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Journal of International Relations and Development
Finland, A Case of Beneficial Integration
By Timo Kivimäki
*
Introduction
Membership in an organisation such as the European Union (EU) is a challenge for any country wishing to accede to it. On the one hand, membership needs to be negotiated successfully to protect a country’s vital interests and, on the other hand, the eventual membership requires a lot of political and economic adaptation. Most political and economic analysts would claim that Finland’s membership negotiation with the European Community/ies (EC) and adaptation to the EU has been relatively successful: Finland was able to get a deal accepted by the Finns, and on which it was able to build a strategy of economic recovery. 1 This article analyses this assertion by attempting to dwell on the background to and reasons for Finland’s success in these negotiations. Thus, the initial setting before the negotiations, the negotiations themselves, and the outcomes are briefly analysed. This analysis represents the central part of the present article. In the concluding chapter, the prospects of other countries emulating the successful elements of Finland’s strategy are touched upon by pinpointing the similarities and differences between Finland and the Central and Eastern European candidates in their efforts to become members of the EU.
Finland and the EC/EU: The Initial Setting
Despite its domestic capitalist economic orientation and democratic political institutions, Finland had belonged to the Soviet ‘outer orbit’ since the Second World War. Consequently, Finland had not politically or economically committed itself to the European integration before the Soviet Union disintegrated.
Specifically, the economic basis and production power structure of Finland has traditionally rested on three pillars: paper, food, and metal. 2 Of these, the paper industry had always depended on Western European markets and, therefore, it had been the most vigorous supporter of the ideology of Western European unity and the vision of integration as an irreversible ‘natural process’. The metal industry, however, had found its markets in the Soviet Union and feared competitors from Western Europe. This pillar therefore supported the option for Finnish foreign policy which, due to the ‘geopolitical realities’, pointed out that Finland should give priority to its relationship with the Soviet Union, even at the expense of Finnish economic interests in the West. The food industry and especially agriculture had also found the prospects of competition harmful, with the caveat that competition from the East appeared less threatening. Consequently, this pillar, too, lent support to the notion of ‘geopolitical realism’, and called for the maintenance of good relations with the Soviet Union, and remained hesitant about prospects of western integration (Kivimäki 1995:302-3; Kivimäki 1997:71-2).
Soon after the Soviet Union collapsed, Finland became determined to move from the shadow of the former Soviet Union into the family of European nations, but not all the three pillars found this change equally beneficial. After new, primarily East Asian, markets started to emerge for the Finnish metal industry (Statistics Finland 1995:9; Finnish National Board of Customs 1995: Table 3), the agricultural pillar was left alone in its effort to contain the anticipated pressure resulting in Finland moving towards the EU (Kivimäki 1995:303).
The political scene reflected the debate within the three pillars of Finland’s economic basis. Among the Finnish right-wing parties, and especially within the agricultural Centre Party, EU membership was seen as a threat to the independence of agricultural self-sufficiency and domestic labour markets. At the same time, however, the expansion of the market economy and the loss of the power of trade unions were seen as arguments in favour of membership. The latter arguments prevailed, and the right wing became favourably disposed towards Finland joining the EU (Paloheimo 1998:57-9).
On the political left, the strengthening of the global neo-liberal economic order and especially the expected decline of the power of national trade unions were seen as disadvantages of Finnish membership in the EU. At the same time, however, the strengthening of political control over global market forces, and especially the prospects of boosting the power of European trade unions were positively evaluated by the left (Paloheimo 1998:57-9). Such differences in opinion had left the left-wing parties divided. The Social Democratic Party of Finland was very positive about joining the EU, while the Leftist Coalition and the Centre Party were against Finnish membership in this organisation (Taloustutkimus Oy 1992-1999).
While an overall favourable political climate could be discerned in Finland in the post-Soviet era, 3 the Finnish approach towards EU membership was influenced by the government coalition which at the time of membership negotiations consisted of centre/right wing parties, with the agriculturally-oriented Centre Party playing a dominant role. The majority of the constituency of Prime Minister Esko Aho’s Centre Party was never in favour of Finland’s membership, which certainly did not make it easy for the government to conduct negotiations on Finnish accession to the EU. At the same time, however, these political constraints made Finland’s demands for good terms in membership negotiations more credible. European partners in negotiations could not expect Finland to commit political suicide by compromising on too many of what were considered to be Finnish vital interests (Väyrynen 4 1996a).
