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Uppsala University Department of Business Studies Management of International Business Thesis Spring 2007 Supervisor Rian Drogendijk Political Risk in Finland Does the financial crisis in 1990’s consist of political risk? By Jukka Davidsson

Copyright Jukka Davidsson 2007 2

Summary

Thesis political risk in Finland will explain the real nature of the financial crisis in

Finland in the beginning of 1990’s. Before 1990’s Finland used to be a closed and controlled

market. The liberalisation of the financial market began in 1980’s. This process caused the

depression in Finland. Partly there is truth behind this statement. The restructuration of Finnish

economy and state policy needed more. The government formed collaboration with the legal system

and major actors in Finland. Financial institutions and large corporations were provided a

parachute. The mentioned companies got a different treatment in front of the law than small and

medium size companies. Government together with financial institutions made a plan for solving

the problems what the market faced. They signed secret agreements upon execution of the plan.

Actually, the three actors made a plot for the rest of the people in Finland.

This is a thesis of political risk in a developed country called Finland. Political risk is

not only concentrated on undeveloped countries. The existence of political risk is increasing

throughout the world. Therefore, it is important to point out the possibility of political risk in

developed world.


Table of Content

Page

1. Introduction

4

2. Problem description

5

3. The Objective of Thesis

6

4. Theory

6

5. Method

9

6. Presented data

11

6.1 The research of economics

11

6.2 Government related matters

12

6.3 Economic freedom in Finland through the years

15

6.4 Legal system in Finland

16

6.5 Summary of different comments of people

19

6.6 The bankruptcy rate

20

6.7 The accounting of Banks

20

7. Analysis

21

8. Discussion

27

9. Conclusions

29

References

30


1. Introduction

The phenomenon risk is related to local business as well as to international business.

Research of risk is mostly focusing on direct risks like choices of corporate strategy and

competition. Different studies concerning international business are, at least, indirectly related to

risk of any kind. Political risk has been studied less. However, the more the economical agenda will

be part of international geopolitics or power politics, the more political risk plays an important role.

One resent example is the behaviour of the Kremlin toward Ukraine, Georgia and Belarus1. Using

energy supply as political tool against states is clear sign of increased political risk2.

The definition of political risk is not clear. The researchers are pointing out, that there

are differences between political risk and business risk. However, most of the articles are defining

the political risk as actions of political forces causing drastic changes in a country’s business

environment, which is affecting the goals and profits of international companies3. In this context we

have to recognize the cooperation of political powers and local companies, as the case is in Russia4.

The political risk is related to several issues. The source of political risk might be the

problems in country’s legal system. Furthermore, the level of legislation is for importance, when

scrutinizing the political risk concept in one country. This might even cover the economical risks in

this specific country. The protection of property is matter of legislation. Political risk could be the

source of different business cultures and ethics resulting in some countries in corruption and

violations of human rights.

The behaviour of a specific government is the power and source for political risk. All

governments are driving own agendas when ruling the country. They are protecting domestic

market and its local actors or trying to invite foreign direct investments to the market. Each country

has its backbone industries to protect. Therefore, governments are using instruments for trade policy

and government interventions5. Typically, trade policy acts are related to different tariffs, subsidies,

import quotas, export restraints, local content requirements and administrative and antidumping

policies6. Instruments for trade policies are effective, if the government implements the different

requirements in volume and on different levels of legislation. Foreign companies shall use a lot of

energy to meet all the required standards. Government interventions are more often used as tool for

1 CSIS Euro-Focus, January 24, 2007. 2 Ibid. 3 Hill, Charles W.L., 2005. p. 79 4 CSIS Euro-Focus, January 24, 2007. 5 Hill, Charles W.L., 2005. p. 180-193 6 Ibid.


protecting jobs and industries7. In addition, the national security is one explanatory to this

behaviour8. Even human right and consumer protection are behind the interventions. Increasingly,

the foreign policy objectives seem to be on the agenda.

Finland used to be a closed and controlled market, protecting its major industries like

the forest cluster. Finnish government maintained a policy of inflation and revaluation in order to

boost export industries9. The Finnish State was by itself one of the biggest owners of large

corporations. The trade in Finland was mainly based on the bilateral agreement with Soviet Union.

On that market competition was an almost unknown phenomenon. The only competition that

occurred was the struggle of Finnish companies to access to the barter trade system and

organization. This was government controlled area10.

2. Problem description

Developed countries are considered as safe markets in the context of political risks.

Such countries are trying to maintain the reputation of risk free market for foreign direct

investments. However, the existence of political risk in world market is increasing11. This is

because of the political involvement into different industries. The economy is used as tool in foreign

policy12. Even, the globalization of financial market will bring up risks for politically motivated

actions13. Therefore, the political risk as phenomenon will be more important for businesses in the

global market. Governments can affect the business environment dramatically14.

In the beginning of the 1990’s the Finnish economy experienced a financial crisis.

Research available is focusing only on macro economical issues. Research of political risk in the

same period does not exist. Discussion of the financial crisis in Finland is mostly based on external

factors. In the beginning of 1990’s Finland wasn’t the only country facing the economical problems.

Finland did actually ‘’suffer due to German financial policy15’’. This argumentation is popular

among the political parties in Finland. The prospective existence of political risk in Finland is still

in present situation without answers. The research which is not concentrating on confidential issues

or on politically sensitive matters is as such ‘political risk’ in Finland. It is important for any

7 Ibid. 8 Ibid. 9 Kiander, Jaakko & Vartia, Pentti, 1998. 10 Kiander, Jaakko & Vartia, Pentti, 1998. 11 CSIS Euro-Focus, January 24, 2007. 12 Ibid. 13 Cato Policy Report, Jan/Feb 2007. 14 Robock Stefan H., 1971. 15 Kiander, Jaakko & Vartia, Pentti, 1998.; Honkapohja Seppo; Koskela Erkki; Gerlach Stefan; Reichlin Lucrezia, 1999.


business owner to have full knowledge about the reality in Finland. If there is political risks in

Finland the story should be studied and told.

Economical freedom and security are central for international business and direct

investments. Financial crises are normally explained as exceptions. The elements of such crisis are

described in terms of international business cycles. The outcome of the Finnish depression was

shocking. The amount of bankruptcies, transferred properties, suicides and unemployed people was

enormous. From the private company point of view it is important to study, whether the depression

in Finland can be explained as a regular economical crisis or as the result of political risk. This is

also vital information for companies planning investments in Finland. The worst possible outcome

because of the political action is the lost of company and private freedom, that is bankruptcy of own

company and criminal sentencing.

