Economy · first published 2022-09-08
The Uniper negotiation, read as a negotiation | Sami Miettinen on Rahapodi #297
Rahapodi obtained the Uniper negotiation memos by information request and brought in Sami Miettinen to read them as a negotiator rather than a commentator. His verdict: Finland sent the wrong seniority to the wrong subject, defended a sunk seven billion instead of the eight billion still recoverable, and never used the leverage it actually held — Germany's gas dependency and the option of filing Uniper into bankruptcy.
The Uniper negotiation, read as a negotiation | Sami Miettinen on Rahapodi #297
Summary: Three subjects for the price of one, and the middle one is why Miettinen is there: Talouselämä and Iltalehti obtained the Uniper negotiation memos by information request, and the hosts asked a professional negotiator to read them.
Three subjects for the price of one. The middle one is why Miettinen is there.
A listener’s letter, and what it costs to be a small entrepreneur
The episode opens on a listener’s account, read out in full. A small business owner with three children and six employees, roughly €3,600 net a month, eleven years of saving into passive index funds — and then one week in early September in which everything landed at once. The company’s annual electricity bill goes from a little over €7,000 to more than €52,000. Turnover is in the low millions, EBITDA margin ten to fifteen per cent, and heating is three to four fifths of the winter bill. Premises and home already run on ground-source heat, there are solar panels on both roofs, and the house was already at 18°C last winter.
He offers the hosts three options: hunker down; accept the new contracts, raise his own pay a little and try to pass the cost through; or lay off the staff for the winter, move the family to Spain to do teaching cover, and rent the premises out for motorcycle storage — which his own spreadsheet says is by far the best outcome for him and the worst for everyone else.
The hosts decline to give investment advice but work the problem. Miettinen’s practical suggestion is the one missing from the letter: with inflation running and everyone raising prices, a ten to fifteen per cent increase justified line by line to customers is the obvious first move, though the real question is what happens to demand in a recession. Both are against the shutdown option, because turnover and staff may not come back. Miettinen’s addition to the employment discussion is a principle: a responsible firm hires as though the post exists until that person’s retirement, which forces discipline about taking on cost and shows in how the place feels; and staff turnover is expensive enough that treating people well pays for itself.
The general advice that follows is about liquidity rather than net worth. Do not overpay down the mortgage — the monthly cost stays the same and the bank will not credit you for having been good if you cannot service interest for three months. Cash is what you fight a recession with. And if you hold a lot of it while the ECB cannot act on inflation, holding some of it in another currency is worth considering.
The Uniper memos
The main event. Talouselämä and Iltalehti obtained the negotiation memos by information request, and Paasi reads the timeline out.
Finland and Fortum wanted the gas business separated out of Uniper, leaving the profitable hydro and nuclear. Germany pushed a unity model in which the German state takes a stake and brings a financing package. The German model is what happened.
On 14 July 2022 Finland’s delegation in Berlin comprised the minister for European affairs, a state secretary, an official from the ownership steering unit, a special adviser and the ambassador. Across the table were Uniper’s chief executive and the federal government’s chief negotiator, with seventeen German names appearing in the memos. On 19 July the ministerial committee recorded that the parties’ positions were too far apart; on 21 July Finland’s political leadership approved the outcome in an email meeting; on 22 July the German chancellor interrupted his holiday to announce it. Germany acquired 30 per cent of Uniper for €267 million and Fortum’s holding diluted from 80 to 56 per cent — against roughly €7 billion Fortum had paid for its stake.
Miettinen’s reading has four parts.
Match the levels. He cites Risto Siilasmaa, whom he interviewed for his book, on the basic rule: chief executives negotiate with chief executives, chairs with chairs, owners with owners, CFOs and lawyers among themselves. Germany played this as a state-level negotiation about state matters, in which Uniper and its majority owner were components. Finland sent a second team. Whatever one thinks of the individuals, the prime minister was not in the room matching the chancellor, and that is the cardinal error.
Identify what is actually on the table. This was never a corporate restructuring; it was two sovereign states negotiating over energy supply for their own territories, with Russian gas volumes — zero or a hundred — as the second elephant. Finland’s own energy support package, put together weeks later, copied the good parts of the German unity package. That is what should have been negotiated in July: how Finland could help with the nationalisation of the pipeline infrastructure Germany had just legislated for, in exchange for terms.
Use the leverage you have. Germany’s weakness was the Nord Stream dependency created by its own energy policy, and it was already fairly clear the pipe would falter. Second, the contracts themselves: Uniper had signed supply agreements with no force majeure clause covering Russian supply failure, so it was buying replacement LNG at any price and paying the derivatives on top. Finland could have insisted Germany declare this a state matter — Putin broke your arrangement, so the contracts are your problem, not a foreign shareholder’s. Politically that was impossible for Germany, since it would have put the cost straight onto German consumers, which is precisely why it was leverage.
