Finland's position, security and welfare in an increasingly complex world

MINISTRY FOR FOREIGN AFFAIRS OF FINLAND Finland's position, security and welfare in an increasingly complex world Futures Outlook of the Ministry for Foreign Affairs Publications of the Ministry for Foreign Affairs 10/2014

Ministry for Foreign Affairs PO Box 176 00023 Government Finland Publications of the Ministry for Foreign Affairs 10/2014 September 2014 ISSN 0358-1489 (print) ISSN 2341-8230 (PDF) ISBN 978-952-281-270-4 PDF ISBN 978-952-281-271-1 EPUB ISBN 978-952-281-272-8 Print: Grano Oy, Jyväskylä Layout: Grano Oy, Joensuu

Contents Abstract... 5 1. A changing operating environment and Finland s foreign policy... 6 2. Futures Outlook themes... 8 2.1. Finland s strong international position... 8 2.2. Networked national security... 10 2.3. Open cooperation as a foundation of welfare and sustainability... 12 The preparation process of the Futures Outlook... 15

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Abstract The Futures Outlook of the Ministry for Foreign Affairs presents the ministry s vision of continuity and change for the coming years, and outlines a foreign policy that Finland might pursue in order to succeed in a changing operating environment. The principal purpose of the review is to inform discussions for the formation of the next government, but the timeframe also extends beyond its term. Finland must pursue a strong foreign policy in order to succeed internationally. Having an active foreign policy is how Finland can drive change in the direction it desires, in the face of ongoing upheavals in the European and global operating environments. Foreign policy objectives must shape the structure and resources of the Foreign Service, not vice versa. The deepening interplay between security policy, external economic relations and development policy calls for a foreign policy that is comprehensive in scope. The Outlook draws together three overlapping themes for the near future: 1) Finland s strong international position, 2) networked national security, and 3) open cooperation as the foundation for welfare and sustainability all of which are vital to Finland as it steers its foreign policy through the next decade. 5

1. A changing operating environment and Finland s foreign policy Finland must pursue a strong and effective foreign policy to succeed internationally. Foreign policy is never conducted in a vacuum: Finland s foreign policy priorities and capabilities are essentially influenced by shifts in the European and global operating environments. The most important international developments affecting us are presented in an outline describing the future of Finland (tulevaisuudensuomi.fi) prepared jointly by all the ministries of the Finnish Government, which was released in the summer of 2014. Factors such as the expanding global interdependence of the networked world, the intensifying influence of geopolitics, and values being ever more contested are constantly modifying Finland s foreign policy playing field. Finland needs to adjust to a host of factors that are beyond its power or influence. By means of pursuing an active foreign policy, Finland can, however, drive change in the direction that is in its interest. The Foreign Ministry s Futures Outlook presents the Foreign Service s vision of continuity and change for the coming years and outlines a foreign policy that Finland might pursue in order to succeed in a changing operating environment. The Outlook has been prepared by ministry officials and its principal purpose is to inform discussions related to the formation of the next government in the spring of 2015. Although the timeframe of the Outlook, spanning 5 to 10 years, extends beyond the prospective term of the next government, all the themes that are discussed here should be attended to in the next government s programme and work. In the Outlook, foreign policy is used as an umbrella concept, which covers security policy, external economic relations, development policy and other areas of foreign policy. An overarching aspect of the themes of the Outlook is the link between Finland s national interest and international cooperation. Finland must protect its own interests, but in an interdependent world it is difficult to imagine conditions where it would be advisable to pursue these interests alone. Common interests with others should be sought; divergent interests should be brought closer together. A successful foreign policy must always be based on a clear view of the actor s own needs. Only when we know what we need and want are we able to decide how and with whom it is wise to cooperate in order to reach the objectives. We must also be brave enough to make clear choices when our foreign policy goals are specified. Even larger and better resourced international actors cannot allocate their resources equally to all policy areas and all geographical regions. Since we cannot do everything, it is worthwhile to concentrate on key objectives and pursue them in the best possible way. A strategy that is based on a limited number of priorities directs the work of the Foreign Service and strengthens Finland s influence and identity in the world. The selected priorities must translate into practical ways of action in the Foreign Service both at home and abroad. Foreign policy objectives must shape the structure and resources of the Foreign Service, not vice versa. The Foreign Service must be capable of stepping up efforts to pursue Finland s interest as a proactive international player. As global change intensifies, the importance of timely and analytical information for foreign-policy decision-making is highlighted. The changing operating environment accentuates the need for an influential foreign policy and sets new demands for diplomacy. The realm of traditional foreign policy has not disappeared but an upheaval of the international system persists alongside it. Governments, companies and citizens 6

