SPEECH BY PRESIDENT MARTTI AHTISAARI AT THE EUROKLUBI FIFTH ANNIVERSARY SEMINAR IN HELSINKI ON 10 April, 1995

FINLAND'S WAY IN AN INTEGRATING WORLD

When I was asked to appear as a speaker at this anniversary seminar, I was delighted to accept the invitation. During the historic changes that Finland has undergone in recent years, Euroklubi has had an important role in deconstructing prejudices and opening up perspectives on the future.

Five years ago, only few could have imagined that by the beginning of 1995 Finland would be a member of the European Community. Obstacles to presenting such an idea included not only the lingering residues of the Cold War, but also the stereotypes that had become deeply ingrained in Finnish minds over a period of five decades. We had to shake loose those shackles of the past, and in that we were helped by Euroklubi through its fresh approach to issues at stake. For that I extend my warmest felicitations.

The radical transformation of the international community that began in the closing years of the last decade is continuing. It is only with difficulty that we are beginning to discern its contours. All states have had to adjust to it, to make new assessments and to choose new means of pursuing their goals.

Finland's way through this transition has been favourable for the most part. Our position has been clarified and our security strengthened. Nothing seems to put our decisions into question. We continue on a road promoting partnership in security policy through conciliation and cooperation.

For the Finns, the foreign and security policy pursued has always been an exceptionally important cause of concern. That is a result of our history. It applies today as well. We consider it important that in these matters we offer the best expertise, sound judgment and a sense of purpose. During the Cold War, our policy of neutrality was one of the central factors in European stability and cooperation. Now, after the Cold War, we have set new goals and opted for more diversemeans of pursuing them.

The radical change that our era is witnessing springs from many factors, assessment of which only beginning. We are aware of many global security concerns: population growth, the state of the environment and unmanageable armed conflicts. On the other hand, we see many new opportunities: expansion of economic interaction, a reduction in ideological confrontation as well as transparency enhanced by global communications.

Today, as we stand on the threshold of a new millennium, great opportunities are within our reach. What is now demanded is the boldness to grasp them. However, relations between states are always also power relations, subject to constant changes and tensions.

President John F. Kennedy once noted that the economic and political integration of Europe was the greatest achievement of international politics in our era - the period from the end of the Second World War to the point at which the President was speaking. We know today that he saw the development correctly.

The sudden end of the Cold War opened up a new opportunity and new dimensions for the unification of the continent. It did not become a process connected with the future of Western Europe only, but instead we are now dealing with a historic change that impinges on the whole of Europe. We are on the way towards a more enduring state of European peace, in which military confrontation between states has been replaced by economic and political cooperation and market-based economic progress.

Change has been intense in Europe, although it has been even more frenzied elsewhere. Yet, the integration of our continent seems to be lagging a step behind. That is our concern. A solution to this problem must be found through a deepening of integration between the European Union and states closely associated with it.

Europe must be able to respond to the challenges of the world economy in a new, tougher climate of competition. At the same time we must act in a manner that does not pave the way to the formation of economic blocs. Even less desirable would be the emergence of new superpower configurations and the return of military competition.

I shall turn to Finland's international position and our objectives mainly in the light of two factors:

First, by examining the development of international security, and

secondly, by examining the position and role of the European Union.

In international politics we are in many respects living in a period of uncertainty that is permanent in character. An essential difference in comparison with earlier periods of history is that we now have many means of managing uncertainty. These means must be used, they must be developed.

It is regrettable that within the framework of OSCE cooperation there are still states and groups which use, in violation of agreed principles, military force to solve problems. Such resort to the use of force creates insecurity, not security. Violations of human rights are always at their highest level in a war.

Achieving a new security order in Europe has not been simple by any means. We have, nevertheless, created the foundation for a partnership, on the basis of which we should now proceed. It must be ensured that the new arrangements increase security rather than diminishing it.

