Confident Finland aims to share lessons with EU

HELSINKI, July 2: Top of global competitiveness and education league tables, Finland is keen to share the lessons of its successful economic and social model with the rest of the European Union during its six-month presidency.

Buoyed by a booming economy and the globally ubiquitous tones of its Nokia mobile phones, the Finns plan to make the 25-nation bloc take a hard look at how to overcome sluggish growth and high unemployment in much of western Europe.

Prime Minister Matti Vanhanen told visiting European journalists he would explain the ''Finnish model'' of combining economic flexibility with social security to EU leaders, trade union and employers at an informal summit in Lahti, north of Helsinki, in October.

Finland and Sweden had set an example by spending more than 3.5 percent of gross domestic product on research and development, and giving high priority to investing in education.

''If all member states could achieve that, it would mean annually more than 100 billion euros extra spending on R&D. That would be a huge boost to R&D in Europe,'' Vanhanen said.

An old joke says the definition of a Finnish extrovert is the one looking at the other guy's shoes.

But the shyness which characterised the neutral Nordic state of 5.2 million when it ran its first, highly successful EU presidency in 1999 has given way to a new self-confidence.

TAKING RISKS

Former prime minister Esko Aho, author of a report to EU leaders on how to promote innovation, believes Europe's politicians must take risks and make radical changes to shake up European labour and capital markets.

That means making workers more mobile and doing far more to encourage venture capital.

''Innovation and stability cannot live together. It's innovation and mobility. That means you have to change whole societies,'' Aho told the same group of journalists, calling for simultaneous, synchronised change across the EU.

The European venture capital market was dying, having shrunk from a peak of 10 billion euros in 2001 to little more than 1 billion euros in 2004, he said.

''We can live without an (EU) constitution but we cannot live with our present standard of living if we don't have some leadership role in science, technology and innovation,'' he said.

When challenged on the political feasibility of his ideas in a country such as France, which has seen strikes and mass protests over less radical reforms, Aho said: ''Every single government loses an election sooner or later.

''It is better to lose having tried to do something than to do nothing.'' Finland's industrialists are equally bullish about the need to make radical reforms, build economic bridges with Russia, and overcome fears of globalisation and EU enlargement.

Their own experience of shifting within a decade from an economy largely based on pulp and paper to being world leader in mobile telephony and related technologies has given them a story to tell.

Jorma Ollila, Finland's best known industry leader as chairman and until recently CEO of Nokia, says Europe must do more to gain the full benefit from its single market, notably by extending it to services, energy and retail banking.

''European markets do lag far behind the United States and Asia in flexibility, especially in the creation of new jobs and the removal of old ones,'' he told the group.

''Too often in EU history, it has not been possible to enact change without inciting a revolution.'' He defined the successful ''Finnish model'' as a mix of social, economic and educational policies that combined a positive business environment with a knowledge economy.

Nokia had achieved growth by taking advantage of globalisation and outsourcing much of its production while continuing to increase the number of jobs in Finland, he said.

REUTERS