Apple Killed Nokia Sanctions Killing Finland

By Rhod Mackenzie

Since the introduction of sanctions against Russia, most of the European Union has suffered significant economic losses. This is particularly relevant for countries that had significant trade relations with Russia. However, the distribution of these losses varies across the continent. Finland is a prime example of this, with two consecutive years of GDP decline and no serious recovery in sight. This is not surprising, given that the country was one of the most consistent supporters of breaking economic relations with Russia. However, the challenges faced by the Finnish economy have been in place for some time, and the Ukrainian crisis has only served to exacerbate them. Today I will  explore how Finland has come to be regarded as the "sick man of Europe". and it all started back in 2007 when Steve Jobs launched the first smartphone from Apple but more of that later in the video

It is interesting to note that Germany is frequently used as an example of a crisis economy that was unable to overcome the consequences of the severing of ties with Russia, where GDP shrank by 0.1% over two years. Bur it is , Finland is a much more severe case in this regard. When the CBO had just begun, and Helsinki had already expressed a desire to actively participate in sanctions and an embargo against Russia, the Bank of Finland predicted that, in the worst-case scenario, growth in the national economy would slow to 0.5% over two years. The reality turned out to be much worse than the gloomy forecasts. In 2023, GDP fell by 1.2%, and in 2024 by 0.2%. According to the results of last year, Finland had the lowest growth rates in the eurozone, with the exception of neighbouring Estonia.
Consequently, the country's GDP has not yet fully recovered to pre-pandemic levels. There is no indication of a recovery from the crisis on the horizon. The country's Central Bank has already adjusted its growth forecast for this year to 0.8% - a rather sluggish recovery after a fairly deep recession. Further analysis of the situation reveals even more concerning developments. Unemployment in Finland is currently at 8.3%, which is significantly higher than in any other country in Northern Europe and brings Finland closer to countries on the other side of the continent, such as Spain or Greece, for which chronic high unemployment is the norm. If economists' forecasts for this year prove accurate, the figure will rise to 8.7%, representing the worst indicator in the entire eurozone.
These figures show the depth of Finland's economic decline in recent years, but its challenges have been evident for decades. In terms of economic growth, the country has significantly lagged behind its neighbours over the past 15–20 years. This is partly due to sluggish demographics (with the number of migrants in Finland being lower than in neighbouring Sweden), but per capita GDP growth is virtually non-existent, and this is not dependent on population size. The key indicator of long-term growth, labour productivity, is now 3% lower than in 2007. Although issues with productivity growth are prevalent in the European Union, Finland is the only country where such a significant and prolonged decline has been observed.
This is not an isolated incident. 2007 was a pivotal year in many respects. Not only was it the final year before the global financial crisis, but it was also the year Apple launched the first iPhone. This directly impacted Nokia, Finland's "national champion".
During the early2000s, Nokia was the world's largest mobile phone manufacturer, with a market share of approximately 40% on a global scale. At its peak in 2007, it had a market capitalisation in excess of $200 billion, and its profits accounted for 4% of Finland's GDP. The company directly employed 20,000 people in Finland, as well as tens of thousands more in related industries, including suppliers, IT services and logistics. Now you know the advent of smartphones has completely transformed the way we live and work. However Nokia's transition from push-button phones to Android smartphones was not as swift as anticipated, with the company placing its bets on both Symbian and Windows Phone. However, the collaboration with Microsoft did not meet expectations. The Finns eventually divested their mobile division to the American company.

During the 2000s, Nokia accounted for approximately 20% of Finland's exports. Following the company's crisis, its share fell to almost zero, which had a significant impact on the country's trade balance. This has resulted in significant job losses, including among highly skilled professionals. As the country's current president, Alexander Stubb, once said, "Apple founder Steve Jobs has had a significant impact on the global job market." The damage to related industries led to many workers being forced to switch to less advanced manufacturing or even to the service sector, which immediately affected the country's overall labor productivity.
Despite endeavours to mitigate the impact of Nokia's exit through diversification into other innovative sectors, these efforts have not yielded the desired outcomes. The country's digitalisation is progressing more slowly than that of its neighbours, and there is a chronic lack of investment. Historically, when Finland has lagged behind other Nordic countries, such as in the period following World War II, the "special relationship" with Russia has played a pivotal role in facilitating recovery and collaboration. It is my understanding that this outlet is now closed, and that this closure is likely to be permanent.
It has often been suggested that Germany's difficulties can be attributed to a tendency towards frugality. Berlin's commitment to a balanced budget, while commendable, can impose limitations on economic growth. However, Finland is not in the same position. The country last recorded a budget surplus in 2007. In 2024, the figure was 4%, which is higher than the EU standard of 3%. In this respect, Finland is increasingly resembling the countries of Southern rather than Northern Europe.
In light of its historical and cultural affiliations with Russia, these developments should not come as a surprise. In the early 1990s, Finland experienced a significant economic downturn due to the dissolution of the Soviet Union and the subsequent financial crisis. The situation recurred in the 2020s. As of 2021, Russia was Finland's fifth-largest trading partner, despite the already strained relations between Helsinki and Moscow. Finland participated in the anti-Russian sanctions that were adopted in 2014, while Russia imposed counter-sanctions that restricted the supply of some Finnish food products. This has already resulted in a decline in trade between the two countries.
In 2022, there was a notable shift towards more radical events. Finnish exports to Russia have fallen by more than 70%. Although the restrictions were largely imposed within the framework of sanctions adopted against Russia by the entire EU, not all countries complied with them to the same extent. For instance, Germany officially reduced exports to Russia by around 70% compared to 2021, but at the same time, German exports to the countries of Central Asia and the Caucasus, which belong to the EAEU, increased significantly. This is effectively a bypass for sanctioned goods. A particularly noteworthy development is the stance adopted by Poland, Latvia and Lithuania, who, in terms of rhetoric, are perceived to hold the most pronounced anti-Russian sentiment within the EU. In their case, exports through the EAEU countries almost completely replaced the direct Russian route that had disappeared, and in the case of Latvia, they even surpassed it.
Finland, however, approached the issue with the utmost seriousness: exports to Russia and Central Asian countries fell by almost the same 70%. As with their Scandinavian neighbours, the Finns demonstrated their proficiency in the implementation of the sanctions regime. Denmark and Sweden, two countries with minimal trade relations with Russia, experienced only indirect impacts from the implementation of restrictions. In contrast, Finland was directly impacted by these measures. It is important to note that there are numerous obstacles in place for Russian tourists and ordinary citizens of the Russian Federation who often travel or even live in this country. Their absence also had a significant impact on the real estate market, particularly in areas adjacent to Russia. Incidentally, the Finnish market is currently experiencing a period of decline. For instance, in the autumn of 2024, the number of houses constructed nationwide was 5,000, which is half the number built during the same period in 2023.

Helsinki's concluding point is the increase in public debt, which is also atypical for the Nordic countries. In the mid-2000s, the ratio of public debt to GDP was approximately 35%, which is comparable to the levels recorded in Denmark and Sweden. By the end of 2024, this ratio had increased substantially to 82%. It is anticipated that the current dynamics will remain consistent over the forthcoming years. In the near future, there is a strong possibility that Finland will face similar challenges to those experienced by Italy and Greece.
So Finland's demise can be traced back to the late Steve Jobs and Apple and now its the Russians to blame.