Finland’s trade minister says he hopes his country can withstand the populist, anti-trade backlash sweeping the world, which represents a particular threat to small, open economies.
On a trade mission to Abu Dhabi to drum up business for Finnish companies during Sustainability Week, foreign trade and development minister Kai Mykkanen said Finland is slowly beginning to recover from the economic battering it has taken since the financial crash, but it still faces threats on a number of fronts.
“Something we are very scared of is this rhetoric, this new kind of protectionism. It is a major threat,” he said.
The sense of unease in Finland, which is the only Nordic European Union member that is also in the euro zone, is greater than it has been since the days of the Soviet Union, when Finland overcame many hurdles to develop a modern economy comparable to the Nordic model of its western neighbour, Sweden, the minister said.
“With the talk in Finland, or Britain, the United States, or Europe, you wonder if nowadays we would be able to do what we were able to do then; people seem to lack the vision,” he said.
“When meeting the leadership here in the UAE, they said they are afraid about the situation in Europe too,” he said.
Finland’s economy has had a torrid time since the financial crisis, with a sharp plunge in 2009 followed by declining GDP in four of the six subsequent years.
It was uniquely hit by the collapse of Nokia, the pioneering 1990s mobile phone maker that at one point accounted for a quarter of Finland’s economic growth, but failed to keep pace with smartphone technology and is a shell of its former self.
Mr Mykkanen said a reflection of that is trade with the UAE when Nokia was riding high, 15 years ago, was about €1 billion (Dh3.88bn), but trade now runs at about €450 million a year.
Finland has more recently been hit by the stalling economy of Russia, its oil-dependent neighbour.
“Russia is much more of an oil state than, say, the UAE, and Finnish exports to Russia halved with the oil price slump,” Mr Mykkanen said. But at the same time they have risen to the US, which now surpasses Russia and is Finland’s third-largest trading partner.
“That is remarkable when you think about the geography, the history,” said the trade minister. But now with the election of Donald Trump as US president and his threats to free trade, there is a new risk.
“Maybe it makes it a bit easier with Trump that most Finnish brands are business-to-business products, not like BMW or something that he says in interviews that he wants to slap a tariff on,” Mr Mykkanen said.
But Finland’s embrace of globalisation and its membership of the EU and euro zone are at most threat from within, with the rise of populist political movements that have threatened to seek Finland’s exit from the euro and from the EU altogether.
Mr Mykkanen said he hopes the main threat has been neutralised by bringing the fast-rising anti-EU Finns Party into the coalition two years ago, when the Centre Party formed a government with his own National Coalition Party.
“Definitely, we have problems, especially with the so-called ‘inner devaluation’ and lower salaries and [government spending],” he said. Unemployment still stands at a stubborn 10 per cent and is not likely to be helped even by rising exports.
“Obviously, if the French or Italian elections lead to a situation where the basis of the euro zone or its rules are so much shaken, if Germany loses its belief in the euro, then Finland would have to reconsider,” he said.
For now the country is weathering the storm, but the next big test will be elections in 2019, he said.
amcauley@thenational.ae
Follow The National's Business section on Twitter
