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

213. National Security Council Report⁰

NSC 5914/1

Washington, October 14, 1959.

STATEMENT OF U.S. POLICY TOWARD FINLAND

General Considerations

1. Finland is one of the countries which has a common border with the USSR but which has managed to date to remain free from Soviet domination. Aside from Norway, it is the only such country with long established Western traditions. It stands as an example of democracy on the Communist threshold and a buffer against further Soviet encroachment in an area of direct confrontation between the West and Soviet imperialism. Complete Soviet domination of Finland would be a heavy blow to Western morale and could weaken the resistance of some other small Free World nations to Soviet Bloc pressures. In addition, it would put the USSR in control of advance air defense and early warning positions and additional naval bases in the Baltic. Its continued denial to the USSR is thus both psychologically and militarily important to the West. Furthermore, if Finland is able to preserve its present neutral status—that of a nation able to maintain its independence despite heavy Soviet pressure—it could serve as an example of what the United States might like to see achieved by the Soviet-dominated nations of Eastern Europe.

2. All significant Finnish moves are calculated in terms of their effect upon the ever-present danger of gradual absorption into the Soviet orbit. The capacity of the Finns to deal with this overriding problem is circumscribed by the influence of the USSR resulting from Finland’s geographic proximity to Soviet power and its singular vulnerability to Soviet economic pressures, as well as by internal Communist influence and political dissension among non-Communist elements.

3. On the other hand, any significant move by the USSR to capture Finland militarily or politically would have certain adverse effects on the Soviet position. For example, such a move would probably push Sweden into closer association with the West and possibly with NATO. Moreover, the Russians would suffer a substantial propaganda setback, inasmuch as Finland is cited by them as an example of “peaceful coexistence”.

Military

4. Finland’s vulnerability is increased further, first, by the 1947 peace treaty that limits Finland’s military force to 42,000 men, 60 war-planes (none of which may be bombers), and a total navy not in excess of 10,000 tons; and, second, by the Soviet-imposed mutual assistance pact of 1948 that prevents the Finns from seeking refuge in alliances with the West. Apart from this, Finnish actions are strongly influenced by a natural sense of isolation, reinforced by Finland’s lone struggle with the USSR in 1939–40, subsequent Soviet encroachment into Central Europe, and the impressive growth in Soviet military capability.

Economic¹

5. The principal non-military basis of Finland’s vulnerability is dependence on the USSR for roughly one-fifth of its total foreign trade, or one-fourth if trade with the satellites is included.² Finland’s economy, like that of other small European countries, relies heavily on foreign trade. The Soviet Bloc purchases Finnish products that are largely noncompetitive in Western markets—primarily products of the uneconomic metal industries that Finland, under Soviet compulsion, established to meet reparations payments to the USSR following World War II. Because Finland obtains non-convertible Bloc currencies for these exports, it is compelled to purchase about one-fourth of its total imports from the Bloc. In this way the Bloc has become the supplier of a large portion of Finland’s needs for certain essential commodities—oil, coal, cereals, sugar, fodder, cotton, fertilizer, vehicles, iron and steel. Any significant disruption in this trade, which the USSR could bring about with ease, would stimulate social, economic, and political disturbances in Finland, a consequence that all democratic political elements in Finland urgently desire to avoid.

6. Some of Finland’s trade with the Soviet Union might be shifted Westward without undue difficulty, except for the danger of Soviet retaliation. There is, however, little practical possibility of a major reorientation of trade away from the USSR. It would be politically impossible—and not necessarily advantageous to the West—for the Finns to make such an adjustment in their economy, unless forced by Soviet action permanently cutting off trade. Such reorientation would involve an expensive replacement of most of the high-cost productive capacity now finding markets in the USSR with new industries competitive in the West. Most seriously affected would be the metal industry which employs roughly 100,000 persons, a substantial portion of whom would have to be retrained and relocated. Other enterprises, particularly those serving the metal industry, would be similarly affected, although probably to a lesser extent in most cases. For an extended period heavy expense, unemployment, social disruption and a decline in the general level of living would be unavoidable. Only if there were no other alternatives would a Finnish government risk subjecting the country to these difficulties. In the light of these considerations, the Finns focus instead on resisting expansion of Finno-Soviet trade while seeking to strengthen economic ties with the West.