Negotiations
General Overview
Finland applied for membership of the European Community on 2 March 1992 and joined the EU at the beginning of 1995. 5 Official negotiations at the ministerial level started on 1 February 1993 and ended after exactly 13 months. The most difficult questions, on agricultural adjustment and regional development, were left until the last months of the political negotiations, and were continued by more detailed discussions at the level of bureaucracies and legal experts until autumn 1994.
As already indicated, the emphasis in these negotiations lay on agricultural issues and issues of rural development. These were the only questions in which there were any substantial political problems (or any problems other than technical ones). 6 As put by Finland’s ambassador to the EC at the time Erkki Liikanen, 80 percent of all problems in the negotiations were agricultural (Liikanen 1995:148). In a similar fashion, Finland’s then Minister for Foreign Trade Pertti Salolainen mentioned in his speech to open the negotiations (Salolainen 1993) that agriculture, regional development, and foreign and security policies were the most important tasks to be tackled during negotiations and since, in relation to the two last concerns, no real negotiations were ever initiated (no commitments were needed from either side), the question of agriculture and regional development can be legitimately considered as the core of the membership negotiations.
Initial Positions of the Actors
Although Finland and the EC had similar objectives and means for their agricultural policy administration (Commission 1992), the conditions for agricultural production and regional development were very different (Haavisto 7 1993). Therefore, when Finnish agriculture and regional development were integrated into the European framework there was a tremendous need for adjustment. From the Finnish perspective, Europe represented the liberal market against which Finland needed special protective means, in a similar way as the EC/EU needed protection from global agricultural markets. On the question of adjustment, there was a clear conflict of interests relating to the question of who should bear the costs of adjustment. Should the principles of integration be compromised? How would the adjustment to the EU affect the level of income of Finnish farmers? Should the EC/EU budgetary frames be extended because of Finland’s needs, or would it be Finnish taxpayers or food consumers who would pay the bill (Haavisto 1996; Härmälä 8 1996)?
The differences in positions between the EC/EU and Finland can be briefly discussed by focusing on three major issues: permanent EC/EU support measures, national subsidies, and transition measures. 9
On the question of permanent support, Finland’s position was that the special conditions of Finland were to be fully recognised by the EC/EU in order to allow full compensation for the less favourable agricultural production conditions and also the fulfilment of the objectives (not the measures) of the EC Common Agricultural Policies in Finland. Supportive measures and quotas should be adjusted 10 so that there would be no need for reductions in the level of production and no decline in the incomes of Finnish farmers, and a maximum share of the compensation could be expected from the EC and not from national funding (Aho 1993; Härmälä 1993; Salolainen 1993; Väyrynen 1993; 1996a). According to the EC’s initial position, however, European agricultural and regional development policies were not to be reformed because of new applicants (Commission 1992; Council 1994). Furthermore, the level of support expected by Finland, as well as the required quotas for Finnish products were considered too high by the EU (Council 1994; Liikanen 1995:126).
As to the question of national subsidies, the position of the EC/EU Commission was that approvals for permanent rather than transitional national subsidies were not acceptable. Furthermore, the transitional national support measures were to be minimal. The area of national support measures should be limited to farms above the 62nd parallel (Commission 1992). At the same time, Finland insisted that national subsidies were needed to allow compensation for the possible shortcomings of EC support, and that these subsidies were needed in addition to the EC support on a permanent basis for the whole country (Aho 1993; Härmälä 1993).
Regarding the transition measures, notably the adjustment to common European prices, the initial positions were simple: as far as the EC was concerned there had to be a direct adjustment, whereas Finland demanded a 12-year-long transition to EC prices with a linear reduction of producer prices.
The Solution
Overall, Finland’s negotiations with the EU may be considered successful. Finland has become a member of the Union, which was in the interests of both parties. The negotiations were conducted without unexpected costs on either side and according to the agreed timetable. All member-states of the EU, the European Parliament, and the majority of the Finnish population (with a margin of 14 percentage points) were thus able to accept the terms of accession. In addition, the process of negotiations did not create any permanent distrust or difficulties in the co-operation between Finland and other EU members.
