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

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

No. 497

Helsinki, February 2, 1960.

REF

• Emdes 419, December 21, 1959¹

SUBJECT

• Proposed U.S. Program for Finland

Present Situation

Finland is rapidly emerging from an existence as a small isolated nation devastated by two major wars in one decade into a technically competent, industrialized, viable economy.

Her political situation should be improving in view of Russia’s seeming determination to use Finland as a show window for coexistence, but actually it has deteriorated in recent years. The major causes of her political retrogression to the Eastern sphere are:

1. Increasing Soviet effectiveness.

2. Internal political dissension.

3. Role of President Kekkonen.

4. Physical isolation.

5. Economic instability.

Although all of these causes have been fully discussed in recent Embassy communications, including Desp. 419, Dec. 21, 1959, “Assessment of Finnish-Soviet Relations”, a brief review here may be helpful.

The U.S.S.R. has applied increasingly effective pressure on Finland during recent years. This pressure has manifested itself in a number of ways including:

1. An increased number of exchange visits of officials between the U.S.S.R. and Finland. For instance, President Kekkonen visited Moscow in May and June in 1958. In January 1959 he visited Leningrad for a meeting with Khrushchev. There has also been a large number of visits of cabinet, military and labor officials. In the last eighteen months there have been 32 visits of Russian labor officials to Finland and 35 visits of Finnish labor officials to the U.S.S.R.

2. Top policy speeches by Soviet officials such as Mikoyan’s speech in Helsinki in October of 1959 at the opening of the Russian Trade Fair.

3. The trade agreements with the U.S.S.R. offering attractive terms as a lure to increase Finnish dependence on the Russian market. The latest agreement also gives Russia a more complete monopoly of Finland’s oil imports.

4. The U.S.S.R.’s present Ambassador to Finland, A. V. Zakharov, is a specialist in trade and industry. Moreover, the present roster of the Russian Embassy includes 198 persons, which is four times as many as the U.S. Embassy staff.

5. The impact of Soviet technological advances implying a shift in world power relationships.

6. Increased activity of Communist front groups throughout Finland.

7. Soviet sales of military hardware to the Finnish defense forces. The first such sale was made a year ago. Russian technicians have now arrived in Finland to train the F.D.F. in use and maintenance of the equipment.

The election of Kekkonen as President in 1956 and the nature of Finland’s foreign policy (which he largely determines and which includes a large degree of accommodation to the U.S.S.R.) have been accompanied by a period of increasing internal political instability. Partisan dissension reached a peak in the parliamentary elections of 1958 and led almost directly to a Communist gain, making its front organization the largest unified group in Parliament. This situation continued under the succeeding non-Communist Fagerholm government until it was overthrown in circumstances which gave the Soviets a new lever with which to manipulate Finnish affairs.

Finland’s economic situation is for the present reasonably good with imports and exports approximately in balance (and with the country currently experiencing a small boom) yet unemployment still remains a problem, and Finland has little ability to withstand any major worsening of economic conditions without additional erosion of her independence. With approximately 17% of her exports going to the U.S.S.R. on a non-competitive price basis and approximately 24% of total exports to the Eastern Bloc, she is open to economic pressures from the Russians.

With a tremendous potential market on her eastern border, it would be unrealistic to assume that Finland will not wish to enjoy the advantages of this market. Therefore, the problem is not one of futilely trying to coerce Finland into denying herself these advantages, but rather one of helping Finland increase her ability to export to the West so that she would not suffer as drastically if suddenly she had to discontinue exports to the Eastern Bloc.

Our proposed operational program is directed primarily to regain the ground that the United States and the Western World have lost here in recent years by helping Finland back to a position of pure neutrality, not the kind of spurious neutrality that exists today. To do this the United States must show a genuine interest in Finland’s problems by a continuing series of reasoned, carefully planned actions, rather than by a few dramatic moves.

Needs of Finland

The following list includes many of Finland’s current major needs:

1. Finland’s sense of isolation must be removed. She needs more contact with the Western World, especially for those Finns living in provincial areas.

2. The degree of economic dependence on the Soviet Union should be reduced by increasing Finland’s ability to export to the West in larger volume and in other products in addition to those of pulp, paper and timber.

3. Finland needs to train her sales forces in many industries in modern marketing practices in order to sell in Western markets.

4. Although designers and manufacturers in some fields such as architecture, furniture, glass and china have an ability to create satisfactory styles, yet designers in many other fields, such as the textile and appliance fields, require more training in order to be competent in designing for the high style Western market.

5. There is a serious shortage developing of trained mechanics and engineers. More technical facilities including new manual training and engineering schools are needed.

6. There are no fossil fuels in commercial quantities in Finland. Finland purchases all of her oil, coke and coal. (86% of her oil is supplied by the U.S.S.R.) Finland’s potential in water suitable for power generation has largely been developed. To decrease her dependence on overseas fuels Finland should prepare a program as rapidly as possible to utilize atomic power for central heating and power generation.

