May the Baltic way be the European way - Baltic Rim Economies
01.08.2007
The Baltic area is fast becoming a text book example of a dynamic business environment. European Union membership of the three Baltic States and Poland has made the area into one big market. Healthy tax competition has increased trade and investment flows. The prospects for the four core freedoms of the EU people, capital, goods and services look strong in the Baltic.
But the Baltic is already a significant actor. According to World Bank figures, with $33,56 billion in foreign direct investment flows in 2005, the Baltic region (excluding Germany), with only a fraction of the population, was not far behind China, the world's largest single recipient of FDI.
The economies of the Baltic rim are complementary, contrary to the Mediterranean for example. Labour markets are flexible and the population is well-educated. They have demonstrated a capacity and a willingness to move around the region, not only between Sweden, Denmark and Finland, but also the Baltic States. Witness the groundbreaking labour dispute in Waxholm involving the Latvian construction company Laval. Despite the ruling by the European Court of Justice upholding Swedish collective wage agreements, the ice is broken and it will be a reference point for future EU labour movements.
The structural dynamism of the Baltic area is unrivalled in Europe. It is the EU's most competitive region and it will only increase its attractiveness for foreign investors. In OMX, the joint stock exchange operator, the region possesses one of the most promising capital markets in Europe. The bid from NASDAQ and the rumoured rival bid from Dubai's stock exchange testify to its potential. OMX offers a single platform for companies to raise cash, giving rise to more liquid and more transparent securities markets. The infrastructure for clearing and settlement of OMX trades is also one of the most efficient cross-border mechanisms in Europe.
There are also problematic policy areas confronting the Baltic. Firstly energy policy, which indeed seems to cause problems for the whole union. Russia's interest is to deal not with the union as a whole, but bilaterally with individual member states. EU common interests have successfully been split as a consequence. The new Baltic pipeline Nord Stream is a vivid example. For Russia it is as much about politics as about energy. The previous German government should have anticipated the ire of the Baltic States. It could have made a stronger case for their suggestion to build the pipeline on land, through the Baltics and Poland. It would probably be less expensive, better for the environment and bring benefits for the energy management of these countries and would thereby not be a project just between Russia and
Germany.
The EU needs a common energy policy. Dependence on Russia is problematic, both because its capacity to keep the oil and gas flowing is questionable due to chronic underinvestment, and because of its habit of shutting the valves for political purposes. Bilateral agreements should be avoided and a common European ground should be established. The Baltic area can lead the way in this debate.
Secondly, the union is still lacking solidarity and a robust common defence to back it up. The crisis provoked by the Soviet war memorial in Tallinn was a stark illustration. We cannot let any of our Member States be left on their own in a case of crisis even
a diplomatic one. What is the point of the union, its values and common policies, if in reality they are not enforced and guarded?
The Baltic is a strategically important region. We all, the Finns and the Baltics in particular, have a specific interest in maintaining balanced and secure relations with our eastern neighbour. Sometimes it is forgotten in Brussels how long our common border with Russia actually is. A united Baltic area could show the way towards a united EU policy on Russia. A united foreign policy is what we need if we dream of ever being a powerful actor in world politics.
Thirdly, our common concern is also the environment and the fragile Baltic Sea. It has been estimated, that the Baltic Sea is the most polluted sea in the world. Cooperation with Russia is once again vital. More than anything, the countries surrounding the Baltic Sea have to convey to our European friends that the Baltic Sea is not just their business anymore. It is Europe's new Mare Nostrum, which makes it our common concern. The Baltic Sea could be in a pilot project for solving our common environmental threats with the necessary supranational action.
In spite of all the problems yet to be solved, the Baltic area is clearly a frontrunner is several sectors. It has vigorously implemented the four freedoms of European Union, to the envy of other Member States. It has shown that we can build a successful common home market area and rapidly adjust and improve our economies. There is a lot to learn here for the rest of the EU. In the future, the Baltic area can play an important role in tackling Europe's new common challenges.
Mrs. PiiaNoora Kauppi
Member of the European Parliament (EPP-ED Group) |
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