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finland Politics

Finland’s Prime Minister Resigns…Rinne Home for Christmas

UPDATE 3 December 2200 HELSINKI: As expected, Antti Rinne has resigned as Finland’s Prime Minister. He’ll stay on to lead a caretaker government until a new PM is agreed, or in the unlikely event a snap election is called. See below for who we’re betting will be Finland’s next Prime Minister.

The Finnish Government is in deep trouble. It is very likely that Prime Minister Antti Rinne will be ‘home for Christmas,’ or perhaps we should say ‘by Christmas’. Rinne is currently under heavy scrutiny due to allegedly making false statements regarding the recent postal strike

In the early evening on December 2, the Centre Party (Finnish: Keskusta) expressed a lack of confidence and distrust in Rinne, who is a member of the Social Social Democratic Party (Finnish: Suomen sosialidemokraattinen puolue). The Centre and SDP are the main parties in the current coalition government. Other parties have previously expressed concerns over the PM’s behaviour also. 

However, the Centre Party is likely to proceed carefully as they don’t actually want another election, in which they may perform poorly. Instead, they are pushing the SDP to force Rinne out.

Background: Posti Strike controversy

The whole situation started when it was discovered that Rinne and the now ex-Minister of Local Government and Ownership Steering, Sirpa Paatero knew more than they had claimed about state-owned postal company Posti’s plans to cut pay for 700 workers. 

Both Paatero and Rinne claimed that they had no knowledge of Posti’s plans for pay cuts but the Postal Union Leader (PAU) Heidi Nieminen and Posti board member Markku Pohjola disputed those claims. 

“Posti informed the minister of our outsourcing plans during the preparation stage,” Pohjola was quoted as saying, according to Yle.

Helsingin Sanomat reported that Paatero received Posti’s plans to move 700 parcel sorters and 8,100 postal delivery workers to a different, cheaper employment contract on June 7, 2019. The Posti’s board members decided to put the plan into action after returning from a lavish trip to San Francisco in mid-August. Posti chiefs discussed the decision – which would decrease the salaries and benefits of 700 postal workers dramatically – with Paatero on August 21. She did not express any opposition to the plans, according to reports. 

A Posti delivery cart on the streets of Helsinki.

Too little, too late 

On September 3, Paatero announced a timeout regarding the employment contract transfer. This was too late, however, since 700 parcel sorters had already been moved under the new contract on September 1. 

On Nov 29, when Paatero announced her resignation, Rinne threw her under the bus claiming that she had not followed his orders. According to Rinne, Paatero should have stated her objections to changing the terms of employment for the Posti workers.

Rinne appears to be using Paatero as a scapegoat and as a last attempt to save his political skin. This will be unlikely to work. 

Push to shove?

If the Centre Party withdraws support from Rinne, the government will likely fall, should the SDP continues to support him. This would be too large of a risk for the SDP. The party has been losing support steadily since coming to power in Parliamentary elections in April this year. It is likely they will force Rinne out to save the government, hence keeping their position intact.

The SDP Party members held a party congress on the evening of December 2 at their main party office in Hakaniemi district’s iconic Ympyrätalo in Helsinki. They discussed Rinne’s situation and decided not to vote for his resignation at this time.  

Rinne made a very brief public appearance and commented on the situation, critising the Centre Party’s for being unclear with their demands. 

“If my way of communicating has been said to be unclear, I have to say that the Centre Party’s way of communicating is even more unclear, ” Rinne said.

“At the moment it is hard to know what they (the Centre Party) want in this situation. That is why tomorrow, for my due process, I want a Yes or No answer from them regarding if they want to continue working with me.”

Today (December 3) Rinne will be facing an interpellation organised by three opposition parties the Coalition Party (Finnish: Kokoomus), the Christian Democrats (Finnish: Kristillisdemokraatit) and the Movement Now (Finnish: Liike Nyt). That is, unless he has resigned before this happens. 

Vice President of the Social Democratic Party Sanna Marin seems to be the most likely choice to step into Rinne’s shoes following his nearly certain resignation.