For a long time into the future, developments in Russia will remain a central security concern for all European countries. The most pessimistic forecasts have remained unrealised and, to the annoyance of many pundits, it may well turn out that not a single one of their predictions come true as such.

In fact and despite many teething troubles, market economy has begun to function there. What will be of central importance from now on is that legislation creating a climate conducive to investment is put in place and that Russians' own investments return to the country. That would also be a signal for others.

What matters is that, all difficulties and setbacks notwithstanding, the reform process in Russia is supported and the country continues to have its positive role both in the international economy and in security arrangements. Without Russia these arrangements would be neither credible not viable.

Thus the development of arrangements that strengthen cooperation must be resolutely continued. New ideas and new methods must be presented. Likewise, the scope of cooperation must be broadened.

Many important plans for managing global uncertainty have been prepared. The most recent plan of this kind, the report on global governance of the commission headed by Prime Minister Ingvar Carlsson of Sweden, deserves attention. The report proposes the establishment, under the auspices of the UN, of an economic security council, which would strive to prevent and manage major crises in the international economy.

Likewise, it would be essential to study what the United Nations could do to ensure the resources and decision-making capability required for military crisis management. I have told the UN Secretary-General that, for example, General Colin Powell, the former chairman of the U.S. joint chiefs of staff, is a person well qualified to conduct such a study. Whoever is given the task, the recommendations thus made should be implemented in earnest. A window of opportunity exists for such a study. In this conjunction, the role and status of regional security arrangements like the OSCE - which are ever more important - in working out crisis-management tasks should be agreed upon on a more permanent basis.

For its part, Finland should study how we, as a UN member state, could increase our readiness to participate in international peacekeeping and crisis-management tasks. One possibility is to form an appropriately equipped standby unit within the Defence Forces.

Already during the Second World War, the perception that the political and economic integration of Europe was essential gained hold in both the countries that were losing and those that were winning. Indeed, the development that took place after the war proceeded at the pace set by economic integration. Political integration has often been a result of economic integration. The most ambitious plans for political integration have not been realised, but most of the steps on the road to economic integration have been taken.

The European Union's role as the engine driving the integration of the continent has now finally been established. As a result of the latest enlargement, the European Union is an entity embracing an increasing number of states. It must continue to be developed on this basis, although the position of France and Germany will remain central in the Union, not least for historical reasons.

In this decade, the Union should be able to establish a balance between economic and political integration. As a general rule in history, monetary unions have not been created without political unions. As we prepare for the 1996 intergovernmental conference, this need to create a balance should be kept carefully in mind.

I am certain that the members of the Union want to preserve the sovereignty of states: even when monetary union has been implemented, the multi-state Union will still be a new kind of community of independent states.

At the moment, the Union is being developed on the basis of three or four pillars developing of a different pace. This model is undoubtedly wise in the political sense, but over the long term it will not ensure the balanced development. This is a great challenge for researchers in the fields of political science and international law.

Indeed, it may be that the development of the institutions of the European Union is the biggest challenge facing the 1996 conference. Extensive political cooperation cannot be aimed at without developing the institutions of the Union.

The tragedy of former Yugoslavia resulted in part because of a failure to create sufficiently developed political and diplomatic cooperation between the Member States of the European Community - later the Union. Successful development of security policy cooperation in the Union calls for learning to walk before running: first the ability to work together in diplomacy, then improvement of military cooperation in the event of crises to be managed and controlled.

The most important security-building task of the European Union is linked most directly with enlargement, its ability to project stability.

Further enlargement of the Union will not be easy, either. That is because it will, in my view, be far more expensive to member states than predicted. Further enlargement is, nonetheless, inescapable, because a new economic and political division of Europe will cost even more in the longer run. It would also significantly weaken prospects for peaceful interaction.

The all-round development of the European Union requires reform of its working methods. That is a current cause of concern for the present member states and especially for the new Commission. I have noted with pleasure that new assessments have indeed been made in the administration of the Union. For instance, Community legislation is to be prepared in a more transparent manner.