3. The Objective of Thesis

The aim of this thesis is to study the phenomenon of political risk in Finland. The

Finnish example is interesting because of the financial crises.

There are some limitations in the thesis. This thesis will concentrate only on the

period of 1990 – 1997. This is because of the limited time available for the study. In order to

minimize the presumable critics, the thesis will present information in discussion part. This data

will take into account the timeframe from 1980’s to present. Legislation in the country will have

major effects in business environment. Legislation in Finland will be excluded.

4. Theory

The expression political risk is a widely used term among executives in corporations

as well as governmental civil servants. Although the usage of this term, a common definition of this

concept does not exist in political risk literature or research articles. The academics are using

different approaches defining the political risk. Stefan H. Robock defined the political risk, when 1)

discontinuities occur in the business environment, 2) when they are difficult to anticipate, and 3)

when they result from political change16. He discussed the term political risk in a framework of

industry based risks, political risk vs. business risk and political risk vs. economical risk17. He

argued political risks in favour to clear defined causes of risks explained either on the

macroeconomic or microeconomic level18. ‘’The risk is of a macro nature when unanticipated and

16 Robock Stefan H., 1971 17 Ibid. 18 Ibid.


politically motivated environmental changes are broadly directed at all foreign enterprise. The risk

is of micro nature when the environmental changes are intended to affect only selected fields of

business activity or foreign enterprises with specific characteristics’’19. Robock also considers the

macro risk as more dramatic and the micro risk as more prevalent. Causes of risk are described

more as pains in a process when a country is developing. To this category fits social unrest and

disorder as well as internal rebellion and attaining independency. Further relevant issues, that are

discusses in this article are ineffective law enforcement and other risks as result from the political

influence of local business interests. Finally, this article explains also the possibility for both losses

and gains in political risk.

Kobrin made a comprehensive review of literature concerning political risk studies.

Kobrin discussed the phenomenon political risk as action or event20. Risk can also be understood as

uncertainty, where the political risks should be separated from environmental risks. The uncertainty

is subjective, depending on the perceptions of the decision maker. He pointed out, that the political

risk seems to be related only to downsize, i.e. negative outcome of the firm. In contrary, the

political risk is like a coin with two sides. There are, or at least might be, gains to someone else.

Further, he argues, that executives round the world are not using any sophisticated methods to

estimate or calculate the political risks, when entering new markets. Kobrin also claims that

business leaders are using data from newspapers for market evaluation as political risk. Managers

are not using real research in this context. Finally, he concludes the article with following statement

– ‘we need better definition of the phenomena, a conceptual structure relating politics to the firm,

and a great deal of information about the impact of the political environment. The three are, of

course, related’21.

Simon made his contribution to research of political risk with an article in the middle

of 1980’s. In addition to the existing theories he presented the need for joint studies among

economists, political scientists, business management scholars, legal experts and sociologists.

Simons argued that the political risk may have the roots not only in host government behaviour, but

also in plans of the local business groups or in host country’s social environment. This might be

violent behaviour of certain groups in the region. In this sense he gets support from peace and

conflict researchers. Luke and Tuathail define one of the presumable reasons to political risks as

failed state, that is, ‘states that had experienced a spectacular breakdown in the functioning of their

governmental apparatus and the disintegration of their civil institutions’. They also argues, that

19 Ibid. 20 Kobrin, Stephen J., 1979. 21 Kobrin, Stephen J., 1979


such countries are in a number of cases involved with ‘contraband commerce’ defined as ‘trade in

illegal and/or prohibited goods, practices and services’22. Collier and Hoeffler investigated the

outbreak of civil conflict. They found, that one explanatory factor for rebellion is the availability of

finance23. In this context, it would be of interest to mention studies focusing on private gains during

uncertainty or violent periods. Fortunes made in very short period of time might be based on illegal

or criminal activities motivated with greed24. Simon divides the risk in four categories. Host country

risks are stemming from government actions and policies, societal actions and attitudes, local

business community actions, legal community rulings. Home country actions are the same as the

ones in host country. Further, Simon divides the flow of risk in four categories – direct internal and

external as well as indirect internal and external25. Simons is combining in his article political risk

studies with peace and conflict studies i.e. conflict management.

Miller discussed the political risk in context of risk management and uncertainty in

strategic management. He divided the risk concept in three categories, 1) general environment, 2)

industry and 3) firm specific variables26. The general environment uncertainties cover political,

government policy, macro economic, social and natural uncertainties. Miller refers in the article to

industry and firm specific variables. In this context most of researchers consider this kind of

uncertainties as normal business risks. However, he also discusses in the article financial and

strategic responses to uncertainties. This section refers also to the political risk factors. Strategic

risk management as well as the financial risk management are tools to cope with political risk. The

weakness with his approach is the definition of political risk and business risk. In case the political

risk is more unexpected events or causes of risk, the management tool is not the right approach. In

order to be able to forecast political risk in specific market there is need for more research.

Globerman and Shapiro made an important contribution to the field of political risk

research with studies focusing on attributes of legislation, regulation and legal system affecting the

freedom of transacting, security of property rights and transparency of government and legal

processes27. The purpose of the study was to assess whether and to what extent governance

infrastructure attributes of national economies influence US FDI flows. The results indicated that

governance infrastructure plays a critical role in the determination of the volume of US FDI flows

across countries. In particular, the classification of legal systems of former socialist countries was

difficult. The results indicate that countries that fail to achieve a minimum threshold of effective 22 Luke, Timothy.W. & Tuathail, Gearóid Ó., 1998 23 Collier, Paul and Hoeffler, Anke, 2004 24 Duffield, Mark, 1998; Collier, Paul, 2000; Keen, David, 2000 25 Simon, Jeffrey D., 1984. 26 Miller, Kent D., 1992 27 Globerman, Steven and Shapiro, Daniel, 2003


governance are unlikely to receive any US FDI28. They also found that market size is statistically

the most important predictor of whether a country will receive FDI and, if so, the amount.

The study will concentrate on theories of Robock, Kobrin, Simon and Globerman &

Shapiro. All of the above presented theories focus on same issues. There are three parties dealing

with political risk (A). The political risk in one country is illustrated with (A). The major party –

government including country politics – is named with (C). This corner will include the legislation

in that country. The (B) is the country economics including all actors dealing with issues of

economics. Finally, the (D) is the legal system. All the parties are in interaction with each others.

