FINLAND HAS BEEN THE SITE of human habitation since the last ice age
ended 10,000 years ago. When the first Swedish-speaking settlers arrived
in the ninth century, the country was home to people speaking languages
belonging to the distinctive Finno- Ugric linguistic group, unrelated to
the more prevalent Indo- European language family. The first dates in
Finnish history are connected with the Swedish crusade of the 1150s
that, according to legend, aimed at conquering the "heathen"
Finns and converting them to Christianity. There was, however, no
Swedish conquest of Finland. The bodies of water that lay between
Finland and Sweden, rather than making them enemies or separating them,
brought them together. Trade and settlement between the two areas
intensified, and a political entity, the dual kingdom of Sweden-Finland,
During the seven centuries of Swedish rule, Finland was brought more
and more into the kingdom's administrative system. Finland's ruling
elite, invariably drawn from the country's Swedish-speaking inhabitants,
traveled to Stockholm to participate in the Diet of the Four Estates and
to help manage the kingdom's affairs. Swedish became the language of law
and commerce in Finland; Finnish was spoken by the peasantry living away
from the coasts. The clergy (Lutheran after the Protestant Reformation),
who needed to communicate with their parishioners, were the only members
of the educated classes likely to know Finnish well.
Swedish rule was benevolent. Sweden and Finland were not separate
countries, but rather were regions in a single state. The elite spoke a
common language, and it was not until late in the eighteenth century
that any separatist sentiments were heard within Finland. However, Finns
occasionally suffered much from Sweden's wars with neighboring states.
In the sixteenth and the seventeenth centuries, Sweden was one of
Europe's great powers and had a considerable empire around the shores of
the Baltic Sea. Wars were frequently the means of settling Finland's
eastern border. In the long run, however, Sweden could not sustain its
imperial pretensions, and military defeats obliged it to cede Finland to
tsarist Russia in 1809.
Finland's new ruler, Tsar Alexander I, convinced of the strategic
need to control Finland for the protection of his capital at St.
Petersburg, decided it was more expedient to woo his Finnish subjects to
allegiance than to subjugate them by force. He made the country the
Grand Duchy of Finland and granted it an autonomous status within the
empire. The Grand Duchy kept its Swedish code of laws, its governmental
structure and bureaucracy, its Lutheran religion, and its native
languages. In addition, Finns remained free of obligations connected to
the empire, such as the duty to serve in tsarist armies, and they
enjoyed certain rights that citizens from other parts of the empire did
Nevertheless, the Grand Duchy was not a democratic state. The tsar
retained supreme power and ruled through the highest official in the
land, the governor general, almost always a Russian officer. Alexander
dissolved the Diet of the Four Estates shortly after convening it in
1809, and it did not meet again for half a century. The tsar's actions
were in accordance with the royalist constitution Finland had inherited
from Sweden. The Finns had no guarantees of liberty, but depended on the
tsar's goodwill for any freedoms they enjoyed. When Alexander II, the
Tsar Liberator, convened the Diet again in 1863, he did so not to
fulfill any obligation but to meet growing pressures for reform within
the empire as a whole. In the remaining decades of the century, the Diet
enacted numerous legislative measures that modernized Finland's system
of law, made its public administration more efficient, removed obstacles
to commerce, and prepared the ground for the country's independence in
the next century.
The wave of romantic nationalism that appeared in Europe in the first
half of the nineteenth century had profound effects in Finland. For
hundreds of years, Finland's Swedish-speaking minority had directed the
country's affairs. The Finnish-speaking majority, settled mostly in the
interior regions, was involved only marginally in the social and the
commercial developments along the coast. Finnish-speakers wishing to
rise in society learned Swedish. Few schools used Finnish as a means of
instruction: higher education was conducted entirely in Swedish, and
books in Finnish were usually on religious subjects. The nationalist
movement in Finland created an interest in the language and the folklore
of the Finnish-speaking majority. Scholars set out into the countryside
to learn what they could of the traditional arts. Elias Lönnrot, the
most important of these men, first published his collection of Finnish
folk poems in 1835. This collection, the Kalevala, was quickly
recognized as Finland's national epic. It became the cornerstone of the
movement that aimed at transforming rural Finnish dialects into a
language suitable for modern life and capable of displacing Swedish as
the language of law, commerce, and culture.
Several generations of struggle were needed before the Finnish
nationalist movement realized its objectives. Numerous members of the
Swedish-speaking community entered the campaign, adopting Finnish as
their language and exchanging their Swedish family names for Finnish
ones. Finnish journals were founded, and Finnish became an official
language in 1863. By the end of the century, there was a slight majority
of Finnish-speaking students at the University of Helsinki, and
Finnish-speakers made up sizable portions of the professions.
Finland's first political parties grew out of the language struggle.
Those advocating full rights for Finnish-speakers formed the so-called
Fennoman group that by the 1890s had split into the Old Finns and the
Young Finns, the former mainly concerned with the language question, the
latter urging the introduction of political liberalism. The
Swedish-speaking community formed a short-lived Liberal Party. As the
century drew to a close and the Fennoman movement had achieved its
principal goals, economic issues and relations with the tsarist empire
came to dominate politics.
Finland's economy had always been predominantly agricultural, and
with the exception of a small merchant class along the coast, nearly all
Finns were engaged in farming, mostly on small family farms. Despite the
location of the country in the high north, long summer days usually
allowed harvests sufficient to support the country's population,
although many lived at a subsistence level. In years of poor harvests,
however, famine was possible. In 1867--68, for example, about 8 percent
of the population starved to death.
Sweden's political development had favored the formation of an
independent peasantry rather than a class of large landowners. Even
while part of the tsarist empire, Finland maintained this tradition. As
a result, instead of serfs, there were many independent small farmers,
who, in addition to owning their land, had stands of timber they could
sell. When Western Europe began to buy Finnish timber on a large scale
in the latter part of the nineteenth century, many farmers profited from
the sale of Finland's only significant natural resource, and ready money
transformed many of them into entrepreneurs. There was also demand for
timber products, and, at sites close to both timber and means of
transport, pulp and paper mills were constructed.
Liberalization of trade laws and the institution of a national
currency not tied to the Russian ruble encouraged a quickening of the
economy and the growth of other sectors. Finland's position within the
Russian Empire was also beneficial. As Finnish products were not subject
to import duties, they could be sold at lower prices than comparable
goods coming from Western Europe.
The appearance of an industrial sector offered employment to a rural
work force, many of whom owned no land and earned their living as tenant
farmers or laborers. Much of the employment offered was of a seasonal
nature, a circumstance that meant considerable hardship. In contrast to
the larger European countries, most of this emerging proletariat did not
live in concentrated urban areas, but near numerous small industrial
centers around the country. This had two results: the one was that the
Finnish working class retained much of its rural character; the other
was that labor problems affected the entire country, not just urban
Finland's modernizing economy encouraged the formation of social
groups with specific, and sometimes opposing, interests. In addition to
the Finnish movement's Old and Young Finns, other political
organizations came into being. Because the existing political groups did
not adequately represent labor's interests, a workers' party was formed
at the end of the century. In 1903 it became the Finnish Social
Democratic Party (Suomen Sosialidemokraatthinen Puolue--SDP). At the
same time labor was organizing itself, the farmers began a cooperative
movement; in 1907 they formed the Agrarian Party (Maalaisliitto--ML).
The Swedish People's Party (Svenska Folkpartiet--SFP), also dating from
this period, was formed to serve the entire Swedish-speaking population,
not just those involved in commerce, an area where Swedish-speakers were
The Grand Duchy's relationship with St. Petersburg began to
deteriorate in the 1890s. The nervousness of tsarist officials about
Finnish loyalty in wartime prompted measures to bind Finland more
closely to the empire. The campaign of "Russification" ended
only with Finland's independence in 1917. In retrospect the campaign can
be seen as a failure, but for several decades it caused much turmoil
within Finland, reaching its most extreme point with the assassination
of the governor general in 1904. The first Russian revolution, that of
1905, allowed Finns to discard their antiquated Diet and to replace it
with a unicameral legislature, the Eduskunta, elected through universal
suffrage. Finland became the first European nation in which women had
the franchise. The first national election, that of 1907, yielded
Europe's largest social democratic parliamentary faction. In a single
step, Finland went from being one of Europe's most politically backward
countries to being one of its most advanced. Nonetheless, frequent
dissolutions at the hands of the tsar permitted the Eduskunta to achieve
little before independence.
The second Russian revolution allowed Finland to break away from the
Russian empire, and independence was declared on December 6, 1917.
Within weeks, domestic political differences led to an armed struggle
among Finns themselves that lasted until May 1918, when right-wing
forces, with some German assistance, were able to claim victory. Whether
seen as a civil war or as a war of independence, the conflict created
bitter political divisions that endured for decades. As a consequence,
Finland began its existence as an independent state with a considerable
segment of its people estranged from the holders of power, a
circumstance that caused much strife in Finnish politics.
In mid-1919, Finns agreed on a new Constitution, one that constructed
a modern parliamentary system of government from existing political
institutions and traditions. The 200-seat unicameral parliament, the
Eduskunta, was retained. A cabinet, the Council of State, was fashioned
from the Senate of the tsarist period. A powerful presidency, derived,
in part at least, from the office of governor general, was created and
provided with a mixture of powers and duties that, in other countries,
might be shared by such figures as king, president, and prime minister.
Also included in the new governmental system was an independent
judiciary. The powers of the three branches of government were
controlled through an overlapping of powers, rather than a strict
separation of powers.
Finland faced numerous political and economic difficulties in the
interwar years, but it surmounted them better than many other European
countries. Despite the instability of many short-lived governments, the
political system held together during the first decades of independence.
While other countries succumbed to right-wing forces, Finland had only a
brush with fascism. Communist organizations were banned, and their
representatives in the Eduskunta arrested, but the SDP was able to
recover from wounds sustained during the Civil War and was returned to
power. In 1937 the party formed the first of the so-called Red-Earth
coalitions with the ML, the most common party combination of the next
fifty years, one that brought together the parties representing the two
largest social groups. The language problem was largely resolved by
provisions in the Constitution that protected the rights of the
Swedish-speaking minority. Bitterness about the past dominance of
Swedish-speaking Finns remained alive in some segments of the
population, but Finnish at last had a just place in the country's
economic and social life.
Finland's economy diversified further during the the 1920s and the
1930s. Timber, the country's "green gold," remained essential,
but timber products such as pulp and paper came to displace timber as
the most important export. Government measures, such as nationalization
of some industries and public investment in others, encouraged the
growth and strengthening of the mining, chemical, and metallurgical
industries. Nevertheless, agriculture continued to be more important in
Finland than it was in many other countries of Western Europe.
Government-enforced redistribution of plots of land reduced the number
of landless workers and fostered the development of the family farm.
Survival during the Great Depression dictated that Finnish farmers
switch from animal products for export to grains for domestic
Finland's official foreign policy of neutrality in the interwar
period could not offset the strategic importance of the country's
territory to Nazi Germany and to the Soviet Union. The latter was
convinced that it had a defensive need to ensure that Finland would not
be used as an avenue for attack on its northwestern areas, especially on
Leningrad. When Finland refused to accede to its demands for some
territory, the Soviet Union launched an attack in November 1939. A
valiant Finnish defense, led by Carl Gustaf Emil Mannerheim, slowed the
invaders, but in March 1940 the Winter War ended when Finland agreed to
cede to the Soviets about 10 percent of Finnish territory and to permit
a Soviet military base on Finnish soil. In June 1941, Finland joined
Germany as cobelligerent in its attack on the Soviet Union. In what
Finns call the Continuation War, Finland confined its military actions
to areas near its prewar borders. In the fall of 1944, Finland made a
separate peace with the Soviet Union, one that was conditional on its
ceding territory, granting basing rights, agreeing to onerous reparation
payments, and expelling German forces from its territory. However,
although Finland suffered greatly during World War II and lost some
territory, it was never occupied, and it survived the war with its
Finland faced daunting challenges in the immediate postwar years. The
most pressing perhaps was the settlement of 400,000 Finns formerly
residing in territory ceded to the Soviet Union. Most were natives of
Karelia. Legislation that sequestered land throughout the country and
levied sacrifices on the whole population provided homes for these
displaced Finns. Another hurdle was getting the economy in shape to make
reparation payments equivalent to US$300 million, most of it in kind, to
the Soviet Union. This payment entailed a huge effort, successfully
completed in 1952.
A less concrete problem, but ultimately a more important one, was the
regulation of Finland's international relations. The Treaty of Paris,
signed in 1947, limited the size and the nature of Finland's armed
forces. Weapons were to be solely defensive. A deepening of postwar
tensions led a year later to the Treaty of Friendship, Cooperation, and
Mutual Assistance (FCMA--see Appendix B) with the Soviet Union, the
treaty that has been the foundation of Finnish foreign relations in the
postwar era. Under the terms of the treaty, Finland is bound to confer
with the Soviets and perhaps to accept their aid if an attack from
Germany, or countries allied with Germany, seems likely. The treaty
prescribes consultations between the two countries, but it is not a
mechanism for automatic Soviet intervention in a time of crisis. The
treaty has worked well, and it has been renewed several times, the last
time in 1983. What the Soviet Union saw as its strategic defensive
need--a secure northwestern border-- was met. The Finns also achieved
their objective in that Finland remained an independent nation.
The Finnish architect of the treaty, Juho Kusti Paasikivi, a leading
conservative politician, saw that an essential element of Finnish
foreign policy must be a credible guarantee to the Soviet Union that it
need not fear attack from, or through, Finnish territory. Because a
policy of neutrality was a political component of this guarantee,
Finland would ally itself with no one. Another aspect of the guarantee
was that Finnish defenses had to be sufficiently strong to defend the
nation's territory. This policy, continued after Paasikivi's term as
president (1946-56) by Urho Kekkonen (1956-81) and Mauno Koivisto (1982-
), remained the core of Finland's foreign relations.
In the following decades, Finland maintained its neutrality and
independence. It had moved from temporary isolation in the immediate
postwar years to full membership in the community of nations by the end
of the 1980s. Finland joined the United Nations (UN) and the Nordic
Council in 1955. It became an associate member of the European Free
Trade Association (EFTA) in 1961 and a full member in 1986. Relations
with the European Community (EC) and the Council of Mutual Economic
Assistance (CMEA, CEMA, or Comecon) date from the first half of the
1970s. In mid-1989, Finland joined the Council of Europe. The policy of
neutrality became more active in the 1960s, when Finland began to play a
larger role in the UN, most notably in its peacekeeping forces. Measures
aiming at increasing world peace have also been a hallmark of this
policy. Since the 1960s, Finland has urged the formation of a Nordic
Nuclear-Weapons-Free Zone (Nordic NWFZ), and in the 1970s was the host
of the Conference on Security and Cooperation in Europe (CSCE), which
culminated in the signing of the Helsinki Accords in 1975. By the end of
the 1980s, the most serious question for Finland in international
relations was how the country's economy, heavily dependent on exports,
would fare once the EC had achieved its goal of a single market in 1992.
Finland's neutrality seemed to preclude membership in an organization
where foreign policy concerns were no longer left to individual member
Finland also dealt effectively with domestic political problems in
the postwar era. By the early 1950s, the patterns of postwar Finnish
politics were established. No one group was dominant, but the ML under
the leadership of Kekkonen, who became president in 1956, became an
almost permanent governing party until the late 1980s. In 1966 it
changed its name to the Center Party (Keskustapuolue--Kesk) in an
attempt to appeal to a broader segment of the electorate, but it still
was not successful in penetrating southern coastal Finland. The SDP
remained strong, but it was often riven by dissension. In addition, it
had to share the socialist vote with the Communist Party of Finland
(Suomen Kommunistinen Puolue--SKP). As a consequence, nonsocialist
parties never had to face a united left. In the 1980s, the communists
had severe problems adjusting to new social conditions, and they split
into several warring groups. As a result, their movement had a marginal
position in Finnish politics. The SFP, a moderate centrist party with
liberal and conservative wings, had a slightly declining number of seats
in the Eduskunta, but its position in the middle of the political
spectrum often made it indispensable for coalition governments. The
National Coalition Party (Kansallinen Kokoomuspuoue--KOK), rigidly
conservative in the interwar period, gradually became more moderate and
grew stronger, surpassing Kesk in the number of parliamentary seats in
1979. Excluded from a role in government for decades, possibly because
it had been so right-wing earlier, th KOK Party participated in the
government formed after the national elections of 1987, supplying the
prime minister, Harri Holkeri. The Liberal Party of the postwar period
was never strong, and it had a negligible role by the 1980s.
A number of smaller parties, protest parties, and parties
representing quite distinct groups filled out the list of about a dozen
organizations that regularly vied for public office. Pensioners and
activist Christians each had their own party, and environmentalists won
several seats in the 1983 and the 1987 national elections. The most
active of the protest parties was the Finnish Rural Party (Suomen
Maaseudun Puolue--SMP), which managed to take votes from both Kesk and
the socialist groups. It scored its first big successes in the 1970
national elections. Since then its electoral results have varied
considerably. By late 1980s, it seemed a spent force.
After the 1966 national elections, President Kekkonen succeeded in
forming a popular front coalition government that contained communists,
socialists, and members of Kesk. Although this government lasted only
two years and was succeeded for another decade by short-lived coalition
and caretaker civil service governments, it was the beginning of what
Finns call the politics of consensus. By the 1980s, consensus politics
had become so dominant that some observers claimed that Finnish
politics, long so bitter and contentious, had become the most boring in
Western Europe. Although the larger parties differed on specific issues,
and personal rivalries could be poisonous, there was broad agreement
about domestic and foreign policy. The cabinet put in place after the
1983 elections, consisting mainly of social democrats and members of
Kesk, completed its whole term of office, the first government to do so
in the postwar period. Observers believed that the next government,
formed in 1987 and composed mainly of conservatives and social
democrats, would also serve out its term.
A foundation of the politics of consensus was the success of the
system of broad incomes agreements that has characterized Finland's
employee-employer relations in recent decades. The first of these, the
Liinamaa Agreement, dated from 1968. By the 1980s, the process was so
regular as to seem institutionalized. With about 80 percent of the work
force as members, unions negotiated incomes agreements with employers'
organizations. The government often helped in the talks and subsequently
proposed legislation embodying social welfare measures or financial
measures that underpinned the agreements. The process was successful at
increasing labor peace in a country that had been racked by strikes for
the first decades after World War II. Although there were complaints
that the agreements bypassed political channels or excluded minority
opinion, the obvious prosperity they had helped bring about made the
incomes policy system and the politics of consensus highly popular.
For much of its history, Finland had been a poor country, but in the
postwar era it gradually become one of the world's most prosperous. At
the end of the war, the country's economy faced serious hurdles.
Although it was never occupied, Finland had suffered extensive material
damage, especially in the north. The burden of reparations, to be paid
in kind, meant that much rebuilding had to occur quickly and the economy
had to be diversified. The Finns were successful, and by the early 1950s
the country had an economy well poised to compete in the world market.
Timber and timber products remained important, but a skillful selection
of export objectives and the general high quality of its manufactures
allowed Finnish products to penetrate the international economy at many
points. Careful government fiscal policies and selected state supports
combined with liberal trade policies and financial deregulation to
create an economy among the most capitalistic of Western Europe. In the
1980s, Finnish businessmen began to invest some of their profits abroad.
Faced with the prospect of being closed out of the EC's single market,
they bought into many firms located within the EC's member states.
Finland's membership in EFTA, an important trading partner of the EC,
also served to allay worries about the future of Finland's export trade.
Finland's access to the Soviet Union's economy, through an
arrangement whereby Finnish products were exchanged for raw materials,
had for decades provided a fairly secure market for many of Finland's
exports. By the late 1980s, trade with the Soviet Union was declining
because of the long-term drop in the price of oil, but sophisticated
joint venture agreements were being adopted to meet changed
The economic transformation of Finland caused a social transformation
as well. In 1950, approximately 40 percent of the work force was engaged
in agricultural and forest work. By the 1980s, fewer than 10 percent
were employed in this sector. Rather, the service sector became the
largest single source of work. As the country became wealthier, between
1950 and the 1980s, the number of persons retired or being educated
increased dramatically and accounted for a significant portion of the
population. An advanced economy required a skilled work force, and
enrollment at the university level alone had quadrupled.
A changing economy changed ways of life. Finns moved to areas where
jobs were available, mainly to the south coastal region. This area saw a
tremendous expansion, while other regions, most notably the
central-eastern area, lost population. Finns call this movement of
people from the countryside to the urbanized south the "Great
Migration." It gave Finns improved living conditions, but it caused
much uprooting with predictable social effects: loss of traditional
social ties, psychological disorders, and asocial behavior. Not all of
the new settlements constructed in the south were as famed for their
design as the garden town Tapiola in greater Helsinki.
The new prosperity was widely distributed, and people of all classes
benefited from it. Labor was highly organized, and the broad incomes
agreements involved nearly all of the working population. Those not in
the active work force got a decent share of the country's wealth via an
extensive system of social welfare programs. Worries about health or old
age were no longer pressing because government assistance was available
for those who needed it. Some social measures dealt with family welfare.
Paid maternity leave lasted for nearly a year, and in the 1980s
increasing resources were earmarked for childcare, as most mothers were
employed outside the home. Finland's welfare system was based on the
model developed in the other Nordic countries in which coverage was
universal and was seen as a right, not as a privilege. Faced with
special problems, and beginning with smaller means, Finland put its
welfare system in place somewhat later than did the Scandinavian
countries. By the late 1980s, however, it had become a member of that
small community of nations that combined an extensive state welfare
system with a highly competitive, privately owned market economy.
Finland - ORIGINS OF THE FINNS
During his reign, Gustav I Vasa concentrated on consolidating royal
power in the dynasty that he had founded and on furthering the aims of
the Reformation. In the process, he molded Sweden into a great power,
but he wisely avoided involvement in foreign wars. His successors,
however, sought, through an aggressive foreign policy, to expand
Sweden's power in the Baltic area. This policy produced some ephemeral
successes, and it led to the creation of a Swedish empire on the eastern
and the southern shores of the Baltic Sea.
Beginning in the mid-sixteenth century, Sweden's ambitious foreign
policy brought it into conflict with the three other main powers that
had an interest in the Baltic: Denmark, Poland, and Russia. These three
powers fought numerous wars with Sweden, which was at war for more than
80 of the last 300 years it ruled Finland. Finland itself was often the
scene of military campaigns that were generally conducted as total war
and thus included the devastation of the countryside and the killing of
civilians. One example of such campaigns was the war between Sweden and
Russia that lasted from 1570 to 1595 and was known in Finland as the
Long Wrath, because of the devastations inflicted on the country. Sweden
was also heavily involved in the Thirty Years' War (1618- 48), in which
the Swedes under King Gustavus II Adolphus thwarted the advance of the
Habsburg Empire to the shores of the Baltic and thereby secured the
Swedish possessions there. Finnish troops were conscripted in great
numbers into the Swedish army to fight in this or in other wars, and the
Finns often distinguished themselves on the battlefield.
The Great Northern War began in 1700 when Denmark, Poland, and Russia
formed an alliance to take advantage of Sweden's apparent weakness at
that time and to partition the Swedish empire. Sweden's youthful king
Charles XII surprised them, however, with a series of military victories
that knocked Denmark out of the war in 1700 and Poland, in 1706. The
impetuous Swedish king then marched on Moscow, but he met disaster at
the battle of Poltava in 1709. As a result, Denmark and Poland rejoined
the war against Sweden. Charles attempted to compensate for Sweden's
territorial losses in the Baltic by conquering Norway, but he was killed
in action there in 1718. His death removed the main obstacle to a
negotiated peace between Sweden and the alliance.
The Great Northern War ended on August 30, 1721, with the signing of
the Peace of Uusikaupunki (Swedish, Nystad), by which Sweden ceded most
of its territories on the southern and the eastern shores of the Baltic
Sea. Sweden was also forced to pay a large indemnity to Russia, and, in
return, the Russians evacuated Finland, retaining only some territory
along Finland's southeastern border. This area included the fortress
city of Viipuri. As a result of the war, Sweden's power was much
reduced, and Russia replaced Sweden as the main power in the Baltic.
Finland's ability to defend itself had been impaired by the famine of
1696 in which about one-third of the Finnish people died of starvation,
a toll greater than that caused by the Black Death in the fourteenth
century. The war's greatest impact on Finland, beyond the heavy taxes
and conscription, was caused by Russian occupation from 1714 to 1722, a
period of great difficulty, remembered by the Finns as the Great Wrath.
