Dear attendees of the Student Investment Summit,
Thank you for inviting me to speak here at the summit. I am delighted to see such a large crowd here today.
The overarching theme of today’s event is megatrends shaping the future. What are the big things that drive change? What are the phenomena that make the lives of our kids different from what we are living today? Or, in this case, and maybe your case: What is the trend that turns an entrepreneur that starts something in a garage somewhere today into a global success story tomorrow?
The European Commission’s Competence Centre on Foresight has identified 14 – yes, 14 – global megatrends that are relevant for the future of Europe.
These range from issues regarding widening inequality, accelerating technological change, and continuing urbanization to climate change, aggravating resource scarcity, and the changing security paradigm. Some of these are opportunities. Some of these are threats. Some need you to solve them, some open up a new world of opportunities.
All these issues are topical and need to be addressed. However, it is the last one, regarding the changing security paradigm, which will serve as the link to my speech here today.
When you invest in something, you bet on the future. You calculate and you make assumptions. In the best of worlds, there is a reasonable probability that your prediction is right. Often it isn’t. It’s hard to predict the behaviour of billions of people.
When developing society you want stableness. When your invest you want the same. You want a situation in which the relationship between cause and effect is foreseeable, in order to be able to make the right decisions.
Then there are situations in which unforeseen circumstances immediately change the equation. Those that bought Moderna stock in late 2019 and sold it two years later profited from a catastrophe. As did those that had Saab or Statoil stock before the war.
But these are anomalies. In general, stability is good. For me – a politician – and for you, the investors.
And we have had too little of that, too little of stability, lately.
Our geopolitical landscape underwent a radical change a year and a half ago – a change that in many ways has served as a wakeup call for Europe. I am, of course, talking about Russia’s illegal invasion of Ukraine in February 2022. The attack profoundly changed our security landscape in Europe.
I was in a surgical operation when the invasion started. When I woke up from the anaesthesia, the world had changed.
It had changed. But it also rang a bell. For us Finns it was a familiar situation – an authoritarian Russia wants to, through deceit and violence, swallow a smaller neighbour.
In 1939, Stalin had ordered a piece from Shostakovich to be played in Helsinki after the successful and swift invasion. That never came to be. And Kiev also still stands.
Russia’s attack on Ukraine showed that Russia wants to destroy the European security order. By attacking Ukraine, Russia tries to claim Ukraine within its sphere of influence. This can’t be the playbook of this century. There is no place for this kind of zero-sum game thinking in the 2020s.
This was an unexpected event. But still, we should have seen it coming.
Russia has tried to undermine European security for quite some time, and the attack is a continuation in this development. We didn’t react hard enough in 2008. We didn’t act hard enough in 2014. Now we have acted.
The unity the European Union showed in the wake of the attack might have taken Russia by surprise. The EU was exceptionally quick, united and efficient in its response to Russia’s attack on Ukraine.
At the same time I can’t stop thinking about what could have been. If we had been capable of imagining this scenario, and thought out the possible reactions to it ahead of time, could we have stopped it?
If we had told Russia that we will support Ukraine with weapons and that we will, among other things, freeze Russian assets and shut its access to SWIFT – would that have made a difference?
I think it would have. Contingency plans are good to have in politics, but also when running businesses or when investing.
But here we are.
We Finns support Ukraine in many ways. Since the start of the war, Finland’s total assistance to Ukraine amounts to 1,74 billion euros. This includes about 490 million euros of humanitarian aid and development cooperation assistance as well as 17 packages of defense materiel assistance amounting to 1,2 billion euros.
How much is that? When you compare our economy to the American one, it is equivalent to the US giving 137 billion dollars. It is a significant amount.
And it doesn’t stop here. Finland will continue its support to Ukraine as long as needed.
What are the results of the war so far? It has devastated Ukraine. It has caused immense harm. The wear has been the scene of tens of thousands possible Russian war crimes. It is an immense tragedy.
But it has also caused other things: It has trashed the influence Russia had globally. It has destroyed the economy of Russia and the future of at least a generation of Russians. It has doubled Russia’s border with NATO and made Finland and soon Sweden NATO members.
When the only countries that vote for you in the UN are Syria, Belarus, North Korea, and Eritrea, you know you have a problem. That’s where Russia is today.
There are several lessons to be learned from this war.
It has shown us how important it is to stay united in Europe, how important it is to build relationships and bridges. It has shown that we need to have common rules in order to function properly. It has shown us the importance of democracy, of democratic processes, as well as the importance of rule of law.
We have challenges within the union. The discussion around the sanctions against Russia has once again brought to light the differences and discrepancies we have within the union. Our values are not totally in line. Are world views are not the always the same. And this creates problems in both good and bad times.
