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,
gradually evolved.
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
not have.
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
centers.
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
still dominant.
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
consumption.
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
independence intact.
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
nations.
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
circumstances.
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,
1809.
Finland - THE RUSSIAN GRAND DUCHY OF FINLAND, 1809-1917
Over the centuries, Finland underwent various political changes, but
its society and economy remained fairly static. At the beginning of the
nineteenth century, Finland was a predominantly agrarian country; about
90 percent of its population was engaged in farming. The scourges of war
and famine had kept down the population, which in 1811 numbered just 1
million, only about 4 percent of which lived in cities.
Except for some copper, Finland was without important mineral
deposits. During the nineteenth century, its sole natural resource was
timber, and this became to be the basis on which industrialization was
launched. By the mid-nineteenth century, wood was beginning to be in
short supply in Central Europe and in Western Europe, but at the same
time it was needed in unprecedented quantities for railroad ties,
mineshaft supports, construction, and paper production. Finland thus
found a ready and expanding market for its wood.
The development of the lumber industry was retarded for a time,
however, by the lack of a modern economic infrastructure. Into the
breach stepped the Finnish government, which promulgated a number of
measures aimed at creating the needed infrastructure. Railroads and
inland waterways were developed, beginning in the 1850s and the 1860s,
to connect the interior of the country with the coast; and harbor
facilities were built that, through merchant shipping, connected Finland
with the rest of the world. In addition, the Bank of Finland and the
monetary system were reorganized, antiquated laws restricting economic
activity were repealed, and tariff duties on many items were reduced or
were abolished; thus, the Finnish government promoted industrialization
and general progress in Finland.
The 1860s and the 1870s witnessed a tremendous boom in the Finnish
lumber industry, which put Finland on the road to industrialization.
Between then and 1914, the lumber industry spawned a number of
associated industries for the production of wood pulp, paper, matches,
cellulose, and plywood. The profits earned in these industries led in
turn to the creation of numerous other enterprises that produced, among
other things, textiles, cement, and metal products. Finland's leading
trading partner by 1910 was Germany, followed by Russia and Britain. The
trade in lumber products also stimulated the rise of a relatively large
and modern Finnish merchant marine, which, after 1900, carried about
half of Finland's foreign trade. Meanwhile, however, the steady
conversion of merchant shipping from woodenhulled sailing ships to
iron-hulled and steel-hulled steamships curtailed Finland's traditional
export of naval stores.
The growth of industry was accompanied by the emergence of an urban
working class. As in early industrialization elsewhere, the living and
working conditions of the new industrial laborers were poor, and these
laborers sought to improve their situation through trade unions. Trade
unions were legalized in 1883, and soon a number of them were
established, including, in 1907, a national trade union organization,
the Finnish Trade Union Federation (Suomen Ammattijarjestö--SAJ).
Workers founded a political party in 1899 to represent them in the Diet,
and in 1903 it was renamed the Finnish Social Democratic Party (Suomen
Sosialidemokraattinen Puolue--SDP). By the elections of 1907, the SDP
was already the largest single party in politics. Both the SAJ and the
SDP were heavily influenced by their counterparts in Germany, and, as a
consequence, their doctrines had a pronounced Marxist character. The SDP
grew even more radical, in part because of the resistance of the middle
class parties to virtually all aspects of social reform, but also
because of its strict adherence to the Marxist dogma of class conflict.
One example of its radicalism was its persistent unwillingness to
cooperate with any of the other political parties. Another was its
program, which began in 1911 to change from upholding the right of
farmers to own their own land to demanding that land be nationalized--a
change that cost the SDP most of its support among agricultural
laborers.
In spite of industrialization, Finland in the early twentieth century
was still predominantly an agrarian state. Agriculture also had
undergone modernization, however, a process that had had a significant
impact on Finland. The introduction of the potato in the eighteenth
century had significantly reduced the threat of famine; the gradual
introduction of scientific agricultural techniques during the nineteenth
century had brought about further increases in productivity.
The ultimate consequence of this increased agricultural productivity
was a significant increase of the population from 865,000 in 1810 to
2,950,000 in 1910. Some of this surplus rural population was absorbed by
the growing urban factory centers, but the rest of these people were
forced to stay on the land. Because the amount of arable land in Finland
was limited, about twothirds or more of the agricultural population was
relegated to the status of tenant farmers and landless agricultural
laborers. These people's lives were precarious because of their large
numbers and their dependence on the vagaries of the harvests. The
tsarist government did little on their behalf, and the Diet, which was
dominated by middle-class interests, showed no great concern for them.
As a result, from about 1870 to 1920, approximately 380,000 people left
Finland, more than 90 percent of them for the United States. Of those
remaining in Finland, many were initially attracted by the SDP, until
its pronounced atheistic outlook and its aim of nationalizing land
alienated them. A program of land reform, begun after independence,
eventually integrated these agricultural laborers into the Finnish
economy.
One expression of popular discontent with the status quo during the
nineteenth century was the rise of religious movements that challenged
the formalistic and rationalistic Lutheran state church. Of special
significance was the Pietist movement, in which the farmer-evangelist
Paavo Ruotsalainen (1777-1852) was the most important figure. The
Pietists popularized the notion of personal religion, an idea that
appealed to the agrarian population. Pietism eventually had much
influence within the Lutheran Church of Finland; it was also influential
among Finnish emigrants to the United States, where, among other things,
it provided an effective counterweight to Finnish political radicalism.
Finland - The Russian Empire
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
its pressure.
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
policy.
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
Western democracies.
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
Mannerheim.
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
four presidents.
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
years.
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
integration.
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
Finland.
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
of Lapua."
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
outlawed.
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
ban.
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 first security policy issue Finland faced upon becoming
independent concerned the Aland Islands. Settled by Swedes in about the
sixth century A.D., the islands were administered as part of Finland as
long as Finland was part of Sweden. In 1809 they were transferred to
Russian sovereignty, where they remained until the Russian Revolution.
Throughout this period, almost all of the inhabitants of the Aland
Islands, the Alanders, continued to be Swedish speakers. During the
chaos of the Russian Revolution, the Alanders began negotiations to be
united with Sweden, a move that was later supported in a plebiscite by
96 percent of the islands' inhabitants. The Swedish government welcomed
this move, and in February 1918 sent troops who disarmed the Russian
forces and the Red Guards on the islands. The Finns felt that the
Swedish intervention in the Aland Islands represented an unwarranted
interference in the internal affairs of Finland. Tension rose as both
countries claimed the islands, Sweden emphasizing the principle of
national self-determination and Finland pointing to its historical
rights and to the need to have the islands in order to defend Finland's
southwestern coast. Germany then moved into the islands as part of its
intervention in the civil war and forced out the Swedes; later that
year, however, Germany handed the islands over to Finland. The Finns
arrested the Aland separatist leaders on charges of treason. In 1920
both countries referred the matter to the League of Nations, which ruled
the following year in favor of Finland. The Swedes were placated by the
demilitarization of the islands as well as by the grant of extensive
autonomy to the Alanders, a settlement that still obtained in 1988.
