“A European-level fund to promote the green transition would be a better option than interstate competition,” says EK CEO Jyri Häkämies.
Brussels
Finland must abandon its traditional line defending scarce state subsidies and opposing new EU-level financial instruments, says EK's CEO Jyri Häkämies. Instead, he hopes that the Finnish government would try to put the idea of a common fund of hundreds of billions of euros on the EU's agenda for the next few years, which would support investments in critical technologies heading towards Europe.
Häkämies says that the EK has had to check its own line regarding state subsidies due to the necessity of the circumstances. When the United States, Germany and France attract industrial investments with billions of euros in government subsidies, Finland threatens to be left behind in the competition.
Häkämies says that EK is aware of concrete cases where state subsidies offered by other countries threaten to take away investments from Finland.
“It is not unusual that when different countries make offers, companies weigh options and compete between countries,” he says.
Last year, the Norwegian battery manufacturer Freyr announced that it would shelve plans to build a battery factory in Vaasa. The company focuses on building a factory in the state of Georgia in the United States, where it can benefit from the president Joe Biden About the tax benefits included in the IRA subsidy program.
Competitive state aid has also started within Europe. EU state aid rules have been relaxed first due to the corona pandemic and then due to the green transition and the support policies of the United States and China.
Under the guise of exception rules, member countries have supported their companies with at least one thousand billion euros. Germany and France share the most generous subsidies. They attract billions worth of investments in sectors where Finland also competes, for example in the battery industry and clean steel manufacturing.
Minister of Economic Affairs Will Rydman (ps) recently announced that the government is trying to respond to the competition and is starting to prepare an investment support program. However, only EUR 400 million is available for that.
“This 400 million is not terribly far enough,” says Häkämies.
“A European-level fund to promote the green transition would be a better option than interstate competition.”
According to Häkämie, the size of the fund could be 400–500 billion euros, and it would only support strategically important investments in, for example, the green transition, digitalization and the defense industry. It would be essential that the fund is not distributed to member countries, but that the best projects are supported regardless of location.
His output as a background, EK ordered from the former head of office of the Ministry of Labor and the Economy and the Prime Minister Antti Rinne (sd) from the Secretary of State From Raimo Luoma report on the EU state aid competition. Luoma estimates that the change in state aid policy will be long-lasting.
“I don't think that we will return to the traditional line emphasizing free competition any time soon. I would think that a more active line emphasizing industrial policy will be visible in the future.”
Finland's traditional line has been that strict state aid rules are in the interest of a small member state. Luoma also says that the line needs to be reconsidered.
“Yes, it would probably continue to be in Finland's interest if the rules were strictly adhered to. Unfortunately, this is hardly the case.”
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