History of Finland

THE POST-WAR ERA

The signing of the preliminary peace treaty between Finland and the Soviet Union on September 19, 1944, marked the beginning of a new era for Finland. Its hallmark was to be a diametrical change in Finnish policy toward the Soviet Union; the traditional hostility was to be replaced by a policy of friendship. Finnish leaders felt that only a genuine rapprochement between the two countries could guarantee Finland's long-term survival as an independent state. In the late 1980s, the new policy, operative for more than forty years,appeared to have been successful in preserving Finland's freedom. Domestically, Finland's society and economy have undergone rapid changes that have made the country a prosperous social-welfare state. Finland's achievements in the postwar years have been surviving external threats and thriving as a modern industrialized country.

The Cold War and the Treaty of 1948

The Finnish statesman Juho Kusti Paasikivi was a leading proponent of the relationship between Finland and the Soviet Union that permitted Finland's postwar development. For decades, Paasikivi had been the leading noncommunist Finn advocating reconciliation with the Soviet Union. Before World War I, he had been on Old Finn and a Compliant, who advocated accommodation with Russification. In the negotiations over the Treaty of Dorpat in 1920, he had argued for drawing Finland's border farther away from Leningrad. In the fall of 1939, he had recommended giving in to some of the Soviet demands, because he considered the ensuing war avoidable. He had also opposed Finland's entry into the Continuation War. As a former prime minister under the Finnish White government of 1918 and as a member of the Conservative National Coalition Party (Kansallinen Kokoomuspuolve--KOK), Paasikivi was politically an anticommunist. His lifelong study of history, however, convinced him that Finland's policies toward the Soviet Union needed to be governed by pragmatism. By late 1944, Finland's previous policy of antagonism to the Soviet Union had been shown to be counterproductive, because it had nearly led to Finland's extinction as an independent state. Summoned out of private life to serve--first as prime minister from October 1944 to March 1946 and then as president from March 1946 to March 1956--Paasikivi established the policy of accommodation with the Soviet Union that, with time, became almost universally accepted among the Finns. The change in Finland's policy was so marked that some observers considered the post-1944 years to be the era of the "Second Republic."

The immediate postwar years of 1944 to 1948 were filled with uncertainty for Finland because it was in a weakened condition and the because new policy of reconciliation was still being formed. The Allied Control Commission, established by the 1944 armistice to oversee Finland's internal affairs until the final peace treaty was concluded in 1947, was dominated by the Soviets. Under the leadership of a Soviet, Marshal Andrei Zhdanov, the commission checked Finland's adherence to the terms of the preliminary peace of September 1944. The first test of Finland's new policy of reconciliation was thus to observe faithfully the treaty with the Soviets, including the punctual payment of reparations and the establishment of war crimes trials. Eight leading Finnish politicians were tried for war crimes in proceedings lasting from November 1945 to February 1946. Among the accused were ex-president Risto Ryti (served 1940-44), who, along with six other prominent Finnish politicians, was convicted of plotting aggressive war against the Soviet Union and was sentenced to prison.

The war crimes trials and other stipulations of the armistice were distasteful to the Finns, but their careful compliance led to the reestablishment of national sovereignty. Compliance may have been facilitated by Finland's having its national hero, Mannerheim, as president to carry out these policies, until he resigned for health reasons in March 1946 and was succeeded by Paasikivi. The signing of the Treaty of Paris on February 10, 1947, led in September 1947 to the removal of the Allied Control Commission.

In their strict fulfillment of the Soviet terms of peace, the Finns faced other difficulties. The armistice agreement of September 1944 had legalized the SKP, which had been outlawed in 1930. In October 1944, the SKP led in the formation of the Finnish People's Democratic League (Suomen Kansan Demokraattinen Liitto--SKDL). Commonly referred to as the People's Democrats, the SKDL claimed to represent a broad spectrum of progressive forces. From its inception, however, the SKDL has been dominated by the SKP and has provided the electoral vehicle by which members of the SKP have been sent to the Eduskunta.

In March 1945, in the first parliamentary elections held after the war, the SKDL scored a major success by winning fifty- one seats and becoming the largest single party in the Eduskunta (the ML had forty-nine and the SDP had forty-eight). Several factors account for the success of the communists. A strong sympathy for communism among a large number of voters had persisted since the Finnish civil war. In addition, many Social Democratic voters were alienated from the SDP because of its ardent support of the recent war that had cost Finland so dearly. Many Finns who suffered under the depressed economic conditions of postwar Finland voted for the SKDL as a protest gesture. Finally, the SKDL proved adept at electoral politics, de- emphasizing its communist ties and emphasizing its devotion to democracy, to full employment, and to a peaceful foreign policy.

