back to >>> PUBLISHED

From: NZZ (Switzerland)
Translation by NZZ June 7, 2002 / First published in German, May 29, 2002

Finland: Self-Confident and  Successful
Farewell to the Role of Underdog

By: Wolfgang Matl

Finland has changed greatly in the past decade. Its
self-confidence has grown since the Soviet Union
disappeared. Discreet Finnish understatement has
won friends in the EU. The country is justly proud of
its economic development; it is now ranked as
number one worldwide in competitiveness.

Never before has Helsinki radiated such self-
confidence and satisfaction. There are new public
buildings on every hand, architecturally excellent and
beautifully integrated into the city. The Esplanade is a
top location for upscale shops. The shops were there
before too   just as modern architecture has long
been a Finnish hallmark   but these days everything
seems to shine even more. Even the cuisine has
improved. Formerly, Russian restaurants serving bear
paws (more exotic than delicious) were the principal
culinary draw for tourists. But these days chefs no
longer hesitate to serve up traditional Finnish dishes.
The favorite dish of the famous president and
wartime general, Marshal Mannerheim, receives first-
class treatment in the Restaurant Elite, where good
local works of modern art hang on the walls, dating
from the days when artists who were the restaurant's
regulars would often settle their accumulated bills
with a painting.

Number One Worldwide
"We have modernized more than any other country."
Thoughtfully, Paavo Lipponen sums up. The rest of
the world may be in a big hurry, but he is not. He's a
Finn. He is also Finland's prime minister, so he sets
the pace himself. Speaking to a foreign journalist
(me), he takes the time to explain just what is behind
the rapid economic and political upturn which has
turned things upside-down in Finland in the past
decade. Before the collapse of the Communist bloc,
the country had to be cautious in its dealings with its
powerful neighbor to the east; Moscow had no
compunction about throwing its weight around.
Finland's "compensation transactions" with the USSR
constituted a good part of its foreign trade back then,
and conventional market principles played little part
in it.

The disintegration of the East bloc thus confronted
Finland with a radical shift, politically and
economically. Numerous bankruptcies, a banking
crisis and a welfare system undermined by a declining
tax base, made political and economic changes
necessary. Today it looks as though the country did
everything right. The World Economic Forum has
ranked Finland in first place worldwide as far as
competitiveness is concerned. According to the
organization's annual study, this is the country that
can expect the best economic growth in the next five

Wood and Paper Still Important
Not so long ago, the Finnish economy was heavily
dependent on raw materials, dominated by wood and
paper, supplemented by companies that produced
machinery for processing those basic products. And
Nokia? These days, it may come as a surprise to
many people, but in a good many Swedish and
Finnish garages you can still find old auto tires and
rubber boots lying around bearing that brand name.
By the early 1990s, however, Nokia had already
moved into a new phase of its corporate history and
was losing money hand over fist turning out TV sets
and hi-fi equipment.

Then a new managing director, a man who seemed a
bit too sophisticated for Finnish tastes and so was not
quite trusted by some people at first, got the green
light from his board of directors for a golden strategic
decision that was to change Finland from the ground
up: production of GSM-based mobile telephones.
Today Nokia dominates the world market for cell
phones, as it has done for years, and Jorma Ollila is
one of the world's most highly regarded corporate
managers. Prime Minister Lipponen still praises him
for having been cautious in expanding his successful
enterprise and, given the burgeoning demand, not
having allowed his work force to grow

Nokia now accounts for 25 percent of Finland's total
exports, and the country is being warned not to fall
back into excessively one-sided dependence. But
Finland's timber industry has kept up with the times
as well, and numerous acquisitions have radically
restructured the corporate landscape. Having bought
up America's Consolidated Papers, Stora Enso is now
the world's second-largest producer of paper and
cardboard, and UPM-Kymmene is just behind it in
third place. Fifteen years ago, the largest Finnish
firms in this industry ranked between 40th and 50th.

A Higher Political Profile?
First came devaluations, then increased efficiency and
a tightening of the national budget, until a surplus
was achieved   all of it accompanied by good
cooperation between labor and management. Without
haste or hesitation, Prime Minister Lipponen
enumerates the ingredients of his country's success.
In retrospect it all sounds simple. These things, he
says, are also the hallmarks of modern social-
democratic policy. Talk of a "third way" has long
since died out, he notes. A sound budget and stability
are the essential prerequisites for financing the
welfare state.

Lipponen does not talk fast, which may have brought
him a reputation for ponderousness. But no one can
deny his success. Few Finnish politicians could make
a career in the entertainment industry. Lipponen's
sense of humor is certainly too dry and just a trace
too intelligent. In conversation he does not open up
easily, but he enjoys making his points with quiet
emphasis, underscored with a laugh at the right
moment. This is probably what it takes for a man to
serve for years at the head of a five-party coalition
which is internally peaceful yet ranges all the way
from conservatives to left-wing socialists.
In his own way, Lipponen gets across what he wants
to. Finland, he says, should play a modest but
appropriate role. He denies that Helsinki has lately
opted for a stronger political profile within the EU.
For all its success, his country must remain realistic,
he says, and bear in mind that it lies on the periphery
of Europe. At the same time, it does not want to be
overlooked. Lipponen feels that too much integration
is harmful to small countries. On numerous occasions
he has protested against the big EU member nations
acting like a "club within the club" and has thus
gained a reputation as a spokesman for the smaller
EU states.

