Foreign Relations of the United States, 1958–1960, Eastern Europe; Finland; Greece; Turkey, Volume X, Part 2

206. Despatch From the Embassy in Finland to the Department of State⁰

No. 806

Helsinki, June 4, 1959.

REF

• Deptel 596¹

SUBJECT

• Suggestions for OCB Progress Report

The Embassy believes that several significant developments during the past year should be taken into account in assessing progress toward the objectives stated in NSC 5403. Discussion of those developments and of possible courses of US action are not limited to the specific programs envisaged in that paper, inasmuch as the situation and the dangers are different from those of five years ago.

In its “Suggestions” to the Department on this subject a year ago (D–660, May 12, 1958),² the Embassy reported a number of adverse trends and tendencies within Finland, particularly with regard to relations with the USSR, and foresaw the possibility that future developments might well be such as to constitute a long-term threat to the Western position in Finland.

Events since that time have unfortunately strengthened the Embassy’s forebodings. Beginning with the outcome of President Kekkonen’s state visit to Moscow at the end of May,³ particularly Kekkonen’s acceptance of a number of double-edged Soviet economic “concessions” and his agreement to a communiqué that echoed several stock Soviet propaganda demands, and continuing until the present, Finland’s ability to maintain true independence and neutrality has been steadily impaired. Among the successive responsible developments, following on Kekkonen’s Moscow venture, have been: (1) the injection of “who can best maintain friendship with the Soviet Union” as a central issue in the election campaign of the summer of 1958; (2) the deepening of the split in the Social Democratic Party with the opposition Skogists moving closer to the position of the Agrarian extremists and the Communists; (3) the success of the Communist controlled SKDL in the July Diet election; (4) machinations of the extremist (Kekkonen) wing of the Agrarians and of the Skogists (Social Democratic opposition) to secure SKDL representation in the post-election cabinet; (5) the increasingly shrill charge of the Agrarian extremists and the Skogists that the Fagerholm coalition government, which was formed in August, was incapable of handling Fenno-Soviet relations; (6) the Soviet campaign of passive economic pressures against the Fagerholm government; (7) the flat rejection by Finnish authorities (read Kekkonen) of US offers to lend assistance if needed and desired to withstand Soviet economic pressures; (8) the fall of the Fagerholm Government in December in consequence of withdrawal of the Agrarians on insistence of Kekkonen; (9) Kekkonen’s meeting in Leningrad with Khrushchev and his acquiescence in Khrushchev’s flagrant admission of Soviet intervention in Finnish affairs; (10) complete abandonment of the once vigorous Finnish interest in joining OEEC; (11) renewal of Khrushchev’s attack on Social Democratic leaders in May;⁴ and (12) indications of Finnish interest in promoting Nordic neutrality, culminating in a May 10 statement by Foreign Minister Törngren that “in the present situation it is obvious that… it would be of great advantage to us for the Nordic area as a whole to remain outside the fields of military tension of the great powers.”⁵

Against these adverse developments the only positive trends from the western standpoint were (1) a seeming strengthening of Finnish interest in Nordic cooperation; (2) economic stability despite a strong recession with unusually heavy unemployment during the winter of 1958–59 and the fall and winter difficulties in trade relations with the USSR; (3) progress with expansion plans in the western export industries, aided by a $37 million IBRD loan consummated in March, and (4) the recapture of control of the SAK (labor confederation) by moderates in April 1959.

In analyzing the unfavorable trend of the past year, the feature that stands out is that the basic factors involved were not of outside origin, either in the way of pressures or blandishments, but internal. The simple fact is that after years of successfully withstanding severe pressures and difficulties from within and without and achieving a real degree of independence and neutrality, Finnish leaders, largely because of internal factionalism and machinations, created situations that made a downward spiral almost inevitable. Some leaders, notably among the Agrarian extremists and the Skogists, went even further and directly played with the interests of the country in order to further their own ambitions and personal spites.

The internal splintering of Finland’s non-Communist political parties, which first became serious in 1957, deepened throughout the year. In the 1958 elections not only did the Social Democrats appear with divided slates and afterward split still further, but also the Agrarians suffered a sharp loss which was reflected partly in Conservative gains but still more in the increased strength of the Communist-front SKDL from 43 to 50 seats. Thus the SKDL strengthened its claim to Cabinet representation by becoming the largest united group in the Diet, at the same time as the two parties that were formerly largest lost their combined majority. Formation of a dissident Agrarian party (Small Peasants) since the elections still further weakened the potential coalition considered basic to stable, non-Communist government in Finland.