Finland's interwar security policy was dominated by fear of an attack
by the Soviet Union. Two of its priorities were to end the conflict
between Finland and the Soviet Union--that had continued unofficially
since the civil war--and to settle the Soviet-Finnish boundary.
Negotiations were held intermittently between 1918 and 1920, leading in
October 1920 to the signing of the Treaty of Dorpat. In it, Finland
received all of the land it had held under Russian rule plus the Petsamo
area, which gave Finland a port on the Arctic Ocean. At this point,
Finland controlled more territory than it had at any other time in its
history. The Soviet-Finnish border on the Karelian Isthmus was drawn
only thirty kilometers from Leningrad (formerly St. Petersburg). The new
border caused some Soviet apprehension because it placed the city and
the vital naval base at Kronstadt within the range of the Finns' heavy
artillery.
Finland's relations with the Soviet Union had been problematic from
the beginning, because of the Finns' strong historical distrust for
Russia and the inherent incompatibility of the two political systems.
The Finns saw themselves as occupying an exposed outpost of Western
civilization, an attitude that was well expressed in a poem by Uuno
Kailas that included the verse:
"Like a chasm runs the border.
In front, Asia, the East;
In back, Europe, the West:
Like a sentry, I stand guard.
The mistrust between the countries had been strengthened by the
tsarist policies of Russification, by the Bolsheviks' participation in
the Finnish revolution, and by continued Soviet efforts to foster
subversion in Finland. From the Soviet viewpoint, the Greater Finland
agitation and the blossoming of ideological anti-communism in Finland
posed a threat. In 1932 the Soviet Union and Finland signed a ten-year
non-aggression pact, which, however, did not mitigate the mutual
distrust--illustrated in part by the Soviets' cessation of all trade
between the two countries in 1934--that was to culminate in war.
In dealing with the Soviet threat, Finland was unable to find
effective outside help. The Finns sought assistance first from the other
Baltic states, and in March 1922 an agreement was signed by Finland,
Estonia, Latvia, and Poland. The Finns soon realized, however, that in a
crisis no substantial help would be forthcoming from these countries,
and they thereupon sought support through active membership in the
League of Nations. The breakdown of collective security in the 1930s led
the Finns to seek security through a collective neutrality with the
other Nordic states, but that arrangement offered no effective
counterweight to the Soviets. The more powerful Britain and France did
not take a major interest in the Baltic area.
Throughout this period, the Finnish ruling circles had been strongly
pro-German in outlook, in large part as a result of the civil war. For
this reason, the Soviets developed the suspicion that Finland would
allow Germany to use its territory as a base from which to invade the
Soviet Union. Although Soviet fears were unfounded, the Finns did little
to allay them. In 1937 a German submarine flotilla visited Helsinki, and
it was greeted warmly by the people and by the government. In April and
in May 1938, the Finnish government presided over two great
celebrations, marking the twentieth anniversary of the entry of German
troops into Helsinki and of the entry of Mannerheim's forces into
Helsinki, respectively, events that numerous prominent Germans attended.
The Finns were also indiscreet in allowing a German naval squadron to
visit Helsinki. Soviet suspicions were fuelled again by the visit to
Finland in June 1939 of the German army chief of staff, General Franz
Halder, who was received by the government in Helsinki and who viewed
Finnish army maneuvers on the Karelian Isthmus. In summation, Finnish
foreign policy between the wars was genuinely unaggressive in relation
to the Soviet Union, but it lacked the appearance of unaggressiveness, a
deficiency that Finland since World War II has been at pains to remedy.
With German help, Finland established regular armed forces in 1918 to
1919, using the army of the Whites as a foundation. Beginning in the
1920s, conscription was introduced, and most Finnish males were trained
for military service. Finnish military doctrine presumed an essentially
defensive war in which Finland's forests, lakes, and other geographical
obstacles could be exploited to advantage. The Defense Review Committee,
in its report of 1926, called for the establishment of a Finnish army of
thirteen divisions, equipped with the most modern arms, as the surest
means of deterring a possible Soviet invasion. Because of budget
restraints, however, these recommendations were instituted only in part,
so that when the Soviet Union did attack in November 1939, Finland had
only nine available divisions, and their equipment was generally
inadequate. Beginning in 1931, however, General Mannerheim had
contributed ably to Finnish military preparations from his position as
chairman of the Defense Council, and thousands of citizens spent the
summer of 1939, without pay, strengthening the Mannerheim Line of
fortifications on the Karelian Isthmus. The line later proved to be the
anchor of Finland's defenses in this important area.
Finland - WORLD WAR II, 1939-45
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
one-half years.
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
Soviets.
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,
and 1983.
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
labor.
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
fluctuated greatly.
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
history.
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
elected president.
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
For centuries Finnish society consisted of the nobility, clergy,
burghers, and peasants. The nineteenth century saw the eclipse of the
nobility and clergy and, with the coming of industrialization, the
formation of socially significant entrepreneurial and working classes.
The civil war and subsequent periods of repression helped to create
hostile relations among labor, land, and capital, and in the interwar
period Finland was a country marked by deep social fissures along class
and language lines. The common national goals of World War II closed
some wounds, but it was not until the coming of consensus politics in
the second half of the 1960s that constructive relations among competing
social groups became possible. An unprecedented prosperity, widely
distributed through incomes agreements and a Nordic-style welfare
system, served to integrate all groups into society; a more open
education system, coupled with the internationally pervasive consumer
culture of the postwar era, planed away many differences of taste and
conduct related to class.
Finnish scholars have examined the composition of the new consensus
society, and their varied findings have prompted serious discussions of
its class makeup. Among many issues debated have been the definition of
the working class, the extent to which it has been affected by a process
of "embourgeoisement," and the constitution of the ruling
elite, if any, that has steered the country. One noted Finnish
sociologist, Matti Alestalo, familiar with academic studies in these
areas, divided Finnish society of the 1980s into six classes: farmers,
working class, petite bourgeoisie, lower middle class, upper middle
class, and upper class.
For Alestalo, the two most striking changes in Finland's class
structure after World War II were the steep drop in the size of the
farming population and the great expansion of the lower middle class.
During the early 1950s, the number of those working in agriculture
actually increased, but thereafter it fell steadily. By 1980 the sector
was about one-quarter of its size thirty years earlier, and it consisted
almost entirely of farm owners and their families because the number of
hired agricultural workers had dwindled. The farmers who remained
enjoyed a higher standard of living because it was the smaller and
poorer farms that had been abandoned. Another reason for farmers' new
prosperity was that they were a highly organized and homogeneous class
that successfully lobbied for government policies that benefited them.
