В начале января 2021 г. по приглашению Высшей школы экономики г. Турку начальник экономического отдела Сергей Изотов и эксперты Торгпредства провели лекцию для студентов по теме «100 лет российско-финляндских торгово-экономических отношений: прошлое, настоящее и будущее». Лекция стала частью учебного курса «Ведение бизнеса на европейском пространстве», включавшего выступления представителей официальных, деловых кругов Финляндии и аккредитованных в стране дипломатических миссий.
В выступлении рассмотрены основные этапы развития двусторонних экономических отношений между нашими странами – с 20-х годов XX века до настоящего времени, приведены примеры актуальных и наиболее успешных совместных проектов, в том числе высокотехнологичных. Значительное внимание уделяется находящейся в стадии подготовки совместной программе стратегического сотрудничества двух стран на ближайшие пять лет.
Торгпредство видит наибольший потенциал для развития двустороннего сотрудничества в сфере зеленых технологий, ветряной и водородной энергетики, космических исследованиях и низкоуглеродных запусках, технологиях MaaS (mobility-as-a-service). Отмечается также взаимодействие в Арктике, как в рамках международных организаций, так и в двустороннем формате.
С целью содействия широкой общественности в изучении актуальных вопросов российско-финляндской повестки в части экономического сотрудничества публикуем полный текст лекции на английском языке:
100 years of Russian-Finnish economic relations: our past, present and future
First, let me thank Mr. Kari Liuhto and Turku School of Economics for this opportunity to address you.
The topic at hand today is the history of bilateral economic relations between Russia and Finland over the past century, starting from the point when Soviet Russia and newly independent Finland institutionalized their trade relations and our trade representation was established in Helsinki. That actually happened exactly 100 years ago, in 1921.
In 1920s-1930s the legal basis for trade relations between the Soviet Russia and Finland was the Tartu Peace treaty signed in the city of Tartu on 14th of October of 1920. This agreement re-established diplomatic and consular relations between the countries and settled the temporary rules for trade.
The trade representation of the People's Commissariat for Foreign Trade (NKVT) arrived in Finland in May but officially started to work on 1st of June as the first delegation couldn’t enter Finland and had to turn back. Anyway, formalities were settled and the staff of the organization reached 23 people. At that time, they purchased from Finland paper, cardboard, cellulose, energy wood, leather for shoes, axes, saws and some food products by the orders of the NKVT. The first export deal was signed in 1922 - delivery of 7000 tons of scrap steel. After that, trade expanded to oil, food and agricultural products, mineral goods, paper, cardboard, cellulose and so on.
On 23rd of November of 1923, the new Regulation of NKVT appointed trade representations and trade agencies as the main bodies involved in foreign trade.
In 1926-1929, trade relations with Finland were expanding but in 1930-1931 anti-soviet campaigns started all over again. Political obstacles affected the turnover and its volume decreased. However, by 1932 the Finnish political establishment started looking for new ways of cooperation with the USSR as economic crisis in the Western countries caused the rise of unemployment, devaluation of the Finnish mark and increased prices on the domestic market. This trend lasted until 1939-1940.
Meanwhile, we need to understand that the trade volume in 1920s and in 1930s was marginal – in 1921-1930 the share of Soviet Russia in Finnish foreign trade was about 3.4%, during the next decade it dropped to 1.0%.
Before the WWII bilateral trade relations were still minor and the range (the nomenclature) of goods was limited. The USSR exported to Finland mostly grains, tobacco, sawn timber, salt, asbestos, fertilizers and imported leather, dairy, paper, equipment for the forest industry, ships, cobalt, ferrotungsten.
The main deterrent for bilateral trade, beside political climate, was the industrialization of the soviet economy. The state prioritized import of capital goods that Finland could not offer. Moreover, with the development of domestic industrial production the USSR decreased the import of paper and cardboard from Finland. At the same time, Finland developed its agricultural production and gradually decreased its import of this type of goods.
The first Trade agreement and the Agreement of Payments between the two countries signed in June 1940 made no positive impact on trade turnover and establishment of normal economic relations. Then the war started and the issue lost all the relevance for the next 5 years. Between the wars, the USSR could not increase its share in Finland’s economy though the trade representation made few important moves/steps that helped developing new economic strategy for Finland later.