The SKDL played a large role in Finnish politics during the immediate postwar years. By November 1944, President Mannerheim recognized the growing power of the communists when he appointed to the cabinet the first communist, Yrjö Leino, ever to hold such a position. Following the election of March 1945, Leino was appointed to the important post of minister of interior, a position from which he controlled, among other things, the state security police and a large mobile police detachment. The power of the communists was at its greatest from 1946 to 1948, when the SKDL held, or shared, as many as eight of twelve cabinet posts. These included that of prime minister, which was held by Mauno Pekkala, who also served as co-minister of defense.

Pressures on Finland reached a peak in early 1948. In February the communists took Czechoslovakia by coup, an act that heightened international tensions considerably. The Soviets then requested that Finland sign a treaty nearly identical to those forced on some of their satellite states in Eastern Europe. By March there were rumors of a possible communist coup in Finland. Although it is not clear that a coup was imminent, President Paasikivi took precautionary measures. The Finnish armed forces were under his control, and he summoned them in strength to Helsinki, where they would have proved more than a match for the police units of the ministry of interior that were suspected of involvement in the coup.

In negotiating the requested treaty, meanwhile, the Soviets showed a willingness to accept a neutralized Finland. Paasikivi secured significant changes in the treaty that gave Finland substantially more independence with respect to the Soviet Union than was enjoyed by the East European states under Soviet domination. Paasikivi had served notice on the Soviets that they would not get their way through pressure, but rather would have to use military force. This they were reluctant to do in the tense international atmosphere of early 1948.

The Treaty of Friendship, Cooperation, and Mutual Assistance, which was signed on April 6, 1948, has since then provided the foundation for Soviet-Finnish relations. The key provision of the treaty, in Article 1, calls for military cooperation between Finland and the Soviet Union if Germany, or a country allied with it, attempts to invade Finland or the Soviet Union by way of Finnish territory. Article 2 of the treaty calls for military consultations to precede actual cooperation. Finland's sovereignty is safeguarded, however, because mutual assistance is not automatic but must be negotiated. The treaty helped to stabilize Soviet-Finnish relations by giving the Soviet Union guarantees that it would not face a military threat from the direction of Finland. The Soviets have been pleased with the treaty, and before expiration its original ten-year term has been extended to twenty years on three occasions--1955, 1970, and 1983.

When new elections were held in July 1948, the SKDL suffered a sharp drop in support, falling from fifty-one to thirty-eight seats in the Eduskunta. Communists were not included in the new government formed under the Social Democrat Karl-August Fagerholm, and there was no communist participation in Finland's government again until 1966.

The end of World War II had found Finland in a thoroughly weakened state economically. In addition to its human and physical losses, Finland had to deal with more than 400,000 refugees from the territories seized by the Soviets. In an attempt to resolve the refugee problem through a program of resettlement, the parliament adopted the Land Act of 1945. Through the program thus established, the state bought up farmland through compulsory purchases and redistributed it to refugees and to ex-servicemen, creating in the process 142,000 new holdings. Finland's large class of independent farmers was thereby expanded considerably. Although many of the resulting holdings were too small to be economically viable, they speeded the integration of the refugees into the social and economic fabric of the country.

Reparations were another burden for Finland. From the failure of the reparations demands imposed by the Treaty of Versailles, the Soviets had drawn the lesson that, to be effective, reparations should take the form of deliveries of goods in kind, rather than of financial payments. As a result, the Finns were obligated to make deliveries of products, mainly machine goods, cable products, merchant ships, paper, wood pulp, and other wood products. About one-third of the goods included as reparations came from Finland's traditionally strong forest industries, and the remainder came from the shipbuilding and the metallurgical industries, which were as yet only partially developed in Finland. The reparations paid from 1944 to 1952 amounted to an annual average of more than 2 percent of Finland's gross national product. The reparations were delivered according to a strict schedule, with penalties for late shipments. As the earnestness of the Finns in complying with the Soviet demands became apparent, the Soviets relented somewhat by extending the payment deadline from 1950 to 1952, but they still prevented Finland from participating in the Marshall Plan (European Recovery Program). The United States played an important role, nonetheless, by mediating the extension of financial credits of more than US$100 million from its Export- Import Bank to help Finland rebuild its economy and meet its reparations obligations punctually.

