Finnish PM Moves to Dissolve Coalition Amid Populist Turmoil

  • Finnish Premier Sipila ends government alliance after meetings
  • Sipila may seek to form new coalition with opposition parties

Prime Minister Juha Sipila moved to dissolve the three-party ruling coalition after his junior partner, The Finns, was taken over by its anti-immigrant wing, throwing into doubt the next steps in a process that has helped Finland battle back from an economic slump.

“Talks are over,” Sipila and and Finance Minister Orpo said on Twitter Monday. “Our joint proposal to the Center/National Coalition Party parliamentary groups: no prerequisites for continuing cooperation with The Finns party led by Jussi Halla-aho.”

The Finns’ shift to the right over the weekend was too much to stomach for Sipila’s Center and Orpo’s National Coalition parties that complete the cabinet. Just halfway into his term, Sipila has ruled out fresh elections, saying he will work to build a new majority within the current parliament. He has already reached out to opposition parties such as the Swedish People’s Party and the Christian Democrats.

Read more on The Finns’ upheaval here

The Center Party will target “forming a new, functioning government as quickly as possible,” Antti Kaikkonen, who heads the party’s parliamentary group, said in an emailed statement. 

The party is reluctant to call a new election, with the most recent Yle poll showing it with backing of 18.4 percent, about 3 percentage points below its 2015 election result. National Coalition is up at 20.5 percent, while the Finns have lost almost half its backing with just 9 percent support in the Yle poll.

The Swedish People’s Party and the Christian Democrats, who together would give Sipila and Orpo a one-vote majority, are both open to talks on joining government, their leaders told local media. The biggest opposition party, the Social Democrats, ruled out joining any government unless new elections are held, Chairman Antti Rinne said, as did the Greens, according to news agency STT.

Nordea Bank earlier on Monday warned that the political turmoil will harm the government’s so far successful drive to propel economic growth.

Sipila, a self-made millionaire who came into power in 2015, has been able to push through agreements that have cut labor costs and brought back growth. The government is now in the midst of revamping social and health care policies and municipal reforms that are seen as key projects to ease the structural pressure caused by a rapidly aging population.

Read more on Finland’s recovery here

“The reform process is likely to suffer a blow no matter what,” Jan von Gerich, a strategist at Nordea, said in a note. The bank on Monday raised its forecast for Finnish growth to 3 percent this year while saying further labor market reforms were crucial to maintain momentum.

The reforms aren’t doomed yet, according to Erkka Railo, political scientist at the University of Turku.

As they discuss the composition of a new coalition, “the Center Party and the National Coalition will likely require that the social and health-care reform as well as the reform of municipalities be taken forward almost in the current form,” Railo said by phone. To achieve that, they may be willing to compromise on other matters.

“The Center party will do everything it can to avoid new elections,” Railo said.

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