Speech by president of the republic of Finland Tarja Halonen at the Slovak foreign policy association in Bratislava on 19 April 2005

Ten years as a member of the EU: Finland’s experience and views

It is a great pleasure and honour for me to speak here in Bratislava today. My visit to Slovakia has gone very well. My talks with the President and Prime Minister were good and rewarding, as one would expect among equal members of the same European family.

At the time when Slovakia's road to European integration began in spring 1993, I was a Member of Parliament and delegate to the Parliamentary Assembly of the Council of Europe. In the process of Slovakian membership to the Council of Europe, I served as a rapporteur in the matter.

Today, Slovakia is also a member of the European Union. As members of the EU we share the same values based on respect for human rights, democracy and the rule of law. We also have shared political and economic interests.

Finland has just celebrated her tenth anniversary as a member of the EU and you have kindly asked me to assess the importance of membership for Finland.

The European integration process has varied from one member state to another. Finland's decision to join the EU was a logical step in a long process. Our economic integration into Western Europe began in the early 1960s when we became an associate member of EFTA and continued in 1973 when we concluded a free trade agreement with the EEC. The goal was to create proper conditions for the growth of industry and new branches and at the same to continue building our society based on the Nordic welfare model.

The creation of the single market in the late 1980s and the end of the Cold War changed the situation for Finland as well. The EFTA countries, including Finland, were not at that stage offered full membership of the EC. Instead we were offered a third way: the European Economic Area. This gave us access to the single market, but that was all. The situation changed essentially, however, before the EEA negotiations were completed. In the new situation we decided to apply for full membership of the European Community at the beginning of 1992. The so-called third way remained an option for those EFTA countries that did not want to join the European Union. Finland joined the Union together with Austria and Sweden on 1 January 1995. After a referendum, Norway remained outside the EU. Owing to our close relations even before membership, we had a very realistic picture of the Union we were joining.

Our decision to join the European Union was the right one. The decision was both political and economic. We wanted to be a full member in a group of countries with which we share the same values and objectives. From the very start we have wanted to be fully involved in the Union's activities and do our own part in developing the Union. EU membership also stabilized Finland's international position in the post-Cold War situation.

The willingness of the Finns to join the EU was measured in a consultative referendum. This was preceded by a lively and extensive debate concerning the effects of membership, its projected positive and negative consequences. The debate focused not only on economic growth and employment but also on the future of our welfare state, gender equality and our collective bargaining system. As the outcome of the referendum, 56.9% of voters were in favour of the membership. The turnout was 74%. It is also worth pointing out that the labour market organizations - on both the workers' and employers' side - strongly supported Union membership. During the past ten years no great changes have taken place in Finns' attitudes towards the EU. The number of people who are satisfied with membership has actually risen somewhat in the past few years.

Discussion concerning the EU and Union affairs has remained lively in Finland throughout our membership. This discussion includes not only professionals, but also the labour market parties, civil society and individual citizens. An important role is also played by the European Information Offices that operate around the country. Through a dense library network they let people know about timely issues and arrange discussions in different parts of Finland. Although some Finns still take a negative or indifferent stance towards the Union, the population has not split sharply into those who are for and those who are against. Our membership has so far been undramatic. Citizens' support will remain vital to ensure the Union's ability to achieve its purpose.

Concerns that Finland would somehow lose her national identity as a result of EU membership have proved unnecessary. Finnish is still going strong and will continue to do so despite the growing influence of English. I expect the same to be true of Slovakian. The creator of your written language, L'udovit Stur, can rest in peace. As a matter of fact the Finnish identity has become clearer since we joined the EU, now that we have had a better chance to get to know the other member states. This allows us to learn what we have in common and what is typical of Finns alone.

Assessing membership, the bottom line has been clearly positive, for us and – I do believe - for the Union. We have benefited from membership in many ways. It was clear for us from the start that we want to actively contribute to developing the Union.

***

One of the greatest achievements of the EU is the creation of the single market, the free movement of goods, services, labour and capital in the whole EU area. When joining the Union, Finland had recovered from the recession and the economy had started to grow. In other words, positive development had already begun before we joined. Gaining access to the single market was naturally important for business and joining the Union had a positive impact for Finland's economic growth. Throughout membership we have enjoyed economic growth and especially in the late 1990s the Finnish economy developed positively. On the other hand, after the considerable increase at the time of recession, unemployment has not come down as fast as we had hoped and expected: Unemployment has fallen but is still relatively high.

