In Sweden, the EU-sceptic politicians and parties advanced in the European Parliament elections in early October this year. The turn-out was very low by Swedish standards, 41%, which indicates a lack of interest among the general public. The public-opinion ratings have gone down in the course of the year and now, in autumn, only one out of five Swedes believes that the membership of the EU is beneficial for Sweden. In Austria, the opinion polls have demonstrated frustration with the European Union and, if there were a referendum now, the majority would most likely reject membership. Contrary to these trends, the Finns seem to be the happiest out of the three new Member States. In September, 50% of the 927 interviewees would have voted 'Yes' if there had been a new referendum; 38% would have voted 'No', and there were 11% who had not made up their mind. The support has remained on this level throughout the first year of membership.
The reasons for the relatively positive opinions of the Finns are partly historical, and partly the positive effects which the man in the street has experienced. A short account of their recent history may explain the Finns' positive attitude towards Europe.
Due to the special relationship with its Eastern neighbour, Finland has been a very cautious player in international politics. The plan to form an economic community among the Nordic countries, Nordec, came to nothing in the early 1950s because the Soviet Union resisted Finland's membership. Finland decided to join EFTA in 1961 as an associated member in order to emphasize the non-political character of this action. Finland became a full member in EFTA as late as 1986, when Portugal left EFTA and joined the EC. Finland's membership of the Council of Europe was a delicate domestic issue for a long time due to the critical opinions this organization had expressed against the Soviet Union. In the mid-1980s Finland was the only European democratic market economy which did not belong to this organization. The Finnish politicians were sometimes embarrassed when looking at the maps issued by the Council of Europe: Finland was indicated in a red colour, just like the Eastern European socialist countries. Finally, in 1989, Finland became a member of the Council of Europe.
The relations between EEC and the Soviet Union were frosty for decades, and they did not warm up until the end of the 1980s in the era of perestroika. The disintegration of the Soviet Union started in 1989, and the Soviet economy deteriorated rapidly. Having learned to live with their big neighbour, the Finns found themselves in a totally new political and economic situation.
As a small open economy Finland is dependent on export trade. At the mid-1980s about 20% of exports went to the Soviet Union. The collapse of the Soviet market was one factor affecting the rapid economic decline in Finland. It was vital for it to find new markets in the West. At the same time the EC decided to deepen the internal cooperation and to establish the Internal Market in 1993. With respect to this new development, the EFTA countries were worried about their economic interests and Austria deposited its application for membership in 1989. In this connection, the President of the Commission, Jacques Delors surprised everyone by proposing a new type of cooperation for EFTA and EC, the so-called European Economic Area, which would extend the four freedoms to the EFTA countries as well. This proposal was warmly welcomed in Finland. The concept seemed to safeguard vital national interests without jeopardizing the delicate Soviet relations.
The EEA-concept gained wide support in Finland, and many were of the opinion that it would be ideal for the country. However, two incidents pointed the Finns along the path leading to the EU. Firstly, the Finnish government was taken by surprise, because Sweden decided to apply for the membership in October 1990. This started a serious discussion about Finland's future should the eastern border of the EC run between Sweden and Finland. Secondly, the August coup attempt failed in Moscow in 1991, Boris Jeltsin came to power, the Baltic countries regained their independence, and the Soviet Union was dissolved. The old Treaty of Friendship, Cooperation and Mutual Assistance between Finland and the Soviet Union dating from 1948 ceased to be in force, and the Finns felt that they were free to look for different security political solutions. Obviously, the security considerations were in the background when Finland deposited its application for membership at the Commission in 1992. However, the government carefully avoided any public discussion about the security issues in the accession process, while the other implications of the membership were widely discussed. The big issue was agriculture, almost as if Finland were an agricultural country. Some 7% of the labour force work in agriculture and forestry, but many city-dwellers have their roots in countryside. This made the issue emotional.