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finland Politics

The Finns, a right-wing political party, has gained popularity among educated business people in Finland

Earlier this week, a poll showed that populist Perussuomalaiset (the Finns / True Finns) remained the most popular political party in Finland. 23% of the 3,414 people surveyed over the course of about one-month supported the Finns, while 17.3% backed Kokoomus (the National Coalition Party), the second most popular party.

So soon after the spring parliamentary polls, it’s too early to think about new elections in Finland. However, the popularity of the Finns will be of concern to moderate-minded individuals, given the party’s anti-immigrant stance and critical views of the EU. Along with these factors, the Finns’ policies towards environmentalism, for example downplaying the importance of taking action to prevent climate change, may also be concerning to some. Yet these policies are winning over voters.     

Who are the Finns? 

The Finns became one of the most popular parties in Finnish politics after their election win in 2011. In 2019 parliament elections, they were the second-most popular party (17.5 % of all votes) after the Finnish Social Democratic Party (17.7% of all votes). The SDP’s popularity has since dropped to 13.9%, according to the poll mentioned above, mainly due to frustration with a lack of concrete steps by the government

It definitely looks like the Finns party has established themselves on the Finnish political map. One of the reasons for their success and popularity is their anti-immigrant and Eurosceptic political views. Having shown their popularity during the spring elections, the Finns are now sitting comfortably in the opposition, able to critique the slow-to-perform coalition government.

Who supports the Finns?

The Finns have traditionally been most popular among more nationalist men with lower levels of education.

They’ve also been popular among those who would like to keep ‘Finland for Finnish people,’ individuals who see globalism as a threat, not as an opportunity. According to a survey that was conducted in 2016, 75% of the members of the Finns party were men, and 30% of the members had  a degree in higher education (university or polytechnic). Only 10% of Finns party voters had a degree in higher education.

As in other countries, right-wing populism has gained momentum in Finland in recent years. Perussuomalaiset (ie the Finns party) became famous after their “Jytky” (it’s how they named their election win) in 2011. After the great recession in 2008, right-wing populism has grown in many countries (see the graph below). There has also been more “Jytkys”  in the 2010s than just the Finns’ election win in 2011: the UK’s vote for Brexit and the election of Donald Trump as US president in 2016 for example.

Today, the Finns are increasingly supported by young men under the age of 25 and those who are aged 35-64.  

Business people are also starting to like the Finns party 

According to Helsingin Sanomat, the most popular newspaper in Finland,  people who voted for the Finns party in this year’s parlamentary elections were more right-wing and more educated than in previous elections. According to Suomen Uutiset, engineers, chief financial officers and ITC experts and other educated professionals share more and more of the worldview of the Finns party.

A typical example of a new supporter or member of the Finns could be Veikko Vallin, “The Trump of Tampere”, who joined the Finns party in 2017. He is a Member of Finnish Parliament, an entrepreneur and a millionaire who is against “bad” immigration and who would like to tax corporations and businesses less in Finland. He supports Donald Trump, the US president.

More and more municipal politicians have also become supporters of the Finns party after becoming unhappy with their previous party. The “Trump of Tampere” also claims that “many bankers and CEOs have patted my shoulder”.

Supporters of the Finns party are not only lower income people, at least not anymore. It will be very interesting to see if the Finns can attract more business people to support them in the future.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland Politics

Finland’s super popular President Sauli Niinistö meeting with Donald Trump

What is the Niinistö – Trump Meeting About?

Finland’s super popular President Sauli Niinistö is meeting with US President Donald Trump on 2 October at the White House. The 100th anniversary of diplomatic ties between Finland and the United States is the reason for the meeting, according to a statement from the Finnish Presidency. European and Arctic security (code words for Russia) will also be discussed.

In our view the key points of concern here are:

  • A possible new arms race in Europe
  • European energy security
  • Two recent nuclear-related accidents in Russia

Don’t expect much public clarity about any of these points following the meeting or afterwards. Follow Niinistö though if you’re interested in US – Russia relations. Or US – Finland relations for that matter. Also follow him if you’re enough of a politics junkie to enjoy press conferences with ultra-awkward body language.

August 2017 Niinistö – Trump press conference

Niinistö vs Trump Popularity Contest

At the least, Niinistö meeting with Trump is an occasion to comment on their differences.