The hardships of being conquered by a foreign invader were compounded by
Charles XII's insistence that the Finns carry on partisan warfare
against the Russians. Much of the countryside was devastated by the
Russians in order to deny Finland's resources to Sweden. Of the nearly
60,000 Finns who served in the Swedish army, only about 10,000 survived
the Great Northern War. Finland's prewar population of 400,000 was
reduced by the end of the war to about 330,000.
Charles XII's policies led to the repudiation of absolute monarchy in
Sweden and to the ushering in of a half-century of parliamentary
supremacy, referred to as the Age of Freedom. One major characteristic
of this era was the strife between the two major political parties, the
Hats, representing the upper classes, and the Caps, representing the
lower classes. These political parties, however, proved no more
competent in the realm of foreign affairs than the kings. In 1741 the
Hats led Sweden into a war with Russia in order to try to undo the
result of the Peace of Uusikaupunki. Russian forces thereupon invaded
Finland and began, virtually without a fight, a short-lived occupation
known as the Lesser Wrath. In accordance with the Peace of Turku signed
in 1743, Russia once again evacuated Finland, but took another slice of
Finnish territory along the southeastern frontier.
King Gustav III, who in 1772 had reimposed absolutism in Sweden, also
tried to alter the verdict of the Great Northern War. In 1788 Sweden
declared war against Russia with the intention of regaining territory
along Finland's eastern frontier. A significant incident during that war
was the mutiny of a group of Finnish military officers, the Anjala
League, the members of which, hoped to avert Russian revenge against
Finland. A leading figure in the mutiny was a former colonel in the
Swedish army, Göran Sprengtporten. Most Finnish officers did not
support the mutiny, which was promptly put down, but an increasing
number of Finns, especially Finnish nobles, were weary of Finland's
serving as a battleground between Sweden and Russia. Because of Russia's
simultaneous involvement in a war with the Ottoman Empire, Sweden was
able to secure a settlement in 1790 in the Treaty of Varala, which ended
the war without altering Finland's boundaries.
Sweden's frequent wars were expensive, and they led to increased
taxation, among other measures for augmenting state revenues. A system
of government controls on the economy, or mercantilism, was imposed on
both Sweden and Finland, whereby the Finnish economy was exploited for
the benefit of Sweden. In addition to hindering Finland's economic
development, Sweden's wars enabled Swedish aristocrats and military
officers to gain large estates in Finland as a reward for their
services. The Swedish-speaking minority dominated landholding,
government, and the military. Although free of serfdom, peasants paid
high taxes, and they had to perform labor for the government. Through
the provincial assemblies, the peasants retained a small measure of
political power, but the Swedish-speaking nobility held most political
and economic power in Finland.
Throughout this period, the peasantry continued to be the backbone of
Finland's predominantly agrarian society. The frontier was pushed
northward as new stretches of inland wilderness were settled. The potato
was introduced into Finnish agriculture in the 1730s, and it helped to
ensure a stable food supply. Although Finland's trade in naval
stores--timber, tar, pitch, resin--was expanded considerably, the growth
of an indigenous Finnish middle class was retarded by the continuing
dominance of foreign merchants, especially the Germans and the Dutch.
The centuries-old union between Sweden and Finland came to an end
during the Napoleonic wars. France and Russia became allies in 1807 at
Tilsit, and Napoleon subsequently urged Russia to force Sweden into
joining them against Britain. Tsar Alexander I obliged by invading
Finland in 1808, and, after overwhelming Sweden's poorly-organized
defenses, he conquered Finland in 1809. Sweden formally ceded Finland to
Russia by the Treaty of Hamina (Swedish, Fredrikshamn) on September 17,
Finland - THE RUSSIAN GRAND DUCHY OF FINLAND, 1809-1917
The Russian Empire in the late nineteenth century faced a number of
seemingly intractable problems associated with its general backwardness.
At the same time, ethnocentric, authoritarian Russian nationalism was on
the rise, as manifested both in an aggressive foreign policy and in a
growing intolerance of non-Russian minorities within the empire. The
Russian government began implementing a program of Russification that
included the imposition of the Russian language in schools and in
governmental administration. The goal of these measures was to bring
non-Russian peoples into the Russian cultural sphere and under more
direct political control. Poles bore the brunt of the Russification
policies, but eventually other non-Russian peoples also began to feel
Russian nationalists considered the autonomous state of Finland an
anomaly in an empire that strove to be a unified autocratic state;
furthermore, by the 1890s Russian nationalists had several reasons to
favor the Russification of Finland. First, continued suspicions about
Finnish separatism gained plausibility with the rise of Finnish
nationalism. Second, Finnish commercial competition began in the 1880s.
Third, Russia feared that Germany might capitalize on its considerable
influence in Sweden to use Finland as a staging base for an invasion of
Russia. The Russian government was concerned especially for the security
of St. Petersburg. Fourth, there was a growing desire that the Finns,
who enjoyed the protection of the Russian Empire, should contribute to
that protection by allowing the conscription of Finnish youths into the
Russian army. These military considerations were decisive in leading the
tsarist government to implement Russification, and it was a Russian
military officer, Nikolai Ivanovich Bobrikov, who, in October 1898,
became the new governor-general and the eventual instrument of the
The first major measure of Russification was the February Manifesto
of 1899, an imperial decree that asserted the right of the tsarist
government to rule Finland without consulting either the Finnish Senate
or the Diet. This decree relegated Finland to the status of the other
provinces of the Russian Empire, and it cleared the way for further
Russification. The response of the Finns was swift and overwhelming.
Protest petitions circulated rapidly throughout Finland, and they
gathered more than 500,000 signatures. In March 1899, these petitions
were collected, and they were submitted to the tsar, who chose to ignore
this so- called Great Address. The February Manifesto was followed by
the Language Manifesto of 1900, which was aimed at making Russian the
main administrative language in government offices.
In spite of the impressive show of unity displayed in the Great
Address, the Finns were divided over how to respond to Russification.
Those most opposed to Russification were the Constitutionalists, who
stressed their adherence to Finland's traditional system of government
and their desire to have it respected by the Russian government. The
Constitutionalists formed a political front that included a group of
Finnish speakers, called the Young Finns, and most Swedish speakers.
Another party of Finnish speakers, called the Old Finns, represented
those who were tempted to comply with Russification, partly out of a
recognition of their own powerlessness and partly out of a desire to use
the Russians to undermine the influence of Swedish speakers in Finland.
These Finns were also called Compliants, but by 1910 the increasingly
unreasonable demands of the tsarist government showed their position to
be untenable. The SDP favored the Constitutionalists, insolar as it
favored any middle-class party.
The measure that transformed Finnish resistance into a mass movement
was the new conscription law promulgated by the tsar in July 1901. On
the basis of the February Manifesto, the tsar enacted a law for Finland
that dramatically altered the nature of the Finnish army. Established
originally as an independent army with the sole mission of defending
Finland, the Finnish army was now incorporated into the Russian army and
was made available for action anywhere. Again the Finns responded with a
massive petition containing about half a million signatures, and again
it was ignored by the tsar; however, this time the Finns did not let
matters rest with a petition, but rather followed it up with a campaign
of passive resistance. Finnish men eligible for conscription were first
called up under the new law in 1902, but they responded with the
so-called Army Strike--only about half of them reported for duty. The
proportion of eligible Finns complying with the draft rose in 1903,
however, from about half to two-thirds and, in 1904, to about
four-fifths. The high incidence of non-compliance nevertheless convinced
the Russian military command that the Finns were unreliable for military
purposes, and, as a consequence, the Finns were released from military
service in return for the levy of an extra tax, which they were to pay
to the imperial government.
The Finns' victory in the matter of conscription was not achieved
until the revolution of 1905 in Russia. In the meantime, the Russian
government had resorted to repressive measures against the Finns. They
had purged the Finnish civil service of opponents of Russification; they
had expanded censorship; and, in April 1903, they had granted
dictatorial powers to Governor- General Bobrikov. These years also
witnessed the growth of an active and conspiratorial resistance to
Russification, called the Kagal after a similar Jewish resistance
organization in Russia. In June 1904, the active resistance succeeded in
assassinating Bobrikov, and his death brought a lessening of the
pressure on Finland.
The first era of Russification came to an end with the outbreak of
revolution in Russia. The general strike that began in Russia in October
1905 spread quickly to Finland and led there, as in Russia, to the
assumption of most real power by the local strike committees. As in
Russia, the revolutionary situation was defused quickly by the sweeping
reforms promised in the tsar's October Manifesto, which for the Finns
suspended, but did not rescind, the February Manifesto, the conscription
law, and Bobrikov's dictatorial measures.
In 1906, the tsar proposed that the antiquated Finnish Diet be
replaced by a modern, unicameral parliament. The Finns accepted the
proposal, and the Eduskunta was created. Also included in the tsar's
proposal was the provision that the parliament be elected by universal
suffrage, a plan that the Finns accepted, thanks to the spirit of
national solidarity they had gained through the struggle against
Russification. The number of eligible voters was increased thereby from
125,000 to 1,125,000, and Finland became the second country, after New
Zealand, to allow women to vote. When the new parliament met in 1907,
the SDP was the largest single party, with 80 of 200 seats.
Partly out of frustration that the revolution of 1905 had not
accomplished more, the Finnish SDP became increasingly radical.
Foreshadowing the civil War, the short-lived revolutionary period also
brought about, in 1906, the first armed clash between the private armies
of the workers (Red Guard) and the middle classes (Civil Guard or White
Guard). Thus the Finns were increasingly united in their opposition to
Russification, but they were split on other major issues.
By 1908 the Russian government had recovered its confidence
sufficiently to resume the program of Russification, and in 1910 Russian
prime minister Pyotr Stolypin easily persuaded the Russian parliament,
the Duma, to pass a law that ended most aspects of Finnish autonomy. By
1914 the Finnish constitution had been greatly weakened, and Finland was
ruled from St. Petersburg as a subject province of the empire.
The outbreak of the World War I had no immediate effects on Finland
because Finns--except for a number of Finnish officers in the Russian
army--did not fight in it, and Finland itself was not the scene of
fighting. Finland suffered from the war in a variety of ways,
nevertheless. Cut off from overseas markets, Finland's primary
industry--lumber--experienced a severe decline, with layoffs of many
workers. Some of the unemployed were absorbed by increased production in
the metal-working industry, and others found work constructing
fortifications in Finland. By 1917 shortages of food had become a major
problem, contributing further to the distress of Finnish workers. In
addition, sizable contingents of the Russian army and navy were
stationed in Finland. These forces were intended to prevent a German
incursion through Finland, and by 1917 they numbered more than 100,000
men. The Finns disliked having so many Russians in their country, and
all of this discontent played into the hands of the SDP, the main
opposition party, which in the 1916 parliamentary elections won 103 of
200 seats in the Eduskunta--an absolute majority.
There were no longer any doubts about Russia's long-term objectives
for Finland after November 1914, when the Finnish press published the
Russian government's secret program for the complete Russification of
Finland. Germany appeared as the only power capable of helping Finland,
and many Finns thus hoped that Germany would win the war, seeing in
Russia's defeat the best means of obtaining independence. The German
leadership, for its part, hoped to further its war effort against Russia
by aiding the Finns. In 1915, about 2,000 young Finns began receiving
military training in Germany. Organized in a jaeger (light infantry)
battalion, these Finns saw action on the eastern front.
By 1917, despite the divisions among the Finns, there was an emerging
unanimity that Finland must achieve its independence from Russia. Then
in March 1917, revolution broke out in Russia, the tsar abdicated, and
within a few days the revolution spread to Finland. The tsarist regime
had been discredited by its failures and had been toppled by
revolutionary means, but it was not yet clear what would take its place.
Finland - INDEPENDENCE AND THE INTERWAR ERA, 1917-39
The Revolution that was underway in Russia by March 8, 1917, spread
to Helsinki on March 16, when the Russian fleet in Helsinki mutinied.
The Provisional Government promulgated the so- called March Manifesto,
which cancelled all previous unconstitutional legislation of the tsarist
government regarding Finland. The Finns overwhelmingly favored
independence, but the Provisional Government granted them neither
independence nor any real political power, except in the realm of
administration. As during the Revolution of 1905, most actual power in
Finland was wielded by the local strike committees, of which there were
usually two: one, middle-class; the other, working-class. Also as
before, each of the two factions in Finnish society had its own private
army: the middle-class, the Civil Guard; and the workers, the Red Guard.
The disintegration of the normal organs of administration and order,
especially the police, and their replacement by local strike committees
and militias unsettled society and led to a growing sense of unease.
Contention among political factions grew. The SDP first sought to use
its parliamentary majority to increase its power at the expense of the
Provisional Government. In July 1917, it passed the so-called Power Act,
which made the legislature supreme in Finland, and which reserved only
matters of foreign affairs and defense for the Provisional Government.
The latter thereupon dissolved the Finnish parliament and called for new
elections. The campaign for these new elections was bitterly fought
between the socialists and the nonsocialists. Violence between elements
of the middle class and the working class escalated at this time, and
murders were committed by both sides. The nonsocialists won in the
election, reducing the socialist contingent in the parliament to 92 of
200 seats, below the threshold of an absolute majority.
Meanwhile, the socialists were becoming disillusioned with
parliamentary politics. Their general failure to accomplish anything,
using parliamentary action, from 1907 to 1917 contrasted strongly with
their successes in the 1905 to 1906 period, using direct action. By
autumn 1917, the trend in the SDP was for the rejection of parliamentary
means in favor of revolutionary action. The high unemployment and the
serious food shortages suffered, in particular, by the Finnish urban
workers accelerated the growth of revolutionary fervor. The SDP proposed
a comprehensive program of social reform, known as the We Demand (Me
vaadimme) in late October 1917, but it was rejected by parliament,
now controlled by the middle class. Acts of political violence then
became more frequent. Finnish society was gradually dividing into two
camps, both armed, and both intent on total victory.
The Bolshevik takeover in Russia in November 1917 heightened emotions
in Finland. For the middle classes, the Bolsheviks aroused the specter
of living under revolutionary socialism. Workers, however, were inspired
by the apparent efficacy of revolutionary action. The success of the
Bolsheviks emboldened the Finnish workers to begin a general strike on
November 14, 1917, and within forty-eight hours they controlled most of
the country. The most radical workers wanted to convert the general
strike into a full seizure of power, but they were dissuaded by the SDP
leaders, who were still committed to democratic procedures and who
helped to bring an end to the strike by November 20. Already there were
armed clashes between the Red Guards and the White Guards; during and
after the general strike, a number of people were killed.
Following the general strike, the middle and the upper classes were
in no mood for compromise, particularly because arms shipments and the
return of some jaegers from Germany were transforming the White Guard
into a credible fighting force. In November a middle-class government
was established under the tough and uncompromising Pehr Evind
Svinhufvud, and on December 6, 1917, it declared Finland independent.
Since then, December 6 has been celebrated in Finland as Independence
Day. True to his April Theses that called for the self-determination of
nations, Lenin's Bolshevik government recognized Finland's independence
on December 31.
Throughout December 1917 and January 1918, the Svinhufvud government
demonstrated that it would make no concessions to the socialists and
that it would rule without them. The point of no return probably was
passed on January 9, 1918, when the government authorized the White
Guard to act as a state security force and to establish law and order in
Finland. That decision in turn encouraged the workers to make a
preemptive strike, and in the succeeding days, revolutionary elements
took over the socialist movement and called for a general uprising to
begin on the night of January 27-28, 1918. Meanwhile, the government had
appointed a Swedish-speaking Finn and former tsarist general, Carl
Gustaf Emil Mannerheim (1867-1951), as the commander of its military
forces, soon to be called the Whites. Independently of the Reds,
Mannerheim also called for military action to begin on the night of
January 27-28. Whether or not the civil war was avoidable has been
debated ever since, but both sides must share in the responsibility for
its outbreak because of their unwillingness to compromise.
Within a few days of the outbreak of the civil war, the front lines
had stabilized. The Whites, whose troops were mostly farmers, controlled
the northern and more rural part of the country. The Reds, who drew most
of their support from the urban working class, controlled the southern
part of the country, as well as the major cities and industrial centers
and about one- half of the population. The Red forces numbered 100,000
to 140,000 during the course of the war, whereas the Whites mustered at
most about 70,000.
The soldiers of both armies displayed great heroism on the
battlefield; nevertheless, the Whites had a number of telling
advantages--probably the most important of which was professional
leadership--that made them the superior force. Mannerheim, the Whites'
military leader, was a professional soldier who was experienced in
conducting large-scale operations, and his strategic judgment guided the
White cause almost flawlessly. He was aided by the influx of jaegers
from Germany, most of whom were allowed to return to Finland in February
1918. The White side also had a number of professional Swedish military
officers, who brought military professionalism even to the small-unit
level. In addition, beginning in February, the Whites had better
equipment, most of which was supplied by Germany. Finally, the Whites
had the benefit of more effective foreign intervention on their side.
The approximately 40,000 Russian troops remaining in Finland in January
1918 helped the Finnish Reds to a small extent, especially in such
technical areas as artillery, but these troops were withdrawn after the
signing of the Treaty of Brest-Litovsk on March 3, 1918, and thus were
gone before fighting reached the crucial stage. On the White side,
however, the Germans sent not only the jaegers and military equipment
but also a reinforced division of first-rate troops, the Baltic
Division, which proved superior to the Reds.
The Red Guards suffered from several major disadvantages: poor
leadership, training, and equipment; food shortages; the practice of
electing officers democratically, which made discipline lax; and the
general unwillingness of the Red troops to go on offensive operations or
even to operate outside their local areas. Ultimately, the Reds suffered
most from a lack of dynamic leadership. There was no Finnish Lenin to
direct the revolution, and there was no Finnish Trotsky to vitalize the
Red armed forces. These Red disadvantages became apparent in late March
and early April 1918, when the Whites won a decisive victory by reducing
the Red stronghold of Tampere, the major inland industrial center. At
about the same time, German forces landed along the southern coast,
quickly driving all before them, securing Helsinki on April 13 and, in
the process, destroying about half of the remaining effective strength
of the Red Guards. The last Red strongholds in southeastern Finland were
cleared out in late April and early May 1918, and thousands of Finnish
Reds, including the Red leadership, escaped into the Soviet Union. On
May 16, 1918, General Mannerheim entered Helsinki, formally marking the
end of the conflict. Each year thereafter, until World War II, May 16
was celebrated by the Whites as a kind of second independence day.
The tragedy of the civil war was compounded by a reign of terror that
was unleashed by each side. In Red-dominated areas, 1,649 people, mostly
businessmen, independent farmers, and other members of the middle class
were murdered for political reasons. This Red Terror appears not to have
been a systematic effort to liquidate class enemies, but rather to have
been generally random. The Red Terror was disavowed by the Red
leadership and illustrated the extent to which the Red Guard evaded the
control of the leadership. More than anything else, the Red Terror
helped to alienate the populace from the Red cause; it also harmed the
morale of the Reds.
The Red Terror confirmed the belief of the Whites that the Reds were
criminals and traitors and were therefore not entitled to the protection
of the rules of war. As a consequence, the Whites embarked on their own
reign of terror, the White Terror, which proved much more ferocious than
the Red Terror. First, there were reprisals against defeated Reds, in
the form of mass executions of Red prisoners. These killings were
carried on by local White commanders over the opposition of White
leadership. At least 8,380 Reds were killed, more than half after the
Whites' final victory. Another component of the White Terror was the
suffering of the Reds imprisoned after the war. The Whites considered
these Reds to be criminals and feared that they might start another
insurrection. By May 1918, they had captured about 80,000 Red troops,
whom they could neither house nor feed. Placed in a number of detention
camps, the prisoners suffered from malnutrition and general neglect, and
within a few months an estimated 12,000 of them had died. The third
aspect of the White Terror was legal repression. As a result of mass
trials, approximately 67,000 Reds were convicted of participating in the
war, and of these 265 were executed; the remainder lost their rights of
citizenship, although many sentences were later suspended or commuted.
The civil war was a catastrophe for Finland. In only a few months,
about 30,000 Finns perished, less than a quarter of them on the
battlefield, the rest in summary executions and in detention camps.
These deaths amounted to about 1 percent of the total population of
Finland. By comparison, the bloodiest war in the history of the United
States, the Civil War, cost the lives of about 2 percent of the
population, but that loss was spread out over four years.
The memory of the injuries perpetrated during the war divided the
society into two camps; victors and vanquished. The working class had
suffered the deaths of about 25,000 from battle, execution, or prison,
and thousands of others had been imprisoned or had lost their political
rights. Almost every working-class family had a direct experience of
suffering or death at the hands of the Whites, and perhaps as much as 40
percent of the population was thereby alienated from the system. As a
result, for several generations thereafter, a large number of Finns
expressed their displeasure with the system by voting communist; and
until the 1960s, the communists often won a fifth or more of the vote in
Finland's national elections, a higher percentage than they did in most
The divisions in society that resulted from the conflict were so
intense that the two sides could not even agree on what it ought to be
called. The right gave it the name "War of Independence,"
thereby stressing the struggle against Russian rule, for they had feared
that a Red victory could well lead to the country's becoming a Soviet
satellite. Leftists emphasized the domestic dimensions of the conflict,
referring to it by the term "Civil War." Their feelings about
the course of the hostilities were so intense that, until the late
1930s, Social Democrats refused to march in the Independence Day parade.
Today, with the passing of decades, historians have generally come to
define the clash as a civil war.
Finland - The Establishment of Finnish Democracy
The end of the civil war in May 1918 found the government of Prime
Minister Svinhufvud seated again in Helsinki. Many Finns, however, now
questioned establishing the republic mentioned in the declaration of
independence of December 6, 1917. Monarchist sentiment was widespread
among middle-class Finns after the civil war for two reasons: monarchist
Germany had helped the Whites to defeat the Reds, and a monarchy seemed
capable of providing strong government and, thus, of better protecting
the country. Owing to the absence from parliament of most of the
socialists, rightists held the majority, through which they sought to
establish a monarchal form of government. On May 18, 1918, that is, two
days after General Mannerheim's triumphal entry into Helsinki,
Svinhufvud was elected the "possessor of supreme authority,"
and the search for a suitable monarch began. The new prime minister was
a prominent White politician, Juho Kusti Paasikivi. Its strongly
pro-German mood led the government to offer the crown to a German
nobleman, Friedrich Karl, Prince of Hesse, in October 1918. The sudden
defeat of Germany in November 1918, however, discredited Svinhufvud's
overtly pro-German and monarchal policy and led to his replacement by
Meanwhile, the SDP was reorganized under Vainö Tanner, a Social
Democrat who had not joined in the Red uprising, and this newly formed
SDP repudiated the extremism and violence that had led to civil war. In
the general parliamentary election of March 1919, the SDP again became
the largest single party, winning 80 of 200 parliamentary seats. In
conjunction with Finnish liberals, the SDP ensured that Finland would be
a republic. On July 17, 1919, the parliament adopted a constitution that
established a republican form of government, safeguarded the basic
rights of citizens, and created a strong presidency with extensive
powers and a six-year term of office. This Constitution was still in
effect in 1988. Also in July 1919, the first president of Finland was
elected. He was a moderate liberal named Kaarlo Juho StAhlberg, who had
been the primary author of the Constitution. White Finland's main
leaders, Svinhufvud, Mannerheim, and Paasikivi, retired from public life
in 1918 and 1919, but each of the three would later be recalled to serve
as president at a crucial moment in Finland's development--in 1931,
1944, and 1946, respectively. It is a tribute to the strength of the
democratic tradition in Finland that the country was able to undergo a
bloody and bitter civil war and almost immediately afterward recommence
the practices of parliamentary democracy.
The achievement of independence and the experience of the civil war
helped to bring about a major realignment of the political parties. The
Old Finn Party and the Young Finn Party were disbanded, and Finnish
speakers were divided into two new parties: conservatives and
monarchists formed the National Coalition Party (Kansallinen
Kokoomuspuolue--KOK); and liberals and republicans formed the National
Progressive Party (Kansallinen Edistyspuolue--ED), the ranks of which
included President StAhlberg. The Agrarian Party (Maalaisliitto--ML)
took on the interests of farmers, and the Swedish People's Party
(Svenska Folkpartiet--SFP), which had been founded in 1906, continued to
represent the interests of Swedish speakers. The process of
rehabilitating the SDP proceeded so far that in 1926 it was entrusted
briefly with forming a government, with Vainö Tanner as prime minister.