7. Economic ties with the West were strengthened recently when Finland joined the Western European nations in expanding currency convertibility and by further relaxing restrictions on dollar trade. The weakness of the Finnish position vis-à-vis the Soviet Union has also been somewhat alleviated by improvements in Finland’s economic condition, evidenced by significantly increased exports to Western markets and marked improvement in the country’s balance of payments situation. In addition, a recent IBRD loan of $37 million to the woodworking industries will contribute to the easing of seasonal unemployment and to the further development of industries which are not principally dependent on the Soviet Bloc markets.

Political

8. Politically there is also a fundamental weakness in the Finnish position deriving from persistent and intense conflict among and within the several non-Communist parties, none of which controls more than one-fourth of the Parliament. Governments rest impermanently on tenuous political compromises. It is often extremely difficult, and at times impossible, for the parties to agree on measures calculated to put the Finnish economy on a sounder basis, to lessen social and political discord, and, thereby, to reduce the country’s vulnerability to Soviet influences. The Communists, who have controlled from one-fifth to one-fourth of the Parliament since the war, derive considerable profit from this political dissension which on occasion places them in pivotal parliamentary positions and which gives them an extra electoral advantage by keeping numerous frustrated non-Communist voters away from the polls. Finland’s policy toward the USSR is significantly affected by President Urho Kekkonen, the country’s leading political figure who, while not a Communist, believes that Finland’s best interests are served by greater accommodation to Soviet wishes than many of his countrymen consider necessary. This factor is unusually important since the Presidency, already constitutionally strong, has grown in influence as a consequence of the intense dissension among the political parties.

9. Fully aware of their isolated and exposed position, the Finns follow a cautious policy designed to avoid involvement in East-West disputes, while, at the same time, attempting to preserve ties with the West and to maintain amicable relations with the USSR. Although by cultural orientation and historical experience strongly pro-Western and anti-Russian, Finland is to some extent an unwilling pawn in Soviet efforts to demonstrate the virtues of “peaceful co-existence” and to weaken Scandinavian ties with the West. While often in disagreement on specific actions, the Finns see little alternative to attempting to maintain a facade of good relations and considerable trade with the Soviet Union. In their anxiety to draw closer to their Scandinavian neighbors and in the hope of gaining abrogation of their mutual defense obligations to the USSR, the Finns have shown periodic interest in the concept of a neutral Scandinavian bloc encompassing Finland and, by implication, involving withdrawal of Norway and Denmark from NATO. They have never pressed their Scandinavian neighbors in this respect, however, and it is doubtful that any attempt to do so would be successful.

10. The Finns do not and would not deliberately serve Soviet interests. They have preserved their democratic institutions intact and, since 1948, when they courageously removed the Communist cabinet ministers, they have joined forces to isolate the Communists from the government. Despite Soviet urging, they have skillfully avoided participation in Soviet-sponsored enterprises such as the Warsaw Pact. Moreover, the Finns have thus far maintained and, in some measure, strengthened their economic ties with the West. In this regard, the Finns have a strong desire to associate in one way or another with emerging West European economic cooperation movements such as the Outer Seven free trade area, exclusion from which could mean deterioration of Finland’s Western trade and, consequently, increased dependence on the Soviet Bloc. Besides the Outer Seven, other possibilities are a Nordic common market or, as an alternative to association with such groupings, bilateral arrangements with each of Finland’s principal trading partners. The ability of Finland to associate in one way or another with those economic cooperation movements which would seriously affect access to Western European markets is of such far-reaching importance that it may ultimately be a major determinant of Finland’s fate as an independent and Western-oriented country. Finland’s ability to so associate itself will depend upon the Soviet reaction, which may be severe, and upon the nature of subsequent Western support. Finland may be required to make decisions in this area in the near future.

11. In case of an East-West armed conflict in Europe or Soviet pressures for military concessions, the Finns would do whatever they could to preserve their independence and neutrality and to avoid assisting the USSR. A Soviet attack on Finland itself would probably meet armed resistance and Soviet occupying forces would be subjected to intensive guerrilla warfare.