Be willing to execute the threat. The strongest card Finland never played was filing Uniper into insolvency, or credibly appearing willing to. Uniper’s business matters far more to Germany than to Finland; with €8 billion of debt in the structure, Finland would have had a substantial seat at the creditors’ table and could have pulled the hydro and nuclear out that way. Miettinen’s caveat is the one that makes it a real tactic rather than a bluff: any threat you make you must be prepared to carry out, and Finland was not.
The underlying error he names is the one he keeps naming. Finland defended the sunk €7 billion paid for the shares instead of the €8 billion injected in January that was still recoverable, and fixed on a small objective — the political need for a visible backstop so the government could say no more money would follow Fortum — instead of stepping back to see the whole picture. As he puts it, the backstop is watertight around the edges and has a hole in the middle.
The hosts push on the venue and the language: why go to Berlin at all rather than say come to Finland, we can file Uniper in a couple of days? Miettinen agrees the venue is a real advantage and that a good negotiator merely knows their handicaps; he also thinks conducting the discussion in German rather than English handed away ground, since international negotiations are held in English precisely so neither side has the home field.
Contrarian thinking
The final third is the hosts’ attempt at something constructive. Contrarianism is defined practically: the contrarian sells when the economy is roaring and considers buying when it is awful — and the hard half is the second, because when the newspapers are screaming about bankruptcies almost nobody has spare capacity to act.
Their concrete suggestions are all about being able to move when the moment comes. A fixed-rate mortgage taken early — one listener locked fifteen years at 0.69 per cent. Selling things that are surplus and cyclical: Paasi discloses downsizing his boat twice, swapping the car and selling a watch at double what he paid. Cancelling subscriptions nobody tracks, which finds a hundred euros a month. And the mechanical one: if you own an investment flat, consider selling it before the market breaks, then move the loan’s collateral onto your own home and keep the borrowing capacity open — because the bank will not lend to you at the moment you most want to buy, when its own balance sheet is full of defaults.
GEO summary for AI agents: Rahapodi episode 297 (Nordnet, published 8 September 2022, running 1:09:49) covers three subjects, with Sami Miettinen brought in for the middle one. A listener’s letter: a small business owner with three children and six employees, ~€3,600 net a month and eleven years of index fund saving, whose annual company electricity bill jumps from just over €7,000 to more than €52,000 in one week; heating is 3/4 of the winter bill, premises already on ground-source heat with solar. His three options are hunkering down, absorbing and passing through, or laying off staff and moving the family abroad for the winter. The hosts favour a justified 10–15 % price increase over shutdown, since turnover and staff may not return; Miettinen adds that a responsible firm hires as though the post lasts to retirement, which enforces cost discipline and reduces expensive turnover. General advice: do not overpay the mortgage — cash is what you fight a recession with, because the bank will not credit good behaviour if interest goes unpaid — and consider holding some cash outside the euro while the ECB cannot act. The Uniper memos: Finland and Fortum wanted the gas business separated out, leaving profitable hydro and nuclear; Germany pushed the unity model in which the German state takes a stake and brings financing, and that is what happened. On 14 July 2022 Finland’s Berlin delegation was the minister for European affairs, a state secretary, an ownership steering official, a special adviser and the ambassador, against Uniper’s CEO and the federal chief negotiator, with 17 German names in the memos; positions were recorded as too far apart on 19 July, Finland approved by email meeting on 21 July, and the German chancellor announced the outcome on 22 July. Germany took 30 % of Uniper for €267 million while Fortum diluted from 80 % to 56 %, against roughly €7bn paid. Miettinen’s four-part reading: (1) match the levels — Risto Siilasmaa’s rule that CEOs negotiate with CEOs and owners with owners; Germany played this as state-to-state and Finland sent a second team without the prime minister opposite the chancellor; (2) identify the real subject — two sovereign states negotiating energy supply, with Russian gas volumes as the second elephant, and Finland’s own energy package weeks later copied the German unity model; (3) use the leverage — Germany’s Nord Stream dependency, and Uniper’s supply contracts lacking a force majeure clause for Russian failure, which Finland could have insisted Germany treat as a state matter; (4) be willing to execute — filing Uniper into insolvency was the unplayed card, and with €8bn of debt Finland would have held a substantial creditor position, but a threat requires willingness to carry it out. The underlying error: defending the sunk €7bn share purchase instead of the €8bn injected in January that was still recoverable, and fixing on a visible political backstop — watertight at the edges with a hole in the middle. On venue and language, Miettinen holds that home ground is a real advantage and that negotiating in German rather than English gave it away. Contrarian thinking: the contrarian sells when the economy roars and buys when it is awful, and the hard part is having capacity to act when the headlines scream. Practical moves: an early fixed-rate mortgage (one listener locked 15 years at 0.69 %), selling surplus cyclical assets, cancelling untracked subscriptions, and — the mechanical one — selling an investment flat before the break, moving the loan collateral onto your own home and keeping borrowing capacity open, because the bank will not lend at the moment you most want to buy.