Accordingly, it seems that most actors on both sides were by and large comfortable with the terms of accession, and neither side seems to have needed to use excessively deceptive strategies in applying the norms agreed upon. Yet, one must also note that the negotiation process did not receive overwhelming general support. It can be said that both sides felt more comfortable with the terms of the regional developments, whereas the agricultural arrangements received much severer criticism, notably at the grassroots level. Specifically, the majority of Finland’s agricultural producers and the rural population did not accept the terms of accession. The chief negotiator on agricultural issues Esa Härmälä (who later in 1994 became the chairman of the Union of Agricultural Producers) was also not pleased with the outcome the negotiations. 11
The dissatisfaction of agricultural producers stemmed inter alia from the fact that the continuing support for Finnish agriculture was heavily based on national subsidies, but the levels of EU support were much lower than had been expected in Finland, which was perceived as a threat to Finnish agricultural production. Additionally, a large chunk (EUR 1.7 billion in 1995-1999) of the EU’s permanent support was directed through regional development instruments (Finnish Foreign Ministry 1994). Concerning the question of permanent agricultural subsidies, Finland can pay national agricultural subsidies in areas north of the 62nd parallel, and in some areas south of it. The support cannot intensify production, and it has to be based on farming areas and the number of livestock. Finland is also allowed to give support to deal with serious agricultural problems, so that both EC/EU support and national support measures can be extended to the whole country. National support measures are, however, subject to the Commission’s approval on an annual basis (Finnish Foreign Ministry 1994).
Of course, the agricultural part of negotiations between Finland and the EU has seen positive outcomes, too. The most important component of EU support for agriculture was under the category of support for Less Favourable Areas. The latter was extended beyond its former applications so that instead of the standard 50 percent, Finland is allowed to receive support under this category for 85 percent of its farmland areas. Furthermore, the type of support under this category was administratively unusual, albeit favourable for Finland. Namely, the country became eligible to receive the type of support designed for mountainous areas, even though Finland does not have any mountains in its territory. Revisions that are even more substantial were made, however, in the EU’s regional policy instruments. Nordic applicants received a new category of structural support, the so-called Objective 6, which for Finland meant support on the same level as the EU Objective 1 for poor regions (the highest level of support), but the criteria were changed so that low density of population replaced the overly strict requirements of low income level. This change in the EC/EU agricultural and structural administrative practices obviously worked in Finland’s favour, although the amount promised for agriculture (less than EUR 1.2 billion from the Less-Favourable-Areas support in 5 years) was a disappointment to Finnish farmers (Finnish Foreign Ministry 1994), who expected to get more than double that amount.
As to the question of adjustment to EU levels of producer prices, the EU’s position was adopted and Finnish producer prices were dropped overnight to the level of EU prices. This constituted a drop of 40-60 percent, depending on the product. The share of EU funding in the compensation of income losses for Finnish farmers was EUR 457 million in four years, which, of course, was only a fraction of the total compensation (Finnish Foreign Ministry 1994). National measures were needed to assume the major responsibility for the adjustment, but that did not work well for the Finnish farmers whose incomes were reported to have dropped in 1995 by almost 30 percent compared to the previous year (Härmälä 1996).
Putting the agricultural issues to one side, the quick and successful bringing of Finland’s negotiations with the EC to a close can be attributed to the fact that Finland adjusted very quickly to the European transnational culture of negotiations. Instead of treating all issues as national, Finnish negotiators tried to build up ‘transnational bridges of loyalty and understanding’, channels that united sub-national groups across national borders.
Over these bridges, it was possible for Finland to receive and show understanding of the different arguments. Certain professional groups, the transnational group of agricultural experts, politicians and bureaucrats, acted as intermediaries between the positions of official negotiating teams. It seems that certain professional groups were more effective in conveying specific arguments across the bargaining table, while others could be used for other types of arguments. For example, bureaucrats and politicians both favoured general arguments, whereas agricultural experts wanted arguments more specific to the question of agriculture. At the same time, agricultural experts and bureaucrats and general administrators tended to favour arguments related to administrative feasibility—for example, how things could rationally be arranged—whereas politicians were more interested in arguments appealing to political feasibility, for example, would the EU members accept the arrangement, would the Finnish Government survive the terms, and how would it affect the European power constellation? 12
Further, Finland’s overall satisfaction with the membership negotiations relates to its negotiators’ ability to exploit the national differences within the EC/EU negotiation panel. Many of the compromises during the last days of the political phase of negotiations (February 1994) were made because of Germany’s willingness to help the Nordic countries enter the EU. This, again, was because Germany wanted to see the EU balance shift towards the north, where Germany had natural stakes and power. Germany’s, and especially Foreign Minister Klaus Kinkel’s, ability to utilise power was technically based on the fact that, as the Vice-chairman of the Council of the EU, Germany could participate in the troika which took over the leadership of negotiations during the last days of the formula phase (Haavisto 1996; Härmälä 1996; Liikanen 1995:201-2). Earlier, the United Kingdom’s anticipation of Finland’s support for the Confederalist position played an important role in the Finnish application. Namely, it was felt by some Finnish negotiators that the United Kingdom assumed that Finland’s membership in the EU would strengthen the power of those member-states within the Union that were enthusiastic about the deepening of integration. Consequently, this kind of ‘anticipation’ made the United Kingdom more favourably disposed towards the Finnish candidacy for membership in the EU (Väyrynen 1996a; 1996b). Finnish politicians were also able to sell some of the arguments related to regional development by referring to Finland’s position as Russia’s neighbour. Vitalisation of livelihoods along Finland’s eastern borders was in the interests of the EC/EU’s security policy (Haavisto 1996). If one takes a closer look into which areas in Finland receive support from the EU, one can easily see how important this argument was.
