Democracies have not been able to cope with social media and with modern technology yet, and they're losing the struggle. We also see big tech companies in many ways being more powerful than states. So you can ask the question, you know, is Anthropic or is Facebook more powerful than Norway and Finland?
Hi everyone, I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund. And today I'm in really good company with Alexander Stubb, the President of Finland. Finland has 5 and a half million people, a 1,340 km border with Russia, one of the happiest countries in the world nine years in a row. It punches far above its weight and so does President Stubb. When Europe needs a way through to the White House, Alexander is often the one who gets the call. Earlier this year, Alexander wrote a book about how the old world fell apart and who decides what comes next. I've really been looking forward to this. Alexander, be welcome.
Oh, nice to be with you, Nicolai.
In short, what's the most important message in your book?
The most important message is that the world order is changing much like it changed in 1918, 1945, and 1989. And the ones that are going to decide what it looks like is going to be the Global South, and the choice is between multilateral norms, institutional order, and cooperation versus multipolar, transactional chaos and conflict.
Why is the South going to decide the future?
Because they basically have the size and scale to do that in terms of population, economy, and technology. So the end of Western dominance is over. But I don't think the East is going to dominate either. So, we're going to start getting a whole bunch of new players. And my vested interest coming from a small country is that it would be a multilateral system based on the UN. But that means that the UN has to be reformed so that the South has agency in it.
The African leaders say that we in Europe we just come and wag the finger whilst the Chinese come with the capital. Is that a worry for you, that the Chinese influence in the South?
Yeah, I mean definitely the Chinese have played the long strategic game much better than we Europeans. You know the good old saying goes that a Western leader came to an African country, landed at an airport which was built by the Chinese, drove down a highway which was built by the Chinese and then gave a press conference in a hotel built by the Chinese saying that you should not be cooperating with the Chinese. And I think that's sometimes the mentality. So my take is that we need a more dignified foreign policy. We need to be more humble. We need to wag the finger a little bit less and do a little bit more concrete cooperation.
You say that the West's mistakes wasn't bad intent. It's just that we just saw the world through our own eyes. So what did we get wrong?
Well, I think it's quite normal. I mean, we're all prisoners of our own identity. I mean, you and I are Scandinavians or Nordics. We're Europeans. We're very Western-oriented and we've been born or at least had our professional life in sort of a post-Cold War order. So that sort of skews what we think about the world and what we now have to understand that in order for you to be able to survive in this new world, you need to change. What we got wrong was this sort of innate arrogance that history ended and the West would kind of dominate and everyone would follow. And that's not the case anymore. You look at the Gulf States which are extremely prosperous. You look at India which is now the most populated country in the world. You look at some of the big players in Africa like Nigeria, South Africa, Egypt. You look at Brazil and Argentina and suddenly you realize that it's not the West that dominates anymore. And of course an additional spice to this comes with the new US administration which has quite a different approach to multilateralism than many of us in the West in general.
And some additional spice from the fourth power. And you and Mark Carney wrote this summer that we now have this fourth block incoming, coming technology block built on compute, data, and AI. So how is this going to pan out? Is that now the most powerful of the four you think?
Yeah, it's not really a fourth block as such. I mean, if I would rename my book, it would be the rectangle of power because I had the Global West led by the US, but I think now out of choice and very proudly the US would not want necessarily to lead that block anymore. So I would call us perhaps the Global North, but you know, Mark and I think obviously that technology, especially AI, is going to change everything. It changes the way in which we work in the economy. It changes politics and the way in which we communicate. It changes war and the way in which we conduct it. And it changes science and the way in which we are as human beings. But of course this is about access. So my argument is that we should see this more as a win-win not as a transaction because AI of course if you want to dominate you need two things. You need compute so kind of data and capacity to handle it and secondly you need energy or more specifically electricity and I think we need to have a balance between the East, West, North, and South on this and think that this is not a game with you know only US versus China it's much more complicated than that.
How are democracies adapting to the new technology?
