HS Foreign 16.3.2004 - Is President Halonen bringing morality back to Finnish foreign policy?

By Heikki Patomäki

The World Commission on the Social Dimensions of Globalization headed by Finnish President Tarja Halonen and Tanzanian President Benjamin Mkapa has produced an important report. The paper contrasts sharply with the line taken by Finland previously, according to which globalization is a challenge for Finland, but above all a positive opportunity - even a vital one.

Is President Tarja Halonen making a new opening that would also show the way for Finland to a new future? Is she restoring moral leadership to Finnish foreign policy?

A government study published in June 2001 stated that globalization is mainly a good thing: "So far, Finland has been one of the winners of globalization, and it has good prospects to continue to succeed in the future as well."

Since not everyone is a winner, common responsibility - as well as the charity of the rich - are needed to ease poverty. Nevertheless, the primary responsibility is with the countries themselves.

The World Commission, which was set up by the International Labour Organisation, and which has operated under Halonen's leadership, says that the possible benefits of globalization are uncertain, contradictory, and open to many interpretations. To the extent that there have been any benefits, they have been spread out less equally than before.

In the report, the voice of the critics of globalization can be heard more clearly than in most official reports. No wonder then, that the International Confederation of Free Trade Unions and many other NGOs have celebrated the report as a significant breakthrough.

In recent times Halonen has distanced herself from the official line in many other ways as well. She has criticised Finland for having a double standard on the question of land mines: Finland is the only EU member state not to have signed the land mine treaty. She has also questioned the need to change the law on peacekeeping. The proposed change would give Finland the possibility to take part in military operations of the EU or NATO. In this way Halonen seems to be placing moral considerations and the security of the whole world at least partially ahead of Finland's short-term interests, or of EU plans.

Finland's new constitution and its membership in the European Union mean that the duties and powers of the Finnish President have decreased. It would be easy to deduce that global politics is the most natural forum for the President to participate in and wield influence. This interpretation is too straightforward.

Globalization thinking is not a separate sector unto itself. Instead, it should be a foundation for security policy decisions, as well as EU policy. This would constitute a clear disengagement from the line of Paavo Lipponen, whose idea is to keep pace with the success of the strong no matter what the cost.

The globalization strategy includes competitiveness policy and a programme on the renewal of global control. Finland has long had an exemplary policy on competition. This has been an achievement of the welfare state, and the conscious focus on technology. On the other hand, a global control renewal programme has been conspicuous by its absence. Now perhaps a foundation exists for such a programme.

The report of the commission headed by President Halonen makes its points carefully, but the message is clear. The freeing of trade, the increase in cross-national investments, and global financing have not led to the claimed benefits in efficiency; on the contrary, the tighter the hold that globalization has on countries, the less the world economy has grown as a whole.

According to the report, per capita growth in the world economy was four percent in the 1960s, but in the 1980s and 1990s it was only one percent. At the beginning of this decade the growth has slowed down more than before. According to other calculations, growth stopped completely in the late 1980s.

Most of the growth of more recent times has taken place in China and India. Surveys from different areas give either a very grim picture (Africa), a grim picture (Latin America and the Arab world) or a confused picture (Asia).

"At least it is clear that this differs from the most optimistic predictions of how globalization creates growth", the report points out.

The situation is made even more difficult by the fact that the differences between the rich and the poor have grown rapidly both between countries and within countries - including Finland itself. Competition over capital has led to a situation where taxes have declined everywhere. The progressive nature of taxation has been reduced while inequities have increased.

Poverty has gone down in absolute terms only in China, and inequality has increased sharply even there. Therefore, the report accepts the arguments of Dani Rodrik, who says that the freeing of trade could be harmful for many countries and areas. The report also repeats the criticism of Joseph Stiglitz, who said that free financial markets produce both waste in the micro-economy and crises in the macro-economy.

It also emphasises the socially destructive consequences of capital competition. After all of this, talk about the distribution of the benefits of globalization rings hollow. To be more specific: what are the benefits that could be distributed?

Could it be that not even Finland's position

is as strong as was thought in the years of rapid growth in the 1990s? Nokia and the other success stories can lean on basic national structures, education systems, and technology programmes during times of growth, but once these companies have reached the top, they no longer have a country. There is a warning in the report of the World Commission that many countries might adopt a more self-centred or change-oriented mode of action.

The analysis is more daring than the recommendations drawn from it. Nevertheless even the recommendations cast doubt on the lines taken by Finland and the EU.

The rules of the World Trade Organisation need to be changed to make them fairer and more diverse, the agreements on competition and investments promoted by the EU need to be forgotten, and subsidies and trade barriers need to be dismantled in food production, textile manufacturing, and shoes.

In addition, the report calls for regulation of capital movements, and a global institution to fight against the moves toward monopoly by large companies. The debt problem of the developing countries needs to be solved by setting up debt mediation mechanisms, and the movement of immigrants should be liberated and regulated through joint action.

Finland's traditional tough foreign policy line has recently focused on NATO and other old questions, but if it is understood correctly, the globalization angle also poses a challenge that makes people think.

Although the report does not say it in so many words, the new security threats facing the West are also the result of "globalization". Disasters and the collapse of states are usually preceded by an economic downturn. In the background lies a decline in the commerical value of the countries' export products, as well as instability, increased debt servicing costs, structural adaptation programmes, and decreased flows of aid. If the reasons are known, how sensible can it be to spend money on preparing for military interventions in problem areas?

The report also leaves other things unsaid. Although it quite correctly analyses undemocratic power relationships, there is no genuine plan of action. Everything is left hanging on the hope that "someone" would start to democratise and reform global control. However, a good strategy should be able to point out what the key reforms are, how they are linked with each other, and how they can be implemented. Responsibility for the action must not always be shifted onto someone else.

Helsingin Sanomat / First published in print March 14, 2004