Responsible Development Aid and New Priorities: Finland's Development Cooperation Reforms

Finland's development cooperation will be reformed during this government term. This means that the private sector will play a larger role in delivering development aid, and limited resources will be more carefully targeted to countries that genuinely seek growth and prosperity. These changes aim to increase the effectiveness of the aid provided.

Finland will also not cooperate with countries that support the current Russian administration. Additionally, development aid will not be provided to countries that refuse to accept their citizens when they lack the necessary conditions to reside in Finland.

At the same time, the amount of development aid will be significantly reduced and focused on the rights of women and girls, as several studies have shown that countries are more stable and prosperous when there are fewer restrictions on the rights of girls and women in education and the workforce. Of all the countries in the world, Ukraine will be the largest recipient of Finland's development aid.

In my view, these policies are excellent, although one could always question whether it is wise for a heavily indebted country to take on more debt to give money to others. However, this has been the practice in Finland and will undoubtedly continue in the future.

Previous thoughts on the same topic:
New aid package keeps Finland as one of Ukraine's biggest supporters
The Finnish Government is Unanimous on Fixing the Country's Economy
Getting asylum in Finland becomes significantly more difficult

Will Orpo's Government Restore Finland to Sustainable Economic Growth?

The previous government of Finland – led by the exceptionally beautiful Prime Minister Sanna Marin (SDP) – was unable to manage Finland's public finances. This became particularly evident after the COVID pandemic was over, and the public sector should have been adjusted to match the available funds.

However, this was not done, and during Marin's government, Finland's public debt rose from 69% of GDP in 2019 to nearly 76%. At the same time, automatic expenditures were built into the state budget – the largest being a new level of administration with elected representatives for wellbeing services – which also forced the new government, led by the uncharismatic Petteri Orpo (NCP), to live on borrowed money.

The current strict Minister of Finance, Riikka Purra (Finns Party), recently commented on the situation. According to her, "The tax-funded bubble is even worse than I thought before taking on these tasks. I often wonder in my office, where protests, shouting, and threats occur under my window, whether the taxpayer really has to pay for all of this. Sometimes for legitimate reasons, and sometimes just because some acquired benefit has to be given up again."

She also criticized the attitude of the left-green opposition, stating that "Instead of constructing even a slightly coherent alternative to the government's economic and fiscal policy, the opposition strikes, hits, and shoots in all directions with every possible means."

Despite everything, Purra still believes that Finland's economy will turn for the better. This, of course, requires bringing public spending under control, as well as the success of Finnish businesses – from small bars to heavy industry – in domestic and international competition.

There have already been a few positive signals in this regard. One example is the order received by a Finnish shipbuilder for a massive Caribbean cruise ship, and another is the better-than-expected success of pharmaceutical company Orion’s new innovation on the market. The forest industry, which is particularly important for the entire economy, is also expected to improve its results within this year.

However, the most important task remains bringing public spending under control. This requires significant changes, especially in healthcare, where the new administrative structure has turned out to be even more expensive than anticipated, and the costly salary agreement implemented during the previous government doesn’t help matters.

It remains to be seen whether Orpo's government will succeed in returning Finland to a path of economic growth, one that hasn’t been seen since before 2009, but is optimistically reflected in the linked graph. 

And in any case, the recovery of the Finnish economy would be welcomed in order to attract highly skilled labor from abroad. Or as Purra stated: "When it comes to real foreign top experts, they will come along with private sector-led economic growth. This creates high value-added jobs that foreigners will also want to pursue."

Previous thoughts on the same topic:
Balancing the Books
The Finnish Minister of Foreign Affairs apologized to the Turkish Minister of Foreign Affairs for the words of the woman who criticized the man who exposed his penis
Finnish horror gallery and reality

Balancing the Books

In recent years, there has been much discussion about the indebtedness of nations. This includes Finland, whose debt-to-GDP ratio is at a middle level compared to other Western countries, although it is rapidly increasing.