Of the twenty governments formed from 1919 to 1939, one was headed by
the SDP; five by the KOK; six by the ML; and eight by the ED. On the
average, there was thus one government a year, but this apparent
parliamentary instability was balanced somewhat by the continuity
provided by the office of president--in twenty years there were only
Another major political party was the Communist Party of Finland
(Suomen Kommunistinen Puolue--SKP), which was founded in August 1918 in
Moscow by Finnish Reds who had fled to the Soviet Union at the close of
the civil war. During the interwar period, the party was headed by Otto
Kuusinen, a former minister in the Finnish Red government. Like much of
the SKP leadership, he remained in exile in the Soviet Union, from where
he directed the party's clandestine activities in Finland. The SKP
attracted mainly left-wing militants and embittered survivors of the
civil war. In the 1922 election, the SKP, acting under the front
organization of the Finnish Socialist Workers' Party (Suomen
Sosialistinen Työvaenpuolue--SSTP), received 14.8 percent of the total
vote and twenty-seven seats in parliament. The following year the SSTP
was declared treasonous and was outlawed. As a result, the communists
formed another front organization, and in 1929 they won 13.5 percent of
the vote before being outlawed in 1930. Deprived of political access,
the communists tried to use strikes to disrupt the country's economic
life. They had so far infiltrated the SAJ by 1930 that politically
moderate trade unionists formed an entirely new organization, the
Confederation of Finnish Trade Unions (Suomen Ammattiyhdistysten
Keskusliitto-- SAK), which established itself solidly in the coming
The competition between Finnish speakers and Swedish speakers was
defused by the Language Act of 1922, which declared both Finnish and
Swedish to be official national languages. This law enabled the Swedish
speaking minority to survive in Finland, although in the course of the
twentieth century the Swedish- speakers have been gradually Finnicized,
declining from 11 percent of the population in the 1920s to about 6
percent in the 1980s. The unanimity with which both language groups
fought together in World War II attested to the success of the national
The enduring domestic political turmoil generated by the civil war
led to the rise not only of a large communist party, but also to that of
a large radical right-wing movement. The right wing consisted mainly of
Finnish nationalists who were unhappy with the 1920 Treaty of Dorpat
(Tartu) that had formally ended the conflict between the Soviet Union
and Finland and recognized Soviet sovereignty over Eastern Karelia. The
more extreme Finnish nationalists hoped for the establishment of a
Greater Finland (Suur-Suomi) that would unite the Finnic peoples of
Northern Europe within boundaries, running from the Gulf of Bothnia to
the White Sea and from Estonia to the Arctic Ocean, that included
Eastern Karelia. Eastern Karelia was the area, located roughly between
Finland and the White Sea, that was inhabited by Finnic-speaking people
who, centuries before, had been brought under Russian rule and had been
converted to Eastern Orthodoxy. Since the nineteenth century,
romantic Finnish nationalists had sought to reunite the Karelians with
The most prominent organization advancing the Greater Finland idea
was the Academic Karelia Society (Akateeminen Karjala-Seura- -AKS),
which was founded in 1922 by Finnish students who had fought in Eastern
Karelia against Soviet rule during the winter of 1921 to 1922. In the
1920s, the AKS became the dominant group among Finnish university
students. Its members often retained their membership after their
student days, and the AKS was strongly represented among civil servants,
teachers, lawyers, physicians, and clergymen. Most Lutheran clergymen
had been strongly pro-White during the civil war, and many of them were
also active in the AKS and in the even more radical anti- communist
Lapua movement. Thus the AKS created a worldview among an entire
generation of educated Finns that was relentlessly anti-Soviet and
expansionistic. (The Eastern Karelians were eventually assimilated into
Russian culture through a deliberate Soviet policy of denationalization,
aimed at removing any possibility of their being attracted to Finland.)
The military muscle for the right wing was provided by the Civil
Guard. In the 1920s, the Civil Guard had a strength of about 100,000,
and it received arms by parliamentary appropriation; however, Social
Democrats, branded as leftists, were not welcome as members. Finally
during World War II, the Civil Guard was integrated into the regular
army, and peace was made with the Social Democrats. The Civil Guard
included a women's auxiliary called Lotta Svard after a female hero of
the war of 1808 to 1809. This organization performed important support
work, behind the lines during the civil war and later during World War
II, thereby releasing many men for service on the front.
The apogee of right-wing nationalism was reached in the Lapua
movement, from 1929 to 1932. The emergence of the SKP in the 1920s had
contributed to a rightward trend in politics that became evident as
early as 1925 when Lauri Kristian Relander, a right-wing Agrarian, was
elected president. In November 1929, a rightist mob broke up a communist
rally at Lapua, a conservative town in northern Finland. That event
inspired a movement dedicated to extirpating communism from Finland by
any means, legal or illegal, an imperative that was termed the "Law
Under pressure from the Lapua movement, parliament outlawed communism
through a series of laws passed in 1930. Not content, however, the
Lapuans embarked on a campaign of terror against communists and others
that included beatings, kidnappings, and murders. The Lapuans
overreached themselves in 1930, however, when they kidnapped former
president StAhlberg, whom they disliked for his alleged softness toward
communism. Public revulsion against that act ensured the eventual
decline of the Lapua movement.
The final major political success of the Lapuans came in the election
to the presidency in 1931 of the former White leader, Svinhufvud, who
was sympathetic to them. In February 1932, the Lapuans began calling for
a "Finnish Hitler," and in March 1932, they used armed force
to take over the town of Mantsala, not far from Helsinki, in what
appeared to be the first step toward a rightist coup. Members of the
Civil Guard were prominent in this coup attempt. The Lapuans had,
however, underestimated President Svinhufvud, who used the Finnish army
to isolate the rebellion and to suppress it without bloodshed. The
leaders of the Mantsala revolt were tried and were convicted, and,
although they were given only nominal sentences, the Lapua movement was
The last flowering of right-wing nationalism began the month after
the Mantsala revolt, when a number of ex-Lapuans formed the Patriotic
People's Movement (Isanmaallinen Kansanliike--IKL). Ideologically, the
IKL, calling for a new system to replace parliamentary democracy, picked
up where the Lapua movement had left off. Much more than had the Lapua
movement, the IKL styled itself a fascist organization, and it borrowed
the ideas and trappings of Italian fascism and of German Nazism. Unlike
the Lapua movement, the IKL achieved scant respectability among
middle-class Finns. A future president of Finland, Urho Kekkonen, who in
1938 was minister of interior, banned the IKL. Like the communists,
however, the IKL demanded the protection of the Constitution that it
sought to destroy, and the IKL persuaded the Finnish courts to lift the
By the late 1930s, Finland appeared to have surmounted the threat
from the extreme right and to have upheld parliamentary democracy. The
White hero of the civil war, General Mannerheim, speaking in 1933 at the
May 16 parade, called for national reconciliation with the words;
"We need no longer ask where the other fellow was fifteen years ago
[that is, during the civil war]." In 1937 President Svinhufvud was
replaced by a more politically moderate Agrarian Party leader, Kyösti
Kallio, who promoted national integration by helping to form a so-called
Red- Earth government coalition that included Social Democrats, National
Progressives, and Agrarians.
A final factor promoting political integration during the interwar
years was the steady growth of material prosperity. The agricultural
sector continued to be the backbone of the economy throughout this
period; in 1938 well over half of the population was engaged in farming.
The main problem with agriculture before 1918 had been tenancy: about
three-quarters of the rural families cultivated land under lease
arrangements. In order to integrate these tenant farmers more firmly
into society, several laws were passed between 1918 and 1922. The most
notable was the so-called Lex Kallio (Kallio Law, named after its main
proponent, Kyösti Kallio) in 1922; by it, loans and other forms of
assistance were provided to help landless farmers obtain farmland. As a
result, about 150,000 new independent holdings were created between the
wars, so that by 1937 almost 90 percent of the farms were held by
independent owners and the problem of tenancy was largely solved.
Agriculture was also modernized by the great expansion of a cooperative
movement, in which farmers pooled their resources in order to provide
such basic services as credit and marketing at reasonable cost. The
growth of dairy farming provided Finland with valuable export products.
In summary, the agricultural sector of the Finnish economy showed
notable progress between the wars.
In addition, Finnish industry recovered quickly from the devastation
caused by the civil war, and by 1922 the lumber, paper, pulp, and
cellulose industries had returned to their prewar level of production.
As before the war, the lumber industry still led the economy, and its
success fueled progress in other sectors. By the Treaty of Dorpat in
1920, Finland had gained nickel deposits near the Arctic port of
Petsamo. These deposits were the largest in Europe, and production began
there in 1939. The success of Finnish products on the world market was
indicated by the general rise in exports and by the surplus in the
balance of payments. Finnish governments protected economic prosperity
by following generally conservative fiscal policies and by avoiding the
creation of large domestic deficits or foreign indebtedness.
In the 1920s and the 1930s, Finnish society moved toward greater
social integration and progress, mirroring developments in the Nordic
region as a whole. Social legislation included protection of child
workers; protection of laborers against the dangers of the workplace;
compulsory social insurance for accidents, disability, and old age; aid
for mothers and young children; aid for the poor, the crippled, the
alcoholic, and the mentally deficient; and housing aid. Finland
reflected European trends also in the emancipation of women, who gained
voting rights in 1906 and full legal equality under the Constitution in
1919. The 1920s and the 1930s witnessed a great increase in the number
of women in the work force, including the professions and politics.
Although in many ways Finland was predominantly nationalist and
introspective in spirit, it participated increasingly in the outside
world, both economically and culturally, a trend that contributed to its
gradual integration into the international community.
Finland - Finnish Security Policy Between the Wars
The underlying cause of the Winter War was Soviet concern about Nazi
Germany's expansionism. With a population of only 3.5 million, Finland
itself was not a threat to the Soviet Union, but its territory, located
strategically near Leningrad, could be used as a base by the Germans.
The Soviets initiated negotiations with Finland that ran intermittently
from the spring of 1938 to the summer of 1939, but nothing was achieved.
Finnish assurances that the country would never allow German violations
of its neutrality were not accepted by the Soviets, who asked for more
concrete guarantees. In particular, the Soviets sought a base on the
northern shore of the Gulf of Finland, from which they could block the
Gulf of Finland from hostile naval forces. The Finnish government,
however, felt that accepting these terms would only lead to further,
increasingly unreasonable, demands.
The Nazi-Soviet Non-Aggression Pact of August 1939, by bringing
together these former archenemies, revolutionized European politics. The
secret protocol of the pact gave the Soviet Union a sphere of influence
that included Finland, the Baltic states, and parts of Eastern Europe.
When the Germans won a stunningly quick victory over Poland in September
1939, the Soviets hastened to take control in their sphere of influence.
In addition to the land taken from Poland in September, the Soviets
quickly turned the three Baltic states into quasi-protectorates. Finland
followed these events closely; thus, when, on October 5, the Soviets
invited Finland to discuss "concrete political questions," the
Finns felt that they were next on the Soviets' agenda. Finland's first
reaction was to mobilize its field army on October 6, and on October 10
Finland's reservists were called up in what amounted to a general
mobilization. The following day the two countries began negotiations
that were to last until November 8.
In the negotiations, the main Soviet demand was that the Finns cede
small parcels of territory, including a naval base on the Gulf of
Finland that the Soviets wanted to help them protect Leningrad. In
exchange, the Soviets offered to cede to Finland about 8,800 square
kilometers of Karelia along the Finnish border, or about twice the
amount of land to be ceded by Finland. Unlike the previous negotiations,
these talks were conducted in the public eye, and the Finnish people,
like the government, were almost unanimous in rejecting the Soviet
proposals. The ostensible reasons for Finland's refusal were to protect
its neutral status and to preserve its territorial integrity. In
addition, moving the Finnish border on the Karelian Isthmus away from
Leningrad would have given the Soviets possession of much of the line of
Finnish fortifications, the loss of which would have weakened Finland's
defenses. Underlying the hardline Finnish negotiating position were a
basic mistrust of the Soviets and a feeling that the Soviet offer was
merely a first step in subjugating Finland. In this suspicion of an
ulterior motive, the Finns were matched by the Soviets, who believed
that Finland would willingly assist Germany in a future war.
The Finnish government appears to have underestimated the Soviet
determination to achieve these national security goals. The two main
Finnish negotiators, Vainö Tanner and Juho Paasikivi, vainly urged the
Finnish government to make more concessions, because they realized that
Finland was completely isolated diplomatically and could expect no
support from any quarter if events led to war. General Mannerheim also
urged conciliating the Soviets, because Finland by itself could not
fight the Soviet Union. When he was ignored, he resigned from the
Defense Council and as commander-in-chief, saying that he could no
longer be responsible for events. Mannerheim withdrew his resignation
when war broke out, however, and served ably as the Finnish military
leader. Some historians suggest that the war could have been prevented
by timely Finnish concessions. It appears that both sides proceeded from
a basic mistrust of the other that was compounded by mutual
miscalculations and by the willingness to risk war.
The Soviets attacked on November 30, 1939, without a declaration of
war. The Soviet preparations for the offensive were not especially
thorough, in part because they underestimated the Finnish capabilities
for resistance, and in part because they believed that the Finnish
workers would welcome the Soviets as liberators. However, almost no
Finns supported the Soviet puppet government under the veteran communist
Otto Kuusinen. In addition, in one of its last significant acts, the
League of Nations expelled the Soviet Union because of its unprovoked
aggression against Finland.
The task facing the Finnish armed forces, to obstruct a vastly larger
enemy along a boundary of about 1,300 kilometers, appeared impossible.
Geography aided the Finns, however, because much of the northern area
was a virtually impassable wilderness containing a few, easily-blocked
roads, and Finland generally presented difficult terrain on which to
conduct offensive operations. Thus the Finns were able to use only light
covering forces in the north and to concentrate most troops in the
crucial southeastern sector, comprising the Karelian Isthmus and the
area north of Lake Ladoga, that protected the isthmus from rear assault.
The position on the isthmus was strengthened considerably by the
Mannerheim Line. An additional Finnish advantage lay in the Finns'
unorthodox military doctrine. They were trained in the use of small,
mobile forces to strike at the flanks and the rear of road-bound
enemies. By means of the so- call motti tactic (the name is
taken from the Finnish word for a cord of firewood), they sought to
break invading columns into small segments, which were then destroyed
piecemeal. The final advantage of the Finns was their phenomenally high
morale; they knew they were fighting for their national survival.
Finland's main disadvantage lay in the glaring, fifty-to-one disparity
between its population and that of the Soviet Union. The Finnish hope
was to hold out until help could arrive from the West, a forlorn hope as
events turned out.
Most observers expected an easy Soviet victory. The Soviets simply
advanced all along the front with overwhelming forces, apparently
intending to occupy all of Finland. Thanks to the foresight the Soviets
had shown in previous years by constructing bases and railroads near the
Finnish border, they were able to commit much larger forces than the
Finns had anticipated. The main Soviet assault on the Mannerheim Line
was stopped, though, in December 1939. Farther north along the line, the
Finns were able to employ their motti tactics with surprising
effectiveness. At the most famous of these engagements, the Battle of
Suomussalmi, two Soviet divisions were virtually annihilated. By the end
of December 1939, the Finns had dealt the Soviets a series of
humiliating defeats. For a few weeks, the popular imagination of the
outside world was captured by the exploits of the white-clad Finnish ski
troops gliding ghostlike through the dark winter forests, and in general
by the brave resistance of the "land of heroes."
The Soviet invasion brought the Finns together as never before. In an
act that only a few years before would have been unthinkable, on
Christmas Eve in December 1939, middle-class Finns placed lighted
candles on the graves of Finnish Red Guards who had died in the civil
war. The magnificent courage displayed by Finnish soldiers of all
political persuasions during the Winter War of 1939-40 led Mannerheim to
declare afterwards that May 16 would no longer be celebrated, but that
another day would be chosen to commemorate "those on both sides who
gave their lives on behalf of their political convictions during the
period of crisis in 1918."
The defeats and the humiliations suffered by the Soviet Union made it
even more determined to win the struggle. The military command was
reorganized, and it was placed under General S. K. Timoshenko. The
Soviets made intensive preparations for a new offensive, assembling
masses of tanks, artillery, and first-class troops. On February 1, 1940,
the Soviet offensive began, and this time it was confined to the
Karelian Isthmus. Soviet tactics were simple: powerful artillery
bombardments were followed by repeated frontal assaults, using masses of
tanks and infantry. The Finnish defenders were worn down by the
continual attacks, the artillery and the aerial bombardments, the cold,
and the lack of relief and of replacements. On February 11, 1940, the
Soviets achieved a breakthrough in the Mannerheim Line that led to a
series of Finnish retreats. By early March, the Finnish army was on the
verge of total collapse. Finland was saved only by agreeing quickly to
Soviet terms, which were encompassed in the Peace of Moscow, signed on
March 13, 1940.
By the terms of the Peace of Moscow, Finland ceded substantial
territories: land along the southeastern border approximately to the
line drawn by the Peace of Uusikaupunki in 1721, including Finland's
second-largest city, Viipuri; the islands in the Gulf of Finland that
were the object of the negotiations in 1938-39; land in the Salla sector
in northeastern Finland (near the Murmansk Railroad); Finland's share of
the Rybachiy Peninsula in the Petsamo area; and the naval base at Hanko
on the Gulf of Finland, which was leased for thirty years. The ceded
territories contained about one-eighth of Finland's population;
virtually all of the inhabitants moved over to Finnish territory,
thereby losing their homes and livelihoods.
Finland's losses in the war were about 25,000 dead, 10,000
permanently disabled, and another 35,000 wounded, out of a population of
only 3.5 million. Estimates of Soviet losses vary greatly. A subsequent
Soviet leader, Nikita Khrushchev, estimated in his memoirs that the
Soviet losses were about one million men. In addition, the Soviets lost
much of their military credibility. Foreigners had observed keenly the
performance of the Red Army in Finland, with the result that the
military capabilities of the Soviet Union were widely discounted. Four
months after the conclusion of the Winter War, Adolf Hitler decided to
invade the Soviet Union, an event that historians generally consider a
turning point of World War II.
It is true that the Red Army had performed badly in Finland, but
there had been some extenuating circumstances. The winter of 1939 to
1940 was one of the coldest winters of the century, and the Soviet
troops were not trained for action under Arctic conditions. The Soviet
officer corps had been decimated by the purges of the 1930s, and the
officers were intimidated by the presence of political commissars within
their units. There was, especially in the first phase of the fighting,
poor coordination of the various arms (infantry, artillery, armor,
aircraft), and there were deficiencies in preparation and in
intelligence. In the year following the Winter War, the Soviets worked
hard at correcting their weaknesses, with the result that in 1941 the
Red Army was a much more effective military machine.
Finland - The Continuation War
The sudden admission of defeat by the Finnish government shocked the
Finnish people, who had been misled by overly optimistic government
reports on the military situation; however, the resilience of democratic
society helped the people to absorb defeat without undergoing radical
change. Instead, the Finns threw themselves into two major tasks:
absorbing the 400,000 refugees from the ceded territories, and rearming.
In the succeeding months, Soviet meddling in Finnish affairs and
other overbearing actions indicated to the Finns a continuing Soviet
desire to subjugate Finland. Among other actions, the Soviets demanded
the demilitarization of the Aland Islands (not called for by the Peace
of Moscow), control of the Petsamo nickel mines, and the expulsion of
Vainö Tanner from the Finnish government. More ominously, the Soviets
demanded to send an unlimited number of troop trains through Finnish
territory to the Soviet base at Hanko. Occurring at about the same time
that the Soviets annexed the Baltic states in June and July 1940, the
Finns began to fear that they would be next. When Soviet foreign
minister Viacheslav Molotov visited Berlin later that year, he admitted
privately to his German hosts that the Soviets intended to crush
Finland. The Finnish-Soviet Peace and Friendship Society
(Suomen-Neuvostoliiton rauhan ja ystavyyden seura--SNS), a
communist-front organization that quickly gained 35,000 Finnish members,
conducted subversive activities in open defiance of the Finnish
government. The SNS was banned in August, thus preserving public order,
but on other matters of concern to the Soviets the Finnish government
was forced to make concessions. Unknown to the Soviets, however, the
Finns had made an agreement with Germany in August 1940 that had
stiffened their resolve.
Hitler soon saw the value of Finland as a staging base for his
forthcoming invasion of the Soviet Union. The informal German-Finnish
agreement of August 1940 was formalized in September, and it allowed
Germany the right to send its troops by railroad through Finland,
ostensibly to facilitate Germany's reinforcement of its forces in
northern Norway. A further GermanFinnish agreement in December 1940 led
to the stationing of German troops in Finland, and in the coming months
they arrived in increasing numbers. Although the Finnish people knew
only the barest details of the agreements with Germany, they approved
generally of the pro-German policy, and they were virtually unanimous in
wanting to recover the ceded territories.
By the spring of 1941, the Finnish military had joined the German
military in planning for the invasion of Russia. In midJune the Finnish
armed forces were mobilized. It was not politically expedient for the
Finnish government to appear as the aggressor, however, so Finland at
first took no part in the Nazi invasion of the Soviet Union on June 22.
Three days later, Soviet aerial attacks against Finland gave the Finnish
government the pretext needed to open hostilities, and war was declared
on June 26. Finland thus appeared to be defending itself against an act
of Soviet aggression, a posture that helped unite the Finnish people for
the war effort.
The Finns called this conflict the Continuation War, because it was
seen as a continuation of events that began with the Winter War. What
began as a defensive strategy, designed to provide a German
counterweight to Soviet pressure, ended as an offensive strategy, aimed
at invading the Soviet Union. The Finns had been lured by the prospects
of regaining their lost territories and ridding themselves of the Soviet
threat. In July 1941, the Finnish army began a major offensive on the
Karelian Isthmus and north of Lake Ladoga, and by the end of August
1941, Finnish troops had reached the prewar boundaries. By December
1941, the Finnish advance had reached the outskirts of Leningrad and the
Svir River (which connects the southern ends of Lake Ladoga and Lake
Onega). By the end of 1941, the front became stabilized, and the Finns
did not conduct major offensive operations for the following two and
Finland's participation in the war brought major benefits to Germany.
First, the Soviet fleet was blockaded in the Gulf of Finland, so that
the Baltic was freed for training German submarine crews as well as for
German shipping activities, especially the shipping of vital iron ore
from northern Sweden and nickel from the Petsamo area. Second, the
sixteen Finnish divisions tied down Soviet troops, put pressure on
Leningrad, and cut one branch of the Murmansk Railroad. Third, Sweden
was further isolated and was forced to comply with German wishes.
Despite Finland's contributions to the German cause, the Western
Allies had ambivalent feelings, torn between their residual goodwill for
Finland and the need to support their vital ally, the Soviet Union. As a
result, Britain declared war against Finland, but the United States did
not; there were no hostilities between these countries and Finland. In
the United States, Finland was highly regarded, because it had continued
to make payments on its World War I debt faithfully throughout the
interwar period. Finland also earned respect in the West for its refusal
to allow the extension of Nazi anti-Semitic practices in Finland. Jews
were not only tolerated in Finland, but Jewish refugees also were
allowed asylum there. In a strange paradox, Finnish Jews fought in the
Finnish army on the side of Hitler.
Finland began to seek a way out of the war after the disastrous
German defeat at Stalingrad in January-February 1943. Negotiations were
conducted intermittently between Finland on the one side and the Western
Allies and the Soviet Union on the other, from 1943 to 1944, but no
agreement was reached. As a result, in June 1944 the Soviets opened a
powerful offensive against Finnish positions on the Karelian Isthmus and
in the Lake Ladoga area. On the second day of the offensive, the Soviet
forces broke through Finnish lines, and in the succeeding days they made
advances that appeared to threaten the survival of Finland. The Finns
were equal to the crisis, however, and with some German assistance,
halted the Russians in early July, after a retreat of about one hundred
kilometers that brought them to approximately the 1940 boundary. Finland
had been a sideshow for the Soviets, however, and they then turned their
attention to Poland and to the Balkans. Although the Finnish front was
once again stabilized, the Finns were exhausted, and they needed
desperately to get out of the war. Finland's military leader and
national hero, Gustaf Mannerheim, became president, and he accepted
responsibility for ending the war.