Theories concerning the political risk are related to actions or events. They are

unforeseen action or events. In this context we have to separate the normal business risk from

political risk. In this thesis theories will be applied in interaction between the different actors in the

triangle. The cause of political risk seems to be a sum of actions. Different actors are causing the

outcome in cooperation. To illustrate this we might assume collaboration between local business

owners with government bodies. In this example the corner C and B are in relation. If the legal

system supports the cooperation then the political risk will be a complete ‘plot’.

5. Method

This thesis of political risk in Finland is based on secondary data. Presented

documentation consists of domestic and foreign articles and research rapports. The articles cover

macro economics in Finland and financial issues in depression. The data part will cover major

government events during the chosen time. Presented material is well documented and copies exist.

The data concerning the legal system is presented mainly from external sources. All the mentioned

data will be analyzed only in qualitative terms. Studies of political risk will be applied.

Presented data consist of major part of the published articles. Legal studies are

excluded. The economical data will be presented briefly in the thesis. Only major findings from

28 Ibid.

C

B

A

D


each study will be noted. The economical data will be presented briefly. This data will be analyzed

qualitatively i.e. the structure of studies will be criticized due to some weaknesses in presented data.

The outcome of this analysis will operate as base information for further research in this report.

The government data presented in the thesis represents the most important pieces of

data during the chosen period. Data concerning legislation will be excluded, due to limited

resources. The analysis of government events, agreements and decisions will be done separately.

The focus in analysis will be on major issues in each data group. The analysis will be qualitative in

nature. Major focus and interest is in elements of political behaviour. Finally, all the presented data

parts will be analyzed as a total chain of events. This exercise will be carried out in order to find

trends or patterns from data.

Data of economical freedom is chosen due to its relation to the legislation in Finland.

This data is presented as external information in order to bring a quality point of view from Finland.

The second purpose of this data is to present also a broader understanding of potential political risk

in Finland. The analysis of the presented data will focus on trends from 1980’s to present.

The legal system is presented in the thesis because of the central role of judiciary in

political risk research. The presented data concerning the qualitative part of legal system is

collected from external sources. External parties are more reliable to analyse the system than the

local ones. The figures of criminal sentences are presented as accurate available internal

information. Further, the figures are presenting trends, which can be analyzed against other

information presented in the thesis.

Data concerning bankruptcy rate as well as data concerning the banks are presented as

evidences of outcomes of the depression. There will be trends, which can be analyzed as such, but

also against other presented data. The analysis will be qualitative.

The documentation and data used in this thesis is collected with means of

investigative journalism. The presented data is the core of financial crisis in Finland. In addition the

documents are confidential in nature. The presented data is something which has not been published

in any other research reports. The material is the key documents for the research of political risk in

Finland. The official documentation like research reports is not covering the issues of confidential

nature. As an example the secret agreement between the State and banks is not analyzed or

mentioned in any report.


6. Presented data

Data presented in this section is divided in different categories. Government actions

are presented in chronological order. Status of legal system is discusses from point of view of

foreign actor statements. Some economical research reports will be explained and other data related

to economical freedom is published. The political risk in Finland will be scrutinized only in 1990’s.

We can separate different periods from 1980’s. The 1980’s and especially the second half of the

decade is time for liberalization of the monetary market. The first years in 1990’s can be described

as a planning phase for reconstruction of the Finnish economy and politics. Most active period of

actions is the years between 1993 and 1997.

6.1 The research of economics

The summary of the research material – ‘’In the 1990s, Finland underwent a deep

depression as its GDP dropped about 14% and unemployment rose from 3 to almost 20%. This is a

story of bad luck and bad policies. Bad luck took the form of external shocks: the collapse of trade

with the former Soviet Union in 1991, but also sharp cycles in the OECD area’’.29

‘’However, bad luck is far from being the whole story. In the absence of bad policies,

Finland would have experienced a recession, not a depression. Bad, policies included a poorly

designed financial regulation and mistaken reactions to the onset of the crisis. Of particular interest

is the role of financial factors in triggering the crisis and aggravating the effects of bad policies.

Not only were consumption and investment spending hurt by the credit crunch, but there is evidence

that the private sector's indebtedness has increased structural unemployment, which explains why

the recovery is proceeding with firm job creations. A number of general lessons emerge. They

concern the deregulation of financial markets, the policy reaction to massive capital inflows and the

role of employment policies’’.30 The main diagnosis in this study is, that the depression was a

29 Honkapohja Seppo; Koskela Erkki; Gerlach Stefan; Reichlin Lucrezia, 1999. pp. 400 30 Honkapohja Seppo; Koskela Erkki; Gerlach Stefan; Reichlin Lucrezia, 1999. pp. 400

1980's liberalization of

Finnish monetary system

1991‐ 1993 planning phase of

financial crisis

1993 ‐ 1997 execution of the

chosen plan

1997 ‐ cover up of the plan


financial crisis31. The reason to that are the timing of liberation of financial market32, disregard in

legislation and finance supervision, tax system and mismatch of lending and deposit rates33.

The ending of Soviet trade in 1991 had only minor effects on the exports volumes. On

the contrary, the export developed rapidly from 1992. The major reason to the deep depression is

the total failure of specialists to estimate the effects of chosen economical policy34. The practiced

financial and economical policy took the state economy in tail spin process. Inflation decelerated,

all property prices declined, debt problems escalated and the demand shrank35.

One study, which is comprehensive and covers a historical account of Finnish

depression is called Suuri Lama i.e. Great Depression. This book describes the background and

elements of the financial crises in Finland. This account of the financial crisis is focusing on macro

economics and on behaviour of different actors36. The analysis of the crisis is not concentrating on

elements which effected the development of crisis. This book is analyzing the Finnish economy

since early days of independence of Finland. The subject of financial policy is scrutinized in 1980’s

as well as during the time of crisis. Authors are giving accurate account of the events and decisions

made in the economical and financial policy sector. For an unknown reason researchers are not

dealing with secret information like the agreement signed in 1993. This is a clear weakness in the

report. However, this can be understood again as ‘country habit’.

6.2 Government related matters Rohto Group founded

In May 1991 the Rohto37 group was founded with objective to plan different matters

concerning the financial crises. The group was composed of representatives from Bank of Finland,

Ministry of Finance and Finance Inspection. The Rohto group was supported by other governmental

organizations38. The created documentation of the group remains still confidential39.

