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WHILE
North America appears to be in a state of
hesistant, if not fitful recovery, the Sick
man of Europe - the Eurozone itself - seems
to languishing is a state of ennui unable
to rouse itself from its slump.
To
a great extent, its power to do that will
determine the fate of shipping, and the
mega-ships that now crowd the trade lanes
between the Far East and Europe.
Neil
Irwin, writing in the New York Times, raises
interesting point about European problem,
starting with Greece and its spendthrift
ways, but quickly coming to focus on Finland,
which despite its unquestioned thrifty virtues
has suffered similar outcomes as its feckless
southern neighbour.
Finland
is, in many ways, the anti-Greece, writes
Mr Irwin. Like Greece, it is geographically
far from the core Western European powers
of Britain, France and Germany.
And
like Greece, it uses the Euro. But unlike
Greece, it is a model of sound governance
and responsible use of debt.
Yet
Finland's economy is also not doing so great,
with an 11.8 per cent unemployment rate
and with contracting GDP in each of the
last three years.
A
number of American commentators have looked
at Finland's current economic troubles as
a clear sign that what ails the Eurozone
is far deeper than profligate spending by
the Greeks.
Paul
Krugman has made that case in The New York
Times, Tim Worstall in Forbes and Matt O'Brien
in The Washington Post.
Alexander
Stubb, the Finnish finance minister, thinks
they're wrong. That's what he said at a
waterside restaurant in Espoo, the Helsinki
suburb where he lives. His comments - a
vigorous defence of what the euro has done
for Finland - help explain why elite opinion
about the euro is so different on the two
sides of the Atlantic.
Mr
Stubb says one must look at a longer time
horizon to evaluate the euro. There are
three main causes of Finland's economic
weakness, he said.
Nokia
has gone from the world's largest mobile
phone maker to an afterthought, costing
thousands of Finnish jobs and many more
when its supply network is counted.
Demand
for paper, another major export, has fallen.
And the economy of neighboring Russia, with
which Finland has deep trade ties, has collapsed
because of plummeting oil prices and Western
sanctions.
Because
Finland has used the euro since its inception,
the value of its currency cannot adjust
in ways that would cushion the overall Finnish
economy from those shocks.
If
Finland still had its old currency, the
markka, it would have fallen in value on
international markets. Suddenly other Finnish
industries would have had a huge cost advantage
over, say, German competitors, and they
would have grown and created the jobs to
help make up for those lost because of Nokia
and the paper industry and Russian trade.
To
evaluate the euro, you can't just look at
what he calls a current "rough patch"
for the Finnish economy. You have to look
at a longer time horizon. In his telling,
the integration with Western Europe - deepened
trade and diplomatic relations, making Finland
both more powerful on the world stage and
its industries better connected to the rest
of the global economy. That made its people
richer.
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