Notwithstanding these difficulties, the Fagerholm coalition formed at the end of August 1958 represented a sound and basically stable government. However, domestic political rivalry which manifested itself in differences relating to how Soviet policy should be applied, aided and abetted by willing Soviet leaders, condemned the Fagerholm Government to death. Regardless of the motives and decisive influences involved, the manner of its death constituted a precedent for future Soviet intervention in Finland’s internal affairs. With this precedent Soviet interference in the future could well be considerably less apparent to outsiders while still being sufficient to accomplish Soviet aims.

One kind of far-reaching Soviet interference appeared, in fact, on the heels of the change of government and has since been repeated in intensified form–the stigmatization by Khrushchev of the leadership of the Finnish SDP. His two statements, in January and May, had the immediate effects of sustaining and deepening the divisions within the Social Democratic movement and between the SDP and the Agrarians, thereby paralyzing efforts to restore a normal non-Communist governing coalition. They also had a potentially significant contrary effect, however, of administering a shock to those elements in Finland that had supported the Fagerholm Government, but were inclined to “wish away” the memory of how it fell. Under the proper conditions, this group could provide the basis for stable, non-Communist government, but thus far it has proved unequal to the task of either outwitting or joining the President who, in his turn, has not been sufficiently clever to avoid approaching the status of a captive of the opposition SDL and the SKDL.

Signs of further deterioration in Finland’s claim to neutral and fully independent status have appeared in official and semi-official support for the idea of a neutral Nordic bloc, implying advocacy of the detachment of Norway and Denmark from NATO. As this plan is completely visionary under conditions now foreseen, it is difficult to understand the motives for what is obviously a concerted move which surely has the blessing of Kekkonen. While the latest Finnish statement has not attracted public attention, minimum unfortunate effects of such official pronouncements are to impair Finland’s neutral status by appearing to enlist it in the service of the Soviets, while feeding materials to Norwegian and Danish opponents of NATO.

From this summary statement it is easily seen that US policy faces a variety of problems in Finland, among which the most important are:

1. A growing Finnish tendency, especially apparent in the words and actions of President Kekkonen and certain Agrarian politicians, as well as the Skogists, to sacrifice bit by bit the country’s claim to neutrality and independence on the alleged ground that Finland’s interests dictate that the Soviets be appeased in advance of a local or general crisis when it could be completely at Soviet mercy.

2. An inability or moderate elements, which together command a preponderance of popular support, to marshal their forces so as to resist successfully the above trend.

3. Deep-seated concern among virtually all elements of the population over the geographic vulnerability of Finland to the USSR and an accompanying conviction that the West could not be depended upon for support “in an emergency”.

4. A latent desire among probably a majority of Finns for association of Finland in a neutral Nordic bloc as a haven from the danger of Soviet domination in peace or war.

5. Economic dependence on the USSR, born in part from the fact that the USSR offers virtually the only market for certain important but non-competitive Finnish products, and in part from the government’s feeling that close economic ties are essential for maintenance of Soviet “confidence” in Finland.

6. A solid block of Communist electoral support, encompassing something over one-fifth of the total vote which, in contrast to the trend in other countries of Europe, has not diminished but tended to increase, at least slightly, in recent years.

7. Increasing support in narrow but influential non-Communist circles for abandonment of a ten year rule and granting the Communists a share in the government.

8. A carefully nurtured official campaign to depict Soviet-Finnish “friendship” as a positive good, and therein increasingly to down play the objectionable features and inherent dangers of the Soviet system and policies.

The courses of action open to the United States in the face of these problems are, to say the least, circumscribed. There are, on the one hand, the limitations imposed by geography and by the practical difficulties which stand in the way of the US extending to Finland security guaranties. Even more important, perhaps, are the limitations imposed by the Finns themselves. The difficulty about these is that they are not confined to such as derive from an “understandable caution” regarding Soviet sensibilities, but increasingly verge on an anticipatory appeasement of the type noted above.

Even this generalization does not cover the whole problem raised by Finnish attitudes. Popular reaction to events of the past year give cause to question the degree of will to stand firm against Soviet encroachments that actually exists under present circumstances. It almost appears as if a “grand duchal” complex is becoming increasingly prevalent, one that harks back to the latter days of Tsarist rule when the Finns had to play a tricky and dangerous game of yielding here in the hope of holding fast there. Given more able, selfless, and courageous leaders, the situation might be changed and a willingness emerge to take the perhaps not too serious risks necessary for true independence. But with things as they are, [2 lines of source text not declassified] the outlook is anything but bright.

