Interview with the former Prime Minister of Finland Esko Aho

The Aho Group Report on Creating an Innovative Europe was published in 2006. The report focuses on the creation of innovation friendly markets, strengthening of R&D resources, increasing the structural mobility in Europe and to foster a culture which celebrates innovation. The report states that current trends in the European Union are unsustainable in the face of global competition and calls for a European pact for research and innovation. The report urged for rapid, collective action on a European scale and a new vision to address Europe’s productivity and social challenges.
Where are we now?

In spite of the fact that our report got a lot of attention both in the EU decision making bodies and in national capitals, that kind of structural change we proposed and expected to happen, has not taken place. Europe is still lacking behind in R&D and innovation.

The Blockchain Revolution sounds like a good thing but to get all the benefits out of this big movement we need to think and direct the development. Which opinion do you want to share with us in this regard?

Blockchain offers a lot of opportunities and promises, but it is still a long way to go to get major practical solutions. There are some areas where blockchain has special opportunities. One of those is consumer protection and privacy. Another practical option is related to sustainability and safety and security of products. Complex and complicated processes will be able to be tracked and audited in a way that consumers can trust the quality of products and services. I am optimistic that there is a huge potential. In addition to substantial economic benefits blockchain technology promises added value for social and environmental development as well.

How happy are the Finnish people with Europe? Are there Brexit feelings, or not at all?

When Finland joined the European Union, 1st January 1995, a referendum preceded this entry. Public opinion was divided but almost 60 per cent of Finns voted in favor of the EU membership. Since the accession, there has been rather stable support for our national EU policy. We believe that the European Union provides for a small, extremely export-dependent and globalized economy indispensable contributions.

However, the EU urgently needs improvement in its efforts. In my opinion, it should concentrate in areas where there is need for a real, joint European action. Trade policy, completion of the European Single Market, environmental protection and circular economy or common security policy are examples of areas where stronger European policy is urgently needed.

Thank you, Prime Minister. That is an encouraging message. How does the Finnish government stimulates the economy today and in which direction are future investments going? 

Finland has experienced substantial problems in its economy since the financial crisis. Between 2006 and 2016 our GDP didn’t grow at all. Last couple of years have been much more positive. Our economy is back on the growth track. Thanks to higher employment figures and increasing investments, our budget deficit is under control.

But we have some critical long-term challenges. One is the aging of population. Radical reforms are needed in order to increase productivity both in private and public sector. Another risk is lack of talents. Our labour force is aging as well. Improvements in the education system are crucial but they are not enough. Finland needs a systemic approach for immigration.

At the same time, I see major opportunities for Finland. First of all, manufacturing is back. Several traditional sectors like forest industry or shipbuilding are doing well again. Secondly, digitalization provides special opportunities for a country like Finland with a well-educated population, high level of trust and traditional good collaboration between business and government. And finally, there is fantastic growth potential for bio sector. Transformation towards circular bioeconomy is a global necessity. Finland has a leading role to play in this historical process.

How intense is the cooperation with the other Scandinavian countries? Do they also see opportunities in being a bridge between Russia and Europe?

All the Nordic countries have a lot of similarities. Not only in their economic structures: they are small and extremely dependent on foreign trade and global markets. They are also culturally and socially rather similar. Since Sweden and Finland joined the European Union, we have not put enough attention and resources into the Nordic collaboration. Thanks to EU’s weaknesses, interest in joint Nordic effort has increased. In R&D and innovation, bioeconomy, environmental policies or security the Nordics should be able to play a much bigger international role. Russia is a special case. Sanctions and countersanctions limit the scope of collaboration with Russia. I don’t expect that situation will be improved soon. However, it is our common interest that Russia will not be fully isolated. It will never accept being pushed into isolation. I don’t expect that the Nordic countries will make any joint efforts towards Russia but each of them have an interest to avoid escalation of conflicts.

And in this entire context, how important is the finance sector for Finland. How far is the progress in technological improvements in the finance sector?

Finland is highly developed in the financial sector. The major explanation for progress is very simple. The financial and banking crisis in the early 1990s forced us to make radical efforts to improve productivity in the banking and financial sector. Financial institutions recognized that modern information technology provided fantastic tools to do that. Simultaneously, the Finnish banks learnt the lesson how important it is to manage risks. Thanks to that, all the local financial institutions survived the global financial crisis without major harm.

Interview taken by Barbara Dietrich and Maarten Vermeir and transcribed by Maarten Vermeir