Economic Pros and Cons of Finland’s Membership in the EU
After having suffered the lowest rates of domestic investments in more than 20 years and a very low level of foreign investments in the first half of the 1990s (Statistics Finland 1996 ), Finland’s economy attracted greater foreign investment after Finland joined the EU. The previous lack of the capital component of production was naturally a problem in a country with a high rate of unemployment. In general, the effect of this problem on the Finnish stance concerning the deepening of integration has been positive. Even though one cannot make precise estimates of the link between the flow of investments into Finland and the deepening of integration, one can make rough estimates on the basis of surveys made among German and Japanese investors, according to which membership in the EU is considered a vitally important question in decisions to invest in Finland. Consequently, the effort to attract foreign investment and thereby curb unemployment has been used by the government in arguments favouring the deepening of economic integration in Europe (Alho 1996). 13
Market access has also been connected to the levels of domestic investment, and thereby to the question of employment in the Finnish European integration debate. It is not easy to assess which developments in Finland’s economic, political and other conditions can be regarded as a result of Finland joining the European integration, and which are caused by a favourable phase in the economic cycle. Yet, the market access argument has also been utilised in favour of deepening integration. This has been made easy since the expansion of European markets for Finnish exports has been most favourable. Finland’s exports to the EU grew in 1995 by 14 percent compared to the previous year, i.e. to almost EUR 17 billion, and this was important for Finnish production, investments and employment, since the EU markets constituted over 56 percent of the total value of Finland’s exports (Finnish National Board of Customs 1996: Table 3). Integration’s contribution can be seen as important in the expansion of Finland’s exports to the EU, since at the same time the growth of the total exports declined from 13 percent in 1994 to 7.6 percent in 1995. However, this development did not last long; already in 1996 exports to the EU remained practically stagnant (Statistics Finland 1996-1997).
The expansion of markets in the EU for Finnish products has to some extent probably contributed to the fact that Finland’s domestic investment started to increase for the first time in several years in 1995 by 11.2 percent compared to 1994 (Statistics Finland 1996). This development has continued ever since. Here again, however, the overall recovery of the Finnish economy due to phases in the economic cycle works in favour of arguments for the deepening of integration.
EU membership has also affected Finnish foreign trade. The first years of membership expanded the market, which is the most important contributor to Finland’s balance of payments surplus. 14 At the same time, even in the first year of membership (1995) the country witnessed an unfavourable imbalance in the growth of imports and exports. While exports increased by 14 percent, imports grew by 18 percent compared to the previous year. Yet in absolute terms the values of Finland’s exports and imports in the EU were roughly the same. Finland’s external imbalances have finally disappeared with a balance of payments surplus. In 1998, the trade balance supported this development, with the value of imports less than 75 percent of the value of exports (Finnish National Board of Customs 1998: Table 3). However, the Finns were not mainly motivated by considerations of balance of payments, since one of the main motives for continuing support for Finnish membership in the EU related to the import of EU products. In other words, new competition in food products lowered prices substantially and since a vast majority of Finns (94 percent) are food-consumers rather than food-producers, this factor has been welcomed by most of them. However, on the other side of the coin, the resistance to membership among farmers has intensified while threats of cuts in income levels have suddenly become real.
