed upon was frowned upon in Finland. It was considered particularly negative that the large member states were setting a bad example. Not much attention was paid to the fact that Germany had to choose between short-term violations and far-reaching structural reforms. Germany changed from “the sick man of Europe” to the anchor of stability for the continent’s economy.
Finland’s hardest time as a member came in 2008, when the global financial crisis struck. The crisis that started in the USA dealt a severe blow to Finland: gross domestic product fell by 8% in 2009. Along with the euro crisis and the slowly progressing structural reforms, Finland’s economy had taken a step back. The expected growth had yet to come.
During the management of the euro crisis, Finland tried to emphasise that decisions, once taken, must be respected, and that the words and actions of others must be trustworthy. The uncontrollable growth of debt in some eurozone countries ignored the common decisions. Greece’s inadequate statistics distorted the actual situation and shook the trust between the eurozone countries. Criticism grew, especially in Germany, the Netherlands and Finland, but also in other eurozone countries.
Difficulties spread from Greece to Ireland, Portugal and Spain. Member states’ leaders met repeatedly and ministers of finance convened often. In spite of financial assistance packages, improving economic coordination, regulating the financial markets and erecting a firewall, the market did not settle down. The eurozone was in deep crisis, and none of the measures appeared to be sufficiently effective or timely. The northern states of the eurozone stressed the importance of strict economic control, while the southern ones underlined joint responsibility and solidarity.
The worst period of the euro crisis coincided with Finnish parliamentary elections in spring 2011. Populist forces were able to use this issue in the election campaign and, according to various opinion polls, increased their support. The situation also began to affect the views of some other parties. The formation of a new government in this difficult situation became possible only by toughening up Finland’s position. As a prerequisite for participation in the assistance package, guarantees were requested from Greece and Spain. This was the hardest period for Finland in all of its membership.
The situation finally stabilised after decisions by the European Council and with the statement by the European Central Bank taking final responsibility in 2012. The strict policy started to change and Finland’s positive agenda was again given more space. The government led by Jyrki Katainen began to improve relationships with the countries in crisis, which had previously reached rock bottom.
The paradox lies in the fact that, according to opinion polls, the Finns’ support for the euro has remained stable, reaching figures similar to those in the top eurozone countries. The same goes for support for Finland’s EU membership. The conclusion must be that the people’s decision 20 years ago was made thoughtfully and has endured over time. Although, at times, the decision has been challenged, it has not swayed the position of the stable majority.

Finland Actively Seeks to Develop the Common Foreign and Security Policy

In his discussions, president Mauno Koivisto found that joining the European Union is inherently connected to security policies. Membership would strongly unite us with Western countries and anchor us into a stable European context. This view played a central role in the referendum, and many thought that membership would provide a deeply longed-for security.
For Finns, it was rather surprising that there was no proper debate over foreign and security policy. Was it really that simple? The debate was mainly concerned with how Finland would act in a situation in which the interests of Russia and the European Union conflicted. Some people considered it necessary for us to have a special security clause for such situations. Nothing of this sort was proposed by Finland during the negotiations; neither were steps taken to continue the policy of neutrality in general. Finland’s neutrality policy had gradually changed to one of militarily non-binding security.
As an EU member, Finland immediately started to push forward a stronger common foreign and security policy and develop more efficient decision-making mechanisms. Finland, together with Sweden, has left a lasting mark on this policy area. In the early days of membership, before talks over the Treaty of Amsterdam, foreign minister Tarja Halonen and her colleague Lena Hjelm-Wallen promoted improving the field of crisis management. Fifteen years on, this has evolved into the central part of the CFSP. The European Union is seen as a leading and major force with versatile means in crisis management. The EU’s special strength is the effective management of civilian crises.
Lately, the EU has found itself in a difficult situation. Russia has occupied and annexed the Crimean peninsula, disregarding international law. In addition, Russia has, directly and indirectly, caused a state of war in eastern Ukraine by its actions, bringing great misery and suffering to the local population. The EU has responded to such actions as a unit and imposed unanimous sanctions against Russia.
Like other member states, Finland supports the policies adopted and sanctions imposed. Although the EU has been unanimous, there are some differences of opinion among the member states. Finland has acted with the majority, clearly placing international law, the right to self-determination of all states, and the inviolability of borders and other values that unite us above all else.
The CFSP has not developed to the level Finland had hoped for. The 2009 Treaty of Lisbon brought along amendments, while the preconditions for common policy and actions have improved from that time. However, the EU’s competence in this area remains limited—the political will of the member states is decisive and the activities of the large member states play a crucial role. In Finland, we acknowledge the fact that the vast majority of the EU has resolved its security policy by joining NATO. This has partially slowed down the development of the EU’s security and defence policy.

The EU’s Stability is reflected across the Entire Continent

The best example of integration has been the EU’s soft power, thanks to which peace and stability have been established and the union covers an increasingly large territory. At the start of the century, Finland actively supported the EU’s enlargement to the Baltic States, and to Central and Eastern Europe. We considered it important that the interests of Estonia, Latvia and Lithuania were considered during the negotiations in the same way as the objectives of larger candidate countries.
The accession of Estonia was politically important for Finland; from our point of view, its economic implications were positive and its symbolism significant. Cooperation between Finland and Estonia in the EU is close and uncomplicated, and we usually reach a common understanding. There is good cooperation in developing the internal market, creating a digital society, strengthening research and development activities and supporting the EU’s common trade policy.
The development of agriculture played an important role in the early days of Finland’s membership. The geographical position of Finland is what it is, and the weather conditions remain harsh. The adjustment of agricultural production has required major structural changes, as a result of which we have fewer farms; but they are coping better and produce more efficiently. From the farmers’ point of view, the situation is still complex, but it seems to have stabilised substantially. To farmers, EU membership appears to be, if not perfectly acceptable, then at the very least tolerable.
Finland has clearly changed from being a net recipient to a net contributor. Finland’s contribution to the EU budget is notable, but it should be reflected in the broader benefits received from EU membership. Finland is part of the internal market and the majority of its exports are still directed towards the other member states.
There is now a generation in Finland that has lived its entire life in the EU. Travelling from one country to another without a passport is axiomatic for young people. They have not experienced the constant hassle of currency exchange, customs procedures or other travel difficulties. They can study and work in other member states. Various exchange schemes, especially the Erasmus programme, are an everyday reality. It is the most natural way to create a base for common understanding and cooperation among the young.
The past year has highlighted the main idea and starting point of European integration—maintaining peace and stability. It is the basis for everything else, and without it the internal market does not develop and other progress does not occur. It is a distant dream of our ancestors and the result of the diligent work of generations before us. We have to take care of it, and integration is equally important for today’s young people. Therein lie the existence of and justification for the EU.
The EU is currently facing several problems. Globalisation should be used to our own advantage. The economy should be directed towards growth to create work and prosperity. Global warming requires decisive action so that our planet will also flourish in the future. The internal market that unites the EU must be further developed. The EU must come closer to its citizens and its democratic legitimacy should be strengthened. We have to be open to one another and to other countries and nations.
Today’s young Finn is simultaneously a European. He or she considers Finland’s membership in the EU natural. Their slightly older fellow countrymen approve of membership in almost the same way, but few proclaim their support loudly. Sometimes it would be worth doing so, because together we are stronger.


This article was published in ICDS Diplomaatia magazine.

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