Finland’s Iron Lady

Date: 04/06/1998

OMNIVORES on the board of the central bank of Finland heaved a sigh of relief this week.

From now on, they will be able eat their bear steaks for lunch in peace. For their boss, Finland's most famous vegetarian Sirkka Hämäläinen, has left for Frankfurt.

Although her name was sometimes mentioned as a possible dark horse in the race for the European Central Bank presidency if euro-zone members could not settle their differences over the front runners, the Finnish government lobbied energetically for Hämäläinen to be appointed to the ECB board but never went for the big prize.

The only woman on the new bank's board comes across as a frighteningly strong person. At 59, she has the posture of a 20-year-old and it is obvious that she has many kilometres of Lapplandic cross-country skiing in her legs.

Hämäläinen has often played the role of the archetypal successful professional woman but she is not a feminist, unless supporting the female theatre group 'Raivoisat Ruusut' (The Raging Roses) puts her in that category.

She is also an ardent belly-dancer. This ability comes as something of a surprise when one studies her curriculum vitae, which shows no tendency to swirl about but reveals a straight step-by-step climb to the summit, with no looking back and no deviations.

Apart from a short stint at the ministry of finance in 1981-1982, Hämäläinen has remained faithful to the Bank of Finland for the past 37 years.

She joined it as an economist and worked her way up while, at the same time, studying for a doctorate in 1981.

Her doctoral thesis for the Helsinki School of Economics and Business Administration concerned the savings patterns in Finnish households. In 1992, when Hämäläinen took over as governor of the Bank of Finland, the rate of saving in most Finnish homes was negligible. The country had been hit harder by the economic slump than any other nation in Europe and people were struggling to get by.

The job of heading the Bank of Finland over the past six years has certainly not been one for the faint-hearted.

When Hämäläinen took over, Finland was sliding deep into recession due to three factors: bad luck, bad banking and bad politics.

The bad luck could be ascribed to the Soviet Union falling apart, dragging with it some 10&percent; of Finland's gross domestic product; the bad banking to the problems which also hit other countries due to reckless lending; and the bad politics resulted from the lack of a sense of crisis, which meant that Esko Aho's government did not have the same room for manoeuvre as today's broad coalition government under Paavo Lipponen.

Sirkka Hämäläinen is not a stranger you would like to meet in a dark alley, but rather the friend you would choose to accompany you through that alley.

In the middle of the gloomy tunnel of recession, the Finnish government did just this when it selected her to head the Finnish central bank. Thus it was that the Finnish answer to Margaret Thatcher moved to centre stage.

Observers point out that Hämäläinen has never shown any mercy towards those hardest hit by the recession: mainly the unemployed who, when the economy was at its lowest point, accounted for one-fifth of the active population.

“She was the toughest man among them all at the board of the Bank of Finland,” remembers one former board member.

Luckily, the role of the really bad guy was played by the colourful Finance Minister Iiro Viinanen, so Hämäläinen avoided attracting most of the public's wrath over the budget cuts which followed. Equally, however, no one gives her the credit today for the fact that the Finnish economy has picked up so strongly.

They say that the recovery was not thanks to Hämäläinen, but rather to the broad coalition government's ability to instil a sense of urgency and crisis among Finnish citizens.

As a result, they accepted drastic spending cuts, such as a 10&percent; reduction in child benefit, at a time when many were already living on the margins.

Anybody who believes that all northern Europeans are eager to save the welfare state and equally keen environmentalists should reconsider. The welfare state is not on Hämäläinen's agenda as long as it risks overshadowing the fight against inflation. Her monetarist approach is so uncompromisingly orthodox that it makes Bundesbank president Hans Tietmeyer look like a softie.

Price stability is her mantra. She has seen how it has been successfully pursued in Finland in recent years and firmly believes that is how it should be pursued in the single currency zone as well - with a set target for annual inflation.

In Finland, the target announced in 1993 was 2&percent;. This, coupled with a strict fiscal policy and very restrictive wage settlements, has ensured that the exchange rate attained by the markka in early 1994 has not changed since. By 1996, Hämäläinen felt confident that Finland could join the Exchange Rate Mechanism and told her government so.

Hämäläinen is described by those who know her best as ambitious, hard-working and meticulous, but not a great organiser (“for a woman”, adds one of her male former colleagues).

Some also regard her detailed preparations for every task as a sign of a certain lack of confidence, arguing that she is never able to “shoot from the hip”.

But others say that may just be typical of a central banker. If they shoot from the hip, they are liable to hit themselves in the foot.

Hämäläinen did not commit such an error during the European Parliament hearings with the ECB board nominees early last month, although at the beginning she was far from her usual cool and collected, official self.

She was definitely nervous when facing MEPs but she had, as usual, prepared herself extremely well. Her answers were often brief, sometimes to the point of being rude, according to one Finnish parliamentarian.

However, in the questionnaire which the Parliament sent out before the hearings, she answered the last question: 'What would you do if the Parliament rejected your nomination?' almost pleadingly.

“If the European Parliament were to find it impossible to support my nomination, I would find myself in a very difficult situation, which would be painful and embarrassing. However, I feel that my duty is to leave the decision to the heads of state and government,” she wrote.

All of this demonstrated that there was some emotion behind Hämäläinen's stern surface of absolute correctness.

Although colleagues describe her as a tough person to work with, she does share her feelings with an inner family circle.

When her name first began circulating in the press as a potential member of the ECB board, Hämäläinen complained that she was not sure she could bear to live so far away from her two toddler grandchildren, the daughter and son of her daughter Salla. Her son Jonni is a violinist and lives in Turkku.

The head of the Bank of Finland has historically enjoyed a very strong position in Finnish society. The job used to be reserved for very distinguished politicians. One of them, Mauno Koivisto, became prime minister and then president. Membership of the board was, however, more of an honorary post.

All that changed with Hämäläinen's predecessor Rolf Kullberg. She became the second central bank governor to be a genuine professional who had risen through the ranks of the bank.

Despite her tough exterior, those invited to the bank's traditional crayfish party say that Hämäläinen is always the perfect hostess. “She never drinks too much, and is humorous and nice,” says one frequent guest.

Sirkka Hämäläinen is a household name in Finland and as such, unusually for a banker, even her private life attracts attention. She divorced a few years ago, and since then the media have tried to match her with a series of eligible bachelors, but in vain - at least officially.

BIO