Despite these limitations and difficulties, however, the US can hardly afford to let the game go by default. The Embassy feels that at a minimum the US should continue, or adopt, as definite policy:

(1) A quiet readiness, as during the autumn 1958 crisis, to provide adequate emergency assistance to enable Finland to withstand a partial or complete break in trade relations with the USSR. This readiness should include, on a standby basis, all necessary internal clearances so that in case of need it could be translated into action without delay. The fact that the Finnish authorities publicly rejected and privately ignored US offers last fall, and almost certainly would not give advance assurance that aid would be requested or accepted in a future emergency, should not be allowed to affect this matter. Finland remains for the present at least as vulnerable to Soviet economic pressure as last year, if not more so. At the same time, the Soviets having tasted the heady fruit of an easy victory through only passive action on their part may well resort to a similar course again. While nothing about the present situation gives assurance that Finnish reaction would be different from last time, it could be. If so, the chance of success would be immeasurably enhanced by the availability of US aid of the type planned during the previous crisis. Conversely, if the Finns tried to resist and failed because of lack of outside help, the result could only be described as disastrous, since it would confirm the worst fears of the Finns that they are in truth at the mercy of the USSR in peace and war.

(2) Economic aid as requests and requirements justify. A basic long-term need that must be met to insure long run stability in Finland remains the expansion of productive capacity, and for this foreign credits are essential. This is the need which is directly reflected in last winter’s peak unemployment and indirectly in the maintenance of a highly uneconomic farm population, with all the political consequences of these structural problems. Steps have already been taken which go a long way toward meeting present investment needs, particularly the $37 million IBRD loan announced in March. This credit provides the foreign exchange necessary for a planned major expansion of the pulp and paper industries and domestic investment resources are probably sufficient to furnish the complementary domestic investment. Foreign exchange reserves on the one hand and bank liquidity on the other are in fact in such a relatively good situation currently that the question arises whether business enterprise, further specific investment plans, and confidence among those controlling funds are not for the present more needed than capital. Because of the uncertainty about future US aid cited above, however, there is probably a strong tendency to conserve foreign exchange for use in the event of recurrent Soviet trade pressure. This could in the long run also act as a danger to private investment. Another factor which must be borne in mind is that some Finnish industries, as a purely economic matter, probably should not be maintained even at present levels. Shipbuilding is the foremost example.

In any case, the United States clearly cannot offer credit assistance with good effect unless the Finns want it and unless they have plans for the use of funds.

For these reasons, and because any assistance must avoid the appearance of a political label and credits or investments must respond to requirements, the best possibilities for the time being may relate to the encouragement of non-governmental credits and private investment. We are of course doing what we can in this line. We have offered an investment guaranty agreement, which the Finns have indicated they may accept, and we have consistently encouraged sound credits to Finnish business from American public and private financial institutions, e.g. Eximbank loans to U.S. exporters of paper-making machinery, as well as commercial bank credits. Continuation of P.L. 480 agricultural surplus sales also appears very desirable as a means of generating potential investment funds as well as for other reasons.

Beyond measures of this type, which would stay largely in normal commercial channels, our immediate ability to help under present circumstances is doubtful. The Embassy has recommended that we program $10 million for credit to Finland in FY 1960, with the understanding that a decision on actually extending a credit would be postponed until the Finns came forward with a specific request and program which could be judged on its merits. Finnish authorities have on several occasions referred to their desire for an early procurement of this sum and they may at any time present a concrete request. The Embassy therefore considers that this recommendation remains valid.

For the longer pull, the Finns may at any time come forward with new requests for substantial funds. They are in process of developing expansion programs that will require perhaps 200 million dollars of foreign credit over the next five to ten years. In conversations with the Ambassador, President Kekkonen has touched upon, in general terms, Finland’s interest in new American loans to help with this program. All that can or should be done at present in regard to this matter is, however, to prepare the way for prompt and sympathetic consideration of specific requests when and if they are presented.

(3) Continuation of a maximum cultural exchange program, with some shifts in emphasis. In view of the special circumstances existing in Finland, our exchange program is of very special significance. In particular, it is one of the most important of the very few means available to us to influence Finnish attitudes.

