Juha Sipilä, an innovative approach for reconstructing Finland

Juha SipiläAfter a quiet campaign , where he has said as little as possible, the new leader from the Centre Party Keskusta, Juha Sipilä, seems to have easily won the elections, 4 years after 2011 when Keskusta, in difficulty, have had one of its worst results, bringing them in the opposition.

Now, we are going to see one very specific characteristic of the Finnish election: the constitution of a coalition and the choice of a common programme between the parties in the elections. Even if Keskusta has won the election, it does not mean that its programme is going to be implemented as it is: all will depend on the outcome the negotiations, and everything people have voted for when they voted Keskusta can be absent from the coalition’s plans . However, there will be certainly some chances of Juha Sipilä choosing its allies depending on the compatibility with is own ideas. But in order to understand the situation,  it is worth going back to what is the Centre Party, who is Juha Sipilä, what are his ideas, and what is the status of the negotiations .

What is the centre Party Keskusta?

Founded in 1906 as the Agrarian League, Keskusta finds its roots in two countryside movements who merged and called themselves Maalaisliitto (Agrarian Party) in 1908, after having gained 9 seats in the Parliament. They were rural members of the society, with Christian values, fought for young people’s rights and believed in education. They represented rural communities and supported decentralisation of political power from Helsinki.
They became rapidly one of the main parties, and the party’s first Prime Minister, Kyösti Kallio, held the office four times between 1922 and 1937. As you can see in Wikipedia, after World War II, the party settled as one of the four major political parties in Finland. Urho Kekkonen served as President of Finland from 1956 to 1982, by far the longest period of any President. The name ‘Centre Party’ was adopted in 1965. The Centre Party was the largest party in Parliament from 2003 to 2011, during which time Anneli Jäätteenmäki and Matti Vanhanen have been Prime Ministers for seven years. Following a number of scandals involving Jäätteenmäki (leak of confidential state documents during the campaign), then Matti Vanhanen (lively personal life published in the tabloids and alleged illegal campaign financing), the party was reduced in parliamentary representation in the 2011 elections from the largest party to the fourth largest.

One fact needs to be mentioned: the Finns’ Party (Perussuomalaiset) finds it origin in the Centre Party: Veikko Vennamo, a vocal Agrarian politician, ran into serious disagreement particularly with Arvo Korsimo, then Party Secretary of the Agrarian Union (old name of the Centre Party), and was excluded from the parliamentary group. As a result, Vennamo immediately started building his own organization and founded a new party, the Finnish Rural Party (Suomen maaseudun puolue, SMP) in 1959. He was a populist and became a critic of Kekkonen and of political corruption within the “old parties”, particularly the Centre Party. After his father in the 60s, his son Pekka Vennamo was able to raise the party to some success in 1983, before it went bankrupt in 1995. Then somne former members of SMP immediately founded the Finns’ Party or True Finns (Perussuomalaiset).

The Centre Party’s political influence is greatest in small and rural municipalities, where it often holds a majority of the seats in the municipal councils. Decentralisation is the policy that is most characteristic of the Centre Party. The Centre has been the ruling party in Finland a number of times since Finnish independence. 12 of the Prime Ministers of Finland, three of the Presidents and a former European Commissioner for Economic and Financial Affairs have been from the party. And the centre party is mainly conservative, but generally not liberal, and in some way social, but has never been really left side.

Who is Juha Sipilä?

According to Wikipedia, Juha Sipilä, who is 54 years old, is a Finnish politician and businessman, and was elected chairman of the Centre Party in 2012. He was elected to the Parliament of Finland in 2011 from the Oulu electoral district, led the Centre Party to victory in the 2015 general election and is now Finland’s Prime Minister.

From a professional point of view, he has a Master’s degree in engineering from the University of Oulu. He started his professional career in Kempele, near Oulu, in a company called Lauri Kuokkanen Oy. He then took a position in the early 90s in Solitra Oy, a manufacturer producing components for mobile network stations and in 1992, he became Solitra’s CEO, before taking the control of the company as majority shareholder in 1994. During the 90s, the company benefited from the IT boom and grew at a rate of over 100 % a year. In 1996, the company was sold to an American company, and Juha Sipilä became the first IT millionaire from Oulu, getting more than 12 million euros in the transaction.

