SPEECH BY MR. MARTTI AHTISAARI, PRESIDENT OF THE REPUBLIC OF FINLAND, AT HARVARD UNIVERSITY ON OCTOBER 15, 1997

TOWARDS A GLOBAL INTERNATIONAL SYSTEM IN THE 21´ST CENTURY

Let me first say how pleased I am to address this distinguished audience. Harvard is the symbol of American academic and intellectual tradition. As a Finn, I have always taken great pride in the fact that the first Finns came to these shores 360 years ago. We were among the very first settlers and consider ourselves as part of the development of the American nation. However, now that I am at Harvard, I am reminded of the compelling fact that when we Finns settled in a modest colony in the Delaware valley area, this fine institution had already been established, if only for a couple of years. Since those times, Harvard has always maintained its quest for excellence. It is indeed an honour to speak here.

I arrived here from Strasbourg, France, where the summit meeting of the Council of Europe was held. Most European heads of state were in attendance. The United States participated as an observer. The meeting adopted a document outlining new actions in the field of human rights. It also focused on new security risks and on common concerns such as crime, corruption, and child abuse.

Indeed, the security agenda for the 21st century must include the concerns and problems of the civic society at large, not only politics among nations.

Let me remind my listeners of another historic fact. Next year is the 350´th anniversary of the 1648 Peace of Westphalia.

This peace accord created a system of nation states interacting peacefully with one another. Unfortunately, the system failed. It could not prevent politico-military competition for hegemony in Europe. We all know the results. Only since the end of the Cold War have realistic prospects emerged to reshape the international system on the basis of cooperation and integration as military competition gradually recedes.

A new system is emerging in which Asia will take its place. The United States is the only actor that has a truly strategic role throughout the globe. It will have to fulfil its task in promoting stability and change with Europe, the Asia-Pacific area as well as with Latin America.

My theme today is globalization and its implications. In the best traditions of Stanley Hoffman, Harvard's distinguished professor on the civilization of France, I have tried to divide my topic into three basic themes.

First, globalization and mutual interdependence.

Second, the implications of globalization for Europe and its institutions.

Third, new actions and initiatives by the international community to cope with globalization.

Of course, my perspective will be that of Finland.

You may ask what particular wisdom Finland may have to offer on this vast topic.

I remember an article in the Business Week Magazine some time ago. It was about a small Finnish electronics firm that had just established a subsidiary in Silicon Valley. Why did you come here, the interviewer asked. Because, the CEO answered, in this business you have to be where the markets are. In Silicon Valley, if a small innovative group of engineers makes a discovery in their garage and open the door, they have all the potential buyers on their doorstep. In Finland, what would such engineers have at their doorstep? Three feet of snow.

This was of course true. Yes, the snow is still there, but we learned to do it our way. The company was NOKIA, the product was a cellular phone. The rest is history.

Globalization has developed dramatically since the Cold War. It now encompasses economic interaction, ideas and information technology, culture and even the labor force. Distance ceases to be a decisive factor in the overall competition for market share.

The worldwide movement of production, capital and information has become easier and more widely used. Information technology has increased efficiency and competition tremendously. Unfortunately, this development has also led to widespread job losses and to increasing unemployment.

These developments present a formidable challenge. Will economic globalization and the information revolution improve the daily lives of people not only in the developed but also in the developing world?

Economic growth in South-East Asia, China and India has been hectic. The door to prosperity has been opened for hundreds of millions of people. Although several countries have suffered setbacks, the prospect of their economic growth ending is not on the cards.

There are of course doubts as to whether this success story can he initiated everywhere. Many developing nations insist that they must concentrate on development as such. I find this argument hard to accept. There is very little evidence to prove that a fertile mix of free trade, good government and grassroots entrepreneurship would not extend the benefits of globalization to every corner of the world.

The potential is exciting provided that democratically-mandated Governments, in cooperation with business, fulfil their role; if they do not, the gap between the developing and the developed world as well as within societies will widen.

Growing economic interdependence also creates problems that have to be resolved if all are going to reap the benefits of globalization. How do we deal with increasing environmental problems, of which the extensive forest fires in South East Asia are just one example. How do we cope with the nutritional and energy needs of the ever-growing population? And with disparities with regard to access to technology and knowledge?

A great portion of the world's population is still deprived politically, culturally and economically. The level of suffering is not diminishing as we would wish. Development, making more of everything, doing everything better, educating more and more people, extending electricity to the smallest communities, may not be the only answer. We need to look at development also from an individual viewpoint, relate it to reality, and especially to local reality.

There are of course no simple answers.