are increasingly interdependent in issues related to the economy, security and our common living environment. Globalisation and intensifying competition for markets and investments strengthen the role of external economic relations in international interaction where technology and innovations are gaining more ground. The pursuit of global sustainable development will become a more manifest part of foreign policy. Finland ranks very high in international assessments measuring education and welfare, which is why we have every opportunity to influence issues relating to our own future. In an increasingly complex world, succeeding in this advocacy work requires the expertise of Foreign Service professionals. In the midst of change, the importance of the diplomatic mission network abroad is emphasised. Despite the growing global operations of the business and communications sectors, it is the public sector that is explicitly pursuing Finnish interests. There is a growing demand for a presence abroad that produces analytical information from the Finnish perspective. Simultaneously, the priorities and structure of the current network of diplomatic missions should be reviewed. In the future, resources will still be needed both near and far away, but they must be scaled to better respond to Finland s current objectives and global political and economic centres of gravity. In addition, new forms of presence and influence must be explored with an open mind, for example in cooperation with the EU, other Nordic countries and individual partner countries. Even though new technologies and international cooperation will not replace the network of missions, they might open up new opportunities applicable in such areas as consular services and general interaction with the business sector and civil society. Consular services and communications will play a greater role as part of foreign policy when citizens need more and more diverse assistance and information. An open democracy also involves discussion with citizens on foreign policy matters on a growing number of forums, and a modern Foreign Service has to be active on them. In a digitalised world, information management and communications will be a more integral part of foreign policy both in the context of deepening international cooperation and in conflict and crisis situations. Barriers between foreign and domestic policy will be further lowered. Foreign policy starts at home: for example, attracting international companies and foreign investment to Finland require genuine effort and expertise on our part. Making a clear distinction between traditional foreign policy sectors also becomes unnecessary. The interplay between security policy, external economic relations and development policy will deepen the trend is towards growing interconnectedness. Understanding the complex world and exercising influence on it sets new demands for the Foreign Service. The expanding remit of foreign policy requires more and more capacity for holistic thinking throughout the organisation. This Futures Outlook outlines Finland s foreign policy agenda in the near future along three closely related themes. The themes chosen here are 1) Finland s strong international position, 2) networked national security, and 3) open cooperation as the foundation for welfare and sustainability. Securing these objectives needs to be the guiding principle of Finnish foreign policy in all circumstances during the decade ahead. 7