On the other hand, there are arguments concerning unemployment figures. Despite all the growth, increasing investments, and expanding trade, unemployment has only very recently started to decline more rapidly. The problems of domestic economic imbalances—demonstrated in unemployment and the balance of payments deficit—have continued to cause concerns, especially in relation to Finland’s position on the deepening of integration towards closer monetary integration (see, for example, Parliamentary Debates 15 of 4 April 1995, 12 May 1995, and 4 December 1995). The fact that Finland has traditionally dealt with such imbalances by using monetary measures (devaluation) that become unavailable in the third phase of the European Monetary Union (EMU) also makes the Finnish position towards the deepening economic co-operation troublesome. This can be seen in the fact that, already at the outset of preparations for the 1996-1997 Intergovernmental Conference, the Finnish parliament commissioned the government to investigate the instruments available to correct domestic economic imbalances such as unemployment, within the EMU, and to consider on the basis of such investigations, what kind of initiatives Finland should take to guarantee that the EMU does not threaten the possibility of working at full employment in the new system (Grand Committee 1995:9). In the government’s position paper (Finnish Government 1995), the issue of unemployment was highlighted by a demand to emphasise high employment in the objectives of the EU in a variety of policy sectors of the Union.
Later, however, the increased stability in the Finnish market has influenced the basic conditions of Finland’s economy and significantly improved its employment situation. Now the Finnish economy is showing positive growth rates for the sixth year in a row (1994-1999), after three years of negative growth (1991-1993, as much as -7.1 percent in 1991). The present growth appears to be relatively fast (5.9 percent in 1997 and 4.9 percent in 1998) and based on sustainable macro economic developments. By way of illustrating positive developments in Finland, it may be added that this country was among the first members of the EU to fulfil the Maastricht convergence criteria (Bank of Finland 1997).
Security and Political Implications of Finnish Membership of the EU
Implications of Finland’s membership
Finland’s security in Europe has fundamentally changed due to EU membership. According to the Finnish government’s report to the Parliament (Finnish Government 1995), EU membership has strengthened the foundations of security and given Finland a channel of influence for the pursuit of its national interests, and for demonstrating its sense of international responsibility.
The fact that membership strengthens the foundations of security should be understood, on the one hand, as proof of the Finnish subscription to the liberal conception of security according to which symmetrical relationships of economic and political interdependence are a structural foundation of security among the interdependent nations. 16 Furthermore, it would seem beneficial that Finland’s destiny is now more closely tied with a group of nations with similar democratic political values, not least because EU membership works as a kind of a probabilistic deterrent against potentially threatening non-members. At the beginning of 1995, there were also signals that the EU would offer Finland the opportunity to join the North Atlantic Treaty Organisation (NATO) should Finland need to bolster the credibility of its deterrence ( e.g. against an expansionist Russia). 17 However, after the government’s report on security to the Parliament in June 1995, and after the memorandum by the Parliamentary Foreign Affairs Committee in October and the Parliamentary approval of it, the NATO option has been closed for the time being. In 1995, Finland clarified its position as a militarily non-aligned nation, with credible national defence (Finnish Government 1995:6; Defence Committee 1995; Foreign Affairs Committee 1995:2). 18 However, Finland has extended its commitments towards European (military and other) crisis management efforts (Finnish Government 1995), and agreed to support the extension of issues considered as common security (such as questions related to the Common Foreign and Security Policy), but in relation to military alliances, peace enforcement and direct military involvement, Finland has taken a negative position. This has made it very difficult for the opposition to argue against. The approach towards the West European security instruments was initiated by the Centre Party government and, since the present government is not willing to go further, the opposition cannot criticise the Cabinet for its security policies. The only thing left for the opposition has been procedural questions and details. 19 In European security issues, the opposition has criticised the government for not listening to the Parliament enough, and the only substantial question has related to compromises in the consensus principle in common European security issues, which the Centre Party opposes.
