(Translation)

SPEECH BY PRESIDENT OF THE REPUBLIC MARTTI AHTISAARI

AT A BUSINESS LEADERS’ MEETING ARRANGED BY CEOE,

THE CONFEDERATION OF SPANISH INDUSTRY AND EMPLOYERS,

IN MADRID ON 3.2.1999

First of all I wish to extend my most sincere thanks to the Confederation of Spanish Industry and Employers (CEOE) for hosting this prestigious gathering. This function with its list of very senior participants is a clear demonstration of the excellent all-round cooperation that the CEOE and TT, the Confederation of Finnish Industry and Employers, have practised for so long.

I fully agree with the view that the distinguished CEOE Chair José María Cuevas and his TT counterpart Jukka Härmälä have presented concerning the need for broader cooperation between our two countries’ industrial and corporate sectors. I believe that this meeting is an important step forward in that respect.

The biggest obstacle to economic cooperation between Finland and Spain is probably - despite our partnership in the EU - inadequate knowledge of each other’s capabilities, technology and economic potential. Consequently, the primary task set for this meeting is to increase mutual exchanges of information in addition to enabling top managerial personnel to establish or strengthen acquaintances. Looking further ahead, let us hope that this meeting will also produce ideas for new forms of cooperation that will benefit the economic sectors of both countries as well as broaden and stimulate old business contacts.

Finland and Spain have many similar background features as they develop their economies and societies. They both have their main market in Europe, and both lie on its periphery. They must overcome formidable problems and costs relating to communications and transport, because both are extensive in area. Population is sparse, distances long and communications networks must cover islands, water bodies and mountains. Foodstuffs are produced under unfavourable conditions in both countries. Protecting the Mediterranean and the Baltic and ensuring their sustainable use for recreation, fishing and free navigation are matters of equally vital importance to both of our countries. Parts of the borders of both countries are on sharp gradients between standards of living, for which reason effective policies on neighbouring regions and cooperation in internal and legal affairs are essential.

For historical reasons, Spain and Finland did not become full participants in European integration until relatively late. Finnish membership of the EU - something that also Spain helped bring about - is of only four full years’ standing. The Finnish economy had, however, already had time to adjust to all of the central demands of integration thanks to our participation in the European Free Trade Association and our free-trade agreement with the EEC. Besides that, the five Nordic countries - Denmark, Sweden, Norway, Iceland and Finland - have had a common labour market, a passport union and reciprocal social security arrangements since the 1950s.

The majority of Finns consider our membership of the Union a positive factor. For as long as the principles of participation on a basis of equality, balanced harmonisation of interests and fair sharing of costs are observed, Finland can play a full role in developing the Union. We want it to become an effective and global community, which provides its members with the stability, peace and other conditions they need for development and reflects this also in the state of its environment. We attach great value to all aspects of security, including secure economic activities.

Now that we have both adopted the euro as our common currency and measure of value, we have taken an impressive step forward on the road of economic integration. There is security in operating with a common unit of measure and on the basis of regulations that have already been harmonised to quite an advanced degree. A credible foundation for investing human and capital resources in the territory of a Union partner has been created. This benefit is mutual.

It is only in this decade that our bilateral trade has been freed of the customs tariffs that were allowed to remain for a traditional period. And it is only for the past four years that Union regulations have been in force in relations between Finland and Spain. Thus it is fair to say that the process of learning and adjustment that integration calls for is still ongoing, even though the rules have been in existence for some time.

Trade between Finland and Spain has been growing steadily throughout the 90s and last year reached record figures: Finnish exports to Spain totalled about €960 million, whilst our imports from here were around €500 million.

These figures are impressive, but yet quite marginal against the backgrounds of both countries’ overall foreign trade. In Finland’s case, the percentage is around two. Given the economic potential of both countries, it is clear that there is plenty of scope for growth in our bilateral trade. This growth must be encouraged in every suitable way.

The structure of trade between Finland and Spain is quite traditional; indeed, I would even say that it is one-sided given the high level of development that both countries have achieved. Forest products account for more than half of the Finnish export total. On the other hand, our machinery and equipment have been capturing new markets at a gratifying pace. Especially high-tech products like telecommunications equipment have been increasing their share in recent years.

Finnish imports from Spain have traditionally consisted largely of agricultural produce, and I cannot fail to praise your wines, the popularity of which has been growing enormously in Finland. In recent years, however, the category machinery and equipment has overtaken agricultural produce, and especially automotive imports from Spain have been rapidly growing. We have noted with interest that Spain is now Europe’s second-biggest car manufacturer after Germany.

I would like to see Finnish and Spanish companies begin a fresh-minded search for new areas in which to cooperate. In particular I want to encourage small and medium enterprises, whose biggest problem is perhaps that they still lack adequate knowledge of the country. The significance of the SME sector in an integrating Europe is substantial also from the perspective of employment. This is recognised in the economic and social policies of both Finland and Spain.

