The small Scandinavian country of 5.5 million people was once seen as a bastion of stability, unity and neutrality. A kind of frosty Santa Claus country. Only the cold remains today.
Nine candidates ran for president of Finland in January. Conservative former Prime Minister Alexander Stubbe (55) led the first round with 27% of the vote, followed by Pekka Haavisto (65), Finland’s top diplomat from 2019 to 2023, in second place with 26%. It became. Sunday’s final race was between the two, with polls showing Stubb leading (54%) and Harvist second (46%).
presidential rival
Pekka Herbist Alexander Stubb
Source: Wikimedia Commons
Haavisto, a Green League politician, ran twice for president against conservative Sauli Niinistö. Despite the failures, his wide support has steadily increased, especially among Finnish youth and women. Finland’s top diplomat, who is openly gay, has represented the United Nations on multiple missions and in many hot spots since 1999. He seeks consensus, is considered very knowledgeable, and enjoys great respect among Finns.
Haavisto is likely to receive significant support from the Social Democratic Party, the Left Alliance, and the Center Party. But it will take more than that to win. His constituency is not as strong as Mr Stubb’s, as the country leans towards the far right. The Conservative Party (KOK) star has risen rapidly since 2008, holding various cabinet posts and becoming prime minister in 2014. Until his controversial conservative policies reduced his popularity. He returned to the presidential campaign after working in the EU office. However, there are holes in his track record. Repeated allegations of favoritism, embarrassing gaffes, personal promotion allegations, and conservative secretive NATO process (see https://worldfinancialreview.com/making-or-breaking-finlands-future-a-behind- ) Finland sees the facade after the 2024 elections/)
As tensions between Finland, currently a NATO member state, and its borders increase, Mr. Stubbe calls for neoliberal structural reforms and a NATO policy that allows nuclear weapons on Finnish territory in the name of “security.” He promoted himself as the president. He sells himself as a “unifying force,” but his collaboration with his party and the far right has dramatically divided the country.
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time economist When asked “Which economy did best in 2023?” Finland ranked at the bottom of a comparison of 35 countries. S&P Global Ratings praises Finland’s “energy diversification away from Russia,” but expects Finland’s economic activity to remain “nearly flat” and not recover until 2026.
Prime Minister Petteri Orpo’s cabinet is dominated by conservative and far-right Finns, joined by a small Swedish party and the Christian Democrats. As soon as the movement began, political turmoil ensued. Initially, far-right Economics Minister Wilhelm Junila was arrested for comments suggesting “climate change abortion” in “underdeveloped Africa.” His successor is embroiled in a sexual harassment scandal and has sent racist messages calling Arabs “desert monkeys” and calling Jews names “we Nazis don’t like very much” and “kids.” Will Rydeman, a far-right man who had been texting, took office.
Last summer, far-right ministers Mari Rantanen (Minister of the Interior), Minister Leena Meri (Minister of Justice), Minister Ville Tabio (Minister of Foreign Trade), and Minister Rikka Pullula (Deputy Minister of Finance and Prime Minister) made a public appearance in parliament and on social media. Things got even worse when the media discovered that he had proposed: In recent years, Finns have been demographically replaced by “dark Muslims” due to large-scale immigration.
This racist debacle was deeply embarrassing to most Finns, including many conservatives. But the latter requires the far right to govern. By the fall of 2023, conservative Foreign Minister Elina Valtonen, whose campaign finances feature big donors who also bankrolled Mr. Stubb, said the Nordic countries’ “EU membership is similar to a racist fiasco.” “We are equally concerned about Finland’s economic growth.”
But there was something even worse to come.
Labor turmoil, economic decline
As the cabinet struggled for credibility and tried to contain reality, its support dwindled to just 24% of Finns and mass strikes ensued. Workers rejected a central collective bargaining agreement, protested the government’s plans to limit the right to strike, and cut unemployment benefits. After the Christmas Armistice, around 290,000 Finnish workers (every 8 adult employees) went on a two-day strike against the Cabinet’s labor reforms and social welfare cuts. Instead of negotiating a settlement, government ministers referred to trade unions as “the mafia”, as they did in Finland’s dark 1930s.