By the end of the WWII, Finnish foreign trade halved compared to the level of 1938 due to the following reasons:
- decrease of the physical amount of potential export goods as a result of military operations on the Finnish territory,
- obligation to pay the Soviet Union heavy war reparations – 600 million USD in 5 years (90,6 million first year, including export of goods – 72,5 million). At some point reparations were extended to 8 years and the whole amount decreased to 226,5 million USD$;
After the war, the USSR tried to divert Finnish economic activities from Western partners to boost bilateral cooperation based on good-neighborhood principles. The reparation payments mentioned above contributed to the renewal and diversification of the Finnish economy and normalized economic relations between the countries. The reparations, fairly called ‘heavy burden’ for the Finns, consisted mainly of machineries, heavy equipment and vessels. It guaranteed stable order flow, demand for the national manufacturing goods and services and a substantial share on the Soviet market.
Since the end of the 1940s and until the beginning of the 1960s Finland was the most important foreign trade partner for the USSR. Germany, Japan, France and the UK expanded their trade relations with the USSR but never came close. Two main reasons - well-established industrial cooperation and compatibility of economies.
The Soviet Union pursued the goal of doubling the mutual trade volumes compared to the level stated in the Trade agreement of 1940 and becoming a crucial supplier of oil and petroleum goods, coal, materials for textile industry, fertilizers and other important for Finland goods. At the same time, it intended to become the main importer of Finnish cellulose, paper and plywood.
During this period, the legal framework of our trade substantially changed. In 1947 a new Trade agreement was signed. It included articles covering the legal status of the Trade representation of the USSR in Finland.
In 1950 the first five-year trade agreement to exchange goods for 1951-1956 was signed. Later, seven more of them were agreed upon. These types of agreements proved to be an efficient instrument for long-term economic planning. They made possible for the Finnish industry to attract necessary investments and modernize the economy. Some Finnish experts noted that soviet orders demanded the highest technological level from their suppliers. That significantly improved Finnish competitiveness on a global market.
The first five-year agreement increased the share of Russian goods and services in the Finnish foreign trade up to 14-15% though the numbers varied from 7.3% in 1951 to 21.3% in 1953. By the beginning of 1960s the USSR accounted, on average, for 16.5% of the Finnish foreign trade. However, the share of Finland in the USSR foreign trade balance was just 3%, around 10% among all the western countries.
In the beginning of 1950s, success of our bilateral trade relations proved that the Soviet Union was a reliable trade partner capable to cooperate with the western countries and demonstrated its’ market attractiveness. Finnish partners quiet often used these special relations in their favor. For instance, one round of trade negotiations resulted in concessions in credit policy made by the USSR and the agreement on long-term deliveries of Finnish wood-processing industry products. Moscow was ready to agree to these terms to maintain good partnerships. Helsinki was interested in preserving its market share while the USSR significantly expanded its foreign trade with other countries (UK, France, Denmark and Sweden). And preliminary negotiations for the second mutual trade agreement began two years prior to expiration of the first one.
In 1960-1973 the average share of the USSR in Finnish foreign trade fluctuated around 12-14%. During the 1973 oil crisis Finland reevaluated its position on import of soviet oil and trade expanded. Previously the country tried to reduce its dependency on Russian import and to diversify supplies and Neste oil refinery was launched in 1957. But in 1973 oil prices skyrocketed and Finland found itself in the best position compared to other western countries as its supplies and prices were protected by long-term trade agreements.
Worth noticing that exchange of goods was based on clearing trade, where financial claims were settled against each other and reduced to a single net balance. By the request of the government of Finland trade deficit was reduced by additional export and extension of payments for 3-4 years. Thus, in 1974 bilateral trade doubled compared to the previous year. That had a positive effect on development of Finnish consumer goods industry.
Active trade balance was used to flatten out imbalances in the Finnish economy. When market conditions improved – import from the east decreased, and vice versa – during economic slump soviet orders kept Finnish industry busy. According to Russian and Finnish economists, a single increase of soviet orders by 60-70% could boost national production up to 4% and even the pace of economic growth.
Despite the fluctuations, our mutual trade relations set an example for other western countries on how to deal with the USSR and other states of the Eastern Block. Moreover, Finnish exporters used the Soviet market as a springboard to Western markets. The cost of Finnish exports to the USSR was lower than in trade with other countries because of volumes and low marketing costs. On average, Soviet exports were also more profitable than exports to tougher markets.