The level of investment flows between Finland and Spain is still unacceptably low. There is a surplus in Finland’s favour in our visible trade, which is of course compensated for by Spain’s overwhelming plus in the tourism balance. Spain is lagging behind where investment is concerned. Dozens of large Finnish companies have invested in Spain, but so far, regrettably, Spanish companies have shown quite little interest in Finland. I believe, however, that thanks to our EU membership this situation will gradually correct itself. That is because it lies in the interests of Spanish companies to locate in Finland and from there project their operations further into northern Europe, the Baltic States and Russia. I very much hope that you, our Spanish friends, will give Finland closer consideration than in the past when you are making country-specific investment decisions.

As I noted at the banquet hosted by His Majesty on Monday, there are opportunities for Finland and Spain to cooperate in third countries. I have already mentioned Finland’s advantageous location as a business centre from which to conduct operations in northern Europe, the Baltic States and Russia. As the EU’s emerging Northern Dimension - the result of a Finnish initiative - has shown the other member states, there are immeasurable resources in this part of the world. It lies in the interests of every member state that these opportunities are grasped. On this point, there is agreement between Finland and Spain on the government level. But that is not enough; a fresh-minded attitude conducive to cooperation, new visions and ideas are needed also in the business sector.

Spain has a respected role as the gateway to the Mediterranean and as a link between Europe and the countries south of the sea. Finland has given her full support for the Union’s cooperation with Mediterranean countries.

Spain also has quite a central position as a kind of bridge between the EU and Latin America. It was in this very city that we heads of state and government from the EU and MERCOSUR member states met in December 1995 to sign a historic outline agreement. That the agreement was negotiated so expeditiously was largely thanks to the Spanish Presidency.

We in Finland have noted the fact that Spain has become the largest EU investor in Latin America. We know that Spain has probably had contacts with Latin America for longer than any other European country. In addition to sharing a language and a cultural tradition with Latin America, Spaniards have a greater familiarity with the distinctive business culture of that part of the world than any other Europeans.

When I visited Brazil, Argentina and Chile in 1997, the first time that any Finnish head of state had done so, I was greatly impressed by the opportunities and resources of all kinds that the continent offered. Finland is one of the many countries that are increasingly interested in cooperation with Latin America. Both our government authorities and our companies have been trying to develop their relations with that part of the world. At the moment, prospects for the global economy are uncertain and especially financial markets are unstable, but none of this lessens Latin America’s importance over the longer term.

That being the case, the question that arises is what Finnish companies can offer in the line of technology and expertise for Spanish companies to put to use in Latin America. And conversely, might experienced Spanish companies and banks be interested in joining forces with Finns? Are there sectors and projects in which we could cooperate through arrangements like joint-ventures?

When cooperation between Finland and Spain is being discussed, tourism can not be ignored. In this context, I must give full marks to the Spanish tourism authorities and companies in the sector for the work that they have been doing in Finland. For decades, Spain has been the most popular destination for Finnish tourists after our immediate neighbours. The Finnish Tourist Board has been doing valuable work throughout this decade to attract more Spanish tourists to Finland. Although we shall never be able to compete in numbers, it is encouraging to note that more and more Spaniards are discovering Finland, her nature and people.

I hope that also you, distinguished leaders of the Spanish industrial and business sector, will become more familiar with Finland as a promising and rewarding partner.

I believe Finland has numerous strengths to offer as an economic partner. We honour agreements, we have the ability to commit to goals and we know how to assume responsibility. Besides that, we take care of our environment, our attitudes to work and saving are positive, gender equality is a respected principle in our working life, we have comprehensive social security to look after those who need it, and our system of collective labour agreements functions very well. Regulation of working life corresponds well to practical needs and is done largely through cooperation between the authorities and various social partners. Its small size gives the Finnish economy flexibility and an ability to adjust rapidly to changes in its operating environment.

It has long been recognised in Finland that innovation is a key success factor. That is why our manufacturing sector, with the full support of society behind it, encourages research and development. Indeed, the amount that we spend in this area is one of the striking features of our economy. Thus, I believe, there is every justification for saying that Finland is developing into an information society. For a small country like Finland, the single market offers a major advantage when it comes to commercialising innovations on an appropriate scale.

To us Finns, Spain is much more than just a market area in southern Europe. Within the Union, benefits are reciprocal. We offer you the opportunity to seek to exploit the comparative advantages that derive from your strengths, to promote the worldwide spread of the language you speak and to bring us the richness of Spanish culture that we find so attractive. You will certainly also find northern markets attractive, especially when you examine our position as a base for business operations in Russia and the Baltic States.

To conclude, let me thank you once again for your friendly invitation to speak to you.