Speech by Mr Jukka Valtasaari, Secretary of State at the Ministry for Foreign Affairs of Finland: Finnish thoughts on change in Europe, at Teleki Institute, Budapest 10th January 2001

Venue: Teleki Institute, Budapest 10th January 2001

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

Ladies and Gentlemen,

I am honoured to have been invited to speak to this distinguished audience in Budapest. Before addressing my topic for today, Change in Europe, I would like to say something about Finns and Hungarians, about our common experiences. Our two peoples have many things in common, among them the belief that small nations must identify their national interest in a way that is understandable to others and promote it within the context of, rather than outside, European historical currents. We might even have been able to do this in coordination, as the linguists maintain that we have a few hundred words in common.

With respect to drinking, another common interest, Hungarians in the past were smarter than Finns, as they took the road southwards on their way from the bend in the Volga River to a region where the soil was suitable for wine growing, while we Finns opted for harder stuff. Yet, one of the words we share for drinking, "hörpätä - hörpint", is similar probably because we Finns have always been lavishly wined and dined in Hungary.

Finland has more engineers per capita than any other nation in the world. We therefore like to solve problems, including those of foreign policy. I am not aware of the number of engineers in your country but I have detected the same tendency here. In the seventies I was a member of the delegation which negotiated GATT-compatible free trade agreements with then socialist countries - an apparent conceptual impossibility. Hungary was the fastest partner to recognize the importance of establishing a customs tariff and then negotiating it away as a concession in order to make everything fit the rules of GATT, of which Hungary was not a member. If that is not a doer's attitude, what is?

But let us move on to the subject " Change in Europe". Since I am a mere practitioner of foreign policy, not an academic, I do not dare to venture to address change in Europe from any other than the Finnish point of view. Let me just quote the former Foreign Minister of your northern neighbour, Poland, Mr. Bronislaw Geremek, who was asked in a French television interview, after the European Conference in Sochaux last November, how he thought Europe looked from the point of view of an applicant country, a somewhat misguided question, I might suggest, since France and Poland have been important members of Europe for centuries. Mr. Geremek replied: "It looks like Tarzan. It is handsome and it is strong but it has problems in communication."

During the month that has passed since the Nice Summit an abundance of judgements have been pronounced, victors declared and losers identified. France, the country of the Presidency, has been criticized to the point that president Chirac said in an interview "je suis l'unique victime en permanence (I am a unique and permanent victim)". Criticism is not surprising; it is part of public diplomacy in the age of television.

Yet, post-Nice judgements deserve a fundamental analysis because the objectives were set high and they included clearing the way for EU enlargement and making the Union's decision-making procedures fit for it, ambitious objectives as any.

We Finns are among those who were somewhat disappointed, not at the result as such - the Summit did clear the way for enlargement of the Union - but because it missed a number of opportunities to improve the way it functions. This may have to do with the fact that Finland, a country of engineers and problem-solvers, shares a Lutheran work ethic and would have liked - accordingly - to solve a maximum number of problems.

On a more serious note, our fundamental EU philosophy is based on active and constructive engagement in European affairs. For this one needs a vision, and a policy to go with it. Our policy remains that while in the short term many things can be improved within the existing structures, in the longer term the Union needs reforms which will enable it to deepen and enlarge at the same time. For that purpose the EU needs a vision that includes the improvement of its decision-making capacity by dramatically enlarging the area where qualified majority voting is applied, the definition of new rules for pooling sovereignty on a supranational level, and the demarcation of competences between the Union and its Member states.

Brussels jargon has long exposed the difficulty of blending the simultaneous deepening and widening of the European Union. Among the more visible products of recent deepening of European integration are EMU and the soon-to-be-launched euro, which represents by far the most important step in the pooling of sovereignty. The common foreign and security policy, where headline goals were defined and commitments were made accordingly in the course of the last year, is another. Despite the deficiencies of the Nice Summit - or perhaps because of them - deepening remains a very concrete issue for the years to come, if the EU were to develop into an important player in all aspects of its external relations.

Closer cooperation, in other words flexibility, remains important too, for deeper integration. From the perspective of small nations, the challenges are to make flexibility appealing inside rather than outside the Union and to make closer cooperation open to all governments willing and able to pursue deeper integration.

As far as enlargement goes, the Nice Summit cleared the way. The necessary institutional reforms for the inclusion of new members were decided upon. All member states continue to have their own commissioner in the Commission. This applies to the new member states as well, a factor which we considered particularly important from the point of view of legitimacy. When the number of member states exceeds 27, a system based on rotation will be adopted. The role of the President of the Commission will be strengthened. In the Council, the weighting of votes was changed and the votes of the applicant countries were determined. In our opinion, the end result is satisfactory although not optimal. From the point of view of an enlarged Union, an efficient decision-making system is vital. In an enlarged Union, the unanimity requirement, which still applies to many issues, would make decision-making on those issues very difficult. That is why perhaps the most important goal for Finland in Nice was to extend qualified majority voting to new areas. In this respect, the results in Nice were clearly disappointing, since of the politically important areas progress was made only in the trade sector. As a whole the Nice results are a mixed bag and it will take some time to make a final analysis of the state of the Union after Nice. But Nice was a success judged against the most important criterion, which is, of course, making the Union ready for enlargement.

Thus, the European Union should be ready when the first window for enlargement opens. It goes without saying that enlargement is not a matter of declaration. It remains a two-way commitment, a commitment to transition on the part of the applicants and a commitment to support this transition on the part of the EU and its member states. And, the Copenhagen qualifications are written with great clarity. Finland insists on differentiation; individual performance must be rewarded. Under this concept Hungary should do well.