Farmers differed from other classes in that they were, to a far higher
degree, self-recruiting; about 80 percent of farmers were the offspring
of farmers. The rationalization of agriculture made small businessmen
out of most farmers, but farmers differed from other owners of small
enterprises in that they passed on to their children something that was
more a way of life than a business.
Alestalo classified as a worker anyone employed for primarily manual
work, and he included in this class some white-collar wage earners whom
others judged to belong to the lower middle class. According to his
calculations, the working class had accounted for about 50 percent of
the economically active work force during the entire postwar period, but
the sectors in which it was employed had changed. The share of workers
employed in agriculture and forestry had dropped from 22 to 4 percent by
1980, while the share active in manufacturing and services had increased
to 60 and to 26 percent, respectively. Workers' living standards had
improved greatly--more than those of other groups-- since the war, but
even in the 1980s workers still had poorer health and less job security
than other classes. They were also housed more poorly, and one of their
primary concerns was to acquire homes of their own. By the 1980s,
Finnish workers had become much more integrated into society than they
had been in the immediate postwar period, but they still identified
strongly with their labor unions and with the parties that had
traditionally represented them. Although workers no longer lived in the
isolated enclaves of the interwar period, Alestalo believed it would be
premature to say that they had become part of the middle class.
Finland's petite bourgeoisie of shopowners and small entrepreneurs
had never been an economically important class. It had declined slowly
in size, beginning in the 1950s, until by 1980 it accounted for only 5
percent of the work force. Many small shops operated by this class had
closed because of the growth of large retail firms. Many small grocery
stores, for example, had gone out of business. There was little
intergenerational stability in this class because many of its members
came from outside it.
Alestalo divided the large group engaged in nonmanual, whitecollar
occupations into a lower middle class and an upper middle class.
Educational level, recruitment criteria, complexity of tasks, level of
income, and commitment to the organization were among the factors that
determined to which of these two classes a person belonged. Both classes
had grown since the war, doubling in size between 1960 and 1980, but the
lower middle class share of the total work force in 1980 amounted to 24
percent, making it the second largest class in Finland and dwarfing the
8 percent of the upper middle class. Both levels of the middle class had
many members born in other classes, but the lower-middle-class had more,
one-third having a farming background and another third coming from the
working class. Women dominated in the lower middle class, constituting
60 percent of its membership in 1960 and 70 percent in 1980, an
indication of their heavy employment in lower-level service-sector
positions such as those of office workers, elementary school teachers,
and nurses.
According to Alestalo, the country's upper class accounted for about
1 percent of the economically active population; it was made up of the
owners, directors, or managers of large industrial concerns, banks, and
commercial institutions in the private sector, as well as the heads of
large state companies and agencies, and senior civil servants in the
public sector. Some members of the country's upper class inherited their
wealth or position. In the postwar era, however, most appeared to be
hired professionals. Much of the membership of the upper class came from
the upper reaches of Finnish society, but several factors resulted in
its having a more heterogeneous composition than earlier--the coming to
power of socialist parties with leaderships from a various classes, the
common practice of politicizing senior civil service appointments, and
the greater importance of state institutions.
Finland - FAMILY LIFE
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
equality.
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
documents.
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
Finnish speakers.
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
The Lutheran Church was divided into eight dioceses, each headed by a
bishop. An exception was the diocese of Turku, which was headed by an
archbishop. Although he had no legal power over the other bishops, the
archbishop was regarded as the first among equals and was the country's
most prominent clergyman. He presided over important church meetings and
was frequently the church's spokesman. One of the dioceses, that of
BorgA, did not have a primarily territorial basis, but ministered to the
Swedish-speaking members of the church throughout the country. For
administrative purposes, each diocese had a chapter, consisting of the
bishop, three other clergymen, and a jurist. The chapter also functioned
as a court to resolve disputes and to answer appeals against church
decisions. Appeals against chapter decisions were handled by higher
state courts. The highest subdivision of the diocese was the deanery, an
administrative entity no longer of much importance. The seventy-odd
deaneries were divided into parishes. In the late 1980s, there were just
under 600 of these core units of the church. The 600 parishes varied
widely in both the number of their parishioners and their geographic
extent. In the sparsely populated north, for example, a parish could
have more square kilometers within its jurisdiction than it did
parishioners, while there were nearly three dozen parishes in Helsinki
alone.
The Lutheran Church of Finland employed about 18,000 persons in 1987,
some 10,000 of whom worked full-time. There were about 1,400 ministers,
enough to meet the church's needs. They received their training at two
institutions, one in Helsinki and the other in Turku. The first women
priests were ordained in 1988. Until that time, women had been limited
to the secondary role of lector, with duties that encompassed teaching,
pastoral work, and administering Holy Communion.
The highest body of the church was the Synod, which met twice a year,
once in the spring and once in the fall. The 108-member body consisted
of the 8 bishops, 1 military bishop, 2 high judges, 1 representative of
the government, and 96 elected delegates--64 of whom were laymen and 32
of whom were clergymen. The number of delegates that the individual
diocese sent to the Synod depended on its population, but each diocese
sent at least six delegates, two of whom were clergymen. Chaired by the
archbishop, the Synod had a number of responsibilities, including
deliberating on legislative questions, directing disbursement of the
resources of the central church fund, supervising Bible translations,
discussing the nature of relations with other religious organizations,
and resolving fundamental and highly divisive issues.
Two other central bodies were the Ecclesiastical Board and the
Bishops' Conference. The former was a permanent body, chaired by the
archbishop, that oversaw the church's administration and finances and
prepared matters for discussion at the Synod. The latter, consisting of
the bishops and eight other church officials, met twice a year to
discuss, in an unbinding way, issues of concern to the dioceses.
The church placed great emphasis on congregational life. Despite the
apparent episcopal nature of the church organization, parishes were
quite independent. They made most of their decisions on their own and
had only to observe the constraints of ecclesiastical law. By means of
democratically elected councils and boards, they chose their own
pastors, church musicians, and administrative personnel and, to some
degree, set their own salaries. Every adult member of a parish had the
right to vote, and he or she had the possibility of winning a place on
the council or board, which meant that the laity had much say about how
its parish was run.
Parishes were financially independent, for it was to them that the
national government paid the church tax, equal to about 1 percent of the
taxable income of parishioners. Corporations within a parish were also
obliged to pay the church tax and, altogether, this tax represented
about 75 percent of the Lutheran Church's income. Some of the religious
and social services that a parish managed yielded income, too, as did
the 1 percent of the nation's forests that were in church possession. An
elected administrative board and an executive council managed parish
finances, although in urban areas parishes sometimes banded together to
handle such practical details. Parishes were obliged, however, to pay
about 6 percent of their income to a fund, used by the church as a
whole, to help poorer parishes and to pay for other activities like
missionary work.