In 1995, Sipilä founded Fortel Invest Oy, which is a technology-focused private equity finance company. The company has not been so profitable, showing a profit for only four years between 1995 to 2012. In 2012, the company made a loss of EUR 2.9 million. During the period 2002-2005, Juha Sipilä has also been president and CEO of Elektrobit (EB), a company specialized in demanding embedded software and hardware solutions for wireless and automotive industries and listed on NASDAQ OMX Helsinki. He then he returned to lead the Fortel Invest, until he was elected to the Parliament. From a career point of view, his main success has been the development and the sale of Solitra Oy.

In addition, and certainly most relevant for guessing what he will push for, one interesting matter about Juha Sipilä is his personal interest and practical experience in the use of wood-gas to produce electricity, and the resulting creation of a company called Volter Oy. Juha Sipilä, was looking for an electricity supplier for his cottage in 1998. A tender of 424,000 marks  (70 000 euros) in those days made him consider building his own power station. The project turned self-sufficient  in terms of energy, where electricity was produced with wind and diesel. He then converted an old Chevrolet El Camino into “El Kamina” (kamina = “stove” in Finnish) powered by wood gas, with electronic control systems, and he replaced diesel with wood chips. On this idea, he created the company called Volter Oy, selling its solutions in Finland, Sweden, UK, and developing in other countries. This shows Juha Sipilä’s interest in environmental technologies, and his belief in the possibility to use Finnish forests to boost Finnish growth.

Another important element to consider is that Sipilä is a member of Word of Peace (Rauhan Sana), a Lutheran  movement which is one branch of Laestadianism, a conservative Lutheran revival movement started in Lapland in the middle of the 19th century and named after a Swedish state church administrator and temperance movement leader Lars Levi Laestadius. The most conservative branch is quite extremist: Laestadians condemn pre-marital sex, alcohol consumption except in the sacrament of holy communion, dancing, television, birth control, rhythmic music, make-up, earrings, movies, tattoos, and cursing (from Wikipedia). Some refuse to buy insurance, prohibit their children’s participation in organized school sports, and remove their car radios.

Journalists have sometimes emphasized this aspect during the campaign. Juha Sipilä seems not to have voted in favour of same-sex marriage (adopted in Finland in 2015), has been hesitant on abortion before indicating that he supports the present law and has been sometimes criticized on his religious beliefs. However, after refusing to speak about religion, he has stressed that he is a member of the most liberal group of the movement, and that he believes in the freedom of conscience, which is quite the opposite of what a traditional conservative Laestadian would be allowed to say. So it should be considered that we will not probably have in Finland a liberal Prime Minister, but that his religious beliefs are not going to affect hugely his management, certainly a lot less than his managerial experience.

In politics, his experience is quite limited. As a student, Sipilä worked for a short time in the Finnish Centre Youth, but otherwise he has not had experience in party politics before being elected to the parliament in 2011. In April 2012, he announced his candidacy for the chairman’s position in the party congress and was elected in June 2012. For the campaign, this limited experience has played a positive role, as voters have clearly  lost confidence in the previous leaders, such as Alexander Stubb and Antti Rinne, unable to help Finland face efficiently the crisis. A new party leader, with no experience of political failure, able to listen to people, used to manage efficiently companies, and creative seems quite attractive and positions him as a modern leader.

Now the exciting question is to know what kind of plans has this new Prime Minister: as he is not a traditional politician, we can expect some changes, and one could hope that he will be able to boost Finland, and maybe show a new path for the other European countries in difficulty. In order to know more about his plans; it is interesting to consult the centre Party election platform (click here to access to it), among which we have selected some major topics which may represent, in our opinion, Juha Sipilä’s ideas to change Finland.

