The Delegates Lounge

Finland's Foreign Minister on Financial Reform and Global Stability

• The Delegates Lounge LLC • Season 1 • Episode 7

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Join us for a succinct conversation with Finland's Minister of Foreign Affairs, Elina Valtonen, as she shares her deep views on the Pact for the Future straight from the United Nations General Assembly Week. Minister Valtonen emphasizes the pressing need for equitable funding access for developing countries and the critical role of public-private partnerships and transparent tax systems in achieving economic stability in the Global South. We also delve into the repercussions of sanctions on Russia, examining their complex influence on Russia's inflation and interest rates.

J. Alex Tarquinio (host). @alextarquinio of @delegateslounge on X, formerly known as Twitter. 

Elina Valtonen, Minister of Foreign Affairs of the Republic of Finland (guest). @elinavaltonen of @Ulkoministerio on X, formerly known as Twitter. 

References:

Alex, our podcast host, wrote the United Nations General Assembly curtain raiser for Foreign Policy, and in it, she explains the Pact for the Future. Here's a gift link for nonsubscribers.

https://foreignpolicy.com/2024/09/23/unga-summit-united-nations-dysfunction-guterres-russia/

The Pact for the Future is explained on this site about the Summit of the Future.

https://www.un.org/en/summit-of-the-future/pact-for-the-future

We spoke about the high interest rates in Russia and Central Bank of Russia Chief Elvira Nabiullina. 

https://foreignpolicy.com/2023/12/11/russia-central-bank-chief-ukraine-war-ruble-value/



J. Alex Tarquinio:

Welcome to the Delegates Lounge. Pull up a chair. I'm Alex Tarquinio, a journalist based at the United Nations here in New York City and your emcee for this podcast featuring some of the most influential minds in the world today. Settle in for some riveting tete-a-tete, available wherever you listen to podcasts. Welcome back to the third day of our continuing coverage of the United Nations High Level Week here at the UN headquarters in New York.

J. Alex Tarquinio:

At the Delegates' Lounge, we're interviewing foreign ministers and senior diplomats during the General Assembly Week, the focal point of global diplomacy, every September. Today, we're delighted to share our exclusive interview with the Minister of Foreign Affairs of the Republic of Finland, lina Valtonen. She became the Nordic nation's foreign minister in June of last year. Minister Valtonen has a background in high finance, having worked for a decade in investment banking at the Royal Bank of Scotland. As it happens, I spent a good part of my career as a financial journalist interviewing investment bankers, so naturally our conversation delved into the persistent calls, especially by the Global South, to reform the global financial structure. That was a big part of the pact for the future, a grand policy document approved by consensus in the General Assembly this week. We also spoke about the economic bite of sanctions in Russia, the challenges of tackling the growing number of conflicts around the world and the historical importance of Finland joining NATO. Stick around until the end to learn about the culinary delights in Finland's long summer days.

J. Alex Tarquinio:

Here's our conversation. Thank you, minister, for making time for us in the midst of UNGA. It's a very busy week. Thanks for having me. I wanted to jump right in on the Pact for the Future, which was passed by consensus on Sunday. There are some provisions in there which, of course, the Global South is very interested in financial reform and, as you do have a background in high finance, I wanted to ask your opinion of this. It's obviously easier said than done, but what do you think of the provisions in the pact about reforming the global financial structure?

Elina Valtonen:

I think the initiative of reforming the financial structure is very good and welcome.

Elina Valtonen:

I think we should be combining two things for the future First of all, access to funding, which needs to be there for all sorts of businesses, even the smaller ones, in developing countries, which is not always the case.

Elina Valtonen:

And in those cases where it unfortunately does not happen through, say, regulated banks or financial institutions, then it can be that people are misled or they are even misused, and unfortunately this not only applies to smaller enterprises that people are misled or they are even misused, and unfortunately this not only applies to smaller enterprises, but even to governments who are forced to borrow at conditions which are not acceptable from a sort of certainly not the Western point of view, but neither from a, say, un Charter point of view, because in some cases those governments even lose their sovereignty or parts of it.

