Finland presidential hopeful calls for EU investment bank to fund arms for Ukraine

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Good morning. A scoop to start: The head of one of Europe’s biggest business lobby groups has warned that red tape has hamstrung the EU’s post-pandemic recovery fund and made it “very, very difficult” to access, resulting in only 30 per cent of the money being disbursed so far.

Today, our Nordic correspondent hears from the leading candidates battling to be Finland’s president, while our Netherlands and Balkan correspondents explain why an EU delegation is visiting Bosnia.

Race to the Finnish line

Finland votes for a new president this week, and some of the leading candidates are coming up with novel ways of trying to support Ukraine, writes Richard Milne.

Context: The first round of voting for the president, who traditionally leads Finland’s foreign and security policy, is on Sunday. A second round will probably follow on February 11.

Frontrunner Alex Stubb, a former prime minister, told the FT in an interview that the European Investment Bank should change its statutes to be able to invest in arms.

Stubb, who used to be a vice-president of the EIB, urged its new head Nadia Calviño to back Europe’s defence industry as the continent tries to arm both Ukraine and itself in the face of Russian aggression.

“The European Investment Bank should change its rules so that investments and loans for the defence industry would be possible. It is an important measure for hard power in Europe,” said Stubb.

The EIB is currently banned from investing in the sex industry, gambling and defence — bar from dual use items like drones — among other things.

Stubb is not the only candidate in the running campaign on a Ukraine ticket.

Olli Rehn, a former EU commissioner and Finnish central bank governor, told the FT in a separate interview that the European Stability Mechanism and its €500bn lending capacity could be used to fund Kyiv.

He envisions his “plan B” will come into play if EU countries fail to circumvent Hungary’s blocking of financial aid to Ukraine.

But Rehn is struggling to gain traction. According to a poll published yesterday by the Helsingin Sanomat newspaper, Stubb leads with 22 per cent, followed by Pekka Haavisto, who until recently was foreign minister, at 20 per cent.

The former leader of the populist Finns party Jussi Halla-aho came in third with 18 per cent. Stubb would beat both in a second round, the poll predicted.

Haavisto told the FT “you cannot find very big political differences” between the leading candidates. He said it would be a question of experience, touting his four years in government and guiding Finland into Nato.

Chart du jour: Mind the gap

Leaving the EU’s single market increases regulation for any business trying to sell in both the UK and EU, resulting in huge costs. Martin Wolf argues that Brexit is performative politics, full of sound and fury signifying nothing sensible.

Checking in

A month after EU leaders opened the door to accession talks with Bosnia and Herzegovina, a troika is visiting to clarify the reforms needed before the troubled state can walk through, write Andy Bounds and Marton Dunai.

Context: After heavy pressure from neighbouring countries, the European Council in December offered to begin membership talks with Bosnia and Herzegovina if certain conditions were met.

Today, Ursula von der Leyen, European Commission president, travels to Sarajevo with the prime ministers of Croatia and the Netherlands to reinforce the message.

Diplomats note it is an interesting mix. Andrej Plenković of Croatia is one of the leading proponents of Bosnian membership. On the other hand, Mark Rutte of the Netherlands is among the biggest sceptics, because Bosnia has completed very few of the needed reforms.

However, the Netherlands is still dealing with the guilt of the Srebrenica massacre of 1995, when its peacekeepers failed to stop the Bosnian Serb army taking more than 8,000 civilians from a haven and killing them.

Rutte laid a wreath at the memorial in the town yesterday and visited Dutch troops serving with an EU mission.

However, Milorad Dodik, president of Republika Srpska, the Serb entity within Bosnia and Herzegovina, is reopening the wounds of the civil war that claimed more than 100,000 lives and displaced millions.

Dodik staged a celebration on January 9 to mark the 1992 declaration of independence by the Bosnian Serbs that led to civil war.

He hints that his republic could try to break away again — a move that would scorch any chance of EU membership.

What to watch today

1. EU-Egypt association council.

2. EU economy commissioner Paolo Gentiloni, Belgian finance minister Vincent Van Peteghem and EIB president Nadia Calviño participate in an EU sustainable investment conference.

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