Niinistö’s approval ratings have consistently been high. Nearly all respondents of a recent poll thought he was doing a good job. During a speech this week to the UN General Assembly, Niinistö focused on the need to address climate change, which is already occurring ‘from the Arctic to the Amazon,’ he said.

On the other hand, the opposition Democrats have just launched a formal impeachment inquiry against Trump. Polls show the US president’s approval rating to be about 43%. His speech to the UN General Assembly focused on threats aimed at other countries and championing nationalism.

Upon arriving at the UN he got dirty looks from Swedish teenage environmental activist Greta Thunberg, who later bested him on social media taunts.

Who is Sauli Niinistö?

Niinistö has been president of Finland since 2012 (Finland’s presidency has 6-year terms). He was reelected in 2018, notably becoming the first Finnish president to be elected in the first round of voting. During his time in office, Niinistö’s seen four different prime ministers, giving him plenty of perspective on how governments in Finland, or in the United States, can come and go. Finland’s current Prime Minister Antti Rinne has his hands full with some controversial economic reforms and the longevity of his government is under question.

On 24 September, Niinistö tweeted about meeting UK economist Nicholas Stern (someone who is very concerned about climate change), emphasising how important this issue is for Finland and Niinistö personally.

Niinistö is also not shy about meeting some of the more difficult leaders in global politics. For example:

Personality Matters in Politics

Of course personality is what really matters in politics. Niinistö is pretty likable in the eyes of most Finns. He’s not done much that would make him controversial in Finland. He comes across as trustworthy and honest. He also shares photos of hockey games, along with images of his baby son and Boston Terrier dog.

Niinistö Walks the Line

We’re not expecting much to come out of Niinistö’s meeting with Trump. We do think that the Democrats’ impeachment inquiry will ultimately help Trump gain votes in 2020 and probably aid his reelection. That means Finland will need leaders who, like Niinistö, can have positive relationships with other politicians with whom they don’t see eye to eye on all issues.

Categories
finland Politics

Hold onto your horses, Putin is coming!

Photo: A woman at the Russian Orthodox Pokrovskaia Association in Helsinki, Finland.

Stop the traffic. Stop the music. Stop whatever you are doing. Putin is coming to town!

The big man of Russia will be in Finland on August 21 to meet with President Sauli Niinistö.

The two have a tight relationship, and Putin visits Finland annually. 

Niinistö last met with Putin in April at the International Arctic Forum in St. Petersburg. Putin expressed that relations between Russia and Finland are developing in a good direction. Thanks for the love, Vlad!

The meeting next week takes place at the Finnish president’s summer residence in Naantali and comes at a time when relations between Russia and the West are, frankly, in a dreadful state. Niinistö has sought to reassure the Finnish media by saying that no conversations topic will be taboo. However, he refused to disclose the talking points.

We expect Niinistö to continue acting as a bridge between Moscow and Western countries and to carefully tend to what is an uneasy, but important partnership. Many Finnish companies want the sanctions currently imposed on Moscow to be lifted and for Russia to return to buying a wider assortment of products from Finland . Don’t forget, Russia remains an important market and is located right on Finland’s eastern border. Even notoriously quiet Finns talk to their neighbours.

An abusive relationship?

A digression to dig a little deeper into Russian-Finnish relations…

Innocent and inexperienced small town girl meets mysterious, unattainable bad boy. It is an old story that rarely has a happy ending.

Falling in love with such a character can bring your exhilarating excitement. Yet one day you wake up and realise that you are in an abusive relationship with a narcissistic lunatic and there are very few ways out.

Perhaps I am exaggerating a bit (just a bit) by seeming to compare such a dynamic to the Russia-Finland relationship. Yet, like that unattainable new love interest, Russia remains a mystery to Finland, and just about everyone else.

That doesn’t stop Finns from pursuing it of course….there are all those people, all that land, so many resources…

 Russian poet Fyodor Tyutchev famous poem says it all: 

”You cannot grasp Russia with your mind 

Or judge her by any common measure, 

Russia is one of a special kind –

You can only believe in her. ”

Another Cold War?

Yes, Russia is Finland’s main longterm external security threat.