31 Honkapohja Seppo; Koskela Erkki; Gerlach Stefan; Reichlin Lucrezia, 1999. 32 Ibid. 33 Ibid. 34 Kiander Jaakko, Ed., 2001. pp. 36-39. 35 Ibid. 36 Kiander, Jaakko & Vartia, Pentti, 1998. 37 Kiander, Jaakko & Vartia, Pentti, 1998. (Rohto is a dialect word meaning medicine) 38 Kiander, Jaakko & Vartia, Pentti, 1998. Bank Of Finlanf year book 1991 39 Kiander, Jaakko & Vartia, Pentti, 1998.


Task Force of banking sector

The Government in Finland asked the President of Bank of Finland to provide an

analysis of the state of banking sector in Finland. The report was accumulated and written by

CEO’s from all major banks in collaboration with Bank of Finland. The report was handed over to

Prime Minister in the middle of March, 1992.40

The report points out several issues. First, the focus in the report was on the solidity of

banks as well as the capability of banking industry to continue financing the customer base. The

major reasons to the problems was the so called ‘interest rate trap’, that is the bank management

strategic failure to estimate the development of interest rates in Finland and throughout the world.

The capital used in banking sector was more costly i.e. higher interest rate, than the received

interests from Finnish customers.41

Second, the estimated credit losses were a danger for major banks. The survival of

financial sector was on brink42.

Third, banking sector faced the increased requirement in solidity due to new

international legislation of BIS i.e. Bank of International Settlement. All Finnish banks had to be

able to present solidity up to 8 percent.43

Finally, it is stated the in the reports, that bad profitability is due to strategic mistakes

in bank management. Partly the government authorities are responsible to the situation. To point out

the blameable people will not solve the problems. The report concluded that both the banking sector

and government must realise fast actions in order to maintain the financial capabilities in banking

sector44.

President Mauno Koivisto meets the top management from different banks

President Mauno Koivisto had an economical seminar with top management of all

major banks. This seminar took place in March 2, 1992. Several issues were presented during the

meeting. One specific issue was important for banking industry. The degree of solidity in all banks

had to be changed to the BIS 8% level. The top management of banks presented the requirement of

banking sector to remove chosen liabilities out from the assets of the banks. This requirement was

motivated because of the drop in real estate prices. The amount of needed transfer was about FIM

40 Valtioneuvoston kanslia 1992 (Task Force in Banking Sector). 41 Ibid. 42 Ibid. 43 Ibid. 44 Valtioneuvoston kanslia 1992. (Task Force in Banking Sector).


180 billion. This amount equals about 45% of the total liabilities in banking sector45. The

documentation used in seminar remains confidential.

President Koivisto meets the judges and professors in law

President Mauno Koivisto invited several judges, lawyers and professors in law to the

presidential premises on May 6, 1992. The purpose of the seminar was to discuss the exercise of

power and independence of court of laws. Further, the themes covered the assessment and critique

of operations in courts46. The structure of the meeting was designed on presentations and

discussion. The invitation letter reflects the idea of President Koivisto that also the courts have to be

in collaboration with other actors when they are solving the problems in depression47.

Several participates have confirmed in writing, that the purpose of the seminar was to

press the judicial system to act according to the economical situation in Finland, not according to

the law. President Koivisto writes in his memoirs, that the lawyers must have their responsibility in

the society48.

Securitisation Task Force

The government nominated a group to collect a plan for securitisation in a report. The

basic structure of the process is to transfer loans or other assets from bank to an investor49. This

report was realized between September 1992 and May 1993. The report is a full legal account, how

this process would be accommodated in Finland. The report states, that the securitisation is a cost

effective method to direct state support to banking sector. The process of securitisation was

supported by major Investment banks50.

Secret agreement sign in October 199351

State of Finland signed an agreement with banks in October 199352. The government

meeting concerning the agreement was held starting 2.50 at night. Ministers used backdoor, when

entering the state building. Every minister in the meeting was able to read the contract including

government documentation. The package consisted of more than two hundred pages. Ministers were 45 Koivisto, Mauno, 1994. 46 Invitation letter of President Mauno Koivisto 47 Ibid. 48 Koivisto, Mauno, 1994. 49 Bank of International Settlement, 1992. 50 Ympäristöministeriö Asunto-osasto, 1993. 51 Secret agreement signed between State of Finland and major banks in Finland. 52 Pilkkomissopimus, 1993.


allowed to read but not take the package with them53. The acceptance of the agreement was a

unanimous decision. The agreement as such consists of several additional agreements i.e. legal

corrections and enhancements. In 1994 the agreement was renewed entirely. This was needed due to

legal aspects. Parties agreed that the banking sector was able to transfer liabilities from their assets

to the state owned ‘bad bank’ called Arsenal Oy. The agreement consisted of two parts – the

customers and liabilities subject to immediate transfer and large customers subject to later transfer.

Parties agreed that among other things the banks were allowed to transfer specified

lines of businesses (industries) or ‘’force’’ them to bankruptcy. In this agreement parties agreed,

that such industries were investments in real estates, and all companies close to real estate business,

other investments, construction, retail business, hotel and restaurant sector, leisure sector.

It is also of interest to mention that the structure of this contract follows the

securitisation process. The definition of line of business as well as ownership of a company was

composed according to large volumes of liability transfers. Finally, the parties agreed upon

contribution of the authorities through the political process.

6.3 Economic freedom in Finland through the years

Besides, the legal system, it is important to analyse the financial market and freedom

to trade internationally as well as domestically. The overall review of market economy in Finland is

based on indexes from the Economic Freedom report 200654:

1985 1990 1995 2000 2001 2002 2003 2004 Finland A 7,8 9,3 9,6 9,5 9,6 9,6 9,6 9,7 B 6,7 6,1 8,2 8,4 8,2 8,1 8,1 7,9 C 5,8 5,8 7,1 7,1 6,9 6,8 6,7 7,2

In this table the A index – Access to sound money - describes the state monetary

policy, inflation rate and freedom to operate with several currencies. B index – Freedom to

exchange with foreigners - indicates the status of low cost communication and transportation as

well as freedom to exchange across the national borders (including tariffs, quotas, hidden

administrative restraints and capital control). Finally, C index – Regulation of credit, labour and

business – illustrates the level of restrictions for market entry and the politically motivated

53 Oral discussion with former minister Kankaanniemi 54 Gwartney, James and Lawson Robert, Economic Freedom 2006, p. Chapter 2 pages 85, 144 and 155


interferences with the freedom to engage in voluntary exchange55. The chart is illustrating the trend

from 1985 to present days. The maximum index figure is 10.

