SPEECH BY MR. MARTTI AHTISAARI, PRESIDENT OF THE REPUBLIC OF FINLAND, AT THE FINNISH-AMERICAN CHAMBER OF COMMERCE

IN NEW YORK, 14 OCTOBER 1997

The Finnish economy is still in the process of emerging from a deep recession. Most indicators show that our economy is on a steady growth track, driven by a rapid increase in exports as well as by a growing domestic demand. The growth is among the highest in the OECD. The inflation rate is around one per cent. There is a clear surplus in our current account.

All this is due to the restructuring and streamlining our industry has undergone in order to improve its competitive edge. We have continually invested in research and development. Furthermore, Finnish companies have taken on the challenges of globalization by going increasingly international.

An unrestricted global economy, the rapid development of technology, as well as the need to maintain economic growth and bring about an environment favorable for job creation pose enormous challenges to the Finnish economy and society. Our biggest problem is still unemployment. Even though there are positive signs of improvement, a lot remains to be done.

Finland is not the only country so challenged. Most countries of the European Union face similar problems. Investment in human capital, training and research are the key factors in propelling Finland toward an information society. Finns are curious by nature and keen to try out new things. Finns have a tradition of not being tied to tradition. This is why Finland is at the forefront in many fields of communication and information technology. Early deregulation of telecommunication markets gave Finland competitive advantage vis-à-vis many other EU-countries. Due to the liberal regulatory environment, implementation of the Information Society is proceeding at an almost unparalleled pace.

Finland is second only to the United States in the use of information technology (according to a report compiled by the research organization International Data Corporation). The report, known as the Information Imperative Index, focuses on 55 countries that together deploy 99 per cent of the world's information technology. Other Scandinavian countries also faired well in the study: Sweden, Denmark and Norway came right after Finland.

The report compares the progress of these countries in the adoption of new information technologies by reference to 20 factors grouped under three main headings: social, information and computer infrastructure. The social factors include, among others, educational levels, newspaper readership per country, press freedom and civil liberties. Information infrastructure covers factors such as telephone lines per household, telephone faults per line per year and cellular phone ownership per capita. Computer infrastructure refers to such indicators as personal computer ownership per household, personal computer deliveries to commerce, to public administration and education establishments as well as expenditure on software and hardware.

The future will witness an increase in the amount of electronic information published. The nation's IT and telecommunication infrastructure - the Finnish information superhighway - is to be integrated into a multi-level but seamless system. Schools and other educational institutions, libraries and public services will be integrated into it. Finland's high educational standards and investments in research and development will, in my opinion, continue to be the key elements in maintaining the international competitiveness of our industry.

Ladies and Gentlemen,

Economic and Monetary Union will be implemented in the European Union from the start of 1999. Finland aims to be among the first countries to join the third phase and to introduce the new Euro currency. Finland will have no difficulty fulfilling the criteria which have been set for membership. Economic growth will bring about a reduction in the percentage of GDP accounted for by the government debt. Strict control of government expenditure and the estimated growth in revenues will correct the budget deficit in the next few years. The Monetary Union will bring much needed stability in the world's currency system; it is also a crucial step towards further and deeper European integration. It is a change that will create exciting new opportunities.

With the accession of Finland and Sweden in 1995, the European Union now extends from the Mediterranean to just a few kilometers from the Barents Sea. The Union has thus acquired a natural "northern dimension". There is, however, a lack of comprehensive strategy for this Northern Dimension. Developing a policy for the Northern Dimension, based on an analysis of the risks and opportunities that the region offers, is a major policy decision. It will make the Union a more effective global actor. When looking onto new ways to develop the huge strategic oil and gas reserves of the area, we expect close co-operation from the U.S. as well.

There are great opportunities as well as huge problems in the Northern regions. On one hand some of the biggest sources of pollution and the most serious nuclear hazards exist in this area. Differences in standard of living, health, social conditions and the extent of the rule of law are enormous. Civic security is threatened by increasing traffic in drugs and organized crime.

On the other hand, the trade between the Baltic Sea countries is estimated to grow up to tenfold by 2010. The remaining obstacles to trade must be removed through the use of the Partnership and Cooperation Agreement that the European Union has signed with Russia. Finland also supports Russia's accession to the World Trade Organization and the OECD. These memberships would better integrate Russia firmly into the World economy which is in the best interest of us all. But before this can happen, Russia has to reform her legislation and administration.

The increasing volume of trade and economic cooperation requires investments in infrastructure, particularly East-West rail and road connections. The construction of the so-called Nordic triangle, extending from Scandinavia via Finland to St. Petersburg and Moscow, should be speeded up. Increased international participation from organizations such as the IBRD, the IMF and the World Bank is needed to accomplish this.

Finland has a lot of accumulated experience with Russia, the Baltic region and the Arctic. It is now a shared common interest to make our region a model of cooperation.

Thank you