JOINT COMMITTEE ON EUROPEAN AFFAIRS debate -
Wednesday, 28 Jun 2006

Finnish Presidency of the European Union: Presentation.

Chairman

Apologies have been received from Senator Ormonde.

The first item on the agenda is a discussion with His Excellency Mr. Seppo Kauppila, ambassador of Finland to Ireland, on the priorities of the Finnish Presidency of the European Union. On behalf of the joint committee, I welcome the ambassador to discuss the priorities of the Finnish Presidency, any other related matters and any issue he wishes to raise with us. The format is simple. The ambassador may make a short presentation, following which I will allow members to ask questions. I thank the ambassador for coming for this exchange. It is much appreciated.

His Excellency Mr. Seppo Kauppila

I thank the Chairman and members of the committee. As I was told I would have five minutes, my presentation will be brief and general in nature. I look forward to answering more detailed questions.

Finland's EU Presidency will begin on Saturday. We are honoured that the Taoiseach will visit Finland on Friday, the eve of the Presidency. When Finland prepared for its first Presidency in the latter half of 1999, there was an air of a baptism of fire and expectations of great decisions. As is often expected from small countries such as Finland or Ireland, we also did well and important decisions were made at the Helsinki Summit, including on an EU crisis management force and the start of membership negotiations with Turkey.

Preparations for Finland's second Presidency have been much more low key. The Presidency is now a routine task and the European Union has changed fundamentally since 1999. There are more member states, while the foundering of the constitutional treaty in referenda in France and The Netherlands will cast a shadow over the Union for the next few years. We expect that, through our Presidency, we will be able to take small steps, rather than great leaps forward. Do not expect from us any heroic or sweeping decisions. The holder of the Presidency can only do what is politically possible.

During the Presidency Finland will host 130 official and unofficial meetings on a variety of levels. Among the most important will be the unofficial summit to be held in Lahti in October. For those members who are interested in winter sports, they may recognise the name, as Lahti is famous for ski jumping. The biggest meeting will be the ASEM meeting, the Asia-Europe summit, to be held in Helsinki in September. Another big meeting will be the meeting of Foreign Ministers on the Barcelona Process in Finland's second largest city, Tampere.

Finland has collaborated with the current holder of the Presidency, Austria, in producing a working programme for this year and will carry on where Austria leaves off. This is a novelty in that we have a working programme for the whole year, to which only minor adjustments will be made for the Finnish Presidency.

Our Prime Minister, Mr. Vanhanen, announced the areas on which the Finnish Presidency will report in a report submitted to the Finnish Parliament one week ago. We have given the text of the Prime Minister's statement to the secretariat. He will brief the European Parliament on 5 July.

Finland's agenda will naturally include the recurring themes which we inherit from previous Presidencies. They range from globalisation to improving the competitiveness of the European Union, and from the challenges presented by an ageing population to controlling climate change. Finland will add her personal objectives to this agenda such as increasing transparency in a Union that is still very secretive by Nordic standards. It will also streamline the EU's decision-making process. Finland will also highlight EU-Russia relations and the northern dimension. I shall be glad to answer questions on any of these themes such as the Lisbon Agenda, competitiveness, innovation and other themes that will be important during the next few months of the Finnish Presidency. I understood, however, that the committee would be particularly interested in our views on EU-Russia relations and the northern dimension. I can answer questions on those themes as well.

The extensive reliance of member states on imported energy has placed energy policy high on the agenda. This topic will be addressed at a very early stage in the Finnish Presidency when the G8 meeting of leading industrial countries is held in St. Petersburg in July. Russia, a late entry into the G8, is now chairing the group for the first time. Quite appropriately, it has chosen energy security as its theme. The high dependency of several member states on Russian oil and gas became a serious issue in the EU when Russia cut off deliveries of natural gas to Ukraine for a period, early this year. At the summit in Lahti, after the regular meeting where the main focus will be on innovation, the Heads of State and Government will also discuss external energy policy in preparation for the discussion with the Russian President, Mr. Vladimir Putin, who has accepted an invitation to join the EU leaders for a working dinner in the evening. We can expect a very open and thorough discussion on EU-Russia relations, including the major issue of energy.