Elina Valtonen:

So that will be that. So there needs to be mutual respect for the access, but also for the UN Charter at the same time, and those values that we hold dear globally. And at the same time, we of course need to make room for market-based solutions so that we really do have the volume which is needed to providing funding to actors in the developing South in sufficient amounts, because there's no way that we would have enough capital if it was only state-sponsored. So we need to find solutions which combine both private and public capital. And especially when making use of private capital, it could be so that, say, un institutions or governments willing to do so take a little bit of the risk away, which incentivizes private financial institutions to lend under better conditions to those in need.

J. Alex Tarquinio:

And you do think the commitments made in the pact for the future will help lead to more of these public-private partnerships and invest in the global south.

Elina Valtonen:

Yes, there are some very good ideas in this regard, and also what is also, of course, very important if we talk about the government level, is that we also assist those countries to set up a functioning tax collection system and independent of the level of the tax. But the point is that the system needs to be transparent, it needs to be non-discriminatory to everybody and, of course, the more the government is able to collect funds, the better also the credit worthiness, which also helps in accessing capital.

J. Alex Tarquinio:

Well, I've heard also that you know, many Global South countries actually are quite innovative on finance and in some cases that's by necessity. People use their mobile phones, for example, to exchange money because maybe they don't have a full banking system or they live in a remote area. So are there things we can learn, perhaps, working with the Global South?

Elina Valtonen:

There's definitely a lot we can learn, and especially the innovativeness and the flexibility to you know adjust in sometimes also difficult conditions. I think that's a remarkable trait in human beings.

J. Alex Tarquinio:

Yeah. Now there's another financial aspect, which is, of course, sanctions, and I wanted to ask your opinion, as someone with a financial background, about the sanctions, particularly on Russia since the full-scale invasion of Ukraine, how they're working. There's some concern. They are finding, of course, workarounds, sort of dual-use products, but on the other hand, there's also the dramatic increase in interest rates by the Russian central bank. A lot of that is, of course, to suppress inflation, very high inflation, but the Russian central banker, elvira Dabulina, sort of implied that sanctions might be having an impact. Do you believe sanctions are having an impact both on Russian inflation and the high interest rates there?

Elina Valtonen:

Absolutely do. The sanctions have an impact, and nobody ever believed that they are 100% bulletproof. That's never been the case in global history and neither is it now. And of course, it is the duty of us, the sanctioning countries, also to find ways to fill the loopholes, and that's constant work we are occupied with. But at the same time, even if and when which is completely the truth Russia has been able to circumvent some of the sanctions, even to the extent that we are not so happy with it, some of the sanctions, even to the extent that we are not so happy with it. They still have to pay a premium for that, and we do see that also reflecting in the very high rate of inflation, because, of course, their imports just cost more these days, even if they were able to access those products and services which they otherwise wouldn't be if all countries around the world were adhering to the sanctions. So it just comes at a cost. So, of course, also in this regard to the sanctions, well, actually the sanctions?

J. Alex Tarquinio:

they have a dual purpose at least. One is, of course, to try and prevent them from obtaining materials that would be useful in their war against Ukraine, and the other is to create some economic pain, really to make it difficult or the war less popular among Russians. So do you think it's succeeding in that second aim?

Elina Valtonen:

Well, in the second aim, it's difficult to tell. Of course we don't have any reliable data on how the Russian population truly thinks, and of course they have been living with their dictator for quite some time and, of course, in a very limited media space, I would say. So that's one thing, but I think the main purpose is, of course, to economically drain the future, which would allow for a better future for the Russian people, because of course they also, like everybody else, deserve freedom and democracy. And number two is that this again, the hike in the central bank rate, which is now at 19% it also reflects that there's a massive capital flight going on, so there's very little belief in the long-term future of the Russian economy, also in this regard.

J. Alex Tarquinio:

So you believe, it's not only extremely high interest rates. They're not only to suppress the inflation, but also to make the ruble more appealing to foreign investors.

Elina Valtonen:

There are many phenomena at play here.

J. Alex Tarquinio:

Okay, now we're at the General Assembly this week in New York, but it's impossible to overlook the historical importance of Finland joining NATO. That has massively increased NATO's land border with Russia, and in wintertime the Gulf of Finland freezes over as well, so that actually increases the border even more, practically speaking. So what impact will that have on the security situation in the Arctic region?