In September 1944, a preliminary peace agreement was signed in Moscow
between the Soviet Union and Finland. Its major terms severely limited
Finish sovereignty. The borders of 1940 were reestablished, except for
the Petsamo area, which was ceded to the Soviet Union. Finland was
forced to expel all German troops from its territory. The Porkkala
Peninsula (southwest of Helsinki) was leased to the Soviets for fifty
years, and the Soviets were given transit rights to it. Various rightist
organizations were abolished, including the Civil Guard, Lotta Svard,
the Patriotic People's Movement, and the Academic Karelia Society. The
Communist Party of Finland (Suomen Kommunistinen Puolue--SKP) was
allowed legal status. The size of the Finnish armed forces was
restricted. Finland agreed to pay reparations to the Soviet Union.
Finland agreed to hold war crimes trials. Finally, an Allied Control
Commission, which was dominated by the Soviets, was established to check
Finland's adherence to the terms of the preliminary peace. This
preliminary peace treaty remained in effect until 1947, when the final
Soviet-Finnish peace treaty was signed. Although Finland had been
defeated for a second time, it had managed to avoid occupation by the
Finland - The Lapland War
The Finnish statesman Juho Kusti Paasikivi was a leading proponent of
the relationship between Finland and the Soviet Union that permitted
Finland's postwar development. For decades, Paasikivi had been the
leading noncommunist Finn advocating reconciliation with the Soviet
Union. Before World War I, he had been on Old Finn and a Compliant, who advocated accommodation with
Russification. In the negotiations over the Treaty of Dorpat in 1920, he
had argued for drawing Finland's border farther away from Leningrad. In
the fall of 1939, he had recommended giving in to some of the Soviet
demands, because he considered the ensuing war avoidable. He had also
opposed Finland's entry into the Continuation War. As a former prime
minister under the Finnish White government of 1918 and as a member of
the Conservative National Coalition Party (Kansallinen
Kokoomuspuolve--KOK), Paasikivi was politically an anticommunist. His
lifelong study of history, however, convinced him that Finland's
policies toward the Soviet Union needed to be governed by pragmatism. By
late 1944, Finland's previous policy of antagonism to the Soviet Union
had been shown to be counterproductive, because it had nearly led to
Finland's extinction as an independent state. Summoned out of private
life to serve--first as prime minister from October 1944 to March 1946
and then as president from March 1946 to March 1956--Paasikivi
established the policy of accommodation with the Soviet Union that, with
time, became almost universally accepted among the Finns. The change in
Finland's policy was so marked that some observers considered the
post-1944 years to be the era of the "Second Republic."
The immediate postwar years of 1944 to 1948 were filled with
uncertainty for Finland because it was in a weakened condition and the
because new policy of reconciliation was still being formed. The Allied
Control Commission, established by the 1944 armistice to oversee
Finland's internal affairs until the final peace treaty was concluded in
1947, was dominated by the Soviets. Under the leadership of a Soviet,
Marshal Andrei Zhdanov, the commission checked Finland's adherence to
the terms of the preliminary peace of September 1944. The first test of
Finland's new policy of reconciliation was thus to observe faithfully
the treaty with the Soviets, including the punctual payment of
reparations and the establishment of war crimes trials. Eight leading
Finnish politicians were tried for war crimes in proceedings lasting
from November 1945 to February 1946. Among the accused were ex-president
Risto Ryti (served 1940-44), who, along with six other prominent Finnish
politicians, was convicted of plotting aggressive war against the Soviet
Union and was sentenced to prison.
The war crimes trials and other stipulations of the armistice were
distasteful to the Finns, but their careful compliance led to the
reestablishment of national sovereignty. Compliance may have been
facilitated by Finland's having its national hero, Mannerheim, as
president to carry out these policies, until he resigned for health
reasons in March 1946 and was succeeded by Paasikivi. The signing of the
Treaty of Paris on February 10, 1947, led in September 1947 to the
removal of the Allied Control Commission.
In their strict fulfillment of the Soviet terms of peace, the Finns
faced other difficulties. The armistice agreement of September 1944 had
legalized the SKP, which had been outlawed in 1930. In October 1944, the
SKP led in the formation of the Finnish People's Democratic League
(Suomen Kansan Demokraattinen Liitto--SKDL). Commonly referred to as the
People's Democrats, the SKDL claimed to represent a broad spectrum of
progressive forces. From its inception, however, the SKDL has been
dominated by the SKP and has provided the electoral vehicle by which
members of the SKP have been sent to the Eduskunta.
In March 1945, in the first parliamentary elections held after the
war, the SKDL scored a major success by winning fifty- one seats and
becoming the largest single party in the Eduskunta (the ML had
forty-nine and the SDP had forty-eight). Several factors account for the
success of the communists. A strong sympathy for communism among a large
number of voters had persisted since the Finnish civil war. In addition,
many Social Democratic voters were alienated from the SDP because of its
ardent support of the recent war that had cost Finland so dearly. Many
Finns who suffered under the depressed economic conditions of postwar
Finland voted for the SKDL as a protest gesture. Finally, the SKDL
proved adept at electoral politics, de- emphasizing its communist ties
and emphasizing its devotion to democracy, to full employment, and to a
peaceful foreign policy.
The SKDL played a large role in Finnish politics during the immediate
postwar years. By November 1944, President Mannerheim recognized the
growing power of the communists when he appointed to the cabinet the
first communist, Yrjö Leino, ever to hold such a position. Following
the election of March 1945, Leino was appointed to the important post of
minister of interior, a position from which he controlled, among other
things, the state security police and a large mobile police detachment.
The power of the communists was at its greatest from 1946 to 1948, when
the SKDL held, or shared, as many as eight of twelve cabinet posts.
These included that of prime minister, which was held by Mauno Pekkala,
who also served as co-minister of defense.
Pressures on Finland reached a peak in early 1948. In February the
communists took Czechoslovakia by coup, an act that heightened
international tensions considerably. The Soviets then requested that
Finland sign a treaty nearly identical to those forced on some of their
satellite states in Eastern Europe. By March there were rumors of a
possible communist coup in Finland. Although it is not clear that a coup
was imminent, President Paasikivi took precautionary measures. The
Finnish armed forces were under his control, and he summoned them in
strength to Helsinki, where they would have proved more than a match for
the police units of the ministry of interior that were suspected of
involvement in the coup.
In negotiating the requested treaty, meanwhile, the Soviets showed a
willingness to accept a neutralized Finland. Paasikivi secured
significant changes in the treaty that gave Finland substantially more
independence with respect to the Soviet Union than was enjoyed by the
East European states under Soviet domination. Paasikivi had served
notice on the Soviets that they would not get their way through
pressure, but rather would have to use military force. This they were
reluctant to do in the tense international atmosphere of early 1948.
The Treaty of Friendship, Cooperation, and Mutual Assistance
(FCMA--see Appendix B), which was signed on April 6, 1948, has since
then provided the foundation for Soviet-Finnish relations. The key
provision of the treaty, in Article 1, calls for military cooperation
between Finland and the Soviet Union if Germany, or a country allied
with it, attempts to invade Finland or the Soviet Union by way of
Finnish territory. Article 2 of the treaty calls for military
consultations to precede actual cooperation. Finland's sovereignty is
safeguarded, however, because mutual assistance is not automatic but
must be negotiated. The treaty helped to stabilize Soviet-Finnish
relations by giving the Soviet Union guarantees that it would not face a
military threat from the direction of Finland. The Soviets have been
pleased with the treaty, and before expiration its original ten-year
term has been extended to twenty years on three occasions--1955, 1970,
When new elections were held in July 1948, the SKDL suffered a sharp
drop in support, falling from fifty-one to thirty-eight seats in the
Eduskunta. Communists were not included in the new government formed
under the Social Democrat Karl-August Fagerholm, and there was no
communist participation in Finland's government again until 1966.
The end of World War II had found Finland in a thoroughly weakened
state economically. In addition to its human and physical losses,
Finland had to deal with more than 400,000 refugees from the territories
seized by the Soviets. In an attempt to resolve the refugee problem
through a program of resettlement, the parliament adopted the Land Act
of 1945. Through the program thus established, the state bought up
farmland through compulsory purchases and redistributed it to refugees
and to ex-servicemen, creating in the process 142,000 new holdings.
Finland's large class of independent farmers was thereby expanded
considerably. Although many of the resulting holdings were too small to
be economically viable, they speeded the integration of the refugees
into the social and economic fabric of the country.
Reparations were another burden for Finland. From the failure of the
reparations demands imposed by the Treaty of Versailles, the Soviets had
drawn the lesson that, to be effective, reparations should take the form
of deliveries of goods in kind, rather than of financial payments. As a
result, the Finns were obligated to make deliveries of products, mainly
machine goods, cable products, merchant ships, paper, wood pulp, and
other wood products. About one-third of the goods included as
reparations came from Finland's traditionally strong forest industries,
and the remainder came from the shipbuilding and the metallurgical
industries, which were as yet only partially developed in Finland. The
reparations paid from 1944 to 1952 amounted to an annual average of more
than 2 percent of Finland's gross national product (GNP). The
reparations were delivered according to a strict schedule, with
penalties for late shipments. As the earnestness of the Finns in
complying with the Soviet demands became apparent, the Soviets relented
somewhat by extending the payment deadline from 1950 to 1952, but they
still prevented Finland from participating in the Marshall Plan
(European Recovery Program). The United States played an important role,
nonetheless, by mediating the extension of financial credits of more
than US$100 million from its Export- Import Bank to help Finland rebuild
its economy and meet its reparations obligations punctually.
The Finns turned adversity into advantage by using the industrial
capacities created to meet the reparations obligations as the basis for
thriving export trades in those products. As a result, Finland's
industrial base acquired greater balance than before, between, on the
one hand, Finland's traditional industries of lumber, wood pulp, and
paper products, and on the other hand, the relatively new industries of
shipbuilding and machine production. Finland's growing integration into
the world economy was demonstrated by its joining the General Agreement
on Tariffs and Trade (GATT) in 1949.
Finland - Domestic Developments and Foreign Politics, 1948-66
The underlying assumption of Paasikivi's foreign policy was that the
Soviets could tolerate the existence of an independent Finland only
because Finland was peripheral to the Soviet Union's main strategic
interests in Central Europe. Paasikivi sought to reinforce that Soviet
attitude by actively demonstrating that Finland would never again be a
source of danger to the Soviet Union. The combination of traditional
neutrality plus friendly measures toward the Soviets was known as the
Paasikivi Line. Continued by Paasikivi's successor as president, Urho
Kekkonen (in office 1956-81), the policy came to be known as the
so-called Paasikivi-Kekkonen Line. It remained the foundation of
Finland's foreign policy in the late 1980s.
Paasikivi's statesmanship was rewarded in 1955, when the Soviet Union
returned the Porkkala Peninsula to Finland, well before the end of the
fifty-year lease granted in 1944. The return of Porkkala ended the
stationing of Soviet troops on Finnish soil, and it strengthened
Finland's claim to neutrality. The Soviets also allowed Finland to take
a more active part on the international scene. In December 1955, Finland
was admitted to the United Nations (UN); in that same year Finland
joined the Nordic Council.
In the three parliamentary elections held during Paasikivi's
presidency--those of 1948, 1951, and 1954--the SDP and the ML received
the largest number of votes and provided the basis for several of the
government coalitions. These so-called Red-Earth coalitions revived the
prewar cooperation between these parties and laid the basis for their
subsequent cooperation, which was a major feature of Finnish politics
after World War II. The communist-dominated SKDL retained some power
because of domestic discontent; in the elections of 1951 and 1954, it
won more than 20 percent of the vote.
Domestic politics during Paasikivi's presidency were characterized by
conflict and instability. During those ten years, 1946 to 1956, there
were nine government coalitions, nearly one per year. The issues that
divided the parties and brought such frequent changes of government were
primarily economic, centering on the rising cost of living. One early
attempt to solve conflicts among the various sectors of the economy was
the so-called General Agreement made in 1946 between the Confederation
of Finnish Trade Unions (Suomen Ammattiyhdistysten Keskusliitto--SAK)
and the Confederation of Finnish Employers (Suomen Työnantajain
Keskusliitto--STK). The General Agreement, which called for compulsory
negotiations between labor and management, was used as a basis for
reconciling industrial disputes. Another milestone was the Castle Peace
Agreement of 1951 that brought together the main economic interest
groups for a wage and price freeze that helped to establish a precedent
for wage and price control. Nevertheless, throughout these years there
were frequent strikes.
The intensity of the conflict over economic issues was demonstrated
by the general strike of 1956, the first general strike in Finland since
November 1917. The cause of the nineteen- day general strike was an
increase in food prices for which the trade unions demanded a wage
increase as compensation. When the employers refused the wage increase,
the trade unions called the general strike. More than 400,000
workers--about one-fifth of the total work force--participated, the flow
of various vital supplies was disrupted, and some violence occurred. The
strike ended when the employers agreed to the wage increases demanded by
the unions. These wage increases, however, were largely cancelled out by
subsequent rises in consumer prices.
Paasikivi's successor, Kekkonen, assumed office in March 1956, and he
remained as president until 1981. A member of the ML, he had been one of
only three members of the parliament who voted against the Peace of
Moscow in 1940. The following year, he had been one of the most
outspoken advocates of the Continuation War. By 1943, however, he had
reversed himself totally in calling for reconciliation between Finland
and the Soviet Union, and he remained a leading advocate of that policy
for the remainder of his life. From 1944 to 1946, he served as minister
of justice, a position from which he prosecuted Finnish war criminals.
Between 1950 and 1956, he served as prime minister in five cabinets,
before being elected president in 1956.
Kekkonen demonstrated his mastery of politics by bringing Finland
successfully through two major crises with the Soviet Union, the first
in 1958 to 1959 (the Night Frost Crisis) and the second in 1961 (the
Note Crisis). The Night Frost Crisis received its name from the Soviet
leader, Nikita Khrushchev, who declared that Soviet-Finnish relations
had undergone a "night frost." The immediate origins of the
crisis lay in Finnish elections of 1958, in which the SKDL won the
largest popular vote and the largest parliamentary representation of all
Finnish parties but was not given a place in the Finnish government
headed by the Social Democrat, Fagerholm. As a result, the Soviets
recalled their ambassador from Helsinki and generally made known their
unhappiness with the Fagerholm government.
Two reasons are generally brought forward for this instance of Soviet
interference in Finland's domestic politics. One was the Soviet dislike
of certain Social Democrats, whom they referred to as
"Tannerites," after the long-time leader of the SDP, Vainö
Tanner. The second reason may have been the international crisis of the
late 1950s that centered on West Berlin. Underlying the Soviet actions
was the traditional fear of a German resurgence; the Soviets imagined a
renewed German military threat's developing through Germany's North
Atlantic Treaty Organization (NATO) partners, Denmark and Norway.
Kekkonen defused the crisis by pulling the ML out of the government
coalition, thereby toppling the SDP government that was objectionable to
the Soviets. The alacrity with which Kekkonen placated the Soviets
resolved the crisis.
The Note Crisis of 1961, far more serious than the 1958 crisis,
constituted the most severe strain in Soviet-Finnish relations since
1948. On October 30, 1961, the Soviet government sent a note to Finland
that called for mutual military consultations according to Article 2 of
the 1948 FCMA treaty. For Finland, the note represented a real threat of
Soviet military intervention. As during the 1958 crisis, a tense
international situation coupled with Soviet fears of a German military
resurgence led to Soviet pressure on Finland. There was also a domestic
side to the crisis; as in 1958, the Soviets considered certain elements
on the Finnish political scene to be objectionable. The Soviets were
concerned about the SDP, especially about the SDP nominee for president,
Olavi Honka. Delivered only two and one-half months before the Finnish
presidential elections, the Soviet note demonstrated clearly which
candidate the Soviets preferred. In response to the note, Kekkonen
sought to placate Soviet fears by dissolving the Finnish parliament in
November 1961. He then flew to Novosibirsk, where he met with Khrushchev
and, after three days of personal consultations, succeeded in winning
Khrushchev's confidence to such a degree that the call for military
consultations was rescinded. The Note Crisis not only constituted a
personal diplomatic triumph for Kekkonen but also led to an era of
increased confidence-building measures between the two governments.
For Kekkonen, the lesson of the Note Crisis was that the Soviets
needed continual reassurance of Finnish neutrality. He pointed out that
Soviet mistrust of Finnish declarations of neutrality in the 1930s had
led to war. After 1961, the Finns took great pains to demonstrate their
neutrality and to prevent a repetition of the Note Crisis. The effort to
win the trust of the Soviets led Kekkonen in two directions--expanded
trade and cultural contacts between the two countries and a more active
international political role in which Finland worked to promote peace in
Northern Europe and around the world.
Kekkonen sought to create ever-wider zones of peace around Finland;
thus, he became a determined advocate of an entirely neutral Northern
Europe, a position he had enunciated as early as 1952. The Danes and the
Norwegians, however, generally did not accept neutrality because they
would thereby lose the military protection of NATO. In 1963 Kekkonen
also proposed a Nordic Nuclear-Weapons-Free Zone (Nordic NWFZ--see
Neutrality, ch. 4). Kekkonen's advocacy of these peace issues helped him
to win the virtually unquestioned confidence of the Soviets and
precluded a repetition of the Note Crisis.
Conflict among Finnish political parties was so great that, during
the twenty-five years of Kekkonen's tenure as president, there were
twenty-six governments. Among these twenty-six governments were six
nonpartisan caretaker governments, formed when conflicts among the
parties became too intense to permit their joining in coalition
governments. As during the years of the Paasikivi presidency, there was
greater agreement on foreign policy issues than on economic concerns. An
especially divisive issue was whether or not to link agricultural
income, consumer prices, and workers' wages, and thus to reconcile the
competing aims of the main sectors of the economy--farming, capital, and
The conflict over domestic policies was also evident in the
consistent strength of the protest vote in elections. The electoral
vehicle of the communists, the SKDL, polled more than 20 percent of the
vote in the 1958, the 1962, and the 1966 parliamentary elections. That
same discontent brought about the emergence of another protest party,
the Social Democratic Union of Workers and Small Farmers (Työvaen ja
Pienviljelijain Sosialidemokraattinen Liitto--TPSL), which broke off
from the SDP in 1959. The TPSL advocated both a friendlier stance toward
the Soviet Union and more active measures to protect workers' and
farmers' economic interests. In 1959 a breakaway group from the ML
formed a party called the Finnish Small Farmers' Party; in 1966 its name
was changed to the Finnish Rural Party (Suomen Maaseudun Puolue--SMP).
Led by Veikko Vennamo, the SMP spoke for the so-called Forgotten
Finland, the small farmers, mainly of northern and eastern Finland, who
lived a precarious economic existence. The SMP made a breakthrough into
the ranks of the major parties in the parliamentary elections of 1970 by
winning 18 seats in the Eduskunta, but in following years its power
Kekkonen's personal triumph in the Note Crisis led not only to his
reelection as president in 1962, but also to the dominance, for a short
time, of his own party, the ML. (From 1958 to 1966, the SDP was
considered too anti-Soviet to be part of a government.) The ML provided
the basis for the various coalition governments formed during those
years. In its desire to be at the center of Finnish politics, the ML
changed its name to the Center Party (Keskustapuolue--Kesk) in 1965. The
presence of this large and important agrarian-based party at the center
of the political spectrum has characterized the Finnish political system
since independence. Fifty-four of sixty-four Finnish governments
(through 1988) included the Agrarian/Center Party, compared with
thirty-three for the SDP, and twenty-six for the KOK; furthermore, three
of Finland's nine presidents, Relander, Kallio, and Kekkonen have
belonged to this party.
Finland's economy underwent a major transformation in the 1950s and
the 1960s, shifting from a predominantly agrarian economy to an
increasingly industrial one. The number of workers engaged in agriculture
and forestry dropped from about 50 percent to about 25 percent, and the
decline of this traditionally dominant sector of the economy continued
into the late 1980s. After the Soviet reparations were paid off in 1952,
Soviet-Finnish trade did not decline, but rather it increased. In 1947
the Treaty of Paris had been followed by a Finnish-Soviet commercial
treaty that provided the framework for expanded trade between the two
countries. The Five-Year Framework Agreement of
1951, which has been renewed repeatedly, established this trade on a
highly regulated basis. To a large extent, the trade consisted of
Finland's selling machine goods to the Soviets in exchange for crude
oil. Finland benefited from the arrangement because Finnish products
sold well in the Soviet market, which could be counted on regardless of
fluctuations in the Western economic system. Increased trade between the
two countries also strengthened the political relationship between them.
Throughout the postwar period, the Soviet Union has been Finland's
single most important trading partner, generally accounting for 20
percent to 25 percent of Finland's total imports and exports.
Nevertheless, Finland's goal has been to create a balanced trade system
embracing both East and West, and more than 70 percent of Finland's
trade has been with noncommunist states. Finland's main trading
partners, after the Soviet Union, have been Sweden, Britain, the Federal
Republic of Germany (West Germany), and the United States, in order of
importance. This trade has consisted mainly of the export of timber,
pulp, and paper products in exchange for other countries' manufactures,
technology, and raw materials for Finland's various industries. In maintaining good economic ties with
these countries, Finland has had to overcome persistent Soviet
suspicions; however, Finland was allowed to join the European Free Trade
Association (EFTA) as an associate member in 1961 in the so-called FINEFTA
agreement. The members of EFTA, including Finland, signed free-trade
agreements with the European Economic Community (EEC) in 1973. Finland
placated the Soviets for these initiatives by signing a trade agreement
in 1973 with the Council for Mutual Economic Assistance (CMEA, CEMA, or
Comecon), the Soviets' organization for trade and cooperation with its
East European allies. Nevertheless, through the trading arrangements
with EFTA and the EEC, Finland gained greater economic independence from
the Soviet Union.
The economic growth that Finland has experienced in this century has
laid the foundation for its social welfare state. The benefits of
economic prosperity have been spread around to the population as a
whole, with the result that the Finns have enjoyed a level of material
security unsurpassed in their history. Conceived not as a whole, but as
a series of responses to specific needs, the social welfare system has
become strongly rooted. Among its main components are several forms of
social insurance: allowances for mothers and children, aimed at
encouraging people to have children; pensions; and national health
insurance. By 1977 social welfare expenditures accounted for over 20
percent of GDP. The general effect of these measures has been to raise
the standard of living of the average Finn and to remove the sources of
discontent caused by material want.
Finland - Finland in the Era of Consensus, 1966-81
The parliamentary elections of 1966 marked a major turning point in
Finnish politics. As in most of the recent Finnish parliamentary
elections, the main debate centered on domestic issues. One issue in
1966 was the need to promote economic development in the northern part
of Finland, which was lagging behind the more prosperous southern part
of the country. The parliamentary elections were a great victory for the
socialist parties, which gained 103 seats, their first absolute majority
in parliament since 1916. Changes in the leadership of the SDP--which under a
new party chairman, Rafael Paasio, had become more temperate in its
attitude toward the Soviet Union--had made the SDP a viable partner in
the government. Kekkonen thereupon took the major step of allying his
Kesk with the SDP and with other leftist parties in order to help
achieve a greater measure of cooperation in Finnish politics. The
Red-Earth coalition was thus revived, and the communists enjoyed their
first participation in government since 1948. Center-left coalition
governments dominated Finnish politics for several elections after 1966,
and this cooperation among center and left parties contributed to a
growing consensus in Finnish political life.
The core of the developing consensus politics was the participation
of all market sectors in major economic decisions. This had begun
earlier, but was now intensified. A milestone, for example, was the
conclusion in March 1968 of the Liinamaa Agreement, the first
comprehensive settlement among the economic interest groups that
regulated agricultural prices, workers' wages, and industrial
productivity. This agreement brought together the trade union
organization, SAK, the employers' organization, STK, and the
Confederation of Agricultural Producers (Maataloustuottajain
Keskusliitto--MTK). The agreement was made possible in large part by
Kekkonen's active intervention. In succeeding years, the creation of
package deals to regulate conflicts among the various sectors of the
economy became a regular feature of political life. One important
government-sponsored meeting among these various economic interests, at
the Korpilampi Motel near Helsinki in 1977, led to the coining of the
phrase "the spirit of Korpilampi" to describe this growing
spirit of cooperation.
Another milestone in Finland's development was reached in 1969 with
the amalgamation of two competing trade union organizations--the
smaller, communist-dominated SAJ and the larger, Social
Democrat-dominated Confederation of Finnish Trade Unions (Suomen
Ammattiyhdistysten Keskusliitto--SAK)--into the Central Organization of
Finnish Trade Unions (Suomen Ammattiliittojen Keskusjarjestö--SAK). By
the 1980s, it had succeeded in organizing about 85 percent of Finland's
total work force, one of the highest percentages in the world.