More information on the priorities of the Finnish programme can be found on the Presidency website, of which we will give the committee details. It will contain Presidency bulletins and statements, a calendar of meetings, news items, basic information on the Finnish Presidency and special information intended for the media.

Perhaps I can mention briefly the number one priority for the Finnish Presidency. Much is expected of us in so far as Europe's future is concerned, which includes the future of the constitutional treaty and enlargement. I hope no one will be disappointed to learn that our main objective is to run the process as effectively as possible, but without our goals being too ambitious. Our main objective as regards the constitutional treaty will be to keep the process moving. The Finnish Presidency is ready to start a preliminary inquiry to explore the future viability of the constitutional treaty. That means, in line with the June summit's conclusions, that we will start consultations on how to move forward with the constitutional treaty. This will pave the way for next spring when the report will be given to the European Council by the next Presidency, Germany. This means any major progress as regards the treaty will have to wait until the German Presidency takes over. We will co-operate closely with Germany on this issue.

As far as enlargement is concerned, the most immediate question will be whether to accept Romania and Bulgaria as EU members from the beginning of next year. What may be even more important is how the EU assesses the progress made by Turkey towards membership eligibility. The position regarding the negotiations with Croatia is somewhat easier. Enlargement in general will be discussed during the Finnish Presidency, as the question of absorption capacity has been raised in the recent summit. We are very happy that the summit accepted that it is important to avoid creating new criteria for enlargement and we want everybody to stick to the commitments given in this regard.

Chairman

I thank Ambassador Kauppila. I have one quick question before opening the discussion to the members of the committee. The ambassador mentioned Bulgaria and Romania. It seems that Finland is the only country that has definitively said it will open its borders for the free movement of workers from both those countries upon accession. Will the ambassador give the committee some background to this decision and let us know why it was made and the rationale for it, as well as the expectations of migration into Finland once that decision is carried through?

HE Mr. Kauppila

The Finnish Government and Parliament studied the experiences we had during the first two years after the decision was made to have the transitional period for the eight new member countries. The conclusion was that our decision in that case to have such a transitional period was unfortunate. The Government decided not to make the same mistake again. Traditionally, there have not been many Bulgarian or Romanian citizens in Finland, only about 1,000.

Chairman

Will the ambassador please clarify? He said the decision Finland made regarding the eight accession countries was unfortunate. Will he explain that?

HE Mr. Kauppila

The main reason we did not have a derogation as some other countries did was because of workers engaged in foreign companies that came to Finland to provide services. This created a very unregulated labour market in Finland which also meant that we lost a good deal of income tax. The working conditions were impossible to control. Rather than allowing that, we decided to allow workers from the new member states to enter.

The Finnish Government and Parliament calculated that it will not be likely that this trend would change when workers came from Romania and Bulgaria. One must take into account our location as a cold, northern country with an impossible language.

Chairman

It is not that warm here either.

HE Mr. Kauppila

It is much warmer and temperatures have been at 25° to 30° Celsius for the past three weeks. The transport links with Bulgaria and Romania are not as good as those with other areas.

Chairman

Is there any concern that Finland might end up being the only state that allows complete freedom of movement with these two countries?

HE Mr. Kauppila

I do not know the real thinking behind the Finnish Government position and the parliamentary debates. I think they are confident that we can deal with the situation. We need foreign workers because the demographic situation in Finland is the most difficult in Europe. The population is more aged in Finland than anywhere else, so we must import foreign labour.

Deputy Allen

I welcome the ambassador and the first secretary. I thank the ambassador for his contribution and the detailed submission on the Finnish Presidency programme we received prior to this meeting. In this document, a reference was made to the constitutional treaty. There is a view that we cannot cope in the long term with the extension of the period of reflection and that there is a need to find ways of operating through current treaties in dealing with external issues.

