In a tie is the colors of the flags of Ukraine. Russia’s attack on Ukraine has deeply shocked the Governor of the Bank of Finland Olli Rehnwhich turns 60 on Thursday.
The war is an exceptionally tedious subject for a birthday interview, but it can’t be ignored in Rehn’s case. He has worked for the European Union for more or less 20 years. In those positions, he has defended the values and principles that Russia is president of Vladimir Putin chair crumpled in the trash.
Rehn emphasizes that Putin’s attack has shattered both the European security order and Finland’s active stability policy. He fears that building peace will obviously be difficult. We must be prepared for a long-standing confrontation between the West and Russia.
“On the other hand, the crisis has strengthened the unity of the West and forced us to see Russia and China build an alliance of authoritarian states. Liberal democracy between Europe and the West and the authoritarian regime between Russia and China are at odds. ”
Central Rehn is concerned about the extent to which China may support Russia, either militarily or financially. The risks are great for China as well. It will not be able to compensate for all the economic losses caused to Russia by the sanctions, but it could face unpredictable distress if it starts to help Russia.
“Of the Western sanctions, sanctions on the financial sector in particular also indirectly affect China. When the assets of the Russian Central Bank are frozen and transactions [maksujen välittäminen] Chinese banks will also have to take this into account. ”
Sanctions against Russia are slowing economic growth worldwide, but especially in the euro area. How long, no one knows yet. More sanctions may well be imposed. Rehn believes the European Union should prepare to ban energy imports from Russia, even if it causes problems in Germany and Eastern European countries
The ban would mean the depletion of Russia’s main source of foreign income. Therefore, financing Putin’s “war machine” should become more difficult over time and could, at best, promote a ceasefire.
“Energy imports from Russia to the EU this year will be worth roughly € 600 billion at current prices. In 2020, the value of imports was EUR 200 billion. The rise in energy prices is directly reducing the purchasing power of European consumers, and this 600 billion represents 4% of the EU’s GDP. “
This too the matter is not black and white. If the EU banned the purchase of Russian energy, it would probably lead to higher prices for crude oil and gas.
Inflation, ie consumer price inflation, accelerated to 5.9% in the euro area in February, mainly due to higher energy prices. According to the European Central Bank’s price stability target, it should be 2% in the medium term.
The Governor of the Bank of Finland is an ex-officio member of the Governing Council of the European Central Bank, for whom accelerating inflation at the same time as economic growth is slowing down is a painful problem.
“The rise in energy prices due to the war is accelerating inflation, but it is very difficult to influence it with monetary policy. Monetary policy cannot solve the high price of energy or prevent war. ”
Sodan despite the horrors, Rehn welcomes the pressure exerted on Russia by civil society in democracies.
“I would believe that business leaders have now reached full measure with Russia, because legal certainty in Russia is also even weaker. Even more, the withdrawal of companies reflects the pressure on civil society that has been really strong in the West. It has been great to see what all the people are willing to do for Ukrainians. ”
Rehn says he follows foreign and security policy issues mainly as a citizen and as a “throwback” researcher. Rehn is a docent in general political science at the University of Helsinki, who announced his support for joining NATO in 1994 in an article in Foreign Policy. In it, he also specifically mentioned Ukraine as one of the European powder kegs.
“The ongoing tensions with Ukraine over nuclear weapons, the navy, the borders and the Crimean peninsula are a potential barrel of powder, although [Ukrainan] president Leonid Kravchuk has called the dissolution of the Slavic state union between Russia and Ukraine a ‘civilized divorce’, “Rehn wrote in Foreign Policy.
The article also had personal consequences for him.
“This article was one of the reasons I got a shoe for the position of vice president of downtown. I had been an active supporter of joining the European Union since 1990, so I had long disadvantages in the eyes of opponents of the EU. Then I dared to start thinking about NATO membership. It was the last rivet. ”
Sodan Because many in the field of politics and economics have changed exceptionally fast. Russia has become a risk to Western states that will probably be avoided for years.
Rehn says he woke up to a change in President Putin’s policy in 2007, when he spoke at the Munich Security Conference.
“He accused the West, and especially the United States, of trampling on Russia’s interests in harsh language and began modernizing the armed forces. With this speech, Putin opened the game to lobbying. After that, he first started the war in Georgia and conquered the Crimean peninsula in Ukraine. ”
Rehn finds it sad that Russia is stuck in an authoritarian regime that has been going on for 500 years, with the exception of momentary gusts of freedom.
“Now it is not worth counting on Russia becoming a democratic state governed by the rule of law in our lifetime. Putin lied face to face with Western leaders. He decided to attack Ukraine, although he had said he would not attack. You can only lose confidence once. ”
In Finland Citizens’ views on joining NATO have changed dramatically since the start of the war of aggression, according to opinion polls. Rehn’s conclusion is that citizens have made a new risk assessment that it is not good to be alone in the neighborhood of an unpredictable Russia.
“A defensive alliance based on the Norwegian model would be a meaningful option for Finland. This would mean that no nuclear weapons or permanent NATO bases would be deployed in Finland. Such a defensive model would not threaten anyone, and in the slightest rational way, this should also be understood by the Russian leadership. ”
He also emphasized the national consensus on the NATO issue in order to better withstand the pressures and retaliatory consequences of eventual membership.
“It is also important not to blame those who have at some point been against or for NATO membership. The world has changed so much. We need to take care of our strong national defense capabilities and security of supply. A strong defense capability based on universal military service is at the core of our national security, also because of Finland’s geopolitical location. ”
Rehnin the statements already sound almost presidential. It is therefore reasonable to ask whether he intends to run in the 2024 presidential election.
“When war is raging in Europe, which has a big impact on the operating environment and line of Finnish security policy, it is worth supporting the state leadership in its work and not focusing on presidential speculation. Of course, I fully understand that Finns are considering the presidential issue, because the president has a leading role in foreign and security policy. ”
Your current term as Governor of the Bank of Finland will end in 2025. Are you planning to apply for a second term?
“That is the appointment of the next president of the republic. I am very motivated for my current job, but I will return to it in due course. ”
Born in 1962 in Mikkeli.
The Governor of the Bank of Finland since 2018. Prior to that, he worked as Minister of Economic Affairs 2015–2016 and EU Commissioner 2004–2014.
Hobbies: football, reading, music and cycling.
The family includes a spouse and an adult daughter.
Turns 60 on Thursday, March 31st.
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