Part of the security gain has also related to the improved Finnish ability to influence the policies of the EU and use this influence in a constructive and unifying manner. In the 1996-1997 Intergovernmental Conference, Finland’s activity was still relatively modest, concentrating on some innovations in the field of security policies, especially focusing on soft means to European security. This focus, in co-operation with Sweden, has continued in the initiative to enhance confidence in the Baltic area, by increasing transparency in military affairs and opening additional opportunities for the Baltic countries to observe Finnish and Swedish military exercises. 20 One of the signs of increasing initiative in Finland’s integration policies relates to the Finnish effort to attract attention to the northern areas of Europe. Already at the Intergovernmental Conference, Finland was active in focusing European attention to co-operation with the east and to the north-east rather than towards the south. The mechanisms of co-operation stressed by Finland also reflect the specific conditions of the north. This could be seen in Finland’s two joint position papers with Sweden as anxiousness to stress the importance of supporting democratisation in the transition economies confidence-building in the Baltic area as a strategy of conflict prevention in the Common Foreign and Security Policies of the EU (Halonen and Hjelm-Wallén 1996; 1998). This was also visible in September 1997 when Finland’s Prime Minister Paavo Lipponen published the Finnish Northern Dimension initiative, which was presented by him at the EU summit in Luxembourg later in December 1997 and further elaborated at the Vienna Summit in 1998. The highlighting of the northern dimension of EU integration has, for a long time, been assumed to be one of the targets of the Finnish EU presidency due at the end of 1999 (Vayrynen 1996b).
Improvements in the economic situation and Finland’s ability to adapt to EU membership have also improved Finland’s domestic political leverage. After the shock of the fall of Soviet markets, it was felt that Finland was unable to compete with Western European nations, primarily due to its extensive state sector (and heavy taxation) and expensive system of agricultural subsidies. These two limitations were taken care of by market-oriented government programmes and coalitions; first, by focusing on agricultural subsidies with the support of the left-wing parties (1987-1991); then, by focusing on the state sector in another coalition with the Centre Party (which gets its support from rural areas) (1991-1995); and finally, by focusing on the agrarian questions with the left-wing parties (1995-1999). During the whole period, there was consensus over the need to make the Finnish economy fitter for global and European competition. However, the controversy was about how much burden the Finnish welfare model should assume and how much competitive edge could be derived by compromising on the national security of food supply (food security) and the interests of farmers. Now that Finland’s competition handicaps have vanished, there is a sentiment that Finland is no longer in an economic crisis and that government programmes and coalitions can finally start reflecting political values instead of the instant needs of economic survival. After the parliamentary elections, political debate was no longer lacking substance and despite the fact that the old government basis was restored, this time the choice of government was a political one, rather than being necessitated by the imperatives of survival.
Finland’s favourable public opinion of integration has remained stable after joining the EU. A majority of Finns continued to favour Finland’s EU membership—in fact, support has grown since the popular referendum of 1994. 21 The favourable political climate can partly be explained by the above mentioned economic success Finland has experienced after joining the EU. In any case, due to the favourable political climate, the government’s position in integration affairs is relatively strong and unchallenged. The Cabinet coalition after 1995 (Social Democrats, National Coalition Party, Swedish Peoples Party, Greens and the Leftist Coalition) received 72 percent of the seats in the parliamentary elections of 1995 (Statistics Finland 1995), which gave it a secure position from which to govern. The unity of the cabinet coalition is naturally the weakest point in a government that houses not only former communists (Leftist Coalition), but also moderate conservatives (National Coalition Party). What seems to be the main asset for the government is that the chief opposition party (Centre Party) is committed to a very constructive opposition policy in integration affairs, since it was the Centre Party that was the leading Cabinet party when Finland applied for, and negotiated, its membership in the EU. Furthermore, popular support of integration policies is stable and the parties that were most in favour of membership (Social Democrats, National Coalition Party, the Progressive Party, Swedish Peoples Party) marched forward by 7 percent in the 1995 elections (compared to the previous elections in 1991), while those more hesitant fell by almost the same percentage. 22
After the parliamentary elections of 1995 (and this is expected to continue after the 1999 elections as the party-basis of the government has continued), the opposition concentrated its criticism against the government’s integration policies regarding security-related integration. By highlighting the issue of NATO in the debate on European integration, they have aimed at disrupting the unity of the government by inviting the left-wing of the Leftist Union to join the opposition in criticism of Finland’s co-operation with the NATO. Since the parties of the government occupy an overwhelming majority of the Parliamentary seats, it seems rational for the leading opposition party, the Centre Party, to conclude that the only feasible way to shake the position of the government is to exploit vulnerability of this large and heterogeneous coalition.
Conclusion: Can Finland’s Positive Experience in the EU Negotiations be Emulated by Central and Eastern European Candidate-Countries?