How will the EU work with the existing treaties in the area of enlargement? How does the Finnish Presidency propose to go down that road, as suggested in the document? The enlargement to include Bulgaria and Romania comes within the existing treaties. We will be issuing a report on this, but from my visit to Bulgaria and Romania, I feel that they are working with great determination to comply with the demands of the EU. I hope that those efforts and the progress made will be recognised. A report on the Turkish application will be published in November. How does the Finnish Presidency view the ongoing failure of Turkey to recognise the existence of Cyprus and its failure to give the normal courtesy to Cypriot vessels at its ports? How can we continue to deal with that enlargement in a realistic way while such an affront is being visited upon one of our member states?

The Commission issued a Green Paper on Energy Policy. We expect to have a policy proposal by next year, during the German Presidency. In the meantime, much work must be done on the issues raised in the Green Paper. Finland is Russia's nearest neighbour. In that context, how does the Finnish Presidency propose to deal with the increasing Russian hold on the European economies through control of its natural resources? Will be there increased dialogue on energy policy between the EU and Russia during the Finnish Presidency? How will a link develop between the European energy policy and our obligations under the Kyoto Protocol?

HE Mr. Kauppila

I am a humble civil servant. Most of these questions should be addressed to my colleagues in Helsinki or Brussels. People should not expect everything from an ambassador.

We are concerned about the situation regarding the Ankara Protocol. The crunch will come in the autumn. I cannot speculate on how we will deal with it. We will rely on other member states and the Commission, but both Turkey and Cyprus must move forward. This issue occupies the minds of the specialists in Helsinki and the Finnish embassies in Ankara and Nicosia. They would be able to provide a better answer to the committee. We will cross that bridge when we come to it.

I probably cannot answer all of the Deputy's questions on energy policy. We will have preparatory discussions during our Presidency to assist Germany, which has been asked to prepare an energy action plan for the summit next spring. We will carry out the consultations as requested at the June summit. We will work actively with the Commission and consult member states in order that we can present correctly what the Council believes are the guidelines for the Commission.

On energy policy and climate change, the Kyoto Protocol will feature prominently on the agenda for almost all third country summits, including the EU-Russia summit. We will also carry the ball in the meetings with the United States and other important players. I hope the Lahti meeting, the informal meeting of Heads of State and Government, will give further substance to the work on the EU-Russia energy dialogue which has progressed but not produced many results. It has been slow work, but we intend to give it greater visibility by organising a permanent partnership Council on energy matters with Russia. The British had the first such meeting and we will continue to give it political visibility. Very important in this process was the discussion with President Putin during the Lahti meeting. I understand the matter is very much linked to the future of our legal framework with Russia and the partnership and co-operation agreement which will expire. It has been suggested that once we have a new framework for EU-Russia co-operation, we can also move to a more contractual basis on energy matters with Russia to avoid such unfortunate events as the ones which took place earlier this year.

Deputy Allen

Given the bilateral agreement into which Germany entered with Russia, is there a danger that unless matters are taken in hand quickly, individual countries will make their own direct deals, leading to a fragmented approach to energy policy?

HE Mr. Kauppila

Unfortunately, most EU countries regard energy as a matter for sovereign rather than EU policy. This has been the problem throughout. It has been difficult to achieve a common policy vis-à-vis Russia. We try to make progress on this matter in order that no one can tell another EU country that it cannot make bilateral energy agreements with any other country.

Senator Dardis

The ambassador is very welcome and I thank him for the presentation. The Finns are to be complimented on the preliminary agenda which offers very wide scope. We wish Finland well in its Presidency. It has a very good history of successful Presidencies which I am sure will be continued.

I am pleased that the ambassador stated the failure to agree a European constitution should not prevent the European Union from functioning and developing. This is a widely held view. However, fault lines seem to be appearing. Representatives from France recently appeared before the committee and we got the distinct impression that the French would like to revisit parts of the constitutional treaty. However, our view is that the constitution represented a reasonable compromise that took a long time to develop and that it would be wrong to unpick the treaty. In other words, people cannot select individual elements from it. However, we recognise the difficulties in overcoming opposition to it, which is the purpose of the period of reflection. What will be the Finnish approach to the treaty? Does Finland take the Irish view that the constitution should not be unpicked and that it represents a reasonable compromise which we should try to have adopted as is, or does it take the other extreme, that it should be dismantled and put together again? These diverging views seem to be developing.