Badly. And the reason is that you know democracy as such was originally created say in the 1700s by the likes of John Locke and Montesquieu and Rousseau and Hobbes and others to be very slow and cumbersome you know sort of back deals and you had a lot of time to respond to things and you know the US constitution was basically created in secret as a compromise and you don't have that luxury anymore you have to react to everything all the time and you know coming back to the book. The original version actually of the working title was digital democracy or digital dictatorship. And I think you know democracies have not been able to cope with social media and with modern technology yet and they're losing the struggle. We also see big tech companies in many ways being more powerful than states. So you can ask the question, you know, is Anthropic or is Facebook more powerful than Norway and Finland? And I think it's a legitimate question and political science can't necessarily give you the answer.
Well, we see it in financial markets. The market capitalization of some of these companies are bigger than countries. Do you think AI will be an equalizer or do you think it will amplify injustice?
It can go both ways and that depends on the choices that we make in the upcoming years. I mean if you look at the mix between biology and technology then it can really be a destabilizing factor which creates different types of Homo sapiens. So when you start doing DNA manipulation or sequencing of genomes then suddenly you start creating different types of human beings. I think Harari talks quite well about what he calls a useless class. So at least you know in the fight between capitalism and communism you always had the choice that the working class was useful for the capitalist system. But what if we move into a world where that is not the case anymore? What does that mean for governmental and societal structures? And what I find with a lot of the big tech guys, you know, who are obviously doing tremendous advances for mankind, they have a very limited understanding of what the societal impact is. I mean, apart from a few specifics like Demis Hassabis who works very much, you know, AI for good and he's looking at different types of ways of controlling frontier AI. So my argument here is, Nicolai, it can go either way. It can be an equalizer or it can be the creation of different types of human beings, Homo sapiens.
Well, another person, Bill Gates, he is advocating creating a domestic and international framework for dealing with AI. What are your thoughts about that?
Oh, I definitely agree with that. But I'd be looking at the stuff that Demis Hassabis and other tech leaders are working on right now because what we have understood is that regulation is always going to be one, two, three years behind. So we need some kind of control bodies that can deal with this and make sure that frontier AI, you know, doesn't give us an apocalyptic result in for instance cyber attacks. And because things are advancing so fast, legislators can rarely sort of hold up. So I do think that we need to start probably a little bit local and I think the best place to start is the US followed by perhaps Europe and China where we start looking at these new rules and containment in a new kind of a way and then at the end of the day you take it into some kind of a bigger governance body like the United Nations which I still think that should be the ultimate goal in trying to preserve mankind and this sort of technological revolution.
Given how we now embed AI into weapons and cars and batteries and research and into everything pretty much. Do you really think it's feasible to get the US and China to cooperate on this?
I think out of necessity, yes. So that's why it's kind of good that there's a certain balance of power here with critical minerals and capacity to compute and the power of the chips and then the companies. Is it a closed system, is it an open system? Who can use it? Who can't? And you know, I do think that there needs to be a dialogue between China and the US, Chinese companies, and American companies, but of course, you know, Europe, the Global South and the rest of the world needs to be involved as well. I mean, we used to talk about Europe as a regulatory superpower, you know, setting the standards for trade. You know, whether you liked it or not. Now we need kind of an AI regulatory superpower to make sure that things don't run astray.
Moving on to the new order then you call your answer values-based realism. What does that mean exactly?
Well, it means two things. One is that you stay true to your values. So in your case, in my case, Finland, Norway, you know, the Nordics, West and Europe, it's probably about democracy, freedom, rule of law, human rights, fundamental rights, international institutions. That's the sort of starting point of our sort of value base, equality and justice as well. And then realism again means that not everyone in this world will share those values. There'll be countries that have different identities. I believe actually that human rights and fundamental rights are universal. But there might be someone else who doesn't believe that. And my realist side comes from that you cannot solve these problems of the world just between Finland and Norway. You know, climate change, artificial intelligence, energy, development, environment, these are all global problems and we need to solve them globally. And that also sometimes means compromise. You don't need to compromise with your own values, but you need to realize that in order to get results, you need compromises.
If you have all these ad hoc coalitions with a different set of countries for every problem, how is that going to work in practice?