One case to prove the point: prerequisites mentioned above boosted Finnish shipbuilding industry after the WWII. At first, around 90% of all ships exported to the USSR. Later on, with the development of new types of ships/icebreakers for the soviets (disruptive innovations at that time) Finland created the competitive industry on a global market and could start exporting its production to the west.
It’s true to say that 70-80s were the golden age of eastern trade – the volumes of export and import deals as well as the share of the USSR in Finnish foreign trade, industrial cooperation and number of joint investment projects reached their peaks.
Finland considered economic cooperation with the USSR a prerequisite for the creation of high-tech production with the higher value added. In many western countries these industries were controlled by multinational monopolies and were almost impossible to compete with. Thus, the eastern block was an attractive market especially with the possibility of signing long-term contracts – some deals were signed for the period of 15 years (included delivery, installment and services).
Success of our economic cooperation could be evaluated by the volume of trade, number and scale of infrastructure and industrial projects. Some of them were implemented in 70-80s in the eastern regions of Finland and in the North-West of Russia. The largest construction project involving Finnish participation was the building of the Kostomuksa mining facility and its surrounding infrastructure in Karelia in 1977–1985. Its estimated value was more than 4 billion EUR in current prices. 35 years have passed since its launch. It set the world record for the speed of construction of objects this scale in brown-field area. The employment effect was significant. Thousands of Finnish workers moved to construction site and gave an impulse to the economy of the Eastern Finland. At the same time residents of Kainuu and Northern Karelia, regions that seriously suffered from unemployment, were offered jobs. Directly the project created 5 000 jobs, indirectly – 20 000.
The Kostomuksa mining facility is linked to another joint Soviet-Finnish project. In 60-70s Russian engineers worked on construction of the Raahe steel mill. They also worked on its reconstruction in 1983. President of Rautaruukki Company Helge Haavisto stated in the article published in local press called “Two-way Street”: Soviet Union delivered us first-class metallurgical equipment. I consider their continuous casting machines the best. They have been operating efficiently and reliably for years. Recently we have obtained the set of working drawings / engineering for new technological equipment for the modernization of the mill. We have also achieved the agreement to start cooperation in expanding raw materials base for the mill. Kostomuksa plant has been supplying steel pellets to Raahe up to this day since 1983. As we know all the soviet equipment delivered to Raahe half a century ago is still working well.
Few more cases worth mentioning are:
- Loviisa nuclear plant built by soviet engineers in 1971-1980, still one of the most effective and safest stations in the world;
- Wood processing facility in Svetogorsk in 1972–1984;
- Cellulose and paper factory in Vyborg in 1984–1988;
- Machine-building plant Petrozavodskmash in Karelia built in active cooperation with Finnish engineers. It produced mainly machines for paper and cardboard industry and cooperated with large Finnish machine-building companies. For instance, rolls made by Petrozavodskmash were the vital part of Valmet machines.
The projects mentioned above had a real economic effect on both countries’ economies and set an example of an effective international division of labour – use of both soviet and finnish engineering, construction, installing and supplying companies. An integral part of success was a strong political will of the leaders of the countries.
During that period the USSR paid special attention to exchange of experience and extensively studied best practices in the Finnish forest, wood-processing, pulp and paper industries, metal industry, food production, agriculture and so on. Technological and cooperation ties with Finland played its part in geopolitical confrontation with the USA and Western Europe.
Should be mentioned that transfer of technologies was absolutely legal – based first on Peace treaty of 1944 / The Moscow Armistice and then – on Agreement on Finnish-Soviet Scientific-Technical Cooperation, the so-called TT-agreement (first signed in 1955). The Soviet leadership aimed to develop its own innovations to launch domestic production of the newest technologies. However, interest was mutually beneficial. Finnish experts visited production sites and science hubs in Moscow, Saint Petersburg, Urals, Siberia and even southern regions. Finns had particular interest in wood-processing and metallurgy. In addition to visiting facilities, parties joined efforts in developing new technologies in electronics and automatics – the most promising fields for R&D. Transfer of technologies opened new opportunities for economies and export growth and strengthening competitiveness on global markets. For example, deep-sea research equipment produced in the USSR in cooperation with Finnish partners using Finnish technologies was in higher demand on global market than similar equipment manufactured in North America.
