area handbook series

Finland

a country study



Finland

a country study

Federal Research Division

Library of Congress

Edited by

Eric Solsten

and Sandra W. Meditz

Research Completed

December 1988
On the cover: A lion rampant, the Finnish national symbol

Second Edition, 1990; First Printing, 1990

Copyright ®1990 United States Government as represented by

the Secretary of the Army. All rights reserved.

Library of Congress Cataloging in Publication Data

Finland: A Country Study.

Area Handbook series, DA Pam 550-167

Research completed December 1988. Bibliography: pp. 373-420.

Includes Index.

1. Finland. I. Solsten, Eric, 1943-. II.Meditz, Sandra W., 1950-.

III. Federal Research Division. Library of Congress. IV. Area

Handbook for Finland. V. Series: DA Pam 550-167.

DL1012.A74 1990 948.97—dc20 89-66315

CIP

Headquarters, Department of the Army

DA Pam 550-167

For sale by the Superintendent of Documents, U.S. Government Printing GfTice Washington, D.C. 20402
Foreword

This volume is one in a continuing series of books now being

prepared by the Federal Research Division of the Library of Congress under the Country Studies—Area Handbook Program. The

last page of this book lists the other published studies.

Most books in the series deal with a particular foreign country,

describing cind analyzing its political, economic, social, and national

security systems and institutions, and examining the interrelationships of those systems and the ways they are shaped by cultural

factors. Each study is written by a multidisciplinary team of social

scientists. The authors seek to provide a basic understanding of

the observed society, striving for a dynamic rather than a static portrayal. Particular attention is devoted to the people who make

up the society, their origins, dominant beliefs and values, their com- mon interests and the issues on which they are divided, the nature

and extent of their involvement with national institutions, and their

attitudes toward each other and toward their social system and

political order.

The books represent the analysis of the authors and should not

be construed as an expression of an official United States government position, policy, or decision. The authors have sought to adhere to accepted standards of scholarly objectivity. Corrections,

additions, and suggestions for changes from readers will be welcomed for use in future editions.

Louis R. Mortimer

Acting Chief

Federal Research Division

Library of Congress

Washington, D.C. 20540

iii

Acknowledgements

While accepting full responsibility for the information and opinions expressed in this study, the authors are grateful to numerous

individuals in various agencies of the United States government

and in international, diplomatic, and private organizations in

Washington and elsewhere who gave of their time, research materi2ils, and special knowledge. We especisdly want to thank the staff of the Embassy of Finland. Specizd thanks must go to Taru Spiegel, Onni and Lulu Rauha, and Pirkko Johnes for their frequent

aid and assistance.

The authors also want to thank those who contributed directly

to the preparation of the manuscript. These include Richard F. Nyrop, who reviewed all drafts and served as liaison with the sponsoring agency; Ruth Nieland, Gage Ricard, and Sharon Shultz,

who edited the chapters; Martha E. Hopkins, who managed edit- ing and book production; and Barbara Edgerton, J2inie L. Gilchrist,

and Izella Watson, who did the word processing. Carolyn Hinton

performed the final prepublication editorial review, and Shirley

Kessel compiled the index. Linda Peterson of the Library of Congress Printing and Processing Section performed phototypesetting,

under the supervision of Peggy Pixley.

David P. Cabitto, who was assisted by Sandra K. Cotugno and

Kimberly A. Lord, provided invaluable graphics support. Stanley M. Sciora supplied information on ranks and insignia. Susan

M. Lender wrote the section on geography in Chapter 2 and

reviewed the map drzifts, which were prepared by Harriett R. Blood,

Kimberly A. Lord, cind Greenhorne and O'Mara. Wayne Horn

designed the illustrations for the book's cover and the title pages

for four chapters. Marty Ittner prepared the illustration used for

the title page of Chapter 2.

Contents

Page Foreword iii Acknowledgments v Preface xiii Country Profile XV

Introduction xxiii Chapter 1. Historical Setting i Paul Rood

ORIGINS OF THE FINNS 4

THE ERA OF SWEDISH RULE, c. 1150-1809 5 Medieval Society and Economy 7 The Kalmar Union 9 The Reformation 10 Finland and the Swedish Empire 12 THE RUSSIAN GRAND DUCHY OF FINLAND,

1809-1917 16 The Rise of Finnish Nationalism 17

Social and Economic Developments 20

The Era of Russiflcation 23

INDEPENDENCE AND THE INTERWAR ERA,

1917-39 26

The Finnish Civil War 26

The Establishment of Finnish Democracy 33

Finnish Security Policy Between the Wars 39

WORLD WAR II, 1939-45 41 The Winter War 42

The Continuation War 47

The Lapland War 50

The Effects of the War 52

THE POSTWAR ERA 53

The Cold War and the Treaty of 1948 53

Domestic Developments and Foreign Pohtics,

1948-66 57

Finland in the Era of Consensus, 1966-81 64

vii
Chapter 2. The Society and Its Environment 7i Eric Solsten GEOGRAPHY 74

Size, External Boundaries, and Geology 74

Landform Regions 75

Climate 79

DEMOGRAPHY 79

External Migration 81

Internal Migration 81 Urbanization 84

SOCIAL STRUCTURE 84

Occupational and Wage Structure 85

Class Structure 87

FAMILY LIFE 90

Marriage 90

Status of Women 91 MINORITY GROUPS 93

Lapps 94

Swedish-speaking Finns 96

Gypsies 101 Jewish and Muslim Communities 102

RELIGION 103

Role of Religion 103

Lutheran Church of Finland 105

Orthodox Church of Finland 110

Smaller Registered Churches 112

EDUCATION 112

Primary and Secondary Education 113

Higher Education 116

Adult Education 118

PUBLIC WELFARE 118

Growth of the Social Welfare System 118

Organization of the Welfare System 120

Income Security Programs Classified

as Social Insurance 120

Income Security Classified as Welfare 124

Health System 129

LIVING CONDITIONS 132

Protection of the Environment 133

Housing 135

Chapter 3. The Economy 139

Paul M. Pitman III

GROWTH AND STRUCTURE OF THE ECONOMY 142

Vlll
Economic Development 143

Structure of the Economy 147

ROLE OF GOVERNMENT 150

Macroeconomic Policy 152

Public Finance 154

HUMAN RESOURCES 156

Employment 156

Industrial Relations 158

AGRICULTURE, FORESTRY, AND

FISHERIES 160

Agriculture 160

Forestry 169

Fisheries 172 ENERGY AND MINERAL RESOURCES 172

Energy 172

Minerals 176

INDUSTRY 178

Industrial Policy 182

Wood-Processing Industries 183

Metal Industries 185

Other Industries 189

SERVICES 191 Banking and Finance 191 Transportation and Communications 195

Tourism 199

FOREIGN ECONOMIC RELATIONS 199

Foreign Trade 200

Finnish Direct Investment Abroad 205

Balance of Payments 206

Regional Economic Integration 207

Chapter 4. Government and Politics 215

Eric Solsten

CONSTITUTIONAL FRAMEWORK 219

Constitutional Development 219

The Constitution 221

GOVERNMENTAL INSTITUTIONS 222

Legislature 223

President 229

Council of State 232

Legal System 235

Civil Service 238

Provincial Administration 240

Local Administration 240

ix
Electoral System 243

Aland Islands 245

POLITICAL DYNAMICS 246

The Social Democratic Party 248

The Center Party 252

The National Coalition Party 254

The Communist Party of Finland 255

The Swedish People's Party 258

Smaller Parties and the Greens 259

Interest Groups 261

The Presidential Election of 1982 and Koivisto's

Presidency 263

The Parliamentary Election of 1983 264

The Parliamentary Election of 1987 267

The Presidential Election of 1988 268

Mass Media 269

FOREIGN RELATIONS 275

Neutrality 275

Soviet Union 278

Nordic Europe 282

Western Europe 284

United States 285

United Nations and the Third World 285

Chapter 5. National Security 289

Jean R. Tartter MILITARY HERITAGE 293

TREATY COMMITMENTS AFFECTING

NATIONAL SECURITY 296

GEOSTRATEGIC SITUATION 298

CONCEPTS OF NATIONAL SECURITY 302

THE ARMED FORCES 305

Command Structure 307

Army 308

Navy 310

Air Force 312

Conscription and Reserve Duty 315

Training and Education 318

Uniforms and Insignia 319

Conditions of Service 322

DEFENSE SPENDING 323

THE ARMED FORCES IN NATIONAL LIFE 324

UNITED NATIONS PEACEKEEPING

ACTIVITIES 326

X
SOURCES OF EQUIPMENT 327

Arms Acquisitions from Foreign Suppliers 328

Domestic Arms Production 329

CIVIL DEFENSE 330

PUBLIC ORDER AND SECURITY 332

Police Organization 332

Central Criminal Police 335

Mobile Police 335

Security Police 335

Police Training 336

Frontier Guard 336

CRIMINAL JUSTICE SYSTEM 338

Principles of Criminal Justice 338

Criminal Courts 340

Incidence of Crime 342

Sentencing and Punishment 342

Drug Enforcement 344

Appendix A. Tables 347

Appendix B. Treaty of Friendship, Cooperation,

and Mutual Assistance between the Republic

of Finland and the Union of Soviet

Socialist Republics 371

Bibliography 373

Glossary 421

Index 425

List of Figures

1 Administrative Divisions of Finland, 1988 xxii 2 Historic2il Regions 6

3 Finland to 1617 8 4 Sweden-Finland, Sixteenth to Eighteenth Centuries 14

5 Grand Duchy of Finland, 1809-1917 18 6 Republic of Finland, 1917-40 28

7 Finland, Adjustments to the Frontier, 1940-44 46

8 Topography and Drainage 78

9 Population by Age and Sex, 1986 80

10 Population Density by Province, 1981 82

11 Areas Inhabited by Swedish- speaking Finns up to 1910 .... 98

12 Language Areas of Finland, 1976 100

13 Education System, 1980s 114

14 Structure of Gross Domestic Product (GDP), 1950 148

xi
15 Structure of Gross Domestic Product (GDP), 1986 149

16 Agriculture and Forestry, 1985 168

17 Minerals and Industries, 1985 180

18 Transportation System, 1986 196

19 System of Government, 1988 224

20 Organization of National Defense, 1988 306

21 Air and Coastal Defenses, 1988 314

22 Officer Ranks and Insignia, 1987 320

23 Enlisted Ranks and Insignia, 1987 321

24 Police and Frontier Guard Organization, 1988 334

xii
Preface

Like its predecessor, this study is an attempt to treat in a compact and objective manner the dominant social, economic, and mili- tary aspects of contemporary Finland. Sources of information

included scholarly books, journals, and monographs, official reports

of governments and international organizations, numerous periodicals, and interviews with individuals having speci2il competence

in Finnish and Nordic affairs. Chapter bibliographies appear at the end of the book; brief comments on sources recommended for further reading appear at the end of each chapter. Measurements

are given in the metric system; a conversion table is provided to

assist readers unfamiliar with metric measurements (see table 1

,

Appendix A). A glossary is 2ilso included.

There are two official languages in Finland, Finnish and Swedish. The latter language, once dominant, is now spoken as a first language by only 6 percent of Finland's population. For this rea- son, Finnish place-names are used throughout this volume. An

exception was made only when referring to the Aland Islands and

to their capital, Mariehamn, where the Swedish forms are preferred.

In cases where it could be useful for a reader to know a Swedish

place-name, it has been provided in parentheses after the Finnish

place-name. Table 2, Appendix A, lists the Finnish and Swedish names of the country's twelve provinces and of several dozen other

geographic sites.

xiii

Country Profile

Country

Formal Name: Republic of Finland

Short Form: Finland

Term for Citizens: Finns

Capital: Helsinki

XV
Date of Independence: December 6, 1917.

Geography

Size: About 338,145 square kilometers, slightly larger than

Missouri and Illinois combined. About 10 percent of area made

up of inland water. A quarter of the country above Arctic Circle.

Topography: Four natural regions. Archipelago Finland begins

in southwestern coastal waters and culminates in Aland Islands.

Coastal Finland a band of clay plains, extending from Soviet

to Swedish border. Seldom exceeding width of 100 kilometers,

plains slope upward to central plateau that forms basis of inte- rior lake district. This core region contains more than 55,000 lakes

set within country's densest forests. Above central plateau, upland Finland extends into Lapland, where forests gradually yield

to harsh climate. Above timber line are barren fells and numerous

bogs. Upland Finland crossed by country's largest and longest

rivers. Climate: Gulf Stream and North Atlantic Drift Current moderate temperatures somewhat, but winter still lasts up to seven months

in north, and most years gulfs of Finland and Bothnia freeze,

making icebreakers necessary for shipping. Long days in sum- mer permit farming far to north. Continental weather systems can

bring quite warm summer temperatures and severe cold spells

in winter.

Society

Population: About 4.9 million at end of 1985, averaging 14.5

inhabitants per square kilometer. Population growth 0.5 percent

per year during 1980-84 period. About 60 percent of population

lived in urban municipalities in 1980s.

Language: Two official languages; Finnish spoken by 94 percent

of population; Swedish spoken by 6 percent, most of whom live in southwestern and western coastal areas and Aland Islands.

Religion: Two official state churches; Lutheran Church of Finland with 88.9 percent of population as members; Orthodox Church

of Finland with 1.1 percent. Constitutionally guaranteed freedom

of religion permits existence of severed dozen other religions. About

7 percent of Finns belong to no religion.

Education: A little more than 900,000 Finns attended schools and

institutions of higher education in 1985. About half this number,

aged seven to sixteen, enrolled in obligatory comprehensive school

XVI
system. Around 100,000 each studied at academic high schools and

country's twenty university-level facilities, while remainder were

at multitude of institutions that provided career training of varying levels and duration.

