The jury is still out on the outcomes of the economic turbulence

At the begin­ning of the report­ing peri­od, Finnish dis­cus­sion about eco­nom­ic gov­er­nance was still heav­i­ly focused on nation­al poli­cies and the means for recov­ery. Lessons learned – or not learned – from, and com­par­isons with, the Finnish reces­sion of the 1990s were the main point of ref­er­ence. Only grad­u­al­ly did the Greek prob­lems draw atten­tion from the nation­al to the Euro­pean lev­el.

The Com­mis­sion, or more pre­cise­ly the Com­mis­sion­er for Eco­nom­ic and Mon­e­tary Affairs Olli Rehn, was wide­ly sup­port­ed by his com­pa­tri­ots and seen as a capa­ble and deci­sive actor in the cri­sis from very ear­ly on.11Turun Sanomat: Kreikan kri­isi nos­tanut Rehnin Bar­ro­son rin­nalle, 11 May 2010. The grow­ing impor­tance of the Euro­pean Coun­cil and its Pres­i­dent Van Rompuy was not­ed, con­tribut­ing towards the over­all impres­sion in Fin­land that the EU is ris­ing to its task.22See the Finnish chap­ter on the imple­men­ta­tion of the Lis­bon Treaty (chap­ter 1).

Thus, while the dis­cus­sion began with a nation­al focus, it grad­u­al­ly took a deci­sive­ly more Euro­pean turn. Rather sur­pris­ing­ly, it emerged that, in the eyes of many Finns, the cri­sis might not actu­al­ly man­i­fest fragili­ty and inter­nal frac­tures or dif­fer­ences in the Union, but could lead to a stronger Union, active in the field of eco­nom­ic pol­i­cy. Even the plum­met­ing Euro after the Euro­pean Coun­cil in May 2010 did not lead to an imme­di­ate pan­ic. Seri­ous com­men­taries sug­gest­ing the dis­man­tle­ment of the Euro were almost non-exis­tent. Rather, the received opin­ion was that Fin­land was capa­ble of bear­ing this bur­den. Some econ­o­mists even main­tained their pre-cri­sis expec­ta­tions of the Finnish econ­o­my remain­ing on the path of mod­er­ate growth, fuelled by glob­al recov­ery.33Talous­sanomat: Velka­kri­isi ei pysäytä talouden kään­net­tä, 18 May 2010. It was also wide­ly not­ed that the Finnish export indus­tries – cru­cial for the nation­al econ­o­my – were ben­e­fit­ing from the weak­ened Euro.44Turun Sanomat: Euron heiken­tymi­nen kas­vat­taa Suomen vien­tiä, 12 May 2010.

“Loans or recession are the options”: the finance package for Greece accepted as the least harmful option

The ini­tial con­sen­sus was to let Greece do “every­thing it can” by itself.55Helsin­gin Sanomat: Talouskomis­saari Rehn vaatii Kreikalta lisäsäästöjä, 2 March 2010. How­ev­er, once the plans for sup­port­ing Greece start­ed tak­ing shape, the Finnish gov­ern­ment quick­ly grew sup­port­ive of it. The par­lia­ment accept­ed the loan pack­age after a long debate on 12 May 2010, with the oppo­si­tion – led by the tra­di­tion­al­ly pro-EU Social Democ­rats – vot­ing against the pack­age. This sparked an argu­ment between polit­i­cal par­ties with a degree of harsh­ness not usu­al in the con­sen­sus-ori­ent­ed coun­try. Some com­men­ta­tors have argued that the cri­sis has turned the usu­al divi­sion in Finnish pol­i­tics around, with the Social Democ­rats oppos­ing the cen­tre-right government’s calls for “inter­na­tion­al sol­i­dar­i­ty” and more gov­er­nance.66Helsin­gin Sanomat: Mak­samme velkaa Aris­toteleelle, 14 May 2010. In real­i­ty, the shift of posi­tions was not quite as stark as that. Through­out the debate, the gov­ern­ment argued its pol­i­cy in terms of nation­al inter­est and as the least harm­ful option for Fin­land, empha­sis­ing that “this is not a pleas­ant deci­sion.”77Mat­ti Van­hanen, Prime Min­is­ter: Press Brief­ing, 4 May 2010.

