Lecture by Mr Jukka Valtasaari, Secretary of State: A Finnish perspective on the changing Europe, at the Academy for Social and National Development of Uzbekistan, Tashkent 8th January 1999

The Academy for Social and National Development of Uzbekistan, Tashkent 8th January 1999

Mr. Jukka Valtasaari,
Secretary of State,
Ministry for Foreign Affairs of Finland

A Finnish Perspective on the Changing Europe:

An upheaval in the strategic, political and economic situation in Europe in the 1990 has brought us to the threshold of a new millennium. The old order is no more, but a new one has not yet come into being. Unlike the World Wars, the Cold War did not leave ruins behind. Yet, a huge task is awaiting us. Instead of steel and concrete for rebuilding bombed-out cities and industries, we now need new elements and designs for conceptual and institutional reconstruction.

On the agenda there is the task of creating a common strategic concept for the promotion of security in Europe and in the world. Among its elements are the so-called New Strategic Concept of NATO, the development of the European Secu-rity and Defense Dimension (ESDI) and the consolidation of Europe’s own crisis management capabilities. Another set of new tasks has to do with the adaptation of national economic and fiscal policies of the members of the European Union to the requirements of economic and monetary union and the euro, which is now the common currency of 11 of us, including, of course, Finland. Further challen-ges are presented by the imminent enlargement of the Union, and by the need to adapt its budget, its structural policies, its common agricultural policy and its in-stitutions to serve a union far more diverse and comprehensive than anything that its founding fathers had in mind.

Undaunted by this long and complex agenda, Europeans are embarking upon their new tasks in an exceptionally happy, almost euphoric mood. This was espe-cially evident when the euro was launched at the beginning of the year.

A Finnish perspective on these developments is not a view from the sidelines. No longer are we watching developments from a position restrained by the straitjacket of our Cold War neutrality.

During that period, the history of Europe and indeed the entire world, in the words of Raymond Aron, a French philosopher, was frozen by the confrontation of the two military alliances with their nuclear deterrent. In the shadow of nuclear weapons, Europe was divided. Different types of integration processes were at work on the two sides of the East-West divide. In the East, countries and nations were forced into something that was labeled ‘socialist’ integration but actually - perhaps true to the Marxist theory - planted the seeds of its own disin-tegration and destruction.

In the West, integration advanced step by step, by slowly building institutions and programs from the results of negotiations. Many an effort failed, e.g., the at-tempt to create a European monetary union at the end of the 1960’s. However, when the time was ripe for them, discarded projects could be taken out of the drawer and completed on the basis of old blueprints. As a whole, the march of European integration has been the success story of the latter half of the century. As the father of European integration, Jean Monnet, used to say, "only institu-tions have a memory." This guarantees that the wheel does not have to be in-vented over and over again. Or, as the Polish aphorist Jerzy Lec says: "When you overturn the statues, spare the pedestals. They will be needed."

As far as institution building is concerned, the present decade has been exceptio-nally productive. Some people speak disparagingly of an alphabet soup of the acronyms of an ever-growing number of international institutions, especially in Europe. But institutions are important, particularly from the standpoint of small countries like Finland. They oblige all parties to take into account what has been jointly agreed. A few thoughts on "what might have been" may illustrate their significance.

What would have happened around the Baltic Sea on the eve of the Second World War if the Molotov-Ribbentrop Agreement, consolidating the spheres of interest between the Soviet Union and Germany, had been subject to public dis-cussion in an international forum more effective than the League of Nations? What if Yugoslavia had been a member of the EU at the beginning of the present decade? Institutions might have prevented tragedies. To take an example of an opposite kind: what if the United States had opted out of the CSCE at the begin-ning of the 1970´s? It would have meant that 15 years later its influence would have not been felt when it was time to establish common values as the basis of the rules of conduct for the entire Euro-Atlantic Community.

