I would like to begin by thanking Mr. Pentti for his kind words and by greeting all those present at this meeting of Finnish and Portuguese businessmen. Thank you for coming here today. I hope this meeting will contribute to making both Finland and Portugal more familiar with each other and aid the development of economic and trade relations between our two countries.

S.E. o Ministro da Economia, Dr. Carlos Tavares
S.E. o Secretário de Estado do Turismo, Dr. Pedro Antunes de Almeida
S.E. o Embaixador de Portugal em Helsínquia, Embaixador Filipe Guterres
S.E. o Chefe da Casa Civil do Presidente da República, Embaixador José Filipe de Moraes Cabral
S.E. o Chefe do Protocolo do Estado, Embaixador Eurico Paes
Assessor para as Relações Internacionais do Presidente da República, Dr. Bernardo Futscher Pereira
Consultor para os Assuntos Económicos do Presidente da República, Dr. António Mendonça Pinto

ICEP
Dr. Pedro Líbano Monteiro, Presidente
PORTUGAL TELECOM, S.G.P.S. S.A.
Eng.º Francisco Murteira Nabo
A E P
Eng.º Ângelo Ludgero Marques
GRUPO VISABEIRA
Eng.º Fernando Campos Nunes, Presidente
SOGRAPE- Vinhos de Portugal
Dr. Salvador da Cunha Guedes
ATLANTIS/VISTA ALEGRE
Dr. Bernardo de Vasconcelos e Sousa
A I P - Vice-Presidente / Administrador da CUF SGPS
Eng.º João Dotti
CIP - Vice-Presidente / Administrador da MGlass
Dr. Duarte Raposo Magalhães
CONFEDERAÇÃO DO TURISMO PORTUGUÊS
Dr. Atílio Forte
EPM-SGPS
Eng.º António Galvão Lucas, Presidente
VILA GALÉ HOTÉIS
Dr. Jorge Rebelo de Almeida
GRUPO PESTANA
Dr. Dionísio Pestana
PROFABRIL
Eng.º Miguel Catalão

The great geographical distance separating Finland and Portugal does not prevent us from being quite close in other fields or from sharing the same project of society that is the European Union.

From the early 60s, Finland and Portugal understood that in an increasingly interdependent and globalised world economic integration is a factor of development and progress. In 1960 Portugal was a founding member of EFTA, which Finland joined in 1961. It was also the idea that there is no better alternative to European integration that in 1986 led Portugal to join what was then the European Economic Community, and in 1995 Finland to join the European Union. Eventually, in 1999, we were both founding members of economic and monetary union. Today we share the same currency, which is much more than it appears to be. As a result of its symbolism and integrative potential, the euro is in fact more than a currency that is common to several countries. It is also a symbol of the European identity and a catalyser of the deepening of European integration.

The last decade saw profound and rapid changes that significantly altered the operating mode of the European economies and raised new general policy issues such as, for instance, the revision of the role of States and the need for European governance, as I have mentioned on other occasions. At this meeting today, the subject being what it is and not having much time in which to talk about it, I will restrict myself to enumerating the main landmarks of European integration and then indicate some of the challenges for the future of Europe, with particular emphasis on the economic area; bearing in mind the current situation of the Portuguese economy, I will then show that it is both possible and advisable to count on the effort of Finnish and Portuguese businessmen to develop economic and trade relations between our two countries.

Ladies and gentlemen,

The creation of the European single market between 1986 and 1992 signified remarkable progress both for European companies and for consumers. Companies now have a huge market at their disposal, can grow and function on a larger scale with the corresponding economies of scale. Consumers, on the other hand, can now more easily resort to a wide range of suppliers and buy from those offering the best conditions of price and quality.

The European single market, now more "single" with the creation of the euro, is the support and strength of the European economy. It is nevertheless important to acknowledge that it is not entirely completed. We still have some way to go towards liberalising and opening some markets such as the energy and financial services markets, for instance, and developing the necessary regulations to prevent oligopolistic behaviour by companies. On the other hand, together with opening markets, it is also crucial to pay due attention to the economic and social cohesion policy to level the playing field, as well to competitive conditions between States that are more or less developed. From this perspective, the economic and social cohesion policy was and continues to be a condition for the feasibility of the European single market, and more so now with the arrival of the European single currency.

In turn, the creation of economic and monetary union, which culminated in the euro being in circulation since the beginning of this year, not only completed the European single market with all the advantages of a single currency but also has the potential to make the European Union evolve towards more advanced forms of political integration. In the meantime, having replaced national monetary and exchange rate policies by a single monetary policy, the economic and monetary union needs to fine-tune the co-ordination and management of economic policies, particularly the monetary and fiscal policies, to achieve a good European policy mix.

I believe, above all, that the need to correct a certain deflationary bias is widely acknowledged, by giving as much weight to promoting economic growth as to the control of inflation. As I said less than a week ago at the European University Institute in Florence, the need for fiscal discipline is undeniable but I believe there are ways of revising the stability pact that will preserve that objective whilst simultaneously correcting the defect I mentioned above.