Health and Welfare: Legislation guarantees all Finns high-quality

health care regardless of income. Health problems resemble those

of other countries of Northern Europe, with cardiovascular dis- eases and cancer chief causes of death. In mid-1980s, Finland had

world's lowest infant mortality rate. Welfare and social security

legislation provide family and unemployment 2illowances and dis- ability and retirement benefits.

Economy

Gross Domestic Product (GDP): US$70.5 billion in 1986

(US$14,388 per capita). Economy grew faster than other Western

industrialized countries throughout 1980s, averaging about 3.3 per- cent per year from 1980 to 1986.

Agriculture and Forestry: Below 8 percent of GDP and about

10 percent of employment in 1986, but sufficient to make country

self-sufficient in staple foods and provide raw material to crucial

wood-processing industries.

Industry: Major growth sector, contributing nearly 35 percent of

GDP and 32 percent of employment in 1986. Main engine of post- war structural change, industry faced increasing competition in

1980s causing restructuring and a shift to high-technology products.

Services: Largest sector, providing nearly 58 percent of GDP and

about 57 percent of employment in 1986. Generally labor-intensive

and uncompetitive, but banking, engineering, and consulting

showed promise.

Imports: Raw materials, especially fuels, minerals, and chemicals,

but growing share of foods and consumer goods.

Exports: Primarily industrial goods, especially forestry products

and metal products; growing high-technology exports.

Major Trade Partners: Soviet Union largest single trade partner,

but West European countries together accounted for nearly twothirds of trade.

Balance of Payments: Despite positive trade balance, Finnish

tourist expenditures abroad and debt service caused continuing cur- rent account deficits in 1980s.

xvii
General Economic Conditions: Standard of living high despite

difficult environment. Inflation traditionally exceeded that of other

industrialized countries, but fell below 4 percent in 1986; unemployment, at about 6 percent in 1987, was considered Finland's

most serious economic problem.

Exchange Rate: In March 1988, Finnish mark (Fmk) 4.08 = US$1.

Fully convertible, but some capital controls maintained by Bank

of Finland.

Transportation and Communications

Railroads: 5,905 kilometers (Russian gauge—1.524 meters) in

operation, of which about 500 kilometers multiple-track and 1,445

kilometers electrified in 1987. Railroads used primarily for bulk

commodities because of growing competition from trucking.

Highways: About 76,000 kilometers in 1987 (including 43,000

paved). Another 30,000 kilometers of private, state- subsidized

roads.

Inland Waterways: About 9,200 kilometers of floatways used by

wood industries to move forest products downstream to process- ing centers and on to ports for export. Another 6,100 kilometers

of internal waterways for general use, including about 70 kilometers of canals.

Ports: Seven major ports, many minor ports. Most ports blocked

by ice in winter.

Civil Airports: Helsinki airport handled most international traffic; about forty smaller airports served secondary cities. Telecommunications: Excellent system covering most cities; mobile telephones widely used in rural areas. Government and Politics

Government: Constitution Act of 1919 basis of system of government both parliamentary 2ind presidential. Division of power among

legislative, executive, and judicial branches only partial, and result- ing overlapping of competencies ensures that authorities act according to Constitution. Supreme power rests with the Finnish

people, who elect through universal suffrage 200-member Eduskunta, country's parliament. This body ultimately more powerful

than president, the supreme executive, who often can act only

through Council of State, or cabinet, whose members come mainly from Eduskunta.

xviii
Politics: As many as a dozen parties actively articulate wide range

of political viewpoints. Smaller number of parties, socialist and nonsocialist, have participated in cabinet governments in the postwar

era. All parties with members in Eduskunta receive state subsidies. Party newspapers also enjoy state financiad support.

Legal System: Independent judges and constitutional guarantees

protect integrity ofjudicial system consisting of general courts that

deal with civil and criminal cases and administrative courts con- cerned with appeals against decisions of government agencies.

General courts exist at three levels: local, appeal, and Supreme

Court; administrative courts exist at provincial and Supreme

Administrative Court levels. Chancellor ofjustice, Finland's highest

prosecutor, and parliamentary ombudsman charged with rectifying legal injustice.

Foreign Relations: Finland follows what is officially termed an

active and peaceful policy of neutrality. Member of Nordic Council, European Free Trade Association (EFTA), Council of Europe,

and United Nations (UN).

National Security

Armed Forces (1988): Defense Forces consist of army of 30,000

troops (22,300 conscripts), navy of 2,700 (1,300 conscripts), and

air force of 2,500 (1 ,300 conscripts). In time of crisis or hostilities, Fast Deployment Forces of 250,000 could be mobilized in two to three days. Full mobilization of 700,000 could be carried out in a week. Frontier Guard (Rajavartiolaitos—RVL) of 4,500 (1 1 ,500 on mobilization) would come under military command.

Treaty Commitments: By 1947 Treaty of Paris, active Finnish

armed forces limited to 41,900 persons, total warship tonnage to 10,000 tons, and combat aircraft to 60. Offensive weapons such

as bombers and submarines prohibited. The 1948 Treaty of Friendship, Cooperation, and Mutual Assistance (ECMA) with Soviet

Union commits Finland, with Soviet assistance if needed, to repel

aggression by Germany or any state allied to it. Conscription and Reserves: Over 90 percent of Finnish men per- form eight months of military service at age twenty (eleven months

for officers and noncommissioned officers in reserves). Reserve

obligation continues until at least age fifty. Younger reservists subject to periodic refresher training.

Standing Forces: In 1988 army organized into 7 light infantry and

1 armored brigade, each with 1,500 to 2,000 men in peacetime.

xix
plus independent infantry battalions, field and coast artillery, and

antiaircraft units. In wartime would consist of an estimated 20 to 25 brigades at full strength of 6,800 each, plus 70 independent light

infantry battalions of 800 each, and other specialized units. Navy

has two corvettes, eight missile boats, fast patrol craft, minelayers, and minesweepers. Air Force consists of sixty fighters organized

into three squadrons, forty-seven jet training-reconnaissance air- craft convertible to attack role, and small fleet of transport and liai- son aircraft. Sources of Equipment: Finland produces close to 40 percent of

its own equipment, including light arms, artillery, vehicles, munitions, hulls, and light aircraft. Soviet Union supplies about half

of imports, including tanks and armored vehicles, missiles, and

MiG aircraft. Remainder comes from West, including Sweden

(fighter aircraft and missiles), Britain (jet trainers), France (radar

and missiles), and United States (electronics and antitank missiles).

Defense Expenditures: In 1988 defense budget of US$1.47 bil- lion was about 1.5 percent of gross national product and 5.5 per- cent of total government budget. Defense spending low relative to other countries of Europe.

Internal Security: Police cire part of national government aind operate under control of Ministry of Interior. Loc2d police, supervised

by provincial authorities and organized into town police departments cind rural police districts, manage routine police work. Operating at national level and assisting local police when necessary are Mobile Police (Liikkuva Poliisi—LP), responsible for traffic safe- ty and riot control; Security Police (Suojelupoliisi—SUPO), charged

with preventing subversion and espionage; and Central Criminal

Police (Keskusrikospoliisi—KRP), able to mount extensive investigations, with advanced technical means when required, and maintain centralized criminal files and contacts with foreign police forces. RVL and Coast Guard, also under Ministry of Interior, responsible for security in border areas and have military role in wartime.

XX

-•- International boundary

- - Provincial boundary

® National capital • Provincial capital 50 100 Kilometers

Figure 1. Administrative Divisions of Finland, 1988

xxii
Introduction

FINLAND HAS BEEN THE SITE of human habitation since

the last ice age ended 10,000 years ago. When the first Swedishspeaking settlers arrived in the ninth century, the country was home

to people speaking languages belonging to the distinctive FinnoUgric linguistic group, unrelated to the more prevalent IndoEuropean 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 setdement between the two areas

intensified, and a political entity, the dual kingdom of SwedenFinland, gradually evolved (see The Era of Swedish Rule, c. 1150-1809, ch. 1). 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 stra- tegic need to control Finland for the protection of his capital at

St. Petersburg, decided it was more expedient to woo his Finnish

XXlll
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 (see The Russian Grand Duchy of

Finland, 1809-1917, ch. 1). The Grand Duchy kept its Swedish

code of laws, its governmental structure and bureaucracy, its Lutheran religion, and its native languages. In addition, Finns re- mained 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 offi- cial 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 obli- gation 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 (see The Rise of Finnish Nationalism, ch. 1). For hundreds

of years, Finland's Swedish-speaking minority had directed the

country's affairs. The Finnish-speaking majority, setded 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 Lonnrot, 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

xxiv
law, commerce, and culture.

Several generations of struggle were needed before the Finnish

nationadist movement realized its objectives. Numerous members

of the Swedish-speaking community entered the C2impaign, 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- speciking students at the

University of Helsinki, and Finnish- speakers made up sizable portions of the professions.

Finland's first politicEil 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 principcd goals, economic issues and

relations with the tsarist empire came to dominate politics.

Finland's economy had always been predominandy agriculturcd,

and with the exception of a small merchant class along the coast,

nearly all Finns were engaged in farming, mostly on small family

farms (see Growth and Structure of the Economy, ch. 3). 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 peaszintry 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 sm2dl

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 cur- rency 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

XXV
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 seasonEil 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 airound 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 SociaJ Democratic Party (Suomen Sosialidemokraattinen

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—SEP), 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 (see The Era of Russification, ch. 1). In retrospect the campaign can be seen as a failure,

but for severad decades it caused much turmoil within Finland,

reaching its most extreme point with the assassination of the gover- nor 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 univerS2d 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.

xxvi
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 (see The Finnish Civil War, ch. 1). 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 (see Governmental Institutions, ch. 4). Finland faced numerous political and economic difficulties in the

interwar years, but it surmounted them better than many other

European countries (see Independence and the Interwar Era,

1917-39, ch. 1). 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 ailive in some segments of the

population, but Finnish at last had a just place in the country's

economic and socicd life. xxvu
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,

chemiccd, and metallurgiczd 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.

Finl2ind'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 (see World War II, 1939-45, ch. 1). 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 ter- ritory 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 territo- ry, it was never occupied, and it survived the war with its independence intact. Finland faced daunting ch2illenges 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.

XXVlll
A less concrete problem, but ultimately a more important one, was the regulation of Finland's international relations (see The Cold

War and the Treaty of 1948, ch. 1; Foreign Relations, ch. 4), 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 severad 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 (see Concepts of National

Security, ch. 5). 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—see Glossary)

in 1961 and a full member in 1986. Relations with the European

Community (EC—see Glossary) and the Council of Mutual Economic Assistance (CMEA, CEMA, or Comecon—see Glossary)

date from the first half of the 1970s. In mid-1989, Finland joined

the Council of Europe (see Glossary). The policy of neutradity

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

XXIX
hallmark of this policy. Since the 1960s, Finland has urged the for- mation 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 (see Domestic Developments and Foreign Politics,

1948-66, ch. 1; Political Dynamics, ch. 4). 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 severad 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 slighdy 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 Kokoomuspuolue—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, the KOK 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

XXX
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 socisdist 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

(see Finland in the Era of Consensus, ch. 1). 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 (see Industrial Relations,

ch. 3). 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 became one of the world's most

prosperous. At the end of the war, the country's economy faced

xxxi
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

(Industry, ch. 3). 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 poli- cies and financial deregulation to create an economy among the

most capitalistic of Western Europe (see Role of Government, ch.

3). 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 (see Foreign Economic

Relations, ch. 3). 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 (see Finnish- Soviet Cooperation, ch. 3). 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 trans- formation 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 (see

Occupational and Wage Structure, ch. 2; Employment, ch. 3). 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 (see

Internal Migration, ch. 2). 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

xxxii
countryside to the urbanized south the "Great Migration." It gave

Finns improved hving 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 set- tlements constructed in the south were as famed for their design

as the garden town Tapiola in greater Helsinki (see Urbanization,

ch. 2). 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 (see

Public Welfare, ch. 2). Worries about health or old age were no

longer pressing because government assistance was available for those who needed it. Some social measures deaJt 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.

August 7, 1989 Eric Solsten

xxxiii

Chapter 1. Historical Setting
Fifteenth-century Olavinlinna Fortress in Savonlinna
The signal achievement of Finland has been its survival against great odds—against a harsh dimate, physical and

cultural isolation, and international dangers. Finland lies at higher

latitudes than any other country in the world, and the punishing

northern climate has complicated life there considerably. Geographically, Finland is on the remote northern periphery, far from the mass of Europe, yet near two larger states, Sweden and Russia

later the Soviet Union, which have drawn it into innumerable wars and have dominated its development (see fig. 1). At the beginning of its recorded history, in the eleventh century

A.D., Finland was conquered by its powerful neighbor, Sweden.

Christianization and more than 600 years of Swedish rule (c. 11 50- 1809) made the Finns an essentially West European people,

integrated into the religion, culture, economics, and politics of

European civilization. The Finns have, however, maintained their

own language, which is complex and is not related to most other

European languages.

The centuries of Swedish rule witnessed Finland's increasing in- volvement in European politics, particularly when the country

served as a battleground between Sweden on the west and Russia on the east. Over the centuries, Russia has exerted an especially

persistent and powerful pressure on Finland. Many wars were

fought between Swedes and Finns on the one side and Russians on the other. Eventually, Russia conquered Finland and incorporated it into the Russian Empire, where it remained for more than

a century, from 1809 to 1917.

Until the nineteenth century, the Finns were, like many other

peoples of Europe, a subject nation seemingly without a culture or a history of their own. The national awakening of the nineteenth

century brought recognition of the uniqueness of the Finnish people and their culture, and led to Finland's independence in 1917.

Complicating the emergence of the Finnish people into national

consciousness, however, was the split between the majority of Finnish speakers and a powerful and influential minority of Swedish

speakers. Only during the twentieth century was this conflict gradually resolved.