2. Futures Outlook themes 2.1. FINLAND S STRONG INTERNATIONAL POSITION As the world order is seeking a new balance, Finland s position is not set in stone but requires active attendance. The beacons defining Finland s position in the world are, above all, our European and Nordic identities: we must take advantage of these keystones more firmly in the future. In Finland s third decade as an EU member state European integration spans all areas of the Finnish society and has a profound influence on the everyday life of Finns. EU membership has fundamental foreign policy significance because for Finland the European Union is the most important framework defining our international position. From the point of view of our national identity, EU membership is an indisputable absolute value for Finland. As a major global player with established institutions, the EU also offers its member states instrumental value. Throughout its membership, Finland has consistently supported a unified EU, speaking through which our own voice is also amplified. Strengthening the traditional EU institutions and the European External Action Service serves Finland s interests. At the same time, Finland must be attentive in its EU policy and follow the diverging trends of European integration. Within the next few years, both incentives arising outside the EU and the union s internal dynamics might lead to further multi-layered integration, in economic and security issues alike. All EU member states are not capable or willing to respond to the challenges that lie ahead in the same way. Participation in a two-tier integration does not mean the pursuit of selfish, short-term instant gains, quite the opposite: in cooperation with other capable and willing members, deeper integration in specific fields can be conducive to the exercise of a more dynamic influence in the EU and to the resolution of critical problems. Finland can increase its influence within the EU both in the union s external relations and in the Common Security and Defence Policy (CSDP). The changing security situation in Europe and the institutional openings that give the Commission a more prominent role in the development of the CSDP may call further attention to the European defence policy Finland should remain closely involved in the strengthening of the CSDP. In addition to its EU membership, Finland s international role is to a significant degree determined by its position as one of the Nordic countries. Finland has close ties with the other Nordic countries at the government, business and civil society levels: our Nordic identity builds on everyday interaction. However, Finland must take care that the gap between its social, economic and foreign policy resources and those of its most important counterparts will not grow. Close contacts with the other Nordic countries is of primary importance for Finland s international position. Being one of the Nordic countries is a key source of Finland s soft power, from which even more could be drawn to build our international profile. Strengthening the Nordic connection is not only a means to uphold the brand and image of Finland: the Nordic countries are a very important economic market for Finland and we can find the most suitable models for structural changes in society from them. Effective Nordic cooperation is also a precondition for another Finnish priority: the development of our Arctic policy. The potential for cooperation is not limited to the issues on the agenda of the Nordic Council of Ministers. There is room for a substantial diversification of concrete Nordic cooperation on all sectors of foreign policy, too. Finland s international position is highly dependent on the smooth operation of the multilateral system. Despite their deficiencies, both the UN and the OSCE are important channels of influence for Finland. Faced with multiple problems associated with the instruments of global governance, however, multilateralism is being constrained this shows in both the traditional bilateral great power politics 8

and the new multipolar system with groupings such as G20 and BRICS. In this environment Finland must foster direct bilateral relations with the major players the United States, Russia and China, in particular but also with other emerging economies firmly engaged in globalisation. Russia s rapprochement with Europe has been the objective for twenty years, but this development has now come to a serious turning point, with important ramifications for Finland as well. Russia is creating increasing instability in its own neighbourhood and has not only seriously violated international law but is also about to break away from the European value base. Despite the disconcerting direction that Russian policy has taken, it is politically and economically essential for Finland to maintain as functioning as possible relations with Russia as a part of the EU and the international community as well as bilaterally. Succeeding in this without compromising Finland s international position is one of the most important tasks on our foreign policy agenda. International politics has long ago ceased to be interaction between states only. In an interdependent world, international companies and global civil society activities have emerged alongside states and governments. Today s fast-moving technology facilitates the empowerment of individuals. In the middle of this change, Finland s international position is also being shaped from outside the traditional government-centred diplomacy. Finland s foreign policy must support the capacity of Finnish companies and private citizens to navigate in the network of a growing number of non-state international relations. One opportunity for more influence can be found in the field of international law. There is growing pressure to open the international treaty system and global governance to non-state actors, which are at present not recognised as parties to treaties. In today s world, there are only few contexts in which states act fully independently. Pursuing its own policy, Finland could assume a profile as a bridge-builder, reducing the gap between the public and private aspects of international law. 9