One of the biggest political concessions was opening the domestic market for the Finnish consumer goods. Finland was among the few western countries allowed to export to Russia agricultural products, furniture, clothes and shoes. During the Olympics of 1980, Finland was the main supplier of goods. Finnish companies participated in engineering and construction of the Olympic objects. That proves once again the importance of bilateral cooperation.
In 1977 countries signed the long-term Soviet-Finnish economic cooperation programme till 1990 that declared cooperation on many levels – expansion of trade, industrial cooperation, joint large-scale industrial projects, R&D etc. According to Russian and Finnish experts, this approach was successful and lead to increase of turnover from 9 to 12 billion RUB in 1981-1985 and to 16 billion RUB in 1986-1990. Just to compare: during the first 5-year agreement (1951-1955) volume of mutual trade could not exceed 1 billion RUB.
However, raw materials and mineral goods still dominated the structure of Russian export to Finland. Finns were concerned about their dependence on eastern oil supplies: unstable oil prices made export planning impossible. Yet problems were not perceived as unsolvable. By the mid-80s the Soviet share in Finnish foreign trade reached 25-26%. However, due to economic recession and political crisis in Russia and decrease of oil prices in the beginning of 90s this figure dropped to 5%. Collapse of the USSR put an end to the eastern trade as well as the clearing trade and lead to abolition of state monopoly on foreign trade.
Our countries had to rebuild their trade relations from scratch. After 1991 Russia was the only post-soviet republic that managed to inherit some features of the Soviet-Finnish trade. In 1992 the Treaty on the Foundations of Relations (it replaced the Soviet-Finnish Treaty of Friendship, Cooperation and Mutual Assistance (FCMA) of 1948) and the Agreement on trade and economic cooperation between the governments of the countries were signed.
At that time two major trends influenced our economic relations. Sudden fall of GDP and industrial production, decrease of centralized orders and restrictions imposed on energy export were deterring trade. However, liberalization of trade, free currency flow and lifting restrictions on import stimulated mutual economic activity in 1992. In 1993-1997 intermediarytrade flourished and Finland became a so-called “trade bridge” between Russia and the rest of the Europe.
In 1995 an important event that defined the future of Russian-Finnish political and economic relations happened – Finland entered the EU. Simultaneously Russia and the European Union signed the Partnership and Cooperation Agreement (PCA) outlining political dialogue, bilateral trade and investment liberalization, as well as social, economic, financial, scientific and cultural cooperation. This agreement is still crucial for our bilateral relations.
Becoming a member of the EU had a marginal effect on the level of tariffs and trade barriers for Russian products. As for non-tariff restrictions, Finland pursues a quite independent trade policy guided by national economic interests. Some restrictions came from the needs of certain industries. However, Finland’s trade policy has always been in line with the EU regulations.
On the turn of the century cross-border economic ties expanded in different forms – from companies’ contacts and cross-border trade to involvement of regions in the instruments of cooperation meaning the Northern Dimension, Barents Euro-Arctic Council, Euroregion Carelia, Cross-border cooperation programmes (CBCs – Carelia, Colarctic, South-East Finland – Russia). Joint projects financed by these instruments contributed to economic recovery and then to economic development of regions on both sides of the border.
In 2000s Russian-Finnish trade dynamics highly correlated with fluctuations in our national economy as well as with global economy trends. The crisis of 1998 was succeeded by the period of rapid growth in 2000s – and bilateral trade multiplied again. Trade surplus peaked in 2008 and finally exceeded the figures of trade between the USSR and Finland during the clearing era.
Worth mentioning that fluctuations of bilateral turnover have a pronounced cyclic dynamic. Our economies are sensible to crises in global economy due to Finland’s involvementin global trade (foreign trade turnover is about 80% of national GDP) and structure of export and import supplies (energy products account for 60% import from Russia). This became obvious during the financial crisis of 2008 and later after 2014. Events in Ukraine and sanctions imposed by the US and the EU revealed that we live in a brand new political and economic environment and face new challenges fundamentally different from the ones thatinfluenced our bilateral relations over the previous decades. Both economies have suffered from sanctions. At the same time everyone has seen that the idea of isolation of Russia is worthless. Finnish companies still consider Russia as an important economic partner now, and in the long run.