7. An improved transportation system is needed. The present roads are inadequate and the railroads need modernization and expansion. There were only 150,000 passenger autos in Finland for 4,500,000 people at the end of 1959. Finland needs more autos and trucks for private and commercial transportation, particularly in provincial areas.

8. Finland needs to increase promotion of tourism which would bolster and diversify her economy and decrease her isolationism. This would require improved transportation, better recreational facilities and new hotels.

9. As the Finnish language is only used in Finland, it is important for all Finns to learn English in order to facilitate trade and cultural relations with the Western nations.

Basis for a U.S. Program

There are certain basic prerequisites for a U.S. program which would assist the Finns in resisting further Communist gains and allow the country to pursue its course of neutrality. Finland’s location on Russia’s border inhibits freedom to become a member of Free World political and economic organizations and, by inclination (to date) she will not join the Soviet Bloc. Our efforts should first be: (a) to make the Finnish public aware of our firm and continuing concern for the country’s independence and integrity, as a means of maintaining morale and the will to remain independent; (b) to convince the Finnish Government of our readiness to give it tangible assistance, both in emergencies and over the long term, in solving problems which threaten the country’s independence and basic existence; and (c) to promote the long range objectives of more firmly “neutralizing” Finland as an object of Soviet domination by removal of any basis for Soviet pretensions that Finland would be used against the U.S.S.R. in the event of hostilities.

Suggested Program

Our suggestions for a program which would meet these basic prerequisites are:

1. A visit by President Eisenhower on his way to Moscow. The Finnish Government is most careful not to take steps which would displease the U.S.S.R. With President Kekkonen so sensitive to Soviet reactions it is logical to assume that he and the government would not have personally invited President Eisenhower to visit Finland if they had thought it would be objectionable to Russia. We believe that it would be a huge propaganda victory if President Eisenhower could make at least a refueling stop and greet the President and other government leaders. The importance of such a visit cannot be overestimated. Some indication of how the visit is regarded by the Finns may be seen from the fact that Foreign Minister Törngren, when he offered the invitation, said that it was of the “highest political importance”. In addition, such a visit would be an ideal time for President Eisenhower to give a brief statement which could include assurances of our interest in Finland and possibly disavow any desire to change Finland’s post-war neutrality.

2. Invite President Kekkonen to the United States, on an “official” visit, this spring. This clever politician has great influence. His term as President does not expire until 1962. He may be re-elected, and he is leading Finland into a type of cooperation with the U.S.S.R. which goes considerably beyond the bounds of pure neutrality. Like many other Finns, he believes that Finland would be abandoned by the United States in time of war.

If President Eisenhower cannot stop in Finland, then it becomes even more important to invite Kekkonen to the United States. The invitation, however, should be extended if possible before March 15 of this year, in order to plan his visit before President Eisenhower leaves for Moscow.

3. In order to enlarge the Finnish claim to neutrality, which is now based only on the 1948 Treaty with the Soviet Union, we should seek ways of formalizing the “neutralization” of Finland through a bilateral treaty or multilateral convention.

4. Since Finland has become a show window of coexistence for the Soviets, we should on all relevant occasions insist upon reciprocity of treatment or parity with the Soviets whenever the argument is raised that they have a special position in Finland. The justification for this position lies in Finland’s commitments to “remain outside great power disputes” (1948 Treaty) and to prevent “organizations conducting propaganda hostile … to any of the … United Nations”² (1947 Peace Treaty). Carefully chosen examples of this kind might also induce the Soviets to temper their own attitude toward Finland in an effort to avert unfavorable Scandinavian opinion and new United States initiatives.

5. Establish closer contact between American officials and Finnish military in order to help maintain the morale of the Finnish Defense Forces as a strong non-Communist element and seek to have Finnish officers, such as General Simelius (whose invitation is being temporarily withheld) visit military installations in the United States and in Europe.

6. Remove the restriction on potential Finnish military purchases in the United States under the Mutual Security Act in order to help maintain the morale of the Finnish Defense Forces.

7. Survey the technical school situation to determine what steps the government is planning to take to establish additional manual training and engineering schools or to enlarge existing facilities. In case the government cannot finance the necessary expansion, the survey should ascertain what foreign funds could be made available.

8. The Embassy is planning a program to have all officers spend as much time as practical visiting key locations in provincial Finland. Present travel funds are inadequate to enable officers to do the necessary travel to meet Finn leaders in small villages and towns.

9. The English language training program should be enlarged as rapidly as possible. For instance, contingent upon a revitalization of the Finnish-American Society, increased aid be given it for teaching English in provincial areas.

10. For economic-political objectives, arrange a large U.S. trade fair in the fiscal year 1961. Now that import regulations have been liberalized there is an added attraction to the Finnish market for United States products. The political motive should also be prominent as it was in recent major fairs held here by the British, French, Germans, and the Russians.