The first essential regarding the exchange program is to insure continuation of funds. Under existing agreements the present level of dollars used in the program will remain available through 1984 from Finland’s payments against its World War I debt. Finnmark funds are, however, on a year to year basis. The Embassy feels that there should be favorable action on the proposition that payments against recent US Finnmark loans be set aside to insure the long term availability of Finnmarks for the part of the exchange financed in this currency (Embdes 1022, April 30, 1958⁶ and Dept.’s A–88, January 7, 1959).⁷

Of the exchange program, the Embassy, including the Public Affairs Officer, considers the leader-specialist part by far the most important. In it, in fact, lies our best chance of directly influencing Finnish opinion and perhaps alignment. The Embassy feels, therefore, that the program should be substantially expanded. To this end the Embassy is recommending separately that beginning with fiscal 1960, allotment of funds for the purchase of books and technical equipment be ended, and that the funds previously employed for this purpose be shifted to the leader-specialist category and to certain specific projects (see below). The book-technical equipment program met a serious need when first inaugurated, but considering the present situation in Finland its continuation would be like carrying coals to Newcastle.

The Embassy for the past two years has been seeking to direct the emphasis in the leader-specialist program away from strictly cultural and business leaders to those who more directly influence Finnish opinion and public affairs, leaving it to the teacher-research student category and to private arrangements, to take care of the former groups. The Embassy is particularly interested in enabling representatives of groups that are lacking in knowledge of American conditions and policies to visit the United States. These include representatives of certain political parties, leaders of youth organizations, leaders of certain labor groups, etc. The Embassy also wants to increase the number of influential newspaper people, particularly of the provincial partisan press.

Difficulties that stand in the way of the Embassy’s objective are (1) the rigid application of visa restrictions for persons who have been members of Bloc “friendship societies”, and (2) prevailing language requirements. The Embassy has recommended that policy in regard to the former be modified (D–661, April 7, 1959, and D–759, May 15),⁸ and would appreciate favorable action on its recommendation. The Embassy also feels that more provision should be made for translators to accompany groups of non-English speaking leaders, in order to permit broader selection from among the most influential leaders regardless of knowledge of English.

The increase of assistance to certain selected “projects” referred to above is considered desirable since through such projects we should, with ingenuity, be able to combat more effectively Communist activities and influences in traditional Communist strongholds, particularly in the northern provinces. (See D–760 of May 19, 1959)⁹

It goes without saying that the Embassy favors the strongest sort of support and encouragement of privately sponsored Finnish-American exchange programs.

(4) Maximum utilization of Sections 104(a) and (k) of Public Law 480.¹⁰ The Embassy has repeatedly pointed out the importance of US sponsored research and related programs in Finland. In Embassy despatch of May 2, 1958,¹¹ for example, Ambassador Hickerson made the following points:

“Finland as a result of its excellent educational system, particularly its first rate universities, has for its population an unusually large number of highly trained and skilled scientists. Because of the nature of Finland’s economy, full utilization of these is not possible domestically. There is consequently open to us an opportunity to add indirectly to our own scientific resources and at the same time to contribute to the maintenance of a high level of scientific competence in Finland.

“As the Department is aware, Finland’s position as against the USSR rules out the utilization of Finnish scientists under any of the programs sponsored directly by the Department of Defense. However, the response to the Department of Agriculture’s program confirms indications that we have previously had that approaches by civilian agencies or groups will be warmly welcomed.

“I recommend to the Department that it give any support needed to the Department of Agriculture for its program, and that it encourage exploration of similar programs by others that might be interested. The Department is familiar with the extensive activity that the Soviet Union is carrying on in this field under the auspices of the Fenno-Soviet Scientific and Technical Collaboration Committee (D–520, March 18, 1958 and D–120, October 12, 1956).¹² While my recommendation is in no sense based upon the simple concept that we must respond to any and every Soviet challenge, I do feel that it is important that we not concede the USSR a monopoly of the field, not only because of the concrete advantages to be gained., but also because of the probable consequences on the orientation of Finnish scientists, a highly influential sector of Finnish society.”

The Embassy at present feels especially that care should be taken to prevent programs of lesser importance, including Defense housing, from monopolizing P.L. 480 funds that might be used for research and related purposes. In this connection, the Embassy feels that after maintenance of the exchange program at its present level, research and related projects should have top priority in the disposition of Finnmark funds.

