Finland and Russia: a special relationship

Citation

Gordon Dickinson, P. (2003), "Finland and Russia: a special relationship", European Business Review, Vol. 15 No. 1. https://doi.org/10.1108/ebr.2003.05415aab.002

Finland and Russia: a special relationship

Paul Gordon Dickinson

Paul Gordon Dickinson is a Lecturer at Turku School of Businesses and Economics, Turku University, Turku, Finland. E-mail: Paul.Dickinson@turkuamk.fi

Keywords: Russia, Finland, European Union

Abstract In discussions about the future of Europe, the Northeastern corner is too often overlooked. Yet this is an area of growth and rapid change, where the relationship between the EU and Russia is taking shape. Paul Gordon Dickinson, who lives and works in Finland, argues that the Russo-Finnish "special relationship" is crucial to such developments and so deserves wider attention.

Two countries of vastly different cultures, size, population and political and economic systems lie side by side in northern Europe. Russia and Finland are bound by historical conflict, trade, association and a long border (in fact the only European Union border with Russia).

Finland gained its independence from Russia in 1917 and since then has been at war with its neighbour twice in the 1940s and at the same time established decades of trading and business dealings during and beyond a communist period which has been highly beneficial for the Finnish economy. But this expertise should be tapped into far more by entrepreneurs, economists and politicians, and Finland given a more leading role particularly by the European Union. Russia is of vital importance, for European and indeed global stability and growth, it is the second largest producer of oil and gas globally, with a population of 150 million people.

The Finns themselves are a modest, often shy people, who are not particularly known for their marketing skills and not particularly for the marketing of their own abilities. Yet their experience of dealing with Russia is vast and invaluable and they understand more than any other European Union country Russian mentality. More than a passing glance at the reasons for Estonia's successful business, economic and political development bringing it to the brink of the European Union door would point strongly towards Finland, a Baltic Sea neighbour.

On the other side of the coin, the Russian President, Vladimir Putin, has often expressed the willingness of Russia to integrate into the world economy and especially the European economic systems. Obviously this requires a great deal of effort in terms of harmonisation of norms, standards, laws, etc., and there are notable bodies such as the European Bank for Reconstruction and Development, carrying out much needed work and projects related to Russia.

There is, however, a pressing need for an assimilation centre, dealing perhaps with the effects of the Euro, European Union enlargement and business and economic co-operation between Russia and the European Union (Remes, 2001). This could include an early warning section dealing with problems European business has, and informing Russian decision makers of their nature and significance. A classic example of such problems is the unfair random – and punitive – taxation of European businesses, together with corrupt bureaucratic practices.

To oversee such a body, there would be, in my opinion, nobody better than the Finns. In a recent interview (May 2002) with Kaisa Vayrynen (Project Manager of the East-West innovation centre of Joensuu on the Finnish/Russian border dealing with co-operation and transfer of business professional and economic know how between East and West) I asked her about the Finnish and Russian relationship. "It's a big cultural gap", she replied, "but we bridge it, we have had the experience of dealing with Russians over many years. We even have courses on Russian mentality and for Russian female entrepreneurs. The Russian women are so strong and proud, but we know how to deal with it."

Another aspect involving a Finnish pivotal role to be encouraged would be a Gulf of Finland growth triangle involving Finland, Estonia and Russia. This would be in addition to the northern dimension already acknowledged by the European Union as an area of growing economic interdependence among the enlarging European Union, Russia and the Baltic states. Indeed the Finnish presidency organised in partnership with the European commission, the foreign ministers conference on the northern dimension in Helsinki in November 1999.

In the northern dimension the Kaliningrad region of Russia is designed to get a pilot position as a laboratory for co-operation between the European Union and Russia and it was discussed again when a European Union delegation met President Putin in Moscow in May 2001.

A growth triangle provides a solution to strategic and administrative problems of co-operation between countries differing in their stages of development, and can utilise comparative advantage by for example strategic alliances, but the geographical proximity of the partners is an essential pre-requisite for the achievement of savings by trade, arising from transport, time and information costs. Finland's relations to the other parties are the least problematic and as a European Union member it holds a special position, being able to enhance ties with both Russia and Estonia easily (Kivikari, 2001).

However there have been some recent difficulties, between the European Union and Russia, concerning travel arrangements for the Kaliningrad population (about one million) once expansion takes place to include Poland and Lithuania. Russia had rejected suggestions that Kaliningrad residents would need a full visa to get to Russia.

The dispute appears to have been resolved with the European commission having indicated recently that Russian citizens who frequently travel will get a simplified transit document to cross European Union territory once enlargement takes place. Certainly this latest difficulty illustrates Russian sensitivities about the imminent expansion of the European Union and indeed NATO to its borders. But Kaliningrad is the headquarters of Russia's Baltic fleet and their anxieties are perhaps understandable and need to be handled carefully, something the Finns, given their history and geographical location, are well positioned to do.

Indeed it is almost possible to equate the UK's special relationship with the USA, with that of Finland and Russia, in the sense, that both the UK and Finland have the ability to act as bridges between two powerful countries and a European door. The Finns who originate from the East with an out-post mentality have a Lutheran work ethic and a desire for perfection when they set about a task.

In my opinion their independent outlook and lateral thinking, which is exemplified in their technological innovation over recent years (particularly in the computer and mobile phone industries) make them ideal bridge builders between East and West and specifically Russia and the European Union. They understand the Russians like no other Europeans do. For instance the influence of climate and remoteness are two things both countries share. Indeed the high winter suicide rate in Finland suggests that Russians are not the only ones to wallow in bleakness for long periods (Lewis, 1999).

Perhaps this is the other special relationship in need of being nurtured and used for European and global benefits, as well as the much-discussed British and American connection.

ReferencesKivikari, U. (2001), "A growth triangle as an application of the northern dimension policy in the Baltic Sea Region", in Liuhto, K (Ed.), Ten Years of Economic Transformation Vol. 1. The Economies in Transition and EU Enlargement, Lappeenranta University of Technology, Lappeenranta.Lewis, R. (1999), "The Russians' economic turmoil and cultural change", Nordicum Scandinavian Business Magazine, pp. 6-7.Remes, S. (2001), "One year with a new president: address to President Putin from European business", in Liuhto, K. (Ed.), Ten Years of Economic Transformation Vol. 1. The Economies in Transition and EU Enlargement, Lappeenranta University of Technology, Lappeenranta.