The historical role of the Lutheran Church as a state church was
reflected in the services managed by the parish that in other countries
were the concern of secular government. For instance, it maintained the
official population records for all of its members. Those of nonmembers
were kept by local government. Parishes managed graveyards. In an area
where there was no alternative cemetery, nonmembers or nonbelievers
could be buried in one belonging to the church. Weddings performed by
the parish had the same value as civil services, provided both the bride
and groom were Christians.
Parishes did not limit themselves to regular religious services and
to other activities such as Sunday schools or study groups. They often
organized a specifically Finnish religious meeting, the seurat,
which had its origins in the revivalist tradition and was a mixture of
hymns and addresses by both clergy and laymen.
Parish personnel also offered services of a secular nature that
supplemented social services provided by the state. Church law required
that each parish have a deacon or deaconess who had many of the
responsibilities of a state social worker. Often trained as nurses,
deaconesses ministered to the sick, aged, and handicapped and
coordinated their work with state agencies. Since World War II, the
church has been active in providing personnel and facilities to youth
programs, such as summer camps.
Finland - Orthodox Church of Finland
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
institutions.
Health Problems
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
eastern Finland.
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
As part of its overall responsibility to supervise the nation's
environment, the Ministry of Environment was charged with overseeing
what kinds of buildings and housing Finns worked in and lived in,
arranging remedies for existing deficiencies, and guaranteeing adequate
conditions in the future. Two of the ministry's four departments, the
Physical Planning and Building Department and the Housing Department,
were created specifically for these tasks. In addition, the National
Board of Housing, which had been created in 1966 to organize the state's
administration of housing, was made subordinate to the ministry in 1986.
Efforts to improve the housing of workers began in the nineteenth
century, as did arrangements for low-interest mortgages. The 1920s saw
the passage of the Housing Corporation Act and the establishment of the
Housing Mortgage Bank. It was only after World War II, however, that
significant measures were undertaken to subsidize housing through what
is known as Arava legislation. These laws were brought together in 1953
by the Housing Production Act, which became the basis of housing policy
and which helped to foster the tremendous construction surge of the next
two decades.
By the 1980s, it was estimated that about 75 percent of Finnish
residential dwellings of all types had been constructed since World War
II. For some types of dwellings the figure was even higher. For example,
some 70 percent of apartments were built after 1960. Migration, whether
voluntary or not, and an upsurge in population growth had made this
construction necessary. Population movements during the economic boom
caused the first half of the 1970s to be the period of peak
construction, when as many as 70,000 units were built in a single year.
By the first half of the 1980s, about 48,000 units were built
annually. In addition to a decline in building activity, the kinds of
dwellings constructed changed. In the economic boom years, about
two-thirds of new dwellings were apartments, and the remainder were
free-standing houses or row houses. By 1980 the ratio was reversed. In
addition, by the 1980s much construction work was for renovation, and
government plans called for the number of buildings restored each year
to climb from 15,000 in 1980 to 60,000 by the end of the 1990s.
The construction boom meant that Finns were housed better than
before. The number of dwelling units increased from 1.2 million in 1960
to 1.8 million in 1980 and gave them more room. Finnish dwellings were
still rather small, however. In the 1980s, their average size was
sixty-nine square meters, nine square meters more than in 1970. Much
poor standard housing had disappeared during the boom years. The new
dwellings had modern conveniences; by 1980 nearly three-quarters of
them--compared with only one-half a decade earlier--were fully equipped
with hot water, indoor plumbing, central heating, and sewer connections.
Although Finnish housing was still somewhat poorer than that of the
other Nordic countries, it ranked well by world standards.
About 60 percent of Finns owned their dwellings, and Finns spent, on
the average, about 18 percent of their income on housing. Government
housing allowances helped people of low income to keep housing
expenditures within 10 to 20 percent of this income. Government housing
aid came in a number of forms, and it helped people in all income
brackets. Housing allowances were paid to low-income groups and to
pensioners living either in their own homes or in rental units.
Low-interest loans were available to people earning modest incomes who
desired to own their own homes. Better-off Finns benefited from tax
relief if they had mortgages.
Not all government housing policies were so popular as subsidies,
low-interest loans, and tax relief, for some had unfortunate results.
The housing program's most serious failure was seen in the often sterile
and boring apartment house complexes and even whole suburban
developments and towns that were designed and built in the postwar
period to meet pressing housing needs. Some planned towns were
internationally famed for the beauty of their design. An example was
Tapiola, located on the outskirts of Helsinki. Many others, however,
provided an ugly and inhumane environment for those obliged to live in
them. Often situated far from needed services and lacking softening
amenities, the bleak dormitory villages were desolate shelter for newly
uprooted migrants from the countryside, and they fostered antisocial
behavior, family problems, and illnesses. In later decades, authorities
applied resources to these ill-conceived residential areas with the hope
of making them more hospitable.
Another problem, less serious, was a shortage of rental units. Some
observers held that state rent-control policies had reduced the profits
earned by landlords and hence had caused a scarcity of rental
properties. The lack of available rental housing particularly affected
young people, generally not yet able to purchase their own homes.
Finland - The Economy
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.
Economic Development
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
problem.
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
until 1939.
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
diversified.
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
unrest.
Finland - ECONOMY - ROLE OF GOVERNMENT
As in most European countries that were late in industrializing, the
Finnish state played an important role in sponsoring economic
development. Thus, in the interwar years, the government carried out
crucial agricultural reforms and established pioneering industrial
enterprises. During World War II, the government imposed comprehensive
economic controls to support the defense effort, many of which remained
in force during the reconstruction years. Starting in the 1950s,
however, as economic growth overcame production bottlenecks and
shortages of consumer goods, the government gradually relaxed the
regulatory framework. Nevertheless, wartime intervention in the economy
had left institutional legacies that influenced later economic policies.
The need to maintain export markets in Western Europe, itself engaged
in a process of economic integration by the late 1950s, led the
government to decide to liberalize trade in industrial products. Free
trade, in turn, undermined the government's ability to isolate the
domestic economy from world market conditions. Increasingly tied to the
economies of the Nordic area and Western Europe, Finland was constrained
to adopt policies similar to those in force elsewhere. Although the
policy packages varied in response to domestic political developments
and international market shifts, they all took into account Finland's
position as a small, relatively open economy, in which fluctuations in
raw material exports had a significant impact on the business cycle. By
the late 1980s, when exports and imports each accounted for about
one-quarter of GDP, export competitiveness had become the dominant
policy concern.
