---
title: "The Economy Holds, Finland Does Not — Sami Miettinen on 23 minuuttia #708"
titleOriginal: "Sami Miettinen: Talous kestää, Suomi ei | Heikelä & Koskelo 23 minuuttia | 708"
description: "A year after the Uniper negotiation, Miettinen returns to score it: what the worst case would have been, why the German state's stake was priced the way it was, and what Germany did with the gas price the moment it took control. From there to why he is unsentimental about Germany's industrial decline, why Finland managed to get poorer in nominal dollars, where the next banking crisis actually sits, and whether the BRICS bloc is anything to worry about."
format: "podcast"
show: "Heikelä & Koskelo 23 minuuttia"
episode: "708"
hosts: ["Jussi Heikelä","Arto Koskelo"]
date: 2023-08-28
duration: "46:32"
language: "fi"
original: https://www.youtube.com/watch?v=rGBmcoCKqGs
relatedEpisode: https://www.neuvottelija.com/media/23-minuuttia-489-even-bankers-are-poor-in-finland/
canonical: https://www.neuvottelija.com/media/23-minuuttia-708-the-economy-holds-finland-does-not/
---

# The Economy Holds, Finland Does Not — Sami Miettinen on 23 minuuttia #708

The Credit Suisse mug he brought to the last appearance is now, he notes, a memorial: the bank
no longer exists. The year between the two visits has been eventful.

## Scoring the Uniper negotiation

A year on from the July 2022 talks in Berlin, the hosts want a verdict. Miettinen's is that it
went the way Finnish state ownership steering projects generally go, and that it will sit in the
history books alongside Sonera's 3G licence purchases and Stora Enso's acquisition of Consolidated
Papers as Finland buying badly abroad and taking the hit. He also credits the current government
for concluding that it does not know how to play this game and deciding to sell roughly three
billion of holdings.

His counterfactual is the one he set out on Rahapodi: negotiate it as **state to state**. Germany
had a gas problem created by its own energy policy — at the time the Nord Stream pipes were merely
closed for "maintenance", with Putin turning the handle himself — and Finland could have offered
help with the crisis in exchange for terms, ideally an arrangement in which Germany nationalised
the German operations and Finnish taxpayers kept the rest. Uniper is not only Germany: its ten
gigawatts of German capacity is the largest block, but Britain and Sweden together are comparable,
and those are what Fortum went for and failed to extract.

On the numbers as they landed: roughly six billion of shares bought, half a billion recovered from
the German state, and — the part that matters — about **eight billion of debt taken off Finland's
back**. Both men note the framing at the time treated this as a victory, and Miettinen concedes
it was one relative to the worst case, in which those eight billion would also have burned. A
genuinely incompetent negotiator would have managed that.

The part that stings is the sequel. Uniper is now highly profitable and repaying the German state.
Miettinen's explanation is mechanical rather than conspiratorial: the moment it was nationalised,
the gas price to German customers went up and the money was recycled back through the company to
repay the state's support. Had the alternative scenario run, Germany could simply have let
Finland recapitalise the company indefinitely while a committee considered whether to raise the
gas price at all — the catastrophic branch, and it was a matter of a few months' timing.

On the negotiation itself the hosts ask what power moves were used. Miettinen's answer is that
there were none to speak of: the German side had a large delegation with a professional lead, and
Finland walked in with a simple objective — no more losses, cap it here and withdraw. When the
other side ran scenarios expecting a Finnish best-outcome position and found only a backstop
request, that was the negotiation. The German chancellor's involvement, he notes for accuracy,
was interrupting his own holiday to announce the result, not to conduct the talks.

## Germany, and why he does not mourn it

A technical aside that turns into an argument. German heating runs on **gas**, and the electricity
grid could not absorb a mass switch to electric heating even if households bought the radiators:
Finland has a single national grid in Fingrid, while Germany effectively has a northern grid and a
southern one which do not function as one system and are a long way from two-way flow. That is why
gas is a necessity there rather than a preference. Britain, Uniper's second-largest area, has the
same dependency through domestic gas boilers.

But Miettinen declines to worry about German decline. His thesis is contrarian and stated as
such: in a currency union it is **not a blessing** for the other members when one country runs a
ten per cent current account surplus on mercantilist export policy. Germany losing some of that
export engine's efficiency is, in his view, healthy for the rest of Europe — the idea that
maximum German exports are automatically good for everyone else he considers naive.