2.2. NETWORKED NATIONAL SECURITY The European security environment is in a state of flux. In the East, the number of frozen or even open conflicts is on the increase as a result of Russia s interventions, on different levels, against its militarily non-aligned neighbours. The repercussions are unpredictable and even in the most optimistic scenario it will take a long time to fix the tense relations between Russia and the West. In the South, the aspirations associated with the Arab Spring have had to give way to the turmoil in North Africa and the Middle East over time the consequences may be more dramatic than those in the East. The road to regional stability is very long. One example of the repercussions that extend to Europe is that the influx of refugees across the Mediterranean does not seem to be subsiding. Changes in the neighbourhood of Europe inevitably reflect on Finland s security, too. Anchored to Europe and the Nordic countries both politically and in terms of values, Finland is undeniably a part of the West. However, Finland does not participate in all forms of cooperation where the West is defined and defended. For those EU member states that are also members of NATO, the latter is the principal security policy instrument. International security cooperation is indispensable for Finland because of economic and technological changes and dependencies. Integration in Europe continues to take various forms, also in matters relating to defence. An important part of this integration is Finland s partnership with NATO, which is further strengthened by the common standards required by crisis management cooperation. Deepening our cooperation with the other Nordic countries and in the European Union are security policy developments that come naturally to Finland, as they also enjoy broad support in society. A key challenge for Finland is to maintain a sufficiently credible threshold to ensure its own security. Finland must in any case take care of its own defence capability, a fundamental precondition of which is participation in international cooperation. NATO membership would clarify Finland s position in many ways. Continued non-alignment would also demand close cooperation with NATO. It is important to notice that changes in the security environment mean that Finland s position is also constantly changing independent of whether we make any formal decisions concerning our position or not. The shaping of our own security and defence policy is a continuing process which calls for persistent and growing attention in the swiftly changing situation in Europe. Finland cannot base its security on one solution only, be it NATO membership, military non-alignment or something else; instead, the security of Finland will also in the future consist of its own defence capability, international cooperation and many non-military factors. It is essential that all decisions that are taken maintain Finland as a stable and reliable actor in its immediate neighbourhood, in Europe and in international crisis management. Finland s concept of comprehensive security continues to be a useful response to both old and new threats and it must be developed further. With the help of new technology, individual citizens, companies and other non-state actors are actively present in global networks. At the same time, information warfare and threats such as security breaches leading to information leaks bring cyber security and also security policy more generally to the level of individual citizens. This increases the need for a broad understanding of security and sustainability in society. A successful foreign policy requires not only wide democratic support but also new kinds of skills and knowledge from all members of society. Where a society s overall resilience is concerned, the choice between military alignment and non-alignment is not the decisive factor. Instead, freedom of the Internet and data protection can be critical these matters require close international cooperation and will be at the heart of foreign policy in the future. The technology-enabled empowerment of individuals is, first and foremost, a positive force, which at the same time builds up confidence and, therefore, strengthens security in society. Finland, the least fragile country in the world according to a UN assessment, has succeeded exceptionally well in 10

the accumulation of trust. A high level of education, equality, open discussion in society and citizens opportunities to influence are all attributes that strengthen Finland s own security, but they also serve as examples to other countries in search of a more democratic and secure society for themselves. Trust-based security in society might become an export article for Finland. With the empowerment of individuals, more attention must be paid to the limitations of a state-centred world view in the conduct of foreign policy. A foreign policy that acknowledges individuals is also better prepared to respond to the negative cross-border side-effects of individualism, such as terrorism, extremist movements and organised crime. It is increasingly common that state fragility and international and regional conflicts reverberate via individuals beyond the actual crisis area fighting the impacts of international crises therefore requires action before our internal security is affected. Many of the security threats of the 21st century do not respect national borders. Even though the national responsibility for health, environment and energy policies rightly lies with the respective sector ministries, challenges such as global pandemic risks, environmental disasters, climate change as well as energy and raw material issues with all their repercussions will increasingly also be a part of foreign policy in the future. Climate and energy issues, in particular, will have an ever greater significance in foreign policy. The US shale gas revolution has already transformed the global energy markets and consequently also had significant geopolitical impacts. Technological breakthroughs in the use of renewable energy sources, for example, may lead to equally swift repercussions of a similar scale. The political importance of traditional fossil fuels oil, coal and gas and their transportation routes and availability has been evident for a long time. The same applies to climate change. Mitigation of climate change and adaptation to it can, if successful, not only transform the entire global energy policy equation but also prevent conflicts and uncontrolled migration. Even though many of the industrialised countries in the West are among the last ones to be affected by climate change, its impacts are already becoming manifest in many emerging economies and developing countries. Linking the dynamics of energy and climate more closely to the core of our foreign policy would thereby bolster Finland s overall credibility as a partner in Africa, Asia and Latin America. 11