Both the pub­lic debate and pol­i­cy mak­ers’ plans cir­cled large­ly around lend­ing as the mea­sure for solv­ing the Greek cri­sis. “Loans or Reces­sion are the options that Europe is fac­ing”88Jyr­ki Katainen, Min­is­ter of Finance: Press Brief­ing, 4 May 2010. was the log­ic of the sup­port­ers of the loan pack­age, where­as the major­i­ty of oppo­nents focused on argu­ing against the loan, not on cre­at­ing alter­na­tive routes – either real­is­tic or utopi­an – out of the cri­sis.

A poll con­duct­ed in ear­ly May 2010 showed that almost half of Finns were will­ing to sup­port anoth­er Euro mem­ber on a case-by-case basis, with anoth­er nine per­cent will­ing to lend sup­port in every case.99Helsin­gin Sanomat: Suo­ma­laiset usko­vat Euroon, 8 May 2010. The sen­ti­ment on inter­net forums and in let­ters to edi­tors, how­ev­er, was almost entire­ly against grant­i­ng the loan pack­age to the Greeks, with the major­i­ty argu­ing that the Greeks should find their own way out. This was expect­ed to cause sup­port for the pack­age to melt away,1010Ibid. but anoth­er poll, ask­ing specif­i­cal­ly about the Greek case and con­duct­ed in 7–12 May 2010, when the debate had already been under­way for sev­er­al days and the size of the loan known, found 42 per­cent of Finns sup­port­ing the loan and 43 per­cent oppos­ing it.1111Uutispäivä Demari: Kansa ei hyväksy luot­toa Kreikalle, 17 May 2010. This result is based on a propo­si­tion that, on the basis of finan­cial con­se­quences, Greece should be sup­port­ed.

Is the EU getting its act together? Improving European economic governance

The eager­ness to strength­en the EU’s role in the field of eco­nom­ic pol­i­cy grew in the spring, as one com­men­ta­tor put it: “the cri­sis is an effec­tive con­sul­tant.”1212Arto Anilu­o­to, Sec­re­tary Gen­er­al, Euro­pean Move­ment in Fin­land, inter­viewed in the Finnish Broad­cast­ing Com­pa­ny (YLE), 11 May 2010.

The ambi­tions of improv­ing eco­nom­ic gov­er­nance were more mod­est at the begin­ning, with many com­men­ta­tors lim­it­ing their sug­ges­tions to, first and fore­most, more effec­tive use of the tools pro­vid­ed in the Sta­bil­i­ty and Growth Pact.1313Turun Sanomat: EU:n val­u­ut­tara­has­to ei ehtisi Kreikan avuk­si, 13 March 2010. How­ev­er, the scope of the ambi­tions soon grew. The Finnish gov­ern­ment strong­ly sup­port­ed sanc­tions – in the form of cut­ting EU sub­si­dies – as a way of guar­an­tee­ing eco­nom­ic aus­ter­i­ty in the future. Fol­low­ing the Euro­pean Coun­cil in March 2010, then Prime Min­is­ter Van­hanen was of the opin­ion that this was fea­si­ble with­in the lim­its of the cur­rent treaties, pre­fer­ring that as a faster alter­na­tive to open­ing treaty nego­ti­a­tions. How­ev­er, as treaty amend­ments would allow for a less vague sys­tem to be estab­lished, he was will­ing to con­sid­er that alter­na­tive, too.1414Mat­ti Van­hanen, Prime Min­is­ter: Press Brief­ing, 26 March 2010.