During the post-soviet time Russian-Finnish economic ties received new dimensions – investment cooperation and localisation of production. According to estimates by Finnish and Russian experts, the volume of investments of the Finnish companies directed to Russia over the last 25 years exceeded 14 billion USD. About 7 000 of Finnish companies are directly and indirectly involved in trade with Russia – some have their own productions or subsidiaries, some made investments. Mostly they operate in the North-West of in Central regions of the country.
Finnish companies invest in wood-processing (like Stora Enso, UPM-Kymmene), the food industry (Valio, Atria, Fazer and Paulig), trade (S-Group), production of automobile tires (Nokian Tyres), paints and varnishes (Tikkurila, Nor-Maali and Teknos Group), construction materials (Skaala and Paroc), production of heaters (ENSTO Finland), residential, industrial and infrastructure construction (YIT, SRV, EKE-Group).
Russian companies show special interest in opening and developing production in Finland. Pharmaceutical company Cytomed produces medications in Lappeenranta. Nitro Sibir Group - producer of explosives for mining and construction - exports services to Finland and is currently building its own logistics chain. Yandex has its data center in Mäntsälä and operates a search engine and a taxi service. In 2019 company Argus-Spectr from Saint Peterburg opened a factory for production of wireless fire alarms and rescue systems in Savonlinna.
Russian companies also participate in large-scale industrial projects in Finland. You probably have heard of Lukoil (owns a network of gas stations under the name Teboil) and Norilsk Nickel (owns a nickel plant in Harjavalta). Russian holding ‘Power Machines’ together with Finnish companies modernize power plants in Finland. State Atomic Energy Corporation Rosatom is carrying out a project of nuclear power plant Hahhikivi-1. Not to mention that Russian companies run Helsinki Shipyard and provide it with orders for construction of high-tech ice-class vessels.
In 2020 it became clear that nowadays we live in essentially new political and economic circumstances. We face new challenges which shortly become natural elements of internal and external environment. These are social polarisation, rise of protectionism, sanctions and trade wars between world’s leading economies, as well as climate change. These factors have hampered economic development in Russia and among our partners. The world economy is currently in the phase of a new crisis which has been triggered by the coronavirus pandemic and oil market instability.
It seemed that in the last few years we had overcome the decrease of bilateral trade which we had witnessed since 2014. In 2018, turnover between Russia and Finland grew by more than 60 per cent compared to 2015. However, by this moment we have almost exhausted the potential for a rapid recovery. While in 2019 our trade fell by more than 8 per cent, in January-November 2020 the decrease reached 28.5 per cent.
The coronavirus pandemic has greatly complicated the circumstances of international economic cooperation. This, in turn, has propelled the decrease of international trade and, eventually, global growth. According to the UN statistics, in 2019 the slide of international trade volume added up to only 1.8 per cent. In 2020, experts say, world economy might have faced a greater fall. The OECD calculations claim that in 2020 international trade of goods and services decreased by 9.2 per cent. The IMF statistics show the world GDP has shrunk by 4.9 per cent.
The recession has changed the megatrends of world economy, which were once deemed sustainable, long-term, and worldwide. The industries of catering, entertainment, tourism, and transport have been quarantined everywhere - thus, a drop of corresponding domestic activity and trade between the countries. Weakening of economic activity has brought about deep shifts in energy markets. The development of the recession has affected industry and most of the economic sectors.
Realizing the importance that Russia and Finland have for each other in mutual trade, we would underscore the importance of finding new drivers of growth which will trigger the development of our cooperation in non-resource field. These drivers will contribute to building sustainable economic relations between Russia and Finland.
It is also worth mentioning that our countries’ officials are developing a programme for strategic cooperation in trade and economy for the following five years. The aim is to overcome the negative dynamics and find new drivers of growth. This programme could serve as a plan to stabilise bilateral trade and compensate for decreased turnover registered in the previous years. Industrial technologies, including Arctic technologies, non-carbon energy, circular economy, construction technologies, especially wood-based, IT and digital technologies, education, R&D, biotechnologies, food production, and tourism are the main fields of our cooperation. Of course, this list is far from being comprehensive. Moreover, it is high-tech that we regard a primary sphere of long-term development of bilateral trade relations.
However attractive high-tech markets may be, no single country in the world can commercialise the results on multiple tracks at once.