2.3. OPEN COOPERATION AS A FOUNDATION OF WELFARE AND SUSTAINABILITY Open international cooperation is vital for a country like Finland. Just as Europe as a whole, Finland too is deeply dependent on an open exchange economy export accounts for over 40 per cent of Finland s gross domestic product. The importance of open international cooperation is not limited to trade. Maximising global openness and making full use of the potential in international cooperation are important principles for Finland, not only in external economic relations but also in development policy. Modern foreign policy cannot view trade and development as separate entities and even less so as fields that would have mutually adverse effects on each other. The opening of markets and global development are closely intertwined objectives. Success in the pursuit of these goals increases security, welfare, justice and sustainability both in Finland and across the world. The European Union is indispensable for Finland s foreign trade. More than a half of Finland s foreign trade is conducted with other EU member states in the internal market. However, the future growth potential lies in non-european markets and Finland s foreign trade there relies strongly on the union s common trade policy. The removal of trade barriers and the creation of common standards are extremely important for Finland s export, which is the keystone of Finnish welfare. EU trade policy pursues these objectives on all tracks: multilaterally through the World Trade Organisation (WTO), plurilaterally through agreements in specific fields with a more limited group of participants and bilaterally through free trade agreements. Multilateral progress has stagnated in all areas of global governance and trade policy is no exception. Advances in regional and bilateral trade arrangements can, if successful, also help in breaking the impasse in WTO negotiations. Although a universal WTObased agreement would serve the interests of Finland and Europe best, a tapestry of bilateral trade agreements negotiated with the United States, Japan, India and other partners significantly contributes to the operating conditions of Finland s foreign trade, even without any multilateral breakthroughs. The Transatlantic Trade and Investment Partnership (TTIP) negotiated with the United States has not only significant economic impacts but also additional weight due to its geopolitical value in cementing the West closer together. Europe is only just recovering from the economic and financial crisis, and Finland is struggling to cope with its own economic situation and serious structural problems. Alongside the reforms required at home, support for an economic recovery must also be sought from international interaction. In an intensely competitive international situation more input on two-way traffic is essential: active promotion of Finland abroad and migration of financial and knowledge capital to Finland. Supporting the internationalisation of Finnish companies and attracting investments to Finland will feature much more prominently in Finland s foreign policy in the future. From the viewpoint of the Foreign Service it is important to continue to develop and strengthen the Team Finland cooperation. Cooperation between government and non-state actors must be increased, in particular with companies seeking access to international markets. Determined country branding is an important tool in the conduct of external economic relations. The Foreign Service and other public sector representatives operating abroad create and maintain Finland s profile through long-term advocacy, up-to-date and coordinated information, and cultural and science networks. Both country branding and the internationalisation of companies must be based on a firm foundation at home: in the end a credible picture given abroad cannot differ from what Finland and the Finns truly are. Tourist flows regulated by visa policy also play a part in this internationalisation. A long-term challenge for Finland s export economy is the vast ongoing technological transformation. We have already seen the first effects of digitalisation, but the change has only just started and the process is accelerating all the time. It is very likely that breakthroughs in areas such as automation, robotics, 3D printing, biotechnology and artificial intelligence will transform the structure and dynamics of the global economy more profoundly than we can anticipate. Rather than an economy based on 12