6.4 Legal system in Finland CATO institute report

Cato institute in US is publishing every year a report concerning the economic

freedom from each country. This report gives an overall image, among other things, from legal

structure in each country. The Finnish figures are published since 1970. The maximum index is 10

and the trend is partly presented from 1975. The majority of trends are giving information from

1995.

Finnish legal system at glance56

A= Judicial independence B= Impartial courts C= Protection of intellectual property E= Integrity of legal system

55 Gwartney, James and Lawson Robert, Economic Freedom 2006, p. Chapter 1 page 11 56 Gwartney, James and Lawson Robert, Economic Freedom 2006

0

2

4

6

8

10

12

A

B

C

0

2

4

6

8

10

12

ABCEOverall


Overall= Legal structure and security of property rights

The Cato report gets support from top Finnish lawyers. The President of

Administrative Supreme Court Mr. Pekka Hallberg stated in his presentation57in 2006, that Finland

might lose investments because of low quality legal system.

Reports of United Nations Human Rights Committee

In its eightieth session the UN Human Rights Committee list a number of issues for

Finland. This report is following the capabilities and responsibly of a country according to the UN

international conventions. The UN committee made remarks about the Finnish legal system. It

pointed out problems on right to an effective remedy, right to a fair trial and principle of non-

discrimination. 58

In its eighty-second session UN Human Rights Committee listed many of the issues

for Finland. The report holds the following statement: ‘’The Committee notes with concern the overt

attacks made by political authorities (members of the Government and Parliament) on the

competence of the judiciary with a view to interfering in certain judicial decisions. The state party

should take actions at the highest level to uphold the independence of the judiciary and maintain

public trust in the independence of the court (arts. 2 and 14 of the Covenant)’’. 59

Transparency International reports

TI published in July 2003 a Global Corruption Barometer survey. This survey carried

out in collaboration with Gallup International. A total of 40,838 people were surveyed in 47

countries. People were asked: If you had a magic wand and you could eliminate corruption from

one of the following institutions, what would your first choice be? Choices were – business

licensing, courts customs, education system, political parties, utilities, medical service, immigration,

police, private sector, tax, other.

The result reveals, that Finnish people would choose courts and political parties. Wit

reference to courts only Cameroon, Indonesia and Peru got worse results in the survey60.

57 Seminar ’’Oikeusvaltio, perusoikeudet ja tuomioistuinratkaisujen perusteleminen’’, September, 20, 2006. 58 United Nations, Human Right Committee, 2004. 59 United Nations, Human Right Committee, 2004. 60 Transparensy International, Global Corruption Barometer 2003.

European

in Convent

providing t

Statistics o

have been

elements o

sentences i

elements o

Official sta Year A Crime oB Crime ofC Crime ofTotal

30). Year 1A65 22B66 4

61 Statistics o62 Criminal a63 Criminal a64 Criminal a65 Criminal a66 Criminal a

Court of H

The maj

tion for the

the fair trial

of sentence

Renewal

defined in c

of crimes are

in one speci

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560 512 56

ments of pe

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decision make

1995 1996 1

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1098 10329 2271 62

been explai

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74 Koivisto M75 Ibid. 76 Kiander, Ja77 Statistics F78 Statistics p79 Lahti, Arto80 Statistics F81 Suomen Sä82 Ibid.

2345678

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aakko & VartFinland provided by Bo, 1999. Finalnd and STäästöpankki –

010002000300040005000600070008000

1986

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pp. 383

tia, Pentti, 199

ank of Finlan

TAKES – SSP Oy Ann

1988 1990

Copyright

crises74. He

forced in ba

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was in probl

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en ja vakuutus

993

1994 1996

idsson 2007

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nd new own

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pankki – SS

y the parties

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n82. The Uni

slaitosten tase

1998 200

7

that there a

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panies in Fi

stimated to F

SP Oy, was

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divided in 1

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osille 1991-199

20

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-

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1993. This

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banks81.

t book the

94.

Bankruptcies

0


loss about FIM 2 billion in 1991, KOP bank did not either book FIM 2 billion loss in its income

statement in 1991. The insurance company Sampo participated one of the major speculative deals in

takeovers of banks. The loss from this deal in billion figures was simply left out from the books of

the company83.

7. Analysis

The macro economics studies concerning the Finnish depression in the beginning of

1990’s is comprehensive. Different research reports are describing the development of depression

from various points of views. However, there are some weaknesses as well. First, one of the major

reasons to the depression is the liberalisation process of financial market in 1980’s. The same

pattern is found in several other countries, as well. Research reports do not present any data

concerning the fact that the same problems are occurring at the same time in each country. How is it

possible that all economists are doing same mistakes at the same time in different countries.

Second, Cato institute report describes as follows – ‘All crises of one-way-option speculation

involve capital movements, of course. Speculative outflows of recent years, perhaps especially those

from Mexico, Argentina, and Thailand, had been preceded by not particularly speculative capital

inflows. These had been more or less predicated on the perception that the destination country had

made itself attractive to investors by reforming its earlier bad ways’84. There was in the end of

1980’s a capital inflow from Soviet Union to Finland85. This capital created in Finland a new capital

market i.e. grey capital market. This capital consisted of payments of Soviet companies. That

capital remained in Finland or more specific in Finnish banks as deposits. The Soviet capital created

a specific type of financial market i.e. loan product to small and medium size companies86. After the

collapse of Soviet Union in 1991 the mentioned companies were privatized by oligarchs. They

ordered the Finnish banks to transfer the company capital to new banks in Switzerland,

Luxembourg, London and New York87. The collapse of the Soviet state was due to financial

‘bankruptcy’88- Soviet Union had lack of foreign capital89. Although, lack of capital the Soviet

companies were able to make large capital payments to Finland. The official reports of DEA (US

Drug Enforcement Agency) reveals, that the banks in Russia are ‘’cleaning’’ international capital in

83 Pankkien ja vakuutuslaitosten taseanalyysit vuosille 1991-1994. 84 Yeager, Leland B., 2003. 85 Kiander, Jaakko & Vartia, Pentti, 1998. 86 Ibid. 87 Busch, Gary K., 2003.; Email with Dr. Busch, 2003. 88 Ibid. 89 Ibid.


their system90. The economic and financial research doesn’t cover the essential subject in the

articles. Following questions still remain unanswered - What was the origin of Soviet capital, what

happened with the Russian capital, did the capital transfers have effects on financial sector in

Finland, and finally, did the Finnish authorities have a knowledge of the origin of the Soviet

capital?