Between the watershed election of 1966 and the late 1980s, there were
several more parliamentary elections. Throughout these elections, the
SDP remained the largest party, and Kesk, the KOK, and the SKDL competed
for the next three positions. A series of center-left governments came
into power from 1966 to the 1980s, and these generally broad-based
coalitions--together with the package deals for regulating conflicts in
the economy--helped to make this period the most politically stable in
the history of the Finnish Republic. Although there was some instability
at the cabinet level, where until recent years there was a new cabinet
nearly every year, the presidency added stability; between 1946 and the
late 1980s, Finland had only three presidents.
The pathbreaking center-left cabinet of 1966, which was headed by the
Social Democrat Rafael Paasio as prime minister, lasted until 1968. Conflicts over economic issues, especially incomes
and prices policy, brought the downfall of the Paasio cabinet and the
formation of a new one under the Social Democrat, and head of the Bank
of Finland, Mauno Koivisto. This cabinet, which lasted until the
parliamentary election of 1970, included the three socialist parties,
Kesk, and the SFP.
In spite of the growing consensus in Finnish politics, the 1970s
witnessed increased votes for non-government parties and sustained
conflicts in parliament. In the 1970 parliamentary elections, for
example, Kesk lost about one-third of its strength, and the KOK, which
was not part of the government, rose from fourth place among parties to
second. Even more striking, the SMP, which relied on small, economically
vulnerable farmers, increased its vote almost tenfold. In addition, the
conflicts among the parties were so intense that no coalition could be
established, and, instead, a nonpartisan caretaker government was
installed. It lasted sixty-three days. Finally, a broad-based coalition
was established under the Kesk politician Ahti Karjalainen. This
coalition included Kesk, the SDP, the SKDL, the SFP, and the Liberal
People's Party (Liberaalinen Kansanpuolue-- LKP). The SKDL withdrew from
this government in 1971 because of conflicts within the party.
Karjalainen's coalition fell in late 1971 because of disagreement over
economic issues, especially inflation, the balance of payments, and
growing unemployment. New parliamentary elections were called for early
1972, two years ahead of schedule. Another nonpartisan caretaker
government held power until the election.
The results of the 1972 elections were similar to those of the 1970
elections, except that the KOK fell from second place to fourth.
Political conflicts among the parties, however, still kept a workable
coalition from being formed, and, as a result, a minority SDP government
was created with Paasio as prime minister. It lasted five months.
President Kekkonen's direct intervention helped to bring about the
formation of a coalition under the Social Democrat Kalevi Sorsa in the
fall of 1972; this four-party coalition included the SDP, Kesk, the SFP,
and the LKP. The Sorsa government held together until the 1975
parliamentary election, an uncommonly long time in recent Finnish
Finland's growing economic difficulties, which stemmed from the world
economic crisis that began in 1973, provided the background for the
parliamentary elections of 1975. The SKDL increased its vote to almost
19 percent, making it the second largest party. Following the election,
the parties were reluctant to agree on terms for a coalition government.
Kekkonen thereupon appointed Keijo Liinamaa, a retired Kesk leader, as
prime minister of a caretaker government that lasted about five months.
Kekkonen's direct, public intervention made possible the formation of a
large, five-party (the SDP, Kesk, the SKDL, the SFP, and LKP) coalition
with the Kesk politician Martti Miettunen as prime minister. The
following year, the SDP and the SKDL left the coalition as a result of
conflicts with the other parties. The Miettunen government fell in 1977
because of Finland's continuing economic difficulties, and a center-left
government was formed under Kalevi Sorsa, Finland's sixtieth government
in sixty years. Included in the five-party coalition were the SDP, Kesk,
the SKDL, the SFP, and LKP. The following year, the SFP withdrew from
the coalition because of conflicts with the other parties, but the Sorsa
government lasted until the 1979 parliamentary election.
The main issues in the 1979 parliamentary election were unemployment
and taxation. The election witnessed a resurgence of the KOK, which
became the second largest party, behind the SDP, but was still excluded
from governmental coalitions. A major political crisis, called the "Midsummer
Bomb," was unleashed by a Kesk leader's incautious statement that
the KOK was kept out of power because it was unacceptable to the
Soviets, although in reality domestic political considerations may have
played a role in its exclusion from the government. Another protest
against the established consensus was registered in the 1979 election by
the Finnish Christian League (Suomen Kristillinen Liitto--SKL), which
represented a religious backlash against secularization and which polled
4.8 percent of the total vote. Nevertheless, a center-left coalition was
established under Koivisto; the coalition included the SDP, Kesk, the
SKDL, and the SFP, and it lasted until early 1982, when Koivisto was
Corresponding to the growth of political consensus in Finland was the
increase in social consensus: the divisions of previous decades,
especially the conflicts between language groups and between the working
class and the middle class, diminished.
The Swedish-speaking minority declined steadily in the twentieth
century from 350,000, or 13 percent of the population, in 1906 (the year
the SFP was founded to protect the interests of Swedish speakers), to
about 300,000, or 6 percent of the population, in the 1980s. The decline
has been attributed both to emigration to Sweden (largely for economic
reasons) and to the gradual Finnicization of society. Swedish remains
one of the two official languages of Finland, nevertheless, and a
separate Swedish-language educational establishment is maintained.
The slow decline of the communist vote in Finland since the 1960s has
been interpreted as a sign that the wounds caused by the civil war have
gradually healed and that Finland has achieved a larger measure of
national integration. In the seven parliamentary elections from 1945 to
1966, the SKDL won 20 to 25 percent of the popular vote and a
correspondingly large representation in parliament. Active participation
in the government, beginning in 1966, was followed by a decline in its
electoral success. In 1969, Finnish communists dropped the aim of
revolution from their program.
One major problem that developed in these years, however, was the
urban-rural cleavage, which was compounded by regional differences. The
relatively urbanized, industrialized, and prosperous south and west
contrasted strongly with the basically rural, agrarian, and less
prosperous north and east. The protest vote was typically stronger in
the north and the east than it was elsewhere. The government has tried
to relieve discontent with subsidies for the smaller, less-prosperous
farmers and through other social welfare measures.
During the postwar era, Finland changed from a primarily agrarian
society to an urban society, from a land of peasant proprietors to a
modern society with a predominance of urban- dwelling, white-collar and
blue-collar workers. Along with the changes in social and in economic
circumstances went changes in popular attitudes; in particular,
cosmopolitanism increased. Just as modern productive technology has made
possible an unprecedented material prosperity, so also has modern
communications technology speeded the diffusion of new ideas, breaking
down Finland's cultural isolation. In the process, however, traditional
values have come under assault by cultural imports from Western Europe.
President Kekkonen exerted a formidable influence on Finland's
development during his long tenure as president from 1956 to 1981. He
was re-elected in 1962 and in 1968 by larger percentages of votes than
any other Finnish president had ever received. In 1973 his term of
office was extended for four years by special act of parliament. This
extension, it now appears, was designed to reassure the Soviets that
Finnish foreign policy would remain the same, despite the free-trade
agreement with the EEC that was concluded in 1973. It was evidence of
Kekkonen's international stature that he hosted the Conference on
Security and Cooperation in Europe from 1973 to 1975, a conference that
culminated in the signing of the Helsinki Accords in 1975. By then
Kekkonen was generally recognized as indispensable to Finnish politics,
and he was re-elected again in 1978 with the support of all major
parties. Bad health forced him to resign in October 1981 at the age of
81; he lived in retirement until his death in 1986. His successor as
president, the Social Democrat Mauno Koivisto, began his term of service
in January 1982.
The great majority of the Finnish people and their political parties
have continued to agree on the Paasikivi-Kekkonen Line as the basis of
Finland's foreign policy. Only a few political extremists have opposed
it, and they have been excluded from any role in formulating foreign
policy. A tiny splinter group from the conservatives appeared during the
1970s as a protest against Kekkonen's allegedly too pro-Soviet foreign
policy. Since 1980 this group has been called the Constitutional Party
of the Right (Perustuslaillinen Oikeistopuolue--POP), but it has
achieved virtually no influence.
Finland - GEOGRAPHY
The largest minority group in Finland was the Swedish- speaking
Finns, who numbered about 250,000 in the late 1980s. The first evidence
of their presence in the country, dating from the eighth century, comes
from the Aland Islands. After the thirteenth century, colonization from
Sweden began in earnest, and within two centuries there was a band of
territory occupied by Swedish speakers that ran along the western and
the southern coasts and had an average width of about thirty kilometers.
Cycles of Finnish and Swedish assimilation have changed the linguistic
makeup of this strip of land. In Ostrobothnia, for example, the area of
Swedish settlement extended inland as much as sixty kilometers and still
existed in the late 1980s, while other areas had eventually reverted to
being once again overwhelmingly inhabited by Finnish speakers. By the
end of the nineteenth century, the areas of Swedish settlement had
shrunk to basically what they were in the second half of the 1980s:
Ostrobothnia, the Aland Islands, and a strip along the southern coast
that included the capital. The settlers from Sweden gradually lost
contact with their relatives in the old country and came to regard
Finland as their country. They were distinguished from other Finns only
by their language, Swedish, which they retained even after hundreds of
years of separation from Sweden.
Although most Swedish-speaking Finns worked as farmers and fishermen,
for centuries they also made up the country's governing elite. Even
after the country was ceded to Russia in 1809, the aristocracy and
nearly all those active in commerce, in the courts, and in education had
Swedish as their native language. The country's bureaucracy did
virtually all its written work in Swedish. Finnish speakers who desired
to enter these groups learned Swedish. Only the clergy used Finnish on a
regular basis, for they dealt with the bulk of the population who, for
the most part, knew only that language. There were no campaigns to force
Swedish on Finnish speakers however, and the problem of language as a
social issue did not exist during the period of Swedish rule.
Swedish retained its primacy until the second half of the nineteenth
century, when, as a result of budding nationalism, it was gradually
displaced by Finnish. A good many of the strongest advocates of Finnish
nationalism were Swedish speakers who used their own language in the
patriotic pamphlets and journals of the time because few of them could
write Finnish. By the end of the century, the nationalist movement had
been successful in fostering the birth of Finnish as a written language
and in bringing about the formation of an educated Finnish-speaking
elite. Numbering 350,000 and constituting 13 percent of the country's
population in 1900, Swedish-speaking Finns were still disproportionately
influential and wealthy, but they were no longer dominant in the country
of their birth.
Independent Finland's new Constitution protected the Swedish-
speaking minority, in that it made both Finnish and Swedish national
languages of equal official status, stipulating that a citizen be able
to use either language in courts and have government documents relating
to him or her issued in his or her language, and that the cultural and
economic needs of both language groups be treated equally. The Language
Act of 1922 covered many of the practical questions engendered by these
constitutional rights. Despite these legal provisions, however, there
were still currents of Finnish opinion that wished to see a curtailment
of the Swedish-speaking minority's right to protect its cultural
identity. Attempts at Finnicization failed, however, and the advent of
the national crisis of World War II submerged disagreements about the
language issue. Since the war, there have been occasional squabbles
about practical measures for realizing the minority's economic and
cultural rights, but none about the inherent value of the policy of
The Language Act of 1922, and its subsequent revisions, arranged for
the realization of the rights of the Swedish- speaking minority. The
basic units for protecting and furthering the exercise of these rights
were the self-governing municipalities. After each ten-year census,
Finland's nearly 500 municipalities were classified as either unilingual
or bilingual with a majority language. In the 1980s, there were 461
municipalities: 396 Finnish-speaking; 21 bilingual with a
Finnish-speaking majority; 24 Swedish-speaking; 20 bilingual with
Swedish as the majority language. A municipality was bilingual if the
number of speakers of the minority language exceeded either 3,000 or 8
percent of its population. If a municipality had been classified as
bilingual, it could not revert to unilingual status until the minority
population declined to less than 6 percent.
Language classification had important consequences for the
inhabitants of a municipality, for it determined which language was to
be used for government business. In bilingual municipalities, all
documents affecting the general public--tax forms, for example--had to
be published in both languages. In addition, national and local
government officials had to be bilingual--a requirement not always met,
however--and public notices and road signs had to be in both languages.
In unilingual communities this was not the case. Documents relating
directly to an individual case could be translated, but otherwise
official business was transacted in the municipality's language. If
someone were involved in a court case, however, and did not know the
prevailing language, translation would be provided.
The method used to classify municipalities had to be regarded as
successful because, although the overwhelming majority of municipalities
were unilingual Finnish-speaking communities, only 4 percent of the
Swedish-speaking minority lived in municipalities where their language
was not used. Finnish- speaking Finns fared even better, for less than 1
percent of them lived where their language was not used officially. Some
of the Swedish speakers who lived apart from their fellows did so
voluntarily because they had management positions at factories and
plants in regions that were nearly entirely Finnish-speaking areas.
Because they were educated, these managers knew Finnish. They were also
representatives of the tradition of "brukssvenskar"
(literally, "factory Swedes"), and were sometimes the only
Swedish speakers their brother Finns knew.
On the national level, all laws and decrees had to be issued in both
languages, and the Swedish-speaking minority had the right to have
Swedish-language programs on the state radio and television networks.
Swedish-language schools had to be established wherever there was a
sufficient number of pupils. There were several Swedish-language
institutions of higher learning, and a specified number of the
professorial chairs at the University of Helsinki was reserved for
Swedish speakers, as was one brigade in the army. A drawback for the
Swedish-speaking minority, though, was that because of its small size,
the national government could not, for practical reasons, publish in
Swedish all parliamentary deliberations, committee reports, and official
The Swedish-speaking minority was well represented in various sectors
of society. The moderate Swedish People's Party (Svenska
Folkpartiet--SFP) got the votes of most Swedish speakers, with the
exception of workers who more often than not voted for socialist
parties. The SFP polled enough support to hold a number of seats in the
Eduskunta that usually matched closely the percentage of Swedish
speakers in the country's total population. It very often had ministers
in the cabinet as well. An unofficial special body, the Swedish People's
Assembly (Svenska Finlands Folkting), representing all members of the
minority, functioned in an advisory capacity to regular governing
institutions. Most national organizations, whether economic, academic,
social, or religious, had branches or separate equivalents for Swedish
speakers. Because of its long commercial and maritime traditions, the
Swedish-speaking minority was disproportionately strong in some sectors
of the financial community and the shipping industry. In general,
however, with the exception of the upper middle class, where there were
more Swedish speakers than usual, the class distribution of the minority
matched fairly closely that of the larger community.
The size of the Swedish-speaking minority increased fairly steadily
until 1940, when it numbered 354,000 persons, or 9.6 percent of the
country's total population. Since then it has declined, dropping to
296,000, or 6.1 percent of the population, in 1987. In relative terms,
however, it has been in decline for centuries, dropping from 17.5
percent in 1610, and it was expected to go below 6 percent by the end of
the twentieth century. The decline stemmed from a variety of factors: a
slightly lower birth rate than the rest of the population during some
periods; a greater rate of emigration to the United States before World
War I; a large loss of some 50,000 persons who settled permanently in
Sweden in the decades after World War II; and frequent marriages with
By the 1980s, more than half the marriages of Swedish- speaking Finns
were to persons from outside their language group. In urban areas,
especially in Helsinki, the rate was over 60 percent. This was not
surprising because the members of the minority group were usually
bilingual, and there were no legal constraints (although there were
sometimes social and familial constraints) against marrying those
speaking the majority language. The bilingualism of the minority was
caused by compulsory schooling in the majority language from the third
school year on, and from living in a society where, with the exception
of some rural areas, speaking only Swedish was a serious handicap
because the majority group usually had a poor knowledge of Swedish,
despite compulsory study of it for several years. Swedish-speaking Finns
were easily able then to cross from one language group to another.
However highly they valued their mother tongue and their group's
cultural identity, they were not bound by them when selecting friends or
spouses. A survey of the late 1970s found, for example, that
Swedish-speaking natives of Helsinki felt they had more in common with
natives of their city who did not speak their language than they did
with Swedish speakers from other regions. More often than not, Swedish-
speaking Finns married outside their group. These marriages posed a
danger to their language community in that the resulting offspring were
usually registered as speakers of the majority language, even when they
were truly bilingual. Thus the Finnish practice of counting speakers of
a language by the principle of personality, that is on an individual
basis, rather than by the principle of territoriality, as was done only
for the Aland Islands, was leading to a decline in the size of the
Swedish- speaking minority.
Finland - Gypsies
By the second half of the 1980s, Finns enjoyed a standard of health
fully comparable to that of other highly developed countries. If health
standards did not match those of Finland's Nordic neighbors in all
areas, it was because Sweden, Denmark, and Norway were the world's
leaders in health care. Finland had made remarkable progress, however,
and was rapidly catching up. In one major area, the prevention of infant
mortality, Finland led the world in the mid-1980s: it had the world's
lowest infant mortality rate.
Development of the Health System
Since becoming an independent state in 1917, Finland has managed to
deal with the "traditional" health problems. The most
important cause of death in the nineteenth century, pulmonary
tuberculosis, was brought under control by means of a network of
tuberculosis hospitals built between the world wars. Smallpox and
pneumonia have also ceased to be serious problems. With the aid of the
vaccination law passed in 1952, the fight against communicable diseases
was largely won. In 1980, for example, there were no deaths from common
diseases of this type. By the mid-1980s, no cases of diphtheria had been
registered in Finland for several decades, and, with the exception of a
mini-epidemic of seven cases in 1983-84, poliomyelitis also had
disappeared. An emphasis on hospital construction in the 1950s and 1960s
brought the ratio of hospital beds per capita up to international norms,
and new medical training centers more than doubled the number of
physicians between 1970 and the mid-1980s. The passage of the Sickness
Insurance Act in 1963 and frequent expansion of its coverage meant that
good medical care was available to everyone. Later legislative measures,
such as the Primary Health Care Act of 1972, or the Mental Health Act of
1978, aimed at moving health care from large centers, increasing the
amount of preventive treatment at smaller local facilities, and favoring
out-patient care when possible. Finnish health authorities believed,
even in the late 1980s, that care of this kind could be more flexible,
humane, and effective and could also check cost increases. Despite this
policy innovation, however, social expenditures on health had increased
ten-fold in real terms since the early 1950s.
Organization of the Health System
Health care was directed by the Ministry of Social Affairs and Health
and was administered by the National Board of Health. In accordance with
government practices, the ministry decided policy, and the national
board determined how it would be administered. Actual delivery of care
was the responsibility of local government, especially after the Primary
Health Care Act of 1972, which stipulated that the basis of medical
treatment should be the care offered in local health clinics.
Previously, the emphasis had been on care from large regional hospitals.
The 1972 law resulted in the creation of about 200 local health
centers each of which served a minimum of 10,000 persons. As
municipalities varied greatly in size, small ones had to unite with
others to form health centers, while about half the centers were
operated by a single municipality. Centers did not necessarily consist
of a single building, but encompassed all the health facilities in the
health center district. With the exception of some sparsely settled
regions, people were usually within twenty-five kilometers of the center
charged with their care.
A basic aim of the 1972 law was to give all Finns equal access to
health care, regardless of their income or where they lived. Because
most services of health centers were free, subsidies from the national
government were required to augment the financial resources of
municipalities. The subsidies varied according to the wealth of the
municipality and ranged roughly from 30 to 65 percent of costs. By the
mid-1980s, about 40 percent of the money spent on health went for
primary care, compared with 10 percent in 1972.
Health care centers were responsible for routine care such as health
counseling, examinations, and screening for communicable diseases; they
also provided school health services, home care, dental work, and child
and maternal care. Most health centers had at least three physicians and
additional staff at a ratio of about eleven per physician. Because of
the high level of their training, nurses performed many services done by
physicians in other countries. Most centers had midwives, whose high
competence, combined with an extensive program of prenatal care, made
possible Finland's extremely low infant mortality rate, the world's best
at 6.5 deaths per 1,000 births.
Once it was established that a health problem could not be treated
adequately at a center, patients were directed to hospitals, either to
one of about thirty local hospitals with some degree of specialization,
or to one of about twenty hospitals, five of which were university
teaching hospitals, that could offer highly specialized care. In
addition, there were institutions with a single concern, such as the
sixty psychiatric hospitals, and others that dealt with orthopedics,
epilepsy, rheumatism, or plastic surgery. Given the great drop in the
incidence of tuberculosis in Finland, the country's dozen sanatoria were
gradually being taken over for other purposes. Hospitals were usually
operated by federations of municipalities, as their maintenance was
beyond the power of most single municipalities. By the mid-1980s, the
country's public hospitals had about 50,000 beds, and its 40-odd private
hospitals had roughly 3,000. There were another 20,000 beds for patients
at health centers, homes for the elderly, and other welfare
By the late 1980s, Finland's health problems were similar to those
affecting other advanced countries. The most common causes of death in
Finland were, first, cardiovascular diseases, followed by neoplasms
(malignant and benign), accidents, poisonings, trauma from external
causes (including suicides), and, lastly, diseases of the respiratory
system. The mortality rate from cardiovascular diseases was among the
world's highest for both sexes, but it was especially high for
middle-aged males. A national diet rich in fats was seen by medical
specialists as a cause of the prevalence of coronary illnesses.
Despite its location on the periphery of Europe, Finland was also
affected by the spread of acquired immune deficiency syndrome (AIDS),
but not to a serious degree. As of late 1988, only 32 cases of AIDS had
been reported, and 222 persons had been found to be infected with the
human immunodeficiency virus (HIV), although health officials believed
there might be as many as 500 HIV-positive cases in all of Finland.
Reasons for the slight presence of this health problem were the low
frequency of drug use and prostitution, an aggressive and frank public
education campaign, and the trust Finns felt for the national health
system, which led them to adopt practices it recommended.
The most striking of all Finnish health problems was the high average
mortality rate for males once they reached adulthood, which contributed
to an average longevity in the mid-1980s of only 70.1 years compared
with 73.6 years for Swedish males. In the second half of the 1970s,
Finnish males over the age of twenty were one-third more likely to die
by their sixty-fifth birthday than their Swedish neighbors.
Cardiovascular diseases struck Finnish men twice as often as Swedish
men. The three other chief causes of death were respiratory illnesses at
twice the Swedish rate, lung cancer at three times the Swedish rate, and
accidental or violent death at a frequency 50 percent higher than the
Swedish figure. Health authorities have attributed the high mortality
rates of the Finnish male to diet, excessive use of tobacco and alcohol,
disruption of communities through migration, and a tradition of
high-risk behavior that is particularly marked in working-class men in
Mortality rates for Finnish women, with the exception of women over
sixty-five, compared well with those of the other Nordic countries. A
reason for this discrepancy between Finnish and other Nordic older women
was the higher Finnish incidence of coronary problems, which occur later
in women than in men. In the mid-1980s, Finnish women lived an average
of 78.1 years, compared with 79.6 years for Swedish women. Except for
coronary illnesses, of which Finnish women died 50 percent more often
than their Swedish counterparts, the other causes of Finnish female
mortality matched those of Sweden. In some cases, cancer and respiratory
diseases for example, Finnish women had an even lower rate of incidence.
National efforts to improve living habits have included campaigns
against smoking, restraints on the consumption of alcohol, and better
health education in schools. One program that has been widely studied by
international health officials was one implemented in the province of
Pohjois-Karjala that aimed at reforming dietary habits in a region
particularly hard hit by coronary illnesses. Finland was also a
participant in the World Health Organization's program Health for All by
the Year 2000 and was its European reporting nation.
Finland - LIVING CONDITIONS
During the seven decades after the establishment of the republic in
1917, Finland made remarkable economic progress. At the time of the
collapse of the Russian Empire in 1917, the Grand Duchy of Finland had
the most backward economy in Nordic Europe. Situated at the outer edges
of the spheres of influence of the major European industrial
powers--Britain, Germany, and Sweden-- newly independent Finland
appeared destined to remain a poor, peripheral area. By the late 1980s,
however, the country had become one of the world's advanced industrial
societies, the citizens of which enjoyed a high standard of living and
the industries of which dominated world markets for significant
hightechnology products. Finland was an industrial society, but it was
self-sufficient in staple foods and produced a wide range of goods and
services for domestic and export markets. Although the economy still
depended on exports, the Finns had developed markets in both Eastern and
Western Europe, avoiding excessive dependence on any single market.
