Speech by Minister Soini at the Helsinki Finnish Club foreign policy evening
Speech given by Minister for Foreign Affairs, Mr. Timo Soini, at the Helsinki Finnish Club foreign policy evening on Wednesday 20 January 2016.
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Finland, the EU and Russia in a rapidly changing Europe
The Cold War ended 25 years ago. The change was one of historic dimensions. Europe’s deep ideological divide came to an end and it was believed that the continent had moved to a state of lasting peace. This belief was not even shaken by the acts of war in the Balkans during the 1990s. The Ukraine crisis, however, brought us back down to earth.
“The future ain’t what it used to be”, to quote the American “baseball philosopher” Yogi Berra. Many of our assumptions – or perhaps rather our hopes – have been shown to be wrong. The truth is that there is a war going on in Europe. And commonly accepted principles as well as the foundations of international order are under severe pressure. There is talk of a “new normal”. Or is it simply the case of the former normal returning after an absence of 25 years? We have to ask: Have we been too optimistic or, in fact, downright naïve?
Finland is part of this upheaval. We observe the changing situation as a member of the European Union, as part of the Western community. Relations with Russia have become strained. The EU has not been able to reverse this trend and Russia currently appears to be in no hurry change course. We have to consider seriously how EU-Russian relations should now be arranged.
Amid all of these changes, one constant is geography. Russia is an important neighbour for Finland. Our border with Russia is longer than that of the rest of the EU put together. Finland’s consistent approach has been to build cooperation with Russia. This has been beneficial for both sides.
Russia, however, is more than just Finland’s neighbour. It is a major international player that wants to be recognised as a great power. For this reason, Russia will not hesitate to use actively all the tools of a great power as the instruments of its policy. Consequently, its actions deserve extremely close scrutiny.
Russia will continue to be one of Finland’s major economic partners. For a major economy, however, Russia is exceptionally dependent on the export of only a few products, mainly oil and natural gas. The prices of these products have fluctuated wildly, so it is no wonder that Finland’s exports to Russia have collapsed on three occasions over the past couple of decades (1998–99, 2008–09, 2014–16).
Russia did not take advantage of the period of exceptionally high oil prices to diversify its economy. As the price of oil continues it steep decline, Russia’s economic prospects are a cause for concern. Russia’s working-age population is shrinking, which will be reflected – alongside the challenges of the energy and raw material markets – in slower growth than in the past decade.
The economic interaction between Finland and Russia involves much more than trade. Many Finnish companies, in sectors ranging from electricity production to the retail trade, have invested in Russia. Tens of thousands of Russians are working in these companies.
Tourism, boosted in the last decade by the high price of oil and a favourable rouble exchange rate, has now declined significantly. Although Finland is geographically as close to Russia as ever, neither tourism nor exports are expected to pick up in the near future. Companies will be required to show long-term vision and exceptional belief in the opportunities of the Russian market.
Of the major economies, Russia is one of the most open, as measured by the ratio of exports to GDP. The reason for this is the aforementioned production and export of oil and gas as well as the correspondingly extensive import of industrial products. Integration into global economic structures has not gone as quickly as was hoped back in the 1990s. WTO membership was completed only in 2012 and has not produced the desired results in reforming the Russian economy.
Russia’s overwhelmingly most important foreign trade partner is the EU, which accounts for almost 50% of all trade, despite the recent economic crisis. For example, the Eurasian Economic Union only accounts for roughly 10% of Russia’s foreign trade.
Russia has tried to reduce its dependence on the EU by increasing its trade with Asian countries, particularly with China. The change of course has been slow, however. At best, perhaps a quarter of Russia’s energy exports will be make its way to these regions at the beginning of the next decade. In other words, Europe’s economic importance in Russia’s foreign trade will remain unchanged. We will continue to have common economic interests in the future and, later in my speech, I will address how to take advantage of these interests.
One problem for investors – both Russian and foreign – and companies engaged in trade is Russia’s unpredictable and often arbitrarily functioning business environment. The collapse of the rouble and financing problems have reduced Russia’s foreign trade considerably. Finnish exports to Russia fell last year by more than a third. We are working constantly on these problems, both within the structures of the Economic Commission and through Team Finland cooperation. Even so, I do not believe that growth in exports can be achieved by governmental measures. Trade takes place, when it is profitable.
As seen from the Kremlin, Finland is a geographical neighbour, but not a major international player. Russia has other things on its mind than its north-western neighbour. Finland constitutes a part of Russia’s international relations proportionate to its size – no more and no less. It is worth remembering that. It also provides a calming sense of perspective.