The Finns turned adversity into advantage by using the industrial capacities created to meet the reparations obligations as the basis for thriving export trades in those products. As a result, Finland's industrial base acquired greater balance than before, between, on the one hand, Finland's traditional industries of lumber, wood pulp, and paper products, and on the other hand, the relatively new industries of shipbuilding and machine production. Finland's growing integration into the world economy was demonstrated by its joining the General Agreement on Tariffs and Trade in 1949.

Domestic Developments and Foreign Politics, 1948-66

The underlying assumption of Paasikivi's foreign policy was that the Soviets could tolerate the existence of an independent Finland only because Finland was peripheral to the Soviet Union's main strategic interests in Central Europe. Paasikivi sought to reinforce that Soviet attitude by actively demonstrating that Finland would never again be a source of danger to the Soviet Union. The combination of traditional neutrality plus friendly measures toward the Soviets was known as the Paasikivi Line. Continued by Paasikivi's successor as president, Urho Kekkonen (in office 1956-81), the policy came to be known as the so-called Paasikivi-Kekkonen Line. It remained the foundation of Finland's foreign policy in the late 1980s.

Paasikivi's statesmanship was rewarded in 1955, when the Soviet Union returned the Porkkala Peninsula to Finland, well before the end of the fifty-year lease granted in 1944. The return of Porkkala ended the stationing of Soviet troops on Finnish soil, and it strengthened Finland's claim to neutrality. The Soviets also allowed Finland to take a more active part on the international scene. In December 1955, Finland was admitted to the United Nations (UN); in that same year Finland joined the Nordic Council.

In the three parliamentary elections held during Paasikivi's presidency--those of 1948, 1951, and 1954--the SDP and the ML received the largest number of votes and provided the basis for several of the government coalitions. These so-called Red-Earth coalitions revived the prewar cooperation between these parties and laid the basis for their subsequent cooperation, which was a major feature of Finnish politics after World War II. The communist-dominated SKDL retained some power because of domestic discontent; in the elections of 1951 and 1954, it won more than 20 percent of the vote.

Domestic politics during Paasikivi's presidency were characterized by conflict and instability. During those ten years, 1946 to 1956, there were nine government coalitions, nearly one per year. The issues that divided the parties and brought such frequent changes of government were primarily economic, centering on the rising cost of living. One early attempt to solve conflicts among the various sectors of the economy was the so-called General Agreement made in 1946 between the Confederation of Finnish Trade Unions (Suomen Ammattiyhdistysten Keskusliitto--SAK) and the Confederation of Finnish Employers (Suomen Työnantajain Keskusliitto--STK). The General Agreement, which called for compulsory negotiations between labor and management, was used as a basis for reconciling industrial disputes. Another milestone was the Castle Peace Agreement of 1951 that brought together the main economic interest groups for a wage and price freeze that helped to establish a precedent for wage and price control. Nevertheless, throughout these years there were frequent strikes.

The intensity of the conflict over economic issues was demonstrated by the general strike of 1956, the first general strike in Finland since November 1917. The cause of the nineteen- day general strike was an increase in food prices for which the trade unions demanded a wage increase as compensation. When the employers refused the wage increase, the trade unions called the general strike. More than 400,000 workers--about one-fifth of the total work force--participated, the flow of various vital supplies was disrupted, and some violence occurred. The strike ended when the employers agreed to the wage increases demanded by the unions. These wage increases, however, were largely cancelled out by subsequent rises in consumer prices.

Paasikivi's successor, Kekkonen, assumed office in March 1956, and he remained as president until 1981. A member of the ML, he had been one of only three members of the parliament who voted against the Peace of Moscow in 1940. The following year, he had been one of the most outspoken advocates of the Continuation War. By 1943, however, he had reversed himself totally in calling for reconciliation between Finland and the Soviet Union, and he remained a leading advocate of that policy for the remainder of his life. From 1944 to 1946, he served as minister of justice, a position from which he prosecuted Finnish war criminals. Between 1950 and 1956, he served as prime minister in five cabinets, before being elected president in 1956.

