Trade for development? Finland’s development policy takes a new direction.

Poverty reduction as the top goal of development policy is absent from the recent foreign and security policy report of Petteri Orpo’s government, writes Tapio Laakso, Head of Advocacy at FCA.

FINLAND IS MAKING its foreign and security policy harder and more commercially oriented, including in its development policy. This is reflected in the Foreign and Security Policy Statement published by the government in the summer and the complementary Report on International Economic Relations and Development Cooperation. The two documents jointly guide Finland’s international action and should be read together because, according to the Government, they are based on the same analysis.

The reform comes at a time when Finland’s foreign policy environment has changed dramatically with NATO membership and Russia’s war in Ukraine.

At the heart of the report now seems to be a strong desire to develop development cooperation funding in a direction whose main motive is to promote the interests of Finnish companies above all. I will return to this later in this text.

From a development agency’s perspective, a key concern about the new report was whether Finland’s foreign policy would become all about NATO, Ukraine and a narrow security policy. However, the Foreign and Security Policy Report published in the summer takes a commendable look beyond the immediate partners. The guidelines also reflect the multipolarisation of geopolitics, in particular the rise of the so-called middle powers.

“Finland also seeks equal dialogue and expands its opportunities to cooperate and trade with countries other than those in our reference group.” is an important policy from the government in today’s world. Africa is dealt with extensively in the report and it can be said that Africa has finally entered the realm of realpolitik. This is reflected in the fact that Africa is treated in the same way as China.

The long policy line will be maintained in the new environment

Despite major external changes, there is a lot of continuity in Finnish foreign policy. While there is an emphasis on hard security, the emphasis on agreement and the multilateral system has not disappeared.

Finland promotes international peace, security and sustainable development. Finland defends international law and the rules-based international system. Finland promotes its objectives within the UN and seeks to strengthen the organisation’s capacity to act.

One might ask whether the “value-based realism” launched by President Alexander Stubb is more a continuation of Finland’s long-standing foreign policy than something entirely new.

Finland’s foreign policy values are real, but the realism of national interest limits the activism needed to promote these values.

“Finland’s foreign and security policy is founded on value-based realism. We stand by values we consider important and central to us, such as democracy, the rule of law, international law and human rights, peace, equality, and non-discrimination. At the same time, we are also ready to engage in dialogue with countries that do not share our views and values. We defend the rules-based international system and support its development. Finland’s security is safeguarded by three locks: a strong national defence capability as part of NATO deterrence and defence; our memberships in the European Union and NATO; and ever-stronger bilateral cooperation on foreign and security policy and defence with our key allies and partners.“
– from 2024’s ‘Government Report on Finnish Foreign and Security Policy‘.

Prime Minister Petteri Orpo summed up neatly a situations where values should not be allowed to get in the way of realism at the Annual Meeting of Heads of Mission in Helsinki on 26 August 2024: “Regardless of the winner of the US presidential election, our bilateral cooperation with the United States will continue to be good, mutually beneficial and wide-ranging.”

Narrowing the focus of development policy and conditioning access to aid

Finland’s development policy is narrowing with the new report on International Economic Relations and Development Cooperation.

“(The aim is)…to better support Finland’s commercial and economic interests in developing markets and to increase the economic independence of developing countries by strengthening their responsibility for their own development.”

Poverty reduction as the main (internationally agreed) goal of development policy is conspicuous by its absence. At least the Sustainable Development Goals (SDGs) have been included. The priority given to trade cooperation is likely to shift development funding away from the poorest and least developed LDCs. Last year, the indicator for the poorest countries’ share of funding disappeared from the budget book.

The priorities for development cooperation are as follows:

“Finland’s development policy priorities include improving the rights and the sexual and reproductive health and rights of women and girls, which are also key in managing population growth, as well as education and climate measures.”

The focus of development cooperation is narrowing. The previous focus on “sustainable economy and decent work” and “peaceful, democratic societies” has disappeared. This is understandable in a context of drastic budget cuts. Since its peak in 2014, Finland’s actual development cooperation budget has been cut by well over 40%.

In addition to the priorities, the report’s strong themes include promoting exports by Finnish companies, supporting Ukraine, conditioning development aid and reciprocity with developing countries.

Also at the Heads of Mission meeting, Minister of Development Ville Tavio said: ”We are also continuing our work to support a well-functioning democracy, the rule of law, human rights and a vibrant civil society, all of which are prerequisites for sustainable societal development.”

Of course, even in this reduced framework, a significant part of Finland’s good development cooperation, support to international organisations and NGOs will be able to continue.

Promoting Finnish exports will not bring development to the poorest countries

The report seeks to bring trade and development policies together, but does not address trade policy from a sustainable development perspective. There is no idea of a development policy that would consistently strengthen the role of developing countries in all policy areas. As the introduction states, the aim is to strengthen Finland’s exports.

For example, sustainability regulation is only seen as a threat to trade. The recently adopted EU Corporate Responsibility Directive is not mentioned at all, even though it is a key new piece of legislation at the interface of trade and development policy.

In an interview with Development Today, Minister of Trade and Development Ville Tavio emphasises the importance of industrialisation for development. This is also supported in his aforementioned speech: “Finland supports the industrialisation of developing countries.” and “Development policy promotes the creation of industries and jobs in developing countries.” However, the report itself focuses on highlighting the export potential of Finnish companies, rather than supporting the virtuous circle of industrialisation and poverty reduction.

At the heart of the report seems to be an attempt to focus or tie development cooperation funding more to the interests of Finnish companies. However, international development policy has long recognised that tying aid leads to inefficiency, ignores local needs and neglects local businesses in developing countries.

Finland must also demonstrate the equal partnership it has promised in action

“Finland’s objective is to build sustainable partnerships with developing countries based on mutual benefit and respect.”

This line of the report is extremely welcome. However, mutual benefit and respect also means that Finland is ready to take into account the interests and views of developing countries.

The hoarding of COVID-19 vaccines and the insistence on patent protection, the inaction on ongoing human rights violations against Palestinians, the unwillingness to promote tax cooperation at the UN and the extremely strict immigration policy are Finnish policies in which developing countries have their own interests. Equal partnerships must mean that Finland’s own views are also open to negotiation. So far there is little evidence of this.