Finland has no special status, even though we have effective links with Russia at all levels. We also have problems, such as attempts, as highlighted in the media, to intervene in the extradition of Russians, years of propaganda regarding the treatment of Russian children in Finland, and now most recently – and perhaps most seriously – problems in border control cooperation in Northern Finland. With regard to border control, it is clear that we do not want a new uncontrolled migration route into the Schengen Area through our eastern border. Our position on this must also be made clear to Russia. This issue will be raised next week, for example on the Minister of the Interior level and in connection with a visit to Russia by the Prime Minister.
From a security policy standpoint, Finland’s relationship with Russia has never, however, been merely a bilateral one, rather it is closely linked to the prevailing international situation. Indeed, our bilateral relationship must be viewed from slightly further afar, in order to perceive its true nature.
From Finland’s perspective, it is a concern that tensions created by the Ukraine conflict have shifted towards the Baltic region. This is a concern that we share with the other countries of the Baltic region.
Russia has for some time now been increasing the level of its military activity in the Baltic region. Following the illegal invasion of Crime and conflict in Ukraine, tensions between Russia and NATO have increased. In this tense situation, it is important for the stability of the Baltic region that NATO clearly shows its commitment to the defence of all of its member states. This is also in Finland’s interests. At the same time, it is important that NATO’s response to Russia’s power politics has been proportionate and fundamentally defensive. The intention has been to show determination, not to provoke or escalate the situation.
Rising tensions in the Baltic region affect Finland and Finland’s security environment. Nevertheless, I still sleep peacefully at night.
We must, however, assess the change in Europe’s situation honestly and reach conclusions accordingly with respect to our own national security and international cooperation. This is being deliberated within the preparation of a review process currently under way. The situation now demands both vigilance and composure. It must be made clear to all parties that Finland will decide on its security policy solutions independently. When the snow is falling and the road is icy, your horse must step carefully and steadily to ensure that it does not to slip. As the driver, I’ll keep my gaze firmly on strengthening Finland’s security.
Discussion in Russia has been marked by a divide between nationalistic “Slavophiles” and “Zapadniks”, who defend Western values. There is an on-going debate about what Russia’s real identity is. There is much talk about the country’s Eurasian character. It is said that Russia is neither European nor Asian. Russia is Russia, a country that manages on its own, has its own values and its own identity. On the other hand, many Russians assert that Russia is in all essence a European country, has always aspired to be such and is inevitably evolving in that direction. In addition to this, the Orthodox identity and, through this, the position of the Church are also strong.
EU Europe is accustomed to viewing its diversity as a strength. The authoritarian Russia of today is too easily branded a “one man state”. We should also see the many faces of Russia and understand how difficult it is stamp the country with simplistic labels. Debate within Russia should be followed more closely. Understanding Russia comes from understanding its history and identity.
When we look at the current sorry state of relations between the EU and Russia, we are forced to accept how poorly we understand each other and how often we misinterpret each other’s intentions. We must be able to see each other’s interests as the other party understands them. It would thereby be possible to grasp the key issue as to what the differences of view are really about and to find a basis for agreement. My own observation is that Russia’s capacity to cooperate grows when it feels that it is being treated as an equal. In terms of developing relations, here the stark reality that “the acceptance of facts is the beginning of wisdom” also applies. It may also be the start of something new.
The development of relations between the EU and Russia has led to a historically low point in mutual trust, which collapsed when Russia occupied Crimea. The annexation of Crimea was in violation of international law and the principles of the Organisation for Security and Cooperation in Europe (OSCE). As long as this illegal situation continues, there is no possibility of a straightforward return to previous forms of cooperation.
Russia’s behaviour has been unpredictable and sudden. This was the case in Crimea and in eastern Ukraine. And now also in Syria. Russian leaders’ talk of exemptions and spheres of influence for strong states naturally increase suspicions. Many wonder if Russia yearns for the power enjoyed by the Soviet Union or is building a new empire. If Russia wishes to increase trust, it must be able to provide an assurance – also through its actions – that it wishes to reinforce peaceful order in Europe based on commonly agreed principles.
Europe’s security architecture is based on the UN Charter, the Helsinki Accords and the Charter of Paris. The principles we must maintain include the sovereignty of states, the inviolability of frontiers, the territorial integrity of states and a prohibition on the use or threat of force. At the core of the principles agreed in Helsinki in 1975 is the right of every country in Europe to decide for itself to which organisations or alliances it belongs.
