Contemporary History of Finland

The contemporary history of Finland is the story from around 1990 until today.

Political development in the 1990s

The President has traditionally held a stronger position in Finland than in any other European parliamentary democracy, except France. This is partly due to the fragmentation into several small and half-sized political parties. In addition, Finland has had presidents with strong personalities and with high prestige nationally and internationally. Since the 1980s, power has gradually shifted to the government and the Riksdag, partly as a result of political developments and partly after a constitutional change in 2000.

City of Helsinki

At the 1994 presidential election, there was, for the first time, direct elections in two elections. The election was won by Martti Ahtisaari, who came from an international career as a diplomat and UN envoy with no domestic political experience. He was the candidate for the Social Democrats and in the second round of elections got 53.9 percent of the vote. His opponent was, surprisingly, Defense Minister Elisabeth Rehn. She belongs to the Swedish People’s Party, which usually gets about five percent of the vote. However, Rehn gained 22 percent in the first round, thus knocking out Center Party candidate Paavo Väyrynen, who became the major loser of the election.

Both Koivisto and the “unpolitical” Ahtisaari pursued a more pragmatic policy than Kekkonen. This in turn led to increasing power for the parliamentary bodies. Finland has also had more stable governments since 1982. Social Democrat Kalevi Sorsa was in power in 1983-87, when Harri Holkeri became the first Conservative Prime Minister of Finland after the war. Between 1991 and 1995, the Center Party, led by Esko Aho, was the leading party in the government, while the new Social Democrats leader Paavo Lipponen became prime minister after the 1995 election.

In the parliamentary elections in 1991 and 1995, there was some major upheaval in the parties’ representation in the Riksdag, which must be seen in the light of the economic crisis. But the ability and willingness to cooperate is great in Finnish politics. The Assembly government in 1995–1999 had support from as many as 145 of the 200 representatives in the Riksdag, after the 1999 election from 139. The most important government parties were the Social Democrats and the Conservative Assembly, which together had a majority in the Riksdag. In addition, the Swedish People’s Party, which is a member of most Finnish governments, participated.

Vänsterförbundet was formed in 1990 when the People’s Democrats, Left Socialists and three Communist parties came together. This came first in 1995 with the government, together with the Greens – which in the European context was the first environmental party to get a seat in a government. The 1999 election provided success for the Assembly Party and a decline for the Social Democrats, but Lipponen’s coalition continued. The Center Party had a clear progress, but had to settle for the position of the largest opposition party.

Foreign Policy

Finland is perhaps the western country where the effects of developments in Europe from the mid-1980s have been most dramatic. Finnish neutrality policy has been constantly changing. During President Gorbachev’s visit to Finland in 1989, an agreement was signed in which the Soviet Union formally recognizes Finland as a neutral country. In 1991, the basic 1948 Friendship, Cooperation and Assistance Agreement ( VSB ) was renegotiated and finally dissolved – just a few weeks before the entire Soviet Union collapsed. This meant, among other things, that Finland formally accepted the borders of 1947. Thus, the sensitive border dispute over Karelia was provisionally resolved, and the boundaries were set for the time being. The military clauses in the VSB agreement were also repealed.

Following the dissolution of the Soviet Union, Russia and Finland entered into a new agreement in 1992 within the framework of the KSSE / OSCE, which will, inter alia, open for negotiations on border adjustments at a later date. The border with Finland to the east is a result of the wars in the 1940s, and border demands have sometimes been raised. However, this has been categorically rejected by the Finnish authorities. In addition to the political complications, a possible return of (parts of) Karelia will also offer enormous practical and economic costs.

Finland has strong cultural ties to Estonia and has assumed a special responsibility for the development of the country. Finland also actively participates in the new Baltic Sea Council. In 1992, Finland gained observer status in the North Atlantic Cooperation Council (NACC), and in 1994 Finland joined NATO’s Partnership for Peace program. In 1995, the country gained observer status in the Western Union.

The strongest expression of Finland’s foreign policy reorientation is the relationship with the EU. In 1986, Finland joined the EFTA and thus joined the EEA negotiations of 1989. In 1989, the country also became a member of the Council of Europe, and in 1992 the Finnish government applied for membership in the then EC. The negotiations started in 1993, and Finland negotiated with the other applicant countries Norway, Sweden and Austria.

The Finnish EU debate was not unlike the Norwegian one, where the side argued with Finland’s anchoring in Western Europe and the market importance of membership. The No side was particularly concerned that membership would lead to regional weakening and expressed skepticism about EU agricultural policy. In the referendum in October 1994, the yes side received 56.9 percent of the vote. The Yes side was strongest in the central regions of the south coast, while inland as well as in the north there was no majority. A separate referendum on Åland gave a 74 percent majority to follow Finland into the EU. Following the referendum, Finland joined the EU from 1995.


Towards the end of the 1990s, after the collapse of the Soviet Union, and then the EU adaptation, the hard-line restructuring policy began to produce results. Growth in the economy came in at over six percent, well above the EU average. In the same period, unemployment was almost halved, but then stabilized at around nine percent – a limit that was also unable to break through the first five years of the new centenary. At this time, the Finnish economy was voted the most competitive in the world by several international organizations for two consecutive years. The OECD followed up by ranking Finland as number one on its list of future growth opportunities in 75 countries. On other lists, the school system and corruption problems figured on top and bottom respectively.