Material conditions were difficult at the birth of the Finnish
republic. The country's industries had started to develop after about
1860, primarily in response to demand for lumber from the more advanced
economies of Western Europe, but by 1910 farmers still made up over 70
percent of the work force. Finland suffered from food shortages when
international trade broke down during World War I. The fledgling
metal-working and shipbuilding industries expanded rapidly to supply
Russia during the early years of the conflict, but the empire's military
collapse and the Bolshevik Revolution in 1917 eliminated trade with the
East. The Finnish civil war and the subsequent massacres of the Reds
spawned lasting labor unrest in factories and lumber camps, while the
plight of landless agricultural laborers remained a pressing social
During the immediate postwar years, Finland depended on aid from the
United States to avoid starvation, but by 1922 industrial production had
reached the prewar level. While trade with the Soviet Union languished
for political reasons, West European, especially German, markets for
Finnish forest products soon reopened. In exchange for lumber, pulp, and
paper--which together accounted for about 85 percent of exports--Finland
obtained needed imports, including half the nation's food supply and
virtually all investment goods.
Despite political instability, the state built a foundation for
growth and for greater economic independence. The first and most
important step was an agricultural reform that redistributed holdings of
agricultural and forest land and strengthened the class of smallholders
who had a direct stake in improving farm and forest productivity. The
government also nationalized large shares of the mining and the
wood-processing industries. The subsequent public investment program in
mines, foundries, wood and paper mills, and shipyards improved the
country's ability to process its own raw materials. By the late 1920s,
agricultural modernization was well under way, and the country had laid
the foundations for future industrialization.
Although Finland suffered less than more-developed European countries
during the Great Depression of the 1930s, the country nonetheless
experienced widespread distress, which inspired further government
intervention in the economy. Comprehensive protection of agricultural
produce encouraged farmers to shift from exportable animal products to
basic grains, a policy that kept farm incomes from falling as rapidly as
they did elsewhere and enabled the country to feed itself better.
Similar policies spurred production of consumer goods, maintaining
industrial employment. As in other Nordic countries, the central bank
experimented with Keynesian demand-management policies.
In the 1930s, Britain replaced Germany as Finland's main trading
partner. The two countries made bilateral agreements that gave Finnish
forest goods free access to British markets and established preferential
tariffs for British industrial products sold to Finland. Consequently,
Finland's largest industry, paper production, expanded throughout the
depression years (although falling prices led to declining export
revenues). The economic growth of Finland resumed in 1933 and continued
Production and employment had largely recovered from the effects of
the depression when the Winter War began in 1939. The struggle marked
the beginning of five years of warfare and privation. By 1944, after two
defeats at the hands of the Soviet Union and severe losses suffered
while expelling German troops, Finland's economy was nearly exhausted.
Under the terms of the 1944 armistice with the Soviet Union, the country
ceded about 12 percent of its territory, including valuable farmland and
industrial facilities, and agreed to onerous reparations payments. To
many Finns, it appeared that most of the achievements of the interwar
years had been undone.
Postwar reconstruction proved difficult. Resettling refugees from the
areas ceded to the Soviet Union required another land reform act,
subsidies for agricultural infrastructure, and support payments for
displaced industrial workers. Reparations deliveries to the Soviet Union
absorbed much of the country's export potential. The need to remain
politically neutral precluded participation in the Marshall Plan
(European Recovery Program), but Finland arranged substantial loans from
the United States Export-Import Bank to finance expansion in the forest
industries. High inflation rates inherited from the war years fed labor
militancy, which further threatened output.
Despite these setbacks, the tenacious Finns soon fought their way
back to economic growth. Reparations turned out to be a blessing in
disguise--at least for the metalworking industries, which supplied about
three-fourths of the goods delivered to the Soviet Union. In effect,
forced investment in metalworking laid the foundations for Finland's
later export successes. The fulfillment of the reparations payments in
1952 symbolized the end of the postwar difficulties, but the real
turning point probably came in about 1950, with the Korean War boom in
the West. During the 1950s, the metalworking industries continued to
export to the Soviet Union, a market in which the Finns faced virtually
no competition from other Western countries. Extensive borrowing in
Western financial markets--especially in Sweden and in the United
States--financed investments in infrastructure, agriculture, and
industry. The consumer goods and construction sectors prospered in the
booming domestic market, which remained protected by import controls
until the end of the decade.
From 1950 to 1974, Finland's gross national product (GNP) grew at an
average annual rate of 5.2 percent, considerably higher than the 4.4
percent average for members of the Organisation for Economic
Co-operation and Development (OECD). However, partly as a result of
continued dependence on volatile lumber exports, this growth was more
unstable than that in other OECD countries. The business cycle caused
fluctuations in output that averaged 8 percent of gross domestic product
(GDP). Finland's structural transformation was brutally quick, driving
workers out of agriculture more quickly than had been the case in any
other Western country. Although manufacturing output increased sharply,
many displaced farm workers could not be placed in industry. At the same
time, Finnish inflation, which tended to exceed that of the country's
major trading partners, necessitated regular currency devaluations. Yet,
despite the costs of economic growth, most Finns were happy to have
escaped the hardships of the depression and the war years.
Rapid structural transformation led to innovative economic policies.
During the 1950s, the state had maintained strict controls on many
aspects of economic life, protecting the country's fragile economic
balance, but it had lifted many restrictions by the end of the decade.
Moreover, in 1957 policy makers chose to liberalize foreign trade in
industrial goods, strongly influencing future economic developments. The
achievement of prosperity in the 1960s made possible the extension of
the welfare state, a development that did much to reduce tensions
between workers and management. Finland's increased foreign trade made
industrial competitiveness more important, causing greater interest in
restraining the inflationary wage- price spiral. Starting in 1968, the
government succeeded in sponsoring regular negotiations on wages,
benefits, and working conditions. The political consensus that developed
around incomes settlements helped to slow inflation and to increase
productivity. Liberalization, welfare programs, and incomes policy thus
helped to maintain economic growth during the 1960s and facilitated
stronger economic relations with both Eastern and Western Europe.
In the 1970s and 1980s, changes in domestic and international
economic conditions posed new challenges. At home, Finland was reaching
the limits of extensive economic growth. Expansion was incorporating
ever- greater amounts of raw materials, capital, and labor in the
production process. The economy needed to shift to intensive growth
through better resource management, improved labor productivity, and
newer technologies. In international markets, the oil crises of 1973 and
1979 caused particular difficulties for the Finns, who imported over 80
percent of their primary energy supplies. The country did suffer less
than other West European countries from increased oil prices because of
its special trading relationship with the Soviet Union, which supplied
petroleum in exchange for Finnish industrial goods. However, recession
in Western markets, growing technological competition, and tighter
financial markets made Finland's traditional cycles of inflation and
devaluation untenable. Thus, although the country managed to delay
austerity measures for five years, in 1978 balance-of-payments
considerations compelled the government to introduce a far-reaching
reform package designed to ensure the competitiveness of Finnish
industry in world markets.
Although the austerity package pursued after 1978 slowed growth in
personal consumption, the consensus approach to wage and benefit
negotiations remained reasonably intact. In addition, many Finnish
workers proved sufficiently flexible to accept transfers from declining
sectors to those in which the country enjoyed a comparative advantage.
As a result of competent macroeconomic management and favorable trading
relations with both Eastern and Western Europe, Finland was able to
sustain growth in GDP at an average annual rate of about 3.3 percent
from 1980 to 1986--a rate well above the OECD average.
During the 1980s, structural developments in the Finnish economy
paralleled those in other West European economies. Although surplus
production of animal products plagued agriculture and led to cutbacks in
agricultural subsidies, the country preserved family farming. Policy
makers continued to monitor forestry, energy, and mineral resources
closely, even when falling petroleum prices reduced pressures on the
economy. Industry underwent intensive restructuring, eliminating many
inefficient producers and consolidating healthy enterprises. Despite
mergers and rationalization, Finland lost fewer industrial jobs than
most OECD countries, so that unemployment was held below the
double-digit levels common elsewhere on the continent. Private services,
especially banking and insurance, expanded more rapidly than other
sectors, also helping to limit unemployment.
Structure of the Economy
By 1986 postwar economic growth had raised Finland's GDP to about
US$70.5 billion, making the country one of the most prosperous in the
world. Economic expansion over the years had substantially altered the
structure of the economy. By 1986 agriculture, forestry, and fishing had
fallen to a little under 8 percent of GDP from nearly 26 percent in
1950. Industry, including mining, manufacturing, construction, and
utilities, accounted for about 35 percent of GDP, down from about 40
percent in 1950. Within industry, metalworking had grown most rapidly,
its output almost equalling that of wood processing by the late 1970s.
In the late 1980s, industrialists looked forward to a shift toward
electronics and other high-technology products.
While agriculture and industry had declined in relative terms during
the postwar years, the service sector had grown from about 34 percent of
GDP to almost 58 percent, leading some observers to characterize Finland
as a postindustrial society. Several factors accounted for the expansion
of the service sector. Government, very small under the Russian Empire,
grew rapidly between the Great Depression and the early 1970s as the
state took responsibility for an increasingly greater share of economic
life. In addition, transportation, communications, engineering, finance,
and commerce became more important as the economy further developed and
Control and ownership of Finland's economic life were highly
concentrated, especially after the industrial and financial
restructuring of the 1980s. Thus, by 1987 three firms controlled most
shipbuilding, a small number of woodworking enterprises dominated the
forest industries, and two main commercial banks exercised wide-reaching
influence over industrial development. Large state-owned firms provided
most of the energy, basic metals, and chemicals. The country's farmers,
workers, and employers had formed centralized associations that
represented the vast majority of economic actors. Likewise, a handful of
enterprises handled most trade with the Soviet Union. Some observers
suggested that the trend toward internationalization might increase the
influence of foreign firms and executives in Finnish enterprises, but
this effect would make itself felt slowly. Thus, while Finland remained
a land of family farms, a narrow elite ran the economy, facilitating
decision making, but perhaps contributing to the average worker's sense
of exclusion, which may have contributed to the country's endemic labor
Finland - ECONOMY - ROLE OF GOVERNMENT
Even before the 1973 oil crisis, energy was a major concern, and
Finland had started energy-saving programs meant to cut dependence on
imports and to maintain export competitiveness. Nevertheless, the
country had one of the world's highest per capita rates of energy
consumption. The cold climate required that the Finns expend about a
quarter of their energy supply for space heating, while the relatively
long distances separating Finland's settlements required heavy fuel use
for transportation. The importance of energy-intensive processing
industries, including not only the lumber, pulp, and paper sectors but
also the minerals and basic metals sectors, further expanded the
country's energy needs. In the late 1980s, Finland consumed about 30
million tons of oil equivalent per year, distributed among solid fuels
(15 percent), liquid fuels (40 percent), and electricity (45 percent),
which put annual per capita consumption at 0.6 tons of oil
equivalent--about 50 percent higher than per capita consumption in the
Domestic sources could cover only about 30 percent of total energy
demand, and imported energy supplied the remainder. In 1986 the
government estimated that, even assuming continued efforts at
conservation, energy demand would grow by at least 1 percent per year
during the 1990s and that demand for electricity would grow even faster.
By the late 1980s, policy makers faced important choices in their
efforts to maintain secure supplies of electricity and other forms of
energy. Four major goals governed policy decisions: increasing the use
of domestic energy sources, providing for possible import shortages,
expanding electricity production, and improving conservation programs.
The state played a strong role in energy management. The government
used state-owned energy enterprises and price controls to influence both
production and consumption. The state owned the most important energy
supply enterprises, including Imatran Voima, the largest electricity
producer, which managed the national electricity distribution grid;
Kemijoki, a hydropower concern; Neste, which controlled the import,
refining, and distribution of petroleum and natural gas; and Vapo, a
producer and distributor of peat and other domestic fuels. Another major
policy tool was the control of energy prices, either directly or by
means of taxes and tariffs.
Finland's main domestic energy sources were hydroelectric power,
peat, and wood. By the late 1980s, the country's large hydroelectric
potential had been thoroughly tapped, except possibly for the rivers
protected by environmental legislation. Nevertheless, hydroelectric
production could still be increased by renovating existing installations
and by building additional plants at secondary sites. Encouraged by
investment subsidies and by the results of state-funded research,
Finland had begun systematic exploitation of its peat reserves.
Peatlands covered more than one-third of Finland's surface area, but in
the mid1980s only about 5 percent of this area was being used. The
government hoped to more than double peat output by the year 2000. Wood
was widely used for heating in rural areas, especially after the oil
price increases of the 1970s; it was even more important for the forest
industries, which used waste wood to supply about 60 percent of their
Despite increased use of domestic energy sources, the economy
depended on imports of petroleum, coal, natural gas, uranium, and
electricity. Observers expected that this dependence would get worse in
the 1990s and beyond as consumption increased. Moreover, the fall in
world petroleum prices, starting in the early and mid-1980s, had made
oil imports more competitive and thus might delay investments in
domestic energy sources.
The Soviet Union was traditionally Finland's main energy supplier,
providing petroleum, natural gas, electricity, uranium, and even nuclear
fuel reprocessing services. Energy products played an important role in
Finnish-Soviet trade, accounting for about 80 percent of Soviet exports
to Finland. The decline in world petroleum prices in the 1980s meant
that Finland had to increase the volume of petroleum imports from the
Soviet Union in order to maintain the level of sales to the Soviet
market. To respond to the resulting oversupply of crude petroleum, Neste
began refining oil for export. Finland's imports of Soviet
natural gas transited a pipeline to the southeastern part of the
country, with branches leading to the Helsinki and the Tampere areas. In
the late 1980s, Finland participated in discussions regarding the
construction of a Nordic gas pipeline network that was designed
primarily to transport Soviet gas to other Nordic countries but that
might also carry Norwegian gas to Finland.
The Finns reduced their dependence on Soviet energy by patronizing
other suppliers. For example, during the late 1980s, the Finns began
importing coal not only from Poland and the Soviet Union but also from
the United States, Colombia, and Australia. Coal imports had declined in
the late 1970s as a result of rapid increases in the generation of
electricity from nuclear plants, but they rose again by the mid-1980s to
some 5 million tons per year. Finland also purchased electricity from
Sweden, and the Finns were interested in finding other sources for
To reduce further their vulnerability to cutoffs of foreign energy
supplies, the Finns also undertook an energy stockpiling program.
Informed observers believed that the country maintained stocks
sufficient to supply it for six months, which compared favorably with
stockpiles held by other industrial countries.
Experts predicted that Finland would face an electricity shortage by
the mid-1990s, unless additional generating capacity came into operation
by then. Electricity consumption had grown faster than energy use as a
whole during the 1980s, largely because more and more households had
switched to electric heating. In the late 1980s, most observers expected
that demand would rise by 2 to 3 percent per year until the year 2000.
Finland's growing needs for electric power spurred attempts to increase
domestic generating capacity, which in early 1986 had reached 10,700
megawatts. In the late 1980s, hydroelectric plants supplied
approximately 30 percent of total electric power. Finland produced about
41 percent of its electricity at four nuclear power plants built between
1977 and 1980: two Swedishmade , 660-megawatt, boiling-water reactors on
the island of Olkiluoto; and two Soviet-made, 440-megawatt,
pressurized-water reactors at Loviisa. Conventional thermal plants
accounted for another 22 percent of electricity production, and imports
from neighbors covered the remaining 6 percent.
In early 1986, the Ministry of Trade and Industry prepared a plan for
the 1990s that called for increasing installed electrical capacity by
about 2,700 megawatts by the year 2000. About 1,200 megawatts of the new
capacity was to come from small plants scattered around the country.
Another 1,500 megawatts would have to come from large
plants--peat-fired, coal-fired, and nuclear. According to the plan,
Finland could either import another 500 megawatts from the Soviet Union
or further expand nuclear capacity.
In the spring of 1986, the Eduskunta almost approved the plan,
including the construction of a fifth nuclear plant. Public reaction to
the nuclear disaster at Chernobyl in the Soviet Union froze
consideration of nuclear power, however, and induced a complete review
of energy policy. Public pressure caused the government to replace the
proposed plant with coal-fired plants. Despite this setback to the
nuclear industry, informed observers believed it probable that Finland
would increase its nuclear capacity in the 1990s, once public opposition
had died down.
Since the 1970s, the government has made considerable efforts to spur
energy conservation. Domestic energy prices have been maintained at
realistic levels--gasoline prices were among the highest in all European
countries--encouraging the public to conserve. The government raised
energy efficiency standards for home construction and renovation,
cutting energy use for heating by 30 to 40 percent over a decade.
Finland pioneered the development of district heating, which used
otherwise-wasted energy from power plants. Observers predicted that this
efficient source of domestic heat would supply half the country's homes
by the year 2000. Environmentalists believed that further energy savings
could be achieved that would reduce the need for building more power
plants, but mainstream opinion supported continued increases in energy
production to support economic growth. Yet no matter how much Finland
conserved, the country would still need to import large amounts of
energy and would face difficult tradeoffs between the benefits and the
risks and costs of various energy options.
Finland - Minerals
Under the regulatory structures that had developed since the
mid-nineteenth century, banks had dominated the financial scene, leaving
the stock market and insurance companies to play secondary roles.
Control over investment capital gave a few large banks great power.
Distinct laws for each type of bank contributed to the development of a
fragmented banking structure in which separate types of institutions
served different purposes. Closely regulated by the central bank, the
operations of which depended less on market mechanisms than on capital
rationing, the traditional financial system served Finland's postwar
reconstruction and industrialization well. This same system, however,
appeared outdated in the dynamic international markets of the 1970s and
the 1980s. As a consequence, a process of deregulation and
internationalization was begun, which led to rapid changes in the
financial sector. Observers expected further changes during the late
1980s and the early 1990s. In mid-1988 the process of liberalization was
still incomplete, however, and many institutions retained their
customary roles, making Finland's financial system a peculiar mixture of
new and old.
Founded in 1811, the Bank of Finland (BOF) first provided the
services of a true central bank in the 1890s. Formally independent, the
BOF's management comprised bodies responsible to both the executive and
the legislative branches of government. The governor and a board of
directors, who were appointed by the president of Finland, controlled
day-to-day operations. A nine- member supervisory council, named by and
responsible to the Eduskunta, reviewed bank policy and made most
fundamental decisions, especially those regarding monetary policy. The
BOF served as the lender of last resort, and it regulated the currency
and the financial markets. It also determined monetary policy and
participated in the formulation of government economic strategies.
Although BOF policy originally had concentrated on maintaining the
value of the currency, during the Great Depression of the 1930s the
influence of Keynesian theories began to modify bank policies. After
World War II, the BOF developed regulations designed to favor
reconstruction and the development of manufacturing, and these remained
in force almost unchanged throughout the 1960s. The regulations were
part of a comprehensive government scheme for financial markets that
included foreign-exchange restrictions, regulation of bank lending
rates, a quota system for bank borrowing from the BOF, and an interbank
agreement on deposit rates. At the heart of the system were tax rules
that made interest earnings on bank deposits tax-free and interest
charges paid by companies on loans fully deductible. These two measures
combined to favor bank deposits and to facilitate debt financing for
industry. The BOF used this panoply of regulations to hold borrowing
rates artificially low--generally at negative real rates--to favor
investment. As money markets were not in operation, the BOF resorted to
distributing specific quotas of credits to commercial banks. Strict
limits on the foreign-exchange market protected the system from
Besides the central bank, the banking system included a small number
of commercial banks based in Helsinki, many local branches of
cooperative and savings banks, and a small number of state- owned banks.
The commercial banks differed from the others because they could borrow
directly from the BOF, and they controlled most corporate banking. The
networks of savings and cooperative banks primarily served households,
which provided a solid deposit base. The split between the two banking
networks was not absolute, however, as the savings banks and the
cooperative banks had formed their own so-called central banks, which
enjoyed commercial bank status.
Finland's commercial banks were the real leaders of the financial
industry, and they controlled most lending to Finnish corporations.
Although about ten banks were considered to be commercial banks, only
two--the Suomen Yhdyspankki (Union Bank of Finland--UBF) and the
Kansallis-Osake-Pankki (KOP)--were national banks with extensive branch
networks. The four foreign-owned banks active in Finland also operated
as commercial banks.
The cooperative and savings banks served a wide range of regional and
local customers, but usually exercised relatively little economic power.
They tended to specialize in providing home and farm banking services in
rural areas. The savings banks were nonprofit banks designed to promote
saving, and they served small-scale trade and industry as well as
Although private banks formed the backbone of Finland's financial
structure, state-owned banks still accounted for about one-quarter of
bank assets in the mid-1980s. The most important of these, the
Postipankki, had about 40 branches of its own and made its services
available at windows in more than 3,000 post offices throughout the
country. Other state banks included the Industrialization Fund of
Finland, Finnish Export Credit (partially owned by commercial banks and
private industry), and the State Investment Fund and Regional
Development Bank, both of which invested in underdeveloped regions and
in industries with capital requirements that were too large for private
Finland's commercial banks traditionally were allowed to hold as much
as 20 percent of the total assets of Finnish corporations, and the
leading banks had substantial holdings in the largest corporations. A
1987 law reduced the cap on bank ownership of corporate assets, but the
banks' real power derived from their control over capital supplies.
During the long postwar period of negative real interest rates, banks
controlled the supply of capital--much of which was imported from abroad
by the BOF. The two largest banks, KOP and UBF, built up rival spheres
of influence that extended to many of Finland's largest industrial
The crises and the restructuring of the late 1970s and the early
1980s provided the leading banks with further opportunities to
strengthen their hold on Finnish industry. Starting in the late 1970s,
KOP and UBF arranged many mergers among the wood- processing companies;
by the mid-1980s, they had turned their attention to rationalization in
the metal-processing industry. Several banks also engaged in takeover
battles through the Helsinki Stock Exchange.
In the 1970s, several developments combined to reshape the operations
of the postwar financial system. First, many corporations began to
search for investment opportunities that offered both liquidity and
higher rates of return than those offered for bank deposits. Second, as
Finland shifted from importing capital to investing abroad, the old
restrictions on foreign-exchange transactions became burdensome.
Finally, a number of major Finnish corporations, having large shares of
the domestic market, sought to expand abroad. Some, intent on foreign
acquisitions, wanted to sell stocks on world exchanges in order to build
assets sufficient for world-scale operations.
By the late 1970s, in response to the increasing internationalization
of corporate life, the BOF management became convinced of the need to
liberalize the regulatory system. The bank relaxed controls on borrowing
abroad, and it allowed the establishment of an interbank money market;
at the same time, the banks began to compete on interest rates for large
deposits. These two developments caused Finnish interest rates in the
corporate market to float up toward world levels, while the rates for
most small depositors remained controlled. In 1982 the BOF allowed
foreign-owned banks to open branches in Finland. In 1984 the BOF
permitted Finnish banks to establish branches abroad, abolished
bank-specific credit allocation, and began to levy identical reserve
requirements on all banks. In 1987 legislation on bank deposits
eliminated their traditional tax-free status. And in early 1988, the
government proposed new banking laws that would put all major banks on
the same legal footing.
The BOF had thus been willing to deregulate corporate banking
partially, but important aspects of the regulatory system remained
unchanged. The BOF continued to watch closely both foreign long-term
borrowing and investments abroad by Finnish corporations. Retail banking
continued much as before: small deposits placed at the regulated rates
were tax-free, and the banks maintained their interest-rate cartel. The
Finns had become accustomed to low and stable interest rates; proposals
regarding interest were politically sensitive and might influence
incomes agreements. Most observers thus expected that the BOF, ever
cautious, would not rush toward further deregulation.
One effect of the liberalization of financial regulations and the
internationalization of Finnish commercial life was the revival of the
Helsinki Stock Exchange. Turning away from debt financing, more and more
corporations issued stocks and bonds in the 1980s. Starting in 1982, the
stock exchange attracted foreign investors, who accounted for about
one-third of turnover in 1985. Younger, more prosperous Finns showed
increased interest in stocks. As a result, although the market suffered
a major slump in the second half of 1984, by late 1986 the stock index
had increased tenfold compared with its 1980 level.
Incorporated in 1984, and almost immediately shaken by allegations of
insider trading, the stock exchange in 1985 issued new regulations that
were intended to increase the openness of its operations, thereby
increasing its attractiveness for small investors. In 1987 the
government reduced restrictions on foreign investors and passed a law
allowing banks and insurance companies to set up mutual funds. In the
fall of 1987, options exchanges opened, offering new instruments to
stock traders. Also likely to enliven the market was legislation of the
same year that eliminated the tax-free status of bank deposits. As
Finnish equities continued to offer better rates of return than those on
many markets, stock brokers had good reason to be optimistic.