In integrating the member states' economies, a significant step was economic and monetary union. This was a natural and logical extension of the single market. EMU brought a common monetary policy and price stability along with it. Finland joined the euro at the start, which meant a change in the currency exchange regime and a disciplined common monetary policy in the euro zone.

Finland's decision to join the third stage of monetary union immediately from the beginning only came after an important national debate in which the political parties, the labour market organizations and other parts of society assessed Finland's ability to succeed in EMU. The question was: what will be the effects of the euro on Finland's economy and employment. Finns were also worried about how monetary policy and common economic development in the euro zone would affect a small economy such as ours. The labour market organizations reflected how Finland's quite comprehensive and effective collective bargaining system could be preserved in the face of a common monetary policy.

During the past ten years Finland's economic and labour market development has been characterized by the desire to achieve consensus in big decisions. This was also true with regard to Finland and EMU. First of all the labour market organizations agreed that they would continue the collective bargaining system, which had proved its worth, after Finland joined EMU. In addition, the Government and the labour market organizations agreed on national arrangements so that Finland can react if our economy gets out of step with the rest of the euro zone.

To avoid the harmful effects of market disturbances and other economic instabilities, we decided to add the so-called buffer funds to our pension and unemployment insurance funds. These accumulate when the economy and employment are on the rise and can be used when the economy and employment need to be stimulated. The system has worked well and has increased our economy's stability and security - even though the funds are not very huge.

The establishment of buffer funds - and the common will, which they reflect, to manage the nation's affairs in a equitable manner - are one reason why there was a great consensus about joining EMU in Finland. Mutual trust is an important resource for a small nation. Thanks to it, our economic development has been very good by European standards. Increased stability and economic security have provided a good basis for innovative and dynamic economic development.

We also took seriously the obligation to comply with financial policy aimed at supporting the common objectives and to make a tight commitment to the stability and growth pact. Problems concerning the stability and growth pact have unfortunately affected the credibility of the Union. This can be remedied if we are determined with the implementation of the key objectives in the pact. For the EU's credibility, it is also important to achieve a political decision concerning the Union's financial framework as soon as possible.

***

Five years ago the EU outlined ambitious goals and plans to make Europe "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion". The practical implementation of the Lisbon Strategy has not lived up to expectations, however. We are badly behind the schedule. The implementation of decisions supporting growth and employment, the social dimension and sustainable development is primarily up to the member states. The Commission for its part should support the effective implementation of the Lisbon Strategy. We are now testing our ability to compete in a global economy. We must succeed in this and ensure our citizens' welfare in the years to come.

Finland has been able to keep her competitiveness high - like Sweden and Denmark - without having to give up our traditional Nordic welfare model. To get our economy back on its feet in the early 1990s, we had to make structural changes that created a foundation for improving competitiveness. The opening of markets and strong investment in research and development have proved to be the right decisions. The opening of markets must go on within the EU.

We have assumed that economic growth cannot be sustainable without ecologically and socially sustainable development and the ensuring of workers' rights. We have been satisfied to see that in many evaluations we rank at the top in terms of competitiveness, the environment, our education system or freedom from corruption. Membership of the EU and the euro have supported sustainable economic development and allowed us to maintain our welfare state. The Nordic welfare state model has proved its vitality and adaptability.

One key challenge for us as well as for other member states is demographic change. Finland's population is ageing rapidly. In 2030 Finland will have the oldest age structure in the EU. Efforts have been made to prepare for the consequences of the change in the population's age structure for example by lowering public debt and reforming social security, health care and pension policy. Cross-sector cooperation has achieved positive development in boosting employment among older workers. According to European surveys, Finland has been, during the last years, the most successful member state in increasing the employment rates of older workers – however we still lag behind the best performing member states. The change in the population's age structure will also have far-reaching effects at the EU level. The member states choices, decisions and actions will have a decisive significance. We will take the challenge of ageing seriously in order to ensure the future of our welfare state.