In 1987 Finland celebrated the seventieth anniversary of its national independence, which was a hard-won achievement. Independence was threatened at the start by a bloody civil war in 1918

between Finnish leftists (Reds) and rightists (Whites); a victory by

3
Finland: A Country Study

the Reds might have resuhed in Finland's eventual absorption by

the Soviet Union. One legacy of the war was a long-lasting politi- cal division between working-class Reds and middle-class Whites

during the first two decades of independence. As a result, political

extremism, as represented by communism and by fascism, was

stronger in Finland than it was in many other Western democracies; it was eventually neutralized, however, and with time Finnish democracy became strongly rooted.

The most serious challenges to Finland's independence came during World War II, when the Finns twice faced attack by overwhelming Soviet forces. They fought heroically and were defeated both

times, but the Soviets were narrowly prevented from occupying

and absorbing Finland. Since World War II, the Soviet Union's

status as a superpower has meant that it could at any time end Finland's existence as a separate state. Recognizing this, the Finns

have sought and achieved reconciliation with the Soviets, and they

have tenaciously pursued a policy of neutrality, avoiding entanglement in superpower conflicts. The long era of peace after World War II made possible the blos- soming of Finland as a modern, industrialized, social-welfare

democracy. By the 1980s, the intense social conflicts of previous

decades were largely reconciled, and the country's relationships

with other nations were apparendy stable. Origins of the Finns

Present-day Finland became habitable in about 8,000 B.C., fol- lowing the northward retreat of the glaciers, and at about that time

Neolithic peoples migrated into the country. According to the

legends found in the Finnish folk epic, the Kalevala, those early

inhabitants included the people of the mythical land Pohjola, against

whom the Kalevada people—identified with the Finns—struggled;

however, archaeological and linguistic evidence of the prehistory

of the region is fragmentary.

According to the traditional view of Finnish prehistory, ancestors of the Finns migrated westward and northward from their

ancestral home in the Volga River basin during the second millennium B.C., arriving on the southern shore of the Baltic Sea some

time during the next millennium. According to this folk history,

the early Finns began a migration from present-day Estonia into

Finland in the first century A.D. and setded along the northern

coast of the Gulf of Finland. Recent research, suggesting that the

Finns arrived in the region at a much earlier date, perhaps by 3,000

B.C., has questioned this traditional view, however (see fig. 2).

4
Historical Setting

Both the traditional and modem theories agree that in referring

to this prehistoric age one should not speak of a Finnish people,

but rather of Finnic tribes that established themselves in presentday southern Finland, gradually expanded along the coast and

inland, and eventually merged with one another, absorbing the

indigenous population. Among those tribes were the Suomalaiset,

who inhabited southwestern Finland and from whom was derived

Suomi, the Finnish word for Finland. The Tavastians, another Finnic tribe, lived inland in southern Finland; the Karelians lived far- ther east in the area of the present-day Karelian Isthmus and Lake

Ladoga. On the southern coast of the Gulf of Finland were the

Estonians, who spoke a Finno-Ugric language closely related to Finnish. North of the Finns were the Lapps (or Sami), who also

spoke a Finno-Ugric language, but who resisted assimilation with

the Finns.

Prehistoric Finnic peoples reached the Iron Age level of development, with social organization at the tribal stage. These Finnic tribes were threatened increasingly by the politically more advanced Scandinavian peoples to the west and the Slavic peoples to the east. The Era of Swedish Rule, c. 1150-1809

During the Viking Age (c. A.D. 800-1050), Swedish Vikings came into contact with the Finns in the course of their expeditions

eastward, which were aimed at establishing, via Russia, trade ties with the Arab world, although they built no permanent settlements

in Finland. The Finns' name for the Swedes, Rus, was derived

from the Finnish word for Sweden, Ruotsi, and is believed to be

the origin of the name Russia.

Swedish influence in Finland grew at approximately the close

of the Viking Age, when the Swedes were converted to Christianity by the Roman Catholic Church and soon afterward began

missionary activities in Finland. Most Finns were converted to the

Roman Catholic Church by about the mid-twelfth century, during the wave of crusades that began in 1095. A quasi-historical

legend maintains that in 1157 a crusade was led against the polytheistic Finns by the Swedish King Erik IX and the English monk

Henry, who had been appointed archbishop of Upps2da. According to tradition, Henry was martyred in Finland and was subsequently recognized as the country's patron saint. The success of

the crusade was supposed to have given Sweden and Latin Christianity a solid foothold in Finland. There is no evidence of the cru- sade and Henry's role in it, however, and there are indications

that Christian communities existed in Finland at an earlier date.

5
Finland: A Country Study
Historical Setting

Meanwhile, the Russians, partly on religious grounds, also sought

control of Finland. They had been converted to Eastern Orthodox

Christianity and subsequently tried to convert the Finns to this religion. Finnic peoples in eastern Karelia were converted to Orthodoxy and were thereby drawn into a different religious and

cultural orbit from Swedish-ruled, Roman Catholic Finns in the

west. About 1240, Rome sanctioned two crusades in an effort to push

the frontier of Latin Christianity eastward. Swedish crusaders first invaded Russia along the northern shore of the Gulf of Finland,

but they were halted in 1240 on the banks of the Neva River by

Prince Alexander of Novgorod, who thereby earned the name Alexander Nevsky ("of the Neva"). The second crusade, spearheaded

by the Teutonic Knights, followed the southern shore of the Gulf

of Finland and was defeated by Alexander Nevsky in 1242 on the

ice of Lake Peipus. The Swedes initiated a final attempt to wrest

eastern Karelia from the Russians in 1293, but the thirty years of war that followed failed to dislodge the Russians from the region.

The Peace of Pahkinasaari (Swedish, Noteborg) in 1323, which

ended this war, established the border between Finland and Russia that wasmaintained for nearly three hundred years (see fig. 3). Sweden consolidated its control over Finland gradually, in a

process that was facilitated by the introduction of Swedish settlers along the southern and the western coasts of Finland. The settlers,

most of whom remained in the coastal region, became a ruling class within Finland, and Finland was politically integrated into the Swedish realm.

Medieval Society and Economy

The late medieval period was marked by the expansion of set- tlements along the coast and into the interior. The Finns gradually conquered the wilderness to the north, moved into it, cleared

the forest, and established agricultural communities. This settling

of the wilderness caused conflict between the Finnish farmers and

the Lapp reindeer herdsmen, forcing the Lapps slowly northward.

By the end of the fifteenth century, the line of settlement was about

200 kilometers north of the Gulf of Finland, and it ran along most

of the coast of the Gulf of Bothnia, though less than 100 kilometers inland. The population of Finland likewise had grown slowly

in this difficult environment; it numbered about 400,000 by the

end of the Middle Ages.

The economy of medieval Finland was based on agriculture, but

the brevity of the growing season, coupled with the paucity of good

soil, required that farming be supplemented by hunting, fishing,

7
Finland: A Country Study

Source: Based on information from Eino Jutikkala and Kauko Pirinen, A History of Finland, New York, 1962, 23.

Figure 3. Finland to 1617

8
Historical Setting

trapping, and gathering. All but a small portion of the Finnish population earned their livelihood in this way.

Although the European institution of serfdom never existed in

Finland, and although most of the farmers were freemen, they had

litde political power. Society and politics were dominated by a largely Swedish-speaking nobility. Finland was represented, however,

in the Swedish Diet of the Four Estates (Riksdag)—clergy, nobility, burghers, and farmers—that had advisory powers in relation

to the king. The Finns also had some responsibility for matters of

local justice and administration.

Catholicism was deeply rooted in medieval Finnish society. The

church parishes doubled as units of locad administration, and the

church played the leading role in fostering an educated Finnish

leadership and the development of the Finnish language. For

example, the genereil requirement that parish priests use the

indigenous languajge helped to maintain the speaking of Finnish.

Turku (Swedish, Abo), encompassing the whole country, was the

only diocese, and the bishop of Turku was the head of the Finnish

church. In 1291 the first Finn was named bishop, and thereafter

all incumbents were native-born.

The southwestern seaport city of Turku, the seat of the bishopric,

became the administrative capital of Finland. Turku was also the center of Finland's mercantile life, which was dominated by German merchants of the Hanseatic League. Finland's main exports

at this time were various furs; the trade in naval stores was just

beginning. The only other city of importance at this time was Viipuri (Swedish, Vyborg), which was significant both as a Hanseatic

trade center and as a military bastion that anchored Finland's

eastern defenses against the Russians.

The Kalmar Union

Only once has Scandinavia been united politically, from 1397

to 1523 under the Danish crown. The Kalmar Union came into

existence essentially to allow the three Scandinavian states of Denmark, Sweden, and Norway to present a united front against

foreign—primarily German—encroachments. The driving force

behind the union was Queen Margaret I of Denmark, who had

gained the Norwegian crown by marriage and the Swedish crown

by joining with the Swedish nobility against an unpopular German king.

Under the Kalmar Union, monarchs sought to expand royal

power, an attempt that brought them into conflict with the nobles.

The union eventually came apart as a result of antagonisms between

the Danish monarchy and the Swedish nobility, which controlled

9
Finland: A Country Study

both Sweden and Finland. Frequent warfare marked DanishSwedish relations during these years, and there was also fighting

between factions competing for the Swedish crown. As a result of

the turmoil, Finland suffered from heavy taxation, the disruption

of commerce, and the effects of warfare carried out on its soil. The struggle between Denmark and Sweden diverted essential resources from Finland's eastern defenses and left them open to attack by the Muscovites. The late fifteenth century had witnessed

the steady expansion of the power of the Grand Duchy of Muscovy,

which was eventually to become the basis for the Russian Empire.

In 1478 Grand Duke Ivan III subdued Novgorod and thus brought

Muscovite power directly to the border of Finland. In 1493 Denmark and Muscovy concluded a treaty of alliance aimed at embroiling Sweden in a two-front war, and in 1495 Muscovite forces

invaded Finland. Although the fortress city of Viipuri held out,

the Muscovites avoided the city, and, almost unchecked, devastated

large areas of Finland's borderlands and interior. The Swedes made

peace with Muscovy in 1497, and the borders of 1323 were

reaffirmed, but the Swedish-Finnish nobility had to defend Finland without much direct assistance from Sweden.

A revolt, against the Kalmar Union, under the leadership of a Swedish noble named Gustav Vasa resulted in 1523 in the creation of a Swedish state separate from Denmark. Vasa became king

of Sweden, as Gustav I Vasa, and he founded a dynasty that ruled

Sweden-Finland for more than a century. He was genersiUy credited

with establishing the modern Swedish state. Under his rule, Finland remained integrated with the Swedish state, and the SwedishFinnish nobility retained its primacy over local affairs. The Reformation

The Protestant Reformation that Martin Luther initiated in Germany in 1517 spread quickly to other countries. German merchants,

students, and missionaries soon brought Lutheran doctrines to Scandinavia, where for centuries German influence had been strong,

and where, moreover, there was some receptivity to the new doctrines. By the time Luther died in 1546, Lutheranism was firmly

implanted in the Scandinavian countries. Sweden-Finland converted

to Lutheranism largely through the efforts of Gustav I Vasa, who

acted mainly for political reasons, especially in order to strengthen

the monarchy. The decisive break with Rome took place in 1527

at the Riksdag held at Vasteras. This acceptance of Lutheranism

enabled Gustav I Vasa, with the help of the aristocracy, to break

the political power of the Roman Catholic Church, which had stood

in the way of his desire for a stronger centralized state. The

10
Olavinlinna, the castle built at Savonlinna to defend Finland's

eastern frontier against the Russians

Courtesy Embassy of Finland, Washington

confiscation of Church properties that accompanied the Reformation also provided an enormous economic windfall for both the

aristocracy and the monarchy. Before the Reformation, the Church

had owned about one-fifth of the land in Sweden.

In Finland there was little popular demand for the Reformation

because more than 90 percent of the homesteads were owned by

the farmers, and the Church, which owned less than 10 percent,

used most of its income to support schools and charities. Lutheranism was instituted without serious opposition, nevertheless. In

part, this was attributable to the gradual and cautious manner in

which Lutherans replaced Roman Catholic doctrines while retaining

many Catholic customs and practices. The Lutheran Church was

not firmly established finally until 1598, when the last Catholic king

of Sweden-Finland, Sigismund, was driven from the throne.

The outstanding ecclesiastical figure of the Reformation in Finland was Mikael Agricola (1506-57), who exerted a great

influence on the subsequent development of the country. Agricola had studied under Luther at Wittenberg, and, recognizing

the centrality of the Bible in the Reformation, he undertook to translate the Bible into Finnish. Agricola' s translation of the New Testa- ment was published in 1548. He wrote other religious works and

translated parts of the Old Testament as well. Because Finnish had

11
Finland: A Country Study

not appeared previously in print, Agricola is regarded as the father

of the Finnish literary language. After 1554 he served as the bishop

of Turku, the highest office of the Finnish church.

The Reformation brought two educational benefits to Finland.

Its emphasis on religious instruction in the vernacular languages

supported an increase in literacy, especially after the Ecclesiastical Law of 1686 had confirmed royal control over the Lutheran

Church of Sweden-Finland and had charged it with teaching the

catechism to each church member. Another benefit of the Reformation was the founding of Abo Academy in 1640 to provide theological training for Finnish clergymen. Abo Academy was the

precursor of the University of Helsinki, which later became the center of higher education in Finland and the focus of Finland's

cultural life. Finland and the Swedish Empire

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 for- eign 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 (see fig. 4; table 2, Appendix A).

Beginning in the mid-sixteenth century, Sweden's ambitious for- eign 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 wairs 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 batdefield.

The Great Northern W2ir began in 1 700 when Denmark, Poland,

12
Historical Setting

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 1 696 in which about one-third of the Finnish people died of star- vation, 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

13
Finland: A Country Study

100 Kilometers 100 Miles

Source: Based on information from William R. Shepherd, Historical Atlas, 7th ed., New

York, 1929, 120.

Figure 4. Sweden-Finland, Sixteenth to Eighteenth Centuries

14
Historical Setting

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 signifi- cant 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, Goran

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 batdeground 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, 2ind 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 predominandy agrarian society. The frontier was

pushed northward as new stretches of inland wilderness were set- tled. 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

15
Finland: A Country Study

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.