Some analysts saw in Finnish economic management a liberal,
noninterventionist variant of the economic polices of other Nordic
states. Thus, Finland, less prosperous than its Western neighbors, did
not develop a comprehensive welfare state until the late 1960s, and it
held benefits below the Scandinavian average. Like other Nordic states,
Finland had institutionalized wage and benefit negotiations, but the
Finnish system of industrial relations involved substantially more
conflict than the systems in the Scandinavian states. Along the same lines, Finland protected
domestic agriculture, but generally avoided bailing out declining
industrial concerns, favoring measures to facilitate structural
adjustment. Finnish politicians, some of whom saw Sweden as a model,
claimed that their neighbor's mistakes had taught them to avoid
excessive welfare programs and industrial subsidies that would slow
adaptation to new market conditions. Foreign analysts noted, however,
that special factors, such as Finland's relatively late industrial
development and the role of Finland's trade with the Soviet Union, also
helped to explain deviations from the general Nordic pattern. By the
1980s, as austerity policies spread throughout the region, aspects of
Finnish policy seemed to lead rather than to follow Nordic developments.
Despite the laissez-faire slant of Finnish economic policy, direct
state intervention strongly influenced operating conditions in many
sectors. In agriculture, for example, years of government support and
tariff protection had sustained a relatively large rural population that
expected continued aid regardless of the need to cut farm surpluses. Similarly, the state had established enterprises in
capital-intensive, high-risk sectors, including energy, minerals, basic
processing, and manufacturing in which private investment had proven
inadequate. By the mid-1980s, private capital markets were relatively
well-developed, but the twenty state enterprises still accounted for
some 21 percent of industrial production, and they included many of the
country's leading firms, such as the Kemira Group in chemicals,
Enzo-Gutzeit in wood processing, the Valmet Group in engineering and
shipbuilding, and Valvilla in textiles. Yet industrial policy no longer
depended on state ownership, and these enterprises functioned much as
private companies. Indeed, starting in the early 1980s, the Ministry of
Trade and Industry, which was responsible for state enterprises, began
to demand that they earn profits. The state maintained monopolies in
alcoholic beverages, energy (Neste and Imatran Voima), and minerals (the
Outokumpu Group and Rautaruukki) for political reasons, but divestment
in other sectors was a possibility. In 1988 the government decided to
allow certain state enterprises to sell shares. The Valmet Group was the
first state firm to announce plans for a stock offering, and observers
reported that Outokumpu, Kemira, and Neste were also candidates for
partial privatization, depending on how well the Valmet stocks sold. The
government planned to retain controlling interests in the companies for
at least several years, but some politicians favored complete
privatization.
Privatization and deregulation were ways to dismantle the relics of
earlier economic policies and to release public resources for other
purposes. In the late 1980s, government interest concentrated on
speeding rationalization and restructuring, even at the cost of higher
unemployment and greater industrial concentration. Industrial policy
sought to foster a shift away from heavy engineering toward electronics
and high-technology production. The state sharply increased expenditures
for research and development, and it helped coordinate efforts among
universities, private industry, and government research centers. The
government and the Bank of Finland (BOF), Finland's central bank,
gradually deregulated the financial sector in an effort to improve the
efficiency of capital markets. Thus, although the state continued to
control certain key sectors, such as agriculture, forestry, minerals,
and energy, overall economic policy had shifted from sectoral
intervention toward efforts to improve productivity and market
efficiency.
Finland - Macroeconomic Policy
As of 1987, public-sector spending amounted to about 42 percent of
GDP, below the OECD average. Austerity policies had limited real budget
increases to about 1.5 percent per annum from 1980 to 1987,
substantially less than the rapid growth in government spending during
the 1960s and 1970s. Total taxes amounted to about 36 percent of GDP in
1987, fluctuating by a few percentage points from year to year. Because
of the gap between taxes and spending, government debt grew relatively
rapidly during the 1980s, reaching almost 15 percent of GDP by 1987, but
it was still low by OECD standards.
Each autumn the Ministry of Finance submitted to the Eduskunta, the
country's parliament, the budget for the next fiscal year (which
corresponded to the calendar year), accompanied by a survey of the
economic situation. Early in the following spring, while the budget was
being debated, the ministry published a revised version of the survey,
which estimated the overall fiscal impact on aggregate demand, income,
and money supply. After parliamentary approval of the annual budget, the
government often responded to changing conditions by requesting
supplementary appropriations, sometimes significantly modifying the
original budget.
Starting in the late 1970s, as it sought to maintain tight limits on
the growth of the public sector, the government, in its fiscal policy
considerations, began to analyze social security funds and local
spending as parts of the overall budget. The central government
regularly transferred large sums to local authorities, which accounted
for about two-thirds of publicsector operations. Local administrations
levied a flat tax, which had reached about 16 percent in 1986, on earned
income. The central government influenced local expenditures by
regulating transfers and by negotiating multiyear spending limits.
Nevertheless, current local government expenditures, many of which were
required by law, sometimes exceeded targets. The central government also
attempted to manipulate social security taxes as an instrument of fiscal
policy, a technique that Finland had pioneered. The government lowered
employers' contributions for health, accident, and unemployment
insurance by about 2 percent of the wage bill between 1977 and 1987 in
an attempt to encourage job creation.
National taxes absorbed about 26 percent of GDP, and local taxes,
roughly 16 percent, in the mid-1980s. In 1986 the government introduced
reforms of business income taxes, including a reduced value-added tax on
energy, designed to improve export competitiveness. In 1988 the
legislature enacted a comprehensive tax reform meant to reduce marginal
rates of taxation after eliminating many deductions. Policy makers
expected that the 1988 reform would reduce tax-induced distortions in
investment behavior and would make the tax system fairer.
Government spending had changed significantly during the postwar
years. In the late 1940s and early 1950s, temporary expenditures
associated with the war dominated the budget. From the early 1950s to
the early 1970s, the fastest-growing sectors in the budget were
education, social welfare transfers, and capital investments. By the
late 1980s, current expenditures remained roughly the same as in the
1970s, but investments had fallen. In 1987, for example, debt service
led expenditures (at about 17.2 percent of total outlays), followed
closely by social security (17.1 percent) and education, science, and
the arts (16 percent). Government operations and defense amounted to
about 14.7 percent, and health, to 8 percent. Except for agriculture and
forestry (which absorbed 8.3 percent) and transport (8 percent),
subsidies for different branches of the economy took relatively small
amounts: housing, 4.4 percent; industry, 3.4 percent; and labor, 2.5
percent.
Finland's state debt, at about 14 percent of GDP in 1987, was low by
international standards, as was the debt of local governments, which
stood at roughly 3 percent. Nevertheless, during the 1980s the
government tried to limit the growth of state debt to avoid increased
interest expenditures. As of 1987, slightly more than half the state
debt was in foreign currencies. When the state sought financing abroad,
it avoided crowding out private borrowers in Finland's relatively
shallow capital market, but foreign debt increased foreign-exchange
risk. In 1986 and 1987, however, officials took advantage of their
government's high credit rating to refinance much of the debt at lower
interest rates. Although policy makers would have to manage the debt
carefully, most analysts believed it was unlikely that Finland's state
debt would seriously constrain government operations during the late
1980s and early 1990s.