The Finnish gov­ern­ment expressed con­cerns about exces­sive super­vi­sion of the bank­ing and finan­cial sec­tor, which – in its opin­ion – would lead to shrink­ing lend­ing and, there­fore, cur­tail recov­ery from the eco­nom­ic cri­sis. At the Ecofin meet­ing of 17 April 2010, Mart­ti Het­emä­ki, Finland’s rep­re­sen­ta­tive at the meet­ing, called this risk a “super­vi­sion tsuna­mi”, say­ing that it was not only the banks, but also polit­i­cal deci­sion-mak­ers who were con­cerned about it.1515Helsin­gin Sanomat: EU-päät­täjät varoit­ti­vat liian tiukas­ta pankkien sään­telystä, 18 April 2010. How­ev­er, as the main focus in the Euro­pean dis­cus­sion turned towards the pub­lic sec­tor and strength­en­ing the EU’s posi­tion in gov­ern­ing that sec­tor, Fin­land threw its weight behind the Commission’s pro­pos­als. Finland’s posi­tion was pos­i­tive towards the pro­pos­al to review the draft bud­gets of EU mem­ber states before they are adopt­ed at the nation­al lev­el. Jyr­ki Katainen, Min­is­ter of Finance, declared that “Fin­land has noth­ing to hide.” Katainen felt that he would “feel safer” upon see­ing the oth­er mem­ber states’ bud­gets in advance.1616The Finnish Broad­cast­ing Com­pa­ny (YLE): Katainen puoltaa EU-maid­en tiukem­paa bud­jet­tisyyniä, 18 May 2010. All in all, his empha­sis was on strict bud­getary dis­ci­pline to be imposed by all mem­ber states.1717Helsin­gin Sanomat: Talousongel­mat pitkit­tivät taas euro­maid­en kok­ous­ta, 18 May 2010. Fin­land was also keen to improve the trans­paren­cy and qual­i­ty of sta­tis­ti­cal infor­ma­tion about all EU mem­ber states’ eco­nom­ic per­for­mance, as well as to increase com­par­isons between them.1818Turun Sanomat: EU:n pankkiverolle varovainen tuki, 18 April 2010. At the same time, Fin­land was com­pla­cent­ly remind­ing that it had been call­ing for bud­get rules to be strict­ly applied from much ear­li­er on.1919E.g. Mat­ti Van­hanen, Prime Min­is­ter: Joint Par­lia­men­tary Meet­ing on EU Affairs in the Finnish Par­lia­ment, 25 May 2010.

With a num­ber of ini­tia­tives float­ing around, the dis­cus­sion on each of them would be too lengthy to report. More­over, with most deci­sions still to be tak­en and it being too ear­ly to make a long-term assess­ment of the eco­nom­ic con­se­quences, the gen­er­al dis­cus­sion soon focused instead on the gen­er­al direc­tion that the Union seemed to be tak­ing. With the excep­tion of the forces most staunch­ly opposed to the EU, Finns seemed to view a stronger EU eco­nom­ic pol­i­cy as both very ben­e­fi­cial and long over­due. Even those polit­i­cal fig­ures who had been around at the time of the deci­sions on the Euro and the Greek entry into the Euro­zone were will­ing to pub­licly admit that cor­rec­tions to the old mod­el were nec­es­sary.2020Helsin­gin Sanomat: Lip­po­nen: EU:n löperön otteen on lop­ut­ta­va, 12 May 2010. From very ear­ly on, the plans sparked a dis­cus­sion on fed­er­al­ism. Tra­di­tion­al­ly, Finnish pub­lic opin­ion has been cau­tious of fed­er­al­ism – which, in fact, has been a rather cen­tral theme in the Finnish EU debate. In Fin­land, EU scep­ti­cism has been allayed by empha­sis­ing the ways in which the Union is dif­fer­ent from a fed­er­a­tion. How­ev­er, a major part of iden­ti­fi­able anti-fed­er­al­ists are sup­port­ers of the Cen­tre Par­ty, the par­ty of then Prime Min­is­ter Van­hanen and Com­mis­sion­er Rehn. This may have con­tributed towards them large­ly accept­ing the gen­er­al idea of more Euro­pean eco­nom­ic gov­er­nance as a neces­si­ty in this case. The emerg­ing con­sen­sus seemed to be that, though this could be seen as a step towards more fed­er­al­ism, no-one “should think that a fed­er­a­tion is being cre­at­ed”.2121Suomen­maa: EU-maid­en talouden­pito tarvit­see velvoit­teen­sa, 12 May 2010. More­over, as men­tioned above, Fin­land has already, pri­or to the cri­sis, been call­ing for bet­ter com­pli­ance of the Euro rules, and this is now eas­ing the accep­tance of greater con­trol.