## Finland got poorer

The wealth comparison from the previous visit has moved, and not upward. Where a year earlier he
was posting about diverging curves, the update is that Finland managed to **fall in nominal dollar
terms** in an ageing population — and ageing normally adds wealth — with roughly fifteen per cent
inflation on top.

The comparison countries fell too: Sweden and Denmark more in absolute terms, because their
property leverage is higher and rate rises hurt more, with a weakening krona amplifying the
dollar-denominated fall. But they fell from considerably higher.

His prescription is the same one he has been pushing since: replace **inheritance tax with capital
gains tax on disposal**. The take has gone from €800 million to €900 million a year against €6
billion of annual state pension cost; the €900 million does not vanish, it simply moves into the
capital income pot and is collected later, and in exchange partial intergenerational transfer of
wealth becomes possible. It is in the government programme as something to be studied, and he is
guardedly hopeful.

## Where the banking crisis actually sits

Asked about a well-known short seller going heavily against the market, Miettinen is dismissive of
signal-reading in general and turns to structure instead.

2008 was subprime — badly structured, small, and slow to detonate. Today's subprime market is much
smaller, but exposures to good-credit borrowers are much larger, and banks have started selling
property portfolios below par. He expects Finnish construction companies and their suppliers to
fail, while noting Finnish flat prices bubbled less than elsewhere.

The mechanism to watch is a bank's balance sheet: roughly **four per cent equity and 96 per cent
other people's money**, of which about half is deposits — which are the customers' loans to the
bank. In the Credit Suisse and Silicon Valley Bank episodes it was exactly that half draining away
that produced the liquidity squeeze and the rescues. That remains possible, but he considers the
more likely seed of the next crisis a **rotting property loan book** at a lender that picked bad
customer segments. Rising rates have widened core banking margins enormously — Italy tried to
capture the spread for the state through special legislation — but a fat margin does not help when
your customers default.

## The blocs

On China versus the West, Miettinen's reading is that China has turned inward under Xi, driving
out expatriates and foreign investment, so explosions there propagate less than they once would —
though companies exporting into China take the hit. And as with Germany, he sees a China that
lives more on its own consumers' purchasing power as a **rebalancing** rather than a threat: the
dangerous configuration is mercantilist systems paired with over-consuming ones.

On the BRICS bloc he is unimpressed by the aggregate GDP argument and points at the composition:
the West has liberal democracy, more wealth and more room to flex. Finland, he notes, has
abandoned the old between-East-and-West positioning entirely and is now fully in the Western bloc,
which he considers the better outcome — Sweden's not-yet-complete integration is visible in how
much less secure a business trip there feels.

He is more interested in the self-criticism angle, citing Douglas Murray's argument that a
prosperous Western society has bought a package of self-reproach and generational apology, and
sometimes ends up apologising to the states doing the most damage. When the hosts tease him about
whether he will apologise for the term "Global South", he declines, at some length and with
evident enjoyment.

His practical note on the same subject: the Belt and Road debts are now coming due, and it will be
interesting to see how gracefully China handles collection from countries that cannot pay — the
role of the world's provider of foolish money being, as he puts it, surprisingly difficult.

## Finland's own industry

On Kilpilahti, Neste and Borealis, the hosts worry that the refinery was built around Russian
heavy crude. Miettinen is unbothered about the refining itself — the margin is on lighter Brent
now, the plant is efficient and has had a billion invested in it, and energy prices have come
down. What he objects to is the planning: a ten-year LNG terminal charter taken at a very high
price that now circles the Baltic because it cannot sit still, and a state ownership pattern he
summarises as buying dear and selling cheap — with the warning that the current government has
just as much opportunity to repeat it if it decides to sell Neste at the bottom.

His closing note on the debt-and-rates question is deliberately undramatic. The system has taken
a move from zero to five per cent surprisingly well, inflation has already removed something like
ten per cent of the real burden, and not every accumulation of leverage has to be popped with a
pin. Doom prophets, he notes, are always available.

Original recording (Heikelä & Koskelo 23 minuuttia): https://www.youtube.com/watch?v=rGBmcoCKqGs

From the same session: https://www.neuvottelija.com/media/23-minuuttia-489-even-bankers-are-poor-in-finland/

---

Cite as: Sami Miettinen, guest on Heikelä & Koskelo 23 minuuttia 708 — The Economy Holds, Finland Does Not — Sami Miettinen on 23 minuuttia #708, 2023-08-28, https://www.youtube.com/watch?v=rGBmcoCKqGs. Record: https://www.neuvottelija.com/media/23-minuuttia-708-the-economy-holds-finland-does-not/.