It is no surprise that the Finns talk about transparency which has formed part of its parliamentary and national tradition. The conclusions of the outgoing Presidency made reference to the problem of over-regulation. The ambassador also made reference to regulation and spoke about competitiveness. There seems to be a disconnection. At one level we want the European Union to be more competitive, while at the other it seems that the Commission in Brussels is increasingly getting involved in areas in which some believe it should not be involved in the degree and nature of regulation and so-called red tape. On a weekly basis those of us who sit on the Sub-Committee on European Scrutiny come across detailed regulations which may make competitiveness in a global market more difficult to achieve, given the need to respond quickly.

On external relations, the ambassador made the point that the Middle East, Iran and Iraq were being monitored through the General Affairs and External Relations Council. The most recent Council meeting reached conclusions regarding the difficult situation in Palestine and Israel which impinges on the wider region. One could argue that the original difficulties were the genesis of many of the problems now evident in Iran, Iraq and elsewhere in the region. The situation in Palestine, particularly the West Bank and Gaza, should be prominent in the Finnish Presidency efforts. Unless progress is made to alleviate some of the problems, there is potential for total disaster in the region.

Another issue relates to humanitarian aid for the people in Palestine. We are aware of the difficulties regarding the Hamas Government and attitudes to making payments. However, there is a core human tragedy developing to which the European Union must have regard. Vulnerable people who are suffering as a result of what is taking place should be protected. Obviously, there is the question of the recognition of Israel by Palestine and vice versa. While I do not ask the ambassador to comment in detail, I wish to make sure the matter is kept to the fore during the Finnish Presidency.

HE Mr. Kauppila

I thank the Senator for his comments and we will brief our experts on them. I can answer only his first question about the constitutional treaty. Our national position is similar to that of Ireland. We consider the current text to be as good as we can make it and we are not in favour of cherry-picking or amending it. However, as Presidency, we must work with everybody to carry the ball forward. Big steps should not be expected from us in this process. We must be realistic and prepare the ground for more fruitful proceedings after next year's French presidential elections. We will consult senior civil servants, European Ministers and EU institutions with regard to how progress can be made and will pass our findings to the next Presidency, either informally or by means of a formal report. Further progress can be expected towards the end of the German Presidency.

Senator Quinn

I have been a regular visitor to Finland since 1971 and, although my Finnish does not extend beyond hyvåå påivåå and kiitos, I have had the opportunity to visit Turku and Tampere and attend the opera festival in Savonlinna. I am very pleased that Finland is taking over the Presidency at this stage and I hope to influence the ambassador rather than ask him questions. He is being too modest when he claims to expect progress under the German Presidency because a great deal can be done in the next six months.

Last month, I met the Finnish Minister for Trade and Industry to discuss the challenges he will face during the Presidency. The Minister believes that innovation will occupy an important place on his agenda. Given the recent history of Finland, and that of companies such as Nokia in particular, it will be an ideal time to discuss the Lisbon Agenda and ways of making Europe more competitive in the world. I support Senator Dardis's comments with regard to emphasising innovation and reduced regulation. One of the reasons for our failure to meet the targets set out in the Lisbon Agenda is the hidebound attitude of Brussels towards regulation.

I cannot think of any country closer in relationship and history to Russia than Finland. In recent years, the relationship between the western world, that is Europe and the United States, and Russia has been one of animosity rather than friendship. However, our ties could be strengthened during the Finnish Presidency. We would benefit from a less confrontational atmosphere in terms of being able to rely on Russia for energy and as a market for exports. I urge the Finnish Presidency to help us learn how to work together.

Finland has long been regarded as a neutral country but I note that it now describes itself as uninvolved in military alliances. I am impressed by this change because we are currently debating similar issues. Ireland's triple-lock system requires UN approval before becoming involved in military affairs outside the country. That has meant that we were unable to become involved in the former Yugoslavia to save lives. We must ask ourselves whether we can take part in the Partnership for Peace or battle groups while remaining neutral. How has Finland dealt with this challenge? No one can be neutral in the battle between good and evil but, like Finland, we wish to maintain non-involvement in military alliances.