The Russian Grand Duchy of Finland, 1809-1917

Russia planned at first to annex Finland directly as a province

of the Russian Empire, but in order to overcome the Finns' misgivings about Russian rule, Tsar Alexander I offered them the fol- lowing solution. Finland was not annexed to the Russian Empire

but was joined to Russia instead through the person of the tsar. In addition, Finland was made an autonomous state —the Grand

Duchy of Finland—v^th its inherited traditions intact. Thus the

laws and constitution of Finland remained unchanged, and the tsar took the place of the Swedish king as sovereign. The officiad forms

of government inherited from the era of Swedish absolutism were

sufficiently autocratic to allow the tsar to accept them largely intact; however, included in these forms of government was the comprehensive law code of 1734 that protected individual rights. Imperial

assurances that Finland would be autonomous and that its traditions would be respected were encoded in two 1809 decrees that

constituted for the Finns the basis of their relationship with Russia. The Finnish Diet that met at Porvoo (Swedish, Borga) in 1809

seconded the tsar's decrees. As a further gesture of magnanimity,

in 1812 the tsar restored to Finland the lands Russia had annexed

in the eighteenth century. These conciliatory measures were ef- fective, and, as long as Russia respected this arrangement, the Finns

proved to be loycd subjects of the Russian Empire (see fig. 5). According to the terms of the agreement reached between the

Diet and the tsar, the government of Finland was direcdy controlled

by the tsar, who appointed a governor general as his adviser. With

one brief exception, all of the governors general were Russian. The

first governor general was the Swedish-Finn Goran Sprengtporten, who was ably assisted by the prominent Swedish-Finn politician, Gustaf Mauritz Armfelt. The chief instrument of government

in the grand duchy was the Government Council, renamed in 1816

the Senate, which was composed of fourteen Finns appointed by

the tsar. The counterpart of the Senate in St. Petersburg was the

Committee for Finni^ Affairs, composed of Finns, which presented

Finnish requests to the tsar; however, Finnish civil servants usually

carried on the business of government with little interference from

the tsarist government in St. Petersburg. The Diet was formally

16
Historical Setting

the lawmaking body of the government; it could not initiate legislation, however, but could only petition the tsar to introduce legislation. The tsar, moreover, could summon and could dismiss the

Senate without reference to the Diet. There was an independent

judicicd system. Finland even maintained its own customs system,

and taxes collected in Finland remained in the country. Finns were exempted from conscription into the Russian army.

Despite these safeguards, Finland still felt the autocracy of the

tsar. The Finnish Diet was dismissed in 1809, and it was not recon- vened for more than fifty years. Although the government of the

grand duchy represented an uneasy balance between the traditions

of Finnish self-government and those of Russian autocracy, as long

as the Russians respected the balance, the Finnish people were satis- fied. The period of Russian rule was characterized by peaceful

internal development, largely because, for the first time in centuries, Finland was free of war. The Rise of Finnish Nationalism

The eighteenth century had witnessed the appearance of

embryonic Finnish nationalism. Originating as an academic movement, it incorporated the study of linguistics, folklore, and history,

which helped to establish a sense of national identity for the Finnish people. The leading figure of this movement was professor

Henrik Gabriel Porthan of the University of Turku. The work of

Porthan and others was an expression of the Finns' growing doubts

about Swedish rule, and it prefigured the rise of Finnish nationalism in the nineteenth century.

In the nineteenth century, Finland witnessed the rise of not one

but two national movements: Finnish-language nationalism and

Swedish-language nationalism. The creation of the independent

Finnish state in the twentieth century was made possible in large

part by these nationalist movements.

Finnish-language nationEilism arose in the nineteenth century,

in part as a reaction against the dominance of the Swedish language in Finland's cultural and political life. The ethnic self- consciousness of Finnish speakers was given a considerable boost

by the Russian conquest of Finland in 1809, because ending the

connection with Sweden forced Finns to define themselves with

respect to the Russians. At first the Russian government generally

supported Finnish linguistic nationadism, seeing it as a way to alienate the Finns from Sweden and thereby to preclude any move- ment toward reintegration. For the same reason, the Russians in

1812 moved the capital of Finland from Turku to Helsinki, bringing it closer to St. Petersburg. Similarly, after a catastrophic fire

17
Finland: A Country Study

Source: Based on information from Hugh Seton-Watson, The Russian Empire 1801-1917,

Oxford, 1967, 774

Figured. Grand Duchy of Finland, 1809-1917

18
Historical Setting

in Turku, the University of Turku was moved to Helsinki in 1827.

The University of Helsinki soon became the center of the Finnish

nationalist movement. Finnish-language nationalism, or the Fennoman movement, became the most powerful political force in

nineteenth-century Finland. A famous phrase of uncertain origin

that was coined in the early nineteenth century summed up Finnish feelings as follows: "We are no longer Swedes; we cannot

become Russians; we must be Finns."

The leading Finnish nationalist spokesman was Johan Vilhelm

Snellman (1806-81), who saw increasing the use of the Finnish lan- guage as a way for Finland to avoid assimilation by Russia.

Snellman stressed the importance of literature in fostering national

consciousness; until the nineteenth century, however, there had

been almost nothing published in Finnish except for religious works.

The publication in 1835 of the Kalevala, the Finnish folk epic, filled the void, and in the late twentieth century the Kalevala continued

to be the single most important work of Finnish literature. Its author was a country doctor named Elias Lonnrot, who, while practicing

medicine along Finland's eastern border, compiled hundreds of folk ballads that he wove together into an epic poem of nearly 23,000

lines. In the years following the publication of the Kalevala, numerous other works of Finnish literature were published. Of special

importance was the work of the Swedish-language poet Johan Ludvig Runeberg (1804-77), who authored a collection of poems called The Tales of Ensign Stdl. The first poem of the cycle, called "Our

Land," was soon set to music, and it became the national anthem

of Finland.

The growth of the militant and increasingly powerful Fennoman

movement threatened the traditional dominance of the Swedish

speakers in Finland, who reacted by forming a Swedish-speaking

nationalist countermovement, the Svecoman movement. The main

idea of the Svecomans was that the Swedish-speakers of Finland were a separate nation from the Finnish-speakers and needed to preserve their Swedish language and culture. The Svecomans

became a small but powerful political movement that won the backing of much of the Swedish-speaking community in Finland.

A third political faction at this time was the short-lived Liberal

Party. This party sought to obtain reforms for Finland, especially

freedom of the press, greater self-government, and increased eco- nomic freedom. It was split, however, by the growing language

controversy, and most of its members were absorbed into either

the Fennomans or the Svecomans.

Emerging as a debate among educated Finns, the nationalist

movement reached ever wider circles of the Finnish people in

19
Finland: A Country Study

succeeding decades in the nineteenth century. Major breakthroughs

for the Finnish-language movement were made possible by Russia's humiliating defeat in the Crimean War (1853-56), which

opened up an era of reform in Russia. For example, in 1858 Finnish was established as the language of local self-government in

those administrative districts where it was spoken by the majority

of the inhabitants.

When Poland revolted in 1863, the Finns remained at peace,

and the Russian government showed its gratitude by granting the

Finns two major imperial edicts. The first summoned the Finnish

Diet for the first time since 1809, an event that had long-term reper- cussions. The Diet enacted legislation establishing a separate Finnish monetary system and creating a separate Finnish army. The

subsequent regular meetings of the Diet gave the Finns valuable

experience in parliamentary politics. The second edict of 1863 was

the Language Ordinance, which over a period of twenty years gave

the Finnish language a status equal to that of Swedish in official business. Although Swedish speakers found ways of blocking the

full implementation of the Language Ordinamce, it still made possible a vast expansion of the Finnish language school system. Ultimately, the Language Ordinance led to the creation of an educated

class of Finnish speakers, who provided articulate mass support

for the nationalist cause. Social and Economic Developments

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 predominandy agrar- ian country; about 90 percent of its population was engaged in

farming. The scourges of war and famine had kept down the population, which in 1810 numbered somewhat under 900,000, only

about 5 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

20
Historical Setting

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 reor- ganized, 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 eaimed in these

industries led in turn to the creation of numerous other enterprises

that produced, among other things, textiles, cement, and meted

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 wooden-hulled 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 Ammattijarjesto—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

21
Finland: A Country Study

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 cen- tury 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 two-thirds 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 middleclass 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 re- maining 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 (see Lutheran Church of Finland, ch. 2). 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 in- fluential among Finnish emigrants to the United States, where,

among other things, it provided an effective counterweight to Finnish political radicalism.

22
Historical Setting

The Era of Russification

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 anomcdy in an empire that strove to be a unified autocratic state; furthermore, by the 1890s Russian nationalists had several rea- sons 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

23
Finland: A Country Study

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 Finl2ind that dramatically aJtered 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,

24
Historical Setting

they had granted dictatorial powers to Governor General Bobrikov.

These years also witnessed the growth of an active aind conspiratorial

resistance to Russification, called the Kagal after a similar Jewish

resistamce orgeinization in Russia. In June 1904, the active resistance

succeeded in assassinating Bobrikov, and his death brought a les- sening 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 beg2in in Russia

in October 1905 spread quickly to Finland cind 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 tscir's October

Manifesto, which for the Finns suspended, but did not rescind,

the February Manifesto, the conscription law, and Bobrikov's dictatori2il 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 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

25
Finland: A Country Study

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 t2ike its place.

Independence and the Interwar Era, 1917-39

More than a century of Russian rule in Finland ended in 1917.

The Finns, however, experienced no easy transition to independence, but rather endured a bloody civil war between their own

leftist Reds and rightist Whites. Finally, a leftist takeover was

averted; Finland's independence was secured; and a parliamentary democracy emerged (see fig. 6). The Finnish Civil War

The Revolution that was underway in Russia by March 8, 1917,

26
Historical Setting

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 politiccil 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

27
Finland: A Country Study

Source: Based on information from Eino Jutikkala and Kauko Pirinen, A History of Finland, New York, 1962, 152.

Figure 6. Republic of Finland, 1917-40

28
Historical Setting

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 sei- zure 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 cind 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 trans- forming the White Guards 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

ofJainuary 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

ofJanuary 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 mosdy farmers, controlled the northern and more rural part of the country. The Reds,

29
Finland: A Country Study

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-h2ilf 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 edong 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

30
Victory parade by German and Finnish White Guard troops, Helsinki, May 1918

Courtesy Embassy of Finland, Washington

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 ter- ror that was unleashed by each side. In Red-dominated areas, 1 ,649

people, mostiy 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

31
Finland: A Country Study

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 v^as 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

genergd 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 W2ir 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 cdienated from the system. As a result, for several generations thereafter, a large number of Finns expressed their displeas- ure 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

32
Historical Setting

parade. Today, with the passing of decades, historians have generadly come to define the clash as a civil war. 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 monarchical 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 monarchical policy and led to his replacement by Mannerheim.

Meanwhile, the SDP was reorganized under Vaino 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

33
Finland: A Country Study

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—SEP),

which had been founded in 1906, continued to represent the in- terests of Swedish speakers. The process of rehabilitating the SDP

proceeded so far that in 1926 it was entrusted briefly with forming

a government, with Vaino 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 Tyovaenpuolue—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.

34
Vdind Tanner, a leader of the Finnish Social Democratic Party

and prime minister, 1926-27

Courtesy Embassy of Finland,

Washington

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 (SuurSuomi) 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 (see The Era of

35
Finland: A Country Study

Swedish Rule, this chapter). 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 Kairelia Society (Akateeminen KarjalaSeura—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 proWhite during the civil war, and many of them were also active in

the AKS and in the even more radical anticommunist Lapua movement. Thus the AKS created a worldview among an entire generation of educated Finns that was relendessly 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 rightwing 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

illeg2il, an imperative that was termed the "Law of Lapua."

Under pressure from the Lapua movement, parliament outiawed

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

36
Historical Setting

murders. The Lapuans overreached themselves in 1930, however,

when they kidnapped former president Stahlberg, whom they dis- liked 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 elec- tion 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 nationsJ 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, Kyosti 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 in- terwar years was the steady growth of material prosperity. The

37
Finland: A Country Study

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, Kyosti 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 pro- vide 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 econ- omy 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.

38
Historical Setting

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.

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 settle- ment 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

39
Finland: A Country Study

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 sys- tems. 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 anticommunism

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' ces- sation 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 fmd

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

40
Historical Setting

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 navsd squad- ron 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 Haider, 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 advcintage. The Defense Review Committee, in its report of 1926,

called for the establishment of a Finnish army of thirteen divisions,

equipped with the most modem 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. World War II, 1939-45

For most of Finland's history, the country had lived on the

periphery of world events, but for a few weeks during the winter of 1939-40, Finland stood at the center of the world stage.

Finland's stand against Soviet aggression aroused the world's admiration. The Winter War, however, proved to be only a curtainraiser for Finland's growing entanglement in World War II.

41
Finland: A Country Study

The Winter War

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 sum- mer 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 north- ern 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 fur- ther, 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 previ- ous 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

42
Finnish machine gunners during the Winter War (1939-40)

Courtesy Embassy of Finland, Washington

Soviets possession of much of the Une 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, Vaino 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 willing- ness to risk war.

43
Finland: A Country Study

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 mili- tary doctrine. They were trained in the use of small, mobile forces

to strike at the fl2inks 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

smzdl 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 cdong 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 tham 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 divi- sions were virtually annihilated. By the end of December 1939,

44
Historical Setting

the Finns had dealt the Soviets a series of humihating 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 sol- diers 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 com- memorate ' '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 Pet- samo 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 in- habitants moved over to Finnish territory, thereby losing their

homes and livelihoods (see fig. 7).