The locomotive in Finnish business was the electronics company Nokia, which had to undergo extensive restructuring at the beginning of the new century. In 2005, the government implemented a number of measures to stimulate the further growth of the Finnish economy, with the main emphasis on tax cuts and reductions in corporate taxation. This was to counter a decline in exports and investment, as well as increasing competition from the Baltic neighboring countries that had now joined the EU, but, unlike Finland, did not have a strong euro as their currency.

Since 1995, Finland has focused on playing an active role in the EU, a line that gathers broad unity in the Riksdag and solid public opinion. As the only Nordic member state, Finland joined the euro cooperation – and exchanged land as currency – from its inception in 2002. The year in advance, the country also entered into the Schengen cooperation. Finland is among the few EU member states that can show increasing participation in national elections to the European Parliament; 40 per cent in 2004. And it was decided that the country, together with Sweden, should form a division of the EU emergency response force that was under construction at this time.

From the beginning, Finland was also assigned the central management position in this context. This force was considered to entail a military shift from NATO to the EU. The new EU countries in Finland’s neighboring Baltic Sea have opted for membership in both organizations. The fact that relations with NATO are sometimes aired in Finnish politics is another sign of innovation after the Cold War. In public opinion, however, there has been widespread skepticism about entering the defense alliance; thus, a crucial criterion for applying for membership is not met.

Political development in the 2000s

Ahtisaari did not run for re-election in 2000; all in all, he enjoyed greater popularity in international forums than in domestic politics. Five candidates took part in the election, and the result was that the Social Democrats got their third president in a row – and the women their first: Foreign Minister Tarja Halonen got 40 percent of the vote, Center Party leader Esko Aho 34.4 percent. In the second round of elections, Halonen became the Republic’s 11th president with a turnout of 51.6 percent. At the same time, a constitutional amendment came into effect that restricted the president’s authority, including in foreign policy. The reform also meant that the prime minister was no longer appointed by the president, but by the Riksdag.

The 2003 parliamentary elections brought the Center Party back to power after a scant victory over the Social Democrats. The Lipponen five-party government thus departed, but the party continued in a coalition with a solid majority behind it in the Riksdag, together with the Center Party and the Swedish People’s Party. At the election, Finland’s first female prime minister, Anneli Jäätteenmäki, also got the first. Women in nine of the 18 government ministries also held a Finnish record. Jäätteenmäki was relatively new in the position of Center Party leader, and had led a tough election campaign focusing on Lipponen’s stance on the Iraq war.

However, Jäätteenmäki’s prime minister’s term lasted only 62 days. The departure was surrounded by drama – and what triggered it was the revelation that she herself had unlawfully obtained confidential documents, which she quoted and used against Lipponen in the election campaign. It was widely believed that this citation usage had a decisive impact on the outcome of the election. In 2004, for the first time in Finnish history, a former Prime Minister was indicted; the charge was for solicitation of service failure and breach of confidentiality. She was acquitted in court, declared politically dead in politics – but figured with the most votes when the Finns only a few months later elected their members to the European Parliament.

New Prime Minister in the summer of 2003 became Matti Vanhanen, who also took over as Center Party leader after Jäätteenmäki. Otherwise, the scandal had no consequences for government cooperation. Thus, the pattern of Finnish government formation was further consolidated: the two parties with the largest electoral support form a coalition, the third goes in opposition – regardless of party color.

At the 2006 presidential election, Tarja Halonen renewed her mandate, with 51.8 percent versus 48.2 percent for Sauli Niinistö of the Conservative Assembly in the second round of elections; a total of eight candidates participated and none achieved more than 50 percent of the vote in the first round. For the first time, NATO membership became a central theme in a Finnish election campaign, with Halonen saying no while Niinistö wanted to open for future membership in a smaller US-dominated alliance.

The parliamentary elections the following year again gave the Center Party the most votes, while the coalition partner Social Democrats and the opposition party The Samling Party swapped places as number two and three – voting was 23.1, 22.3 and 21.4 per cent respectively. Following Finnish tradition over the last couple of decades, the Center Party’s Matti Vanhanen thus continuedas prime minister, now with the Samlingspartiet, the Gröna federation and the bourgeois Swedish People’s Party as partners. The replacement of the Social Democrats ushered in no major course change. But the new government wrote history with a 60 per cent share of women. Prior to the election, Vanhanen attracted international attention when an ex-girlfriend published a book detailing their nine-month relationship – without hurting Vanhanen’s reputation. Foreign Minister Ilkka Kanerva, on the other hand, had to leave his post in 2008 as a result of extensive SMS correspondence with a “young erotic dancer”.

In 2005, the government made the formal decision to build a new nuclear power plant, the first in Europe since the early 1990s and which will be the largest and probably also the most advanced in the world. This will be the country’s fifth reactor, Olkiluoto III, which after several delays is expected to be completed in 2018 (World Nuclear News). A state investigation has also recommended the construction of a sixth nuclear power plant. This form of energy has strong and growing support for the population, based on the Kyoto Protocol (see under the Climate Convention ) as well as on the goal of reduced dependence on power imports from Russia. Energy policy and relations with Russia were also the two main themes of the Finnish presidency in the EU in the second half of 2006.

Twice, Finland has been shaken by school massacres, where students have shot down fellow students and teachers before taking their own lives. This happened in Tusby outside Helsinki in November 2007 and in the southern Finnish small town of Jokela one year later, the massacres cost a total of 19 people’s lives. Following these events, the focus was on Finland’s liberal arms legislation.

But also possible shadow sites of the country’s successful school system became a topic of debate; Finnish students have for years been at the top of the international knowledge survey Pisa. After the turn of the century, Finland has also topped the international list of competitiveness, and in spring 2008 – with the financial crisis under development – was named the best economy in the EU.