Suomi, Our Partner to the North
Belarus and Finland maintain active political and economic contacts
Citizens of Belarus and Finland, a Scandinavian country that amazes travelers with white nights and colorful northern lights, have much more in common than it might seem at first glance. Belarus and Suomi (the Finnish name for Finland) have similar historical destinies: for quite a long time they were part of more powerful states and gained their statehoods not so long ago.
Similar features can be found in the mentality of the two peoples: Belarusians and Finns are deliberate and thorough, reserved but friendly and hospitable. They also share love for nature and native land, winter sports. As regards culinary preferences, their number one choice is meat and potatoes. How similar are the business interests of the two countries, and what is the basis of the Belarusian-Finnish cooperation? The Economy of Belarus Magazine addresses these and other questions to Ambassador Extraordinary and Plenipotentiary of the Republic of Belarus to the Republic of Finland and concurrently to the Kingdom of Denmark Alexander OSTROVSKY.
Mr Ambassador, what is Finland today? Has the country managed to avoid being affected by the financial and economic crisis that engulfed the world?
I think there is no country that has not felt the impact of the global crisis. Finland is no exception. The economy has not yet recovered fully for a number of reasons.
Before the 2008 crisis, the Finnish economy was one of the fastest growing in the eurozone, with the GDP growth close to 4%, which was considerably higher than the European average.
Now for the fourth consecutive year, the country has been in a recession. The country’s GDP growth is close to zero. The national debt has exceeded €100 billion and has almost reached the numbers which are considered the ceiling under the EU standards: 60% of the GDP. The debt is expected to increase to 62% by 2016. The unemployment rate rose to 8.8%.
Along with the weakened global economic growth, one of the main reasons was the reduced economic cooperation with Russia which was the main trading partner of Finland for many years. According to international analysts, the Finnish economy suffered the worst sanctions-related damage in Europe.
The situation with refugees has also made its negative contribution. According to the official data published in the Finnish press, the country spends €1 million every day on accommodation and support of refugees.
The economies of the EU countries have started to show signs of improvement, while Finland is still struggling.
I would like to draw your attention to a paradoxical situation: despite worsening macroeconomic indicators, the country remains high in several international rankings. For example, Finland is one of the four eurozone countries whose debt did not exceed the official ceiling of 60% of the GDP (according to the EU, last year Germany’s debt burden amounted to 80%, and the average debt in the eurozone stood at the level of 95%). It is the only country in the eurozone, the rating of which is “AAA” although the outlook has been downgraded from “stable” to “negative”.
Finland is third in the competitiveness rankings. The Finnish pension system ranks fourth in the world list. Education is the best in Europe. Finland goes third on the corruption perceptions index.
They say Finns are measured people, not overly emotional. They are not inclined to take a risk or take hasty decisions. Can we say that Finns are entrepreneurial people?
Surely Suomi residents are more reserved than southern nations. I would rather call it discretion, reasonableness, thoroughness which is also characteristic of the Belarusians.
When starting a business project with the Finns, it is necessary to understand that the preliminary negotiations will not even come close to signing a memorandum of understanding. Before the parties are able to shake hands, several detailed expert meetings and discussions will have to happen and, of course, some time will have to pass. But when it is done, you will find the most committed and reliable partners in the Finns.
Due to the peculiar living conditions this nation has to be active in everything, including in business. You will agree that for a nation of only 5.5 million to develop such a vast country partly located beyond the Arctic Circle is no easy task. Believe me the tagline “Finland: Everything Works!” is not just idle words.
Are the Finnish people interested in events happening outside the European Union? How do they see Belarus?
Although Belarus is not a blank spot on the world map for the Finns anymore, to some extent it is still terra incognita. So far, not so many Finnish tourists come to Belarus, however, their number has been gradually growing and those who visited once usually return. They speak highly of their visits. They praise the architecture of our cities (and not just in the capital), the generosity of people, Belarusian cuisine and transport infrastructure. Their main interests are historic sites and sporting events.
Thanks to Belavia, a direct flight has been operating from Minsk to Helsinki since 2011, which facilitates mutual travels.
Finland is a very athletic nation. The Finns are very interested in international tournaments where their national teams are featured. The number of visa applications peaks during matches between the Belarusian and Finnish teams in Belarus. The scale of the competition does not matter; fans come to support even their town and school teams.
It goes without saying that the 2014 IIHF World Ice Hockey Championship drew a lot of interest to Belarus. According to our information, about 5,000 Finns took advantage of the visa-free entry to Belarus to support their team or watch other teams play.
In general, according to the consular data, about 700-800 Finns apply for visa to Belarus every year.
How is the political dialogue between Belarus and Finland developing?
The two countries maintain active contacts at the political level: foreign ministers of the two countries meet almost every year, political consultations are held. Currently, we have been actively working on the renewal of the inter-parliamentary dialogue.
The level of interaction in the environmental sector is very high. In 2013, Helsinki hosted the first Days of Belarusian Culture.
