COMMENTARY: Awkward practical problems over the "Karelia Purchase"
By Pekka Hakala
It is hard to believe that Finnish decision-makers would have had the nerve to look the other way in 1992, if Russia had really offered to sell back the areas of Karelia ceded to the Soviet Union after the war.
A rejection of the offer would inversely have been seen as the callous discarding of all the sacrifices of Finland's recent wars. And all for the absurdly cheap price of just 15 billion dollars and change.
But then again, would that price have been such a give-away bargain? Let's look at the historical context in 1992.
The previous autumn, a major Finnish commercial bank - which also served as a "central clearing house" for some eighty savings banks - had gone belly-up and had been taken over by the Bank of Finland.
Finland Inc. was itself already in a steepling dive from ‘80s boom into ‘90s bust, towards the most horrendous of depressions. The state had no cash to spare in the coffers, so buying back Karelia would have been done with borrowed money.
And borrowed money was not exactly cheap: the old Helibor (Helsinki Interbank Offered Rate) of the time was hovering between 12% and 14% in 1992, and the state was borrowing money from the domestic market at around 11.5%.
At the same time, international credit rating agencies were falling over each other to downgrade Finland's creditworthiness as fast as they could go.
The multi-billion-dollar Karelia Purchase would soon have been seen alongside all the belt-tightening and cuts being urged upon the public sector and set against the bread-lines that had recently appeared at Finnish Salvation Army citadels.
"Yeah, sure, we got Karelia, but it cost us the Welfare State" would have been a familiar jibe, whether or not it was strictly true.
Russia would have hardly been likely to agree to massive internal migration out of the area, so along with the pristine forests and lakes of Karelia we would probably have acquired more than 300,000 new inhabitants, the great majority of them Russian-speakers.
Besides, even if there had been some form of compulsory relocation, it would pretty soon have turned into an ugly ethnic-cleansing exercise in which the residents with Finno-Ugric family roots would have received better treatment.
Not good. What else?
Well, according to the official statistics, Finland had 312,000 people on the dole in 1992.
A couple of years earlier, unemployment was not much more than a quarter of this figure, but by 1994 it was close to half a million.
Into this already hellish situation would have been thrown hundreds of thousands of Russians, most of them going directly into the ranks of the long-term unemployed.
The Estonian war memorial dispute earlier this year would probably not have crossed the Finnish news threshold in quite the same way as it did: we would have had more than enough column-inches written about the fifteen uneasy years of living side-by-side on our own turf to worry much about things in Tallinn.
And what about in Russia? How would the sale have benefited them?
In 1992 and 1993 alone, according to conservative estimates, roughly half a billion dollars in cash were siphoned away from the Russian central bank system through simple bank transfer fraud.
Whoever it was who would ultimately have got their hands on the Finnish "Karelia money", we can be fairly sure it would not have been pensioners, widows, and orphans.
On the other hand, though... if we had gone for it in 1992, we wouldn't have to worry now about those annoying timber import tariffs, since there would still be plenty of wood to keep the harvesters busy in the forests of Karelia.
And we'd be in NATO of course, and probably in Iraq, too, just to be on the safe side.
Helsingin Sanomat / First published in print 6.9.2007
Previously in HS International Edition:
Ex-President Koivisto denies Russia offered return of Karelia (24.8.2007)
Fyodorov: Finnish leaders knew about Karelia project (6.9.2007)
Yeltsin´s Russia secretly calculated price for Karelia (5.9.2007)
Finnish Karelia (Wikipedia)
PEKKA HAKALA / Helsingin Sanomat