Finland giving up neutrality

I think Finland is known for ranking top for six years in a row in the World Happiness Report, published by the UN-related organization. By the way, Japan was ranked 47th in 2023. Certainly, we cannot say there is only one method of such a measurement and one feeling of happiness, which are diverse. However, it seems to be a fact that Finland is a good country to live in.

Finland, in response to the invasion of Ukraine by Russia, which began in February 2022, applied for NATO membership in May, together with another Northern European country, Sweden. Finland became a member of NATO in April 2023. In Japan, some thought that it was natural for Finland, which has a long border with Russia, to aim to be a member of NATO. However, this came as very surprising news to me. Because I felt that their decision making for the membership application was way too quick.

As you know, Finland was once ruled by the Russian Empire, although a certain level of autonomy as the Grand Duchy of Finland was allowed, and it achieved independence in 1917. After that, in 1939 during the World War II, it was invaded by the Soviet Union military at that time, and had to cede some of its land. After the war, Finland gradually strengthened its ties with Western countries, while always trying not to agitate the neighboring Soviet Union and then the Russian Federation.

Even after joining the EU in 1995, its military policy had been neutral, and it did not join NATO. This intention was not only of politicians and bureaucrats in Finland, but also seemed to be shared by the general public.

Although the land size of Finland is about the same as Japan, its population is only about 5.5 million. Meanwhile, Japan’s population is about 120 million and Russia’s population is about 140 million. From Finland’s viewpoint, given that a large country like Ukraine with a population of about 40 million was invaded, then it is natural to think that Finland would be scared. Having said that, Finland gave up its long history of military neutrality, and it decided to apply for the membership only about three months after Russia’s invasion of Ukraine.

There must have been quite a few citizens who felt anxious about this choice. However, surprisingly, it proceeded to the application of membership without any particular confusion. Thus, northern European countries, including Finland, have this aspect of swiftly making a political decision which can appear to be bold. When the bubble burst in Finland in early 90s, it made an immediate policy shift to the ICT industry. I think this is an example of that.

Reform to sustain high welfare service

Although I just mentioned swift policy decision making, it is not always the case. Finland being ranked the top of the happiness level is perhaps influenced by its rich social welfare system. Moreover, when I speak to my Finnish acquaintances, they seem to be proud of and satisfied with Finland being a welfare state. The area related to the foundation of the welfare state does not seem to have been swiftly decided.

Since joining the EU, Finland has continued its economic growth and is regarded as a role model of public finance within the EU. However, after the so-called Euro crisis, it struggled to recover its economy and is in quite a difficult financial situation. In the first place, Finland is a country which introduced the euro and the level of freedom in the financial policy is low, and its fiscal policy is restrained by the EU standard. Under such situation, a low birthrate and aging population, along with a population concentration in the southern area, is advancing. Therefore, considering the financial aspect, some kind of reform was needed for social welfare and healthcare.

Finland traditionally has not had regional authorities like prefectures in Japan, and municipalities like cities, towns, and villages have been engaged in local administration. Moreover, concerning social welfare and healthcare, authority basically lies in the municipalities. Finland has been regarded as a decentralized welfare state centering around municipalities. Thus, it can be said that the social welfare and healthcare reform is, in other words, a local government reform. Furthermore, this reform will waver for around 10 years.

Firstly, a policy to strengthen the financial foundation of the municipalities as well as streamlining the service provision system by promoting voluntary mergers between municipalities (PARAS) was implemented. This PARAS was successful to some extent. However, after that, because they thought this was not enough, various proposals were presented by the cabinet at that time.

For example, there was a proposal to encourage the mandatory merger of municipalities by the state, a proposal to make a municipality association consisting of multiple municipalities, and make a municipality with a weak financial capability and a population of 20 thousand or less relegate the authority of social welfare and healthcare to its municipality association, a proposal to create regional authorities like prefectures in Japan, which have broad authorities, and relegate the authority of social welfare and healthcare to this regional authorities, etc. In each plan, it was also proposed to make use of private sectors and advance privatization, although there were differences in levels according to each plan.

Among these proposals, some discussions advanced to the stage where it was almost implemented. However, they were difficult to realize. Around that time, I visited the Ministry of Finance in Finland for hearings almost every year. But each time I visited, I felt that the situation had changed a lot. I remember that I felt sorry for the person in charge. But honestly, at the same time, I was also lost and it was difficult to organize and write a paper.

What Japan should learn from Finland

The social welfare and healthcare reform finally took shape under Prime Minister Marin. However, it seems that what the function and financial resources should be for the newly created regions (wellbeing service counties) remains to be discussed. As the Social Democratic Party of Finland led by Prime Minister Marin was defeated in the general election held in April 2023, it will remain a challenge for the new administration. It can be said that it wavered for around 10 years before it reached this stage. However, I was wondering whether we can simply reduce it to a matter of “wavering.”

The past 10 years saw a change in administration. However, the reform itself never fell apart, and the next administration presented a new proposal and persistently continued the discussion. Moreover, for example, the reform proposal was not realized under the coalition government of the center-right faction, and the majority party was defeated in the general election just after that. Still, the reform proposal by the coalition government of the center-left faction was not something that completely denies the proposal from the former government.

As such, the reform itself was not realized so easily, but I have the impression that at least it had gradually advanced forward. In other countries they may completely deny a proposal from the former administration and start to discuss the necessity of the reform from scratch.

It can be thought that what is mentioned above is the case because there was a common recognition among Finnish people that some reform was necessary to sustain the service level toward the future, as well as the fact that Finland has a coalition government and it clarified to the EU in the first place that it would implement social welfare and healthcare reform owing to the EU’s fiscal rules. However, I understand that careful discussions were required rather than a swift decision making as for the specific content of the reform. In fact I saw that the government was carefully proceeding with the discussion by implementing experimental efforts in restricted areas and periods regarding specific policies and evaluating their challenges, etc.

Of course, I do not think that everything about Finland is useful for Japan. However, I think that there are many things that we can learn from Finland, the world’s happiest country, in the sense that it tries to find a convincing point by discussion, instead of just deciding matters by majority vote, when we think about how democracy should be.

* The information contained herein is current as of June 2023.
* The contents of articles on are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

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