An action plan of cooperation between the Forestry Ministry of Belarus and the Agriculture and Forestry Ministry of Finland is in place.
The parties have made great progress in drafting the memorandum of understanding between the Department for the Supervision of Safety Practices in Industry of the Emergencies Ministry of Belarus (Gospromnadzor) and the Finnish Safety and Chemicals Agency as well as between the foreign ministries of Belarus and Finland.
We hope to establish closer cooperation between municipal authorities of the two countries next year.
What Belarusian products are in demand in Finland? Are the Finns satisfied with the quality?
Like all Scandinavian consumers, the Finns are very loyal to their country and opt for the goods made in Finland even if they are much more expensive than similar imported goods.
Hence, the main exports to Finland are industrial goods (transmission gear, instruments, steel frames) and off-the-shelf items (fittings, steel wire, mink hides), which make part of the further production process.
Belarus also exports women’s outerwear which is made on the order of one Finnish company.
Are they happy with the quality? I believe yes. They would not buy our products otherwise.
I would like to cite one interesting example. A voluntary society of Belarus tractor owners was set up in Finland during the USSR times. Once this fleet numbered 5,000 vehicles. Then the purchase of Belarusian tractors was ceased.
Last year the Belarusian embassy resumed contacts with this organization. Eight tractors were shipped to Finland in 2015. In the future there are plans to export 15 Belarus tractors on an annual basis.
In November 2015 the Finnish city of Tampere played host to the international agricultural expo KoneAgria 2015. Taking part in the expo were nearly 300 companies from more than 10 countries. Our partner, the Finnish company Agri-Kymi Oy, showcased the products of MTZ, Bobruiskagromash and Minsk Gear Works at the event.
Is Belarus working to expand the export of its services to Finland?
In 2010-2012 the annual export of services stood at $10-11 million. In 2013 it reached $19 million and has been at this level ever since.
Belarus provides a wide range of services. Computer, telecommunication and information services account for about 67% of the country’s total export. Transport services make up 17%.
Does Finland invest in Belarus?
Finland is a small country and the Finnish business has no extra capital to invest in any project.
The Finns rely on the personal experience of working in a certain sector and prefer investing in this sector, including through the application of the gained knowledge and latest technologies in order to produce well-known goods and sell them both on the domestic market and to third countries.
Among the most important projects implemented by Finnish companies in Belarus is the reconstruction and retooling of OAO Lidskoye Pivo (Finland’s Olvi holds 96% of the company’s shares), the construction of a network of household hypermarkets (Finland’s Kesko Corporation owns 18% of the shares), the acquisition of shares and modernization of Gomel Ice Cream Factory by Finland’s Ingman in 2009-2013.
What is the recipe for success of Olvi, the most famous brewery company in Finland? After purchasing the Belarusian company, the investor kept producing only Belarusian brands in the first years. Apart from that the investor upgraded the company’s technological lines using its best practices.
Many Finnish companies are considering setting up joint manufacturing facilities, outsourcing or expanding their business to third countries, including Belarus.
I can cite Amkodor Holding Company as a good example. Over a number of years the company has been cooperating with Finland’s Kesla, a producer of harvesting equipment, power-lift units and manipulators for harvesters and forwarders. Finnish equipment is installed on Belarusian car frames and the final product is sold on the international market.
If we are to name concrete figures, the situation is as follows. Over the past five years the Belarusian economy has raised over $140 million in Finnish FDI. In 2014 this figure stood at $32.9 million, including $18.7 million in net FDI. There are 30 Finland-funded companies in Belarus.
Finland is a very environmentally friendly country. Several thousands of Finnish companies use eco-friendly technologies. Is Belarus interested in Finland’s experience?
Finland is among the world’s leaders in conservation, management and sustainable use of natural resources.
The hefty fines for environmental pollution imposed throughout the country play a certain role in this. However, they are obviously not the main reason. This is rather about the attitude of people towards the country they live in.
Environmental conservation is natural for Finns. They try to save energy and sustainably use water which, I must note, is very clean and tasty. By the way, the quality of tap water in Helsinki is considered one of the best in the world. Personally, I drink it without any fear.
This responsible attitude to natural resources is not due to the high cost of housing and utilities in Finland. In fact, the energy and water prices there are among the lowest in Europe. It is just that people have got used to living in harmony with nature.
You will see no impassable thickets in their forests as they are regularly thinned. Old and diseased trees are carefully cut, packed and removed, opening up space for young trees.
It is important to say that forests cover 70% of Finland’s surface. The number of lakes exceeds 188,000, and their water is amazingly clean.
Hence, it is no surprise that forestry and woodland management are among the most promising cooperation avenues for Belarus and Finland. In November 2014, a high-level Belarusian forestry delegation visited Finland to study the forest management system. A number of agreements were signed, and efforts are being made to implement them.
As for the high level of eco- and biotechnologies, the Nordic country achieved great results in this field as early as in the 1990s. Due to its harsh weather, energy-intensive industry, and remoteness from major markets, Finland started investing in energy efficient eco-technologies earlier than any other country. The effective business management practices Finland has developed make an integral part of its image.