The deci­sions tak­en in mid-May were wide­ly under­stood as emer­gency mea­sures, designed to give a lit­tle extra time for the prob­lem economies, as well as the whole EU, to gath­er strength before embark­ing on real changes. Nev­er­the­less, the Union was gen­er­al­ly com­mend­ed for show­ing deter­mi­na­tion and “get­ting its act togeth­er”. While com­men­ta­tors at one end of the dis­cus­sion were remind­ing the pub­lic that the impact of the cri­sis was still large­ly unknown,2222Helsin­gin Sanomat: Kel­lot soi­vat Euroopas­sa taas kaikille, 23 May 2010. at the oth­er they were rejoic­ing that the Union is final­ly work­ing on leg­is­la­tion with sub­stan­tial sig­nif­i­cance.2323Helsin­gin Sanomat: Turhaa lohtua, 23 May 2010. Last but not least, Estonia’s entry into the Euro­zone was gen­er­al­ly warm­ly wel­comed as a pos­i­tive note amongst the finan­cial dis­ar­ray.2424Helsin­gin Sanomat: Viro on ansain­nut paikkansa eurossa, 9 May 2010.

Finns initially sceptical or indifferent towards the Europe 2020 Strategy

In Fin­land, the over­all recep­tion of the Europe 2020 Strat­e­gy was bor­der­ing on scep­ti­cism. While the goals of the strat­e­gy were seen as laud­able, EU’s abil­i­ty to reach them was doubt­ed. The fail­ure of the Lis­bon Strat­e­gy, in par­tic­u­lar, was seen as grounds for scep­ti­cism: “Why would any­thing be dif­fer­ent this time?”2525Hufvud­stads­bladet: EU-strate­gi bemöts med skep­sis, 5 March 2010. The more pos­i­tive voic­es sug­gest­ed that Europe had learnt its lessons from the fail­ure of the Lis­bon Strat­e­gy: the Europe 2020 Strat­e­gy will be designed to be more down-to-earth, giv­ing it a bet­ter chance of suc­cess.2626Kale­va: Euroop­pa isku­un, osa 2, 8 March 2010.

In its post-Coun­cil eval­u­a­tion, the Finnish gov­ern­ment empha­sised, e.g., rais­ing Euro­pean pro­duc­tiv­i­ty as a key means for recov­ery from the cur­rent eco­nom­ic cri­sis. Charts com­par­ing mem­ber states’ per­for­mance in this regard were seen as a means to improve aware­ness of dif­fer­ences in pro­duc­tiv­i­ty.2727Mat­ti Van­hanen, Prime Min­is­ter: Press Brief­ing, 26 March 2010. From the point of view of imple­ment­ing the Strat­e­gy, then Prime Min­is­ter Van­hanen did not envis­age much extra effort. Rather, his empha­sis was on boast­ing how far advanced Fin­land was with many of its goals, some­times even sur­pass­ing them, for exam­ple, in the lev­el of research and devel­op­ment inputs. The nation­al plans – the beef of which is in the Europe 2020 Strat­e­gy – are still in the mak­ing at the time of writ­ing, with the gov­ern­ment promis­ing more details before the Euro­pean Coun­cil meet­ing in June 2010.2828Ibid. All in all, how­ev­er, nei­ther the strat­e­gy nor the nation­al plans aroused much inter­est or debate in Fin­land.