One of the biggest changes in the past ten years has taken place in agriculture. One factor here is the impact of EU membership. The ageing of the rural population has also accelerated structural change. The number of farms has halved in ten years and the downward trend continues. In a country like Finland, which is sparsely populated but has the fifth largest area in Europe, it is important to ensure the vitality of the countryside for future generations as well. This includes the possibility to farm the land. Moreover, our agriculture has adjusted fairly well to the Common Agricultural Policy. In addition to our own measures we still need the EU's support to develop our countryside, particularly in the remotest parts of Eastern and Northern Finland. We must also make sure that the Common Agricultural Policy adjusts to the challenges of globalization. It is essential for world food production to engage in ecologically sustainable agriculture around the world.

***

As a result of EU membership Finland has become a more open society in many respects. Moving is easy, whether we are talking about work, studies or tourism. Thanks to Schengen, internal borders have disappeared and it is easy for citizens to move from one country to another. Schengen membership will also benefit the people of Slovakia a few years from now. Many tens of thousands of Finnish students have used the opportunity to study at a university in another EU country. And it is encouraging to note that at least as many young people from other parts of the EU have chosen to study in Finland. Our interest in the history, culture and people of our EU partners has steadily increased. While we are still very conscious of being Finns, we feel a close sense of belonging to Europe. Commissioner Ján Figel has pointed out the importance of learning about different cultures and studying languages in strengthening the European identity.

When the latest enlargement took place a year ago, Finland opted for a transition period concerning the free movement of workers. Next year we will have to decide whether to the continue the transition period after two years or not. The final decision is naturally up to Parliament. The Government is in close contacts with the social partners on this issue. Neither EU membership nor enlargement has caused a rush of workers from the other member states to Finland. For example, only a few dozen workers have come to Finland from Slovakia. I hope that when the transition periods for the free movement of workers expire, more people will use the right of free movement between our countries.

There are also problems associated with the free movement of people. The challenge is to develop EU legislation and cooperation in justice and home affairs so that we can go on making progress in our goals regarding freedom, security and rights while effectively fighting terrorism and cross-border crime. In the EU, it also vital to discuss openly and in a positive spirit the issues of migration from non-member states and integrating immigrants - taking into account the particular situation and existing legislation in the member states.

We have strongly supported the enlargement of the EU, citing Finland's own positive experiences. The criteria for membership have not changed, however. They must still be met and implemented before a country can join the EU. The Copenhagen criteria have not lost their importance. It is essential for the Union's credibility to hold on to its key values: human rights, democracy and the rule of law.

With enlargement, political stability, security and prosperity have also spread to a larger part of Europe. This is a precondition for favourable economic growth, for favourable business environment and generally for overall prosperity. With the enlargement of the single market, companies gain new markets - as Finnish companies have been quick to realize. There is still a lot of unused potential in this respect.

It is too early to assess all the effects of enlargement. Whether the latest enlargement will change the EU more than anything before, it remains to be seen. So far enlargement has gone very well. The ten new member states have adapted to life in the EU at a very fast pace.

***

When we joined the Union we approved the Maastricht provisions concerning defence policy and a common defence. The world has changed rapidly since Maastricht, however, and security threats have also changed. The common foreign and security policy has been one of the most dynamically developing fields in the EU. Finland has actively participated in this development work. While I was Minister for Foreign Affairs, I presented an initiative with my Swedish colleague Lena Hjelm-Wallén to develop the European Union's crisis management capacity. This received support from the other member states and was included into the Amsterdam treaty. The crisis management capacity that was created in Amsterdam and the Helsinki headline goal have been important steps in developing military crisis management and civilian crisis management alongside it. We also need to be able to respond in natural crises, as the Asian tsunami clearly showed at the end of last year.

As a member of the Union Finland participates fully in the common foreign, security and defence policy. Last year the President, the Government and the Parliament confirmed Finland's security and defence policy approach. This approach is based on a credible national defence, the functioning of society, a consistent foreign policy as well as a strong international position and an active participation as a member of the EU. Membership in the NATO is not a timely issue for us but remains a possibility. This policy has the backing of a large majority of Finns.

