The outcome of the EU’s recovery fund and multiannual financial framework, brought to a conclusion on Tuesday, has sparked lively debate and strong emotions in the political arena, particularly regarding Finland’s evolving role as an ever-stronger net contributor. Many other countries are celebrating their own achievements and the success of their objectives. In Finland, however, the package received a rather cool reception. Opinions on the outcome of the negotiations can certainly differ, and with small changes the result could have looked quite different. In any case, this is a compromise reached through difficult negotiations. Yet in the agreement reached, Finland was directly branded the biggest loser of the negotiations, even though the trajectory of the membership fee, for instance, was already foreseeable following the UK’s exit from the EU.
Based on EU membership contributions, states can be divided into net recipients and net contributors. For practically the entire 2000s, Finland has belonged to the latter group. But does this mean that Finland isn’t getting sufficient value for its membership fee?
The benefits of the EU can always be examined along the net-contributor–net-recipient axis. In reality, this tells us nothing more than whether a country receives more or less in subsidies than it pays back. The real benefits arise from indirect, country-specific gains that are almost impossible to measure in euros.
On the other hand, focusing too much on how individual states fared on their own turf is misleading. Negotiations where everyone merely seeks to maximize their own advantage don’t lead very far. The agreement now reached is a step forward in the development of a better and stronger EU. In global competition, no single European country can succeed alone. Without economic cooperation, there is little point in trying to compete with the United States, China, Brazil, or South Africa. As a competitor, the EU is only ever as strong as its weakest member.
Europe’s recovery and the steady development of the economic area are essential for Finnish exports, since about 60% of Finland’s exports go to other EU countries, of which around 39% goes to the eurozone. Finnish exports need functioning internal markets that carry no currency risk, have no tariffs, but have sufficiently solvent customers. If the EU’s economic development stalls and recovery fails to materialize, Finnish exports will also suffer. A decline in exports directly affects Finland’s economic growth, which cannot be compensated for by stimulating domestic demand.
Large financing packages and recovery aid always create disruptions to the free functioning of markets and production structures. In deciding what is subsidized and how much, the future of the sectors and products in question is also being decided. The competitiveness of subsidized sectors improves artificially, leading to the production of goods on the market that might not otherwise succeed. This makes it extremely important to take part in negotiations concerning industries that matter to you. The value of this decision-making power is also impossible to measure directly in euros.
Was the agreement a bad one? Perhaps, but a worse one would also have been possible. Is now the time to leave the EU? Absolutely not. It is difficult to put a euro-denominated price on decision-making power, peace, human rights, and functioning internal markets. In fact, as long as Finland remains part of the EU and actively involved in its decision-making, I would argue that Finland will never be the biggest loser.
For more information:
Jenna Rautionaho
Helsinki Metropolitan Area JEF (Young European Federalists), Treasurer
[email protected]
+35840 419 4191
The author is a Bachelor of Business Administration student and the 2020 Treasurer of the Helsinki Metropolitan Area Young European Federalists. The original article was published on July 23, 2020.
