Recovering from the recovery fund: How Finland can reboot its EU policy

Finland was never officially part of the “frugal” group of EU member states – it took a more constructive and flexible position in the negotiations over the EU’s multiannual financial framework (MFF) in early 2020 than the frugals proper, whose actions earned them the moniker. However, Finland’s stance on the European Union’s recovery fund at the European Council in July 2020 was similar to that of Austria, Denmark, the Netherlands, and Sweden. What do Finns themselves make of this crucial episode in the EU’s development? They are not happy. Survey data commissioned by the European Council on Foreign Relations demonstrate that, of the five countries, Finland is the one where the share of respondents associating negative emotions (“anger”, “frustration”, or “worry”) with the recovery package is the highest, reaching 50 per cent.

The controversy in Finland around the recovery package is the result of at least three long-term developments. Firstly, the legacy of the eurozone crisis still influences the Finnish debate on the recovery fund. During that crisis, Finland situated itself firmly within the German-led bloc of creditor states, which viewed the crisis as the result of some countries’ failure to adhere to commonly agreed rules. Members of the bloc advocated strict conditions for the bailout programmes and stressed member states’ responsibility for their own finances.

Secondly, the Finns Party – whose initial rise was closely linked to the eurozone crisis – has spearheaded the opposition to the recovery fund. Since the 2010s, the party – which generally polls at a steady 20 per cent – has developed into a full-blown populist radical right party, for which Euroscepticism represents only one part of a broader socio-cultural agenda. However, it quickly identified the debate about the recovery fund as an opportunity to re-emphasise its Eurosceptic credentials.

Thirdly, the Finnish debate about the recovery fund has a strong legal dimension. As a small member state, Finland has always attached great importance to rules and institutions. The Finnish narrative on the eurozone crisis and some member states’ more recent violations of the rule of law have only strengthened this view. Although the agreement on the MFF and the recovery package includes the rule of law mechanism, an element that Finland strongly supports, there remain concerns in Finland about the fund itself not being fully compatible with the provisions of the current EU treaties – and therefore allegedly weakening the EU’s common rules.

These concerns and criticisms do not, however, mean that Finns would reject the recovery fund altogether. A more nuanced look at Finnish views suggests that they are mixed rather than negative. The ECFR data indicate that 31 per cent of voters in Finland expressed positive sentiments (“optimism”, “relief”, or “enthusiasm”) about the recovery package. And among the 50 per cent reacting negatively, the biggest share consists of those who are “worried”. This is likely to include many who are concerned about individual aspects of the recovery fund rather than the idea of a common recovery instrument as such.

The two national polls so far published on the recovery fund support this interpretation. According to a survey commissioned by three Finnish newspapers in July, 24 per cent of respondents considered the fund to be “a bad solution that should be rejected” and an equal share viewed it as “right and necessary”. However, the largest share of the Finnish electorate – 42 per cent – described the fund as a “necessary evil”. In a more recent survey by the Finnish Business and Policy Forum, 39 per cent of respondents agreed and 38 per cent disagreed that participation in the recovery package is in Finland’s interest, with 24 per cent choosing the option “hard to say”.

Moreover, all three surveys testify to a strong party-political dimension to – and polarisation in – Finnish voters’ perceptions about the recovery package. The views of Finns Party supporters are much more critical than those supporting any other party, “anger” being their most common reaction to the package in the survey commissioned by ECFR.

This reflects, by and large, the positions of the parties themselves. While the Finns Party and two minor opposition parties oppose the recovery fund, the five government parties have strongly defended it and stressed the value of a common recovery instrument for an open and export-driven economy like Finland’s. The centre-right National Coalition Party, the second biggest opposition party, has criticised the fund in its current form, but supports it nonetheless due to the importance of a strong and united EU for Finland.

Overall, there is little doubt about Finland’s interest in a functioning and cohesive EU. This was most recently demonstrated by Finland’s ambitious programme for its 2019 presidency of the Council of the European Union. Moreover, while the frugal four may still view the EU mainly through an economic lens, for Finland EU membership has always been about security as well – and this dimension has, if anything, gained weight in recent years.

However, there is clearly a need to pay more attention to how Finland can, and should, contribute to bringing about the EU it wants. The ECFR data show that almost half of the Finnish respondents (48 per cent) see Finland’s influence as having declined in the last few years. This may be partly due to new dynamics in the EU: there is a (somewhat exaggerated) sense in Finland that the post-Brexit EU means that Germany – Finland’s most important reference point among what used to be the EU’s “Big Three” – is moving closer to France, making it less attentive to its traditional preferences as well as to small partners such as Finland. The purported shifts in the EU’s balance of power explain recent political disagreements about whether Finland is, or should be, part of the ‘frugal group’ or the New Hanseatic League.

However, the task for Finland’s national EU policy is to ward off any feeling that Finland’s influence in the EU is diminishing. It should more clearly convey the impression that developments in the EU are not only the result of external factors but can also be shaped by Finland. Due to its explicitly pro-EU orientation, the current government is well placed to pursue a more proactive role in EU affairs. The European Commission’s recent push in climate policy, for example, chimes well with the government’s ambitious national climate goals. And as the EU prepares for potential future pandemics, Finland could draw on its long tradition of thinking about security of supply to shape EU-level arrangements in this field.