Bloomberg News

Finns Embrace Pro-Euro Candidate Niinistoe in President Race

January 24, 2012

(Updates with comment from Timo Soini in 11th paragraph.)

Jan. 23 (Bloomberg) -- Sauli Niinistoe, a former finance minister who led Finland into the euro in 1999, won the first round of the country’s presidential race as voters handed a loss to candidates calling for an exit from the single currency.

Niinistoe won 37 percent of votes and faces the Green League’s pro-euro Pekka Haavisto in a second round of voting, the Justice Ministry said yesterday on its election website. Haavisto had 18.8 percent of votes while the Center Party’s Paavo Vaeyrynen came third with 17.5 percent. A run off between the top two candidates will be held on Feb. 5.

“This result was a very strong signal for a European Finland,” said Martti Haeikioe, a professor and historian at the University of Helsinki, in an interview. “It’s a victory for stable and prudent Europe policy.”

The election may add momentum to Prime Minister Jyrki Katainen’s drive to have his country participate in European crisis management efforts. The vote comes less than a year after Timo Soini led his anti-euro “The Finns” party in a fourfold surge in parliamentary elections. Soini received 9.4 percent of the vote yesterday.

“This is a vote of confidence in the government’s policy,” said Pasi Kuoppamaeki, chief economist at Sampo Bank, a unit of Danske Bank A/S, by phone. “Both candidates support the government’s stance toward the European Union.” Niinistoe is a member of the same party that Katainen leads.

AAA Club

The difference between 10-year yields on Finnish government debt and German bunds with a similar maturity was little changed at 39 basis points as of 11:28 a.m. in Helsinki. A basis point is 0.01 percentage point.

Finland, one of four remaining AAA rated euro countries, has threatened to derail efforts to solve the debt crisis, including demanding collateral to provide emergency funds to Greece. Finance Minister and Social Democrat Jutta Urpilainen, who heads the second-largest of six coalition partners in the government, has signaled she may not back Europe’s permanent rescue fund should Germany and France push ahead with plans to do away with unanimous voting in the euro area.

Croatians yesterday voted to become the European Union’s 28th member in a test of the bloc’s lure amid a sovereign debt crisis. Some 66 percent approved a plan for the government to proceed with its expected July 2013 entry into the EU.

Rebuilding Economy

Niinistoe, 63, was finance minister for the seven years until 2003 and helped rebuild Finland’s economy after a banking crisis and recession in the early 1990s. He lost in 2006 to President Tarja Halonen, who will step down after a two-term limit.

“Criticism toward the euro didn’t catch on,” Niinistoe said in an interview. “The anti-euro candidates didn’t get unexpectedly high votes today.”

Soini, who has said Greece should be allowed to default and talks openly of reintroducing the Finnish markka, conceded defeat, saying he wasn’t “disappointed.”

While declining to endorse another candidate, Soini said his vote may go to Haavisto in the second round, YLE reported today. The Center Party’s Vaeyrynen eroded Soini’s support by arguing for Finland to quit the euro.

Most Experience

“Niinistoe has by far the most experience in a European setting, as well a strong domestic mandate as a former leader of Finland’s currently largest party,” Haeikioe said.

In Finland, the president is the head of state, while the prime minister runs the government day to day. The president’s powers include steering foreign policy in cooperation with the government, appointing top-ranking civil servants such as the central bank governor and commanding the armed forces. Bank of Finland Governor Erkki Liikanen’s second and final term ends in July 2018 and there’s a chance his successor will be named by the new president.

The election result shows Finns support the government’s pro-European stance, Prime Minister Katainen said in an interview on YLE TV1.

“Both candidates represent openness, an international and European Finland,” Katainen said. “It’s a positive message for all of us. Finns have shown they want to bear responsibility.”

The president’s ability to impact internal politics is limited and the legislative powers will be further curtailed by a constitutional amendment that comes into force on March 1.

Taxpayer Disgruntlement

The rise of “The Finns” party in April reflected Finnish taxpayers’ disgruntlement over handing over cash to governments that overspent. Even so, two thirds of Finns support membership in the euro, according to a Dec. 27 poll in Helsingin Sanomat.

“The result won’t impact the government,” Urpilainen said in an interview on YLE TV1. Her party’s candidate Paavo Lipponen got 6.7 percent of votes. “My work to defend the Finnish taxpayer’s interests continues.”

The winner will replace Halonen. The first woman head of state in the Nordic nation has served two consecutive terms and is barred by the constitution from seeking re-election. In 2006, she won 51.8 percent of votes to beat Niinistoe’s 48.2 percent to secure her second six-year term.

Niinistoe is married to his party’s spokeswoman Jenni Haukio, 34, a published poet. He has two sons from a previous marriage to Marja-Leena Alanko, who passed away in 1995.

“It’s quite clear Niinistoe will win in the second round,” Sampo’s Kuoppamaeki said. “Many voters from the Center Party and “The Finns” Party will line up behind Niinistoe.”

Haavisto helped mediate peace in Sudan and Darfur from 2005 until 2007 as a special representative appointed by the United Nations, following in the footsteps of 2008 Nobel Peace laureate Martti Ahtisaari, also a former president of Finland. Haavisto is one of the founding members of the Green League and lives in a registered partnership with hairdresser Antonio Flores from Ecuador.

The “heavy burden” of Finland’s history of three wars during the past century has taught the nation a “hard lesson” and forged it into a peacemaker, Haavisto wrote on his website. Finland must be more active in offering help where it’s needed, he said.

--With assistance from Diana ben-Aaron and Kasper Viita in Helsinki. Editors: Jonas Bergman, Tasneem Brogger

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


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