The ongoing Rule of Law Mechanism in the EU is a key tool in strengthening the rule of law in member states. It is process where the whereby the Commission, the Council of the European Union and the European Parliament engage in an annual dialogue with Member States on issues related to rule of law. With the mechanism, we can promote the development of rule of law within the union.
Rule of law is exceptionally important in a union, which in many ways is based on transfers of resources and shared responsibilities. The rules must be the same for all. If you accept money from the EU, you must also play by the same rules.
Another important lesson we have learned is the fragility of our energy market. Russia used its control on energy resources as a tool to gain advantage and to put pressure on Europe. The war has showed us how vulnerable the union was in its dependency on fossil fuels from Russia.
We knew that Russia uses energy as a weapon. We had seen it before. And still, we went on building the Nordstream pipeline, thus tying yet another noose around our neck.
When I, together with then fellow Member of Parliament, now Minister for Foreign Affairs Elina Valtonen, questioned the sanity of the Nord Stream project in 2016, arguing that it has security policy implications for the EU and Finland, we were dismissed. “It is only an environmental matter”, was the answer.
Today we know better. Energy can be a weapon.
This underlines the importance to continue in promoting the green transition and renewable energy production. It is critical to our security in so many ways.
EU is a global frontrunner in green transition and on its way to become the first climate neutral continent. The work on the measures to achieve the EU 2030 climate target – the so-called Fit for 55 -package – has been successfully concluded. As a next step, the EU needs to start working on the milestone to be set for 2040. It is important that Finland is active in these discussions.
Achieving global carbon neutrality and then carbon negativity will require several technological breakthroughs and a subsequent industrial transformation. Finland is well placed to lead the way in this process. Use and export of clean economy solutions aim at increasing Finland’s carbon handprint – a concept we seek to mainstream also at EU level.
There are few industries we can say for certain that will grow in the future. The green economy is one. Only in Finland there are projects that add up to around 100 billion euros in the pipeline.
This is not naïveté. It is hard industrial and economic policy. Pure and simple.
Finland’s position as a leader in the circular economy will also create new work and business. We need a better functioning single market that supports circular solutions, including a European market for secondary raw materials.
It would also help Europe reduce risks related to strategic dependencies.
This brings me to the third lesson from the war: The need to minimize strategic resource dependencies and to guarantee security of supply. We have been naïve in relying on resources from authoritarian states, which then can use our dependencies in extortive purposes.
However, the lesson here is not to turn inwards. We are and we will continue to exist in an interdependent world. Instead, the lesson is to be more aware of our weaknesses and to take action to minimize our strategic dependencies.
We should ask ourselves: What does the world look like in the wake of the war, where all supply chains have been altered and dependencies have been exposed and exploited? How do we navigate these dependencies?
It is no easy challenge to strengthen national security of supply while also strengthening the inner market at the EU level. An efficient market is a market where everybody competes fairly – both countries and companies. And the EU can only be effective and competitive globally if our internal structures are efficient.
We are in a post-Covid reality. State involvement in the economy has to be geared down. If countries enter into a race of state subsidies, Finland will have difficulties to compete for investments in industry. Here there is reason to be concerned about the attitudes in some major EU countries.
I go back to the green economy: We have immense potential in the clean energy market. We have cheap and clean electricity. We have Europe’s best electrical grid. We have the raw materials needed for the battery industry.
But if this becomes a battleground of state subsidies we might still not come out as winners.
Free trade must include a sound assessment of what democracy deficit means and what risks it entails. We need to be better in assessing what it means to do business with authoritarian states.
At the same time, it is important to strengthen our relationship with our partners. The transatlantic partnership is the most important and strategic relationship for the EU and its Member States.
The closely coordinated transatlantic response to Russian aggression on Ukraine has demonstrated the nature of this strong relationship. It has become self-evident that in the face of current geopolitical challenges, our partnership is stronger and more important than ever.
The EU and the US are strategic partners and allies also economically. The EU and the US are together the bedrock of global trade and investment. Transatlantic trade is a key artery of the global economy.
However, with two large economies, it is no surprise that there are also challenges (e.g. Inflation Reduction Act, IRA). Potential irritants remain on trade policy. It is important that during times like these we do our utmost to enhance the dialogue on the difficult questions.
And, if you allow me to reflect on a recent non-issue that popped up in our political discussion: Let’s not flirt with EU-scepticism. It is irresponsible and naive to think that a country like Finland could be better off outside of the world’s biggest market, than inside it.
Our primary challenges are global: Climate change, biodiversity loss, security, democracy, the economy. To solve these issues, we need the EU, and no amount of irresponsible nostalgia or wishful thinking trumps – no pun intended – this fact.
The changes in our security landscape have been profound in the past couple of years. We need to learn, and we need to adapt. We need to strengthen our partnerships and focus on building new, sound ones. We need to take measures to tackle the dependencies that have been revealed, and we need to secure competitive neutrality and a functioning single market.
This we do it best, when we do it together.