It's going to be extremely messy and we're starting to see that already. And I think the difference between diplomacy and business is that in diplomacy you look for win-win situations and quite often for compromises whereas in business it's quite often a zero-sum game and a transaction and we need to understand that the world will not work on transactions. It will work on compromises and on solutions.
You previously compared this with 1918, 45, 89 and then you talk about a new balance. What will the new balance look like and when could we foresee something like that? What is it?
You kind of have three options if I may. First one is that we sort of continue with this almost chaotic transactional world where we see an increase in conflicts like you know Russia's war aggression on Ukraine or the Middle East or Sudan and many others where there are no norms and rules on warfare and on conflict etc etc and at the same time you see this emergence of a lot of ad hoc coalitions quite unholy alliances as well which are not bound by values but purely by interests. The second option is you know some kind of a multipolar world where there are some rules and norms but they're quite iffy and they're very often based on the pure sovereignty of nation states and very little compromise. And it could also be that we move towards this world of regional integration like the EU or ASEAN or Mercosur or the African Union. But my ideal is that these sort of regional multilateral institutions come together in the United Nations. But in order for that to happen, we need to reform it. So we need to reform the Security Council which has five permanent members with veto powers. We need to have at least one country from Latin America, two from Africa and one more from Asia. We need to look at different solutions because we can't solve these world problems just with regional transactional deals.
Alex, let's zoom in a bit on Finland. Why is it such a happy place?
Well, you know, I don't know. I think if you start from Maslow's hierarchy. You could say that we have a lot of the basics in life in order much like one would have in Norway or in Sweden or in Denmark or in Iceland, the Nordics in general. But I think it begins from this sort of innate understanding of equality and justice and then trying to implement and incorporate that into a society which then brings us to, you know, a welfare state where you really should have an open economy. But if people fall down the system, you have a fairly good and strong system of security and welfare. There are other elements that have to do with happiness. For me, it's about, you know, education. I think that's a big part. If you have a civilized population by and large who understands, who reads, who follows, I think that gives you meaning in life. And then finally, I think we have a very close attachment to nature. So those things, you know, make the country quite happy. And I think we were the happiest country in the world for nine years running. Now, of course, the feeling is also quite subjective, but I think, you know, Finns are quite proud of the fact that we're happy. We don't always show it. You know, we don't walk around the streets and smile all the time.
Happiness is very subjective, but the best way to measure it is to actually ask people, how happy are you from 1 to 10, you know, there is no better way to measure it. When you look at the factors going into this, what do you think is the biggest, what's under threat? Which part of this are you the most worried about?
Polarization and inequality in society. You know, we see that in a lot of liberal democracies. I mean, I can mention, of course, the United States, which is probably the most polarized liberal democracy in the world right now. And then, you know, we get into difficult identity-based issues of immigration and race, skin color, even. But I think the key here is sort of this promise that globalization gave to everyone that everyone will be doing well. But if people feel that well this free trade system or these international institutions are not delivering for my needs that would be a big worry for me and we need to have that dialogue. We need to be open about it. We need to discuss it and make sure that everyone has at least an equal opportunity. But we also need to understand that the world is never going to be perfect. Not Norway, not Finland, you know, we don't live in a utopia. It's always going to be a balance. But people need to have the feeling that we're working for each other in one way or another. That way, we will avoid the threat of polarization, division.
In Finland, you have this special split between the Prime Minister who does the domestic things and the President. You do the foreign policy and the military. Do you also have influence on the domestic scene and topics?
No, not really. Not constitutionally, but I guess as what we would call in Finnish a value leader, the president always has a voice and that voice is quite often a megaphone. So if I say something linked to domestic policy then it becomes a subject of discussion and I feel that I should not meddle in issues that have to do with let's say the state budget or the allocation of resources but I do feel that I can and must have a voice in issues that have to do with values and ethics and well-being. So I can set the target in these questions quite high but people do understand that I'm not the one deciding how much money goes to education or how much money goes to a specific road somewhere or to a hospital. And I think the Finnish system is actually quite ideal if we want if and when we want to maximize our foreign policy power.
In the sense that the President really is focused on foreign, security, and defense policy.