Everyone understands that economies and technology are the driving forces that will make the world a smaller place. But there is more to it than cellular phones or the Internet. There is even more to it than markets or sustainable economic growth. There is a political dimension that we cannot afford to overlook. Globalization must provide for a more effective participation in order to ensure that its fruits are spread more equitably among different segments of the population and among the nations of the world.

First, we must develop international cooperation, re-evaluate and rethink the dialogue, negotiation and decision-making mechanisms of the international community. The new mechanism, or system of international cooperation, that we should work for, could be multi-leveled. There is now more room for regional as well as global arrangements. New standards, norms and procedures for decision-making must be set. Examples of such widely-binding normative arrangements include disarmament processes, environmental protection as well as the liberalization of world trade through the World Trade Organization.

Second, we must develop closer interaction between economic and political regional entities, including the European Union, NAFTA and ASEAN. Trade wars will benefit none. Of course, it is of vital importance to strengthen transatlantic cooperation, particularly between the EU and the U.S. Its new prospects must be studied with vigor.

Third, we have to realize that existing international organizations correspond to a world which, to a large extent, no longer exists today.

That the United Nations needs streamlining and needs to become more effective, we can all agree. Reform is in the interest of all member states, big and small alike. Where else but at the United Nations could we deal with truly global issues: international peace and security, the new security threats from uncivilized society, environmental degradation, human rights, poverty, and uncontrolled population growth?

The United Nations has a global mandate and global legitimacy. These are unique assets. So let us not waste them. It encourages me that the United States is moving toward providing the financial support to the United Nations that it legally owes.

Just as important as the reform of the United Nations is the development of the World Trade Organization. Integrating big powers such as Russia and China into the World Trade Organization is not only in their interest but will benefit us all.

I am pleased to recognise increasing support for efforts to integrate developing countries into the multilateral trading system. Trade, not aid, is as valid an objective as ever. However, this requires that we in the developed world open up our markets to ensure market access for those countries and give our support to strengthen their trading capacity. Protectionism has no future in our interdependent world.

One of the most important challenges in managing globalization is that of adapting to a world in which capital moves freely.

The biggest upheaval in international money markets will be the advent of a common European currency. Its goals are to improve monetary stability in Europe and provide protection against currency speculation. But the euro also poses a formidable challenge. It has heen estimated that with the introduction of the common European currency there will be a major portfolio diversification from dollars to euros. If not well managed, this may lead to destabilization and misalignments that could severely affect the whole international monetary system. It is evident that sound cooperation between the EU and the U.S. as well as within the IMF is urgently needed.

Globalization also touches upon important ethical questions, education, birth control, and equality within the societies. And when dealing with these we have to realize that in this global family not all share the same values - at least not yet.

Let me also discuss the role of regional cooperation in managing globalization.

The core organization in Europe as to economic and political integration is no doubt the European Union. Simply put, in the face of growing globalization, the role of nation states has weakened. The EU aims at meeting this challenge in a number of ways, institutional, economic and political.

The historic importance of the European Union is to cement joint values of peace, stability and prosperity in Europe. Now the Union is about to embark upon a major enlargement.

I already briefly referred to the important mandate of the Council of Europe in the field of human rights and civic society.

The Organisation for Security and Cooperation in Europe (OSCE) fulfils the function of a general regional organization. States should make every effort to achieve a peaceful settlement of local disputes through the OSCE before referring them to the UN Security Council.

But we understand that the historic importance of the OSCE has been to help dismantle the Cold War division of Europe. Today, the OSCE has an important preventive function. In Bosnia, it has been in charge of civilian aspects in urging the parties to fulfil their obligations deriving from the Dayton Accords.

The real challenge in the present system in Europe is not only defense against war but the conduct of peace.

NATO is undergoing the most important transition in its history in both respects.

In the first area, restructuring and enlargement are under way.

In the second, NATO's greatest task is to build peace in Bosnia. The operation is in practical terms carried out by NATO, together with partners from outside the Alliance. SFOR doubtless will serve as a model for handling situations where political peace efforts need strong military backing. The newly established Euro-Atlantic Partnership Council (EAPC) is a suitable forum for consultations on NATO-led operations where NATO members and non-members are involved. We have to make more use of it. The NATO Partnership for Peace programme creates practical prerequisites for these activities.

Let me share with you some ideas on another aspect of regional effort.

I want to speak about Europe's North.

Here, I can rely on Finland's historic role.

As early as 1878 a native Finn, Adolf Erik Nordenskjöld, a famous explorer, sailed around the Arctic coast of Europe and Asia, thus discovering the Northeast Passage. He was among the first to globalize our region by bringing Europe to Asia via the North.

