Beautiful Aaland islands in the Gulf of Bothnia rely on duty-free for their prosperity

An erection it was. The raising of the midsummer pole, with all its obvious phallic symbolism, is all about fertility and fecundity…

An erection it was. The raising of the midsummer pole, with all its obvious phallic symbolism, is all about fertility and fecundity, the islanders told us and laughed. In every village across the Baltic's Aaland islands, this traditional pagan ritual is re-enacted, the precursor to the serious celebrations that mark both the longest day and the start of the holidays. They will go on right through the night and see the entire hard-drinking Finnish nation on its ear by morning. Nine months later the birth rate will go up again.

In the little hamlet of Bjarstrom several hundred people gathered last Friday. The giant 40-foot mast lay on its side, its crossbars draped with branches and greenery. Then large coloured balls of cloth and paper, like oversized Christmas Tree decorations, are added as the village men prepare to lift.

As the pole rises, propped up by long struts between each hoist, the wind catches the leaves and it sways precariously, threatening to crash down on its lifters. The crowd moves back, with bated breath, as they stagger from side to side to control it. But the moment passes and applause rings out as the pole is anchored in the vertical.

Then parents and children, and even visiting Brussels correspondents, dance in whirling circles round its base. The holidays have begun.

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For Finns and Swedes, the Aaland islands are not the glorious secret they may be to the rest of us. The 25,000 population of this stunningly beautiful archipelago, midway between Finland and Sweden in the Gulf of Bothnia, is swelled every summer by over half a million visitors, 90 per cent of them Nordic. Every other Finn, it appears has a small red holiday home here.

Others pass through in their hundreds of thousands, availing of their continuing right to buy dutyfree goods, a trade that has seen the prosperity of the islands significantly outstrip that of mainland Finland. A special protocol negotiated as part of the Finnish accession package excludes Aaland from EU fiscal union and thus will allow the regime to continue. If it didn't, the locals say, the islands would simply die. One in five of them make their living in the shipping and ferry business.

The Aaland islands form a unique part of the Finnish state. Demilitarised and neutral, the Swedish-speaking inhabitants of this archipelago of 6,500 islands and skerries have a parliament of their own, the Lagting, and a degree of autonomy that makes them a model, the islanders say, for resolving intractable minority problems.

Indeed, the new head of the island's administration, Elisabeth Naucler, has just returned from the former Yugoslavia, where she has been advising the UN on the Aaland system as a possible model for either Kosovo or the Krajina, the enclave in Croatia from which the majority Serb population has been driven.

The islands' demilitarised status, enshrined in a convention of the League of Nations, was the product of the military stand-off between Sweden and Russia in the mid-19th century.

While the latter would control the islands until after the Russian revolution, its build-up of a military presence was seen by the Swedes, much as the US has regarded Cuba in the last few years, as "a gun pointed at the heart of Sweden".

Following the seizure of a key fortress during the Crimean war by France and Britain, the Russians agreed to guarantee demilitarisation. Now even the Finnish government may not land troops or weapons here.

Anxious to prop up the new Finnish state, the League of Nations in 1921 was to consign the fate of the islanders to Finnish rather than Swedish sovereignty, to their disappointment.

Although initially reluctant to work the autonomy system, the islanders are now reconciled to their status and the few calling for reunion with Sweden now have virtually no political support.

Prime Minister Roger Jansson acknowledges with gratitude the hands-off approach that Finland has taken to ruling the islands and points to the reality that about 90 per cent of legislation and administration directly relevant to the man in the street is actually controlled by the Lagting, while revenues are determined by a treaty formula which guarantees the islanders 0.45 per cent of the Finnish government's tax take.

Although the external representation of the islands is undertaken by Finland, Aaland is represented independently in the Nordic Council and has the right to approve international treaties. Indeed it was by no means certain when Finland joined the EU that Aaland would also do so, and a protocol guaranteeing both duty-free and special rules on property ownership was the price extracted by the islands.

Pressure for further autonomy is gentle but persistent. Mr Jansson says he would also like to see the power to raise taxes, but accepts that such a right may yet be a long time coming. He boasts that the islands are willing to spend more in health, welfare and education terms than the Helsinki government.

But for most Finns the sparsely-populated islands are less of interest as a constitutional innovation and more as a summer refuge. Because of the duty-free subsidy, travel to the small capital, Mariehamn, some 10 hours by ferry from Stockholm, is exceptionally cheap from both Sweden and Finland. Accommodation is available either in the island's many self-catering houses, camping or in hotels. Prices are reasonable if the visitor is prepared to take just basic accommodation. Many sail out through the well-sheltered straits, protected from the open seas by the many wooded islands, or rent boats once there to navigate a sailor's paradise. (In winter the frozen sea often allows people to drive from the Finnish mainland).

Holiday details available through the Finnish Tourist Board.

Patrick Smyth

Patrick Smyth

Patrick Smyth is former Europe editor of The Irish Times