Finland has largely proven to be a successful case of accession in the EU. In spite of certain unfulfilled expectations, notably in the field of agriculture, membership has had positive implications for Finland such as the increase of independence, diplomatic influence, economic growth, and international self-confidence. But the case of Finnish experience offers more. Of all the new member-states of the EU that joined in 1995, Finland’s initial position and overall context is probably closest to that of what one expects from the first newcomers of the third millennium. For instance, Finland had a problem in adjusting to non-protectionist Western European competition after the fall of the Soviet Union, while politically this traumatic economic structural change opened up opportunities for Western integration. As in the case of the newest applicants, Finland’s security is still largely dependent on the development of the relationship between the East and West in Europe. Does this mean, by analogy, that Central and Eastern European applicants could see a similarly successful outcome of their negotiations and a promising future in the EU?
When one analyses the links between Finland’s success and the differences and similarities between Finland and the Central and Eastern European newcomers to the EU, one can pinpoint at least some of the opportunities that might also be available during the next round of negotiation and adjustment to the EU. On the one hand, it seems rational from the point of view of political economy to react to the needs of structural reform in the international orientation of the national political economy by making necessary political decisions that reflect these pressures for change. Finland and many of the Eastern and Central European candidate-countries have experienced the shock effects of the collapse of the Soviet economy and needed a fundamental change in their international economic orientation. For Finland, it seems that membership in the EU was exactly what was needed to facilitate these changes.
Furthermore, one of the assets in Finland’s integration strategies, and especially in Finland’s membership negotiation strategies with the EU, was its flexibility regarding the political culture of the EU. Finland was quick to adapt to the transnational nature of politics in the EU and was relatively adaptive vis-à-vis the power strategies within the Union. This might have had something to do with Finland’s experiences as a neighbour to a former superpower: the ability to adapt national strategies to the political culture of international agents has been a traditional part of Finland’s foreign policies.
Yet, there are also substantial differences in the starting points of Central and Eastern European candidate-countries on their road to the EU, compared to those Finland had. On the one hand, the nature of structural changes needed in the Finnish political economy for full integration were very different from those of Eastern Europe. Finland is the most Internet-connected society in the world, with the highest ratio of people to mobile phones, and thus very adaptive—perhaps more than most Central and Eastern European countries—towards the information-technology-led globalisation. Thus, at least some of the Eastern and Central European candidates for the EU might experience a longer duration of the integration process and more crises of adaptation than Finland saw. It should be noted that Finland’s first years of membership took place in a historical context of economic growth and recovery. If one remembers that the economic benefits Finland gained from the EU were closely related to the flow of new investments, one must recognise that part of the economic success Finland experienced relates to the fact that integration took place in a favourable economic climate. If Central and Eastern European candidate-countries do not enter the EU in a similar phase, that is, if one cannot expect rapid growth of investments both in Europe and globally during the time of accession to the common markets, one cannot expect quite as many benefits during the first years of EU membership. The political consequence of such non-favourable conditions could be a lack of public support for EU membership.
In conclusion, it seems that the opportunities Finland has been able to utilise in its integration with the EU should be available for newcomers at the turn of the millennium. Yet, most probably, the transition to membership will not be as smooth for these countries as it was for Finland. At the same time, however, Central and Eastern European countries might have some advantages in their integration strategies compared to those of Finland, particularly those caused by their superior geographical position at the heart of European markets. Thus, even if Central and Eastern European countries expect a rockier road to integration, their road might lead further than the one available to the geographically peripheral Finland.
May 1999
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Haavisto, Heikki (1996). Interview by the author on 11 April.
Halonen, Tarja (1995) Answer by the Foreign Minister to MP Sulo Aittoniemi’s written question. Parliamentary Records, KK197/1995.
Halonen, Tarja and Lena Hjelm-Wallén (1996) EUn ja WEUn Yhteistyötä tiivistettävä [EUs and WEUs co-operation to be tightened]. Helsingin Sanomat daily newspaper (21 April), foreign affairs section.
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Endnotes
*: Timo Kivimäki is Professor of International Relations at the University of Helsinki.
The author wishes to thank the reviewers of the journal for their constructive criticism. Back.
Note 1: The conceptual practices of naming the agent of the European integration have been largely utilised in political language. In this article, the standard practices of political science (rather than legal) language are adopted by talking about the European Communities (EC) whenever analysing the period before the Maastricht treaty came into force. When referring to the period of post-Maastricht Europe, the term European Union (EU) will be used. Back.