processing industries and the export of investment products, future success stories will more probably be based on innovations that can be multiplied and distributed irrespective of geographical location. In this scenario Finnish companies, too, become subject to genuinely global competition. Finland is well positioned to fare successfully in this competition. Its main assets are a high level of education, technological know-how, a secure society and a functioning infrastructure. Past success does not, however, guarantee success in the future. In order to keep up with development, Finland needs to attract the best talent to the country and to be open-minded and willing to adopt changes. Companies and individuals bear the main responsibility for innovations, but through external economic relations the central government can foster positive developments. Detecting signals of the future direction of technological change and identifying new markets must play a more active role in the work of Finland s diplomatic missions in the future. With their own activities and the information they convey, Finnish diplomats will also serve as global salesmen who pave the way for export, innovation and investment. As problems related to issues such as climate change, population growth, water issues and financial crises grow, the need for international cooperation is drastic. Yet many of the multilateral forums are increasingly paralysed. Global conferences are rarely able to produce final documents or explicit outcomes anymore, and only a few new global contractual negotiations have been initiated in recent years. The emerging powers and developing countries have questioned the representativeness of the UN Security Council, the Bretton Woods institutions and other old structures. The inflexibility of these structures has, for its part, led to the creation of different G-groups, regional solutions and new coalitions of the emerging powers. Finland must be able to act in this new reality, even though in many of the new groups we are represented only through our EU membership, if at all. Although Finland s small size is essentially a challenge which limits our global influence in the development of multilateral systems, it can also be turned into an asset. Innovative and agile actors will continue to find room to manoeuvre in resolving global problems, be the issue a reform of traditional institutions or one s own mediation activities. In addition to altering the balance of global governance, the economic and social change in the emerging powers also has an impact on the nature of development policy as a whole. Sustainable development is becoming a shared global objective in which the industrialised countries will have goals of their own. Rapid economic growth has lifted a number of developing countries from extreme poverty, although internal income disparities still cause substantial problems within those countries. Escaping poverty is still a huge global challenge, but many former and current recipients of development assistance have become donors. In the future, traditional direct aid will be primarily addressed to the poorest and most fragile states. In fragile states and in crisis situations the role of humanitarian assistance becomes more pronounced, thus bringing development policy closer to crisis management and mediation. Multilateral assistance is gaining ground from bilateral assistance, but the position of regional development banks will become difficult as new kinds of funders seek direct benefits for themselves. In Finland s development policy, more attention will be directed to influencing the activities of multilateral organisations. For example, steering the World Bank s instruments towards the prevention of natural disasters can produce far better impacts than what can be achieved by means of bilateral projects. In its bilateral development policy, Finland must consider the strategically most effective way to organise its own assistance. This applies to the national and international division of labour as much as to the needs and capacities to receive assistance in the partner countries. Cooperation with African, Asian and Latin American countries will be more diverse in the future, when investments and the liberalisation of markets are a more integral part of development. Export in the fields of education, health or cleantech can simultaneously also be human rights based development policy. The financial sources of export support must be assessed carefully because development cooperation 13

appropriations will be increasingly directed to the poorest countries. A developing country is more and more often also an emerging power, an economic partner and co-actor in fields of security policy and crisis management. Dismantling barriers between state, business and civil society organisations in Finland and in partner countries can lead to the development of joint, innovative projects that help the developing countries manage their change in a positive manner and benefit their societies as widely as possible. An efficient and effective development policy also guarantees citizens positive attitude towards development cooperation. Finland s reputation as a responsible and committed actor in development cooperation is a good starting point for a multifaceted development policy, where trade, human rights and corporate responsibility go hand in hand. Reaching a consensus on the most important cornerstones of sustainable development and global welfare an international climate treaty and the post-2015 sustainable development goals still requires the completion of difficult negotiations. These and many other negotiations are further complicated by the contest of values and world views between the western industrialised countries and the emerging powers. Finland has firmly decided that human rights, equality and the rule of law are a part of its foreign policy. The consolidation of the international value and norm base should be persistently continued. However, the resumption of difficult negotiations calls for more diplomacy, not less. Finland must direct its foreign policy resources to the resolution of questions dealing with the common destiny of mankind, for both altruistic and selfish reasons. A more equitable and more sustainable world is also in line with our own interest. 14

THE PREPARATION PROCESS OF THE FUTURES OUTLOOK The Unit for Policy Planning and Research of the Ministry for Foreign Affairs was responsible for the preparation of the Outlook. The work was supervised by the board of senior officials at the ministry and all departments contributed to the work through discussions at the directors-general level and in thematic working groups. An online survey was conducted to find out the Foreign Service staff s views about future foreign policy. Opinion polls examining the public opinion of foreign policy were also used and ideas for the Outlook were tested with a panel consisting of university students. In the review process the Unit for Policy Planning and Research observed the methodological principles of strategic foresight and took advantage of its wide network of international contacts with governments and research institutes across the world. Finnish and international official reports made by public authorities and research institutes were consulted extensively. As a part of the process, the Unit created its own scenarios which did not aim at an accurate forecast of a particular future, but rather at outlining a range of possible futures. The most important megatrends identified in the scenario work were the concentration and fragmentation of power, the dynamics of cooperation and confrontation, the balance between scarcity and abundance of resources, the empowerment of individuals, technological development and changing values. In addition, the possibility of various black swans unexpected variables with potentially far-reaching effects was consciously kept in mind throughout the process. 15