Finns won over by cheaper food and sense of security

Date: 02/05/1996

THE Norwegians voted No, and seem proud of it. The Swedes said Yes, and appear to regret it. But the Finns, who decided almost a year and a half ago to join the EU, have never been happier.

“So far, so good,” reports a smiling Ole Norrback, Finland's Minister for European Affairs, pointing out that recent opinion polls show the proportion of the population in favour of membership has risen to 60&percent;.

Food, explains the minister with a chuckle and a pat of the belly, has made all the difference. The cost of that commodity - cherished by Finns almost as much as steaming saunas - has fallen by a striking 11&percent; since Finland threw its lot in with the Union last January. The flow of cash to the country's remote regions has also helped keep nearly two-thirds of the population happy.

But there are deeper reasons than that for the EU's popularity in Finland. The country which survived decades of awkward and sometimes bloody relations with the Soviet Union, following independence from Moscow in 1917, saw joining the EU as a priceless opportunity to reinforce its security - a view which has not changed since membership.

“We were stuck in the middle of two hostile blocs for a long, long time,” says Norrback. “Joining the EU, the one which we have always felt closest to in terms of culture and politics, has given Finnish people a new sense of security.”

A depression in the 1990s has also been a factor, encouraging Finns to regard EU membership as vital for the country's economic stability and its competitiveness. The government, having clawed its way back from that recession in the past two years, is now hoping to consolidate hard-won economic gains.

Tough budget measures have been introduced to ensure that the country is among the first to enter the final phase of economic and monetary union. And, given the sharp economic upturn, Norrback's claim that Finland will meet the Maastricht convergence criteria seems credible enough.

Joining EMU would be a break with the past for Finland which, like Sweden, has used devaluation as a core instrument for sustaining growth for most of the past three decades. The cost of such a policy was high inflation, but Finland has managed, of late, to return to vigorous, low inflationary growth.

Unemployment remains a serious blight, however, with 17&percent; of the workforce currently out of work and likely to stay that way for years to come. “This is one of the government's primary concerns. We need to talk about cutting labour taxes and introducing more flexibility into the job market. But these are difficult questions which need to be tackled with some delicacy,” says Norrback.

He is adamant - in the face of emerging scepticism from both within and outside the government's ranks - that Finland should lock into EMU. “I am convinced that we would benefit enormously from the single currency,” he says.

Norrback also stands with those arguing that the timetable and criteria should be strictly adhered to. “We will do everything we can to ensure that Finland joins in the first phase. We support the schedule and we are firmly against any watering down of the criteria.”

But the minister refuses to say whether his government plans to join the Exchange Rate Mechanism (ERM) in the near future.

Article 109j of the Maastricht Treaty specifies that membership of a future monetary union will be judged at least in part by “the observance of the normal fluctuation margins provided by the exchange rate mechanism of the European Monetary System for at least two years without devaluing against the currency of any other member state”.

Since it is agreed that a summit will decide in early 1998 which countries are entitled to join the single currency bloc, speculation is growing that Finland - along with Sweden, the UK and Italy - will have to join the ERM soon if they want to be in the first group of countries to form a monetary union.

Finland is arguably the front-runner for membership since its inflation rate is the lowest in Europe, it has a trade surplus and its budget deficit has been significantly cut.

However, the government may be reluctant to join the ERM without an equivalent move by the Swedish authorities, since the two countries compete in pulp, paper and forestry products.

“We are changing our legislation now to allow us to join that system (ERM), but we have not made any decisions about timing or rates,” stresses Norrback.

Given Finland's proximity to the former Communist bloc, it is not surprising that most Finns support entry into the EU for the countries of Central and Eastern Europe.

“Europe was divided militarily for 50 years. Eastern Europeans took huge risks in 1989 when they broke down the military wall. Now we need to show courage in order to dismantle the social and economic walls which replaced the physical ones.”

How many applicant countries cross the boundary between the two Europes in the coming years will depend to a large extent on how many of them manage to knock their economies and democracies into shape. But Norrback warns that enlargement will also stand or fall on the Union's ability to put its own house in order during the Intergovernmental Conference now under way. “It is crucial that the EU does its homework,” he insists.

Although he is an avid supporter of enlargement, Norrback is nevertheless firmly opposed to any dilution of the power of the Union's smaller member states at the IGC - a step which many feel is needed for a Union of 25 or so countries to function properly.

It has been suggested that, as an efficiency measure, the number of Commissioners should be cut back, with smaller states sending only a deputy Commissioner to Brussels.

Sitting up in his armchair, Norrback categorically rejects this idea and delivers a stark warning to those contemplating it. “If the EU were to strip countries like Finland of their Commissioner, then that would completely alienate the people. It would be a public relations disaster.”

But Finland is willing to take more decisions by majority voting, he says in a more conciliatory tone. “A decision-making process which allows one member to block an important policy which the 14 others want to implement cannot be a good thing.”

Norrback is careful, however, not to specify how far Finland would be willing to extend the principle of majority voting, preferring instead to say that Helsinki is “prepared to move a number of policy areas from the third to the first pillar” but is “not yet ready to say which ones”.

Probably the most tricky issue facing Finland is the question of how to find a place for itself in the EU's evolving common foreign and security policy.

Though he insists that Finland's policy of military non-alignment is not up for negotiation, Norrback concedes that its traditional neutral stance is in need of review. “Finland was neutral because it was sandwiched between two military blocs. Those blocs do not exist any more, so our neutrality needs to be questioned,” he says.

“No one has a clear idea of what the common defence policy will look like, so the situation is still quite open. Finland is ready to be active in EU peacekeeping missions, but it is not ready to commit soldiers to peace-enforcement operations.”

And with one wary eye on Moscow, Norrback advises NATO to tread softly with its plans to expand eastward. “I hope that NATO will act carefully and will not provoke bad reactions from anyone. I have no doubt that organisation will play an important role in the new security order, but it must take care not to isolate Russia,” he warns.

The rapidly changing situation in Europe, though challenging, is nothing new to Finland. As the minister puts it, philosophically: “In the past decade, we have seen Europe completely transform itself. We are getting used to changes.”