Note 2: Later, telecommunications and technology have become more important than any of the aforementioned pillars (For the phenomenon of Nokianization of the Finnish political economy, see Kivimäki 1999). Back.
Note 3: Finland’s public opinion, too, was in favour of EU membership for several years. In the 1994 national referendum on Finnish membership of the EU, 57 percent of the voters were in favour of joining. Back.
Note 4: Paavo Väyrynen was Finland’s Foreign Minister during the first months of the membership negotiations. Back.
Note 5: This presentation is based on an analysis in Kivimäki (1998) and Kivimäki (forthcoming). Back.
Note 6: The other issues on which the EC and Finland had any substantial positions had already been solved before the membership negotiations, in the negotiations on the European Economic Area (1989-1991). Back.
Note 7: Heikki Haavisto was Finland’s Foreign Minister during the negotiations, except for the first few months. Back.
Note 8: Esa Härmälä was Finland’s chief negotiator on agricultural issues. Back.
Note 9: The highest authority on the EC/EU side in questions of enlargement was the Council, not the Commission. However, questions of national support measures for agriculture fell under the Commission’s jurisdiction. Therefore, technically it was impossible to treat the issue of national subsidies as an issue at the negotiating table, but since it was crucial to the agricultural package, Finland wanted to consider agreements with the Commission on national support measures as part of the package of terms of accession; and success in negotiations with the Commission was made a condition for Finland’s membership. Back.
Note 10: As for the question of instruments of adjustment, regional development measures were preferred over the means of agricultural policies (Liikanen 1995:155). Back.
Note 11: Some dissatisfaction with the outcome of the negotiations could be sensed on the EU side, too. The representative of Greece (which at the time held the presidency in the Council of the EU) Theodore Pangalos (a member of the troika in charge of the accession negotiations with Finland and Sweden) concluded shortly after the negotiations that the enlargement was probably a mistake, and that he did not ever want to hear anything about Finland’s agriculture (Kairisalo 1995:90; Liikanen 1995:202). Back.
Note 12: These conclusions are based on interviews by the author with the Finnish negotiators and they are further analysed in Kivimäki (1998). Back.
Note 13: It should be noted, however, that decisions on investments are made on the basis of prospects, not on current conditions. Therefore, it is meaningless to assess the role of membership by comparing the levels of foreign investments directly before and after membership. The otherwise low levels of foreign direct investments in Finland started to rise already in 1993 when the terms of membership were still being negotiated. Compared to the levels at the beginning of the 1990s, however, foreign direct investments more than doubled by 1996 (Alho 1996), and this favourable development has continued towards the end of the millennium. It is understood that such comparisons may not be methodologically correct, given that the overall economic situation was very different in the second half of the 1990s than at the beginning of the decade. Back.
Note 14: In this respect, relationships with the United Kingdom have been especially beneficial for the Finnish trade balance: in 1998, imports from the United Kingdom were less than 57 percent of exports to Britain. At the same time, Germany was a market for 11.6 percent of Finnish exports in 1998 (National Board of Customs 1999: Table 3). Back.
Note 15: Published by the Finnish Parliament in the Finnish language. Sorted chronologically. Back.
Note 16: This conclusion in made on the basis of an analysis of Finnish Government (1995), but it was also rather explicitly put in Halonen and Hjelm-Wallén (1998). Back.
Note 17: These signals were referred to the author by Haavisto (1996). Back.
Note 18: This message was further clarified by the Finnish Foreign Minister Tarja Halonen and the Swedish Foreign Minister Lena Hjelm-Wallén in a joint position paper related to the European Common Foreign and Defence Policies, written in April 1996 (Halonen and Hjelm-Wallén 1996). Back.
Note 19: This conclusion of the opposition strategy was drawn by the author based on observation and analysis of opposition policies rather than public declarations. Back.
Note 20: Tarja Halonen’s and Lena Hjelm-Wallén’s initiative was presented at the meeting of Nordic Foreign Ministers in Stockholm (Halonen and Hjelm-Wallén 1998). Back.
Note 21: According to a study by Taloustutkimus (1999), the opponents of Finland’s membership have never outnumbered the supporters and, at the beginning of 1999, the percentage of supporters was higher than ever (over 56 percent, compared to opponents whose share was under 40 percent). Back.
Note 22: Some of this progress was reversed in the 1999 elections as the anti-EU Christian Peoples Party gained more seats. However, these elections no longer related so much to the question of integration but instead to domestic policies. Back.