    Footnotes

  • 1Turun Sanomat: Kreikan kri­isi nos­tanut Rehnin Bar­ro­son rin­nalle, 11 May 2010.
  • 2See the Finnish chap­ter on the imple­men­ta­tion of the Lis­bon Treaty (chap­ter 1).
  • 3Talous­sanomat: Velka­kri­isi ei pysäytä talouden kään­net­tä, 18 May 2010.
  • 4Turun Sanomat: Euron heiken­tymi­nen kas­vat­taa Suomen vien­tiä, 12 May 2010.
  • 5Helsin­gin Sanomat: Talouskomis­saari Rehn vaatii Kreikalta lisäsäästöjä, 2 March 2010.
  • 6Helsin­gin Sanomat: Mak­samme velkaa Aris­toteleelle, 14 May 2010.
  • 7Mat­ti Van­hanen, Prime Min­is­ter: Press Brief­ing, 4 May 2010.
  • 8Jyr­ki Katainen, Min­is­ter of Finance: Press Brief­ing, 4 May 2010.
  • 9Helsin­gin Sanomat: Suo­ma­laiset usko­vat Euroon, 8 May 2010.
  • 10Ibid.
  • 11Uutispäivä Demari: Kansa ei hyväksy luot­toa Kreikalle, 17 May 2010. This result is based on a propo­si­tion that, on the basis of finan­cial con­se­quences, Greece should be sup­port­ed.
  • 12Arto Anilu­o­to, Sec­re­tary Gen­er­al, Euro­pean Move­ment in Fin­land, inter­viewed in the Finnish Broad­cast­ing Com­pa­ny (YLE), 11 May 2010.
  • 13Turun Sanomat: EU:n val­u­ut­tara­has­to ei ehtisi Kreikan avuk­si, 13 March 2010.
  • 14Mat­ti Van­hanen, Prime Min­is­ter: Press Brief­ing, 26 March 2010.
  • 15Helsin­gin Sanomat: EU-päät­täjät varoit­ti­vat liian tiukas­ta pankkien sään­telystä, 18 April 2010.
  • 16The Finnish Broad­cast­ing Com­pa­ny (YLE): Katainen puoltaa EU-maid­en tiukem­paa bud­jet­tisyyniä, 18 May 2010.
  • 17Helsin­gin Sanomat: Talousongel­mat pitkit­tivät taas euro­maid­en kok­ous­ta, 18 May 2010.
  • 18Turun Sanomat: EU:n pankkiverolle varovainen tuki, 18 April 2010.
  • 19E.g. Mat­ti Van­hanen, Prime Min­is­ter: Joint Par­lia­men­tary Meet­ing on EU Affairs in the Finnish Par­lia­ment, 25 May 2010.
  • 20Helsin­gin Sanomat: Lip­po­nen: EU:n löperön otteen on lop­ut­ta­va, 12 May 2010.
  • 21Suomen­maa: EU-maid­en talouden­pito tarvit­see velvoit­teen­sa, 12 May 2010.
  • 22Helsin­gin Sanomat: Kel­lot soi­vat Euroopas­sa taas kaikille, 23 May 2010.
  • 23Helsin­gin Sanomat: Turhaa lohtua, 23 May 2010.
  • 24Helsin­gin Sanomat: Viro on ansain­nut paikkansa eurossa, 9 May 2010.
  • 25Hufvud­stads­bladet: EU-strate­gi bemöts med skep­sis, 5 March 2010.
  • 26Kale­va: Euroop­pa isku­un, osa 2, 8 March 2010.
  • 27Mat­ti Van­hanen, Prime Min­is­ter: Press Brief­ing, 26 March 2010.
  • 28Ibid.

The reports focus on a report­ing peri­od from Decem­ber 2009 until May 2010. This sur­vey was con­duct­ed on the basis of a ques­tion­naire that has been elab­o­rat­ed in March and April 2010. Most of the 31 reports were deliv­ered in May 2010.

The EU-27 Watch No. 9 receives sig­nif­i­cant fund­ing from the Otto Wolff-Foun­da­tion, Cologne, in the frame­work of the ‘Dia­log Europa der Otto Wolff-Stiftung’, and finan­cial sup­port from the Euro­pean Com­mis­sion. The Euro­pean Com­mis­sion is not respon­si­ble for any use that may be made of the infor­ma­tion con­tained there­in.