Speech by Mr Jukka Valtasaari, Secretary of State: A Finnish Perspective on the Changing Europe, the SASS, Shanghai, 10th February 1999

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

As the world approaches the turn of the millenium, it is grappling with forces and tendencies that few we able to predict, say, ten or fifteen years ago. Information revolution and globalization are advancing at an ever growing pace and changing the outlook of the planet. Nowhere is this as evident as in Shanghai and other cities of China. I have not been here before, though I have been many times in Beijing and other places in China, so that I am very happy to have this opportunity now, and to see with my own eyes the vibrant growth of your city.

Asia has experienced its own ups and downs during this decade, and so has Europe, which has gone through both a strategic, political and economic upheaval with the end of the Cold War.

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 Europe in ruins. 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 Security 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 challenges 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 institutions 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 a determined mood. This was especially 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 initiated a process, which ultimately led to a disintegration of first the Warsaw Pact and COMECON and then the Soviet Union.

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 attempt 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 institutions have a memory." This guarantees that the wheel does not have to be invented 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 exceptionally 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 discussion 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 beginning 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 Council 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 Union 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 thinking 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 announcing 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 security 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 present 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 December 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.

The program for the Finnish Presidency is not yet ready as the new presidency can only formulate its program at the last stages of the previous one. But it will be based on existing agreements and focus in particular on external relations and the necessary internal adjustments, which will enable the union meet the demands of enlargement, relations with Asia and Transatlantic relations.

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 basis of our national and Scandinavian traditions, and now using the common security-political instruments of the European Union, we continue to support reforms everywhere aimed at more effective democracy, better functioning of civil societies, improved respect for human rights and more efficient free trade and market economies. The EU´s relations with China should be seen on this light. Political dialogue, cooperation on Legal and Human Rights are basic parts of this relationship. Trade is another: China is an important market for EU goods, services and investments. And the EU is one of the biggest export markets for China.

Finlands relations to China are also based on these principles. Our cooperation in the legal sector, which includes the rule of law and human rights has brought about several seminars and ministerial and vice-ministerial visits. Apart from legal cooperation, there have several high level delegations during these last years from Finland to China and vice versa. Our trade relations are stronger than ever: China, even when discounting the trade figures of the Special Administrative Region of Hong Kong, is our biggest trading partner in Asia: Trade between the two countries reached over 1.5 billion USD during the first 10 months of 1998. And Finnish exports to China grew by over a 100% from 1997 to 1998, and imports from China grew by over 10% during the same period.

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 independence, seeking their own place in the European security-political environment 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 integrated 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 Union, the Baltic Sea region and Northern Europe will inevitably receive more attention 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 potential 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 networks need to be connected to pan-European ones, all of which involves sizable investments and other economic measures.

We assume that Russia will overcome its present economic difficulties by means of cooperation with other countries. Increased income from exports requires productive investments which, however, need certain preconditions as far as the legal framework for economic activities and basic security are concerned. Investments 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. The opening up of the Chinese market has led the chinese national economy into an unprecedented path of growth. And foreign investors are still coming to China, although the economic downturn in Asia has dampened the inflow of investment both into and within the region.

It may seem from the outside that the European Union spends a lot of time on regulating 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 significance 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. For many a country in Europe, the planned disappearance of the national currency has caused traumatic political infighting on the domestic scene. The ability to set interest and currency 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. But recent happenings show, that the step has been a necessary one. During the last months many European countries were forced to defend their currencies with higher interest rates. However the 11 EMU core countries were not touched by this turmoil.

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 for the new common currency. The economies of the countries that joined the euro zone had to fulfill stringent criteria and they will have to exercise strict fiscal 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, beginning from the mid 1970´s, the Finnish economy lived through an exceptionally 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 became 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. Unemployment 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 comparison 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 Europe.

Another external aspect of the European Union, of growing significance to the outside world, is the European foreign and security policy, including crisis management and defense policy in particular. Foreign and security policy traditionally 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 condensed into three notions.

First: the common enemy faded away and made room for several regional conflicts 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 disarmament 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, Clausewitz 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 management 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 outside Europe.

Ladies and Gentlemen,

I would not like to bore you with the rest of the details of Europe’s agenda. Suffice 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, as well as Asia, 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 without 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.