Finland - HUMAN RESOURCES
Although trade unionization had started somewhat later in Finland
than it had throughout the rest of the continent, in the 1980s the
country's workers and employers were the most highly organized in
Western Europe. According to the Ministry of Labor, about 80 percent of
the work force belonged to unions, although the rate varied
significantly among industries. Employers' federations also represented
most enterprises.
Conflict between labor and management was fierce during the interwar
years because tensions resulting from the civil war had soured
industrial relations. Labor-management collaboration improved in 1940
when the Central Organization of Finnish Trade Unions (Suomen
Ammattiyhdistysten Keskusliitto--SAK) and the Confederation of Finnish
Employers (Suomen Työnantajain Keskusliitto--STK) recognized each other
and agreed to cooperate during the national emergency. Industrial
relations languished immediately after World War II, however, in part
because government regulations tied wages to the cost-of-living index.
Despite a general strike in 1956, occasioned by conflicts of interest
among farmers, workers, and management, a spirit of compromise gradually
developed in the late 1950s and early 1960s.
Finland's industrial relations took an important turn for the better
in 1968, when a system of centralized incomes agreements was instigated
by the government, which hoped to curb inflation and improve
competitiveness after a major currency devaluation. After that date,
regular negotiations, involving the government, labor, and employers,
led to central agreements on wages, benefits, work conditions, and
social policy. Negotiations usually started in the fall and ended in
March. Senior civil servants acted as mediators between labor and
management. The government often offered concessions, such as tax
reductions, longer vacations, or reduced employer social security
contributions, in exchange for wage restraint or increased investment.
The central agreement among the national federations was not binding on
individual unions. In practice, however, the central agreement provided
guidelines for contracts made between unions and employers or, if
necessary, between workers and management at individual factories.
Contracts affecting civil servants and professionals were usually
negotiated after settlements in industry, as were settlements concerning
prices paid for agricultural commodities and lumber. In this way, wages
in private enterprises exposed to international competition influenced
the protected sectors of the economy.
Many observers feared renewed labor conflict during the 1980s as
slower growth, stiff foreign competition, and austerity policies put
pressures on the negotiation process. Strikes did occur, mostly during
the spring negotiation season. In 1986, for example, unions representing
salaried employees, technicians, and professional personnel accepted the
central agreement, but SAK held out for shortened work hours. When the
STK demanded greater flexibility in setting work schedules in exchange
for the proposed reduction in work time, SAK responded with the first
general strike since 1956. As a result, SAK gained a larger wage
increase than the other federations and a provision that by 1990 would
reduce the work week in industry to 37.5 hours. Moreover, a number of
local unions refused to follow the central agreement, preferring to
negotiate on their own.
In 1988 the government was unable to implement a national agreement,
largely because of opposition from employers. Unions and employers
reached agreements industry by industry, generally following the
settlement reached in the paper industry. In this industry, blue-collar
workers had achieved wage increases of about 4 percent for the first
year of their two-year agreement, while white-collar workers had
received higher raises; the parties had agreed to delay negotiations for
the second year. Although its proposals had been rejected, the
government still intervened in the negotiation process by introducing
legislation on retraining programs, security against dismissal, and
worker representation on company boards. The fact that important service
branches, such as banking, insurance, and trade, had opted for multiyear
agreements in which wage increases were to be negotiated a year at a
time, further indicated that the centralized negotiation process was
becoming fragmented. Despite these apparent setbacks, most Finns
supported an incomes policy as a way to restrain wages, thereby
protecting real earnings.
Despite widespread consensus on incomes policy, Finland continued to
experience more strikes and lockouts than other Nordic states. In
principle, Finnish legislation blocked strike actions during periods
governed by incomes agreements. Moreover, according to the law
regulating strikes, unions were required to give two weeks' notice to
both employers and the state before initiating a strike, and the
government could delay a strike and could require mediation. Despite
these controls, illegal work stoppages occurred regularly, often
involving small, but wellplaced , groups of workers. In 1986, for
example, air traffic controllers shut down the Helsinki airport for two
weeks. The number of strikes had declined, however, after 1984, when the
central incomes agreement had included a ninefold increase in the fines
for illegal strikes.
Finland - AGRICULTURE, FORESTRY, AND FISHERIES
Finland's agricultural policy has long been inspired by more than
purely economic considerations. The need to maintain secure food sources
caused the Finns to subsidize uncompetitive grain production rather than
to allow further specialization in dairy and meat operations. Social
concerns drove policies designed to maintain family farms and to give
farmers incomes and working conditions more equal to those of other
workers. The desire to maintain settlements in the sparsely populated
northern provinces led to heavy subsidies for farmers in those regions.
Other goals included stabilizing retail food prices and increasing farm
size and efficiency.
In the late 1980s, agricultural policy making involved tradeoffs
among these partially contradictory objectives. For national security
reasons, the government gave priority to ensuring selfsufficiency in
basic foodstuffs. But self-sufficiency, like other farm-policy goals,
resulted in costly agricultural surpluses that had to be dumped on
international markets. Structural reforms, designed to increase farm
size, could improve efficiency, strengthen family farms, and increase
farm incomes, but they were difficult to implement.
By the early 1960s, the first goal--self-sufficiency--had been
achieved. By the late 1970s, however, surplus production had become a
pressing problem. According to government estimates made in the early
1980s, crop productivity would increase by about 1.5 percent per year,
and productivity in animal husbandry would increase by about 0.5 percent
per year. Because Finland's consumption of agricultural products was
stagnant, crop and animal surpluses would therefore continue to
grow--unless agricultural prices were reduced.
In the late 1970s, the government stepped up programs designed to
encourage farmers to shift production from products in surplus, such as
eggs, milk, and meat, to products that replaced imports, such as wheat,
sugar, and vegetables. Starting in the mid-1980s, worldwide agricultural
surpluses depressed prices and made agricultural exports especially
expensive. In response, the government redoubled its efforts to control
output and to encourage reforestation of surplus farmland. This policy
had begun to make a significant impact by 1987.
