Finland Faces Transformation

May 04, 1991

When Finland's President Mauno Koivisto arrives in Washington Monday for a two-day working visit, he will be a rare visitor: he is not asking President Bush for anything. Moreover, his country and the United States have no outstanding bilateral problems to settle.

Indeed, Finland's preoccupation these days is with domestic economic difficulties. It is a reflection of the country's location in Scandinavia that many of those economic dilemmas are tied to the recent monumental changes elsewhere in Europe, particularly in the neighboring Soviet Union.

For the past 15 years, until last year, Finland trailed only Japan in its breathless economic growth. But even that growth was exceeded by enormous consumer demand, leading to an overheated economy and difficulties in Finland's balance of payments.

This might have been manageable, had the Soviet Union's economy not collapsed. When it did, Finland's lucrative barter of consumer goods for Soviet energy was wiped out. Giant textile and shoe factories went bankrupt as did much of the ship-building industry.

So far this year, Finland's economic performance has been the worst since World War II. Bankruptcies have reached a record, unemployment is soaring. Because of excessively high costs and wages, many Finnish companies are transferring their production to cheaper countries.

Worse yet, Finland is in danger of losing access to the European Common Market. Though such a newly democratic country as Hungary is close to becoming part of that free-trade area, Finland is procrastinating. An increasing number of decision-makers know Finland's membership in the common market is inevitable, yet they fear the short-term costs.

A membership in the European Common Market would force Finland to overhaul its private but highly centralized economy. The wholesale market alone is controlled by four trading organizations. The agricultural sector is equally monopolized.

A common market membership would change all that. It would open Finland's borders to a free and more competitive flow of goods and services, including a cheaper work force.

Finland's post-war economic structure was largely developed under policies of the late President Urho Kekkonen and his agrarian-based Center Party. That party again swept to power in recent elections after having been on the sidelines for years. It is a twist of irony that dismantling the Kekkonen economic legacy now will be the duty of Esko Aho, the 36-year-old Center Party leader who is the world's youngest prime minister.

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