In March, the Finnish Defence Ministry released a critical report of Russia entitled “Voiman Venäjä” (eng. Russia of Power). The report was a continuation of two previous reports “Haasteiden Venäjä” (Russia of Challenges, 2008) and Muutosten Venäjä (Russia of Changes, 2012).

“Voiman Venäjä” paints a grim picture of Russia-Finland relations and even mentions being on the edge of another Cold War. An unstable Russia could have a huge impact on Finland’s security. Meanwhile, the increased Russian military activity in the Baltic Sea makes Finland nervous. Russia sees Finland as part of its larger geopolitical goals, according to the report. For example, the presence of the Russian Orthodox Church (not to be confused to Finnish Orthodox Church that is part of the Patriarchate of Constantinople) is controversial in Finland as it is seen as part of Moscow’s soft power strategy.

Helsinki views Russia as unpredictable and wishes to convey itself as a reliable partner, one who can talk it out, no matter the issues, without physical altercation, according to the report.  

For its part, Russia has criticised Finland’s closer defence co-operation with Sweden and the fact that Finland has taken part in NATO exercises. 

Friends, until we’re not

Hostility is unlikely to be seen during the meeting between Niinistö and Putin next week.

In official meetings Russia has always highlighted its good relations with Finland. This is despite occasional not so subtle hints about the horrible consequences should Finland do something disagreeable (such as making plans to join NATO).

In other news, the Iranian Foreign Minister Mohammed Javad Zarif will also meet with Niinistö next week, on August 19.

So it will be a busy week for Finnish foreign policy. 

Categories
education finland Politics

Work to Study, or Study to Work?

Photo: Student housing in Helsinki.

University students in Finland are demanding more money. In 2017, financial aid was cut to EUR250.28 per month. Today, students are demanding a EUR100 increase in financial aid from the new government that would bring their support to around EUR350 monthly.

Unfortunately for students a rise in financial aid seems doubtful. Earlier this month Interior Minister Maria Ohisalo (Green League) stated on Yle’s 8 minuuttia programme that a hike is unlikely, though that had been one of her party’s main campaign promises during the election earlier this year. The new government has agreed, however, to link the amount of aid to the cost of living. Also more affordable houses and living have been promised to students.

Keeping students happy in a country that faces an aging population may be important, but increasing financial aid would be difficult given an already optimistic government budget.

GoNorth! Outlook
Finnish university students will have to keep up the pressure for the
long-term (we mean years) to see their financial aid increased.
The current government is unlikely to agree to a direct increase in
support …sorry students…

Why might Finnish students turn down work?

This year, Finland’s student financial aid program hits the graceful age of 50. University students don’t pay for education in Finland and receive government financial aid to support themselves. The idea is that young people are enabled to focus on their studies and not have to worry about working at the same time. Therefore, they should be able to graduate faster and become tax payers, which is what Finland needs, especially given the demographic challenges mentioned above.

Here’s the catch: accepting financial aid substantially limits how much a student can earn by working. Yet few companies will hire a graduate with little work experience. Currently, if you study nine months out of the year, and you take out financial aid during those months, you can earn up to EUR11,973 annually.

Summertime blues

The income limit was set because the Finnish state didn’t want wealthy students who were able to independently support themselves also receiving financial aid.

It’s not exactly easy to survive in expensive Finland with only financial aid, especially if you want to enjoy your university years, which every sane person does. What’s tough is that even if students don’t get financial aid for the three summer months (unless they study full-time during the summer), the income they earn from a job during this time is calculated into the whole year’s earnings. A student who succeeds in getting a well-paying summer job and continues part-time work during study time can quite easily go over the earnings limit.

For example, if you make EUR6,000 between June-August, you’ll only be able to earn EUR5,973 the rest of the year. This would mean EUR664 per month. This limit is quite low especially if you, like many students do, work on weekends or nights and earn extra for unusual working hours. For example Sunday work pays double the usual salary.

Tax the students

A January 2019 study from the Labour Institute of Economic Research recommended that the earnings limit be increased to about EUR18,000 per year for students who study nine months out of the year. This would have a positive impact on students’ well-being and increase the government’s net income tax revenue by EUR5.9 million annually, the report found.