Agricultural policy centered on target prices set by the Ministry of
Agriculture and Forestry each spring and fall, after negotiations with
the MTK. Administered under the periodic farm income acts, which defined
general rules for setting farm prices, the negotiations included two
phases. In the first phase, farmers received compensation for increases
in input costs according to a formula laid out in the applicable Farm
Income Act. In the second phase, the negotiations addressed how much
farm labor would be paid. In general, farm pay settlements reflected
nonagricultural wage agreements, and they were based on estimated hourly
wages in agriculture. For example, in the spring of 1986 farmers
received no compensation for input costs, which had been stable (largely
as a result of falling world energy prices), but they did achieve a 6.1
percent increase in income, much higher than the 2.4 percent agreed to
in the 1986 framework agreement for other workers. Observers considered
the settlement to have been generous, but perhaps justified, because
agriculture remained a low-wage sector.
Once the negotiation process had determined overall farm income, the
Ministry of Agriculture and Forestry fixed target prices for individual
crops. In response to overproduction problems, the ministry reduced
prices for surplus products and required that farmers pay part of the
costs of subsidizing exports. Programs to reduce surpluses by lowering
target prices achieved only limited results, however, because increases
in productivity often outweighed declines in target prices. The ministry
established a dual-price system for milk and eggs, which made production
beyond output quotas unprofitable, and implemented a number of voluntary
production controls, including contracts to increase fallow land or to
limit production of milk, beef, pork, and eggs. In the summer of 1987,
the government prohibited clearing fields, introduced measures to
encourage reforestation, and began considering heavier taxes on the
agricultural earnings of part-time farmers as well as increased pensions
for farmers who agreed to retire early.
Subsidies for agricultural consumption were partially effective in
increasing demand for surplus products. Health concerns, however,
apparently limited consumers' willingness to eat more dairy and meat
products. Surplus-reduction measures were having some effect by the late
1980s, but in 1987 farm surpluses remained a serious problem.
Structural reforms also received considerable attention. To slow the
growth of large, "industrial" farms, the government required
licenses for farms that exceeded certain production levels, hoping that
limiting the size of farms would both reduce surpluses and help maintain
family farms. The Agricultural Development Fund provided low-interest
loans and subsidies for investments in farm infrastructure; most of the
loans from this fund went to farmers in northern Finland. Small farmers
who wanted to enlarge their farms could also receive low-interest
credits. In an effort to keep new farmers from falling into debt, the
government also allowed farmers under the age of thirty-five to apply
for state grants when they established a farm. Moreover, the state tried
to make farming more attractive to young people by providing outside
helpers to take over farm operations temporarily. This arrangement
facilitated maternity leaves and even annual vacations.
Farmer training programs, crop research, and extension services
helped farmers to improve agricultural practices. Local schools provided
agricultural training for youths who could later attend specialized
schools; university students could major in agriculture. The Ministry of
Agriculture and Forestry and the universities undertook research
projects that emphasized the development of frost-resistant crop
varieties. The ministry also administered extension services that gave
technical advice and communicated research findings to farmers. These
training and research programs deserved much of the credit for the
progress that farmers had achieved during the postwar period.
Finland - Farm Production Patterns
Forests played a key role in the country's economy, making it one of
the world's leading wood producers and providing raw materials at
competitive prices for the crucial wood-processing industries. As in
agriculture, the government had long played a leading role in forestry,
regulating tree cutting, sponsoring technical improvements, and
establishing long-term plans to ensure that the country's forests would
continue to supply the wood-processing industries.
Finland's wet climate and rocky soils are ideal for forests. Tree
stands do well throughout the country, except in some areas north of the
Arctic Circle. In 1980 the forested area totaled about 19.8 million
hectares, providing 4 hectares of forest per capita--far above the
European average of about 0.5 hectares. The proportion of forest land
varied considerably from region to region. In the central lake plateau
and in the eastern and northern provinces, forests covered up to 80
percent of the land area, but in areas with better conditions for
agriculture, especially in the southwest, forests accounted for only 50
to 60 percent of the territory. The main commercial tree species--pine,
spruce, and birch--supplied raw material to the sawmill, pulp, and paper
industries. The forests also produced sizable aspen and elder crops.
The heavy winter snows and the network of waterways were used to move
logs to the mills. Loggers were able to drag cut trees over the winter snow to the
roads or water bodies. In the southwest, the sledding season lasted
about 100 days per year; the season was even longer to the north and the
east. The country's network of lakes and rivers facilitated log
floating, a cheap and rapid means of transport. Each spring, crews
floated the logs downstream to collection points; tugs towed log bundles
down rivers and across lakes to processing centers. The waterway system
covered much of the country, and by the 1980s Finland had extended
roadways and railroads to areas not served by waterways, effectively
opening up all of the country's forest reserves to commercial use.
Forestry and farming were closely linked. During the twentieth
century, government land redistribution programs had made forest
ownership widespread, allotting forestland to most farms. In the 1980s,
private farmers controlled 35 percent of the country's forests; other
persons held 27 percent; the government, 24 percent; private
corporations, 9 percent; and municipalities and other public bodies, 5
percent. The forestlands owned by farmers and by other people--some
350,000 plots--were the best, producing 75 to 80 percent of the wood
consumed by industry; the state owned much of the poorer land,
especially that in the north.
The ties between forestry and farming were mutually beneficial.
Farmers supplemented their incomes with earnings from selling their
wood, caring for forests, or logging; forestry made many otherwise
marginal farms viable. At the same time, farming communities maintained
roads and other infrastructure in rural areas, and they provided workers
for forest operations. Indeed, without the farming communities in
sparsely populated areas, it would have been much more difficult to
continue intensive logging operations and reforestation in many prime
forest areas.
Finland's government monitored and influenced all aspects of
forestry. The Ministry of Agriculture and Forestry was responsible for
preparing and implementing forestry legislation. Subordinate to the
ministry, the National Board of Forestry supervised private forests and
managed state-owned forests. The national board also maintained liaison
with the two central forestry boards, which in turn controlled a total
of nineteen district forestry boards. The central and the district
boards were self-governing bodies comprising representatives of the
forest owners, wood-processing industries, and forestry workers. The
boards supervised forest operations, often working in cooperation with
the local forest management associations, which were entirely controlled
and financed by forest owners.
The ministry carried out forest inventories and drew up silvicultural
plans. According to surveys, between 1945 and the late 1970s foresters
had cut trees faster than the forests could regenerate them.
Nevertheless, between the early 1950s and 1981, Finland was able to
boost the total area of its forests by some 2.7 million hectares and to
increase forest stands under 40 years of age by some 3.2 million
hectares. Beginning in 1965, the country instituted plans that called
for expanding forest cultivation, draining peatland and waterlogged
areas, and replacing slow-growing trees with faster-growing varieties.
By the mid-1980s, the Finns had drained 5.5 million hectares, fertilized
2.8 million hectares, and cultivated 3.6 million hectares. Thinning
increased the share of trees that would produce suitable lumber, while
improved tree varieties increased productivity by as much as 30 percent.
