Speech by Mr Jukka Valtasaari, Secretary of State: "Remarks at the Mid-year Assessment of the Trans-Atlantic Policy Network, Common Interests shared by the USA, the EU and Russia", Firenze 28-30 March 1999

Venue: the Mid-year Assessment of the Trans-Atlantic Policy Network, Firenze 28-30 March 1999

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

"Defining the common interests shared by the USA, the EU and Russia - from avoiding the worst to achieving the best"

This presentation tries to make the point, natural for a small country, that defining the common interest in terms of the promotion of practical cooperation is often the first test of a successful foreign policy.

Foreign policy that fails the test may lead to disastrous consequences. We Finns experienced this during the Second World War. Today, in the Western Balkans and in many other regions of the world this lesson is being learned the hard way.

Defining the common interest is difficult in the new world of openness and globalization, where engagement and cooperation replace isolation and protectionism, and where a growing number of actors are formulating their policies anew in an environment in which narrow national interests conflict with requirements of international competitiveness. The recent crises in many Asian and Latin American countries are good examples.

As always, things seemed simpler in the past. The American philosopher Yogi Berra says, " The future ain´t what it used to be." During the Cold War, the stakes were awesome, but there was an equally overwhelming interest shared by the two superpowers, and certainly by Europe in the middle, to avoid a nuclear holocaust, and to combat proliferation of weapons of mass destruction. Trade and other forms of economic exchange played a minor role, as investments barely crossed the Iron Curtain.

Today, with only the United States in the superpower category, with Russia redefining the terms of its new international engagement, and with Europe becoming increasingly synonymous with the European Union, the shared interest of the EU, the USA and Russia are still to a large extent perceived in terms of avoiding the worst. But "the worst" has changed. Instead of the already familiar, mutually assured destruction, the "worst case scenario" now offers a multitude of disparate dangers: new Chernobyls, transborder pollution, garage sales of nuclear weapon designs, epidemics of HIV, tuberculosis, diphtheria, organised crime, traffic in drugs and people. Most of these issues require a global approach to enable the implementation of effective regional and local measures.

How to define the shared interest in these circumstances?

We do not have to start from scratch. The money already lent to Russia measures common interest. Since 1992 the IMF has allocated over 18 billion dollars, the World Bank has lent 11 billion, the EBRD has lent and invested 3.5 billion euros, and the TACIS programme of the EU has spent 2 billion euros on technical assistance.

These commitments should be compared with those made in response to the Asian and the Latin American crises in the late 1990´s. The allocations of the IMF and the World Bank to Indonesia amounted to 21 billion dollars and to Brazil 24 billion. The commitments by the entire international community to Indonesia and to Brazil were over 42 billion dollars for each.

Currency fluctuations make GDP comparison difficult, therefore it is more illustrative to show the amount of assistance per capita. The figures are surprisingly similar: 230 USD per each Russian, 214 USD per each Indonesian and 260 USD per each Brazilian.

Fred Hiatt wrote in the Washington Post recently that Russia´s potential influence is perceived mostly in negative terms, the world is scared of the consequences of its disorganisation. Three quarters of the United States´ bilateral assistance to Russia are devoted to programs reducing the nuclear threat and the proliferation of weapons of mass destruction.

There is no doubt that avoiding the worst will remain a central task for years to come. But at some point in time the longer term requirements and the potential of Russia need to be addressed as well.

Here are a few examples of what is being done already.

In Finland, we have focused on identifying interests common to Russia, Europe and the world, say, fifteen years down the line. The first candidate is energy, in particular natural gas. Russia´s reserves are huge, Europe´s demand is growing fast. If it is not met by supply, the global equation might shake as well.

Assistance programs by Governments, think tanks, and the IFIs have addressed the issue of a civil society based on the rule of law in Russia, a declared objective of the Primakov government. Methods include conditionality in programs of financial and technical assistance.

Senator Lugar, one of the co-authors of post-Soviet nuclear clean-up programme, proposes now to use international funds for the training of 10,000 MBAs and 10,000 CPAs in order to make it possible for Russia to better manage its economy in a global and competitive world.

This approach has made its way to European institutions, albeit slowly. The Vienna Summit of the EU decided in December 1998 to draft a common strategy on Russia and to adopt the Northern Dimension as a policy matter for the EU.

To be successful, the strategy must be a concrete roadmap defining specific objectives and realistic means to reach them. It must also ensure coherence and coordinate better the policies and programs of member states´ and the Union vis-à-vis Russia. The goal is to adopt the strategy at the Cologne Summit in June 1999 and to start its implementation immediately thereafter in the complicated Russian reality.