Kekkonen demonstrated his mastery of politics by bringing Finland successfully through two major crises with the Soviet Union, the first in 1958 to 1959 (the Night Frost Crisis) and the second in 1961 (the Note Crisis). The Night Frost Crisis received its name from the Soviet leader, Nikita Khrushchev, who declared that Soviet-Finnish relations had undergone a "night frost." The immediate origins of the crisis lay in Finnish elections of 1958, in which the SKDL won the largest popular vote and the largest parliamentary representation of all Finnish parties but was not given a place in the Finnish government headed by the Social Democrat, Fagerholm. As a result, the Soviets recalled their ambassador from Helsinki and generally made known their unhappiness with the Fagerholm government.

Two reasons are generally brought forward for this instance of Soviet interference in Finland's domestic politics. One was the Soviet dislike of certain Social Democrats, whom they referred to as "Tannerites," after the long-time leader of the SDP, Vainö Tanner. The second reason may have been the international crisis of the late 1950s that centered on West Berlin. Underlying the Soviet actions was the traditional fear of a German resurgence; the Soviets imagined a renewed German military threat's developing through Germany's North Atlantic Treaty Organization (NATO) partners, Denmark and Norway.

Kekkonen defused the crisis by pulling the ML out of the government coalition, thereby toppling the SDP government that was objectionable to the Soviets. The alacrity with which Kekkonen placated the Soviets resolved the crisis.

The Note Crisis of 1961, far more serious than the 1958 crisis, constituted the most severe strain in Soviet-Finnish relations since 1948. On October 30, 1961, the Soviet government sent a note to Finland that called for mutual military consultations according to Article 2 of the 1948 FCMA treaty. For Finland, the note represented a real threat of Soviet military intervention. As during the 1958 crisis, a tense international situation coupled with Soviet fears of a German military resurgence led to Soviet pressure on Finland. There was also a domestic side to the crisis; as in 1958, the Soviets considered certain elements on the Finnish political scene to be objectionable. The Soviets were concerned about the SDP, especially about the SDP nominee for president, Olavi Honka. Delivered only two and one-half months before the Finnish presidential elections, the Soviet note demonstrated clearly which candidate the Soviets preferred. In response to the note, Kekkonen sought to placate Soviet fears by dissolving the Finnish parliament in November 1961. He then flew to Novosibirsk, where he met with Khrushchev and, after three days of personal consultations, succeeded in winning Khrushchev's confidence to such a degree that the call for military consultations was rescinded. The Note Crisis not only constituted a personal diplomatic triumph for Kekkonen but also led to an era of increased confidence-building measures between the two governments.

For Kekkonen, the lesson of the Note Crisis was that the Soviets needed continual reassurance of Finnish neutrality. He pointed out that Soviet mistrust of Finnish declarations of neutrality in the 1930s had led to war. After 1961, the Finns took great pains to demonstrate their neutrality and to prevent a repetition of the Note Crisis. The effort to win the trust of the Soviets led Kekkonen in two directions--expanded trade and cultural contacts between the two countries and a more active international political role in which Finland worked to promote peace in Northern Europe and around the world.

Kekkonen sought to create ever-wider zones of peace around Finland; thus, he became a determined advocate of an entirely neutral Northern Europe, a position he had enunciated as early as 1952. The Danes and the Norwegians, however, generally did not accept neutrality because they would thereby lose the military protection of NATO. In 1963 Kekkonen also proposed a Nordic Nuclear-Weapons-Free Zone. Kekkonen's advocacy of these peace issues helped him to win the virtually unquestioned confidence of the Soviets and precluded a repetition of the Note Crisis.

Conflict among Finnish political parties was so great that, during the twenty-five years of Kekkonen's tenure as president, there were twenty-six governments. Among these twenty-six governments were six nonpartisan caretaker governments, formed when conflicts among the parties became too intense to permit their joining in coalition governments. As during the years of the Paasikivi presidency, there was greater agreement on foreign policy issues than on economic concerns. An especially divisive issue was whether or not to link agricultural income, consumer prices, and workers' wages, and thus to reconcile the competing aims of the main sectors of the economy--farming, capital, and labor.