Finland will continue to participate fully in European security and defence policy and will be active in developing it. Finland has decided to participate in two battle groups. I am satisfied that these units will be multinational. We must further improve the Union's resources and step up cooperation between the EU and NATO.

Finland's international relations, like those of the other member states, are increasingly taken care of also through the EU. A good example is the relations with Russia. We have good and effective bilateral relations with Russia. Naturally Finland takes obvious interest in what happens in Russia. For the EU, Russia is an important strategic partner. By actively using the knowledge they have gained, Slovakia and Finland can bring added value to the development of relations between the EU and Russia. In developing relations with Russia, the Union should act coherently and consistently. With the enlargement of the EU to the north, the EU added the Northern Dimension to its agenda. This is one of the most important initiatives presented by Finland that has been approved in the EU. It is indispensable to strengthen the role of the Northern Dimension as an integral part of cooperation between the EU and Russia.

Economic issues have traditionally held a key position in the EU's international relations. In the area of trade policy the EU is a great power. In the area of development cooperation we can also say the same. Over half of the world's development cooperation funds come from the EU and its member states. An effective development policy and cooperation make it possible to focus on the causes behind crises, above all poverty. The EU must pay more attention to governing globalization in trade policy and development cooperation and ensure its actions are coherent. International organizations should also work more closely and consistently together. This was also recommended by the World Commission on the Social Dimension of Globalization, which I had a pleasure to co-chair with President Benjamin Mkapa of Tanzania. Consistency and coherence will also be key themes as we prepare for the United Nations' summit in September and for the monitoring of the implementation of the Millennium Declaration.

Finland has actively worked and will continue to work to strengthen the role of the European Union in matters related to human and fundamental rights, welfare and security. We must go on developing the European Union as a community of member states and citizens. The European Union's external activities and international role should be developed so that the Union can act in a way that is economically and socially just in order to strengthen international security, improve environmental protection and ensure the stable growth of the economy.

Finland places a special emphasis on the rights of women, children and minorities, since the rights of these groups are still too often more weakly implemented. One “litmus test” of a democratic society is whether it respects the rights of minorities. It is important for minorities to have a real opportunity to participate in decisions that affect them. The European Roma and Travelers Forum that was established in connection with the Council of Europe is striving to achieve this aim - to give the Roma a say in matters that concern them at the international level as well.

It is important to develop the EU's efforts to promote human rights. It is essential for the EU's development to be based on existing norms. Therefore, the EU should become a party of the Council of Europe's Convention on human rights as soon as possible.

***

Activities in the EU have become more challenging, since the Union's decision-making and operating culture are in a state of change. The danger is that the EU's decision-making will become more difficult and activities will become fragmented. During our membership, we have taken part in the preparation of three treaties. In the context of preparing the last of these, the constitutional treaty, we also cooperated closely with Slovakia. It is important for a small country that the Union acts in a consistent manner and that its institutions work effectively and efficiently. We have emphasized equality among the member states, balance among institutions and the use of the community method and have supported the Commission's independent position and the preservation of its key role. We will continue to support these principles in the future. At the same time the importance of bilateral relations has increased. It is important to learn to know the partners well and to engage in close cooperation.

For the Union to work properly, we must make sure that a Union with 25 members works effectively together. The added value brought by integration and enlargement still does not correspond to the EU's international competitiveness and political position. Strengthening the EU's international role is a key objective in the near future. Strengthening the EU's international effectiveness and its global role will be one of the priorities for the Finnish presidency next year

We consider that we have had good opportunities to influence the decision-making in the EU throughout our membership. This has been underpinned by the national system for coordinating EU affairs, which includes the Government, Parliament and the President. Parliament takes part in the national preparation of decisions that are made in the EU, so its role in EU affairs is larger than that played by many other parliaments. The social partners and civil society are also involved in the broader preparation process. Our system means that Finland has a thoroughly prepared, coordinated and coherent position. As a result of the coordination system Finland has a single policy.

The European Union is a unique creation whose strengths are its nature as a community of values, the wide range of tools at its disposal and the depth of cooperation. The European Union is a work in progress and all of us can count on having our hands full in the future as well. Developing the Union's activities is in everyone's interests. This work requires a strong commitment from the member states and from all Europeans. We Finns promise to do our own part.