Insurance companies, once marginal actors in capital markets, became
Finland's largest institutional investors, after the establishment of
compulsory insurance schemes in the early 1960s. After that time,
insurance grew faster than the economy as a whole, and it contributed
some 5 percent of GNP in the mid-1980s. As the result of restructuring
in the early 1980s, there were about fifty insurance companies,
associated in five large groups. The insurance companies placed about
two-fifths of their investments in industry and an additional fifth in
commerce. Other investments included other insurance firms and real
Finland - Tourism
Trade in agricultural commodities, consumer products, and services
had been relatively limited, but exchanges with the outside world were
crucial for industry. Not only had the forest industries grown largely
in response to foreign demand for wood and paper, but the metal-working
industry had also taken off only under the goad of postwar reparations
deliveries to the Soviet Union. By the mid-1980s, exports accounted for
half of all industrial output and for as much as 80 percent of the
output of the crucial forest industries. Similarly, imports of energy,
raw materials, and investment goods remained essential for industrial
production. The development of export-oriented industries had driven
Finland's postwar structural transformation, indirectly affecting the
rest of the economy. Industrial competitiveness would largely determine
the economy's overall health into the 1990s.
During the postwar period, Finnish exports shifted from lumber and
other raw materials to increasingly sophisticated products, a change
which reflected the increasing diversification of the country's economic
structure. The forest industries continued to dominate exports, but,
while they had accounted for about 85 percent of total exports in 1950,
they accounted for only 40 percent by the mid-1980s. The relative shares
of different forest exports also shifted. Sawn timber and various board
products accounted for more than one-third of total exports in 1950, but
by 1985 they had fallen to only 8 percent. Exports of pulp and paper
fell more gradually during the same period, from 43 percent of exports
to about 30 percent. Pulp and cardboard, the main exports of the
chemical wood-processing branch, declined in importance, while
specialized paper products incorporating higher value added, such as
packing material, printed paper, and coated paper, grew in importance.
Taking the place of forest products, exports of metal products grew
rapidly during the postwar period from a little over 4 percent of
exports to about 28 percent. Here, too, exports of more sophisticated
manufactured goods grew faster than those of basic products. By the late
1980s, basic metals accounted for about 20 percent of metal exports,
ships for about 25 percent, and machinery and equipment for about 20
percent. Advanced products such as electronics and process-control
equipment were gaining on conventionally engineered products. The
chemical industry had exported relatively little until the 1970s, but by
1985 it had grown to account for about 12 percent of exports. By
contrast, the textile, confectionery, and leather goods industries had
peaked at over 10 percent in the late 1970s and early 1980s, and then
they had fallen to about 6 percent of exports by the mid-1980s. Minor
export sectors included processed foods, building materials,
agricultural products, and furs.
Up to the 1970s, Finland tended to export wood-based products to the
West, and metal and engineering products to the East. By the mid-1980s,
however, Finnish machines and high-technology products were also
becoming competitive in Western markets.
Finland's imports had consisted primarily of raw materials, energy,
and capital goods for industrial production, and in the late 1980s these
categories still accounted for roughly twothirds of all imports. The
commodity structure of imports responded both to structural changes in
domestic production and to shifts in world markets. Thus, the heavy
purchases of raw materials, energy, and capital goods up until the
mid-1970s reflected Finland's postwar industrial development, while the
subsequent period showed the influences of unstable world energy prices
and Finland's shifts toward high-technology production. Imports of
investment goods climbed from about 15 percent in 1950 to almost 30
percent in the late 1960s and early 1970s, only to fall again by the
1980s to about 15 percent. Foodstuffs and raw materials for the textile
industry accounted for about half of all raw material imports during the
1950s, but by the 1980s inputs for the chemical and metal-processing
industries took some 75 percent of raw material imports. World energy
prices had strongly influenced Finnish trade because the country needed
to import about 70 percent of its energy. After rising slowly until the
early 1970s, the value of oil imports had jumped to almost one-third of
that of total imports in the mid-1970s, then had fallen with world oil
prices to about 13 percent by the late 1980s.
Like its export markets, Finland's import sources were concentrated
in Western Europe and the Soviet Union. The country usually obtained raw materials,
especially petroleum, from the East and purchased capital goods from the
Finnish service exports had exceeded service imports until the early
1980s. Up until this time, shipping and tourism earnings had generally
exceeded interest payments to service the national debt. In the
mid-1980s, however, the balance was reversed as the earnings of the
merchant marine declined and Finns began to spend more on tourism
abroad. Although Finnish businesses tried to compete in these
labor-intensive sectors, the country's high wage levels made shipping
and tourism difficult to export.
Like other Nordic countries, Finland's trade was concentrated in the
Nordic area and in Europe. Unlike the others, however, Finland had, as
its most important trading partner, the Soviet Union. During the postwar
years, trade with the Soviets had expanded and contracted in response to
political developments and market forces. During the immediate postwar
period, the Soviet share of Finland's trade, spurred by reparations
payments, rose to over 30 percent. However, the following two decades
saw this share gradually decline as Finland expanded exports to Western
Europe. A second cycle began after the 1973 oil crisis, when recession
in Western markets cut demand for Finnish products while the increased
value of Soviet oil deliveries to Finland allowed expanded exports to
the East. Finnish exports to the Soviet Union rose sharply during the
years after 1973, only to fall--along with world petroleum prices--by
By the late 1980s, the geographical distribution of Finland's trade
was moving back to the pre-1973 pattern. In 1986, for example, although
the Soviet Union continued to be Finland's single largest trade partner,
trade with West European countries, which together accounted for about
61 percent of Finnish trade, was much more important than trade with the
Soviet Union. Finland's main trade partners in Western Europe were
Sweden, which took the biggest share of Finnish exports, and the Federal
Republic of Germany (West Germany), which supplied the largest slice of
Finnish imports. East European countries other than the Soviet Union
accounted for only slightly over 2 percent of trade. Non-European
countries were responsible for some 19 percent of trade. The United
States, Finland's main non-European trade partner, accounted for over 5
percent of Finnish exports and imports in 1987.
As in many small European countries, the postwar trade policy of
Finland had been to pursue free trade in industrial products while
protecting agriculture and services. During the 1980s, strict quotas
still blocked imports of most agricultural commodities (except for
tropical products that could not be produced domestically), but
liberalized regulations allowed increased imports of services,
especially financial services. Most industrial imports and exports were
free of surcharges, tariffs, and quotas under multilateral and bilateral
agreements between Finland and its major trading partners. Health and
security concerns, however, inspired restrictions on imports of products
such as radioactive materials, pharmaceuticals, arms and ammunition,
live animals, meat, seeds, and plants. With a few exceptions, Finland
discontinued export licensing in the early 1960s. The State Granary,
however, controlled all trade in grains, while the Roundwood Export
Commission reviewed all lumber exports.
Finland - Finnish Direct Investment Abroad
The Eduskunta is the country's highest governing body by virtue of
its representing the people, who possess sovereign power. Its main power
is legislative, a power it shares with the country's president. It also
has extensive financial powers, and its approval is required for the
government's annual budget and for any loans the government wants to
contract. Although the president is dominant in the area of foreign
policy, treaties must be ratified by the Eduskunta, and only with its
consent can the country go to war or make peace. This chamber also has
supervisory powers, and it is charged with seeing that the country is
governed in accordance with the laws it has passed. To enforce its will,
the Eduskunta has the power to hold the government to account, and to
call for the impeachment of the president.
The Eduskunta is closely tied to the president and to the Council of
State. Neither the president nor the cabinet is able to carry out many
executive functions without the support of the Eduskunta, and the
cabinet must resign if it is shown that it has lost the chamber's
confidence. Strong links between the Eduskunta and the Council of State
result, too, from the circumstance that most cabinet ministers are
members of parliament. On the other hand, the Eduskunta is subordinate
to the president in that he may dissolve it and call for new elections.
Despite its legislative powers, it actually initiates little
legislation, limiting itself mainly to examining the government bills
submitted to it by the president and the council. In addition, all
legislation passed by the Eduskunta must bear the president's signature
and that of a responsible minister in order to go into effect. The
Eduskunta need not approve the legislative proposals submitted to it,
however, and can alter or reject them.
As stipulated by the Parliament Act of 1928, the Eduskunta's 200
members are elected by universal suffrage for four-year terms. All
citizens twenty years of age and older, who are able to vote, and who
are not professional military personnel or holders of certain high
offices, have the right to serve in the Eduskunta. A wide variety of the
country's population has served in this body, and its membership has
changed often. Sometimes as many as one-third of the representatives
have been first-term members, as occurred in the 1987 national
Finnish election laws emphasize individual candidates, which
sometimes has meant the election of celebrities to the body. Most
members, however, have begun their political careers at the local level.
In the late 1980s, about one-third of the representatives were career
politicians. The professions were overly represented at the expense of
blue-collar workers; about 40 percent of the members, compared with only
3 percent of the population as a whole, had university degrees. By the
1980s, farmers and businessmen were no longer so prevalent as they once
had been, while there were more journalists and managers. The number of
female representatives had also increased, and by the 1980s they made up
one-third of the chamber. In the 1987 election, women won 63 of the 200
Article 11 of the 1928 Parliament Act states that members are to vote
as their consciences dictate. A delegate is not legally bound to vote as
he or she promised, in a campaign for example. In the late 1980s,
however, party discipline was strict, and delegates usually voted as
directed by their party.
The four-year term, or legislative period, of the Eduskunta is
divided into annual sessions beginning in early February, with vacation
breaks in the summer and at Christmas. The first business of a yearly
session is the election of a speaker, two deputy speakers, and committee
chairmen. Those elected make up the speaker's council, which is
representative of the party composition of the Eduskunta and arranges
its work schedule. The speaker, by tradition of a different party from
the prime minister, presides over the chamber, but the speaker neither
debates nor votes.
Also chosen in the first days of a new session are those, from either
within or outside the parliament, who supervise the pension institute
and television and radio broadcasting; and five auditors who monitor
compliance with the government's budget and oversee the Bank of Finland
(BOF). Among the most important posts to be filled by the Eduskunta for
its four-year term are those of the parliamentary ombudsman and the six
members of the Eduskunta who make up half of the High Court of
Parliament approves legislation in plenary sittings, but it is in the
committees that government bills are closely examined. In the late
1980s, there were thirteen committees in all: five permanent
committees--constitutional, legal affairs, foreign affairs, finance, and
bank--and eight regular ad hoc committees-- economy, law and economy,
cultural affairs, agriculture and forestry, social affairs,
transportation, defense, and second legal affairs. Committee membership
reflects the political composition of the Eduskunta. Members usually
serve for the whole legislative period, and they commonly have seats on
several committees, often of their own choosing. Members who have served
on a given committee for a number of terms often develop considerable
expertise in its area of responsibility.
Legislative proposals also pass through the forty-five-member Grand
Committee. Only the budget, which is not a legislative proposal in
Finland, escapes its review. The committee, adopted as a compromise in
1906 between those who advocated a bicameral legislature and those who
preferred the unicameral body finally established, was conceived as a
safeguard against the measures of a perhaps too radical parliament. It
therefore examines proposals for their legal soundness and propriety.
Yet, according to the British scholar David Arter, the Grand Committee
has only occasionally altered the proposals sent to it, and, as a
consequence, it has lost prestige within the Eduskunta. Its members are
generally newly elected representatives.
The Eduskunta has an elaborate procedure for handling government
bills sent to it by the president, after discussion and approval in the
Council of State. This procedure was adopted with the idea of preventing
the enactment of radical measures, and it is an indication of the
Eduskunta's essentially conservative nature. Proposals are usually first
discussed in a plenary session, then directed by the speaker to an
appropriate committee, where they are carefully scrutinized in closed
hearings. After committee review and report, proposals are returned to
the plenary session for the first reading, where they are discussed but
no vote is taken. The next step is the Grand Committee review. Working
from the Grand Committee report, the second reading in plenary session
is a detailed examination of the proposal. If the Grand Committee report
is not accepted in its entirety, the proposal must be returned to the
Grand Committee for further discussion. Once the proposal is back again
at the plenary session, for the so-called continued second reading, the
Eduskunta votes on the changes recommended by the Grand Committee. There
is no discussion in the final and third reading; the proposal is simply
approved or rejected. Votes may be taken at least three days after the
second reading or the continued second reading. Once approved by the
Eduskunta, bills require the signature of the president within three
months to go into effect. This requirement gives the president the power
of suspensive veto. This veto, rarely used, can be overridden if the
Eduskunta approves the bill with a simple majority following new
Only the government's budget proposal is exempted from the above
parliamentary procedure, because the budget is not considered a
legislative proposal in Finland. Instead, the budget proposal is handled
in a single reading, after a close review by the largest and busiest
parliamentary committee, the twenty-one member Finance Committee.
Government bills connected with the budget and involving taxation,
however, must pass through the three plenary session readings and the
Grand Committee review. This reinforces the Eduskunta's budgetary
The Eduskunta's elaborate legislative procedure can be traversed in a
few days if there is broad agreement about the content of a bill.
Qualified majority requirements for much legislation, most commonly that
touching on financial matters and property rights, enable a small number
of representatives to stop ratification in a plenary session and to
oblige the government to ascertain a bill's probable parliamentary
support before submitting it to the Eduskunta. Qualified majority
requirements for legislation involving taxation for a period of more
than one year require the approval of two-thirds of the body.
Sixty-seven members can hold such legislation over until after a new
election and can thus effectively brake government programs. Because
there is no time limit on a member's right to speak, filibusters can
also slow the progress of a bill through the Eduskunta, although this
tactic has seldom been employed. Government care in the crafting of
bills is reflected in the unimpeded passage through parliament of most
Legislation altering the Constitution is subjected to more rigorous
requirements. Constitutional changes may be approved by a simple
majority, but before they go into effect, they must be approved again by
a two-thirds majority in a newly elected Eduskunta. If the changes are
to go into effect within the lifetime of a single Eduskunta, the
legislation implementing them must be declared "urgent" by
five-sixths of the body and, in a subsequent vote, approved by a
two-thirds majority. This requirement means that a vote of one-sixth
against a proposed economic measure regarded as being of a
constitutional nature, such as some incomes policy legislation, can
prevent its enactment during a single parliamentary term. These same
majorities are required for an unusual feature of Finnish parliamentary
procedure that permits the passage of laws that are temporary
suspensions of, or exceptions to, the Constitution, but that leave it
intact. Since 1919 about 800 of these exceptional laws have been passed,
most involving only trivial deviations from the Constitution.
Members of the Eduskunta may initiate legislation by submitting their
own private members' bills and financial motions relating to the budget.
Several thousand of these are submitted each year, but 95 percent are
not even considered, and only a handful are accepted. Members also may
submit proposals connected to government bills, or may petition for
certain actions to be taken. The main point of these procedures is often
a delegate's desire to win the approval of his constituents by bringing
up an issue in the Eduskunta.
The Eduskunta has other means of exerting pressure on the government,
in addition to refusing to approve its legislative proposals. Its
members may address questions to ministers either orally or in writing,
and in either case a quick response is required. Potentially much more
serious is an interpellation, possible if twenty members desire it, in
which case the government can fall if it fails to survive a vote of
confidence. Few governments fall in this way, however, as they are
allowed to remain in power as long as a lack of support is not shown.
Interpellations have been used principally as a means of drawing
attention to a particular question, and press coverage usually is
An important instrument of Finnish parliamentary control is the right
and duty of the Constitutional Committee to examine government bills
with regard to their constitutionality. Finland has no constitutional
court, and suggestions for its establishment have foundered because the
Eduskunta has refused to cede this important review power to a court
that would be outside parliamentary control. Although the committee's
seventeen members come from parties with seats in the Eduskunta, the
committee has strived for impartiality, has sought the opinions of legal
specialists, and has let itself be bound by precedents. As evidence that
it takes its responsibilities seriously, committee members representing
both the far left and the far right have agreed with 80 percent of its
judgements over a long period of time.
The Eduskunta also exercises control of the executive through the
Responsibility of Ministers Act, which can be used against the
government or an individual minister if a parliamentary committee, the
parliamentary ombudsman, or five members of the Eduskunta so decide. The
Eduskunta's ability to control the government is also apparent in its
duty to comment on the annual report of the government's actions
submitted in May, and the Foreign Affairs Committee's review of the
frequent Ministry of Foreign Affairs reports detailing the government's
conduct in the field of foreign relations.
Finland - President
The Council of State shares executive power with the president, and
it is responsible for the management of the governmental machinery. The
Council of State prepares the government bills presented to the
Eduskunta and authors most legislation. In the late 1980s, it consisted
of the prime minister, the chancellor of justice, and up to seventeen
ministers who directed twelve ministries: foreign affairs, justice,
interior, defense, finance, education, agriculture and forestry,
communications, trade and industry, social affairs and health, labor,
and environment. Some of the ministries have second or deputy ministers,
and occasionally a minister holds two portfolios. There have been no
ministers without portfolio since the early 1950s. Ministers must be
"native-born Finnish citizens known for their honesty and
ability." The minister of justice and one other minister must be
lawyers, but otherwise there are no formal qualifications for a cabinet
post. Ministers generally enter the cabinet from the Eduskunta, but it
has not been uncommon for them to be drawn from the outside, especially
to serve in caretaker governments composed largely of leading private
citizens and civil servants. Even prime ministers have on occasion come
from outside parliament, as did Mauno Koivisto in 1979. Ministers from
the Eduskunta may continue to be members of that body, but they may not
serve on any committee.
The prime minister heads the Council of State, sets its agenda,
nominates some members of the council's committees, settles tie votes,
and, most important, dissolves it when he sees fit or if it can no
longer govern. The prime minister also represents the president when he
is out of the country. If the president can no longer carry out his
duties, the prime minister replaces him until a new presidential
election can be held. Other than these rights and duties, a prime
minister in the 1980s had few formal powers and had only a very small
staff to assist him in his work. His main responsibility was holding
together cabinets composed of a number of political parties that
frequently had opposing views on central issues. He could manage this
through personal prestige or by force of character, through backstairs
wrangling, or, ultimately, by threatening to dissolve the cabinet if it
did not adhere to the government's program.
A key member of the Council of State, although he is not a minister,
is the chancellor of justice. Appointed for life by the president, he is
obliged to attend all meetings of the council and to review its
proceedings for legality. He has no vote, but his decisions about the
legality of council proposals and decisions are regarded as binding. The
chancellor of justice also reviews the president's actions, and he
reports infractions to the Council of State, or, if necessary, to the
Eduskunta. He is also empowered to initiate proceedings according to the
Responsibility of Ministers Act. One of the formal qualifications for
his position is that he be well versed in the law; and within the
country's legal system he is the highest prosecutor.
The Council of State must enjoy the confidence of the Eduskunta in
order to govern. The party composition of a new cabinet has to be
acceptable to the Eduskunta, and it must correspond, to some degree, to
the relative political strength of the parties within the chamber.
Formation of a cabinet has often been difficult because, in addition to
the large number of parties that participate in them, Finnish elections
usually give no clear indication of how political realities should be
reflected by a governing coalition. Even the selection of individual
ministers can be troublesome, for the parties themselves have much to
say about who serves as minister, and even a prime minister may have to
accept members of his own party not of his choosing. If a suitable
constellation of parties cannot be formed to yield an effective majority
government, a minority government, or even a caretaker government, may
be put together if the Eduskunta agrees.
The Council of State is held legally responsible for the acts of its
ministers, in accordance with the Responsibility of Ministers Act of
1922. In addition to making ministers accountable for their official
actions, this law--which has constitutional status--is also a vital, if
indirect, means of controlling the president's actions. Because many of
his decisions can be carried out only through the Council of State,
ministers who approve an illegal presidential action are liable under
the terms of this law. Ministers wishing to avoid the law's sanctions
must refuse to be party to a presidential decision that they view as
illegal. If ministerial consent is lacking, the president cannot act. In
such a case, the president must either abide by the decision of the
council, or he may dismiss it and attempt to form a new one amenable to
his wishes. If this is not possible, he may dissolve the Eduskunta and
call for new elections with the hope of having the voters endorse his
decisions by returning an Eduskunta from which a compliant government
can be formed. If the council refuses to approve a lawful presidential
decision, it is obliged to resign. Ministers can always resign
individually, but the resignation of the prime minister means the end of
A principal task of the Council of State is the preparation of
legislative proposals, or government bills, that the president presents
to the Eduskunta for ratification. Most of this work is done in an
appropriate ministry, where, in addition to ministry personnel and civil
servants, permanent and ad hoc commissions of experts and spokesmen for
special interests can be consulted.
In the 1980s, the Council of State had three committees to handle
important questions: the ministerial committees for finance, economic
policy, and foreign affairs. The Finance Committee, meeting on
Wednesdays, consisted of the prime minister, finance minister, and
several other ministers. It prepared the government's budget and
responded to the financial motions presented by individual members of
the Eduskunta. The Economic Policy Committee met twice a week to discuss
issues touching the country's economic life as a whole, broader
questions about the government's budget, and other financial concerns
suggested by the prime minister. The Foreign Affairs Committee, least
important of the three, met when needed to discuss issues concerning
Plenary meetings of the Council of State, for which a quorum of five
was required, had three forms. The so-called Evening School meeting, on
Wednesday evenings, was a closed, informal session where ministers, top
civil servants, politicians, and leading figures from outside government
freely discussed decisions to be taken. It was thus a forum where the
country's leaders met and exchanged opinions on important issues.
Instituted in the late 1930s as a means of speeding the council's work,
the Evening School had no formal decision-making power. Votes were taken
at the Thursday meeting. The Council of State worked as a collegial
body, and unanimous votes were not required. In case of a tie vote, the
vote of the prime minister was decisive. Approved measures were
presented to the president for signing at the Friday Presidential
In accordance with its executive powers, the Council of State
implemented its decisions and directed the ministries and the lower
levels of the state administrative apparatus. This was done through
presidential decrees and its own ordinances, neither of which could
conflict with legislation passed by the Eduskunta. Ministers, aided by
political secretaries drawn from their own parties, headed the country's
twelve ministries. The ministries, which both formulated and
administered policy, oversaw about eighty central boards that were
wholly occupied with implementing policy. The central board system,
inherited from the time of Swedish rule, had grown considerably,
expanding by about onethird between 1966 and 1975 because of the
increase in state social services. The boards, such as the National
Board of General Education and the State Publishing Office, did much of
the state's work. By tradition somewhat autonomous, they decided how
legislation and ministerial decisions were to be carried out.
Finland - Legal System
The legal system originated during the period of Swedish rule, and
portions of the Swedish General Code of 1734 were extant in Finnish law
even in the late 1980s. The country's first court of appeals was
established at Turku in 1634. The modern division of the Finnish courts
into two main branches--general courts, dealing with civil suits and
criminal cases, and administrative courts, regulating the actions of the
country's bureaucracy--also dates from this time. This division was
formalized in 1918 when two sections of the Senate, the body that had
governed Finland during the period of Russian rule, became the newly
independent country's two highest courts. The Senate Department of
Justice became the Supreme Court, and part of the Senate Finance
Department was the basis of the Supreme Administrative Court. The two
court systems are entirely separate, and they have no jurisdiction over
one another. The establishment of the two courts was confirmed by the
Constitution Act of 1919. Overseeing the system of justice are the
chancellor of justice--the country's highest guardian of the law and its
chief prosecutor--and the parliamentary ombudsman. Although these two
officials have largely parallel functions and each is required to submit
an annual report of his activities to parliament, the former is
appointed for life by the president and is a member of the Council of
State, whereas the latter is chosen for a four-year term by the
Eduskunta. Both officials receive complaints from citizens about the
conduct of civil servants, and on their own may investigate all public
officials and may order prosecutors to proceed against them. The
chancellor of justice supervises public prosecutors, and he also has the
unrestricted right to investigate private persons. Both officials may
call on either of the high courts for assistance.
The High Court of Impeachment may be convened for cases dealing with
illegal official acts by cabinet ministers, judges of the two supreme
courts, or the chancellor of justice. Members of this court, used only
three times since its formation in 1922, are the chief judges of the two
supreme courts and the six courts of appeal, a professor of law from the
University of Helsinki, and six representatives from the Eduskunta.
As in the other countries of Nordic Europe, there is no
constitutional court. Issues dealt with by a court of this kind
elsewhere are handled by the Eduskunta's Constitutional Committee.