Elina Valtonen:

in the Arctic region. Well, we joined NATO together with Sweden in order to enhance our own security, and obviously not as a threat towards anybody, certainly not against Russia. I think together as an alliance, we are so much stronger, Also when it comes to Baltic Sea security and also the Arctic, which becomes ever more so important Now. Unfortunately, with the climate warming in that region, the ice keeps melting and therefore the Arctic Sea becomes more and more part of the Atlantic, With very significant geopolitical meaning as well. But both Finland and Sweden bring in very significant capabilities.

Elina Valtonen:

Finland has one of the strongest armies in Europe and not just relatively speaking, we are a small nation, but also in absolute numbers and plus, of course, we are technologically sophisticated. So we bring in a lot of expertise, not only in the traditional military space, but also in countering hybrid threats. And in quite many cases and I'm happy to see our cooperation and trade with the United States increase massively now with also the technological partnership is that in order to stay competitive technologically, first of all, we have to cooperate as much as possible within the alliance and really abolish all trade barriers. Second thing, we have to excel in the civilian use of technology, because the military always is only a directive of how high class the civilian applications are. So I think we're doing a great job there.

J. Alex Tarquinio:

Now we're at the United Nations this week. The conflicts of Ukraine and the Middle East have really been competing for attention over the last year. Obviously, the Security Council really has their hands tied in Ukraine. With the Russian veto, the Middle East is highly complex. What, if anything, do you think that the UN can do, and what does Finland support the UN doing, to try to resolve these conflicts?

Elina Valtonen:

You know, many people say that the UN or the international rules-based order are somewhat obsolete these days because there are so many countries violating well, most notably Russia those principles. But I would claim the exact opposite is true, because if we didn't have these globally agreed principles, we wouldn't know who is really violating something. We would just, regionally, somehow feel that this is wrong, but we wouldn't have any tools to counteract. And perhaps we don't have the most efficient tools now either, but at least we have means of saying this is wrong and this is right. And at some point and I do believe, there will be a time when perpetrators to these principles are taken to justice and more and more people, by the day even, are able to live their lives according to these principles, in freedom and according to the human rights.

J. Alex Tarquinio:

Okay, well, finally, we're ending all of our interviews with ministers and diplomats this week with a fun question about the cuisine from your country. If you could share one of the favorite items that you think represents the cuisine from your country that you'd like to share with people from various cultures of the United Nations?

Elina Valtonen:

Well, I think at this stage I would have to say that my favorite dish is the carrot pie which my daughter bakes. Not sure whether that's so fantastically traditionally Finnish, but at least she makes her Finnish version of it. But very Finnish is fresh berries, say strawberries and blueberries. Because of the very, very long days in the summer. Well, we have a short summer in comparison.

Elina Valtonen:

But we have almost 20 hours of sunlight during the day. It makes those berries, especially the wild ones, very, very tasty. When I give those berries to my foreign friends they're like well, either this tastes like childhood or do you prepare them somewhere? You don't have to prepare them, well, a traditional dish from berries is you just put the berries and pour some milk on it and perhaps some sugar. But typically you don't even need the sugar because they're so sweet.

J. Alex Tarquinio:

Well, I know your time is very pressed, but thank you for making time for us. Thank you so much.

Frank Radford:

And that's it from the Delegates Lounge. We'd like to thank our esteemed guests, who've graciously allowed us to share their hard-earned insights into what really matters. And then there's you, our listeners, who we hope are sufficiently edified to clamor for more of the same. Do drop in for a weekly episode on Thursday, or, from time to time if we're on the road, for special events, in which case there'll be a bonus episode. Subscribe wherever you listen to podcasts and, if you like what you've heard, please take a moment to rate or review the show, as it helps others who share your abiding interest in world affairs to find their way to the Delegates Lounge. You can connect with us on many popular social media platforms or reach out to us directly at infothedelicatesloungecom. We're a small team so we can't respond to every message, but we will read them. Our show this week was written and produced by the host and by yours truly executive producer, frank Radford. Until next time, keep calm and curious.