Lastly, the largest enlargement in the history of the European Union, which may already take place in 2004, will raise the number of Member States to 25 and expand the European single market to approximately 500 million consumers. Enlargement on this scale places new challenges for the European Union. It is therefore vitally important that the reform currently being discussed at the European Convention, to be negotiated at the next Intergovernmental Conference, ensures an economically effective and democratically legitimate functioning of the European institutions.

The European Union has historic and political responsibilities with regard to the countries of central and eastern Europe. Knowing the benefits we gained from European integration, Portugal is confident that enlargement will be successful. However, this requires that the European Union carry out suitable institutional reforms and provide essential resources to finance the needs of enlargement.

As I said, although apprehensive about its impact on the Portuguese economy, Portugal supports enlargement. This apprehension is linked not only to the possible insufficiency of Community funds and their redistribution, but also to the fact that some direct foreign investment may go elsewhere and competition from new Member States with regard to Portuguese exports to third countries will increase. Such fears should be taken into account but not be exaggerated, nor should they make us forget the opportunities that enlargement also gives the Portuguese economy and which our businessmen should use to their best advantage.

Ladies and gentlemen,

The Portuguese economy is currently in a difficult situation but I am convinced that with the efforts and co-operation of all the Portuguese, businessmen in particular, we will overcome these difficulties.

As a small open economy, the slowdown in the economic growth of our main clients has adversely affected economic activity in Portugal. But we should not blame our difficulties on adverse international economic conditions. They are also the result of a difficult transition the Portuguese economy is making to a more demanding, simultaneously richer and more sustainable growth model.

A growth model based on cheap, abundant, unproductive labour was never good and is totally obsolete today, not only due to our internal situation with a relative shortage of labour (I remind our Finnish friends that Portugal today is a country of immigrants) but also to the international situation, with the growing globalisation of the economy and the forthcoming opening of the European Union to countries where wages are considerably lower.

The Portuguese economy is currently replacing its growth engines. On the supply side, economic growth must occur more as the result of increased productivity than of employment. In the long run this is the only way to raise the standards of living of the Portuguese. On the demand side, economic growth must be driven more by investment and exports than by consumption, to reduce the external imbalance and increase the country’s productive capacity, both of which are essential conditions for lasting growth.

Bearing in mind the framework I have just outlined, I would like to take this opportunity to address directly the businessmen here today. Wealth is created in companies through the combined effort of entrepreneurs, managers and workers, and from there distributed. Without entrepreneurs’ strategic vision, innovative drive and organisational capacity, there can be no economic development.

I would like to remind Finnish companies that Portugal is now a modern and attractive country. Since joining the European Economic Community in 1986 Portugal has invested considerably in creating infrastructures, particularly roads and telecommunications, and in human resources, education and vocational training; it undertook a vast privatisation programme that intensified the role of private enterprise and reduced the weight of the public sector on the economy; it liberalised practically all the markets of goods and services; and a draft labour law is currently under public discussion. Portugal is therefore a country that has the material and institutional infrastructures to support economic development and share with Finland the entire acquis communautaire of the European Union, the best guarantee of political and economic stability one can offer a foreign investor.

Portugal is also a country that manufactures quality products at competitive prices. Nevertheless, trade between Finland and Portugal - despite being partners in EFTA and in the European Union but possibly due to their physical distance - has never really taken off. Last year we exported goods and services to Finland valued at little more than 175ME and imported approximately 210ME from Finland.

The development of international trade is a value added game in which both sides win. I therefore challenge all Portuguese businessmen, particularly those accompanying me on this visit, to make every effort to penetrate the Finnish market. I invite Finnish businessmen, especially those here today, to become familiar with and buy more Portuguese goods and services. The excellent quality-price ratio of Portuguese products in various fields is nowadays internationally acclaimed.

Direct investment between our two countries is almost negligible and it would be mutually advantageous to expand it. Portugal needs and is making a great effort to attract direct foreign investment. Once again, I invite Finnish businessmen, alone or in partnership with their Portuguese counterparts, to invest more in Portugal. I would also remind you that investments by Portuguese entrepreneurs in Finland would also benefit the Portuguese economy if it promotes Portuguese exports and brands.

I am certain that our economic diplomacy, ICEP managers and Portuguese businessmen, starting with those here today, will be happy to inform and encourage their Finnish counterparts to import more Portuguese products and to invest more in Portugal. The entrepreneurs accompanying me on this visit, representing important sectors of the Portuguese economy, also testify to the hope and the trust I have in the development of economic relations between Finland and Portugal.

Ladies and gentlemen,

I will end with two final remarks. The first is to express the wish that Finland and Portugal may, within the European Union, defend the principles of equality and development of States so that in addition to being an enormous single market, Europe can also be a large space of citizenship and solidarity between the European people.

The second is to express a vote of confidence in Finnish and Portuguese businessmen and hope that either on this visit or in its aftermath, new contacts and new businesses may emerge, to enable economic and trade relations between our two countries to develop in a balanced and mutually advantageous form.