At present, the risks of earning too much are real for students. Finland is the only Nordic country that requires students who earn over the limit to pay back the financial aid they received that year in full. That’s right. Go over the limit. Pay it all back.

In comparison, in Finland’s Nordic neighbor Norway, students who earn more than they are allowed only have to pay a greater amount of tax. In Denmark, only the amount earned that’s over the limit for students receiving financial aid has to be paid back.

Finnish social service agency KELA says about one in ten Finnish students ends up exceeding the earnings limit. In fact, the latest statistics show that the number of students who earn too much while receiving financial aid has increased. In 2019, KELA requested 40,000 students to repay financial aid from 2017. This was an increase from 34,800 in 2018 (a payback request from support given in 2016).

Cuts and Loans

Student financial aid without housing support is currently EUR250.28 a month. It used to be EUR336.76* before the previous government (2015-2019) brought it to the cutting board in 2017. Chop.

That government, led by Juha Sipilä of Centre Party (Suomen Keskusta), increased the amount of affordable government backed loans offered to students instead. Now students can take out loans of up to EUR650 per month. On top of that a student can get an up to EUR400 per month housing allowance, depending on how high their rent is and if they live alone or not.

This lower financial aid was put to place in August 2017 and already now it has increased the amount of debt that students take on. According to the Bank of Finland students took out EUR15 million more in loans in January 2019 than they did in the same month a year ago. In total, the amount of loans given to students in January 2019 was EUR285 million. The median interest rate on these loans was 0.48%, according to Bank of Finland data. This is a very low interest rate and some students even use the loan or part of it to invest in different assets. As of August 2014, if a student takes out a loan, 40% of the amount borrowed above EUR2,500 can be ‘forgiven’ (up to EUR6,200) if they complete studies within the amount of time Kela estimates it should take them, becoming an educated, full-time tax payer on schedule.

*For students at university and college level. Lower level students were already receiving only EUR250.28 per month before August 2017.

Categories
finland Politics tax

New Government Jumps Finland ahead of the Environmental Game | Drink Alcohol and be Taxed More!

Finland’s newly formed government has announced its agenda, highlighting environmental issues, job generation and social equality. The new programme aims to make Finland carbon-neutral by 2035. This goal makes Finland a top country in Europe in regards to aspirations for decreasing its environmental impact.

The programme makes massive promises and has left many wondering wether it is too ambitious. The EUR1.2 billion needed to implement all the “improvements” has to come from somewhere. To increase revenue the government, lead by Prime Minister Antti Rinne (SDP), aims to increase taxes by EUR750 million.

Sinners Be Damned

Some of that EUR750 million in additional tax revenue will come from a so-called ‘sin tax’ which includes tax hikes on tobacco, alcohol and sugary drinks.

Yle News calculated that alcohol tax would mean that those winenistas consuming a bottle of wine per week would see their spending increase by about EUR10.92 per year. This could potentially increase ‘booze rallies’ to Estonia, which recently decided to lower its alcohol tax by 25% in order to increase foreigners’ alcohol spending in Estonia. Even before the alcohol tax hike, booze in Finland is substantially more expensive compared to Estonia. For example one bottle of Australian Yellow Tail Shiraz costs €10.54 in Alko and just €2.60 in Liviko store in Estonia.

Despite booze being substantially cheaper in Estonia even before the tax reduction, which will be implemented on July 1, 2019, Tallinn is concerned over revenue losses from alcohol sales to Finnish travelers. Just two years ago Estonia hiked its alcohol tax by 70%, which made many residents of Finland travel further south to Latvia for cheap booze.

“[Following the tax increase] Estonia lost a third of their alcohol tax revenue last year, mainly to Latvia.” Managing director of the Finnish Grocery Trade Association (PTY), Kari Luoto, said to Yle News.

Estonia’s new tax reduction might have a limited impact though since Latvia may follow suit, according to Bloomberg.

The Institute for Health and Welfare (THL) calculated that Finnish travellers imported the equivalent of 7.1 million litres of pure alcohol in 2018. In 2017 this figure was 6.9 million litres. It is yet to be seen if Estonia’s tax reduction and Finland’s tax hike will increase the level of imported alcohol in 2019.