11. Prior to the trade fair, there should be a number of U.S. trade missions and technical exchange groups planned and one or more U.S. groups should be on hand when the fair opens. As an example, it would be most helpful to have a large group of perhaps twenty-five to fifty Finn marketing experts spend a minimum of six weeks to three months in the United States and have a U.S. group plan a similar visit to Finland. We should also send students and junior marketing experts from Finnish firms for longer periods, up to one year, for on-the-job training. There are many other classes of exchangees who would be almost equally helpful, such as production experts, designers, highway and airlines specialists, and management engineers.

12. Although Finland has not been classified for DLF purposes as an underdeveloped country, certain portions of Finland, notably the north, are as undeveloped as the areas where projects have been placed in some of the countries where the Development Loan Fund³ is currently making loans. We believe an objective review of the north of Finland would show this area to be undeveloped, with timber and mineral resources. The area has considerable recurring unemployment, with a large Communist vote and a vigorous campaign by the Communists. The area should be surveyed to ascertain if a sound project could be developed to qualify for a DLF loan.

13. Encourage favorable consideration by the international lending agencies of appropriate industrial, utility and transportation projects.

14. Consideration should be given to proposing a modern Treaty of Friendship, Commerce and Navigation to replace the 1934 Treaty of Friendship, Commerce and Consular Rights.⁴

15. We must recognize that the standby economic aid offer made through the Embassy in November 1958 is interpreted by the Finns as an assurance of U.S. action in the event of like circumstances as a continuing United States commitment. Thus we should be prepared promptly to offer assurances of economic assistance to the extent needed to buttress Finland in resisting further Soviet economic pressure.

16. The Finns should be encouraged to plan a worldwide “Visit Finland in 1961” (or for the year 1962) campaign. Finland’s sense of isolationism can be lessened by such a project, and the stage is set by the increasing amount of tourist travel to the U.S.S.R. Finland has many natural attractions for tourists which are presently unexploited.

17. We think that USIS should expand its present program. Emphasis in the past has been largely on a cultural program. The program should include more emphasis on specific groups and organizations vulnerable to Communist infiltration such as labor, youth, sports and farm organizations.

18. In intensifying American official contacts among the Finns on behalf of the entire program, a substantial representation allotment would be needed. For example, a series of luncheons are being held each Wednesday in the Residence with Embassy officers and various groups of Finns. Luncheons have been held to date with representatives of the motion picture industry, the automobile industry, oil, importers and labor. Invitations have been issued to a military group. It is also planned to include groups of farm leaders, the forest products industries, public administrators, and other groups in the future. These large luncheons have proved successful in creating an informal atmosphere in which everyone freely interchanges ideas.

19. The direction of the leader grant program should be changed and expanded, and also the ASLA program should be influenced to lessen academic weighting and include more of the uncommitted provincial groups uncontacted by the U.S. program to date. This will be difficult because of the language problem, but special arrangements for an expanded program of English language training would be helpful. In the leader grant program, continue the present emphasis directed toward political and public opinion elements.

20. The Investment Guaranty Agreement should be made operative.

21. Encourage more signs of the American presence in Finland through obtaining a greater number of visits of prominent Americans, more tourists, ranking performers in the fine arts, good musical presentations and leading athletes in view of Finnish preoccupation with sports.

22. Expand by 50% in FY 1961 the entire exchange program of approximately $650,000 a year using mainly the approximately $600,000 from accrued savings in the ASLA account.

23. Promote the historic and natural ties between Finland and Scandinavia which represent a continuing factor for improvement in Finland’s position. This, while less sensational and far reaching, constitutes a development similar in kind to the integration of the six countries in the EEC.

24. In view of the political-economic importance of Finnish participation in EFTA, we should take any appropriate measures we can to encourage this end or make the path easier. Particularly we should be prepared to recognize Finland’s special situation in our negotiations with the Six and the Seven and avoid creating obstacles or discouraging accommodation of Finnish needs in the EFTA and the GATT context.

Edson O. Sessions⁵

0. Source: Department of State, Central Files, 611.60E/2–260. Secret.
1. Despatch 419 from Helsinki transmitted a 22-page report covering specific aspects of recent Finnish-Soviet military, economic, political, and cultural relations. Its three major conclusions were that recent developments in Finnish-Soviet relations had impaired Finland’s independence and freedom of action, that internal Finnish political dissension had contributed to this process, and that continuing Soviet pressures and activities foreshadowed a growing Communist influence in Finland. (Ibid., 660E.61/12–2159)
2. Ellipses in the source text.
3. The Development Loan Fund was created by Section 6 of the Mutual Security Act of 1957, enacted August 14, 1957, to provide friendly countries with low cost capital for economic projects not fully financeable from private sources. For text, see 71 Stat. 357.
4. For text of the treaty, signed on February 13, 1934, see 49 Stat. 2659.
5. Printed from a copy that bears this typed signature.