Aside from the program recommended above, the Embassy suggests that consideration be given to devising some means of convincing Finnish leaders and the Finnish public of the deep US interest in Finland’s survival. The need for this derives from the fact that much of the weakness of anti-Kekkonen forces in Finland in their efforts to maintain a national policy clearly independent of Soviet pressures lies in their inability to answer effectively the Kekkonen thesis that Finland will always be at the Soviet Union’s mercy in either a local or general emergency. Aside from domestic political calculations, there is also good evidence that Kekkonen himself and his associates may be strongly influenced in their attitudes by the assumption that the Soviets do in fact have a monopoly over Finland’s fate. A factor in this might well be a genuine failure on the part of these individuals to evaluate correctly United States resources relative to those of the Soviet Union.

Any steps taken by the US along these lines should be unmistakeably authoritative. They should avoid military implications which we would not be reasonably able to fulfill in all foreseeable circumstances, but they should make clear our continuing interest in true Finnish independence, and our willingness to promote by all means economic and cultural ties. In any propaganda or political attention to our concern over Finnish independence, it should be stressed that we are interested in the independence and neutrality of the country per se and not in attempting to use Finland as a weapon against the Soviet bloc.

(In Embdes 787, May 29, 1959, the Embassy recommended for consideration one possible means of giving the Finns the type of assurance discussed here.)¹³

For the Ambassador:

Mose L. Harvey
Counselor of Embassy

0. Source: Department of State, Central Files, 611.60E/6–459. Secret.
1. Telegram 596 to Helsinki, May 18, requested the Embassy to forward suggestions for the next OCB Progress Report. (Ibid., 121.60E2/5–1859)
2. Document 179.
3. May 22–31, 1958; see Annex A to Document 180.
4. Reference is to Khrushchev’s interview, published in Pravda, May 8, in which he criticized certain elements in the Finnish Social Democratic Party for resorting to “plotting, slanders and low attacks against the Soviet Union.” (Despatch 747 from Helsinki, May 12; Department of State, Central Files, 660E.61/5–1259)
5. Ellipsis in the source text. This statement is quoted in full in despatch 787 from Helsinki, May 29, “Finland and the Problem of Nordic Neutrality.” (Ibid., 760E.5/5–2959)
6. Reference should be to despatch 622 from Helsinki, April 30, 1958, “Educational Exchange: P.L. 265—ASLA Program.” (Ibid., 511.60E3/4–3058)
7. Instruction A–88, “Educational Exchange: P.L. 265—ASLA Program.” (Ibid)
8. Despatches 661 and 759 from Helsinki are both entitled “Policy Toward Soviet Bloc Friendship Societies in Finland in Relation to Visa Regulations and United States Exchange of Persons.” (Ibid., Visa Office Files)
9. Despatch 760 from Helsinki is entitled “Educational Exchange; Request for Fiscal Year 1961 Country Proposed Program.” (Ibid., Central Files, 511.60E3/5–1959)
10. Section 104(a) of P.L. 480 empowered the President to enter into agreements with friendly nations to help develop markets for U.S. agriculture “on a mutually benefiting basis.” For text, see 68 Stat. 456. Section 104(k) enacted as an amendment to P.L. 480, June 30, 1958, provided that he could make such agreements to support mutual scientific cooperation and research against diseases. For text, see 72 Stat. 275.
11. Reference is to despatch 632 from Helsinki, “Visit of Dr. G.E. Hilbert and Mr. Raymond W. Sooy.” (Department of State, Central Files, 102.602/5–258) Both individuals were officials in the Agricultural Research Service.
12. Despatch 520 from Helsinki is entitled “Fourth Meeting of the Fenno-Soviet Scientific and Technical Collaboration Committee.” Despatch 120 from Helsinki is entitled “Finnish Reaction to P.L. 480 Program.” (Ibid., 960E. 801/3–1858 and 411.60E41/10–856)
13. In despatch 787 from Helsinki, the Embassy expressed concern at the possibility that Finland, with Soviet encouragement, would seek to persuade Norway and Denmark to abandon NATO in favor of establishing a neutral bloc of Nordic countries, which would remain outside the East-West conflict. The Embassy interpreted this possible démarche as a way for Finland to buttress its position against future Soviet encroachment. The Embassy recommended that the United States publicly reassert its intention never to violate Finnish neutrality. Such a statement, by reducing Soviet suspicions of Western intentions regarding Finland, would ultimately moderate Finland’s need to reinforce its neutrality. (Ibid., 760E.5/5–2959)