Comprehensive silvicultural programs had made it possible for the
Finns simultaneously to increase forest output and to add to the amount
and value of the growing stock. By the mid-1980s, Finland's forests
produced nearly 70 million cubic meters of new wood each year,
considerably more than was being cut. During the postwar period, the
annual cut increased by about 120 percent to about 50 million cubic
meters. Wood burning fell to one-fifth the level of the immediate
postwar years, freeing up wood supplies for the wood-processing
industries, which consumed between 40 million and 45 million cubic
meters per year. Indeed, industry demand was so great that Finland
needed to import 5 million to 6 million cubic meters of wood each year.
To maintain the country's comparative advantage in forest products,
Finnish authorities moved to raise lumber output toward the country's
ecological limits. In 1984 the government published the Forest 2000
plan, drawn up by the Ministry of Agriculture and Forestry. The plan
aimed at increasing forest harvests by about 3 percent per year, while
conserving forestland for recreation and other uses. It also called for
enlarging the average size of private forest holdings, increasing the
area used for forests, and extending forest cultivation and thinning. If
successful, the plan would make it possible to raise wood deliveries by
roughly one-third by the end of the twentieth century. Finnish officials
believed that such growth was necessary if Finland was to maintain its
share in world markets for wood and paper products.
Finland - Fisheries
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
United States.
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
energy needs.
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
electricity imports.
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
Although industrial development began later in Finland than it did in
many other European countries, by the 1950s manufacturing and processing
had replaced agriculture and forestry as the leading sectors of the
economy. By the late 1970s, the service sector had surpassed industry in
total production and employment, but industry remained the main export
earner, allowing the country to pay for needed imports of energy and raw
materials. Labor efficiency was greater in industry than it was in the
economy as a whole--the one-third of the work force employed in industry
produced about 40 percent of GDP--and it continued to grow at a higher
rate here than it did in other sectors. In turn, industrial wages tended
to be higher and to rise faster than the national average, making
industrial jobs attractive. Thus, although some observers categorized
Finland as a postindustrial society, the Finns strove to maintain
industrial competitiveness, which they saw as the foundation for their
high standard of living. By the early 1980s, however, as a result of the
oil crises of the 1970s and the increased competition in world markets
for manufactured goods, Finnish industry faced serious challenges. Many
observers argued that to maintain industrial exports, the Finns would
have to shift from heavy industry to high-technology products.
The geographical distribution of industry had been strongly
influenced by the relative shortage of raw materials (other than lumber)
and by the small size of the domestic market. The woodprocessing
industries had grown up on rivers near the coast of the Gulf of Bothnia
and the Gulf of Finland, in locations that offered sources of both
lumber and hydroelectric power as well as access to foreign markets. As
many raw materials were imported and most industrial production was
exported, other industries had grown up in the four southern provinces,
especially near Finland's main harbors along the southern coast.
Although the government had implemented policies that favored
development in the north during the postwar period, in the late 1980s
more than 70 percent of industrial jobs were still located in the south.
In the long run, the development of high-technology industries, less
dependent on transportation and energy supplies, might facilitate
efforts to decentralize industry, but such development would be gradual.
Once dominated by the forest industries, Finnish industry underwent
rapid structural change after World War II. A boom in metalworking began
in the immediate postwar years in response to the need to ship capital
goods, including machine tools, ships, rolling stock, and chemicals, to
the Soviet Union. By the mid-1950s, heavy industry had
taken over the leading role traditionally held by wood products.
Beginning in 1957, Finland began to liberalize its trade policies,
forcing domestic industry to compete in world markets and bringing new
industries to the fore, especially metalworking and engineering, but
also petroleum refining, chemicals, plastics, and high-technology goods.
Guided by domestic and foreign tastes and by fierce international
competition, industrial firms had developed a wide range of products and
had maintained quality standards that were often higher than those
typical of industry in the United States. Aware of the relatively small
size of their industry, industrial leaders and government officials
aimed successfully for technological leadership in narrowly defined
subsectors in which Finland enjoyed comparative advantages. Since the
1950s, Finnish firms have been able to dominate world markets for
products such as icebreakers, wood-processing and paper-processing
machinery, and environmental protection equipment. Buyers of such
products were often less sensitive to price increases than they were to
technical innovations, quality, and durability. At the same time,
Finland had avoided some of the structural weaknesses, such as excessive
investments in declining product lines, that plagued the other Nordic
economies.
Finland's industrial structure traditionally was polarized between
large and small firms. In the early 1980s, the vast majority of
Finland's 15,000 industrial firms each employed fewer than 100 people.
These small firms accounted for only about onefifth of the industrial
work force and for slightly more than one-fifth of the value of
industrial output. The approximately 130 firms that employed more than
500 people apiece commanded about 60 percent of the labor force and
produced about two-thirds of industrial output. During the mid-1980s and
the late 1980s, a wave of mergers further reduced the market share of
small firms. Although industry was thus quite concentrated, the
flexibility and innovativeness of small firms had often proven crucial,
and observers believed that small firms would continue to serve
important entrepreneurial functions.
Despite many notable successes, industry faced new difficulties in
the 1970s and the 1980s, in addition to increases in world energy
prices. By the late 1970s, industrial firms faced tougher foreign
competition and had to scramble to maintain their shares of export
markets. To ensure competitiveness, industry needed to renovate existing
plants and to increase sharply investments in high-technology product
lines that could supplement traditional specialties.
Industrial capital formation was a major priority. Although Finland's
relatively recent industrial development meant that many industrial
facilities were still relatively new and efficient, the drive to develop
high-technology production required massive investments. Industrial
firms carried a debt load that averaged about 80 percent of total
assets, making further investment difficult. In the late 1980s, however,
a number of developments promised to improve industrial financing.
Helsinki's financial markets were becoming more innovative, and informed
observers expected that the state would cut taxes on corporate profits,
would eliminate taxes on industrial energy consumption, and would
increase tax credits offered for research and development expenditures.
Despite these positive developments, however, industry needed to attract
more resources from abroad if it were to remain competitive in world
markets.
Finland's industry had long depended on world markets, but until the
1980s direct foreign investment in Finland had played only a minor role.
The country hosted significantly fewer foreign firms than its Nordic
neighbors, partly as a result of limitations on foreign ownership of
Finnish assets. Such regulations had been relaxed after 1980, but
foreign firms still controlled only about 5 percent of industrial
capacity. Finnish firms likewise began to invest abroad in the 1970s.
Thus, whereas in 1970 only 5 Finnish firms had invested in the United
States, by 1987 about 250 had done so. By the late 1980s,
internationalization had begun to supplant the traditional strategy of
specialization, as more and more firms entered joint ventures with
foreign partners and built plants in countries to which they exported.
The trend toward internationalization offered the prospect that Finland
would be able to attract additional capital and up-to-date technologies.
Finland - Industrial Policy
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
international competition.
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
households.
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
firms.
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
firms.
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