Running  the country as a private business

It is quite striking that the Centre Party government programme is prepared in the same way as a private company’s strategy. There is a vision: “The Centre Party of Finland wants to work toward a society with happy, healthy homes and narrowing welfare gaps. We want to make Finland a pioneer in creativity and competence. We want to reduce bureaucratic burden and introduce a new political culture of bold experiments to secure the foundations of our well-being”,. Based on this vision, you find the following strategic objectives:
a. “Happy, healthy homes and narrowing welfare gaps
b. Finland as a pioneer in creativity, competence and new learning environments
c. Finland as a model for public sector leadership, reduced bureaucracy, increased digitalisation and experimentation
d. Finland as a forerunner in bio-economy, circular economy and sustainable development
e. 200,000 more jobs in Finland, an economy with a two per cent growth track through support for work and entrepreneurship, an end to living in debt
And then these strategic objectives are the broken down into specific objectives:
a) “Good health – responsibility for one’s own well-being
b) Time for those around us, room for volunteer work
c) A cleaner environment for future generations
d) Less norms, more mutual trust
e) 200,000 new jobs
f) Education and expertise as our foundation
g) State property could benefit the entire country
h) Growth from bio-economy and digitalisation
i) Improving informal care and care for the elderly
j) Home services and freedom of choice for families
k) An end to the marginalisation of youth
l) Equality for those who live alone
m) Taxation should spur entrepreneurship and work
n) No more living in debt
o) Balanced municipal services and financing
p) Finalised social and health care reform
q) Foreign and security policy”

So it is clear that Juha Sipilä wants to run his government based on his experience as a CEO, which could be quite interesting, as it has not been so much tested, even if public offices use sometimes such an approach. The funny part is that he is imposing this approach to other parties without any apparent difficulty: yesterday, he began with issuing a homework assignment for all parliamentary groups – a list of 15 questions to be answered by 2.00 pm Thursday, which will help him determine each party’s positions on key issues to be grappled with during the next government’s term in office.

According to Yle News, one of the 15 questions is listing the key concepts of the “Finland 2025” vision and identifying 5 – 7 strategic government programme goals to take the country toward that vision, which is probably a surprise for politicians not always used to a business approach. It is a new and refreshing approach of politics, and the result will certainly be interesting. Critics are saying that you do not manage a country like a company, but Juha Sipilä may prove them wrong.

The participation of the civil society

A second characteristic in  the centre Party programme is the idea for the government to develop the civil society and to work with the NGOs, which has been quite pushed in particular by Anne Berner during the campaign (see here our article about her ideas), one of the new Keskusta Members of Parliament who has a strong experience in the business field and has been known for her successes in finding funds for the new Helsinki’s Children Hospital. Juha Sipilä has already indicated that he wants also the civil society to work on Finland’s strategy, and is meeting NGOs and groups. The Centre Party programme includes practical proposals to help them develop:
Many Finns give of their time to help out in organisations and other voluntary pursuits. The basic conditions, particularly long-term funding, for these types of activities must be assured. The burdensome norms and bureaucracy weighing on these societies and organisations must be eliminated. It must be admissible, for example, for volunteers to receive a food allowance and compensation for travel expenses. Volunteer organisations should be given increased access to public facilities and tools. The expertise of volunteer organisations should be incorporated to a fuller extent. They should more extensively be heard already at the preparatory phase and involved in the reform, planning and production of services”.

More importantly, it is also indicated later in the programme that “A social contract is necessary for essential reforms, enhanced competitiveness and increased employment; a social contract that represents exceptionally strong and committed collaboration between the Government, the Parliament, the labour organisations, companies and other entities”, which I suppose are the Non Governmental Organisations (NGOs). This is new for Finland, and Juha Sipilä seems to already work on it. In addition, it could be a sign that Anne Berner, who has been successful in the election, could play a role in the new government.

Environment, environment

We have seen that Juha Sipilä is already involved in renewable energy, and there is a big part about environmental policy and housing in the Centre Party’s programme, with in particular 2 practical promises: “Finland must stop using coal and reduce the use of fossil fuels to one third by the 2030s. The Carbon Free Helsinki 2025 project must be launched” and “There is a need for a nationwide move to combat problems related to dampness and mould”. There is nothing about peat, which is not so environmental friendly and which, if I listen to the Greens, is supported by Keskusta.