At some future date, the world will surely recognize the value of the institution building boom that is going on. NATO and the Euro-Atlantic Partnership Coun-cil have over 30 member states, all pursuing partnership in peace. Partnership between NATO and Russia has been established. The OSCE has taken a more operational role. New crisis management mechanisms have been created, and they are now being tested in the Balkans. The enlargement of the European Uni-on is progressing on schedule, enhanced by special programs designed to assist the candidates. And last but not least, economic and monetary union has been created, along with the European Central Bank and the Euro-11 Committee which coordinates economic policy. All this happened during the 1990´s.

Institutions are important also because the "thawing" of history, which started during the 1990´s, set in motion not only positive but also a number of negative processes such as terrorism, organized crime, trafficking in arms, drugs and even human beings, along with illegal immigration and uncontrolled migration. All these problems present a serious security challenge for Europe and the entire world. Putting these issues on the international agenda, Europe is not only thin-king about itself and of its own ‘insular’ safety but of the security of the entire international community.

Geographically, Finland is as far to the North as you can get in Europe. But after joining the European Union in 1995, Finland made it clear that it would be in the core group, in the very center of the union, and not on the periphery, by announ-cing that it wanted to be among the first nations creating the European monetary union. Finland thus consolidated her place and her voice in the European secu-rity environment in a new way.

Looking forward, we see - in the best of the cases - a Europe emerging where old divisions have ceased to exist, and where new divisions are not being created. We see a Europe where jointly agreed rules of conduct are observed and where every nation’s sovereignty is respected, including the right to decide upon one’s own security arrangements, and whether to join or not to join a military alliance. As far as Finland is concerned, under the circumstances now prevailing, our pre-sent non-allied posture and our independent, credible national defense capability will best serve the stability of the entire region of the European north.

In fact, even during the Cold War, when Finland was seen as a borderland from both the East and the West, our policy of neutrality was not based on isolation and opting out, but, on the contrary, on participation in such pursuits that strengthened our position. Now that Finland is a member of the European Union and the euro zone, we have even more channels of influence at our disposal in order to pursue our interests and to shoulder our responsibilities in international relations. As the President of Finland, Martti Ahtisaari, said in his New Year’s address, ‘never before has Finland’s international position been as strong as it is now.’ We have gained more say not only in matters that affect ourselves but also in those of the entire Union and in its global interests. And from July to Decem-ber this year, holding in its turn the Presidency of the Council of the European Union, Finland will be charged to seek optimal solutions for the entire union and to speak in its name.

As a member of the European Union, Finland will draw upon its heritage and its experience from working in international institutions during preceding decades. We shall continue to support the international security order, which is based on strict respect for the common values jointly agreed on in the United Nations, the Organization for Security and Cooperation and the European Council. On the ba-sis of our national and Scandinavian traditions, and now using the common secu-rity-political instruments of the European Union, we continue to support reforms everywhere aimed at more effective democracy, better functioning of civil so-cieties, improved respect for human rights and more efficient free trade and mar-ket economies.

Finland pays special attention to her own neighborhood, which has changed a lot during this decade. In the south, Estonia, Latvia and Lithuania regained their in-dependence, seeking their own place in the European security-political environ-ment and among European institutions. Russia, with its center of gravity shifted further to the north and to the west, again became our eastern neighbor after the Soviet interlude. In Pushkin´s words, the establishment of St. Petersburg opened a window to Europe for Russia. More than ever, this holds true today. Thanks to Finland’s membership, the European Union is now Russia’s next door neighbor. The Finnish border, since 1995 also the border of the European Union, is only a good hundred kilometers from St. Petersburg, and it is today Russia’s most vital interface with markets in the European Union and beyond.

This common border presents opportunities as well as challenges. In an integra-ted Europe, the old West turns towards the East and the old East towards the West. In addition, as Poland and the three Baltic States will in time join the Uni-on, the Baltic Sea region and Northern Europe will inevitably receive more at-tention within the Union.

A response to these opportunities and challenges is attempted in what is known as the Northern Dimension of the policies of the European Union. Originally proposed by Finland, the initiative aims at taking into account, in the policies of the Union, the consequences of the fact that the Union now reaches far to the north and northeast.

