Analysis - True Finns out of gov't but euroscepticism to stay

HELSINKI Fri May 13, 2011 3:39pm BST

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HELSINKI (Reuters) - Even with Finland finally agreeing to support Portugal's bailout and the plan's most ardent opponents --the True Finns-- staying out of government, euroscepticism is likely to remain strong.

The True Finns party dropped out of government talks this week after refusing to help aid debt-burdened economies, a stance that catapulted it from obscurity to the No. 3 spot in parliament in April elections.

While the new government led by National Coalition chief Jyrki Katainen will be pro-Europe, it is also likely to heed voter discontent and take a tougher line against Brussels if the debt crisis deepens, analysts said.

The election outcome and comments from voters show strong and conflicted emotions over the country's role in the EU, with many proud to be part of the bloc but also feeling they are paying too much for the honour.

"In the past, the population has been rather happy with the membership benefits, such as stability. But lately there's a feeling among Finns that the EU is failing," said Juha Jokela, programme director at the Finnish Institute of International Affairs, an independent think-tank.

The country's high taxes have fuelled criticism of the bailout plans. Finnish workers pay some of the highest taxes in the world, although that supports free and high-quality education and a relatively generous welfare system.

There is no coordination of income taxes within the euro zone, and many Finns feel that their fiscal discipline is taken advantage of by what they view as irresponsible governments.

"With the EU, what they say is, you have the same currency, it's more easy to travel. But how much do we have to pay to keep up the organisation? That's something we're always wondering," said Nina Huru, an anaesthetic nurse who also represents the True Finns in Helsinki's local council.

With unemployment stuck at above 8 percent and at above 20 percent for those between the ages of 15 to 24, many feel disenfranchised by the government's internationalist stance.

Even Nokia, the flagship tech company which was once a symbol of Finland's innovation, is now cutting jobs as it gets squeezed by both high-end smartphone makers like Apple Inc and nimble Asian rivals like Samsung.

Dan Steinbock, research director of international business at India China and America Institute, said Finland's competitiveness had been eroding in the past few years.

"Socially, the rise of the True Finns reflects the underlying anxiety of many Finns that their way of life is changing, rapidly and irreversibly," he wrote in a newsletter for Roubini Global Economics.

HAVE GUTS, MAKE NO TROUBLE?

Finland's experience of clawing its way out of recession, and a national emphasis on the term "sisu" --loosely translated as "guts" or strong perseverance-- has also fuelled criticism of the bailouts, particularly among the older generation.

The Nordic economy plunged into a deep recession in the early 1990s after the break-up of the Soviet Union, then its major trading partner. Gross domestic product fell 10 percent, bankruptcies soared and unemployment reached around 20 percent.

Finland's past of having paid off war debts and loans to Russia and the United States have also added to a popular perception that countries like Portugal and Greece are getting an easy ride, analysts said.

Nevertheless, Jokela said many felt uneasy about the international attention on the True Finns' rise.

"They're not usually the trouble makers. But that also shows how strongly they feel about this," he said, referring to the Nordic country of 5 million not known for being outgoing.

In advising parliamentarians to back Portugal's bailout earlier this week, Sixten Korkman, head of The Research Institute of the Finnish Economy, said: "Finland's role is to solve international problems, not to cause them or make them more acute."

Younger Finns appear to be particularly conscious of how Finland's increasingly eurosceptic stance will be viewed.

"The discussions have been about the negative sides of being in the EU, but you have to think about the positives. You also have to think about how this will be viewed outside Europe," said 27-year old Kati Oksman, a Social Democratic party supporter, referring to the True Finns' election success.

But some said that shouldn't be such a concern.

"Why shouldn't what we say count?" said Pertti Ahonen, politics professor at Helsinki University. "Our forefathers had guts. Why shouldn't we have guts."

Some analysts also said the True Finns may also be emboldened by a shift among other northern European countries where voters are beginning to question the EU system.

"If the success of True Finns reflects broader political movement in Europe, then we might have a worrying outlook for the eyes of markets," said Tiina Helenius, Chief Economist at Handelsbanken. (Additional reporting by Jussi Rosendahl and Sakari Suoninen)

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