Anyway, Sipilä sees the green economy, based in particular on forests and new technologies, as a major source of jobs for Finland. I would not be totally surprised to see the Greens joining the government and providing the necessary support in these environmental matters, as anyway Sipilä seems to be quite dubious about the need to build new nuclear plants, which is not the case of the National Coalition Party or the Social Democrats.

Experiment of a universal basic income

In order to simplify Finland’s social system and reduce bureaucracy, the Centre Party wants in his election platform to experiment in some regions a universal basic income (see here for more details): “The impact of a universal basic income system must be tested and developed through regional trials”. This would be a revolution. There is a push at the European level about it (through the Basic Income Earth Network), and except some experiments in the US, Finland would be one of the world pioneers, at least in the developed countries. We will have to look into the coalition programme if it is still there, as it would be a real innovation. Polls are proving that it is supported by the Greens and maybe the Finns’ party, but the other parties’ reactions may be more problematic.

But Juha Sipilä may get some support if he wants to do it: it seems that 52,5% of the newly elected members of the Finnish Parliament support the idea, as indicated by Finland’s Basic Income Network (BIEN Finland), based on the pre-election poll conducted by the national broadcasting company YLE.

The Centre Party has proposed regional basic income pilots but it does not have a clear stance on the issue as such. If the Greens participate in the new government with the Centre Party the experiments would become very likely.

Reducing the debt, cutting in expenses

The approach of the centre party towards the Finnish debt includes some interesting perspectives: “The real deficit of the national economy must be reduced to below two billion Euros and the deficit of the municipal economy to about one billion over the course of the next legislative term. The economic programme would call for a tightened public sector expenditure, improvements in productivity, the removal of excessive regulations and, if necessary, a savings of two billion in spending. Major reforms, such as the pension reform, the extension of working careers and the struggle to combat the grey economy must be realised in a goal-oriented manner”.

Juha Sipilä, who understand the depressing effect on the economy of cutting too deep and too fast, advocates a wage freeze and moderate spending cuts to regain Finland’s competitiveness, but from a general point of view, the level of the cuts (note the very restrained  “if necessary” in Keskusta’s programme) is absolutely not in line with M. Stubbs’ proposal of cutting immediately 6 billion euros, and that has led to a controversy in the campaign. For this reason, I have some doubts about M. Stubb being able to join the coalition, but he may change his mind with the possibility of becoming again a member of the government… On this, Juha Sipilä is more in line with the Social Democrats or the Greens.

Boosting growth

According to Juha Sipilä, there is a need to create 200,000 new jobs in the private sector within the next ten years, “particularly in bioeconomy and creative industries”. In the Centre Party’s project, bioeconomy includes for example the use of renewable natural resources for example, in the manufacturing of bioplastics and new types of packaging and medicines, the replacement of coal with renewable energy sources, and the development of wood construction in town planning by promoting the use of wood in multi-storey residential blocks of flats and public facilities.

The Centre Party wants also to promote Finland’s food and improve the food balance of the country, in particular by marketing Finnish clean foods and increasing their refinement value  In addition, they want to promote digitalisation of the public sector and through digitalisation and upgraded information systems, to increase the productivity in the public sector, provide employees with more time to interact with customers and further promote workplace wellness.

Sipilä is stressing the need to reduce taxes and bureaucracy for entrepreneurs, and to have a more flexible labour market: “The labour market should be reformed in a way that both strengthens employee security and increases flexibility for employers”. It looks quite tricky in my eyes, as more flexibility on the employers’ side means generally less security for the employees, and it may be a problem for Social Democrats. Or they could be seen by Juha Sipilä as a necessary ally if he wants to realise a reform in this domain.

The question of the bioeconomy is quite central, but there may be 2 approaches. You find in the project the liberal approach, with less bureaucracy, less taxes, and more labour flexibility for entrepreneurs. The other one, which is more state-driven, would be to promote renewable energy by tax relief for consumers, or by investing public money in the sector, which corresponds more or less to what the world leaders in the field, such as China and Germany, have done. There is in the Centre Party a group working on some kind of “German Project” (see here Riku Eskelinen interview), but Juha Sipilä has not yet taken any position on this question of a positive action by the state to create the demand.

Even if these announcements are certainly pleasing the Greens, and probably will have the support of all the parties,  the main point is to know if such a policy will really create 200 000 jobs in Finland in the next years.

