MR MARTTI AHTISAARI, PRESIDENT OF THE REPUBLIC OF FINLAND
AT THE INSTITUTE FOR EAST-WEST STUDIES DINNER IN ST. PETERSBURG
8 OCTOBER 1998

The ending of the Cold War has been a major intellectual challenge. The old means and forecasts have no longer provided answers. In this transition, a creative analysis and a good network of contacts are real assets. The Institute for East-West Studies has been providing both in an admirable fashion for nearly two decades. It is a pleasure to have the opportunity to speak at this seminar here in St. Petersburg.

The city of St. Petersburg has numerous ties to Finnish history. The decision by Peter the Great to build Russia’s new capital on territory belonging to the Kingdom of Sweden here at the mouth of the River Neva set the seal for a long time thereafter on Finland’s evolution towards independence. When Emperor and Grand-Duke Alexander I, together with the Senate of the autonomous Grand-Duchy of Finland, built Helsinki’s monumental centre in the early 19^th century, St. Petersburg was chosen as the model.

Pushkin said that the foundation of St. Petersburg opened a window on Europe. Now Russia’s most direct and shortest route to Europe again runs through St. Petersburg. Today, the window that Pushkin referred to is Finland. Russia’s most important route to the markets of Europe crosses the European Union’s external frontier no more than a hundred kilometres or so from St. Petersburg.

The crisis in the Russian economy combined with world-wide economic problems confirms the basic assumption underlying the Finnish initiative that has led to what we call the European Union’s "Northern Dimension". This assumption can be summed up in one word - interdependence. Not even a country the size of Russia can nowadays remain independent of developments in Asia or Europe. Globalisation is neither a blessing nor a curse, but a fact, the effects of which are being felt in every sector.

I brought up the "Northern Dimension" perspective in a speech that I held in the Estonian University city of Tartu in 1994. Now it is evolving into a part of European Union policy. During our tenure of the EU Presidency in autumn 1999, Finland will push vigorously for the development of EU policy on Russia. At the same time we shall also be devoting considerable effort to tripartite cooperation between the EU, Russia and the United States in areas like nuclear safety and the prevention of international crime.

In the assessment of Finland and the EU, the best way for Russia to extricate herself from her present economic plight is by engaging in economic interaction with the outside world. If export earnings are to be boosted, there will have to be investment in production facilities, and this in turn demands that Russia radically improve the investment climate. Only by increasing her income will Russia be able to build new industry, modernise her infrastructure and service her debts. Opportunities for economic development will be substantially better if foreign companies are assured the kind of conditions that will make it possible for them to invest here and at the same time bring in new expertise. Economic crises are not solved by lessening economic interaction, but rather by increasing it.

It has been obvious from time immemorial that prosperity is created only through work and saving. A market economy simply cannot function without the rule of law and a civil society. With her rich natural resources endowment and high standards of education and research, Russia possesses the prerequisites for turning the course of development and beginning to prosper.

The EU is Russia’s most important trade partner. With the accession of Poland and the Baltic States, the interface between an enlarging Union and Russia will grow. When the euro is introduced at the beginning of next year, it will become a central invoicing denomination also in Russia’s foreign trade. Finland is bringing the euro area into northern Europe. Even before it comes into being, the euro area has already created a stability that is also reflected in its surroundings.

The interdependence between Europe and Russia is complex. The aspect that I want to emphasise is security and its new character. The ecology of the Gulf of Finland and the safety of the nuclear power station near St. Petersburg are examples of matters that are important for Finland. Europe’s growing need to import gas reveals a mutual dependence, which creates the prospect of significant opportunities for economic interaction. The partnership and cooperation agreement between the EU and Russia provides a foundation for trade, investment and economic cooperation. It is important to get the agreement to work in practice.

The Fenno-Russian border, which is so far the only one that the EU shares with Russia, is a laboratory for the future. We believe we have every reason to be proud of the way our border authorities cooperate and of the good order that is maintained on the frontier. We are also pleased to have been able to support Estonia in the creation of border controls meeting European standards. Now, together with the EU Commission, we are concentrating specially on developing Latvia’s and Lithuania’s border controls.

A pioneering form of customs cooperation has also begun on the Finnish border. The goal of Finland and of the EU is to have the effective and safe frontier arrangements that growing economic contacts require. This presupposes clear ground rules and respect for the principles underpinning the rule of law. The EU and Finland are prepared to support Russia in developing a modern customs service meeting European standards. There is room on the border for only two authorities: a frontier guard responsible for the security of the national boundary and a customs service monitoring compliance with the ground rules of foreign trade.

Our cooperation with Russia has long encompassed a large geographical area. The new Russia is an open Russia. Businesspeople travel and engage in trade throughout the territory of the state. Economic cooperation has opened up direct links to the constituent subjects of the Russian Federation. People, goods and capital moved freely across the customs border between the Grand-Duchy of Finland and the rest of the empire until 1917. The Bolshevik victory in Russia and Finland’s attainment of independence put an end to almost all of our cross-border contacts for nearly thirty years. After the second world war, the border was reopened, initially for goods and later also one-sidedly for people. Only now, after a break of over 70 years, the border between our countries is again open for Finns and Russians to go about their business with each other.

Decisions that need not be taken on high are delegated. This is profoundly European and in the spirit of the EU principle of subsidiarity. The stabilising force in the Russian Federation is the sharing of responsibility and burdens between the centre and the regions. This summer’s crisis has demonstrated that. Never before has Russia had directly-elected regional leaders, governors, who must answer to the electorate for their actions.

Regional cooperation is a natural activity for the European Union. The European Commission is participating in the work of both the Council of Baltic Sea States and the Barents Euro-Arctic Council. For nearly ten years now, Finland has had direct contacts with the leaders and populations of our neighbouring regions. This is based on an agreement covering cooperation with adjacent areas which we concluded in 1992 and has worked well. Direct contacts with Russia have created a completely new set of interactions. Ties that the Revolution and wars severed have been reestablished.

When the governors of the Murmansk and Kaliningrad regions or the mayors of Viborg or Svetogorsk turn to their Finnish neighbours, they are calling cooperation partners that they know well and whom they have learnt over the years to trust. The reason for the call is obvious: The burden of responsibility is a heavy one and the governors and mayors want to make sure that they will be able to guarantee supplies for the most vulnerable segments of their populations during the coming winter.

There can be no going back to the past. In her work within the EU, Finland wishes to contribute to the development of regional and local administration in Russia. This is part of the building of a state in which the rule of law prevails, something to which the new Russia has herself undertaken a commitment and in which especially the Council of Europe is supporting her.

Direct cross-border contacts reflect a historic development, which has brought stability to a Europe ravaged by world wars. A lowering of borders is one of the greatest achievements of post-war European integration.

Finland’s historical experience crystallises into natural interaction and trade with Russia. That is also the core of the thinking that we call Finland’s European vocation - to prevent the emergence of new dividing lines. The deepening ties and long-term economic cooperation between the EU and Russia will narrow the gaps that still exist.

In the historic transition now in progress, Europe is integrating. Finland and the international community support the unity of Russia on her path towards democracy and the rule of law. That way, the prerequisites for a functioning federation are being met. The best way to prevent disintegration by default is to practise decentralisation by design; in other words, to develop the conditions that the regions need in which to function effectively as components of the federation.

Here in St. Petersburg - a European metropolis - we can sense that also Russia will find her place in the new Europe.