Mr Stubb’s campaign, on the other hand, shrewdly distanced itself from the policies of the Olupo cabinet, which in 2015 simply implemented the “structural reforms, structural reforms and more structural reforms” that he himself called for.
Before the 2008 financial crisis and subsequent debt crisis, Finland’s competitiveness and innovation remained world-class. Nokia benefited greatly from Finland’s political neutrality and strong position in a fast-growing emerging market.Unlike all rivals, the company earned more than 99% of its revenue outside home base.
Currently, Finland is no longer in the top 10 most competitive economies. Spending on innovation is penalized. Nokia was weakened by former Microsoft executives and a restructuring that effectively dismantled the company, and Microsoft eventually bought what was left. At the same time, Finland’s trade surplus turned into a deficit.
In Finland, the expected strong post-COVID-19 recovery has been further undermined by long-standing structural challenges as well as the knock-on effects of Russia’s invasion of Ukraine. Rising energy prices have spilled over into core prices, sustaining inflation. Wage growth remained modest, but public sector pressure led to strikes.
The economic situation is dire, reflecting an aging population and low productivity growth. Moreover, steadily expanding budget deficits are likely to push public debt in a more dangerous direction. This unfavorable trend is further exacerbated by increased “security-related” spending (increased military spending) due to NATO membership, and this is likely to continue in the medium term.
Ten years ago, Finland depended on Russia for 18% of its imports and 10% of its exports. One dependency is currently being replaced by another. While Russian imports plummeted and exports to Russia decreased, imports from the United States increased by about 50% in relative terms, and exports to the United States increased by 30%.
Rising military costs
Military dependence on the United States is likely to increase further. Finland’s 2024 budget estimates defense spending at approximately 6.2 billion euros (6.6 billion U.S. dollars). From 2023, it will increase by nearly 5%. In the past, this country replenished its ICT exports. It is now focused on replenishing weapons and securing Russia’s borders, which were relatively quiet before joining NATO.
Dependence on the United States is increasing rapidly through progressive militarization. During the Cold War, Finland sought to balance aircraft purchases between Eastern, Western, and domestic producers. The relationship with the United States began in the 1990s when McDonnell Douglas purchased American-made F/A-18C/D Hornets at a high price. Finland’s F-35 program began in 2021 with an order for 64 F-35A fighter jets from Lockheed Martin.
This contract is Finland’s largest ever. Despite growing criticism in the United States and abroad over the F-35 program’s unprecedented size, complexity, ballooning costs, and delivery delays, it was deemed “necessary.” Finland spent about $3.9 billion on defense in her 2020. In just three years this figure has increased by almost 70% for her.
The problem is that while expenses are rapidly increasing, income is slow to rise. Finland’s GDP is expected to increase by 0.1% in 2023 and 0.8% in 2024.
Unsustainable current situation
In the 2024 election, the Haaviists based themselves on democracy, green values, and ordinary people. Stubb relied on elite ties and far-right currents. Harvist represented the future. Stubb is in the past, but he has a lot of money and a lot of media.
With an aging population and slowing growth, Finland needs to increase investments in social security, welfare services, economic growth and innovation, and sustainability. Internationally, the country should focus on broader cooperation, especially with the Global South, to benefit from its long-term economic potential.
But joining NATO will require increased militarization for years to come. And internationally, this has forced the country to remain more euro-centric and perhaps even distance itself from some emerging economic powers for geopolitical reasons. At the same time, the welfare state is under attack from far-right governments, and income and wealth polarization is widening.
Something has to be done.
Full disclosure: Dr. Steinbock has worked in the past, advised, and consulted with all major multinational companies, government agencies, parliamentary committees, financial institutions, and competitiveness and innovation organizations in Finland.
Author’s Note: The original complete version was published by The World Financial Review on February 8, 2024. See https://worldfinancialreview.com/making-or-breaking-finlands-future-a-behind-the-facade-look-. Finland after the 2024 elections/