From an economic point of view, the north of Europe represents significant po-tential for growth. There are rich resources of energy, forests and minerals. Most often, not only northern interests are involved but also global issues such as energy management, safe generation of nuclear energy and nuclear disarmament. Utilizing this potential, which in the long term will be inevitable, requires the development of ports, traffic routes, electronic communications and well functioning border checkpoints. Northern transport and communications net-works need to be connected to pan-European ones, all of which involves sizable investments and other economic measures.

Why do I speak about the Northern Dimension here in Tashkent? Because the development of transit ports and storage systems around the Baltic Sea offers al-so to the countries of Central Asia a route to European markets via the Baltic Sea, using the territory of Finland. The identical gauge on Finnish and CIS rail-ways offers the same marketing edge to all sides using them. When Uzbek ex-ports are loaded on a train in Tashkent, only one leg of transportation is needed to get them to Finland or to the Baltic States. We are naturally familiar with the measures that the countries of Central Asia and the Caspian region have been preparing in cooperation with the European Union to revive the historical Silk Road for use as a transport corridor (TRACECA) from the region to world mar-kets.

In its new role, Finland will put to good use knowledge and skills accumulated over the several decades - even centuries - of her contacts and trade with Russia. Based on our experience, we want to prevent the emergence of new barriers whe-re old ones have just been dismantled. We also want to attenuate dangers stem-ming from a too close juxtaposition of affluence and poverty. Present income disparities on both sides of our eastern border are among the highest in Europe, if not even the highest in the world. Only closer contacts and long-term economic cooperation between the European Union and Russia can reduce them.

We assume that Russia will overcome its present economic difficulties by means of cooperation with other countries. Increased income from exports requires pro-ductive investments which, however, need certain preconditions as far as the le-gal framework for economic activities and basic security are concerned. Invest-ments bring not only flows of income but also provide a channel for ideas and new know-how, as we have seen in the case of the economy of China. With an increasingly free movement of factors and production processes in the world, the solution to economic crisis in any country is not to reduce contacts but to increa-se cooperation.

I would like to illustrate what I said about Finland and Russia with two examples of smooth cooperation. First, the Finnish-Russian border. We have reason to be proud of the cooperation between Finnish and Russian border authorities, inclu-ding the customs. Working in cooperation, the authorities of the two countries have managed to create border arrangements that facilitate economic exchange. The border between Finland and Russia is considered to be a model of a well-functioning international interface. Based on our experience, we are helping Es-tonia and Lithuania to organize their border authorities and to train their staff.

The other example is the cross-border cooperation between neighboring munici-palities and districts that was launched at the beginning of the 1990’s. Small in-vestments are used to initiate grass roots projects that are supported by interna-tional financing. This cooperation benefits people on both sides of the border. In a way, they are just reviving an old tradition of cross-border contacts that was broken after the Bolshevik revolution 80 years ago...

These examples demonstrate how Finland and the international community can support Russia on its road towards democracy and the rule of law. By supporting the development of true federalism and devolution by design in Russia we can help to prevent disintegration by default.

It may seem from the outside that the European Union spends a lot of time on re-gulating the lives of its members and their citizens. This may be true. But it does not mean that the European Union is relevant only to its members. Its significan-ce to outsiders is growing step by step, year by year. As this year began, there was another step, in fact a giant leap, when the euro was born as the common currency of eleven European countries and as an international currency alongside the U.S. dollar. Based on stock exchange figures and the euro quotations, the common currency was well received in financial and monetary quarters, which were long of the opinion that the euro would never be more than an idea. Now they are treating it with respect.

The decision to have a common currency represents the boldest chapter in the history of Europe´s integration. National currency has traditionally been regarded as an indispensable ingredient of sovereignty. The ability to set interest and cur-rency rates has always been seen as a necessary tool for anticyclical economic policy. To give them up is a dramatic step towards meeting the demands of the global economy.

