229. National Security Council Report0
STATEMENT OF U.S. POLICY TOWARD FINLAND
General Considerations
1. Finland is the only European country other than Norway having a common boundary with the USSR which is not now under Communist domination. It is the last former territory of Imperial Russia to enjoy democratic practices and remain outside the sphere of direct Soviet imperialism. Finland stands as an example of democracy on the Communist border, and although it cannot be viewed as a strong buffer between the area of the Free World and the Soviet Union, to the degree that Finland resists Communist blandishments, and maintains its Free World orientation and trade it serves as an example of what can be achieved by other countries in Eastern Europe. Complete Soviet domination of Finland would be a heavy blow to the posture of the Free World and could weaken the resistance of other small nations to Soviet Bloc pressures. In addition domination would put the USSR in control of advance air defense and early warning positions and additional naval bases on the Baltic. The continued denial of Finland to the USSR is thus psychologically and militarily important to the Free World. On the other hand, Finland can be useful to the Soviets to the degree that it acquiesces under a steady and sophisticated Communist campaign of pressure and infiltration, serves as a laboratory in which the Communists can practice and perfect their subversive techniques, and while ostensibly practicing democratic methods, is flaunted by the Soviets as an example of neutralized “peaceful co-existence”.
2. All significant Finnish moves are calculated in terms of their effect upon the ever-present danger of 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 [Page 597] and political dissension among non-Communist elements. One result of this has been the takeover of the Finnish Trade Union Confederation by the Communists and the fellow-traveling Skogists and the splitting off of a rival non-Communist national Labor Organization.
3. On the other hand, any significant move by the USSR to capture Finland militarily or politically would have certain adverse effects for the Soviets. For example, such a move would probably cause Norway and Denmark to reconsider their position on the use of nuclear weapons in their territory and 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 co-existence”.
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 alliance with the West.1 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.
Economic
5. The principal non-military basis of Finland’s vulnerability is dependence on the USSR for nearly one-fifth of its total foreign trade, or roughly one-fourth if trade with the satellites is included. Finland’s economy, like that of other small European countries, relies heavily on foreign trade. The Soviet Bloc purchases Finnish products that are not now competing in the Free World market, primarily products of the metal industries that Finland under Soviet complusion expanded to meet reparation payments to the USSR following World War II. Under bilateral trade agreements and 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 [Page 598] USSR could bring about with ease, would stimulate social, economic, and political disturbances in Finland leading to a condition of crisis, 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 toward the Free World 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 Free World—for the Finns to make such an adjustment in their economy, unless forced by Soviet action permanently cutting off trade. Most seriously affected would be the engineering and shipbuilding industries which employ roughly 60,000 persons, a number of whom might have to be retrained and relocated, unless a vigorous attempt were made to compete in the Free World market. 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 a relatively modest expansion of Finno-Soviet trade while seeking to strengthen economic ties with the Free World.
7. Economic ties with the Free World 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 conditions, evidenced by significantly increased exports to Free World markets and marked improvement in the country’s balance of payments situation. In addition, an IBRD loan of $37 million to the wood processing industries will contribute to the further development of industries which are not principally dependent on the Soviet Bloc markets and thereby to the easing of seasonal unemployment. There is overwhelming sentiment in Finland for affiliation with the European Free Trade Association as a means of insuring that Finnish products remain in a competitive position in the Free World market. The Soviet Union has insisted that the most favored nation treatment to which it is entitled by treaty be accorded it should Finland affiliate with the EFTA.
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 as much as 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 [Page 599] 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.
9. Finland’s policy toward the USSR is to a great extent determined by President Urho Kekkonen, the country’s leading political figure who believes that Finland’s best interests are served by greater accommodation to Soviet pressures than a number of his countrymen consider necessary. He is apparently convinced that the world balance of power has shifted to a point where the Soviet Union now has ascendancy over the United States and NATO and that for this reason Finland cannot expect effective aid from the Free World should there be a crisis in its relations with the Soviets. He acknowledged an implicit Soviet veto over participation in the cabinet by persons unacceptable to Moscow and has endeavored to increase Soviet confidence in Finland’s posture as an example of peaceful co-existence. His views are unusually important since the Presidency, already constitutionally strong, has grown in influence as a consequence of the intense dissension among the democratic political parties.
10. Fully aware of their isolated and exposed position, the Finns follow a cautious policy designed to avoid involvement in Soviet Bloc-Free World disputes, while, at the same time, attempting to preserve ties with the Free World and to maintain amicable relations with the USSR. Although by cultural orientation and historical experience strongly pro-Free World and anti-Russian, Finland is to some extent an unwilling pawn in Soviet efforts to demonstrate the virtue of “peaceful co-existence” and to weaken Scandinavian ties with the Free World. 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.
11. 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 keep the Communists isolated from the [Page 600] government. Despite Soviet urging, they have to date avoided participation in Soviet-sponsored economic and military enterprises such as the Warsaw Pact. Moreover, the Finns have thus far maintained and, in some measure, strengthened their economic ties with the Free World. The ability of Finland to associate in one way or another with European Free Trade Association is of such far-reaching importance that it may be a major determinant of Finland’s fate as an independent country oriented toward the Free World. Finland’s ability to so associate depends upon the nature of the Soviet reaction and upon the ability of the EFTA countries and the GATT to make appropriate accommodations.
12. In case of a Soviet Bloc–Free World 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 might even be subjected to intensive guerrilla warfare.
13. Finland’s independence contributes to the security of Scandinavia in particular and Western Europe in general. Although the Finns have thus far had success in staving off Soviet domination with little outside help, the threat of absorption into the Soviet orbit continues to 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 Finnish people are firm will depend in large measure on the strength of their Free World ties and on their confidence in the position of the Free World and in its ability and willingness to provide meaningful support.
14. The measures which can be taken in support of Finland are limited because of the danger of Soviet counter-measures 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 Free World in general, to continue efforts to strengthen Finland’s independence and Free World orientation.
Objective
15. An independent, democratic, and Western-oriented Finland as free as possible from vulnerability to Soviet pressures.
Policy Guidance
[Here follow paragraphs 16–25, which are identical to paragraphs 15–24 of NSC 5914/3 (Document 213).]
- Source: Department of State, S/S–NSC Files: Lot 63 D 351. Secret. An “Annex on Finland’s Foreign Trade, 1954–1959,” the Financial Appendix, and an annex on “Cost Implications of the Proposed Policies” are not printed. NSC 6024, approved by the NSC Planning Board on December 21, superseded NSC 5914/1 (Document 213). The President’s approval of NSC 5914/1 on October 14, 1959, and his order for implementation continued to apply to the new statement of policy in accordance with NSC Action No. 2215–c. (Note from Lay to the NSC, December 30; Department of State, S/S–NSC Files: Lot 63 D 351)↩
- Finland does not take advantage of even these meager allowances, however. Finnish military equipment is largely of World War II and earlier types and has been procured from various foreign sources. The defense budget amounts to only 5.5 percent of the national budget and 1.6 percent of the gross national product. As of August 15, 1960, there was a total of only 37,300 personnel in the Finnish armed forces. [Footnote in the source text.]↩