That’s because the Finnish economy was in recession in 2012 and 2013, and it registered only tepid growth last year. In part, it’s due to Nokia’s loss of market share. Once a synonym for state-of-the-art technology in mobile phones, the exponential rise of the iPhone in the past eight years left the Finnish champion reeling for new areas of growth and shedding jobs near the Finnish capital of Helsinki.
Notwithstanding plans for Nokia to merge with French telecoms equipment provider Alcatel announced last week, Nokia’s global dominance in mobile smartphones collapsed over the course of the four-year government of the center-right, liberal Kansallinen Kokoomus (National Coalition Party) while Samsung and Apple increasingly pushed Nokia out of the market. Nokia ultimately sold it devices and services business to Microsoft in 2013. Simultaneous woes have afflicted Finland’s once-thriving timber market.
So it’s not surprising that voters are poised to elect Sipilä as their next prime minister, a former telecommunications executive who aims to run Finland like a private-sector company.
There’s a sense that voters also want to punish the National Coalition. Even former prime minister Jyrki Katainen appeared to sense that when he stepped down last spring to take a position at the European Commission, where he currently serves as the Commission’s vice president for jobs, growth, investment and competitiveness. Katainen left it to his former European affairs minister, Alexander Stubb, to lead his party into the March 19 elections. Polls suggest that has become increasingly difficult over the course of the past 10 months since Stubb assumed the premiership.
A victory for Sipilä would return the Suomen Keskusta (Centre Party) back to power after a four-year hiatus in opposition. Sipilä came to politics only recently, elected for the first time in 2011 to the Eduskunta, Finland’s 200-member unicameral parliament after a successful career in the telecommunications industry.
A Centre Party victory is not expected to change Finnish policy drastically. Polls show that the four most popular parties, which all finished with between 15.8% and 20.4% of the vote in 2011, will win similar amounts in 2015 — the latest April 8-12 TNS Gallup poll places the Centre Party first with 23.0%, followed by the National Coalition and the center-left Suomen Sosialidemokraattinen Puolue (SDP, Social Democratic Party), each with 17.0% and the right-wing, nationalist and eurosceptic Perussuomalaiset (PS, Finns Party) with 16.2%.
Although Finnish voters may be upset with the National Coalition’s austerity policies, Sipilä’s preferences for Finland are not so markedly different. Sipilä would continue looking for ways to cut spending and gradually reduce the state’s involvement in the economy, as Katainen attempted to do. The key difference is that Sipilä greatly prefers cutting taxes.
Finland’s public debt, around 60% of GDP, is low enough (by eurozone standards) to give the next government some flexibility in its economic policy. So there’s no pressing need to necessarily cut spending sharply in the midst of sluggish growth and rising unemployment, and Sipilä will almost certainly use that flexibility to enact policies, including lower taxes, that will position Finland as more competitive within the European Union and globally. That’s consistent with the last Centre Party government between 2003 and 2010, when former prime minister Matti Vanhanen implemented both income and corporate tax cuts during a period of exceptional growth. Vanhanen’s government is perhaps best known for introducing in 2010 a legal right for all citizens to broadband Internet. Despite roots as a party of Finland’s agrarian and rural base, the Centre Party has increasingly assumed the mantle of Finland’s most pro-market, liberal party.
As with most Finnish governments, Sipilä will govern in coalition that includes at least one of the additional major parties, and Sipilä could look either to the left or to the right for coalition partners. For example, Vanhanen’s first government incorporated the Social Democrats, while his second government veered more to the right, partnering with the National Coalition. Historically, however, it hasn’t been difficult for the major Finnish political parties to find consensus in a country where the ‘Nordic model’ has delivered relatively high social stability, low inequality and steady incomes, growth and government services.
Nevertheless, Sipilä will want to avoid the same unwieldy government that Katainen led, an eight-party coalition that struggled to find common ground. To that end, Sipilä has hinted that he may invite the Finns Party into government for the first time, a controversial step. The party, formerly known as the ‘True Finns’, running on an anti-bailout, nationalist platform, had a breakthrough performance in the 2011 elections. If Sipilä invites the True Finns into a coalition, it will be the second time in three years that a Nordic nationalist party have joined government — Norwegian prime minister Erna Solberg governs alongside the far-right Progress Party.
While the far-right nationalists would be likely to back Sipilä’s agenda, they might also force Finland’s government to take a less accommodate stand with respect to EU policy. Notably, the Finns Party opposes additional bailouts for Greece and, indeed, would prefer that Greece leave the eurozone altogether. With talks between the Eurogroup and anti-austerity prime minister Alexis Tsipras already fragile, the Finns Party in government would add a new layer of uncertainty to a potential third Greek bailout. That’s because the Finnish parliament would have to approve the terms of a fresh bailout.
The elections also fall amid increasing tensions between the European Union and Russia, and the rouble crisis in neighboring Russia has impacted the Finnish economy negatively. Despite Stubb’s support for Finland’s membership in NATO, Sipilä strongly opposes it, along with most Finnish voters. Finland shares an 833-mile border with Russia, and though Finland and the other four Nordic countries last week signed a joint defense pledge in response to growing Russian nationalism, the country has a long history of studied neutrality. During the Cold War, the country introduced a bespoke approach of ‘Finlandization’ that mixed sovereignty and neutrality with realistic accommodation with the Soviet Union. Today, Russian leaders have made it clear that they would view Finnish or Swedish accession to NATO as a hostile move — and that’s far out of line with traditional Russo-Finnish relations.