And I'm also the Commander-in-Chief. Whereas the Prime Minister is focused on domestic issues and the EU. So the most important thing is that the link between the President and the Prime Minister is good. Then you know the President can do a lot of the stuff outside of Europe and some bilateral stuff in Europe whereas the Prime Minister focuses on EU affairs. This system is ideal. There's no other world leader that has as much time for foreign policy than I do and I think that's quite good.
Is the Prime Minister ever envious that you get so much traction on the international scene?
No. You see, I've been Prime Minister myself. So I've always thought that it's extremely important that the President cooperates hip-to-hip with a Prime Minister. So for instance, you know, yesterday morning I gave him a call and asked, 'How are things going?' You know, what does your agenda look like this week? Where are you going to travel? We're going to have an Arctic summit at the end of the week up in Rovaniemi in Lapland. We coordinated that. So you know, envy is probably the wrong word, but put it this way. The Prime Minister's job is much tougher than the President's job and the reason is quite simple and it's quite almost sort of humane is that unfortunately a lot of people for ideological reasons want the Prime Minister to fail. I certainly felt that as a PM but most people want the President to succeed because he or she is in charge of foreign policy so the starting point for the PM and the President are quite different.
I guess in a way it's like you know if you run the sovereign wealth fund everybody wants you to succeed too because they all want to make more money. It's a bit of the same thing.
Yeah. I guess you could say that you know the President is the Chairman of the Board and the Prime Minister is the CEO and then you can figure out yourself who has more pressure.
After the Cold War most countries in Europe cut defense spending but you kept it up. What did you see that the other people didn't see?
Well first of all we didn't join NATO after the Cold War. And I say kind of unfortunately I was one of the few that advocated Finnish NATO membership. I felt that we should have integrated into the West 100%. But we did join the European Union and that helped out. It wasn't so much what we saw after the Cold War but it's what we had seen during the Winter War, the War of Continuation. So from 1939 to 1944 we always felt that you know we were living next to a big neighbor who had the potential of aggression and we decided that if we don't join NATO we need to maintain a strong and independent defense especially the land forces but also the air forces. That's why right after the end of the Cold War, we decided to buy 64 F-18 fighter jets. That's why we kept conscription, so obligatory military service for men. That's why we went to the secondary market to buy artillery and made sure that you know if a difficult day came up, we would be prepared. And the good thing with that was of course that we were so NATO compatible that when we then ended up applying for NATO membership after Russia attacked Ukraine in 2022, it was pretty much a foregone conclusion and we had the quickest accession negotiations in the history of the alliance because we were more NATO compatible and more NATO ready than most member states in NATO themselves.
Is NATO in a crisis today?
No, I think NATO is in a transition. So again I try to look at the sort of long arch of the alliance both as a student of it and as a President of Finland. So the first phase was NATO 1.0 when it was a deterrent to the Soviet Union in the Cold War. The second phase was NATO 2.0 when it started to focus more on peacekeeping and crisis management around the world. You know, Finland was involved in peacekeeping in Kosovo and in Afghanistan, just to name two. And now we're looking at a transition where Europe will take more role, especially conventional forces inside the alliance. But I wouldn't say an alliance is in a crisis when it's increasing its defense expenditure from 2% to 5% when defense industries are booming all around Europe and the United States. But there is a burden shift going on and that's for me is a transition not a crisis. The US will remain involved in NATO because it's in their vested interest to do so.
And more European NATO, how does that change NATO? What is it? What's different?
Well, it means that you know the NATO countries that are in Europe take more responsibility for their conventional forces and of course France now also doing it on nuclear weapons. So it means that you know you ramp up your land forces, you ramp up your air force and if you are a sea-bearing nation, you ramp up your navy, you work a lot on cyber, you work on space, you fill up your stockpiles, you integrate your military operations with NATO operations and especially with different types of responsibilities. The United States has been quite clear on a few capabilities that it will not provide anymore. Not during peace times nor in a crisis situation and some of them we need to basically replace with European goods if you will but some are not necessary because they're things that we don't need. The most important thing is that we do this in a calm, cool and collective manner. And I think that's the trajectory that we have right now and I'm quite confident that we'll do it.