Clear Ideas About the EU's Future
It is inappropriate, says Lipponen, for a few larger
countries to regard themselves as privileged. The EU
needs clear principles. At a minimum, the basic EU
treaties need to be restructured so that the
institutional elements can be more clearly separated.
The Finnish prime minister favors a decision-making
apparatus based on a double majority, a kind of
bicameral legislature. This would include the
European Parliament as it is now, with seats on the
basis of each country's population, and in addition
there would be a Council of Nations in which each
country would have one vote. The European
Commission, serving as the cabinet, would be
responsible to this bicameral legislature, as most
European national governments are today.
Who would have thought a mere 10 years ago that
Finland would be openly discussing the possibility of
NATO membership? But Lipponen points out that
NATO today is simply a crisis-management
organization, and the Europeans have needed NATO
when faced with major challenges. Today, he adds,
everyone is on the same side: against terrorism and
for crisis management. So the question of Finnish
membership in NATO is not really so dramatic, he
says; on the other hand, there is no rush about it

Today Finland invests 3.6 percent of its gross
national product in research and development. Old
ideological blinkers have been laid aside, and its
government, private enterprise and universities live in
symbiotic harmony. The system aims at producing
competent personnel for modern companies. As is the
case everywhere, in Finland too those cities that have
outstanding educational facilities attract the
companies that make up the new, dominant industries
of Northern Europe: electronics, information
technology and biotechnology. In the city of
Tampere, the university has 10,000 students, and
another 4,000 study at the Technical Institute. Nokia
is the chief employer, with 3,000 workers.
Production goes on elsewhere; Tampere is the place
for research and development. The city is a former
textile center   since the early 20th century it has
borne the nickname "Manse," a Finnish abbreviation
for Manchester   and Lipponen's grandmother once
worked at a loom in one of its mills.

The Manchester of Finland
Finland's third largest city has kept its image as a
free-enterprise, arch-capitalist textile metropolis not
only as a historical relic; for as long as anyone can
remember its municipal government has been run by a
Conservative-dominated coalition which has always
included the Social Democrats   an alliance forged in
the early 20th century with an eye on the common
Communist enemy. To seal the parallel with
England's Manchester, the city's soccer team, which
won the national championship in 2001, is called
Tampere United.

Tampere's two sections, one on each bank of the
Tammerkoski River, are named after the industrial
firms that once dominated in each: the "Finlayson
side" to the west, the "Tampella side" to the east. In
its heyday, the industrial quarter covered a square
kilometer. Situated in the center of the downtown
district, it has been renovated with remarkable skill,
with planners and architects adapting the red-brick
buildings to the needs of modern enterprises.
Finland's second-largest newspaper, "Aamulehti,"
recently moved into new quarters in one of the
renovated old factory buildings, whose huge, friendly,
open spaces facilitate a flexible division of work
areas. With Tampere's population at only 200,000,
the conservative regional daily has a circulation of
140,000 and something approaching a monopoly.
One of the paper's main editors explains that
Tampere has the largest influx of new residents of
any city in Finland. New companies are sprouting
everywhere, especially in the IT industry. And to
keep the city's ordinary citizens from falling too far
behind the times, a bus called the Netmobile
circulates from place to place, carrying 12 computers
with which people can surf the Internet free of
charge, and knowledgeable personnel to help them do
so. The latest innovation combines Finnish custom
and modern technology: the "Internet-Sauna." This
gag was probably dreamed up less for the relief of
sweaty Internet surfers than to polish the city's image
as an IT center.

They Know the Russians Well
And what about Finland's much-discussed, erstwhile
dependence on the former Soviet Union? According
to the head of the Foreign Ministry's Department for
Trade with the East, even before the so-called
clearing trade with the East collapsed at the end of
the 1980s it amounted to less than 15 percent of the
country's total. Today, Finland remains an excellent
lookout post. A good many Japanese and American
companies conduct their Russian operations through
subsidiaries in Helsinki. People there know the
Russian mentality and the Russian market, and at the
same time have an effective Western infrastructure at
their disposal.

Politically, too, Finland has accumulated long and
diverse experience: first, centuries under Swedish and
Czarist Russian rule, then, soon after gaining its
independence in 1917, a kind of forced partnership
with German Nazis, and finally, an imposed
"friendship" via treaty with the Soviet Union. No
wonder Finnish politicians are accustomed to reading
between the lines and adjusting to complex

EU Membership: A Logical Step
The Finns have never questioned their membership in
the European Union. After the disintegration of the
East it seemed the only truly logical option, and also
one which they could choose completely on their
own. They quickly developed a mature attitude
toward the EU, according to Heidi Hautala, the very
successful EU deputy from Finland's Green Party.
Surveys show that Finns have become increasingly
critical of the Union, but without calling into question
their country's membership in it, as is frequently the
case with the Danes and Swedes. Finland's Greens
are also markedly different with regard to the EU
from their sister parties in the other Scandinavian
countries. Hautala, for example, would like to see a
European Federation, for which she takes
Switzerland as her model.

Within the EU, the Finns are a good deal more
popular than the Swedes, who also joined in 1995.
The latter are noted for the know-it-all attitude which
may come from their years of playing the Nordic "big
brother." Despite the EU's hierarchical structures,
rather typical of the more southerly parts of Europe,
the Finns manage to get along better; they are
masters at being unassuming, without relinquishing
their own distinctive ways. They have, however,
overcome the underdog role which they had formerly
cultivated for decades. The fact that the Finnish
textile firm Marimekko now produces men's fashions
may be new. But the idea that the bold Marimekko
shirts with their bright, broad stripes can actually be
worn with suits as everyday dress is self-confidently
demonstrated by Finnish EU officials who circulate in
the corridors of Brussels these days, making their
nattily spruced up Italian colleagues seem very old-