45
Finland: A Country Study

Source: Based on information from Anthony F. Upton, Finland in Crisis, 1940-41: A Study

in Small-Power Politics, London, 1964, 22; and D. G. Kirby, Finland in the Twentieth

Century, Minneapolis, 1979, x. Figure 7. Finland, Adjustments to the Frontier, 1940-1944

46
Historical Setting

Finland's losses in the war were about 25,000 dead, 10,000 per- manently 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.

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 Vaino 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.

This event having occured near the time that the Soviets annexed

the Baltic states in 1940, the Finns began to fear that they would

47
Finland: A Country Study

be next. When Soviet foreign minister Viacheslav Molotov visit- ed 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 GermanFinnish 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 German-Finnish agree- ment 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 mid-June

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 rid- ding 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

48
Historical Setting

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 amd 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 2illow 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

49
Finland: A Country Study

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 aU 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.

The Lapland War

As early as the summer of 1943, the German high command

began making plans for the eventuality that Finland might conclude a separate peace with the Soviet Union. The Germans planned

to withdraw forces northward in order to shield the nickel mines

near Petsamo. During the winter of 1943 to 1944, the Germans

improved the roads from northern Norway to northern Finland,

and they accumulated stores in that region. Thus the Germans were

ready in September 1944, when Finland made peace with the Soviet

Union. While German ground troops withdrew northward, the German navy mined the seaward approaches to Finland and attempted to seize Suursaari Island in the Gulf of Finland. Fighting broke

out between German and Finnish forces even before the SovietFinnish preliminary peace treaty was signed, and the fighting in- tensified thereafter, as the Finns sought to comply with the Soviet

demand that all German troops be expelled from Finland. The Finns were thus placed in a situation similar to that of the Italians and

of the Romanians, who, after surrendering to the Allies, had to

fight to free their lands of German forces. The Finns' task was complicated by the Soviet stipulation that the Finnish armed forces

50
Marshal Gustaf Mannerheim, 1941

Courtesy Embassy of Finland,

Washington

51
Finland: A Country Study

be reduced drastically, even during the campaign against the

Germans.

The capable Finnish general, Hjalmar Siilasvuo, the victor of

Suomussalmi, led operations against the Germans; in October and

November 1944, he drove them out of most of northern Finland.

The German forces under General Lothar Rendulic took their

revenge, however, by devastating large stretches of northern Finland. More than one-third of the dwellings in that area were destroyed, and the provincial capital of Rovaniemi was burned down.

In addition to the property losses, estimated as equivailent to about

US$300 million (in 1945 dollars), suffered in northern Finland,

about 100,000 inhabitants became refugees, a situation that added to the problems of postwar reconstruction. (After the war the

Allies convicted Rendulic of war crimes, and they sentenced him

to twenty years in prison.) The last German troops were expelled

in April 1945. As a final, lingering effect of the Lapland War, the

Germans planted numerous mines during their retreat; some of

the mines were so cleverly placed that they continued to kill and

maim civilians who triggered them as late as 1948.

The Effects of the War

World Wsir II had a profound impact on Finland. Approximately

86,000 Finns died in the war—about three times the losses suffered

during the civil war. In addition, about 57,000 Finns were per- manently disabled, and the vast majority of the dead and the disabled were young men in their most productive years. The war had

also left 24,000 war widows; 50,000 orphans; and 15,000 elderly,

who had lost, in the deaths of their sons, their means of support.

In addition, about one-eighth of the prewar area of Finland was

lost, including the Petsamo area with its valuable nickel mines. Onehalf million Finns were refugees—more than 400,000 from the ceded

or leased territories and about 100,000 from Lapland, where their

homes had been destroyed. Another effect of the war was the financial burden imposed by the cost of maintaining one-half million

troops in the field for several years and by the requirement to pay

the Soviets reparations in kind worth US$300 million (in 1938 dollars). The Soviet lease of the Porkkala Peninsula, less than twenty

kilometers west of Helsinki, as a military base was a blot on the

nation's sovereignty. Finally, an intangible, but real, restriction was placed on Finland's freedom of action in international affairs. Finland's relationship with the Soviet Union was permanently

altered by the war.

Despite the great losses inflicted by the war, Finland fought for and preserved its independence; nevertheless, had the Soviets been

52
Historical Setting

vitally concerned about Finland, there is no doubt that Finnish in- dependence would have been extinguished. Finland emerged from

the war conscious of these realities and determined to establish a new and constructive relationship with the Soviet Union.

The Postwar Era

The signing of the preliminary peace treaty between Finland and

the Soviet Union on September 19, 1944, marked the beginning

of a new era for Finland. Its hallmark was to be a diametrical change

in Finnish policy toward the Soviet Union; the traditional hostility was to be replaced by a policy of friendship. Finnish leaders felt that only a genuine rapprochement between the two countries could

guarantee Finland's long-term survival as an independent state. In the late 1980s, the new policy, operative for more than forty years, appeared to have been successful in preserving Finland's

freedom. Domestically, Finland's society and economy have un- dergone rapid changes that have made the country a prosperous

social-welfare state. Finland's achievements in the postwar years

have been surviving external threats and thriving as a modern in- dustrialized country.

The Cold War and the Treaty of 1948

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 (see The Era of Russification, this ch.),

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

53
Finland: A Country Study

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 leader- ship 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

54
Historical Setting

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. Finailly, 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, Yrjo 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 se- cured 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 at- mosphere of early 1948.

The Treaty of Friendship, Cooperation, and Mutual Assistance

(FCMA—see Appendix B), which was signed on April 6, 1948,

55
Finland: A Country Study

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 actucd 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 economicsdly. 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 resetdement, the parliament adopted the Land Act of 1945. Through the program thus

established, the state bought up farmland through compulsory purchases 2ind 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

56
Historical Setting

percent of Finland's gross national product (GNP—see Glossary).

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 relent- ed 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—see Glossary) in 1949.

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 neutrsdity. 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 (see Foreign

Relations, ch. 4).

57
Finland: A Country Study

In the three parhamentary 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 11. The communistdominated SKDL retained some power because of domestic dis- content; 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 Tyonantajain

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 Casde 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.

58
Juho Kusti Paasikivi

president of Finland, 1946-56

Courtesy Embassy of Finland,

Washington

Urho Kekkonen, president

of Finland, 1956-81

Courtesy Embassy of Finland,

Washington
Finland: A Country Study

By 1943, however, he had reversed himself totally in calling for reconciliation between Finland and the Soviet Union, and he re- mained 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, Vaino 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 Adantic 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 pres- sure on Finland. There was also a domestic side to the crisis; as

in 1958, the Soviets considered certain elements on the Finnish

60
Historical Setting

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 NuclearWeapons-Free Zone (Nordic NWFZ—see Neutrality, ch. 4). Kekkonen 's advocacy of these peace issues helped him to win the vir- tually 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 sec- tors of the economy—farming, capital, and labor.

61
Finland: A Country Study

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 (Tyovaen 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 eighteen 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 spec- trum 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 (see table 3, Appendix A).

Finland's economy underwent a major transformation in the

1950s and the 1960s, shifting from a predominantly agrarian econ- omy to an increasingly industrial one (see Economic Development,

ch. 3). The number of workers engaged in agriculture and for- estry dropped from about 50 percent to about 25 percent, and the

decline of this traditionally dominant sector of the economy con- tinued 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

62
Historical Setting

expanded trade between the two countries (see Regional Economic Integration, ch. 3). 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. In- creased 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 (see Foreign Economic Relations, ch. 3). In maintaining good economic ties with

these countries, Finland has had to overcome persistent Soviet sus- picions; however, Finland was allowed to join the European Free

Trade Association (EFTA—see Glossary) 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 —see Glossary) 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—see Glossary), 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 in- dependence 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

63
Finland: A Country Study

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 (see Growth

of the Social Welfare System, ch. 2). 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 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 parliaimentary 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 elec- tions were a great victory for the socialist parties, which gained

103 seats, their first absolute majority in parliament since 1916 (see

table 4, Appendix A). 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 (Maatadoustuottajain

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 vari- ous economic interests, at the Korpilampi Motel near Helsinki

64
Historical Setting

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 smaJler, 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 Keskusjarjesto—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 elec- tions, 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 brocid-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 ye2irs 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 Socicd Democrat Rafael Paasio as prime minister, lasted

until 1968 (see table 5, Appendix A). Conflicts over economic is- sues, 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 elec- tion 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, economiczdly vulnerable farmers, increased its vote almost

tenfold. In addition, the conflicts among the parties were so in- tense 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

65
Finland: A Country Study

(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, stiU 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 unconmionly

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 lar- gest pcirty. 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 caretciker 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 coali- tion 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 t2ixation. The election witnessed a resurgence of the

KOK, which became the second largest party, behind the SDP,

but was still excluded from governmental coalitions (see table 6,

Appendix A). A major political crisis, called the "Midsummer

Bomb," was unleashed by a Kesk leader's incautious statement

66
Historical Setting

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 remained one of the two official languages of Finland, nevertheless, and a separate Swedish-language educational

establishment was maintained (see Swedish-speaiking Finns, ch. 2). 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 nation2il integration. In the seven parliamentary elec- tions 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 differ- ences. 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 (see Agriculture, ch. 3). During the postwar era, Finland changed from a primarily agrar- ian society to an urban society, from a land of peasant proprietors

to a modern society with a predominance of urban-dwelling.

67
Finland: A Country Study

white-collar and blue-collar workers (see Demography; Social Structure, ch. 2). Along with the changes in social and in economic cir- cumstances went changes in popular attitudes; in particular,

cosmopolitanism increased. Just as modem productive technology has made possible an unprecedented material prosp>erity, so also has modem communications technology speeded the diffusion of

new ideas, breaking down Finland's culturad isolation. In the

process, however, traditioncd 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 yesirs 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 eighty-one; 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 (Pemstuslailli- nen Oikeistopuolue—POP), but it has achieved virtually no in- fluence.

« * *

Although there are a number of useful historical works about

Finland in English, the best sources are in Swedish and Finnish.

A good introduction to Finnish history is Eino Jutikkala's A History of Finland. Anthony F. Upton's well regarded The Finnish

68
Historical Setting

Revolution, 1917-1918 deals with a crucial episode in modern Finnish history. Risto Alapuro's State and Revolution in Finland is a

sophisticated examination of the social forces involved in the for- mation of the Finnish state. C. Leonard Lundin's Finland in the Second World War was a pioneering work when it appeared in 1957

and is still considered the definitive book on the subject in English.

Lundin's essay on Russification in Edward C. Thaden's Russification in the Baltic Provinces and Finland, 1855-1914 is a solid work on

that subject. D.G. Kirby's Finland in the Twentieth Century is an in- terpretive history of the period through the 1970s. Among the best

available works that analyze the development of Finland's foreign

policy since World War II is Roy Allison's Finland's Relations with

the Soviet Union, 1944-84. There is a useful collection of speeches

by President Urho Kekkonen, edited by Tuomas Vilkuna titled Neutrality: The Finnish Position. (For further information and complete citations, see Bibliography.)

69

Chapter 2. The Society and Its Environment
Medieval church with uncoursed stone walls and

brick-decorated gables, built circa 1480 at Hollola,

approximately 100 kilometers from Helsinki
Finland has been on Europe's periphery, both physically

and socially, for almost all its history. It is Europe's northernmost

country, with a quarter of its area above the Arctic Circle. By the

late 1980s, however, modern means of communication had substantially reduced its physical remoteness from the rest of Europe.

Modern technology also had lessened winter's hold on the country. Finns lived comfortably, and they moved about freely the whole

year. In the social realm, Finland had left its traditional poverty

and backwardness behind. Since World War II, it had become one

of the world's most advanced societies. Its citizens enjoyed prosperity and meaningful employment, as well as benefits from the social measures they had forged, which guaranteed everyone a decent

and humane share of the prosperity.

During the course of their history, Finns have cJways moved

about, both within their country and abroad. The years after World

War II saw, however, an unprecedented population shift away from

the countryside to the increasingly more urbanized south. New

industries and a rapidly growing service sector meant that the work

force not only relocated, but also changed in character. Agriculture's and forestry's combined share of the work force declined from

about 50 percent in 1950 to about 10 percent in 1980. Industry's

share remained unchanged at about 20 percent, while that of the

service sector doubled from 9 percent to 18 percent. Between 1950

and 1980, the number of students and pensioners quadrupled, going

from 6 to 24 percent, reflecting a wealthier and healthier society.

Personal relationships also changed. Families became smaller;

divorce became more common. A growing public sector meant that

many tasks previously managed by the family could now be

entrusted to the state. Lessened dependence on the family also meant greater freedom for women. This was reflected in new legislation that gave women greater equality with men. Traditional

habits persisted, however, and in the late 1980s Finland's women

still had a secondary place at home, in the workplace, and in politics.

Finland was a remarkably homogeneous country. It had no racial minorities. The largest minority group, the Swedish-speaking Finns, was so well assimilated with the majority that there were fears it would eventu2Jly disappear. In fact, the group's share of the country's population had dropped from 12 percent to 6 percent in the

twentieth century. Two very small minorities, the Lapps (or Sami)

and the Gypsies, remained apart from the majority. They still

73
Finland: A Country Study

suffered from some discrimination and from poor living standards,

but legislation and more open attitudes on the part of the majority were improving their lot. Finland was virtually free of the religious divisions that bedeviled

many other societies. One of the two state churches, the Lutheran

Church of Finland, had nearly 90 percent of the population as members. Religious freedom was guaranteed by law, and Finns also belonged to sever2il dozen other churches. Because Finnish society

had become increasingly secularized, differences of opinion about

moral issues caused less friction than they had in the past.

Finns maintained their traditional respect for education. Education had gradually become more accessible, and an ever greater

number of Finns were studying at all levels. The old system, which

excluded many, had been replaced by one that attempted to meet

individual schooling needs and to keep open as many options for further training as possible; no one went without education for lack

of money.

Finland, like its Nordic neighbors, had created a system of public welfare measures that was among the most advanced in the

world. Through a steady progression of legislation, Finns came to be protected from many of life's vicissitudes. Coverage was virtually universal, and it was seen as a right rather than as charity.