HE Mr. Kauppila

We are glad that Ireland has approached Finland, Sweden, Norway and Estonia with a view to becoming involved in the Nordic battle group. I understand that a preliminary positive answer has already been given to the request but we will be obliged to wait for the outcome of the Irish legislative process and technical discussions among the military forces. I do not think the question of involvement in battle groups has much relevance to neutrality. The term "battle group" is unfortunate because it merely refers to a more strongly armed form of peacekeeping. In my opinion, Ireland is already moving towards that kind of engagement in its peacekeeping operations in Africa, for which Irish soldiers are more heavily armed than they were 20 years ago. I do not see any major difference in that regard.

The Senator is correct that Finland no longer describes itself as a neutral country. That may be a product of our post-war history. Neutrality was intended as an instrument in our difficult relationship with the Soviet Union because we wanted to keep our distance. Ireland also has a large neighbour to the east. When we joined the European Union, we realised that we could no longer describe ourselves as neutral due to the range of common security and defence policies being developed among member states. We are making progress. Instead of saying we are neutral, we say we are militarily non-aligned. We are not a member of NATO. Perhaps I have simplified matters but I hope I have provided some background information for the committee. I am flattered by committee members' comments on Finland's innovation and technological achievements.

The host Minister in Finland has organised an informal meeting of Ministers in Jyvåskylå, central Finland, based on the theme of innovation. The chairman of Nokia, Mr. Ollila, will be the first speaker. If I could select three priorities, innovation within the framework of the Lisbon Agenda would be one of them. We will try to give substance to the agenda in the field of innovation policy which will feature high on the agenda for the Lahti summit, an informal gathering of Heads of State and Government. It will be discussed at several Council meetings, including the one in Jyvåskylå. We will focus on creating demand for innovation and try to draft recommendations for a broad-based policy on the matter by the end of the Finnish Presidency. The former Finnish Prime Minister, Mr. Aho, made a detailed report to the Commission, upon which much of our work is based.

Based on its experience of relations with the Soviet Union and now Russia, I hope Finland can be of benefit to the European Union in its dealings with Russia. We have had dramatic periods but mostly the experience is positive. We will try to use this experience to expand areas of co-operation between the Union and Russia, particularly to implement the so-called road maps for common areas. We also seek to negotiate to amend the current partnership and co-operation agreement to have a legal basis for our co-operation. We must also consult on foreign policy and energy issues.

Deputy Costello

The ambassador is very welcome. I have no doubt the Finnish Presidency will be most successful like the previous one. It is pleasing to see a small country being successful in holding the EU Presidency. An ambitious and comprehensive programme has been presented. Discussion on issues such as energy, climate, health, globalisation and ageing is desirable. Effectively, Finland has drawn on the Lisbon Agenda and included the economic competitiveness aspect and the social agenda. Is there any issue which has priority?

Finland will try to make progress rather than reflect on the constitutional treaty. What are the ambassador's ideas on making progress on this stagnant issue which is particularly difficult in France and the Netherlands? As Senator Dardis states, France has suggested the treaty be revised in some respects rather than accepted as it is. Finland is the 16th country to ratify it. Can it carry out an audit of what other member states are doing? How can progress be made in other countries?

On policing and criminal matters, trafficking and smuggling are major problems that have increased dramatically in recent years. As borders have diminished, opportunities have increased proportionately. No EU Presidency has effectively addressed the problems arising from greater access across borders. What suggestions can Finland make?

Finland will open its markets to Bulgaria and Romania. How many have come to Finland since the ten accession countries joined in 2004? What is the level of unemployment in Finland?

My last question concerns——

Chairman

Three questions are enough.

Deputy Costello

My last question——

Chairman

I have ruled on the matter. The Deputy cannot ask four questions.

Deputy Costello

——concerns globalisation——

Chairman

In fairness, asking four questions in a row is a bit much. I will briefly suspend the sitting.