For non-Europeans, the euro offers an alternative to the dollar. The euro´s share of world trade and bond markets and the external balance of European currency movements represent a good start. The economies of the countries that joined the euro zone had to fulfill stringent criteria and they will have to exercise strict fis-cal and taxation discipline in the future, too.

Finland´s road to this core club of European nations was not an easy one, and its experience may be relevant for others, too. For about one and a half decades, be-ginning from the mid 1970´s, the Finnish economy lived through an exceptio-nally favorable period, enjoying strong growth, rapid productivity increases in industry and close to perfect financial policy with practically no public debt at all.

All this collapsed overnight at the end of the 1980´s. The domestic economy be-came overheated, the markets in Russia diminished into a fraction of their former value, our other major markets stagnated and German unification raised long-term European interest rates vigorously. Finland became suddenly aware of how dependent on markets a small economy was in the old system. The reduction in our gross domestic product between 1991 and 1993 by 13 % may have been the most severe one in the industrial world after the Second World War. Unemploy-ment and, consequently, state expenditure grew explosively together with the state debt. There was not much choice: we simply had to restore order in our house. This was done by an export-led growth strategy favoring high technology exports, and by freezing the state budget. It took us four years to get into shape for the euro. The exertions that were necessary to achieve this are beyond com-parison in our post-war history, but they paid off. Finland´s long-term interest rates subsided to the German level and then even lower, and Finland’s currency - at the time of its transformation into the euro - was one of the most stable in Eu-rope.

Another external aspect of the European Union, of growing significance to the outside world, is the European foreign and security policy, including crisis ma-nagement and defense policy in particular. Foreign and security policy traditio-nally fall within the sphere of national sovereignty. It is therefore a difficult area for joint decision-making and common action, as seen on various occasions in Europe. Real life has taught us and forced us to draw appropriate conclusions. Security developments in Europe at the beginning of the 1990´s can be con-densed into three notions.

First: the common enemy faded away and made room for several regional con-flicts in the peripheries.

Second: positive developments were faster in the central sector than on the flanks.

Third: national security interest spread beyond the borders of Europe.

In the central European sector, the end of confrontation and subsequent disar-mament changed the security policy situation swiftly and dramatically. In the south, in the Balkans, war made its way back to Europe after a respite of over 40 years. In the north, which retains its value as a strategic area as long as there are nuclear weapons, developments have been positive but slower than in the central sector. And finally, dealing with new types of threat, Europe requires an array of approaches - economic, confidence building, and military. Unfortunately, Clau-sewitz is still alive and well, and his teachings have not become redundant, as we have seen in the Middle East.

It is worth noting that peace-keeping - that old stock-in-trade from the toolbox of the United Nations - has risen to a new prominence in Europe, both in the field where it has prevented ethnic crises from flaring up into major wars, and in halls of diplomacy, in negotiations about how to share conflict prevention and mana-gement tasks among institutions such as NATO, the WEU and the European Union. At the initiative of Finland and Sweden, crisis management tasks have been incorporated in the basic treaties of the European Union, as amended in Amsterdam two years ago. In the field crisis management in Bosnia has in itself been an encouraging example of creative international cooperation, as NATO command structures have been used as a framework for military forces in which the majority of troops come from outside the alliance and some even from outsi-de Europe.

Ladies and Gentlemen,

I would not like to bore you with the rest of the details of Europe’s agenda. Suf-fice it to say that the list is pretty long.

Instead I would like to suggest three conclusions.

First. If there is one trend in analyzing and dealing with international issues, it is toward more horizontal and holistic approaches.

Second. This applies also to Europe, where approaches to security and economic integration have traditionally been quite compartmentalized.

Third. In the world of increasingly free access to communications, the global agenda is so broad that there is little room for regional or insular thinking wit-hout relating it to global trends or their global ramifications.

In other words, whatever we do, clear vision is needed. Let us hope that the change of the millennium will open our eyes wider and help set our sights beyond the problems of today.