No-Nonsense Finns Ready to Rain on Franco-German Euro Parade

  • Finnish finance minister cautions against deeper integration
  • Support for the euro remains skyhigh despite unpopular reforms

The euro area should focus on implementing its banking union and consigning bailouts to the history books, rather than exploring ambitious ideas such as a common budget or shared liabilities, according to Finland’s finance minister.

“We’re willing to engage in a discussion on different scenarios on the future of European Monetary Union,” Petteri Orpo said in an emailed response to questions Wednesday. “I would be cautious about proposals that aren’t consistent with the current stage of political union in Europe, such as eurobonds.”

The debate over the future of the European Union has received new impetus following the U.K.’s decision to leave, with the European Commission outlining five possible scenarios. Those hoping for a re-start in the integration drive in response to populist criticisms have drawn new energy from the lovefest on display in Berlin when German Chancellor Angela Merkel hosted a first meeting with Emmanuel Macron, the new French president. Italy and Spain, meanwhile, are renewing their push for mutually-backed debt.

The priorities of Finland’s finance minister are not as lofty.

“The banking union is by far the most important element," Orpo said. "Risk reduction must come before risk sharing."

Finland may have a special interest in boosting the banking union now that the largest Nordic lender, Nordea Bank AB, is considering relocating its headquarters to Helsinki from Stockholm.

Loyal Supporter

Finnish reticence toward the more profligate members of the bloc is understandable. On top of being a traditionally strict enforcer of the rules, the government recently pushed through unpopular measures designed to drive down labor costs and boost exports, now that devaluing the old markka is no longer an option. 

And yet, despite the adoption of a work-more-for-less labor pact, its populace has remained a steadfast supporter of the common currency.

Finnish support for the euro has increased since the U.K. referendum, further evidence that anti-EU sentiment may be on the retreat after the Brexit vote. What’s more, it’s coming from some unlikely quarters.

“It hurts,” the head of the country’s largest trade union group, SAK, said of the euro in a recent interview in Helsinki. However, “the stability and predictability that it provides has protected us from many other problems," said Jarkko Eloranta, whose movement was originally skeptical of euro membership.

Bad Ol’ Days

Memories of the late 20th century -- an era of devaluations, sharply rising interest rates, fiscal laxness and low confidence in the central bank -- are still vivid in the minds of many Finns.

“Not a lot of love was lost when powers were transferred to Frankfurt,” said Juhana Aunesluoma, an expert in European affairs at the University of Helsinki who argues that Finns turned to euro governance to enforce domestic self-discipline and help their economy transition to high-value added production. The rise of Nokia, from struggling cable and rubber boots maker to mobile phone giant, helped support that narrative.

More recently, critics of the euro have been silenced. Attempts to promote an anti-euro referendum have flopped, while the euro-skeptic The Finns -- which in 2015 rose to become the second-largest party in parliament by campaigning against Greek rescue packages -- has seen its popularity fall, sliding to fifth place nationwide in local elections in April.

“The Brexit vote and recent turbulence in Europe and in world politics may have pushed some Finns off the fence, to the pro-EU side,” Aunesluoma said.

Several decades after the Kohl-Mitterand partnership, which provided the initial impetus to what would eventually become a currency shared by 19 European countries, the leaders of Germany and France say they want to inaugurate a new era of closer integration.

But the euro area’s northernmost member isn’t quite yet ready for the next step, particularly if it involves ceding more powers to bigger member states.

If France and Germany "come forward with feasible proposals, we are happy to discuss them and to take a constructive approach," Orpo said. However, "treaty changes are not on the government’s agenda."

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