But Europe's change is not only about political reform of the Union. Europe's development will be decided far into the future by two contrasting processes at play. Former Western Europe is reaching toward the East in its pursuit of bigger units and coalitions needed to achieve its geopolitical and economic objectives. In contrast, former large units in Eastern Europe, in particular the Soviet Union, Yugoslavia and Czechoslovakia, have together split into some twenty separate states on the map of Europe. Both processes underline the strategic importance of EU enlargement.

One consequence of the eastern disintegration is that Russia has become a more western and northern nation than its predecessor, the Soviet Union, ever was. Close to half of its exports go to the area of the European Union and a major part of that transits Finland and the Baltic states, creating an interdependence of interests. The Union's common border with Russia, which is currently the eastern border of Finland, will be considerably extended when enlargement materializes, offering opportunities and challenges alike.

Russia's political leaders have grasped the challenge of making the country stable and prosperous, and competitive in Europe and elsewhere. But the practical task is huge, involving parallel reforms in sectors such as human rights, the rule of law, the economy and democracy. Russia definitely knows the general direction of the goal but present trends in development go at different speeds, often in a variety of directions, and sometimes they contradict each other. Elections are routine, but officials keep being appointed to oversee elected leaders. Economic growth is rapid but poverty is unbeaten. Civil society develops apace but attempts are being made to curb the freedom of the press.

The Union and the United States seem to be perplexed by this diffuse picture. At times it has seemed as if the policy objective was just to avoid the worst possible scenario, yet long-term common interests obviously lie in offering a solid basis for a strategic approach. Issues such as energy, the safe production of nuclear power and prevention of pollution, crime and illnesses are on the Russian, regional, European and even global agendas.

Another key feature of change in Europe is that the old familiar figure of cold-war jeopardy grew, in the course of the 1990s, several new heads. Sometimes he appeared as the greenhouse effect, sometimes as the threat of a nuclear power plant disaster, sometimes as over-population or immigration or epidemics or drugs or crime, sometimes as the multiplication of ethnic conflicts. What these problems have in common is that they ignore borders, they are not limited to Europe and they do not merely affect the security of whole nations but also the sense of security of the individual. It often seems that the darkest hour is not the one just before dawn.

If developments continue down this path, then alienation of the people, already visible in opinion polls in many parts of Europe, including Finland, may question the relevance of the EU.

This issue cannot be solved with a top-down approach, with messages from Summits. European cooperation must be sufficiently attractive for the voter from the point of view of equal opportunities, non-discrimination and basic rights, in order to create a feeling in people's minds that the European Union makes a difference. If not, Europe and its citizens may go in different directions, while Europe seeks answers to new challenges through regional integration and, when even that course does not always seem adequate, a significant part of the electorate still wishes to live as before, in a homogeneous, clearly profiled nation-state led by its own government.

Thirdly, the time when Europe's big challenges could be dealt with in an insular fashion is over. Not even security questions can be treated in isolation. This became abundantly clear when the Union decided to continue its integration from the single market and European Monetary Union into the field of foreign policy and security, which traditionally belong to the domain of national decision making. Challenges affecting European security are no longer restricted to Europe, but the fact remains that resources for crisis management are limited and therefore there is no political or practical need for parallel efforts in NATO and in the EU.

Moreover, globalisation manifests itself on a screen larger than Europe. For those who get to reap the benefits of international investments the possibilities seem boundless. But those left on the sidelines feel that the exercise of power is slipping away into the invisible hands of the market forces. The benefits glitter on the horizon but the minuses of inequality and unemployment remain a burden in many lives. Transition and adaptation to the new requirements are challenges for everybody. For the applicants, adaptation to membership of the EU is the first step.

Now, a few words about information technology. In the political perspective technology has lifted the control of information out of the hands of politicians. It has been a factor in the break-up of states and it continues to cause a variety of surprises for intergovernmental politics. To the public it offers an increasingly efficient channel to air their opinions and increase their influence on international processes.

From the economic perspective, information technology offers yet unseen ways of improving efficiency. The capability of storing and forwarding information doubles every two years, and thus grows tenfold in five years. The national economies and enterprises that are able to hook themselves on to development in the fast lane will fare well, while others will lag behind.

Finland has done well in the last six or seven years precisely for that reason and the Government made its contribution by adopting a policy, fifteen years ago, aimed at tripling the share of research and development in the GNP. We reached that goal and now top the world, with Japan, in the ratio of R&D to GNP, or if the proportion of researchers in the work force is used as another yardstick. The result is visible. Nokia's share of the stock market in Helsinki is over fifty percent, its share of exports is more than 20 percent and its market capitalization value is bigger that the Finnish GNP. This is not an advertisement for Nokia; it is an example of what you can do in a fairly short time by putting your act together in a way that enables you to stay in the fast lane of development. I am talking now about real production, not the internet economy.

Finally, a few words about the European Union's external relations. The Union has been called an economic giant and a political dwarf. But in the age of globalisation such a description is simply not plausible; it is too hard to separate one field of external relations from another. One should rather speak of developing the external activities of the EU in a horizontal fashion. In the world of high politics, where big words are used, there have been calls for developing the Union into a superpower in international relations.

For a starter we could re-establish, for instance, the Union's old position as a central player in the world of trade negotiations. When trade was simply trade in merchandise the Union had a central role. Now that a major part of trade is in the field of services, where the Community does not have exclusive competence, the old position is gone. Or, we could find a permanent solution for the external representation of the euro. The euro will soon be in our pockets. It has, I believe, created a vast and stable new financial market of which the proof is a rapidly increasing two-way investment flow across the Atlantic. Or, the EU could coordinate and put together a research and development policy to improve its position vis-à-vis its main competitors, namely the United States and Japan.

Enlargement, the European strategy for Europe, should proceed smoothly. Now that the political dividing line is gone, it is the way to unify the continent.

Thank you.