Nordicum - Real Estate Annual Finland 2011 | Page 8

THE AGENDA

Decision Time for Europe
by Paavo Lipponen
The writer is former Prime Minister and Speaker of Parliament of Finland.

t was a refreshing experience to observe
world events from Asia during a twoweek vacation in Thailand. This Asian
Tiger is booming, while trying to keep internal pressures under the lid. India is rising
and catching up with China. Although Japan is stagnant, Asia is the engine of world
economy.
China is spreading its influence to its
neighbors, building up its navy. A naval
dimension has been added to the ChinaMyanmar axis, creating suspicions not only in Bangkok but also in Delhi. A naval rearmament is starting in the Indian Ocean.
How far will China extend the perimeter of
its sphere of influence is the question asked
from Washington to Tokyo and Moscow,
from Hanoi to Jedda.
The economy, however, is the main
concern. Signs of rising inflation are not
only an Asian but a global concern, too.
The recovery in the world economy is seriously threatened by rising commodity
prices – not only of oil and other energy essentials, but also of food. The expansion of cultivated area for products of
grain, keeping livestock and producing
palm oil for energy is putting an ever bigger strain on the environment.
China is the case in point in the efforts
to curb inflation. China is systematically
trying to secure access to natural resources everywhere in the world where possible. Growth in the Chinese economy might

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suffer because of the necessity to curb inflation. Interest rates are going up, but it
is not enough. China will be forced to revalue its currency. This, in turn, would rebalance world trade flows.
Unemployment stays high in the
United States, because it is to a great extent structural. The housing sector must recover to employ the construction workers
who lost their jobs when the bubble burst.
An equally big structural problem is below-standard education. American schools
must become better for greater competitiveness of the country. The Finnish lesson has not been understood: you must
educate the whole nation, not just the elite.
Europe is bracing for decisions to get
the crisis of the euro under control. Much
better financial discipline is necessary, but
it is not enough. Structural reforms and
a policy for growth are needed to create
confidence in the euro.
The euro was the right ch