Income security measures guaranteed Finns a livelihood despite

age, illness, or unemployment. The state also provided many ser- vices that assisted Finns in their daily life, such as child care, family

counseling, and health care. Although some social problems persisted, the quality of life for Finns overall had steadily and, in many

instances, dramatically improved. Better medical care meant that

Finns enjoyed improved health, while subsidized housing brought

them better and roomier shelter. Efforts also were being made to protect the natural environment.

Geography

Finland is the northernmost country on the European continent.

Although other countries have points extending farther north, vir- tually all of Finland is north of 60 degrees north latitude; nearly a quarter of the land area and fully one-third of the latitudinal extent of the country lie north of the Arctic Circle (see fig. 1). Size, External Boundaries, and Geology

In area, Finland has 304,623 square kilometers of land and

33,522 square kilometers of inland water, a total of 338, 145 square

kilometers. It shares borders on the west with Sweden for 540 kilo- meters, on the north with Norway for 720 kilometers, and on the

74
The Society and Its Environment

east with the Soviet Union for 1 ,268 kilometers. There are approximately 1,107 kilometers of coastline on the Gulf of Finland (south),

the Baltic Sea (southwest), and the Gulf of Bothnia (west). The

rugged coastline is deeply indented with bays and inlets. The off- shore region is studded with islands.

The most predominant influences on Finland's geography were

the continental glaciers that scoured and gouged the country's surface. When the glaciers receded about 10,000 years ago, they left behind them moraines, drumlins, and eskers. Other indications

of their presence are the thousands of lakes they helped to form

in the southern part of the country. The force of the moving ice sheets gouged the lake beds, and meltwaters helped to fill them.

The recession of the glaciers is so recent (in geologic terms) that

modern-day drainage patterns are immature and poorly established.

The direction of glacial advance and recession set the alignment

of the lakes and streams in a general northeast to southwest lineation. The two Salpausselka Ridges, which run parallel to each other

about twenty-five kilometers apart, are the terminal moraines. At

their greatest height they reach an elevation of about 200 meters,

the highest point in southern Finland.

Landform Regions

Many countries of the world can be divided into distinct geographic regions, in each of which some physical characteristic is dominant, almost to the exclusion of others. In Finland, the same

physical characteristics are common to each of the four geographic

regions into which the country is divided (see fig. 8). Regional differ- ences in Finland lie, therefore, in subtle combinations of physical

qualities. In archipelago Finland, rock and water are dominant.

Coastal Finland consists of broad clay plains where agriculture plays a leading role. The interior lake district supports extensive forests. Upland Finland is covered by Arctic scrub. Nonetheless, each of

these regions contains elements of the others. For instance, patches

of agriculture extend far northward along some rivers in Lapland,

and in southern Finland a substantial bogland, the Suomenselka,

is sometimes referred to as Satakunta Lapland because it has the

character of Arctic tundra.

Archipelago Finland, consisting of thousands of islands and skerries, extends from the southwestern coast out into the Baltic Sea.

It includes the strategically significant Aland Islands, positioned

at the entrance to the Gulf of Bothnia. After World War I, both

Finland and Sweden laid claim to the islands, which are culturally more Swedish than Finnish. For strategic reasons, however, the

League of Nations awarded the Aland Islands to Finland in 1921

75
Finland: A Country Study

(see Finnish Security Policy Between the Wars, ch. 1). A principal reason for this decision was that, during the winter, the islands are physically linked to Finland by the frozen waters of the sea and

are hence essential for the country's defense. This myriad of forest- covered and bare bedrock islands was formed and continues to be

formed by the process of uplift following the last glaciation.

The rest of the country is also still emerging from the sea. The

weight of the continental glaciers depressed the land over which

they moved, and even now, a hundred centuries after their recession, Finland is rising up from this great load through the process

of isostatic rebound. In the south and the southwest, this process

is occurring slowly, at a rate of twenty-five to thirty centimeters a century. Farther north in the Ostrobothnia area, uplift is more

rapid, amounting to eighty or ninety centimeters a century. The

process also means that Finland is growing about seven square

kilometers yearly as land emerges from the sea. Coastal Finland consists of broad clay plains extending from the

coast inland, for no more than 100 kilometers. These plains slope

southward from the morainic Salpausselka Ridges in southern Finland. Along the Gulf of Bothnia coast, the plains slope southwest

from upland areas. The land of coastal Finlcind is used for agricul- ture and dairy farming.

The interior lake district is the largest geographic region, and

it is perhaps what most foreigners think of when they imagine Finland. The district is bounded to the south by the Salpausselka

Ridges. Behind the ridges extend networks of thousands of lakes

separated by hilly forested countryside. This landscape continues

to the east and extends into the Soviet Union. As a consequence,

there is no natur2d border between the two countries. Because no

set definition of what constitutes a lake and no procedures for count- ing the number of lakes exist, it has been impossible to ascertain

exacdy how msiny lakes the region has. There are, however, at least 55,000 lakes that are 200 or more meters wide. The largest is Lake

Saimaa, which, with a surface area of more than 4,400 square

kilometers, is the fifth largest l2ike in Europe. The deepest lake has

a depth of only 100 meters; the depth of the average lake is 7 meters. Because they are shallow, these many lakes contain only slightly more water than Finland's annual rainfall. The hilly, forest-covered

landscape of the lake plateau is dominated by drumlins and by long

sinuous eskers, both glacial remnants.

Upland Finland extends beyond the Arctic Circle. The extreme

north of this region is known as Lapland. The highest points in

upland Finland reach an elevation of about 1,000 meters, and they

are found in the Kilpisjarvi area of the Scandinavian Keel Ridge.

76
mi n . • ..«* - J Tx- T7....: *

The Society and Its Environment

In the southern upland region the hills are undulating, while in

the north they are rugged. Much of upland Finland is not mountainous, but consists of bogs.

Finland's longest and most impressive rivers are in the north.

The Kemijoki has the largest network of tributaries. Fairther south

the Oulujoki drains the beginning of the north country. Most of

the streams flow to the Gulf of Bothnia, but there is a broad stretch of land in the north and northeast that is drained by rivers flowing

north across Norway and northeast across the Soviet Union to the

Arctic Ocean.

Climate

Latitude is the principal influence on Finlcind's climate. Because

of Finland's northern location, winter is the longest season. On

the average, winter lasts 105 to 120 days in the archipelago and

180 to 220 days in Lapland. This means that southern portions

of the country are snow-covered about three months of the year

and the northern, about seven months. The long winter causes about half of the annual 500 to 600 millimeters of precipitation in

the north to fall as snow. Precipitation in the south amounts to about 600 to 700 millimeters annuadly. Like that of the north, it occurs cdl through the year, though not so much of it is snow. The Atlcintic Ocean to the west and the Eurasian continent to the east interact to modify the climate of the country. The warm

waters of the Gulf Stream and the North Atlantic Drift Current,

which warm Norway and Sweden, also warm Finland. Westerly

winds bring the warm air currents into the Baltic areas and to the

country's shores, moderating winter temperatures, especially in the

south. These winds, because of clouds associated with weather sys- tems accompainying the westerlies, also decrease the amount of sunshine received during the summer. By contrast, the continental high

pressure system situated over the Eurasian continent counteracts

the maritime influences, causing severe winters and occasionally

high temperatures in the summer. Demography

Finland had 250,000 inhabitants in the sixteenth century. As a

result of wars, the population did not reach the 1 million mark until

about 1815 (see table 7, Apjjendix A). Mortality remained high even

in the nineteenth century. The famine of 1867 to 1868, for example, killed 5 to 10 percent of the population, and it was not until

1880 that there were 2 million Finns. In the last part of the century,

improved living conditions began to lower the death rate, but a simultaneous fall in the birth rate and increased emigration

79


Finland: A Country Study

AGE-GROUPS

400 POPULATION IN THOUSANDS

Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secretariat, Yearbook of Nordic Statistics, 1987, Copenhagen, 1988, 22.

Figure 9. Population by Age and Sex, 1986

retarded growth. As a result, shortly before World War I the country's inhabitants still numbered only 3 million. A short-lived "baby

boom" in the first five years after the upheav2ils of World War

II allowed the population to reach 4 million by 1950. Since then

the country's population growth has been among the lowest in the

world. Low birth rates coupled with heavy emigration resulted in a population of only 4,937,000 in 1987. The annual birth rate since

the early 1970s has averaged fewer than 14 births per 1,000 persons, a rate that has caused demographers to estimate that Finland's population would peak at just under 5 million by about the

turn of the century, after which it would decline (see fig. 9). At the beginning of the 1980s, Finland's average population density, fourteen persons per square kilometer, was the second lowest

in Western Europe, just behind Norway's thirteen and ahead of

Sweden's seventeen. Actual population density varied widely,

however (see fig. 10). The province of Lapland, covering 29.3 per- cent of the nation's area but containing only about 4 percent of

its population, had a population density of about two persons per

square kilometer, making it one of the earth's emptiest regions.

Uusimaa, Finland's second smallest province, which contains

the capital city, Helsinki, accounted for only 3.1 percent of the

80
The Society and Its Environment

national territory; however, it was home for more than 20 percent

of the country's inhabitants, who hved together at a density of 1 19

per square kilometer, a figure identical to that of Denmark. The

provinces of Kymi, Hame, and Turku ja Pori in south-central Finland, which had a mix of rural and urban areas with economies

based on both agriculture and industry, were perhaps more truly

representative of Finnish conditions. During the 1980s, their population densities ranged from thirty to forty persons per square

kilometer.

External Migration

Demographic movement in Finland did not end with the appear- ance of immigrants from Sweden in the Middle Ages. Finns who

left to work in Swedish mines in the sixteenth century began a

national tradition, which continued up through the 1970s, of settling in their neighboring country. During the period of tsarist rule, some

100,000 Finns went to Russia, mainly to the St. Petersburg area. Emigration on a large scale began in the second half of the

nineteenth century when Finns, along with millions of other

Europeans, set out for the United States and Canada. By 1980 Finland had lost an estimated 400,000 of its citizens to these two

countries.

A great number of Finns emigrated to Sweden after World War

II, drawn by that country's prosperity and proximity. Emigration

began slowly, but, during the 1960s and the second half of the 1970s, tens of thousands left each year for their western neighbor. The

peak emigration year was 1970, when 41,000 Finns settled in

Sweden, which caused Finland's population actually to fall that year. Because many of the migrants later returned to Finland,

definite figures cannot be calculated, but all told, an estimated

250,000 to 300,000 Finns became permanent residents of Sweden

in the postwar period. The overall youthfulness of these emigrants

meant that the quality of the work force available to Finnish

employers was diminished and that the national birth rate slowed.

At one point, every eighth Finnish child was born in Sweden. Finland's Swedish-speaking minority was hard hit by this westward

migration; its numbers dropped from 350,000 to about 300,000

between 1950 and 1980. By the 1980s, a strong Finnish economy

had brought an end to large-scale migration to Sweden. In fact,

the overall population flow was reversed because each year several

thousand more Finns returned from Sweden than left for it. Internal Migration

However significant the long-term effects of external migration

81
Finland: A Country Study

Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt,

Ldnderbericht Finnland, 1986, Wiesbaden, 1986, 8.

Figure 10. Population Density by Province, 1981

82
The Society and Its Environment

on Finnish society may have been, migration within the country

had a greater impact—especially the migration which took place

between the end of World War II and the mid-1970s, when half

the population moved from one part of the country to another.

Before World War II, internal migration had first been a centurieslong process of forming settlements ever farther to the north. Later,

however, beginning in the second half of the nineteenth century

with the coming of Finland's tardy industrialization, there was a

slow movement from rural regions toward areas in the south where

employment could be found.

Postwar internal migration began with the resettlement within

Finland of virtuadly all the inhabitants of the parts of Karelia ceded to the Soviet Union (see The Continuation War, ch. 1). Somewhat more than 400,000 persons, more than 10 percent of the

nation's population, found new homes elsewhere in Finland, often

in the less settled regions of the east and the north. In these regions,

new land, which they cleared for farming, was provided for the

refugees; in more populated areas, property was requisitioned. The

sudden influx of these settlers was successfully dealt with in just a few years. One of the effects of rural resetdement was an increase

in the number of farms during the postwar years, a unique occur- rence for industrialized nations of this period (see Agriculture,

ch. 3).

It was, however, the postwar economic transformation that

caused an even larger movement of people within Finland, a move- ment known to Finns as the Great Migration (see Economic

Development, ch. 3). It was a massive population shift from rural

areas, especially those of eastern and northeastern Finland, to the

urban, industriadized south (see table 8, Appendix A). People left rural regions because the mechanization of agriculture and the fore- stry industry had eliminated jobs. The displaced work force went

to areas where employment in the expanding industrial and ser- vice sectors was available. This movement began in the 1950s, but

it was most intense during the 1960s and the first half of the 1970s,

assuming proportions that in relative terms were unprecedented

for a country outside the Third World. The Great Migration left behind rural areas of abandoned farms with reduced and aging

populations, and it allowed the creation of a densely populated

postindustrial society in the country's south.

The extent of the demographic shift to the south can be shown

by the following figures. Between 1951 and 1975, the population

registered 2in increase of 655,000. During this period, the sm2Jl

province of Uusimaa increased its population by 412,000, growing from 670,000 to 1,092,00; three-quarters of this growth was

83
Finland: A Country Study

caused by settlers from other provinces. The population increase

experienced by four other southern provinces, the Aland Islands,

Turku ja Pori, Hame, and Kymi, taken together with that of

Uusimaa amounted to 97 percent of the country's total population increase for these years. The population increase of the central and the northern provinces accounted for the remaining 3 percent. Provinces that experienced an actual population loss during

these years were in the east and the northeast—Pohjois-Karjala,

Mikkeli, and Kuopio.

