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Russia: Financial Crisis Has Moderate Impact On Finland

  • John Varoli



St. Petersburg, 11 November 1998 (RFE/RL) -- As a highly developed country with a small population (five million), Finland has long been dependent on exports for its livelihood. That status, in turn, has made the country vulnerable to changes in the world economy.

In the early 1990s, when the Soviet Union collapsed and the newly independent Russia opened its economy to foreign competition, Finland was economically affected. It had enjoyed several decades of preferential bilateral trade agreements with Moscow. About 22 percent of its exports had been to the USSR. But the recent Russian crisis seems to be having little effect on Finland's economy, although individual Finish companies have suffered. Hannu Linnainmaa, head of Kera, the state-owned finance corporation that helps Finnish companies compete in the Russian market, told RFE/RL this week that most Finnish companies which invested in Russia plan to stay there.

In Linnainmaa's words: "As is true of most foreign firms in the Russian market, Finnish companies have been hit hard by the crisis. But the country as a whole will not be so deeply effected as in the early 1990s."

This turn of events is due largely to Finland's shift from an eastward trade orientation to greater integration within the European Union, in which Helsinki has been a member since 1993. The EU's economy is more stable and continues to perform well.

If in 1991 Finland was overly dependent on the Soviet market, now the country has diversified its exports among a greater number of countries. Last year, only seven percent of Finnish exports went to Russia. Germany accounted for the largest share, with 11 percent, followed by Britain with 10 percent, and Sweden with 9.8 percent.

Still, many Finnish businessmen are waiting to see how well the Russian government's anti-crisis policy fares. Few have yet made up their minds whether to invest more money in Russia.

Among the hardest hit have been the Finnish transport and consumer-goods sectors. The sale of consumer goods to Russia was held hostage by the unstable ruble earlier this Autumn, curtailing exports to Russia and leaving Finnish transport companies with little work.

Esco Uliasco, director of Niini Virta Terminal, a Russian-registered transport company with 100 percent Finnish capital, says: "September was very bad, with a 50 to 60 percent decrease in business for our company and just about all other transport companies."

But since the beginning of last month, with the stabilization of the ruble, business in all sectors has been picking up. Ira Gladkova, an official at Valio, Finland's leading dairy foods company, told RFE/RL that "even though sales (in Russia) have decreased by about 30 percent since the crisis began, as of the end of October they have begun to increase. People," he added, "are starting to buy again."

Nevertheless, several businessmen --nearly all of whom plan to stay in Russia-- said that it could be a year or two before business reached the levels of July 1998.

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