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September, 8. 2005

From trade to partnership: Finland’s Russia strategy published

Russia will, in the next few years, assume the position of Finland’s biggest trade partner and its importance in the development of the Finnish economy and well-being is constantly increasing. Finland’s economic Russian strategy, now published, defines the target state for the economic relations between Finland and Russia and proposes practical measures to achieve it. The strategy was drawn up as part of Sitra’s Russia Programme, with contributions from 34 Finnish experts on Russia representing different fields in the economy.

Driving force of economic growth
The economic structures in the Russian economy are undergoing a tremendous change, which gives Finnish companies a favourable position to enter the Russian markets, an opportunity that should now be taken. Finnish businesses have already taken some independent initiatives in integrating into the Russian economy. In future, economic co-operation between Finland and Russia will require a deeper and more diversified partnership instead of mere export trade.

“Russia is a much better business environment than is assumed. We have operated on the Russian market consistently and expanded our operations into various fields. The markets are healthy and profitable,” says Hannu Penttilä, CEO of the Stockmann Group and one of the contributors to the strategy.

SMEs are a significant factor in Russian trade. There is increasing interest in Finnish companies to enter the Russian markets but they seem to be lacking the necessary courage.

“The current level of trade has been achieved without any notable input of support from the public sector. Increasing the volume of trade would require more systematic and active investment from Finland. Finland should offer companies internationally competitive funding solutions and instruments to cover some of the market risk for companies,” says Maaret Heiskari, Director of Sitra’s Russia Programme.

Russia to take strong position in Finnish trade policies
Russia is becoming Finland’s most important trading partner. Healthy economic relations with Russia demand that it is consciously kept high on the agenda in foreign and trade policies. Russia should be given a bigger role in the next government programme and the responsibility for implementing the economic policies related to Russia should lie with the Prime Minister. Politicians would be well advised to update their knowledge and attitudes towards Russia and to ensure that their competence regarding Russia is up to the required level for making relevant decisions.

While Finland is looking after its national interests, it has the power to influence the Russian policies of the EU and their systematic implementation through, for example, making Russia one of the focus areas during Finland's presidency in 2006. Finland should also contribute to the contents of the programmes within the EU's Northern Dimension and steer its activities in a pragmatic direction, for example, to carry out environmental and infrastructure projects in Finland’s neighbouring areas.

Best know-how on Russia
Finland must in future invest systematically in improving the know-how on Russia and in gaining commercial benefits from this. This know-how should be utilised and further developed in particular in the selected strategic fields, such as forestry, logistics, construction and technology. The aim is that Finland should have the leading know-how on Russia outside the Russian borders.

“If we are to becoming a leading Russia expert, we need to dispel some of our prejudices against Russia. Understanding the rapid change Russia is undergoing and providing multifaceted information poses challenges to the Finnish school system as well as to the media. Finns should understand and know Russian culture, history, society and language better than our competitors,” Heiskari points out.

To be an expert on Russia also requires increased interest from the Russians regarding Finland. Finland should actively maintain close relations with key actors with an interest in Russia and market their competencies.

Further information:
Sitra, Maaret Heiskari, Director of the Russian Programme, tel. 050 431 1650,
e-mail maaret.heiskari@sitra.fi.
Note!
The publication seminar has been videoed. The video can be viewed on the Sitra website from 3 pm on 8 September at www.sitra.fi > Verkkoseminaarit
Publication:
Kaupasta kumppanuuteen. Suomen Venäjä-talousstrategia. (From trade to partnership. Finland’s economic Russian strategy). Simon-Erik Ollus, Nils Torvalds (eds). Sitra Reports 55. Sitra. Helsinki 2005. The report can be ordered from Sitra, tel. 09 618 991, e-mail julkaisut@sitra.fi. It is also available in electronic format (PDF) on Sitra’s website www.sitra.fi > Publications

www.sitra.fi


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