Post-pandemic growth of the EU and the Finnish economy will rely on a low-carbon model. It is even greener than it was planned before the coronavirus outbreak, in December 2019, when the European Commission approved the Green Deal and issued the respective communiques and a roadmap. Consequently, the Finnish energy and climate strategy, adopted in 2016, is already obsolete and does not correspond with the modern circumstances. Ministry of Economic Affairs and Employment of Finland promises to have a new strategy presented by the middle of 2021.
The target of decarbonisation of economy set by the EU creates new opportunities for the cooperation between Russia and Finland extending far beyond the traditional format existing in the field of energy supplies.
At the moment there are several national projects being carried out in Russia to ensure her economic growth. Their aim is to build up the weight of the Russian companies on the world high-tech markets. In autumn 2020, the Russian Government launched a reform, under which some national development institutions will come under control of a state corporation VEB.RF. Others will be reorganised. The main objective of this policy - to adjust the work of the development institutions in accordance with Russia’s national development goals and the issues of climate change.
We can witness new high-tech markets emerging around the European green initiatives in energy, transport, agriculture and energy-intensive industries. These initiatives encourage development of technologies providing for low carbon emission, production of clean energy and healthy food, reuse of resources, energy-consuming construction, smart transportation, and preservation of biodiversity.
In times of a green transfer market needs renewable energy, production of hydrogen and new materials, including non-carbon aluminum, hydrogen-based production of steel, nickel and other non-ferrous metals, second generation biofuel and all the bio- goods - for instance, construction materials, wooden houses, bioplastic and even wood-based fabric.
Russia possesses significant amounts of resources almost in every sector of renewable energy. Moreover, technical capacity of renewable energy sources exceeds annual energy production by more than 30 times.
In 2020, Russia had six wind farms launched with their total power reaching 600 megawatts. It is 2.5 times more than the respective figure in Finland (246 megawatts). Building wind farms in Russia has led to localisation of production of the main components of a wind turbine - that is, nacelles, blades, towers, generators, and control systems - by Russian manufacturers. In our country there are three world-class companies conducting localisation programmes, two of which - Vestas and SiemensGamesa - are world’s top developers’ vendors. Rosatom develops its own localisation programme. Besides, in 2020 first elements of wind turbines - 48 blades - manufactured in Russia were supplied to the EU states.
In Russia some regions have carried out a nearly complete transfer to renewable energy. For example, the share of renewables in the energy balance of the Republic of Kalmykia has reached 90%.
It is worth mentioning that in the field of developing wind energy Russia has been cooperating exceptionally well with Finland – take the example of Fortum. By the way, the share of the wind farm components manufactured in Russia is relatively high - 65 per cent - which provides for additional workplaces in industry.
As we know, in the coming years Finland is planning to increase the share of wind power in generation partly as an implementation of the European Union Strategy on Offshore Renewable Energy (300 GW by 2050) presented in November 2020. According to the study made by Gasum company for Finnish Wind Power Association (FWPA), by 2030 wind power production will reach7-9 GW.
Russia and Finland have an outstanding experience in developing wind energy in Russia. So why shouldn’t we join our efforts and start cooperation in Finland? We might provide services or vessels for dredging, construction of towers, nacelle and equipment lifting, supply foundations and related equipment. This might stimulate the development of some Russian and Finnish industrial sectors and create additional jobs which is relevant in the current situation.
Currently there are some active projects for developing materials for wind farms that will operate in harsh climatic conditions in the Arctic region.
Speaking of Arctic, as a member of the Arctic Council and Barents Euro-Arctic Council, Finland is a strategic partner for Russia. We have common interests in research as well as similar views on the future of the region. We need to support the initiatives of each other in creating infrastructure for Arctic regions, developing Arctic shipbuilding and tourism, supporting indigenous people, and resolving the issues of climate change and ecology.
In 2021 Russia will take over the chairmanship of the Arctic Council till 2023. The program of chairmanship is still under development and some issues I’ve mentioned above will be implemented in the final document.
On 25th of December 2020 an Action Plan for implementation of the Strategy for Developing the Russian Arctic Zone until 2035 was presented to the Government as well as a new State program for the development of the Arctic Zone. This program defines support for investment projects aimed to create about 30 000 new jobs in the region till 2024. Moreover, both documents emphasize the need for investments in environment protection and supporting R&D.
Expanding the issue of decarbonisation, we should underline the technologies applied in production and distribution of hydrogen fuel.