After the end of the Cold War and breakup of the Soviet Union, major changes occurred in Europe. On the basis of the aforementioned principles, new countries were formed and borders were changed. By pen, not by illegal annexation. Now, the key issue is how we can rebuild trust on upholding these principles so that Europe can take a step forward.
Russia has emphasised that the expansion of NATO and the EU pose a threat to this trust, and that it had no choice but take countermeasures. Russia believes that the West is at fault for the Ukraine crisis. To be honest, mistakes were surely made – at least in matters of style – but Russia’s accusation has no basis in fact.
The EU’s Eastern Partnership is certainly not a conspiracy against Russia. It should be recognised, however, that the EU has not been able to communicate clearly enough to Russia its partnership intentions. No statements of equivalence should be made between the EU’s Eastern Partnership and EU expansion – I, too, am against this. But, it is clear that in neither case can Russia have the right of veto.
When the Ukraine crisis broke out, the international and European community had to react – jointly agreed principles and rules had been violated. Failure to react would have sent the message that violation of international ground rules is worthwhile.
The Union has employed peaceful means, namely it has imposed sanctions. Sanctions are not an end in themselves, but a political instrument. They seek to influence Russia’s decisions and actions. When positive developments take place in the Ukraine crisis, the sanctions will be reassessed. We expect Russia to make a positive contribution to ensuring the full implementation of the Minsk agreements. The cease-fire that has held since the beginning of September and the continuation of the Normandy format negotiations have aroused optimism. Nevertheless, the situation is difficult and deadlines have been extended.
The sanctions, of course, complicate economic cooperation between the EU Member States and Russia. One should remember, however, that Russia’s counter-sanctions, the import ban on foodstuffs from EU countries, make a highly significant contribution to the negative impact. They have hurt producers throughout Finland, and Russian consumers, too.
The main reason for Russia’s economic problems is not the sanctions, however, but the long-term structural problems of the Russian economy. The economy, highly dependent on energy and raw materials, is suffering from a deep recession, and the previously announced diversification of both economic structures and the material base has not been taken forward.
The collapse in global oil prices has been a major blow to the Russian economy. As a result, there has been a sharp fall in the external value of the rouble. Public finances are in trouble, inflation is accelerating, citizens’ real earnings are declining. Russia’s Federal State Statistics Service estimated last summer that the number of Russians living below the official poverty line (140 euros) had risen to 23 million, over 15% of the country's population.
It is no exaggeration to claim that relations between the EU and Russia are weaker than at any time since the collapse of the Soviet Union. In this situation, it is important to look ahead. We must aim to build trust and find common ground where we can – through practical cooperation and shared economic and security interests. It is clear that, in practice, cooperation will also require a change in the political climate.
I will touch on a few areas where there may be potential for cooperation between Russia and its Western partners.
One of the obvious areas of common interest is cooperation in the surveillance and non-proliferation of weapons of mass destruction. There remains a great deal of work to be done in this field and cooperation is essential. In this, a significant step forward was the agreement on Iran’s nuclear programme.
Last weekend, the Director General of the IAEA confirmed that Iran has adhered to the agreement, and as a result the West has begun to lift sanctions against Iran. The constructive contribution of Iran is badly needed to ease the difficult situation in the Middle East. Positive input from Russia is also required to mitigate the growing threat from North Korea.
There has been a high degree of unanimity on counter-terrorism measures within the framework of the UN. In practice, cooperation is difficult, however. The situation in Syria illustrates the magnitude of the challenge. There are major differences of opinion between the West and Russia, even about the fundamental issues in Syria and how the current predicament came about. The actions of Russia’s armed forces operating in the area of Syria rightly raise a lot of questions and legitimate concerns about the objective of these actions.
Russia and the West also have very different views on developments in North Africa as well as the Arab Spring. According to the West, the turmoil in the Arab world had internal causes and was due to the failure of its authoritarian regimes. Russia, on the other hand, has considered the actions of the West to be an intervention into Arab countries’ internal affairs and – irrespective of its own activities in Ukraine – a violation of international law.
Politically, increasing cooperation with Russia in energy is not unproblematic in the EU. But the fact is that Russia is a very important energy supplier to EU countries. And will be in the future. Russia has criticised the Third EU Energy Package as discriminatory to Russia. The point of the package, however, is to create common ground rules for all suppliers in the EU energy market, including Russian companies. Effective market mechanisms would benefit both European and Russian consumers. Cooperation in the development of renewable energy and energy-efficiency as well as their practical application could accelerate the development of the sector and the competitiveness of both.
