The Finnish presidency will be burdened by bitter political wrangles, from the Middle East crisis to Russia as an energy supplier. Aside from these issues, the Finns want to focus on innovation - the crucial area in global competition where Europe is seriously challenged by Asia. This is an issue where the Finns have good credentials.

Fifteen years ago Finland was the first OECD country to put in place a national innovation system, a seamless co-partnership between enterprises, government and research institutes. At the same time Nokia was emerging as a global networking engine for many smaller Finnish IT companies. New ideas were cultivated within a holistic national system. An internationally top-ranking education system has also provided an ideal base for learning the new competitive chain of creativity, innovation and design.

Half a decade ago the international press built up a flattering cult-image for the country where, as the American magazine, Wired, put it, "the cultural mystery remains" and "the Finns have stolen the future". In his recent book, "Finland, the Cultural Lone Wolf", Richard D Lewis has continued the mystification theme of Finland.

At the height of the country's "great knowledge society" fame, Finns were flattered also by Professor Manuel Castells' idea of "the Finnish model", marked by the successful combination of an affluent society and world-class competitiveness.

The national psyche of the Finns is based on non-hierarchical thinking with daring and swift individual decisions and reactions. But there is also a remarkable social cohesion and mutual trust.

In their management style, modern Finnish enterprises reflect this psyche. They have moved to a "jazz band" model, constantly improvising and creating something new while continuing to play and jam.

When outsiders praised Finland as the world's most competitive country, there was a lot of backslapping among Finns. They felt superior. In 2002, they even established the mighty Millennium Technology Prize of ¤1 million (Bt47.6 million), cash-wise the largest international acknowledgement of its kind.

But everything was not picture-perfect. Finns were still complacent and content when experts told them that something is wrong when the most wired and competitive country cannot attract either talented immigrants or foreign investment. Finns want to keep their doors both closed and open at the same time. Social networking with foreigners still causes angst to Finns.

A capacity for world-class innovation is not enough. Marketing skills are also crucial. Finland has to ensure that its capacity for innovation is globally networked, going beyond the EU. In its own survival strategies it has to find ways to cooperate with leading foreign innovation centres in the most dynamic areas of the world. East Asian competitors have forced Finns to learn that in the new global economy you have to run hard just to stay in one place, and even harder to stay on top. Last year the first Finnish innovation centre abroad, FinChi, was established in Shanghai.

The networking vision has gone further than the Greater China area. Shanghai is seen as a future hub for the Pacific Rim knowledge-intensive activities, which run on the opposite North American coastline from Vancouver to San Diego. The latest conception is to establish another Finnish innovation centre in the Silicon Valley.

The economic and innovative dynamism around the PacRim, the exchange of ideas, talents and capital across the ocean, has never captured the imagination of Europeans. Because their world map ends in Japan, they have difficulties in comprehending the almost mystical sense of community that exists among the PacRim countries.

The Pacific psychology - a relaxed community spirit - is reflected in the Apec summit meetings where the heads-of-state wear barongs, batiks, silk jackets, Hawaiian shirts or some other casual outfit. The group photos look like happy class reunions.

On the other hand, the often sombre looking and moody Europeans appear in the EU-Asia summit meetings mostly in formal attire. In the group photos they seem to carry all the problems, worries and agonies of the Earth on their shoulders. No wonder, because they tend to put the most painful and irritating political problems on the negotiating table right away. During the Apec meetings, sensitive issues are often discussed on golf courses. Even Vietnamese officials recently hired Australian pros to teach them golf, this great Asia-Pacific networking game. It has taken a long time for the inward-looking Europeans to realise the implications of the power shift that is moving the epicentre of the world's economic dynamism towards the Asia-Pacific region.

Not only manufacturing, but also research and development activities are moving to East Asia. The simple truth is that R&D moves where production goes.

Among the legions of reports written for the European Commission is the one titled, "Creating an Innovative Europe", which was published last January. It provided further evidence of how emerging Asian economies are challenging the R&D leadership of Europe and even the United States.

The combined talent pools of "Chindia" could form a magic formula that might make Europe fall even more behind its self-imposed timetable to become the world's most competitive area by year 2010 - a target that has become a joke.

The signals of profound global change and challenges were picked up by the OECD and multinational enterprises long before the EU or the bureaucracies of its member states recognised them.

The new generation of corporate leaders in Finland also have a more sophisticated knowledge and understanding of global economics and politics than people generally imagine. They have access to the highest echelons of global political power. Their companies operate in their own economic space, in the spheres high above narrow-minded local politics.

Consequently, the Asia-Europe business dialogue under the Asem umbrella has not been as attractive as Brussels had hoped. International business leaders have their own networks and clubs.

Still the Finns expect 300 to 400 participants in the Asia-Europe Business Forum to be held in Helsinki September 10 and 11. At least the weather will still be good for golf and there are several excellent courses. The jazz is also first-rate.

The unassuming and asocial Finns could create a relaxed ambience - after all, they shocked the timid and schmaltzy Eurovision song contest last May with the heavy metal horror band Lordi.

Pasi Rutanen is the former Finnish ambassador to China and now retired as an OECD/International Energy Agency adviser in Paris.

Pasi Rutanen

Special to The Nation