This is not, of course, the only reason why Finns always emphasize the importance of Northern Europe in the global sense.

The idea of a "Northern Dimension" in Europe has been part of political terminology for some time. For Finland, the Northern Dimension is a wide-ranging concept. Geographically, we include in it the region from Iceland in the west to northwestern Russia in the east, and from the Arctic Ocean in the north to the southern shores of the Baltic Sea. Not only the countries around the Baltic Sea, but all the other Nordic countries, Great Britain, the U.S. and Canada are more or less directly part of this northern region.

Finland has taken the initiative in promoting a new policy for the Northern Dimension within the European Union. The ultimate goal of such a policy is peace and stability, with prosperity and security shared by all nations. Developing the Northern Dimension, with its wide scope and implications, is also making the Union a more effective global actor.

Our purpose is to present the long-term advantages that the Northern Dimension can offer the European Union as a whole. It is an area rich in resources, containing some of the world's largest reserves of natural gas and oil, resources of strategic importance. There is potential for trade, too. If the remaining obstacles to it can be removed, trade is estimated to grow tenfold by the year 2010 between the countries bordering the Baltic Sea.

There are great opportunities, but also huge problems in the Northern region. Some of the biggest sources of pollution and the most serious nuclear hazards exist in the region. Differences in standards of living, health, social conditions and the extent of the rule of law are enormous. Civic security is threatened by increasing organized crime, including drug-trafficking.

We do not seek new instruments to finance cooperation in the Northern Dimension. National governments, bilateral donors, international financing institutions and the European Union programmes all play their role in this cooperation. What we are strongly emphasizing is the need to coordinate all efforts for maximum benefit to the beneficiaries, to set priorities and to attain equality.

The Northern Dimension is a unique challenge for the future not only of Europe but of all the northern region. That is why Finland looks for support for our initiative from all our partners.

As a Finn and a European I want to stress how important it is that Europe and the United States work together in order to promote what we share in a globalizing world.

We are bound together by natural ties. The transatlantic economic flow makes our societies highly interdependent. The EU and the U.S. constitute the biggest trade and investment community in the world.

There is, however, something deeper than hard economic facts. Many in this country, and probably most in this audience, have their roots in the old continent. Cultural heritage unites us. Ideals of freedom, justice and democracy have inspired our peoples for more than two centuries. These originally European ideas were first transformed into political reality in what was then the newly-independent United States. Transatlantic contacts and the exchange of ideas in the fields of science, technology, the media, entertainment and the fine arts have greatly contributed to the dynamic development of our societies.

During this century, the historical destinies of Europe and America have been tied more strongly than ever. Americans have twice been asked to help Europeans during a war. Fifty years ago, General Marshall's plan established the groundwork for European integration. The United States military presence in Europe through NATO was essential to maintaining the Cold War balance. Finland, although neutral, benefited from a keen American involvement in European security.

The aftermath of the civil wars in the former Yugoslavia has again demonstrated the value of the American contribution to European security. I am pleased to see Finland and the United States as close partners in stabilising peace in Bosnia.

I consider the continuing American commitment to European security vitally important. I say this as much to express a national policy as to recognize a shared European interest. However, Europe cannot be a full partner of the United States if it does not have its own house in order. It is an objective for both parties that Europe should undertake greater responsibility for its own security.

The importance of involving Russia in global economic interaction perhaps best illustrates our common interests. It seems that reformists and traditionalists cannot easily reach a consensus on Russia's future. Democratic structures do exist but they are fragile. Economically, the country may have reached its lowest ebb. It is up to the Russians themselves to enact legislation to facilitate investment. It is clear that more time and support from outside are needed. However, if Russia turns inward it will only weaken its impact on the globalizing world, not strengthen it. Therefore it is imperative that determined joint efforts by Europeans and Americans be made in order to integrate this Eurasian power into international cooperation, a goal that is a prerequisite for long-term peace and stability that will affect us all.

Consolidation of the norms and principles of international law, political stability and military security, an ecologically friendly and socially sustainable development are in the joint interest of Europe and the United States.

A prosperous and strong America is an incentive for Europe. Both partners should have their share of the dividends and responsibilities implied by this cooperation.

It is my conviction that an evolving transatlantic bond does not exclude, but, indeed supports and complements our relations with other regions in the world. Close cooperation between Europeans and Americans is conducive for a healthier international system as a whole. What happens in one place matters in the other, and vice versa. Global dialogue is urgently needed. Together we can contribute towards a better world for all.

Thank you.