One way of visualizing the shift to the south would be to draw

a line, bowing slightly to the north, between the port cities of Kotka

on the Gulf of Finland and Kaskinen on the Gulf of Bothnia. In

1975 the territory to the south of this line would have contained

half of Finland's population. Ten years earlier, such a line, drawn

farther to the north to mark off perhaps 20 percent more area, would

have encompassed half the population. One hundred years earlier,

half the population would have been distributed throughout more

than twice as much territory. Another indication of the extent to which Finns were located in the south was that by 1980, approximately 90 percent of them lived in the southernmost 41 percent

of Finland.

Urbanization

The Great Migration was also a process of urbanization.

Mechanization of agriculture and forestry meant fewer jobs in these

sectors that had traditionally taken the bulk of Finland's work force. Redundant workers found new employment in the economically

burgeoning south. Just before World War II, three out of four Finns

lived in rural areas; it was not until 1969 that more than half the

population had come to live in urban communities. The trend continued, and by the early 1980s some 60 percent of Finns lived in

urban areas. The largest urban settlement in Finland was greater

Helsinki, which, with a population of about 950,000 in the 1980s,

contained one-fifth of the country's total population. Two of Helsinki's suburbs, Espoo (established in 1963) and Vantaa (dating

only from 1972), were, by a wide margin, the country's fourth and

fifth largest cities. The greater urban areas of the cities of Tampere and Turku each contained about 250,000 inhabitants.

Social Structure

The economic and political transformations that Finland has

experienced since the last decades of the nineteenth century have

radically altered the country's social structure. In the first phase

of this transformation, industrialization expanded the economy.

84
The Society and Its Environment

created hitherto unknown occupational groups, and forced the old

bureaucratic and clerical elite to share power and prestige with a new entrepreneurial class. The political transformation established a democratic republic in which parties representing workers and

farmers successfully contended for the highest public offices. After

World War II, the two processes of transformation quickened. In one generation, the manner in which Finns lived and earned their

livelihood changed in an unprecedented way. An essentially rural

society moved to the city; farmers, for centuries the most numerous class, ceded this position to white-collar workers; and prosperity

replaced poverty.

Occupational and Wage Structure

Finland's export-dependent economy continuously adapted to the world market; in doing so, it changed Finnish society as well. The prolonged worldwide boom, beginning in the late 1940s and

lasting until the first oil crisis in 1973, was a chadlenge that Finland met and from which it emerged with a highly sophisticated

and diversified economy, including a new occupational structure

(see Economic Development, ch. 3). Some sectors kept a fairly constant share of the work force. Transportation and construction, for example, each accounted for between 7 and 8 percent in both 1950

and 1985, and manufacturing's share rose only from 22 to 24 percent; however, both the commercial and the service sectors more

than doubled their share of the work force, accounting, respectively,

for 21 and 28 percent in 1985. The greatest change was the decline

of the economically active population employed in agriculture and

forestry, from approximately 50 percent in 1950 to 10 percent in

1985. The exodus from farms and forests provided the manpower

needed for the growth of other sectors. Studies of Finnish mobility patterns since World War II have

confirmed the significance of this exodus. Sociologists have found

that people with a farming background were present in other

occupations to a considerably greater extent in Finland than in other

West European countries. Finnish data for the early 1980s showed

that 30 to 40 percent of those in occupations not requiring much

education were the children of farmers, as were about 25 percent

in upper-level occupations, a rate two to three times that of France

and noticeably higher than that even of neighboring Sweden. Finland also differed from the other Nordic countries in that the generational transition from the rural occupations to white-collar positions was more likely to be direct, bypassing manual occupations.

The most important factor determining social mobility in Finland was education. Children who attained a higher level of

85
Finland: A Country Study

education than their parents were often able to rise in the hierarchy of occupations. A triphng or quadrupling in any one generation of the numbers receiving schooling beyond the required

minimum reflected the needs of a developing economy for skilled employees. Obtaining advanced training or education was easier

for some than for others, however, and the children of white-collar

employees still were more likely to become white-collar employees

themselves than were the children of farmers and blue-collar

workers. In addition, children of white-collar professionals were more likely than not to remain in that class. The economic transformation also altered income structure. A

noticeable shift was the reduction in wage differentials. The

increased wealth produced by an advanced economy was distributed

to wage earners via the system of broad income agreements that

evolved in the postwar era (see Industrial Relations, ch. 3). Organized sectors of the economy received wage hikes even greater

than the economy's growth rate. As a result, blue-collar workers'

income came, in time, to match more closely the pay of lower-level

white-collar employees, and the income of the upper middle class declined in relation to that of other groups.

The wage structure of the 1 980s contrasted sharply with that of

1900. At the turn of the century, the pay of a senior government

official was many times greater than that of an industrial worker,

and households headed by professionals customarily employed ser- vants. By the 1980s, the household of a university-educated professional had an average income not quite twice that of a manual

worker in the farming or forestry sector. According to the Central

Statistical Office of Finland, if the average household income is measured at 100 in 1984, that of a professional household is 169;

of a salaried employee, 118; of a construction worker, 112; and

of an ordinary service sector employee, 104. Among households

with incomes below the average are those of farm and forestry

workers, with an average income measured at 92; those receiving

unemployment benefits at 73; and those retired at 44. Despite a more even distribution of income, Finnish government

statistics showed that a considerable portion of taxable income was

earned by small segments of the population. In 1985 the top 10

percent of taxpayers earned 26.9 percent of taxable income, and

the top 20 percent earned 43.7 percent of-income. The bottom 10

percent of taxpayers earned only 0.5 percent of taxable income;

the bottom 20 percent, only 3 percent. These figures had remained

stable since at least the late 1970s, and they were unlikely to change

greatly by the early 1990s, as Finnish taxes remained relatively

modest compared with those of other West European countries.

86
Saimaa, a system of interconnected lakes covering 1, 000 square

kilometers in eastern Finland

Courtesy Embassy of Finland, Washington

Although Finland's income distribution was the most unequal of

the five Nordic countries, it did not differ greatly from its neighbors. Sweden, for example, had the most equal distribution, with

the top 20 percent earning 38.1 percent of taxable income, and

the bottom 20 percent, 5.3 percent.

Class Structure

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

87
Finland: A Country Study

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 dis- cussions 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

88
The Society and Its Environment

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 be- come 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. Alestado divided the large group engaged in nonmanu2il, 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 lowerlevel 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 industrisd 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

89
Finland: A Country Study

socialist parties with leaderships from various classes, the common

practice of politicizing senior civil service appointments, and the

greater importance of state institutions.

Family Life

The profound demographic and economic changes that occurred

in Finland after World War II affected the Finnish family. Families became smaller, dropping from an average of 3.6 persons in

1950 to an average of 2.7 by 1975. Family composition did not

change much in that quarter of a century, however, and in 1975

the percentage of families that consisted of a man and a woman

was 24.4; of a couple and children, 61 .9; of a woman with offspring,

11.8; of a man and offspring, 1.9. These percentages are not

markedly different from those of 1950. Chzmge was seen in the number of children per fgimily, which fell from an average of 2.24 in

1950 to an average of 1 .7 in the mid-1980s, and large families were

rare. Only 2 percent of families had four or more children, while

51 percent had one child; 38 percent, two children; and 9 percent,

three children. The number of Finns under the age of 18 dropped

from 1.5 million in 1960 to 1.2 million in 1980.

Marriage

Attitudes toward marriage have changed substantially since

World War II. Most obvious was the declining marriage rate, which

dropped from 8.5 marriages per 1,000 Finns in 1950 to 5.8 in 1984, a decline great enough to mean a drop also in absolute numbers.

In 1950 there were 34,000 marriages, while in 1984 only 28,500 were registered, despite a growth in population of 800,000. An

explanation for the decline was that there was an unprecedented

number of unmarried couples. Since the late 1960s, the practice

of cohabitation had become increasingly common, so much so that

by the late 1970s most marriages in urban areas grew out of what

Finns called "open unions." In the 1980s, it was estimated that

about 8 percent of couples who lived together, approximately

200,000 people, did so without benefit of marriage. Partners of such

unions usually married because of the arrival of offspring or the

acquisition of property. A result of the frequency of cohabitation was that marriages were postponed, and the average age for marriage, which had been falling, began to rise in the 1970s. By 1982

the average marriage age was 24.8 years for women and 26.8 years

for men, severzJ years higher for both sexes than had been true a decade earlier. The overwhelming majority of Finns did marry, however. About

90 percent of the women had been married by the age of forty,

90
The Society and Its Environment

and spinsterhood was rare. A shortage of women in rural regions,

however, meant that some farmers were forced into bachelorhood.

While the number of marriages was declining, divorce became more common, increasing 250 percent between 1950 and 1980. In 1952 there were 3,500 divorces. The 1960s saw a steady increase

in this rate, which averaged about 5,000 divorces a year. A high

of 10,191 was reached in 1979; afterwards the divorce rate stabi- lized at about 9,500 per year during the first half of the 1980s.

A number of factors caused the increased frequency of divorce.

One was that an increasingly secularized society viewed marriage, more often than before, as an arrangement that could be ended

if it did not satisfy its partners. Another reason was that a gradually expanding welfare system could manage an ever greater portion of the family's traditional tasks, and it made couples less dependent on the institution of marriage. Government provisions

for parental leave, child allowances, child care programs, and much

improved health and pension plans meant that the family was no

longer essential for the care of children and aged relatives. A fur- ther cause for weakened family and marital ties was seen in the

unsettling effects of the Great Migration and in the economic trans- formation Finland experienced during the 1960s and the 1970s.

The rupture of established social patterns brought uncertainty and

an increased potential for conflict into personal relationships.

Status of Women

After examining the position of women around the world, the

Washington-based Population Crisis Committee reported in 1988

that Finland, slightly behind top-ranked Sweden and just ahead

of the United States, was one of the very best places in which a woman could live. The group reached this conclusion after examining the health, educational, economic, and legal conditions that

affect women's lives. When compared with women of other nations, Finnish women,

who accounted for just over 50 percent of the population in the

mid-1980s, did have a privileged place (see fig. 10). They were

the first in Europe to gain the franchise, and by the 1980s they

routinely constituted about one-third of the membership of the

Eduskunta (parliament) and held several ministerial posts. In the

1980s, about 75 percent of adult women worked outside the home;

they made up about 48 percent of the work force. Finnish women

were as well educated as their male counterparts, and the number

of women studying at the university level was slightly higher than

the number of men. In addition to an expanding welfare system,

which since World War II had come to provide them with

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Finland: A Country Study

substantial assistance in the area of child-bearing and child-rearing,

women had made notable legislative gains that brought them closer

to full equality with men.

In 1972 the Council for Equality was established to advise lawmakers on methods for realizing full legal equality for women. In

1983 legislation arranged that both parents were to have equal rights for custody of their children. A year later, women were granted

equal rights in the establishment of their children's nationality.

Henceforth any child born of a Finnish woman would have Finnish citizenship. After a very heated national debate, legislation was passed in 1985 that gave women an equal right to decide what surname or surnames they and their children would use. These

advances were capped by a law that went into effect in early 1987

forbidding any discrimination on the basis of sex and providing

protection against it. Once these laws were passed, Finnish authorities signed the United Nations Convention on the Elimination of

All Forms of Discrimination Against Women, in 1986.

In a number of areas, however, the country's small feminist

movement maintained that the circumstances in which Finnish

women lived needed to be improved. Most striking was the dis- parity in wages. Although women made up just under half the work

force and had a tradition of working outside the home, they earned

only about two-thirds of the wages paid to men. Occupations in

which women predominated, such as those of retail and office per- sonnel, were poorly paid in contrast to those in which men constituted the majority. Despite the sexes' equal educational

attainments, and despite a society where sexual differentiation

played a smaller role than it did in many other countries, occupational segregation in Finland was marked. In few of the twenty

most common occupations were the two sexes equally represented.

Only in occupations relating to agriculture, forestry, and school

teaching was a rough parity approached, and as few as 6 percent

of Finns worked in jobs where 40 to 60 percent of workers were

of the opposite sex. Studies also found that equal educational levels did not—in any category of training—prevent women's wages

from lagging behind those paid to men. Women tended to occupy

lower positions, while males were more often supervisors or managers. This was the case everywhere, whether in schools or

universities, in business, in the civil service, or in politics at both

the local level and the national level. In addition to their occupying secondary position in the workplace, women had longer workdays because they performed a great- er share of household tasks than did men. On the average, their

workweek outside the home was several hours shorter than

92
The Society and Its Environment

men's because a greater portion of them were employed only parttime or worked in the service sector where hours were shorter than

they were in manufacturing. Studies have found, however, that

women spent about twice as much time on housework as men

about three hours and forty minutes a day, compared with one hour

and fifty minutes for men. Men did twice as many household repairs

and about an equal amount of shopping, but they devoted only

one-third to one-fourth as much time to cleaning, cooking, and

caring for children. Given that the bulk of family chores fell to women, and that they were five times more likely than men to head

a single-parent family, the shortcomings of Finland's child daycare system affected women more than men. The Equality Law that went into effect in 1987 committed the

country to achieving fiiU equality for women. In the late 1980s,

there was a timetable listing specific goals to be achieved during

the remainder of the twentieth century. The emphasis was to be

equality for everyone, rather than protection for women. Efforts were undertaken not only to place women in occupations dominated by males, but also to bring males into fields traditionally

believed to belong to the women's sphere, such as child care and

elementary school teaching. Another aim was for women to occupy

a more equal share of decision-making positions.

Minority Groups

Compared with many countries, Finland was quite homogeneous. There were few foreigners, and the ones who were present were usually white-collar employees required for commercial reasons. Very few persons of other races were seen on the nation's

streets, and only a handful of refugees were granted asylum. Finns were open about their desire to avoid admitting workers from dis- tant southern countries and hence to avoid the kinds of situations

that had led to minor racial incidents in neighboring Sweden and

Denmark, let alone those that had caused the serious social problems

experienced by Britain.