A dozen of Finnish corporations are among the world’s eco-technology leaders. The country has set the goal of improving its environmental performance and increasing the energy output by 15% annually. Finland’s eco-technology exports stand at some €4.5 billion and account for around 7% of the total national export, which is more than in any other country member of the Organization for Economic Cooperation and Development.
Belarus has been cooperating with Finnish companies in energy-related fields for several years already. Finnish technologies were used to build a combined heat and power plant in Pruzhany. A number of joint energy efficiency and power-saving projects are under development.
We also cooperate in environmental protection. For example, the John Nurminen Foundation and the consulting company Poyry have become leading partners in several international environmental projects in Belarus.
Three important projects were conducted in Belarus in 2011-2014 with the financial assistance of Finnish partners and EU programs and foundations. Efforts are underway to identify new areas of bilateral collaboration in environmental protection, including in industrial waste management.
On 27 May 2015 a workshop on sustainable forest management was held in Minsk. The objective was to set joint priorities for research in the field of sustainable forest management in the EU, Russia and the Eastern Partnership member states. The workshop was organized by the European Forest Institute headquartered in Joensuu, Finland. Here is another example. The investment program Belarus: Environmental Infrastructure Project – First Stage will be implemented in 2015-2018 with the support of the European Bank for Reconstruction and Development and the Nordic Investment Bank with an active participation of Finland. The program envisages the implementation of a number of projects in Belarus’ Brest Oblast, Vitebsk Oblast, and Grodno Oblast for a total amount of around €60 million.
Pragmatic environmentally conscious Finns are embarking on the construction of the Hanhikivi 1 Nuclear Power Plant, which is their third nuclear facility. By the way, the new power plant will be built by Russia. Why did Finland choose Russia as the supplier of nuclear technologies? Can nuclear power become an area of active contacts and experience exchange between Finland and Belarus which is also building a nuclear power plant using the Russian technologies?
Finland views nuclear power as one of the cleanest sources of electricity. The national NPPs are crucial suppliers of energy for the country’s manufacturing sector. In accordance with Finland’s National Energy and Climate Strategy, the country will be committed to reducing the dependence on fossil energy sources by raising the share of nuclear power to 60%.
The decision to work with the Russian state corporation Rosatom can be explained by Finnish pragmatism. There are not many suppliers of nuclear technologies in the world. If I am not mistaken, these are the USA, Russia, France, Germany, and Japan. Apart from Russia’s Rosatom, Japanese Toshiba and French-German Areva took part in the tender to supply a reactor for the Hanhikivi NPP in Pyhajoki. The proposal of the French-German company was rejected because the construction of the third power-generating unit at the Olkiluoto NPP was still in progress.
Having considered the proposals of the Russian and Japanese suppliers, Finnish experts decided in favor of the former because of lower costs, better technical characteristics, and higher safety.
Another important issue is post-sale services. Highly-qualified Russian specialists will take part in the maintenance of the equipment. Besides, the NPP should be provided with nuclear fuel which has to be disposed of after use. As a rule, an agreement on the delivery of nuclear technologies provides for the return of used nuclear fuel to the supplier. In this regard, the proximity of the Russian Federation to Finland is a big advantage, including from the point of view of logistics.
Belarus and Finland already cooperate in the nuclear industry. The Belarusian side maintains close contacts with Finland’s Radiation and Nuclear Safety Authority (STUK). Its experts take part in various events within the framework of international technical cooperation projects in Belarus.
In my opinion, apart from nuclear power, we must step up efforts to promote cooperation in the use of other renewable energy sources. Northern European and Baltic countries are traditional leaders in the development of alternative energy.
Mr Ambassador, we would also like to ask you about the promising avenues of cooperation between Belarus and Denmark where you have concurrent accreditation.
Unfortunately, the share of Denmark in Belarus’ trade with non-CIS countries does not match our potential. However, Belarus’ export to this country has more than doubled over the past year.
The Belarusian side believes there is a good potential for building up relations in various fields, first of all, in the economy. In particular, the countries can advance bilateral cooperation in the energy sector, energy efficiency, and environmental protection. We would like to use Danish technologies in Belarus, implement joint alternative energy projects. Belarus is also interested in agricultural cooperation with Denmark. This country has huge experience in the field.
Belarus invites Danish companies to promote industrial cooperation, especially in those sectors where Denmark has great expertise, like IT, pharmaceutics, biotechnology, purification technologies, machine building, electronics, furniture and textile production.
I had a working trip to Copenhagen in mid-November and held meetings at the Ministry of Foreign Affairs of Denmark, the Export Credit Agency, the Investment Fund, the Confederation of Danish Industry, the Danish-Belarusian Business Association, with the representatives of such companies as Per Aarsleff, Nordic Dairy Technology, ICT Logistics, Mafcon. The meetings proved that the Danish side is interested in close cooperation with us.