194. Telegram From the Embassy in Finland to the Department of State0

201. Delay by Soviets in starting annual trade talks combined with other less damaging Soviet pressures reported recent embassy messages raises prospect systematic Soviet economic boycott with serious economic consequences for Finland. While direct effects would not begin until existing trade agreement lapses at end December, Finnish leaders are from day to day making their estimates of whether or not real troubles with Soviets should be avoided by dismissing or reorganizing Fagerholm government to appease Soviets. This outcome, whether it should result directly from Soviet pressure or ostensibly over internal issue, would be hard blow to Finland’s anti-Communist majority and to country’s real independence, strengthened in recent years via carefully nurtured position of neutrality on Austrian pattern.

In circumstances I consider it essential that Department determine urgently whether emergency aid, probably in form loans, can be offered to tide Finland over transitional period between possible cut-off or sharp decline Soviet trade and time when displaced Finnish trade could be reoriented to west. Need would relate first to financing essential imports (notably fuels) now obtained from Soviets; second financing continuing production to avert additional burst unemployment this winter in lines normally exported to USSR; and third financing expansion industries capable competing in western markets and thus of taking up in long terms lack resulting from decreased eastern trade. Size of aid needed would depend on severity Soviet action but probably would not exceed 60–70 million dollars. How much initiative US should take in offering such aid will depend on circumstances, but some assurance needed very near future in effort influence decision stand firm in refusal alter Cabinet composition in face Soviet pressures. Main elements Cabinet appear resolved resist firmly Soviet pressure; certain other non-Communist elements, especially within Agrarian Party and reportedly including President, actively seeking overthrow Cabinet to satisfy Soviets. Aim of my proposal is to strengthen hand of first named and to stiffen backs of wavering groups in between. Assurance would have to be on a secret basis to selected leaders.

It remains possible, of course, that Soviets will abandon their pressure. Important note this connection they so far have avoided any positive actions, having limited themselves to dragging feet in various areas. Nevertheless discreet assurance regarding our position if worse comes [Page 516] to worst highly desirable if we are not to risk loss of game by default. Separate messages on finnmark credit (Deptel 180)1 and PL 480 wheat2 follow. Immediate action on these proposals would be extremely useful as concrete interim indications US support.

  1. Source: Department of State, Central Files, 460E.6141/11–658. Secret; Priority.
  2. Telegram 180 to Helsinki, November 5, requested the Embassy’s reaction to a recent request by the Finnish Ambassador for $9 million in finnmark loans. (Ibid., 860E.10/11–558) In telegram 202 from Helsinki, November 6, Hickerson responded that he strongly recommended approval of the $9 million Finnish request as soon as possible. (Ibid., 860E.10/11–658)
  3. In telegram 177 to Helsinki, October 31, the Department of State indicated that the United States could not include wheat in a P.L. 480 program for Finland as long as the Finns exported Soviet wheat. (Ibid., 411.60E41/10–2758) In telegram 203, November 6, Hickerson noted that the only anticipated sales of Finnish wheat were 10,000 tons to Switzerland. He emphasized that whatever the effect of this sale might be, he strongly believed in offering wheat to Finland in order to assist it in becoming independent of Soviet trade. (Ibid., 411.60E41/11–658)