Rohto group started the planning process in May 1991. There are two matters worth

to mention in this context. The group started the planning in early states. This means, that the state

authorities have had knowledge about a political goal, which was not known in public. The work of

this group was and still remains secret. Transparency in governance is the central issue91. Theories

are emphasizing the need for transparency. Therefore, planning of state policies in secrecy suggests

a risk for business owners92. This kind of behaviour should be understood in some degree political

risk93.

The banking Task Force reviewing the situation in Finnish banks made a complete

account of problems in financial sector. The group pointed out, that the strategic plan of all banks

was a total failure. They failed in estimation of interest rates as well as future requirements in

solidity. Problems of this kind are business uncertainties more than any political risks. The only

political risk concerning the banking solution is the cooperation between banks and the State. The

confidentiality of plans is source of political risk94. Governance is in relationship with legal system

and state policy. In case the government fails to follow the requirements of good governance then

there is possibility to political risk95.

The documentation used in the banking seminar in 1992 remains confidential.

Different sources present the highlights of the seminar. The purpose of this meeting was to inform

the President Koivisto of the problems banks were facing. The important political factor was the

political acceptance of President Koivisto. The solution for the problems in banking sector needed

the political involvement and state resources. Therefore, the meeting, de facto, is a political

meeting. The need to transfer certain liabilities from banking sector refers to the same pattern used

in the Enron case. To protect politically one specific industry, in this case the banking industry is a

direct involvement in market operations. In addition, the meeting and its content is confidential.

Theories are defining the political risk as event or action of different actors96. One more

90 Ibid.; DEA Congressional Testimony 1996.; DEA Congressional Testimony 2002.; Dale Scott, Peter, 2005. 91 Globerman, Steven and Shapiro, Daniel, 2003. 92 Robock Stefan H., 1971.; 93 Globerman, Steven and Shapiro, Daniel, 2003. 94 Globerman, Steven and Shapiro, Daniel, 2003. 95 Ibid. 96 Robock Stefan H., 1971.


requirement is the hidden nature of the event97. Miller also explains the political risk from the

general environment and industry point of view. This is, general environment or industry

uncertainties affecting the actors on the market98.

President Koivisto invited judges, academic professors in law and representatives of

legal research institutions to a seminar with him. Again, this seminar and the documentation used in

the meeting remain confidential. Testimonies of participants supports the comprehension, that the

purpose of the meeting was to ‘press’ the legal system to act according to the wish of the President

Koivisto and the economical need of the country99. The judges shall have the economic

responsibility in the society100. One of the major causes of political risk is the ineffective law

enforcement101 or weak legal system102. It is clear, that legal system acting illegally or misleading is

a cause of political risk103.

Securitisation of loans is used in the US market as well as in few countries in Europe.

The basic structure of the process is to transfer loans or other assets from bank to an investor104. BIS

report describes the securitisation process with following words – A number of concerns have

raised in connection with asset securitisation. The main ones are that credit risks could remain with

the bank...securitisation could damage the asset quality of a bank...demand close attention by bank

supervision in order to ensure that banks conduct this business in a prudent manner. BIS report

also notes, that the country legislation is important for a complex process as securitisation105. In

Finland did not exist any legislation for securitisation. It was not used before. The model of

securitisation offered a suitable tool for the authorities to organize the asset transfer from Finnish

banks to elsewhere. Although the securitisation task force published the report it was not publicly

known. In contrary, the process has been a ‘secret’ of the administration. The process is not

transparent106. Securitisation is a complex legal process. There should be legislation concerning the

model if used in a country. Protecting one actor on market suggests more increased political risk107.

Finally, the secret agreement signed in October 1993 consisting of the package of

agreements is more as a political process, than a pure contractual relationship. In the mind of

97 Miller, Kent D., 1992. 98 Miller, Kent D., 1992. 99 Email from Professor Heikki Ylikangas, 2002; Email from Professor Jukka Kekkonen, 2002; Email from judge Olli Karikoski. 100 Koivisto, Mauno, 1994. 101 Robock Stefan H., 1971 102 Globerman, Steven and Shapiro, Daniel, 2003. 103 Miller, Kent D., 1992. 104 Bank of International Settlement, 1992. 105 Bank of International Settlement, 1992. 106 Globerman, Steven and Shapiro, Daniel, 2003. 107 Robock Stefan H., 1971. ; Miller, Kent D., 1992.


different parties there must have been a goal. The large number of agreements describes more a

process to reach the goal. The State of Finland as one party in the agreement used its political

powers and resources for the process. This confidential agreement described the final solution for

the needs of different parties. The solution consisted of two major elements. First, definition of

person(s) (legal and people), who did not have protection of property108. Second, structure how to

transfer assets from owners to new actors i.e. securitisation109. This agreement was not transparent.

Several items in the contract did break the law. There are serious criminal elements in the process

concerning the contract. The agreement and the political and economical process described in it, is

political risk defined in theories110.

Cato institute is publishing a study of economic freedom in about 150 different

countries. The method used in the report is complex and consist of large number of parameters.

There is information collected from each country since 1980’s. The index figures as a trend

describes the development of parameters through the years. Finland has improved both index A and

B, i.e. access to sound money and freedom to exchange with foreigners. The index C illustrates the

level of politically motivated interferences in the country. This figure is improved in Finland only

from 5,8 to 7,2. Research reports111 have characterised Finnish market as a closed one. The market

structure was changed towards open since beginning of 1990’s. However, the index has not

increased more than one point between 1990 and 1995112. The figure deteriorated between 1995 and

2004113. The trend suggests still a controlled market. There is political involvement in market. This

can be explained as general environment or industry specific uncertainty114.

Robock includes the ineffective law enforcement in causes of political risk115.

