The Corner

Great Mannerheim’s Ghost!

Via the Daily Telegraph (my emphasis added):

“Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland,” [Finnish finance minister Jutta]  Urpilainen told financial daily Kauppalehti, adding though that “Finland will not hang itself to the euro at any cost and we are prepared for all scenarios”.

The finance minister stressed that Finland, one of only a few EU countries to still enjoy a triple-A credit rating, would not agree to an integration model in which countries were collectively responsible for member states’ debts and risks. She also insisted that a proposed banking union would not work if it were based on joint liability.

“Collective responsibility for other countries’ debt, economics and risks; this is not what we should be prepared for…”

Some of these comments are just scraps thrown in the direction of Finland’s euroskeptics, but they are nevertheles a handy reminder that it’s not just the Germans who are objecting to the debt mutualization schemes currently being peddled by those who will not actually be paying for them.

For all that, it’s sad to see Ms. Urpilainen still believes that the euro has been “useful” for Finland. It would be interesting to know why she thought that was the case. The idea that membership of the single currency zone helps keep Ivan at bay (a view you can hear from some Finns), by reinforcing Finland’s status as a part of the west seems a stretch, and in recent years even  this well-run country has struggled to maintain labor cost competitiveness against Germany and, crucially, Sweden, a key competitor with a not dissimilar industrial base. 

The Swedes, of course, rejected the advice of their political and economic leaders and said nej to the euro in a 2003 referendum. The resulting exchange rate flexibility (together with free market reforms and sensible budgeting) has been key to Swedish success in recent years. As was said at the time, it is better to be paid in kronor than draw the dole in euros. The Finns should have followed the Swedes’ lead.

But it’s not too late. A Fixit (yes, that’s the term) would not be a bad idea. Not at all.


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