There is also an inclination in Brussels to be prudent about excessive legislation. In some matters, the European Union has regulated more zealously than, for example, the US Federal Government regulates the states. The jungle of directives is certainly no human habitat. Not everything can be regulated by statute. In fact, by regulating less one can create more space for independent initiative in a civic society.

The process of reform appears to have initiated by the new Commission itself. To quote President Santer: "The Commission has decided to concentrate on the essential." It will be proposing about fifty regulations this year, compared with a figure of one hundred and eighty only five years ago.

Now, efforts must be concentrated on ensuring that the Union becomes a community which citizens and nation-states share, not a "distant Brussels", which is seen as an adversary. This is one of the great challenges facing the Union.

Membership of the European Union will not in itself solve a single one of Finland's problems. That applies above all to the economy. The Finns must be able to bring their economy into balance independently of the Union. That is imperative because of the effects on interest rates of a spiral of indebtedness, which also reduces our own room for manoeuvre.

During the parliamentary election campaign this winter, practically all parties recognised the new economic realities in a laudable manner. That provides a good and encouraging prospect for the new Government. As a new member, we are now obliged to adopt programmes preparing for the EMU, stabilizing public indebtedness and cutting the budget deficit. This harmonization of different countries' economic policies is new also in the European Union and places demands on all member countries.

Participation in the intensifying cooperation between finance ministers and heads of central banks encourages us to prepare stabilization programmes that will endure. That will increase our credibility in seeking international financing. Following that road will strengthen the economic competitiveness of the continent and at the same time reduce the danger of the European Union developing into an economic "fortress" that favours mercantilism and protectionism. That would be destructive, especially for those of the Union's member countries, like Finland, for whom the Single Market is not sufficient to absorb all exports.

Finland's goal is to develop as an information society that motivates its citizens to be entrepreneurial and to develop their skills and has an increasingly diversified production base supporting its economy. We have established our standing in many sub-sectors of high technology. Now there should be continent-wide development of means by which the most advanced technology can be used to increase jobs and ensure that the Union's international competitiveness is strengthened.

No goal other than the achievement of a leading position in the world market for high technology should be acceptable to the European Union.

The accession of the Nordic countries has truly brought a so-called Northern dimension to the Union. Our geographical location, natural conditions and the economic and social traditions underpinning our societies give the Nordic countries a distinctive character among the countries of the Union.

We shall have to ask the Union for understanding in some details when our special northern circumstances are involved. In return for that, we are prepared to bear our responsibility for the concerns of the old member states of the Union.

Our country's large area and long distances have often been a drawback in our efforts to enhance our competitiveness in step with the rest of Europe. Recognition of that fact has forced us to assess all sectors, including agriculture and forestry, from a new perspective.

A vital countryside is essential for Finland. Before us we now have the task of diversifying the structure of the rural economy. It is substantially easier than it would have been in the past, because we are living in an information society where it is nowadays possible - and indeed desirable - to locate, for example, information companies in places remote from population centres.

The European Union must continue its efforts to preserve the vitality of the countryside. At the same time it will mean a new adjustment of primary production's role to the challenge of inescapable diversification of the economy's production base. Europe has drawn its vitality from its beautiful countryside and unique cultural landscapes.

A starting point for positive development in our country is, as I have indicated, investing on our intellectual resources, creativity and innovation. The basis of our educational system, the comprehensive school and universities, is of the highest standards even by international comparison. Nevertheless, I want to emphasise that there is no reason for complacency.

If I had to sum up my idea of Finland's working philosophy in the Union in a couple of sentences, I would say that in matters of major concern we should be precise and clear, so that in minor ones we can show magnanimity.

We must avail in every way of the opportunities that membership offers. A small nation can succeed in a large community on two preconditions: by being able to engage in cooperation with others and by ensuring domestic consensus I am certain that Finland will become a bigger and more influential member state of the Union than its size would lead one to expect. That will ultimately benefit the Union as a whole.