12. Finland’s independence contributes to the security of Scandinavia in particular and Western Europe in general. Although the Finns have thus far had remarkable success in staving off Soviet domination with little outside help, the threat of absorption into the Soviet orbit will long persist. The Finns will continue to endeavor assiduously to maintain their independence, but there will be fluctuating tendencies of firmness and softness in dealing with the Soviets. The extent to which the Finns are firm will depend in large measure on the strength of their Western ties and on their confidence in the position of the West and in its ability and willingness to provide meaningful support.

13. The measures which can be taken in support of Finland are restricted in number and scope because of the necessity of taking into account the danger of Soviet countermeasures and Finland’s determination to attempt to avoid that danger. While there is thus little possibility, short of a situation in which Finland’s independence is endangered, of bringing about a dramatic or major change in the Finnish situation, it is clearly in the interest of the United States, as well as the West in general, to continue efforts to strengthen Finland’s independence and Western orientation.

Objective

14. An independent, democratic, and Western-oriented Finland as free as possible from vulnerability to Soviet pressures.

Policy Guidance

15. Strengthen Finland’s hand whenever possible in combatting the ever-present danger of gradual absorption into the Soviet orbit. Bearing always in mind the danger of drastic Soviet counteractions and Finnish sensitivity thereto, be particularly alert to opportunities to attain U.S. aims and make special efforts to anticipate and counter Soviet moves likely to jeopardize Finnish independence.

16. Seek by appropriate means to strengthen democratic elements, encourage anti-Communist sentiments, and particularly among those inclined toward excessive accommodation of the Soviet Union, promote firmer resistance to the USSR.

17. With a view to reducing Finland’s sense of isolation and strengthening its confidence in dealing with the USSR, support efforts directed at closer cooperation between Finland and other West European countries, particularly those of Scandinavia.

18. Be prepared to provide Finland with limited economic assistance for the purpose of mitigating the impact of Soviet pressures or to take advantage of opportunities to make a significant contribution to the strengthening of Finland’s Western orientation.

19. Encourage other Free World governments and private sources to provide economic and other types of assistance to Finland.

20. Support loans to Finland by international organizations consistent with relevant U.S. loan policies.

21. Encourage a high and expanding level of trade and close economic ties between Finland and the Free World. In particular, support efforts consistent with the United States and Finnish interests, and be prepared to provide assistance under paragraph 18 above, aimed at ensuring some form of association or accommodation between Finland and West European economic cooperation movements. In administrative actions, including those involved in U.S. procurement programs, aid to other countries, and import restrictions, take into account, as far as feasible or legally permissible, the desirability of facilitating Finnish exports and dollar earnings.

22. Although a careful case-by-case review should be made in order to minimize any contribution which U.S. exports to Finland might make to the Eastward flow of strategic items from Finland, continue to export materials which are necessary to Finland’s economy and seek practicable Finnish cooperation on East-West trade controls.

23. Maintain cultural, information and exchange programs aimed at influencing Finnish attitudes favorable toward the West and toward firm resistance to the USSR. Operate such programs at levels adequate to support this objective, strengthening them if necessary.

24. In the event of a serious crisis endangering Finland’s continued independence, be prepared to take all necessary and appropriate measures to increase the will, strength, and ability of Finland to maintain its independence.

0. Source: Department of State, S/S–NSC Files: Lot 63 D 351. Secret. Adopted by the National Security Council on October 1 subject to the amendment set forth in NSC Action No. 2132–b (see footnote 7, Document 212). Approved by the President on October 14 as NSC 5914/1, it superseded NSC 5403, in effect since January 25, 1954. An “Annex on Finland’s Foreign Trade, 1953–1958,” the Financial Appendix, and annexes entitled “Cost Implications of the Proposed Policies” and “ICA Comments” are not printed.
1. On the current situation with respect to Battle Act restrictions on U.S. aid, see footnote a on page 11 of the Financial Appendix. [Footnote in the source text.]
2. For figures on Finland’s foreign trade, see Annex. [Footnote in the source text.]