Likewise, Miller and Simon describes the legal factors important in this context. The research report

of Globerman and Shapiro116 explains the legal system as central when choosing investment

markets. Authorities in Finland agree to the values of various studies in context of FDI’s117. Cato

institute presents in the economic freedom report also the status of legal system in countries. Since

1970’s they have information available in about 50 countries. Finland is one of them. As we can

note they have changed the parameters in the report in 1990. Old data has been recalculated for the

108 Ibid. 109 Ibid. 110 Miller, Kent D., 1992.; Robock Stefan H., 1971.; Globerman, Steven and Shapiro, Daniel, 2003.; Kobrin, Stephen J., 1979. 111 Kiander, Jaakko & Vartia, Pentti, 1998. 112 Cato Policy Report, Jan/Feb 2007. 113 Ibid. 114 Miller, Kent D., 1992. 115 Robock Stefan H., 1971. 116 Miller, Kent D., 1992.; , Steven and Shapiro, Daniel, 2003. 117 Seminar ’’Oikeusvaltio, perusoikeudet ja tuomioistuinratkaisujen perusteleminen’’, September, 20, 2006.


new structure. Therefore, we can even use the old figures in trend analysis. Before the financial

crisis Finland used to have figures below 8, which suggests a poorly functioning legal system. The

improvement took place between 1990 and 2000. Thereafter, the index figures for almost all

measurements are declining. Quality of legal system in Finland is hitting the level of 1980’s. This

development suggests again increased political risk in Finland118.

The UN committee in Human Rights has published a clear message. Legal system in

Finland is influenced by political people. Same pattern is found in the study of Transparency

International. Although, the TI study has a different method message is clear. Legal system has a

poor quality. Statistics in ECHR court provides a similar pattern. There are difficulties to organize

fair trials in Finland. Once again, the results support the existence of political risk in Finland119.

Statistics from criminal sentences is important for understanding the outcome of

political risk. It is not novel, that legal system is used for political purposes. The value of this

information is the trend of sentences. The depression started in the beginning of 1990’s. Economists

claim, that the real crisis started in 1992120. The secret agreement was signed in 1993. All the

criminal records are increasing in number of sentences from the year 1993. This will show us the

relationship between government actions and outcome of several business owners. In this context

political risk is representing government actions in a combination of the secret agreement and

criminal trials.

Political risk is related to actors in government. Statements of the actors describe the

foundation for the crisis. First, several actors state, that the financial crisis is organized on purpose

and increased unemployment will bring up the productivity. Statements indicate a planning process.

In this context we have to think about the Rohto group and its confidential work. The State of

Finland had political and economical objectives, which were met with the outcome of the crisis.

Second, illegal means to carry out the financial crisis is the execution part. By controlling the state

engine any plans can be executed without further negative consequences. Third, there is a

connection between the bankruptcies, criminal sentences and illegal behaviour of State authorities.

Finally, professor Kiander has found a ‘’crime and punishment theme’’ in the process121. That is,

the outcome of the financial crises including the government decisions was kind of punishment to

business owners122.

118 Miller, Kent D., 1992.; Robock Stefan H., 1971.; Globerman, Steven and Shapiro, Daniel, 2003.; Kobrin, Stephen J., 1979. 119 Miller, Kent D., 1992.; Robock Stefan H., 1971.; Globerman, Steven and Shapiro, Daniel, 2003.; Kobrin, Stephen J., 1979. 120 Honkapohja Seppo; Koskela Erkki; Gerlach Stefan; Reichlin Lucrezia, 1999. 121 Kiander Jaakko, Ed., 2001. 122 Ibid.


Finland lost about 20 percent of operative companies during the financial crisis. This

equals about 42.000 companies. The amount of bankruptcies started to increase in 1990 and turned

back to its average figure in 2000. This trend can be explained as process of two waves. The first

cycle was due to problems in Saving Banks and the second because of the confidential planning

process. The secret agreement sealed up the political process. Interesting combination is the trend in

bankruptcies and the criminal sentences. The trend of bankruptcies began to increase in 1990. The

outcome, criminal cases and sentences increased just couple of years later. There is a logical

connection in legal process.

Enron is in liquidation. This is because of fabricated accounting. They moved

liabilities out from the company books. Exactly the same pattern can be found in Finland. The

banks and insurance companies fabricated financial statements. The only difference found is, that

the authorities and auditors knew this or they had to have knowledge of the issue. Although, the

illegal proceedings no one made any actions to reveal the unlawful behaviour. The problem we are

facing here is the criminal sentences. Why were only chosen people put under a control of criminal

investigation and trial. The protection for chosen people was provided by authorities and

government. Therefore, this process only can be explained as political risk. The system in Finland

was not transparent and it was discriminative i.e. companies was treated differently. The fabrication

of accounting and behaviour of auditors are examples of bad governance and therefore considered

as political risk123.

To summarize the analysis, some issues shall be addressed. Globerman and Shapiro

mention in their article, that in broad terms, governance infrastructure represents attributes of

legislation, regulation, and legal systems that condition freedom of transacting, security of property

rights, and transparency of government and legal processes. The presented data and analysis show

clearly, that Finnish government and legal system damage all the attributes presented above. The

secret agreement destroyed the property rights and demands for fair trials. Transparency was

sacrificed when declaring the documentation of Rohto group124, Banking seminar125and legal

seminar126 confidential. To this group should also be included the secret agreement. Lack of

transparency can be found from banking documentation. Banks did plan in advance a ‘shot-down’

of liabilities127. They planned bankruptcies and processes, how to handle this kind of issues128.

123 Robock Stefan H., 1971.; Globerman, Steven and Shapiro, Daniel, 2003. 124 Kiander, Jaakko & Vartia, Pentti, 1998. 125 Decision of President Tarja Halonen, A/10773/2006 in Helsinki May 11, 2006 126 Decision of President Tarja Halonen, No 3/30.07.2002 in Helsinki July 30, 2002 127 Keskipohjan Aluesäästöpankki 15.7.1992 documentation 128 Ibid.


Researchers are referring to actions and events. They are pointing out also the concept

of secrecy, uncertainty or unexpected action or event129. All the phases of the crisis were planned

and executed in secret. Behaviour as this suggests a risk for business owners. Only few industries,

like banking sector, were able to react to the planned change in business environment.

Finally, outcome of political risk refer to losses or anything negative for the business

entity130. Certainly, there are massive number of private people and legal entities loosing during the

process. As pointed out earlier in this thesis over 42.000 bankruptcies caused enormous losses. The

amount of FIM 250 – 300 billion represents the value of lost properties. This amount was

transferred over to new owners. This brings us to the next issue. There are always entities gaining in

situations with political risk. The banking sector and the share owners of banks were winners.