A risky coalition with Timo Soini and the Finns’ Party

The question of the  allies to invite in the coalition is central for Juha Sipilä if he wants to implement his programme. He is still quite mysterious about it, but he will necessarily consult with the second party, the Finns’ Party. We have seen that the two parties have a common origin, and that the people they mainly represent are coming from rural areas. There may be a divergence on work immigration, which M. Sipilä wants to liberalise, an idea that Timo Soini, leader of the Finns’ Party, does not like at all. However, the two partners are certainly going to find common grounds, as M. Sipilä has already indicated that he needs people he trusts in the coalition, and on elections’ night he indicated that he trusts Timo Soini… On the other hand, Timo Soini wants to participate in the government (as a Minister of Foreign Affairs, some are saying) and for this reason will also be ready to find an agreement. So the presence of the Finns’ Party in the government seems very probable.

This has triggered some worries in the foreign community in Finland, as the recent declarations of Timo Soini concerning the restrictions to immigration seem frightening. It may be quite tricky for M. Sipilä to prevent some kind of anti-immigrant speech and behaviour with the Finns’ party in power, having ministers and a wide audience.

On another domain, the Centre Party is reluctantly in favour of the EU, after some historical opposition, and the Finns party has always been against. M. Soini has voted against any bail-out for Greece, and M. Sipilä has had the same position. They already announced that they will oppose any new plan to help Greece, so there is clearly a common line between the 2 parties.

Some have even underlined that M. Sipilä and M. Soini have religion in common, one being Laestadian, the other Catholic, and the two of them are quite religious value-driven. It is not sure that it plays a role in the relations, but it is not a handicap

A difficult choice between the National Coalition Party and the Social Democrats

Juha Sipilä will need a strong support and a large majority that he could get from the National Coalition Party and/or from the Social Democrats. The Social Democrats have indicated that they will not go in the government with the National Coalition Party, so the centre Party leader has to make a choice. Culturally, coming from the private industry, Juha Sipilä may share a lot of common views from the right-side conservative National Coalition Party, but he had very divergent views from those of Alexander Stubb during the campaign about the budget cuts.

The presence of Juhana Vartiainen, a social-democrat expert on economy, as a member of Parliament elected for the National Coalition Party and as the main economic adviser for Alexander Stubb could however help to close the gap between the parties.

On the other hand, 60 % of the members of the Centre Party prefer an alliance with the Social Democrats, as it has been a long tradition to have such a coalition since the last war. The two parties are used to work well together. In addition, the Social Democrats are opened to work with the Finn’s Party, and have in the last days showed some flexibility about the possible government programme.

But another worry for Juha Sipilä may be that, after the Social Democrats’ bad results in the elections (16,5 % of the votes after 24.47% in 2003, 21,44 % in 2007 and 19,10 % in 2011), Antti Rinne’s leadership may become fragile, which would make him a problematic partner, and Juha Sipilä may want to avoid to choose a party with such a fragile leadership.

There is also a mathematical possibility for Juha Sipilä to govern without these 2 parties, but it would not be a good sign to have a tight majority to conduct important reforms.

It seems that there are more chances to have the social-democrats in the coalition than the National Coalition Party, but surprises are not excluded.

The other allies

The next party in terms of importance is the Green League, which seems, as already indicated, to be quite compatible with Juha Sipilä’s programme. In addition, they are the other winners in this election with 15 members of the Parliament. There may be some problems, as the Greens may be seen as town activists, but the party has changed, has developed in all Finland and Juha Sipilä’s agreement on the idea of not building any more nuclear plant makes their presence in the government more probable.

The Swedish People’s Party in Finland had as usual around 5 % of votes, and their 9 members of Parliament are going to support whatever government emerges, as a tradition. They are Centre Party compatible.

The Left Alliance  could be interested in working in Sipilä’s government with the Social Democrats, but in our opinion the presence of the Finns’ party would prevent them from joining the government.

For the Christian Democrats, there is apparently no major obstacle in being in the government, but it is still difficult to know if they would want to  work on the basis of M. Sipilä’s principles.



Categories: Economy, Elections, Environment

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