This debt accumulation can be attributed to a variety of reasons, but it is often due to the inability of politicians in government to make difficult decisions. In other words, choices that may be unpopular with citizens and whose alternative is to arrange matters by taking on debt, the repayment of which will be handled by future governments and, in the worst case, even by generations yet to be born.

In this regard, Finland is an interesting case, as the country's economic growth has been negligible since 2008, while government expenditures have rapidly increased under several administrations. Consequently, public debt in relation to GDP has risen from 28% to 55% in just fifteen years.

As a result of this development, the public sector is forced to allocate increasingly large sums of money to debt servicing rather than providing services to citizens. Finnish Finance Minister Riikka Purra (Finns Party) highlighted this issue with a few examples.

According to her, Finland’s interest expenses on state debt will be 3.5 billion euros next year. This amount is about 1.6 times the total expenditures of the Ministry of the Interior's administration of internal security. It is also larger than the state subsidies for basic services provided by all municipalities to their residents or half of the operational budget allocated annually to the Finnish Defense Forces.

It is hoped that these examples will awaken the political left in Finland—and in other countries as well—to the understanding that lax economic policies have negative consequences. And for the people who elect their leaders to realize that there are no free lunches, and that expanding public services beyond revenues will only lead to bigger problems.

It seems that the current conservative government in Finland has at least a reasonable understanding of this, based on the Finance Minister's statement. However, it is hoped that this understanding will continue with future governments as well, so that Finland’s economy can be put back on a sustainable footing, ensuring that public services can be maintained in the future.

Aiempia ajatuksia samasta aihepiiristä:
The difficult times for Finland's economy are coming to an end
Finns are backing the government making difficult decisions
Reducing taxes, enhancing export and paying the governmental debt

French Election Results: A Deep Dive into Tactical Voting and Its Implications

The second round of the French elections held yesterday has been followed worldwide with great interest because, based on the first round, it was speculated that the immigration-critical National Rally might rise to become the country's largest party and possibly even take on government responsibility.

However, when the results came out, it was clear that this did not happen. Instead, the largest party in parliament became the red-green New Popular Front with 182 seats. The center-right Ensemble pour la République, supported by President Macron, came second, and the National Rally ended up with only 143 seats. Other parties received 68 seats.

What makes the result interesting is something that, at least on their election coverage websites, the national broadcaster Yleisradio as well as private newspapers Ilta-Sanomat and Iltalehti failed to mention.

Namely, in Finnish elections, the percentage distribution of votes usually plays a major role. According to this, the clear winner of the elections was the National Rally with 37.1 percent. The New Popular Front, which grabbed the most seats, received "only" 25.8 percent, and the Ensemble coalition got 24.5 percent of the votes.

In other words, the elections saw a huge discrepancy between the parties' support and the number of parliamentary seats they received. The explanation for this was so-called tactical voting, an unholy alliance where the political center-right and left-green encouraged voters in each constituency to support each other's candidate if the National Rally candidate had a chance of winning.

One can – of course – ask whether true democracy was realized in the Gallic elections.

In this writing, however, I do not aim to answer the question I posed, but I note that it will be extremely difficult for Macron's supporters and the left-green to find common ground on the direction in which France will be governed in the future. And the situation is not helped by the fact that the left-green New Popular Front is very likely to break up during the current parliamentary term.

This might not matter much otherwise, but France's public finances are even more indebted than Finland's. And the country's economy has not grown in a long time. Meanwhile, the number of immigrants is steadily increasing, and as a result, the number of Muslims now stands at about 10 percent of the population.

Therefore, it remains to be seen what will happen in one of the EU's major powers in the upcoming parliamentary term. My guess is that we will see a lot of action and dangerous situations, so to speak, but France's problems will remain unresolved despite this. And this is not good for the EU, the French, or Finland.

Previous thoughts on the same topic:
Elections in the UK: A Shift Toward Hand-Waving Politics?
A National Rally election victory does not mean that France will become like Finland under the Finns Party
The future of all Europe is at stake