Sitting suspended at 2.59 p.m. and resumed at 3 p.m.

HE Mr. Kauppila

Finland is in the process of ratifying the treaty. If everything goes as planned, it will be the 16th member state to ratify it. The treaty is before parliament and it will be ratified at some point during the autumn session. All the main parties are in favour of ratification.

A question was asked on what we could do to advance the ratification of the constitutional treaty. I mentioned the consultations that we will commence. We do not want to instruct anyone. We did not want others to instruct us that we should ratify the treaty because it is a matter for each member state to decide. Clearly, we would feel better prepared holding the EU Presidency if we had finalised our own position on the treaty.

There are practical ways and means of working in the interim so that we can make full use of existing treaties. We are aiming to reform the union's work through using existing treaties to the fullest extent. One example has been mentioned regarding police and judicial affairs. There are many areas in which we can improve decision making in vital affairs. As mentioned previously, it would help to agree on legislation concerning the fight against terrorism, organised crime and human trafficking.

Up to now, progress has been much too slow because member states have veto rights in too many areas. At the least, we wish to have consultations on how we can move more towards the qualified majority voting system. It is made possible in the Nice treaty.

On the issue of Bulgaria and Romania, we probably have statistics on how many citizens from the eight countries that acceded to the EU in May 2004 came to Finland to seek work. I do not have any such figures, but I presume that they are relatively low. There is a problem because there is no indication regarding workers who come into the country in the employ of service companies. We have tried to instigate some improvements to eliminate what happens in this grey area by allowing people to come to work for Finnish companies.

The unemployment rate, at almost 8%, is still too high. It is around the EU average.

Deputy Kirk

I welcome the ambassador. I have two questions, one of which relates to energy policy. I am sure that those in authority in Finland, like their counterparts in Ireland and elsewhere in the EU, are aware of problems that may arise in the future with regard to finding alternative sources of energy to fuel economies. What is the Finnish approach to developing such sources of energy? Is there a programme, and have particular possibilities, such as nuclear power etc., been included or excluded? What is the general policy in Finland?

My next question is a follow-on to what Deputy Costello asked. There is a suggestion that there is a relatively high level of unemployment among young people in Finland. If that is so, what is the underlying reason?

HE Mr. Kauppila

With regard to energy policy, Finland has tried hard not to exclude any sources of energy. We will continue to use nuclear power. We have four nuclear reactors in Finland and these have good operational and safety records, even in global terms. We are building a fifth nuclear reactor, a first of its kind, a so-called EPR reactor. It is a Franco-German design which France will also build later.

We have based our policy on two main criteria. We want as good and secure an energy policy as possible. We do not want to be overly dependent on any single source or supplier of energy. We have 100% dependency on Russian sales of gas, so nuclear energy is vital in the context of energy security. Our industries are very dependent on secure and cheap sources of electricity. The other factor is that we wish to fulfil our obligations under the Kyoto Protocol. Nuclear energy is vital in order to do that. On the other hand, we wish to develop renewable energy sources. Finland is one of the leading countries in respect of the use of biofuels. We have many forests, which means we have much wood that can be used both as a fuel and in industrial processes in, for example, the paper and pulp industries. This can produce power that can be used for electricity and heat production. We even have a small option for coal. It is not desirable but we have been obliged to use coal when electricity supplies have been very tight during cold winter days.

Youth unemployment has traditionally been a very sore problem in Finland. However, the position has recently improved. I cannot provide a current figure. In the early 1990s, however, youth unemployment reached 25%. The current rate is probably only half that.

Deputy Kirk

Is there a particular economic reason for this?

HE Mr. Kauppila

The employment situation has improved overall but it has been of more benefit to young workers than members of the population at large. I cannot explain the reason but it may be due to the needs of the ICT sector, which, particularly in the communications field — with the cluster of Nokia and other Finnish companies — is very strong in Finland.

Chairman

I thank the ambassador for his attendance. We look forward to working with him over the next six months and extend our best wishes to him.

The joint committee went into private session at 3.12 p.m. and adjourned at 3.20 p.m. until 12 noon on Wednesday, 5 July 2006.