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09/12/2016

Millionaire businessman wins Finland vote, eurosceptics take second place

Elections

Millionaire businessman wins Finland vote, eurosceptics take second place

Annika Saarikko, Chairman Juha Sipila (C) and Juha Rehula of the Centre Party celebrate at party's parliamentary elections reception in Helsinki April 19, 2015

[REUTERS/Markku Ulander/Lehtikuva]

A millionaire former telecoms executive, touted as a technocrat capable of rescuing Finland from its economic slump, won Sunday’s parliamentary election, but he will likely need coalition support from a second-placed eurosceptic party critical of any more Greek bailouts.

Opposition Centre Party leader Juha Sipila, who advocates a wage freeze and spending cuts to regain Finland’s competitiveness, beat pro-EU and pro-NATO Prime Minister Alexander Stubb after four years of policy stagnation and a bickering coalition.

“Three years ago, we were seen as a sunset movement, but not anymore!” Sipila told his cheering party members.

“Finland is in a very difficult situation. We need exceptional degrees of cooperation so that we can overcome the difficulties.”

He may depend on the eurosceptic Finns Party, formerly known as the True Finns, to form a government. If so, the resulting coalition could increase Finland’s hardline stance over bailouts in the eurozone just as the battle for Greece’s future in the bloc nears a climax.

Based on 99.8% of votes, state broadcaster YLE forecast Sipila’s party won 49 seats in the 200-member parliament, while the Finns won 38 seats. Stubb’s centre-right National Coalition scored 37 seats and centre-left Social Democrats 34 seats.

The anti-immigration Finns Party’s success echoes a Nordic-wide growth in populist parties amid unease over policies of traditional parties, especially immigration. Some mainstream parties have refused to deal with rightists, as in Sweden where the populist Sweden Democrats came third in last year’s election.

New obstacle for Greece bailout

But Sipila says he is open to including the Finns Party in a coalition even though they could complicate ties with Europe because they oppose bailouts and want to kick Greece out of the eurozone. Any third bailout for Greece may now face obstacles in the Finnish parliament.

“If the Finns go to government, I believe Finland’s policy towards Greece will change. It will change for the better, because it can’t get any worse,” Finns Party leader Timo Soini told reporters.

But for voters, the concern was their own economy. It is mired in three years of recession while shackled by the shrinking of its flagship company Nokia, rising labour costs and a diminishing working population.

Standard & Poor’s last year cut Finland’s rating to AA+, citing growth problems and political indecisiveness. That strikes a contrast with the rest of a largely buoyant Nordics.

An assertive Russia on its 1,340 km border has not only hit Finland’s trade but sparked debate in Finland about NATO membership. Stubb was the only candidate openly pro-NATO.

Coalition talks ahead

Weeks of coalition bargaining may now lie ahead with Sipila needing two of the three runner-up parties to form a majority coalition. Traditionally, the second-placed party is awarded the finance minister post, although Soini has hinted he wants the foreign ministry.

The Finns Party, with 17.6% of the vote, performed worse than in the last 2011 election, when it won 19%. Then it spooked markets but won over voters with criticism of EU financial rescues for euro members during the debt crisis.

Soini then refused to join the pro-bailout government coalition. The populist leader has said he now wants power, and some observers say he has softened his tone over Greece.

“It looks like a very good result for the Finns party. It will be hard to disregard them in forming the government,” said Ilkka Ruostetsaari, professor of politics at University of Tampere.

Sipila said he would talk with other party leaders on Monday. “The most important thing will be trust between the parties, then agenda issues. I wouldn’t primarily look at the ranks in the election result,” Sipila told broadcaster YLE.

Many Finns want to avoid anything like the last four years of political bickering. The government failed on plans to reform health care and local government budgets, and it cancelled some spending cuts.

The Centre Party was in power for many years after the Second World War. But Sipila, who favours austerity and trimming welfare, is mostly an unknown quantity. When in opposition, Sipila’s party, along with the Finns, voted against the second Greek bailout.

Respected as a businessman in startups and telecommunications, he has the backing of the urban middle class and rural conservatives that form the grassroots of his party.

Sipila is a member of Word of Peace, part of a Lutheran revival movement, and sets himself apart from more secular-orientated political leaders.

The likely new prime minister has a huge task ahead. The Finnish economy was hit by weak private consumption and turbulence in neighbouring Russia, a major trading partner. It is expected to grow just 0.5% in 2015, according to the finance ministry.

Sipila: A DYI businessman and a non-political figure

Juha Sipila beat electoral expectations by emphasising his business acumen as a telecom millionaire executive while maintaining traditional Finnish roots that emphasise self-sufficiency.

One of his companies has built a pilot wood chip power plant in a northern town, allowing a district to switch off from the national power grid. He converted a Chevy pick-up truck to run on wood chips. And Sipila built a house for his family in three months.

Sipila rose through the ranks quickly at mobile phone network component maker Solitra, becoming chief executive and majority owner. In 1996, he pocketed around €12 million when Solitra was sold to US-based ADC Communications.

The Centre Party led the Finnish government in 2007-2011 but suffered a major loss in 2011 elections after the emergence of suspicious funding arrangements by some party members.

Sipila’s support picked up as voters became frustrated by rising unemployment and bickering in the ruling coalition, leading them to punish National Coalition and Social Democrats.

While campaigning, Sipila toed a careful line in debates and was criticised for keeping his cards too close to his chest out of fear of losing political momentum.

“Sipila shows up almost as a non-political figure, someone who seeks solutions and does not hang himself in any ideology, a converging force in the time of a crisis,” said senior researcher Mari K Niemi from University of Turku.

Many of his party’s policies are characterised by vagueness. The Centre Party includes some vocal EU critics and promoters of warmer relation with Russia. When in opposition, the party voted against the EU bailouts of Greece, Spain and Cyprus.

Sipila was critical of a recent hawkish Nordic defence ministers’ joint statement over Russia, and unlike Alexander Stubb, the outgoing pro-NATO prime minister, he sees military non-alignment as the best solution for Finland.

The party’s domestic election programme differs from other major parties mainly for its focus on rural issues.

With his roots in northern Finland, Sipila wants to make use of renewable resources in a country rich in forests. He has proposed a new €1.5 billion state fund to invest in start-ups.

Background

Alexander Stubb, the now former prime minister of Finland, has seen his government's popularity slide since taking over as prime minister in June, when he replaced Jyrki Katainen, who went to the European Commission.

The current broad coalition, once six parties but now down to four - the National Coalition Party, the Social Democrats, the Christian Democrats and the Swedish People's Party - has been mired in discord, preventing it from pushing through any real reforms.

The Finnish election result is expected to be watched closely in Brussels. Finland has been one of the most reticent eurozone members, if not the most, when it comes to bailing out debt-laden Greece.

Further Reading