In the referendum in October 1994, 57% of voters made a convenient majority for Finland's accession, but the country was clearly divided. The supporters were mainly educated, young city-dwellers in southern and western Finland. Resistance was strong in the rural municipalities and in eastern and northern Finland. Also there were isolated spots of support: the university towns. Some observers claimed that Mr Zhirinovsky, the Russian Liberal Democratic Party leader, assisted the Finns to make up their minds by making radical statements about the annexation of Finland by the Russian Federation.
As it had been estimated, Finnish farmers were the losers in the EU-game. They had lived protected lives for decades, and now they must face competition from the central European farmers and adapt themselves to EU-producer prices. The producer prices plummeted as of 1 January 1995. For example, the new price of barley was 50% and the price of wheat 38% of the respective producer prices in December 1994. The immediate impact on the farming community is being softened by means of temporary income transfers. It is evident that a major structural change must take place in agriculture. The prevailing small family holdings must be merged into bigger production units. Dr Kalevi Hemilä, Minister for Agriculture and Forestry, has estimated that about 50-60% of the holdings will remain, and those that survive can have an adequate standard of living. This is a serious challenge in an era of 18% unemployment in the country.
The other side of the coin is that food prices have also dropped, by 8-9% on the average, as the advocates of the Union had promised. All consumers can see this in their own household expenditure. This has had an impact on the inflation rate, which is the lowest in the Member States. In September the annual inflation rate was 0.3%.
The export industry is running at full capacity, particularly the paper and pulp, metal and electronics industries are making record results this year. In 1992 the EU and EFTA countries made up 73% of Finnish exports and 66% of Finnish imports. This year the EU share is even more dominant as the important trade with Sweden is now internal EU trade. The Finns are also happy that the EU has succeeded in negotiating the free trade agreements and the Europe agreements with the Baltic countries on time. The trade with the Russian Federation is low compared with the volume it was a few years ago. The Finns are eager to claim some expertise in Russian trade, but if this low level of activity continues they will lose touch with that huge market area. The Finns support all proposals intended to stabilize the Russian economy's development and to assist in its revitalization.
The booming exports have only slightly alleviated the severe unemployment, because the domestic demand is still very low. Membership has not boosted the services nor the construction sector. People are careful about spending their money and borrowing from the banks. Due to the low inflation the real interest rate is high, which makes the idea of buying a new house or a new car less tempting. Firms postpone their investments for the same reasons and expect the interest rate to come down. Unemployment is the most serious problem which has to be solved and the EU has not been effective in this respect.
In the autumn months the European Monetary Union was a hot topic. The leading politicians, including the President of the Republic, Mr Martti Ahtisaari, are convinced that Finland will be among the first Member States to proceed to the third stage of the EMU. After a couple of years Finland will fulfil the convergence criteria, and it is said that the EMU will have more positive than negative effects. However, there are also some critical voices. The Finns used to solve the problems of the export industry by devaluation, but this card would not be available in EMU. There are also worries about the exchange rates with which the Finnish markka will be tied to the EMS. The most important point of reference is the Swedish krona which is at the moment very weak compared to the Finnish markka. This would give an advantage to the Swedish export industry. Also public opinion is against a common European currency: 60% of the people are against and only 33% are in favour. However, the resistance is mainly emotional. Most respondents could not give any reasons for their negative opinions.
The Finns have always been proud of their prompt implementation of rules and regulations. In this area they received a cold shower when Commissioner Mario Monti announced the statistics about the transposition of internal market legislation into the national law in the Member States. The average transposition was 93% of the laws. Finland was at the bottom of the list with 84% of laws transposed. The administration was of the opinion that the bulk of the job had been done for the European Economic Area. However, agriculture did not belong to the EEA, and half of the laws not yet transposed related to agriculture. The Ministers and Permanent Secretaries have promised to speed up the process.
All in all, the first year has been like a honeymoon. Perhaps the most important effect of membership is symbolic. The Finns feel that they belong to the Western European culture of which they have in fact always been a part. Their language is an official language of the Union, and they can face other Europeans on equal ground. They can defend their interests and values and also contribute to fulfilling common goals. In everyday life, nothing dramatic has happened; the old problems are still there. If the political and economic leaders of the country do not succeed in exploiting the new opportunities opened up by membership, attitudes may well develop in a negative direction.