Certainly, State of Finland belongs to the winners. People working close to the banks were also

making gains during the process. In this context also other theories should be used when talking

about losses and gains in political turmoil. As an example theories concerning the collapse of the

‘state engine’ can be described as follows - ‘states that had experienced a spectacular breakdown in

the functioning of their governmental apparatus and the disintegration of their civil institutions’131.

This is the case in Finland. Legal, political and economical elite decided the illegal behaviour

executed in Finland.

8. Discussion

Contradiction to this thesis is the argumentation of external causes and international

economic cycles. The international economy caused the depression in Finland. A small economy

like Finland can’t do anything to avoid such depressions. Therefore, there should have been

conducted research for a longer period of time. The thesis will present some real cases from 1980’s

as well as from latest millennia. The reason is to indicate and point out that there are actions and

events before and after the financial crisis which should be regarded as political risk.

First, in the beginning of 1980 one family owned company called Vise succeeded to

sign several lucrative agreements in Iraq. This company was one of the fastest growing companies

in Finland. This company financed partly its export projects through the state official export finance

organization. In order to grow with the projects, company needed further export guarantees. In this

point of time the state owned bank and the export finance organization rejected the application. The

129 Robock Stefan H., 1971.; Miller, Kent D., 1992.; Globerman, Steven and Shapiro, Daniel, 2003.; Kobrin, Stephen J., 1979. 130 Robock Stefan H., 1971.; Miller, Kent D., 1992.; Kobrin, Stephen J., 1979. 131 Luke, Timothy.W. & Tuathail, Gearóid Ó., 1998.


company was forced to bankruptcy. The value of assets of the bankrupt company exceeded the

debts with FIM 56 million132. During the legal process the owner of the company received a ‘secret

binder of documentation’. These documents explain the true nature of the bankruptcy process. One

of the documents was a secret protocol between Postipankki (state owned bank), SKOP Bank

(Central-Bank to savings banks), Lohja Oy (contemporary name Wärtsilä) and State Export Finance

organization. The protocol, dated January 28, 1981, stated, that the participated parties in

negotiations agree, that the company A must be attained to bankruptcy. Further, the parties agree

upon partition of company A’s assets and other compensations to different parties133. The courts in

Finland have failed to understand the context of the secret documentation. Secret agreements made

between the State and private companies are the cause of political risk134. The failure of legal

system to protect the property rights is second source of political risk135.

Second, according to the court records legal system in Finland divided a bank

guarantee136 i.e. the FIM 500 million guarantee was divided in smaller parts. This was done because

of the application of state owned company. Bank guarantee is a document used for securing

business transactions, especially on international market. The trust is the major issue behind this

practice. This is, in Finland a bank guarantee will lose its relevance due to the possibility of state to

violate the international trust. All this court decisions are made in the beginning of 2000’s.

Behaviour like the mentioned division of bank guarantee is a source of political risk, because of the

action of legal system and State behaviour137.

Third, One Finnish company organized bank guarantee for its sister company in

Holland. During the process several versions of documents was discovered. The court of law has

failed to distinguish the versions from each others. Furthermore, they have not been able to

understand, which way the fax, concerning the bank guarantee was send. Was the loan agreement

first sent from A to B and later returned from B to A or vice versa. Depending on the sequence the

case will get a completely different content. The tree judges wasn’t able to understand the sequence,

although, the fax stamps with telephone numbers and efforts of the attorney to explain the sequence.

Examples as presented above, exist more. The same pattern will be repeated, i.e.

failure of legal system and non transparent behaviour of state actors. The purpose to introduce

132 Parkkinen Kauko, 2003. 133 Parkkinen Kauko, 2003. 134 Robock Stefan H., 1971.; Miller, Kent D., 1992.; Globerman, Steven and Shapiro, Daniel, 2003.; Kobrin, Stephen J., 1979. 135 Globerman, Steven and Shapiro, Daniel, 2003. 136 Bank Guarantee Nr 598001-90891951 issued by OKO Osuuspankkien Keskuspankki Oyj, June 18, 1999. 137 Robock Stefan H., 1971.; Miller, Kent D., 1992.; Globerman, Steven and Shapiro, Daniel, 2003.; Kobrin, Stephen J., 1979.


examples is the existence of political risk in Finland during times. Cases like above mentioned

exists from 1980’s, 1990’s and even in 2000 years.

9. Conclusions and recommendations for further research

The financial crisis in Finland is a series of actions or events, which can be related to

political risk. First, depression in Finland can’t be explained only in economic terms. Behind the

crisis seems to be a government plan to cause the depression. This was need for number of reasons.

There was a plan to integrate Finland to EC138. State economy needed a total reorganization from

closed to open industries. The new State structure needed finance, which didn’t exist. The usage of

private property was the solution. This group of issues are events or action139. The political people,

legal system and economical elite are the joint actors in this sense140. Second, the management of

crisis based on illegal means is alarming. Countries using illegal manners do not fulfil the norms of

effective law enforcement. Third, the absence of transparency is essential issue through the period

of time. Fourth, the elite seem to have legal protection in all planned actions. Legal system based on

discrimination is political risk141. As summary, the Finnish market incorporates political risk

because of the collaboration of the three parties mentioned in the theory section142.

Simon states in his article, an important obstacle to the systematic study of political

risk is the cross disciplinary nature of the subject143. Therefore, the study of political risk should be

established on legal, economical, business management, peace and conflict studies144. The future

research of political risk in Finland is recommended to be based on following issues. Legal studies

should be focusing the issue of legal system providing effective remedies and fair trials. The

international dimension in civil and criminal law should be addressed. Especially, the research

should address the concept of crimes against humanity in context of economical crisis. The

international criminal law research should focus on the concept of JCE i.e. joint criminal enterprise.

Further, peace and conflict research is needed for studies on economics. The question is the

rebellion in modern society due to economical crisis. Finally, the political risk is an important

138 Kiander, Jaakko & Vartia, Pentti, 1998.; Honkapohja Seppo; Koskela Erkki; Gerlach Stefan; Reichlin Lucrezia, 1999. 139 Robock Stefan H., 1971.; Kobrin, Stephen J., 1979. 140 Secret agreement 1993. 141 Globerman, Steven and Shapiro, Daniel, 2003. 142 Ibid. 143 Simon, Jeffrey D., 1984. 144 Ibid.


question related to Finland. This subject should be scrutinized as such and as a phenomenon both in

history and present.

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