From Finland’s perspective, it is important that we are part of a well functioning EU energy market. This requires that our energy network is connected better into the Nordic/Baltic energy networks and through them to Western Europe. Finland’s energy cooperation with Russia should be incorporated into the development of the European Energy Union.
Finland has experience of nuclear energy cooperation with Russians. Fortum, for example, has done trailblazing work in Russia’s electricity and heat markets for years now. The construction of the Hanhikivi power plant, in which Fennovoima and Rosatom are cooperating, is a continuation of this. Finland would have a lot to give and receive if energy cooperation could be made to work.
Climate and environmental issues are closely linked to the major challenges of the energy sector. This is another area in which the common interests of the EU and Russia are obvious. Here, open dialogue is also a prerequisite for progress. The unpredictable effects of climate change are already visible in the Russian Arctic, and this trend is accelerating. Russia’s announcement on restricting its own emissions in line with international targets is the first step. The success of the Paris Climate Conference (COP21) at the beginning of December laid the basis for constructive and more open discussion with Russia and other international partners.
Climate and the environment are closely linked to a fifth area of potential co-operation, technology. In the current situation, this is too easily overshadowed by sanctions. This is not one-way traffic, even though in Western discussion it is often thought to be the case. Since the Soviet days, Russia has had expertise to offer, for example in space and nuclear technology and in medicine.
Arctic issues are also important to Russia, and one would hope that their significance would also become better understood in the EU. Finland has been active in regional cooperation, and Russia has also participated in this, even after the Ukraine crisis. At the end of last year in Oulu, I handed over the presidency of the Barents Euro-Arctic Council to my Russian colleague, Sergei Lavrov. In spring 2017, Finland will begin its two-year presidency of the Arctic Council.
On Finland’s initiative, the EU has established the Northern Dimension policy, involving Russia as an equal partner. In parallel, there are EU border cooperation programmes, channelling financing for significant projects in our neighbouring regions.
Finally, I would like to mention perhaps the most important area of cooperation of all. Links between people in the EU countries and Russia. This is includes cultural encounters, living connections between civil societies, researcher and student exchanges. There is every reason to foster human contact, even though mobility in recent years has decreased for economic reasons.
I am also very concerned about the significant narrowing of Russian civil society’s room to manoeuvre as a result of legislation and the actions of the authorities. Partners of many Finnish organisations have either been declared “foreign agents” or they have had to limit their foreign contacts for fear of intervention by the authorities. Many Finnish organisations do commendable work, for example among the Fenno-Ugric peoples living in Russia. The development of cooperation requires that obstacles to human contact be removed, not increased.
All the areas I have mentioned have potential for increased cooperation, and I am sure there are others. As it is customary to say in all difficult situations, “political will” is now needed. Nevertheless, the cliché holds true yet again. Political will is needed – both parties must assess what will happen if the current situation continues. In the global economy, both Europe and Russia are shrinking in comparison with China. And, in global security, nation states ultimately have more common interests than conflicting interests.
Geography is an immutable factor in international politics. Being a neighbour to Russia is a natural and important issue for Finland. We made a fundamental choice in joining the EU – a choice about economics, security and identity. We are part of the West.
It would be absurd to set our relationship with Russia and our membership of the EU in opposition to each other. It would be equally incongruous to serve as an “intermediary” between the EU and Russia, as if we were outside the EU. The EU is not a federation, nor should it aspire to become one. Member States have committed to a common foreign and security policy. Nevertheless, each Member State has its own foreign policy and bilateral relations with other countries. There is no contradiction in that.
For Finland, Russia is an important neighbour whose development we follow with interest and compassion. That is why we are concerned about its internal development. Democracy, rule of law and civil society are not faring well in Russia. A prosperous and vibrant Russia is in the interests of Finland and the entire EU. Russia wants to be an equal and respected partner in European cooperation, but this is a two-way street.
We need a long-term vision for our relations with Russia, to help us navigate through bad times. Finland’s vision is – alongside the fostering of effective bilateral relations – to support Russia’s advance towards global and European structures. This has been Russia’s direction in the last couple of decades, otherwise it would not have sought to join the Council of Europe, the WTO or deepen its relations with the EU and its Member States. Isolating Russia will not benefit Europe or Russia. I hope that Russia will return to a stance of cooperation and observing international rules.