In these efforts we Finns give a special place to the "Northern Dimension of the EU". The concept is based on the following. First, with the accession of Finland and Sweden, the EU acquired a new dimension reaching far into the north, and thereby a common border with Russia. Second, in Europe, the West extends toward the East and Russia, compared to the Soviet Union to the West. Third, nearly half of Russia´s export transit routes are in the Baltic Sea area, and fourth, Russian raw materials are in the north.

Identifying the shared long-term interest in the correlation of these four factors is an opportunity, if not a necessity. It is certainly not difficult. Implementation is a different story. In the name of realism, we must recognize that the West will be able to influence Russian developments only to a limited degree. Lending public money to the Russian government is no answer to the country´s basic economic woes. Private and public investment in industrial infrastructure is.

To succeed, Russia must first improve its investment climate. The necessary legislative framework must be implemented in a transparent way. Assisting Russia in drafting legislation which corresponds to international practice is a clear priority. If domestic funds were abundant this would matter less, but the industrial disinvestment in Russia has been truly stunning. Two figures tell the story. In 1990, 30% of the industrial capital stock was younger than 5 years. Now the figure is near zero. Soon there will be hardly any capital stock younger than 10 years...

The European Union is already Russia´s main trading partner. With the eastward enlargement of the Union, their common border becomes longer. Opportunities for interaction will grow. Sectors with the greatest potential include natural gas and oil. Their major markets are in Europe, where demand grows, and domestic production contracts and the Kyoto standards emphasize the growing importance of natural gas in the global energy balance.

Moreover, when speaking about the Kyoto standards and sustainability of the global ecosystem, Russia´s huge forests, two thirds of the European total, have a crucial role in binding carbon dioxide and in providing raw material for industry.

Apart from the objectives of nation building, a whole range of acute issues of common concern have to be tackled. I might mention the following problems, which Russia´s and our own citizens would like to see solved. Ageing nuclear power stations and the lack of resources at these utilities result in growing risks of leaks and other accidents. There will be no money to replace all unreliable reactors. Some of them will reach the end of their lifetime within 10 years. Others will continue to operate longer. They have to be made safer.

Lack of funds hinders environmental investments. For example, St. Petersburg is by far the biggest polluter of the Baltic Sea. The far northern seas are threatened by nuclear waste in Murmansk and elsewhere. The environment is an immediate shared interest in the region and beyond.

The opening of borders and the free movement of people helped to end the Cold War and dismantle totalitarian regimes. But these developments also made transborder crime and money laundering two growing problems. Russia has become one of the main transit routes for drugs entering Europe.

Russian health problems are highlighted not only by the historically unique decline in male life expectancy but also by epidemics. Tuberculosis is already a serious problem, particularly in jails and among the poor. HIV infections are rapidly increasing.

There is no shortage of institutional structures for cooperation with Russia. The EU has an Agreement on Partnership and Cooperation, which stipulates summit meetings twice a year. There is cooperation between ministers, officials and parliamentarians and others. In US-Russian relations there are, for instance, summits, ministerial meetings and the Gore-Primakov commission. In the new transatlantic agenda, the EU and the US have set as priorities in relations with Russia nuclear safety, the environment and health.

A lot of valuable work has been accomplished by these bilateral institutions. Yet a justified question is, would not some of these shared concerns be better addressed if all three parties concerned sat at the same table? Since 1995, when Finland´s President Martti Ahtisaari suggested that a trilateral summit be arranged, we Finns have tried to advance a tripartite dialogue to complement the panoply of bilateral ones.

So far we have not achieved great success but we still think that energy, nuclear safety, the environment, crime prevention as well as trafficking in drugs and people are good candidates for a trilateral approach.

What is the value-added of Finland, a small international actor, in the approach to Russia? In my view it is the experience we have gained from living as Russia´s next door neighbour for centuries. With shifting alliances and boundaries, we got to know our neighbours both as enemies and friends, as rivals and partners, as a nation under various flags, as collectives and as very individual human beings. For a good part of the Cold War we were pitied for our predicament. Now, in the atmosphere of increased openness, this accumulated experience, to which some three thousand companies active in Russian business are adding their contribution, is again in demand. But our border remains one of the most striking socio-economic fault lines in the world, a border where income differences between the two sides are maybe ten times larger than those between Mexico and the United States or those between Hongkong and Shenzen. A nurse or a teacher in Finland earns 60 times more than his or her colleague on the Russian side of the border.

Thus, work remains to be done. We like to think that the job is more than a Finnish responsibility - or a Finnish opportunity. It is a challenge that calls for a comprehensive and concerted response.