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

207. Operations Coordinating Board Report⁰

Washington, July 1, 1959.

OPERATIONS COORDINATING BOARD REPORT ON FINLAND (NSC 5403)

(Policy Approved by the President, January 25, 1954)

(Period Covered: From October 17, 1958 Through July 1, 1959)

1. Review of U.S. policy toward Finland (NSC 5403) is recommended in the light of developments during the five years since the policy was approved, such as, impairment of Finland’s ability to preserve its independence, proposals for a “Nordic Common Market” which would include Finland and changes in the structure and purpose of European economic organizations. The recent events outlined below highlight the need to: (1) bring the statement of U.S. policy toward Finland up to date, (2) redefine the objective which unrealistically infers that Finland is “neither subject to undue reliance on Soviet Bloc trade nor vulnerable to Soviet economic pressures”, and (3) review courses of action which the U.S. might take to cope with the changed circumstances regarding Finland.

2. During the final months of 1958, the Soviets, taking advantage of heavy Finnish reliance on Soviet Bloc markets, threatened to reduce significantly Finno-Soviet trade levels unless the composition of the newly-formed and broadly-based Finnish Government were changed to their satisfaction. At the same time, the Soviets capitalized on a lack of sufficient determination and unity within and among the democratic parties in Finland and on what appeared to be an unnecessarily accommodating attitude toward the Soviets on the part of President Kekkonen and his wing of the Agrarian Party. The Soviet initiative at this time stemmed not only from a decision to exploit a particularly favorable tactical situation in Finland, but probably also from the desire to arrest what they considered to be a general Western gravitation in Finnish policy, both economic and political.

3. Ultimately, withdrawal of the Agrarian ministers at the insistence of Kekkonen brought about the down fall of the government, which, after a protracted interregnum, was replaced by a weak one-party Agrarian cabinet. This action was followed shortly by a surprise conference between Kekkonen and Premier Khrushchev in Leningrad. Subsequent actions by the Soviets showed their willingness to accept the new Finnish Government. However, at the Leningrad talks and later, Khrushchev concerned himself even more openly than in the past with domestic Finnish political affairs through public vilification of certain prominent Social Democratic leaders.

4. Largely at the behest of Kekkonen, the Finns made other efforts to mollify the Soviets, including—in a significant departure from past practice—negotiations for the purchase of Soviet military equipment (the extent of which purchase is not yet clear).

5. Immediately prior to collapse of the Finnish Government under Soviet pressures, the U.S. offered a $5 million finnmark loan to Finland and held out the promise of more substantial assistance should the economic effects of Russian actions become critical. However, this offer did not alter the determination of Kekkonen and his followers to remove the Cabinet which was so objectionable to the Soviets.

6. Although the Finnish moves to accommodate the Soviets constitute a dangerous trend, they do not result from the adoption of a new basic policy. While continuing a policy of amicable relations with the USSR and non-involvement in great power disputes, Finland remains a Western-oriented country. The Finns have continued to exclude the Communists from the government and have avoided a sizeable increase in Finno-Soviet trade levels for 1959. Moreover, they recently strengthened their economic ties with the West by joining the Western European nations in significantly expanded currency convertibility, and by relaxing somewhat further their restrictions on dollar trade.

7. The weakness of the Finnish position vis-à-vis the Soviet Union has now been somewhat alleviated by improvements in the economic situation. In addition, a recent IBRD loan of $37 million to the wood-working industries will contribute to the alleviation of seasonal unemployment and to the further development of industries which are not principally dependent on Soviet bloc markets.

8. Considering all factors, Finland remains, in almost any conceivable circumstance, vulnerable to Soviet economic and political pressures. That vulnerability is undoubtedly enhanced not only by the fact that, on the basis of their experience since 1939, the Finns tend to consider themselves alone and defenseless. The sense of helplessness seems most pronounced in Kekkonen and among his Agrarian supporters who appear inclined to doubt the willingness and ability of the West to provide effective counter-weights to Soviet pressures.

0. Source: Department of State, OCB Files: Lot 61 D 385, Finland. Secret. Approved on July 1 by the OCB, which agreed that the review of NSC 5403 should address itself to the problems of Finnish economic dependence on the Soviet Union, Soviet interference in Finnish affairs, and the issue of Western political and economic support for Finland. (Ibid.: Lot 62 D 430, Preliminary Notes, IV) On July 23, the report was noted by the National Security Council, which also noted that the NSC Planning Board would undertake the review of NSC 5403. The report was approved by President Eisenhower on July 27 in NSC Action No. 2113. (Ibid., S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)