Hydrogen continuously gains attention as a perspective means of decarbonising economy. At the moment hydrogen is primarily used in traditional sectors, with its production being based on fossil fuels. However, in future, hydrogen market will experience significant growth. It will require stimulation of demand for hydrogen projects, as well as expansion of support provided for them. Some countries have already presented their respective strategies on this matter. Moreover, last year this sphere embarked on a path of exponential growth.
Russia is becoming increasingly interested in hydrogen energy. Last two years saw notable changes in this area.
Energy Strategy of the Russian Federation for the period up to 2035 mentions hydrogen energy as one of perspective areas of development.
In October 2020, a roadmap for developing hydrogen energy in Russia for the period up to 2024 was adopted.
Few pilot projects with active participation of Rosatom and Gazpom are planned including creation of low carbon hydrogen production, development and implementation of gas turbine powered by methane and hydrogen, construction of a pilot train on hydrogen (hydrotrains) and hydrogen production at nuclear power plants.
Cooperation between Russia and Finland in the field of hydrogen energy has real prospects due to several factors. First of all, geographical proximity to the main potential markets.
Second, Russia has resources (natural gas, water, etc.) and generating capacities within the Unified Energy System, and Finland’s know-hows in green energy provide opportunities in producing hydrogen by various methods - steam-methane reforming in combination with carbon capture and storage technologies, electrolysis using energy from renewables and nuclear power plants.
Thirdly, the existing gas transportation system in our countries stimulates the creation of hydrogen production from natural gas and its export both by pipelines and in liquefied form.
Moreover, there is an opportunity to carry out joint pilot projects for public transport powered by hydrogen in Finland because in 2019 the first hydrogen tram was successfully launched in Saint Petersburg. Russia expects to start mass production of hydrogen trams in 2022-2023.
Another important field for cooperation – high tech transportation services - low carbon space launches.
Russia is one of the leaders on space launch market delivering cargos on Soyuz launch vehicle. At the same time Russia pays a lot of attention to developing high tech transport services aimed at lowering carbon emissions.
Finnishmanufacturerofmicrosatellites ICEYE actively uses Russian services for delivering its satellites to the orbit. For instance, in July 2019 and in September 2020 Finnish satellites were launched into space by Soyuz-rocket from the Voctochny and the Plesetsk Cosmodrome.
It is expected that in few years Russia will be ready to offer Finland space launch services with minimal emissions of greenhouse gases by means of reusable launch vehicles.
The Progress Rocket Space Centre is currently developing a clean energy powered launch vehicle Amur – LNG.
Intellectual systems for transportation are another area of cooperation between Russia and Finland.
Moscow is currently launching an application based on the Mobility as a Service (MaaS)- concept, which provides for tailoring transportation around the city for the personal needs. The application will consider all means of transport, real-time traffic situation, and recommend optimal, cost-effective ways of getting to the destination point with, keeping the use of fossil fuels to the lowest possible level.
A unified transportation MaaS platform will be launched in Moscow in the fourth quarter of 2021. Finland has already started using a MaaS intellectual transportation system in Helsinki.
In December 2020, Russian and Finnish IT companies showed their interest in developing MaaS concept at a regular session of the Business Council of Russia and Finland.
An example of overcoming economic crisis by developing long-term international economic plans, programmes, or strategies can be found in many countries’ experience. Perhaps, it is the implementation of the mentioned programme of strategic cooperation that will provide us with opportunities to develop cutting-edge technologies, which will make us feel more confident on new high tech markets. Actually, we do have the necessary capacities and preconditions. I would also stress that the presented list of perspective areas for developing our cooperation is far from being comprehensive and does not intend to mention all the drivers of growth. It is business and science circles who develop our trade and economic relations, and it is their ideas to become the motor of this process. The task of government officials and development institutions both in Russia and Finland is to provide them with the necessary professional support.
As I’ve mentioned many times today, Russia and Finland have experienced many decades of successful economic cooperation. Finland is still one of our main trade partners in the Northern Europe as well as in the European Union. Crises, sanctions, ambitions of political establishment – they come and go. But states’ strategic interests and dreams of people on both sides of the border for peace and welfare stay. And we consider dialogue and cooperation based on mutual benefit and efficiency the key to preserving our good neighbourhood relations and developing of economic ties.