According to Article 5 of the Constitution Act, all Finns are equal
before the law, and Article 13 of the same act stipulates that they may
be tried only in a court of their own jurisdiction. No temporary courts
are permitted. Legislation passed in 1973 provides for free legal
assistance to those in need as well as for free court proceedings in a
number of courts. Trials in lower courts are usually open to the public.
Records of trials in higher courts are made public.
Judges are appointed for life, with retirement set at age seventy,
and they may be removed only for serious cause. With the exception of
some lay judges in circuit courts and in some town courts, all judges
hold legal degrees from one of the country's three law schools. The
judiciary in the late 1980s was a rather closed profession, and only
judges for administrative courts were occasionally selected from outside
Defendants have no obligation to employ an attorney for their defense
in a Finnish court, and may represent themselves or be represented by
another layman rather than by a lawyer. Nevertheless, in most cases
heard in general courts and in many argued in administrative courts,
trained legal specialists are employed.
The general court system handles criminal cases and civil suits and
has three levels: lower courts, courts of appeal, and the Supreme Court.
There are two kinds of lower courts: town courts, numbering 30 in the
entire country; and circuit courts, totaling 147 in 71 judicial
districts. Town courts consist of three judges, all trained
professionals except in some small towns. One of these judges is the
chief judge chosen by the Supreme Court; the others are selected by
local authorities. Decisions are made on a collegial basis. Circuit
courts consist of a judge, chosen by the Supreme Court, and five to
seven lay judges, i.e., persons without legal training, chosen by local
authorities for a term of four years. Decisions on cases in courts of
this type are made by the professional judge, unless he is overruled by
the unanimous vote of the lay members of the court. Larger cities also
have housing courts that deal with rent and accommodations.
Appeals from lower courts are addressed to the six courts of appeal
located at Helsinki, Turku, Vaasa, Kouvola, Kuopio, and Rovaniemi. Most
cases at these courts are heard by professional three-judge panels; more
important cases are tried before a plenary session of judges if the
chief judge so decides. In cases involving senior government officials,
a court of appeals may serve as the court of first instance. Judges of
the courts of appeal are appointed by the Supreme Court.
The Supreme Court, located in Helsinki, consists of a chief justice,
or a president, and twenty-one judges usually working in five-judge
panels. It hears cases involving appeals of decisions of appellate
courts where serious errors are alleged to have occurred, or where
important precedents might be involved. A sentence from a court of
appeals may go into effect immediately, despite an appeal to the Supreme
Court, but it may be postponed while the case is pending if the Supreme
Court so decides. The chief justice of the Supreme Court is appointed by
the nation's president, and the other judges of that court are appointed
by the president on the recommendation of the Supreme Court.
The administrative courts system consists of twelve county courts,
one in each of the country's twelve provinces, and the Supreme
Administrative Court, located in Helsinki. All judges in administrative
courts are professionals, appointed in the same manner as judges who sit
in general courts. Judges work in threejudge panels at the provincial
level and in five-judge panels in the Supreme Administrative Court. When
appropriate, the latter meets in plenary sessions to hear especially
Administrative courts deal with appeals against administrative
decisions by government agencies, although in some cases appeals are
directed to higher administrative levels within the government. About 80
percent of the cases of the county courts involve appeals of government
tax decisions; the remainder deal with questions relating to
construction, welfare, planning, and local government. The Supreme
Administrative Court handles appeals of county court and central
government board decisions that affect, or are affected by,
administrative law. About 50 percent of the cases heard in the Supreme
Administrative Court involve questions about taxes.
Finland also has special courts to handle civil cases; some of these
courts render judgments from which there is no appeal. The four land
courts settle disputes about the division of land, and their decisions
may be appealed to the Supreme Court. Appeals from the insurance court,
which handles social insurance cases, also may be appealed to the
Supreme Court. Cases that involve water use are dealt with in the three
water courts, and may be appealed first to the water court of appeals
and from there to the Supreme Court. If the case involves water permits,
appeals go to the Supreme Administrative Court. Decisions of the labor
court and the marketing court may not be appealed. The former treats
disputes about collective bargaining agreements in either the public or
the private sector. Its president and vice president are lawyers; its
remaining members come from groups representing labor and management.
The marketing court regulates disagreements about consumer protection
and unfair competition.
Finland - Civil Service
The latter half of the nineteenth century saw the appearance of many
newspapers. All the political parties formed in these years and in the
early twentieth century had their own newspapers, and, as a result, most
Finnish papers were partisan until after War World II. After
independence in 1917, there was another upsurge in the number of
newspapers published; a high point, never since surpassed, was reached
in 1930 when Finns could choose from 123 newspapers, each published at
least three times a week. By 1985 there were ninety-eight such papers, a
figure that has remained fairly constant since the early 1960s. Total
circulation of papers of this type, twelve of which were in Swedish,
amounted to about three million by the mid-1980s. In addition, there
were about 160 papers that appeared once or twice a week. One United
Nations (UN) study ranked Finland fourth in the world for per capita
circulation, and surveys have found that over 90 percent of Finns read
papers regularly, 60 percent of Finns viewing them as the most useful
source of information.
Finns preferred to have their papers delivered to their homes in the
early morning, and for this reason there were only two evening papers in
the country, Ilta-Sanomat and Iltalehti, both printed
in Helsinki. Another reason for low newsstand sales in Finland was that
no taxes were levied on newspapers and magazines received via
Most localities were served by only one newspaper, but by the
mid-1980s Helsinki had about a dozen, and its newspapers, which
constituted only one-eighth of the country's total, accounted for
one-third of national circulation. Seven of the Helsinki papers were
among the twelve largest Finnish papers. Although many of Finland's
papers were published in Helsinki, there was little concentration of
press ownership, and there were no dominant newspaper chains, with the
possible exception of the firm Sanoma that owned the two papers with the
largest circulation, Helsingin Sanomat and Ilta-Sanomat.
In contrast to the other Nordic countries, the number of newspapers
in Finland has remained fairly constant, and there was even a slight
upturn in the 1980s. This steadiness was caused, at least partly, by the
government program of general and selective support. General support was
intended for the press as a whole, magazines included; it involved not
taxing subscriptions and essential materials, such as newsprint, and
arranging for low postal rates. Selective support, designed to guarantee
the survival of the party press, consisted of partial subsidies for
distribution and telecommunications costs and direct lump-sum payments
to papers in accordance with the number of representatives their parties
had in the Eduskunta.
Despite these efforts to encourage a varied party press, the number
of independent papers rose sharply after World War II, increasing from
38 percent in 1962 to 64 percent in 1985. The number of nonsocialist
party papers decreased most, but papers of this type still had more than
twice the circulation of socialist papers.
Most Finnish newspapers were served by the country's principal news
agency, the Finnish News Agency (Suomen Tietotoimisto--STT), which was
owned by the leading newspapers and the state-run Finnish Broadcasting
Company (Yleisradio--YLE). STT was connected to many of the world's news
agencies, and it had an extensive network of domestic correspondents.
Some newspapers, however, had direct contacts with foreign news
agencies. There were also agencies, run by political parties, that
supplied subscribers with political news and articles. Agencies of this
type were the Kesk's Uutiskeskus (UK), the KOK's Lehdistön
Sanomapalvelu (LSP), the SDP's Työvaen Sanomalehtien Tietotoimisto
(TST), the SKDL's Demokraattinen Lehtipalvelu (DLP), and the SFP's
Svensk Presstjanst (SPT).
By the mid-1980s, there were about 1,200 magazines being published
regularly, printing a total of about 20 million copies a year. The most
popular subscription magazine in the mid-1980s was Me,
published biweekly in Helsinki for Finnish consumer societies, followed
by the Finnish version of Reader's Digest and by numerous
family and general interest magazines. The magazines with the largest
printings were those distributed free at banks, retail stores, and other
Subscription magazines, like newspapers, enjoyed general support from
the government in the form of lower taxes and postal rates. In the late
1970s, selective government support was introduced to assist those
magazines which, without the aim of financial gain, sought to inform the
public about cultural, scientific, religious, and social concerns. By
the mid-1980s, several dozen of these so-called "magazines of
opinion" were receiving state aid.
Finland's state radio and television company, the YLE, was founded in
1926, and it began television broadcasting in 1958. It was a stock
company, with 99.2 percent of its stock owned by the government and the
remainder owned by fifty-seven stockholders. As a stock company, it was
independent of the state budget. It did not monopolize the airwaves, but
sold a portion of its broadcasting time, a maximum of 18 percent, to a
private television company, Mainos-TV-Reklam (MTV). This arrangement had
been in effect since 1958, when the YLE first began television
transmissions. Beginning in 1973, Finland also had cable television,
centered in the major urban areas, which by the mid- 1980s reached about
100,000 homes. It was expected that Finns and the residents of the other
Nordic countries would be able to see each other's television broadcasts
via satellite sometime in the early 1990s.
In the mid-1980s, the YLE employed nearly 5,000 persons; each year it
broadcast about 5,000 hours of television programming-- 1,000 hours of
which was rented by MTV. Since late 1986, the YLE's television division
has consisted of three channels (TV 1, TV 2, and TV 3). The YLE produced
about 1,400 hours of television itself; the remaining time was filled by
programs purchased abroad. Swedish-language programming amounted to a
little more than 500 hours, about 60 percent of which appeared on TV 1.
In the mid-1980s, about 20 percent of television broadcast time was
devoted to news and current events, another 20 percent to documentaries,
the same amount again to sports and light entertainment, 16 percent to
television serials, and 12 percent to films. Imported programs were
shown in their original languages with subtitles. The YLE had
coproduction arrangements with many foreign companies, mainly those of
Eastern Europe, Western Europe, and the United States. Finns, 81 percent
of them on a daily basis, watched an average of two hours of television
a day; 28 percent held it to be their most important source of
The YLE's radio division broadcast about 21,000 hours annually and
consisted of three sections--Network 1, Network 2, and the Swedish
Program. Network 2 broadcast around the clock. The other two stations
broadcast from early in the morning until around midnight. Somewhat
under half of these radio programs were broadcast on a regional or local
level from the company's nine local stations, eight of which sent
Finnish-language programming. About 20 percent of radio programming was
devoted to news and current events, another 20 percent to general
cultural and public service programs, and 40 percent to all varieties of
music. In addition to its national broadcasts, each year the company
transmitted about 13,500 hours--in Finnish and in other languages--to
listeners, abroad. Private radio stations first appeared in 1985, and
they existed in a score of municipalities by the late 1980s. Finns
listened to the radio an average of two hours daily, and 70 percent of
them listened every day. Twenty- three percent of the population held
the medium to be their most important source of information.
The YLE, having been granted its broadcasting concession by the
government, was obliged to present programming that was "factual
and fair," provided wholesome entertainment, strengthened popular
education, and infringed on no one's rights. A committee, appointed in
1979 to study new legislation for radio and television broadcasting,
concluded in 1984 that the YLE's programs should be marked by
truthfulness, pluralism, and relevance to the lives of the viewers, and
that it should further the basic rights and values of the country's
citizens. The Administrative Council, the members of which were
appointed by the Eduskunta in accordance with each party's parliamentary
strength, was responsible for realizing these objectives. Three program
councils, the members of which were appointed by the Administrative
Council and according to the political composition of the Eduskunta,
were involved in deciding what was to be broadcast. The upper management
of the YLE was also somewhat politicized in the belief that this would
help to guarantee that all viewpoints were adequately aired during
broadcasting time. MTV's programming, including the news broadcasts that
it began in 1981, was also supervised by the councils. This system of
control, while occasionally subject to heavy-handed lapses of judgement,
was generally conceded to have brought about programming that broadly
mirrored the country's political culture as a whole.
Article 10 of the Constitution Act of 1919 guarantees freedom of
speech and "the right of printing and publishing writing and
pictorial presentations without prior interference by anyone."
International surveys of Finnish journalism have found it to be of a
high standard and wholly comparable with that of other Western nations.
The desire for a press reflecting all currents of Finnish political life
has been given concrete expression in government financial support for
political newspapers and journals of opinion. Legislation from 1966
protected the confidentiality of sources, in that it allowed journalists
to refuse to reveal the identity of sources unless such disclosure would
solve a serious crime, i.e., one calling for a sentence of six or more
years. In 1971 this protection was extended to television journalists as
Information was readily available in Finland. Ten major publishing
firms, two of them specializing in Swedish-language books, and numerous
smaller houses published some 8,000 new titles each year. This was an
extraordinary figure for a small country, especially one the languages
of which were not widely known abroad. Finns were able to buy books
published anywhere in the world, and local firms that published the samizdat,
or underground, literature from the Soviet Union allowed Finns to be
well acquainted with the opposition groups of their eastern neighbor.
According to the distinguished Finnish journalist and former
diplomat, Max Jakobson, Finnish journalism did not possess an
adversarial spirit and a tradition of aggressive reporting to the same
degree as the American press. Also on occasion it was noted that the
politicization of YLE broadcasting meant that television journalists
sometimes remembered the political party from which they came better
than they did their duty to inform the public objectively. In consonance
with the tone of Finnish foreign policy, press and television criticism
of the superpowers' foreign policies was muted to some degree. Finnish
press discussions of the failures of the Soviet Union could be frank,
but they were couched in gentler tones than was true in some other
A reminder of the sensitive years just after World War II, when
Finland's survival as an independent nation was not assured, was a 1948
addition to the Penal Code that threatened a prison term of up to two
years for anyone who damaged Finnish relations with a foreign power by
means of defamatory journalism. Serious as this penalty appeared, only
the president could decide if a journalist seen guilty of such
defamation should be prosecuted. Although not applied for decades, the
clause continued to be an embarrassment for Finns. Government officials,
when called upon to comment on the clause, stressed the value of a free
press and the lack of censorship, noted Finland's good relations with
all countries, acknowledged that there had been in the past some
"self-censorship" of the press with regard to the Soviet
Union, but pointed out that the clause had not been applied for decades.
Since World War II, leading Finnish politicians have also occasionally
exhorted the press to be more responsible in its reporting on foreign
policy issues; there were several such calls by Koivisto in his first
years in office. Such political tutelage was by the mid-1980s, however,
no longer viewed as appropriate for a modern democratic state.
Finnish media were also subject to some popular controls. The Press
Law of 1919 gave the right of correction to anyone who held that
material printed about him in a periodical was incorrect or offensive.
The publication was obliged to grant the injured party an equal amount
of space within two days after receipt of the statement. Failure to do
so could result in a fine. Finns could also turn to the Council for Mass
Media (Julkisen Sanan Neuvosto- -JSN), which was founded in 1968 to
promote journalistic ethics. This body examined each complaint submitted
to it and decided on its merits. Between 1969 and 1978, the council
received several hundred queries; it found about a quarter of them
justified and recommended to the criticized journal or station that it
issue an unedited rejoinder from the injured party.
Films were subject to censorship in Finland according to a law from
1965 that had been enacted by the elaborate procedure required for
legislation seen as being an exception to the Constitution. In this
case, there was an exceptional curtailment of the constitutional right
of freedom of information. The law dealt only with films shown for
commercial purposes, and it forbade those that offended good morals,
were brutalizing or injurious to mental health, endangered public order
and the nation's defense, or harmed Finland's relations with other
countries. The Film Censorship Board was set up to administer the law,
and its decisions could be appealed up to the Supreme Administrative
Court. Of 2,688 films reviewed between 1972 and 1983, some 227 were
forbidden in their entirety. Of these, nearly all were rejected for
reasons of morality or potential danger to mental health, and 2 percent
because they could hurt Finland's external relations. The most noted of
these films was the British-Norwegian coproduction, "One Day in the
Life of Ivan Denisovich," based on the eponymous novel by Aleksandr
Solzhenitsyn. Several films from the German Democratic Republic (East
Germany) were banned after having been judged potentially offensive to
the Federal Republic of Germany (West Germany).
Two hard-fought wars, ending in defeat and in the loss of about
one-tenth of Finland's land area, convinced some leading Finnish
politicians by the end of World War II that the interwar policy of
neutral distance from the Soviet Union had been mistaken and must be
abandoned if the country were to survive as an independent nation. Juho Paasikivi, Finland's
most prominent conservative politician and its president from 1946 to
1956, came to believe that Finnish foreign policy must center on
convincing Soviet leaders that his country accepted, as legitimate,
Soviet desires for a secure northwestern border and that there was no
reason to fear an attack from, or through, Finland.
The preliminary peace treaty of 1944, which ended the Continuation
War, and the Treaty of Paris of 1947, which regulated the size and the
quality of Finland's armed forces, served to provide the Soviets with a
strategically secure area for the protection of Leningrad and Murmansk.
The deterioration of superpower relations, however, led the Soviets to
desire a firmer border with the gradually emerging Western bloc. In
February 1948, Finnish authorities were notified by Soviet officials
that Finland should sign a mutual assistance treaty with the Soviet
The treaty that Finnish and Soviet negotiators worked out and signed
in April 1948 differed from those the Soviets had concluded with Hungary
and Romania. Unlike those countries, Finland was not made part of the
Soviet military alliance, but was obliged only to defend its own
territory if attacked by Germany or by countries allied with that
country, or if the Soviet Union were attacked by these powers through
Finnish territory. In addition, consultations between Finland and the
Soviet Union were required if the threat of such an attack were
established. According to the FCMA treaty, Finland was not bound to aid
the Soviet Union if that country were attacked elsewhere, and the
consultations were to be between sovereign states, not between military
allies. Just what constituted a military threat was not specified, but
the right of the Finns to discuss the posited threat and how it should
be met, that is, to what extent military assistance would be required,
allowed Finnish officials room for maneuver and deprived the treaty of
an automatic character.
Since its signing, the treaty has continued to be the cornerstone of
Finnish relations with the Soviet Union; that both found it satisfactory
was seen in its renewal and extension in 1955, 1970, and 1983. For the
Soviet Union, the FCMA treaty meant greater security for the
strategically vital areas of Leningrad and the Kola Peninsula. Any
attack on these areas through Finland would meet first with Finnish
resistance, which many observers believed would slow an offensive
appreciably. The prohibition of Finnish membership in an alliance
directed against the Soviet Union meant hostile forces could not be
stationed within Finland, close to vital Soviet installations.
Finland's neutral status had an effect on the Nordic area as a whole.
Its special relationship with the Soviet Union reduced pressure on
Sweden and eased that country's burden of maintaining its traditional
neutrality. The consequent lowering of tensions in the region allowed
Norway and Denmark NATO membership, although each of these countries
established certain restrictions on the stationing of foreign troops and
the deployment of nuclear weapons on their soil. The interdependence of
security postures in northern Europe, sometimes referred to as the
Nordic Balance, has removed the region somewhat from the vagaries of the
Cold War over the last few decades. The Soviets have closely monitored
developments in the area, but their basic satisfaction with the security
situation that has prevailed there has allowed Finland to survive as an
independent country, bound to some degree to the Soviet Union in defense
matters, but able to maintain its democratic institutions and its
membership in the Western community of nations.
During the years immediately following the signing of the FCMA
treaty, the Finns complied with their obligation to pay reparations to
the Soviet Union; the last payment was made in 1952. The preceding year
the two countries had signed a treaty setting up trade between them on
the basis of a barter arrangement, which has been renewed every five
years since then. In 1954 Finland became the first capitalist country to
sign a scientific and technical agreement with the Soviet Union.
Despite the provisions of Article 6 of the FCMA treaty, which
enjoined each contracting party from interfering in the domestic affairs
of the other, Soviet comments on Finnish domestic politics were often
quite harsh. Soviet attitudes toward Finland softened, however, with the
death of Joseph Stalin and the advent of beter relations with the
western powers in the mid-1950s; consequently, no objections were raised
to the 1955 decisions to admit Finland to the Nordic Council and to the
UN. Late in the same year, the Soviets gave up their
base at Porkkala in exchange for an extension of the FCMA treaty, due to
expire several years after Paasikivi's scheduled retirement in 1956.
Soviet uncertainty about the conduct of his successor made Moscow
anxious for the treaty's renewal.
The departure of Soviet troops from Finnish territory removed an
obstacle to Finland's full sovereignty and to its achievement of
neutrality. In 1956 Nikita Khrushchev, first secretary of the Communist
Party of the Soviet Union (CPSU), spoke for the first time of Finnish
neutrality. Soviet tributes to Finland's neutrality and nonaligned
status grew common in the next few years.
Finnish-Soviet relations were shaken by two crises--the Night Frost
Crisis of 1958-59 and the more serious Note Crisis of 1961. The Note Crisis
was a watershed in Finnish-Soviet relations in that Kekkonen, whose
successful resolution of the crisis made him the virtual master of
Finnish foreign policy, and others realized that in the future Finnish
foreign policy ought to be formulated only after its effects on Soviet
interests had been carefully weighed. Another effect of the crisis was
that it led to the inauguration of a policy of active and peaceful
Finnish-Soviet relations since the Note Crisis have been stable and
unmarked by any serious disagreements. Trade between the two countries
has remained steady since the 1951 barter agreement. In 1967 Finland
became the first Western country to set up a permanent intergovernmental
commission with the Soviet Union for economic cooperation. A treaty on
economic, technical, and industrial cooperation followed in 1971, as did
a long-term agreement on trade and cooperation in 1977 that, in 1987,
was extended to be in effect until the turn of the century. The first
joint venture agreements between Finnish and Soviet firms were also
arranged in 1987. In 1973 Finland was the first capitalist country to
cooperate closely with the Council for Mutual Economic Assistance.
The Soviet Union has carefully monitored Finland's adherence to the
FCMA treaty, and Finland's awareness of this scrutiny has influenced its
Finnish policy. For example, Finland refrained from full membership in
the European Free Trade Association (EFTA) and instead joined the body
through an associate membership in 1961. The entry into a free-trade
relationship with the European Economic Community (EEC) in 1973 occurred only through a carefully orchestrated
preliminary plan that included formal links with Comecon and a special
re-election of Kekkonen in 1974 to assure the Soviets of continuity in
Finnish foreign policy.
Since the Note Crisis, Soviet interference in Finnish domestic
concerns has been limited to occasional critical comments in the Soviet
press and from official spokesmen. Clarification about Soviet policy
toward Finland could be obtained from Soviet officials themselves, or
from articles published in authoritative newspapers or journals. Since
the 1970s, a frequent source of enlightenment about the Kremlin's
attitudes toward Finland, and about Nordic Europe in general, were
articles written under the name of Komissarov, many of which were
commonly believed to have been written by Iurii Deriabin, a well-placed
and knowledgeable Soviet specialist on Finnish affairs. As valued
indicators of Soviet attitudes, the articles were examined line by line
in Finland. Komissarov articles, for example, disabused Finnish foreign
affairs specialists of the notion, which they had entertained for a
time, that Finland had the right to determine on its own whether
consultations according to Article 2 of the FCMA treaty were necessary.
A Komissarov article that appeared in January 1984 in a Helsinki
newspaper expressed the disquieting Soviet view that the passage of
cruise missiles through Finnish airspace might conceivably mean the need
Two examples may indicate the restraint exercised by the Soviets in
their dealings with Finnish affairs since the early 1960s. In 1971 the
Soviet ambassador was recalled from Helsinki after he had become
involved in the internal feuds of the Communist Party of Finland (Suomen
Kommunistinen Puolue--SKP). A suggestion in 1978 by a Finnish communist
newspaper, which was repeated by the Soviet chief of staff General
Dmitri Ustinov, that Finnish military forces should hold joint maneuvers
with Soviet forces was quickly dismissed by Finnish officials as
incompatible with their country's neutrality; there was no Soviet
Finnish foreign policy vis-a-vis the Soviet Union enjoyed widespread
support from the Finnish people. Polls in the 1980s consistently
measured an approval rate of over 90 percent. Another proof of the
acceptance of the Paasikivi-Kekkonen Line was that foreign policy played
virtually no part in the parliamentary elections of 1983 and 1987. From
the Soviet side, comments on these elections were neutral, with no hints
of preferred victors.
Finland - Nordic Europe
Ahto, Sampo. "The War in Lapland," Revue Internationale
d'Histoire Militaire [Vaasa, Finland], No. 62, 1985,
Alapuro, Risto. State and Revolution in Finland.
Berkeley: University of California Press, 1988.
Alestalo, Matti, and Stein Kuhnle. The Scandinavian
Route. (Research Reports, Research Group for
Comparative Sociology, 31.) Helsinki: University of
Allardt, Erik, and Karl Johan Miemois. The Swedish Speaking
Minority in Finland. (2d rev. ed.) (Research Reports,
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