Election Season – Finland

In this Nordic country of a little more than 5.25 million people, 70.4% of the eligible voters went to the polls on Sunday and handed the ruling Center Party a resounding defeat.

Outgoing PM Mari Kiviniemi

As is the case with many European countries – as well as a number of other non-American countries – there are many parties represented in the Finnish Parliament (Eduskunta) and none of them come close to having a majority of seats.  In the elections 0f 2007, the Center Party won the largest percentage of the votes (23.1% – 55 seats), followed by the National Coalition Party (22.3% – 50 seats), the Social Democrat Party (21.4% – 45 seats), and several others, none of which had more than 10 percent.  So, going into Sunday’s election, the coalition government of the Center Party, the National Coalition Party, and two of the smaller parties (Green’s and Swedish People’s Party) was lead by Prime Minister Mari Kiviniemi.

Incoming PM Jyrki Katainen, Social Democrat Party Leader Jutta Urpilainen, and True Finn Party Leader Timo Soini

The National Coalition Party – described as center-right and moving center (much like the Tories in the United Kingdom) – moved up from second to first in percentage of votes (20.4% – 44 seats).  The Social Democrat Party, led by Jutta Urpilainen, moved up to second (19.1% – 42 seats) while the Center Party dropped all the way to fourth (15.8% – 35 seats).  This leaves National Coalition Party leader and current Finance Minister Jyrki Katainen in position to become the new Prime Minister as he forms a coalition government.

While coalitions in Finland have often been formed between the two largest parties and enough of the smaller parties to gain a majority, speculation is that Katainen will form the government with the next two largest parties in this election:  the second-place Social Democrats and the surprising third-place finisher, the True Finn Party.  In the 2007 elections, the True Finns came in a distant 8th with 4.05% of the votes and only 5 seats in the Eduskunta; they were viewed as little more than a fringe party and a nuisance.  Riding a wave of anti-European Union sentiment, the True Finns, lead by Timo Soini, picked up a stunning 19.0% of the vote in this election, only one-tenth of one percent less than the Social Democrats (and less than one-and-a-half percent less than the National Coalition Party). Because of the proportional distribution system used in Finland, they will be allocated 39 seats.

The challenge for Katainen is going to be the issue of the European Union and the bailouts of Euro-member countries who are on the brink of bankruptcy.  The Wall Street Journal points out that:

Finland committed loans as part of aid to Greece last year, and it has guaranteed borrowing by the EU’s current rescue fund, which is being used to help Ireland and will be called upon for the imminent bailout of Portugal.

That has angered many in Finland, one of the euro zone’s most fiscally sound nations, and the tight election campaign has led Finnish leaders to take a hard line on bailouts—delaying, for instance, a plan to expand the size of the existing rescue fund.

Katainen believes the rescue packages are necessary for the survival of the common currency and campaigned on taking the responsible action of providing further assistance. Both Urpilainen and Soini lead parties who campaigned on the premise that Finland should not participate in the financial rescue efforts (this brings the whole rescue effort down as all members of the European Union must agree).  So, while Katainen has won the right to lead the government, his coalition will very likely be opposed to him on one of the major issues of the day.  And, while the Center Party supports him when it comes to the Euro Zone, they have announced that, due to their showing in the election, they will go into opposition.

Given the precarious state of the global economy, financial decisions by members of the European Union could have significant impacts on the United States.  For this reason, the formation of the Finnish government is well worth keeping an eye on…even if it weren’t fascinating political theater.

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