The conflict over domestic policies was also evident in the consistent strength of the protest vote in elections. The electoral vehicle of the communists, the SKDL, polled more than 20 percent of the vote in the 1958, the 1962, and the 1966 parliamentary elections. That same discontent brought about the emergence of another protest party, the Social Democratic Union of Workers and Small Farmers (Työvaen ja Pienviljelijain Sosialidemokraattinen Liitto--TPSL), which broke off from the SDP in 1959. The TPSL advocated both a friendlier stance toward the Soviet Union and more active measures to protect workers' and farmers' economic interests. In 1959 a breakaway group from the ML formed a party called the Finnish Small Farmers' Party; in 1966 its name was changed to the Finnish Rural Party (Suomen Maaseudun Puolue--SMP). Led by Veikko Vennamo, the SMP spoke for the so-called Forgotten Finland, the small farmers, mainly of northern and eastern Finland, who lived a precarious economic existence. The SMP made a breakthrough into the ranks of the major parties in the parliamentary elections of 1970 by winning 18 seats in the Eduskunta, but in following years its power fluctuated greatly.

Kekkonen's personal triumph in the Note Crisis led not only to his reelection as president in 1962, but also to the dominance, for a short time, of his own party, the ML. (From 1958 to 1966, the SDP was considered too anti-Soviet to be part of a government.) The ML provided the basis for the various coalition governments formed during those years. In its desire to be at the center of Finnish politics, the ML changed its name to the Center Party (Keskustapuolue--Kesk) in 1965. The presence of this large and important agrarian-based party at the center of the political spectrum has characterized the Finnish political system since independence. Fifty-four of sixty-four Finnish governments (through 1988) included the Agrarian/Center Party, compared with thirty-three for the SDP, and twenty-six for the KOK; furthermore, three of Finland's nine presidents, Relander, Kallio, and Kekkonen have belonged to this party.

Finland's economy underwent a major transformation in the 1950s and the 1960s, shifting from a predominantly agrarian economy to an increasingly industrial one. The number of workers engaged in agriculture and forestry dropped from about 50 percent to about 25 percent, and the decline of this traditionally dominant sector of the economy continued into the late 1980s. After the Soviet reparations were paid off in 1952, Soviet-Finnish trade did not decline, but rather it increased. In 1947 the Treaty of Paris had been followed by a Finnish-Soviet commercial treaty that provided the framework for expanded trade between the two countries. The Five-Year Framework Agreement of 1951, which has been renewed repeatedly, established this trade on a highly regulated basis. To a large extent, the trade consisted of Finland's selling machine goods to the Soviets in exchange for crude oil. Finland benefited from the arrangement because Finnish products sold well in the Soviet market, which could be counted on regardless of fluctuations in the Western economic system. Increased trade between the two countries also strengthened the political relationship between them.

Throughout the postwar period, the Soviet Union has been Finland's single most important trading partner, generally accounting for 20 percent to 25 percent of Finland's total imports and exports. Nevertheless, Finland's goal has been to create a balanced trade system embracing both East and West, and more than 70 percent of Finland's trade has been with noncommunist states. Finland's main trading partners, after the Soviet Union, have been Sweden, Britain, the Federal Republic of Germany (West Germany), and the United States, in order of importance. This trade has consisted mainly of the export of timber, pulp, and paper products in exchange for other countries' manufactures, technology, and raw materials for Finland's various industries. In maintaining good economic ties with these countries, Finland has had to overcome persistent Soviet suspicions; however, Finland was allowed to join the European Free Trade Association as an associate member in 1961 in the so-called FINEFTA agreement. The members of EFTA, including Finland, signed free-trade agreements with the European Economic Community in 1973. Finland placated the Soviets for these initiatives by signing a trade agreement in 1973 with the Council for Mutual Economic Assistance, the Soviets' organization for trade and cooperation with its East European allies. Nevertheless, through the trading arrangements with EFTA and the EEC, Finland gained greater economic independence from the Soviet Union.

The economic growth that Finland has experienced in this century has laid the foundation for its social welfare state. The benefits of economic prosperity have been spread around to the population as a whole, with the result that the Finns have enjoyed a level of material security unsurpassed in their history. Conceived not as a whole, but as a series of responses to specific needs, the social welfare system has become strongly rooted. Among its main components are several forms of social insurance: allowances for mothers and children, aimed at encouraging people to have children; pensions; and national health insurance. By 1977 social welfare expenditures accounted for over 20 percent of GDP. The general effect of these measures has been to raise the standard of living of the average Finn and to remove the sources of discontent caused by material want.

Finland History Contents

SOURCE: Area Handbook of the US Library of Congress