Finland did have one significant minority, the Swedish-speaking

Finns, who had been in the country for more than 1 ,000 years and

who, for centuries, had been the source of its ruling elite. Nineteenth-century nationalism, some fierce struggles in the twentieth century, and changing demographic patterns had deprived

this group of its traditional dominance, but law and compromise

had allowed the Swedish-speaking Finns a secure and peaceful place

within Finnish society. Two smaller minorities had not been successfully assimilated. One, the Lapps, was descended from the original inhabitants of the land; the other, the Gypsies, was a much

93
Finland: A Country Study

later addition. The former lived mostly in the high north; the lat- ter were found throughout the country. Neither group was a threat

to Finnish society, but both occasionally posed problems for social

workers, and their treatment at the hands of their fellow Finns was

sometimes cause for regret. Also present in Finland were tiny Jewish

and Muslim communities, both of which had roots going back into

the nineteenth century.

Lapps

The oldest known inhabitants of Finland are the Lapps, who were

already setded there when the Finns arrived in the southern part

of the country about 2,000 years ago. The Lapps were distantly

related to the Finns, and both spoke a non-Indo-European language

belonging to the Finno-Ugric family of languages. Once present

throughout the country, the Lapps gradually moved northward

under the pressure of the advancing Finns. As they were a nomadic

people in a sparsely settled land, the Lapps were always able to find new and open territory in which to follow their traditional

activities of hunting, fishing, and slash-and-burn agriculture. By

the sixteenth century, most Lapps lived in the northern half of the

country, and it was during this period that they converted to Christianity. By the nineteenth century, most of them lived in the parts

of Lapland that were still their home in the 1980s. The last major

shift in Lapp settlement was the migration westward of 600 Skolt

Lapps from the Petsamo region after it was ceded to the Soviet

Union in 1944. A reminder of their eastern origin was their

Orthodox faith; the remaining 85 percent of Finland's Lapps were

Lutheran.

About 90 percent of Finland's 4,400 Lapps lived in the municipalities of Enontekio, Inari, cind Utsjoki, and in the reindeer

herding-area of Sodankyla. According to Finnish regulations, any- one who spoke the Lapp language, Sami, or who had a relative

who was a Lapp, was registered as a Lapp in census records. Finnish Lapps spoke three Sami dialects, but by the late 1980s perhaps

only a minority actually had Sami as their first language. Lapp

children had the right to instruction in Sami, but there were few

qualified instructors or textbooks available. One reason for the scar- city of written material in Sami is that the three dialects spoken

in Finland made agreement about a common orthography difficult. Perhaps these shortcomings explained why a 1979 study found the

educational level of Lapps to be considerably lower than that of

other Finns.

Few Finnish Lapps actually led the traditional nomadic life pictured in school geography texts and in travel brochures. Although

94
Lapps in traditional dress Courtesy Embassy of Finland,

Washington

many Lapps living in rural regions of Lapland earned some of their

livelihood from reindeer herding, it was estimated that Lapps owned

no more than one-third of Finland's 200,000 reindeer. Only 5 per- cent of Finnish Lapps had the herds of 250 to 300 reindeer needed

to live entirely from this kind of work. Most Lapps worked at more

routine activities, including farming, construction, and service

industries such as tourism. Often a variety of jobs and sources of

income supported Lapp families, which were, on the average, twice

the size of a typical Finnish family. Lapps adso were aided by oldage pensions and by government welfare, which provided a greater

share of their income than it did for Finns as a whole.

There have been many efforts over the years by Finnish authorities to safeguard the Lapps' culture and way of life and to ease

their entry into modern society. Officials created bodies that dealt

with the Lapp minority, or formed committees that studied their

situation. An early body was the Society for the Promotion of Lapp

Culture, formed in 1932. In 1960 the government created the

Advisory Commission on Lapp Affairs. The Lapps themselves

formed the Samii Litto in 1945 and the Johti Sabmelazzat, a more

aggressive organization, in 1968. In 1973 the government arranged

for elections every four years to a twenty-member Sami Parlamenta

that was to advise authorities. On the international level, there was

the Nordic Sami Council of 1956, and there has been a regularly

occurring regional conference since then that represented—in

95
Finland: A Country Study

addition to Finland's Lapps—Norway's 20,000 Lapps, Sweden's

10,000 Lapps, and the 1,000 to 2,000 Lapps who remained in the

Kola Peninsula in the Soviet Union.

Swedish-speaking Finns

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 aver- age width of about thirty kilometers (see fig. 11). 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 (see fig. 12). The set- tlers 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

96
The Society and Its Environment

time because few of them could write Finnish. By the end of the

century, the nationaUst movement had been successful in foster- ing 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 in- fluential and wealthy, but they were no longer dominant in the

country of their birth.

Independent Finland's new Constitution protected the Swedishspeaking 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 nationzd 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 clas- sified as either unilingual or bilingual with a majority language.

In the 1980s, there were 461 municipsdities: 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 in- habitants 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

97
Finland: A Country Study

Source: Based on information from Erik Allardt and Karl Johan Miemois, Roots Both in the Center and the Periphery: The Swedish Speaking Population in Finland, Helsinki, 1979, 7.

Figure 11. Areas Inhabited by Swedish-speaking Finns up to 1910

not cJways 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

98
The Society and Its Environment

even better, for less than 1 percent of them Uved 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 oi ''brukssvenskar^^ (literadly, "factory Swedes"), and

were sometimes the only Swedish speakers their brother Finns knew.

On the national level, sJl 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 televi- sion 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 nationzd government could not, for practical reasons, publish in Swedish all parliamentary deliberations, committee reports, and officiad 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 sociadist parties. The SFP polled enough support to hold a number of seats in the Eduskunta that usuadly matched closely the percentage of

Swedish speakers in the country's totad population. It very often

had ministers in the cabinet as well (see The Swedish People's Party,

ch. 4). An unofficiad special body, the Swedish People's Assembly

(Svenska Finlands Folkting), representing adl members of the

minority, functioned in an advisory capacity to regular governing

institutions. Most national organizations, whether economic, aca- demic, 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

usu2d, 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

99
Finland: A Country Study

Source: Based on information from Erik Allardt and Karl Johan Miemois,

The Swedish-Speaking Minority in Finland, Helsinki, 1981, 56.

Figure 12. Language Areas of Finland, 1976

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 slighdy 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 permsinently 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 bUingual, and there were no legal constraints (although there were sometimes social and familial constraints) against marrying

100
The Society and Its Environment

those speaking the majority language. The bihnguaUsm 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.

Gypsies

Gypsies have been present in Finland since the second half of

the sixteenth century. With their unusual dress, unique customs,

and specialized trades for earning their livelihood, Gypsies have

stood out, and their stay in the country has not been an easy one. They have suffered periodic harassment from the hands of both

private citizens and public officials, and the last of the special laws

directed against them was repealed only in 1883. Even in the second

half of the 1980s, Finland's 5,000 to 6,000 Gypsies remained a dis- tinct group, separated from the general population both by their

own choice and by the fears and the prejudices many Finns felt toward them.

Finnish Gypsies, like Gypsies elsewhere, chose to live apart from

the dominant societal groups. A Gypsy's loyalty was to his or her

family and to Gypsies in general. Marriages with non-Gypsies were uncommon, and the Gypsies' own language, spoken as a first language only by a few in the 1980s, was used to keep outsiders away.

An individual's place within Gypsy society was largely determined

by age and by sex, old, males having authority. A highly developed

system of values arid a code of conduct governed a Gypsy's

behavior, and when Gypsy sanctions, violent or not, were imposed,

101
Finland: A Country Study

for example via "blood feuds," they had far more meaning than

any legal or social Scinctions of Finnish society.

Unlike the Lapps, who lived concentrated in a single region, the

Gypsies lived throughout Finland. While most Lapps wore ordinary clothing in their everyday life, Gypsies could be identified

by their dress; the men generally wore high boots and the women

almost always dressed in very full, long velvet skirts. Like most

Lapps, however, Gypsies also had largely abandoned a nomadic

way of life and had permanent residences. Gypsy men had for centuries worked as horse traders, but they had adapted themselves

to postwar Finland by being active as horse breeders and as dealers in cars and scrap metal. Women continued their traditional

trades of fortune telling and handicrafts.

Since the 1960s, Finnish authorities have undertaken measures

to improve the Gypsies' standard of living. Generous state financial arrangements have improved their housing. Their low

educational level (an estimated 20 percent of adult Gypsies could

not read) was raised, in part, through more vocational training.

A permanent Advisory Commission on Gypsy Affairs was set up

in 1968, and in 1970 racial discrimination was outlawed through an addition to the penal code. The law punished blatant acts such

as barring Gypsies from restaurzmts or shops or subjecting them

to unusual surveillance by shopkeepers or the police.

Jewish and Muslim Communities

In the 1980s, there were about 1,300 Jews in Finland, 800 of

whom lived in Helsinki and most of the remainder of whom lived

in Turku. During the period of Swedish rule, Jews had been for- bidden to live in Finland. Once the country became part of the

Russian Empire, however, Jewish veterans of the tsarist army had

the right to setde anywhere they wished within the empire. Although

constrained by law to follow certain occupations, mainly those con- nected with the sale of clothes, the Jewish community in Finland was able to prosper, and in 1890 it numbered about 1,000. Finnish independence brought complete civil rights, and during the

interwar period there were some 2,000 Jews in Finland, most of

them living in urban areas in the south. During World War II, Finnish authorities refused to deliver Jews to the Nazis, and the

country's Jewish community survived the war virtually intact. By

the 1980s, assimilation and emigration had significantly reduced

the size of the community, and it was only with some difficulty

that it maintained synagogues, schools, libraries, and other pertinent institutions.

The Muslim community in Finland was even smaller than the

102
The Society and Its Environment

Jewish community; it numbered only about 900, most of whom

were found in Helsinki. The Muslims first came to Finland from

Turkey in the mid-nineteenth century and have remained there ever since, active in commerce. Like their Jewish counterparts, Finnish Muslims, because of their small number, have had difficulty

maintaining all the institutions needed by a social group.

Religion

The right to worship freely is guaranteed by Article 8 and Article 9 of the Constitution of 1919 and by the Freedom of Religion

Act that went into effect in 1923. In the 1980s, there were about

thirty registered religions in the country, all of which met the minimum requirement of having at least thirty followers. Despite this wealth of religions, the country's religious life was dominated by

one of its two state churches, the Lutheran Church of Finland, which

had nearly 90 percent of the population as members. The other

state church, the Orthodox Church of Finland, had a membership

of about 1 percent of the population. The remaining churches or

religions had 2 percent of the people in their congregations. Followers of the sm2iller churches included Jews, Muslims, Roman

Catholics, a variety of Protestants, Mormons, Christian Scientists,

and converts to eastern religions. Seven percent belonged to no

church.

Role of Religion

Religion was a part of public life in a variety of ways. The celebration of the gaining of Finnish independence on December 6 had

a religious component, as did the annual opening of the Eduskunta.

There were three religious holidays when public entertainments were not permitted. The state churches kept the official records

of their members' civil status, and the vast majority of marriages were performed in the state churches and had the same leg2il sta- tus as a civil ceremony. Church members paid a church tax that was collected and paid to the churches by state authorities. Per- sons wishing to leave one of the state churches had to do so for- madly, and records of this decision were maintained. Religious

instruction was a regular part of the schools' curricula, and chil- dren wishing to be excused from it had to request the right to take a substitute course. The armed forces had chaplains, the highest

of whom was a bishop, and their services were, in practice, usually obligatory for recruits. Chaplains' salaries were paid by the state, as were those of the higher clergy of the two state churches. The

oath generally used in court had a religious content, though nonbelievers had the right to one that made no reference to a deity

103
Finland: A Country Study

and instead was only a solemn affirmation of the truth of their tes- timony. Although it was rarely invoked, there was a Finnish law

against blasphemy. Numerous religious programs and services were

broadcast on the country's state radio and television networks.

Much of this religious influence was based in Finland's past,

however, and did not correspond with attitudes of most Finns,

because by the 1980s the country had become a highly secularized

society. Polls revealed, for example, that about 70 percent of the

population believed in God, a good deal fewer than the 90 percent

who belonged to the state churches. About 40 percent of the population believed that the best place to find God was in the Bible,

but only about 10 percent read it at least once a week, striking

figures for a Protestant country. Frequent church attendance was

unusual. Surveys conducted during the 1980s found that perhaps

as few as 4 percent went to church every Sunday, about 12 per- cent went once a month, and 43 percent went at least once during

the course of a year. These figures did not give a complete picture of Finnish reli- gious life, however. Finland's pietist traditions meant that there was much private prayer as opposed to public worship; about onethird of Finns under the age of thirty-five and more than half of

those above this age reportedly prayed every week. In addition,

the Lutheran Church touched the lives of many Finns through its considerable social work and counseling, although these activities were often not strictly religious in nature. The role the state churches played in life's key moments made

them, for reasons of tradition, important to most Finns, even to those who were not religious. More Finns were baptized, married,

and buried with church rites than were members of the churches.

A very important rite of passage for adolescents was confirmation,

which signified a coming of age even for those from freethinking

families. For this reason, more than 90 percent of 15-year-olds were

confirmed, despite the several weeks of lessons this entailed.

Although church membership was a routine affair for many, polls

conducted in the 1970s and the 1980s consistently found that only

about 10 percent of those interviewed had given any serious thought

to leaving a state church, even though freedom from the church

tax would mean a small financial gain. For many Finns, leaving

their church would be too great a break with family and community traditions. In addition, some of the values that churches had

traditionally stood for had been internalized. Observers noted, for example, that although Finland had undoubtedly become more

secularized since World War II, particularly in the urban areas, the traditional Lutheran virtues of hard work and self-discipline,

104
Helsinki Cathedral

Courtesy Embassy of Finland, Washington

inculcated over the centuries, were still evident in the lives of most

Finns.

Lutheran Church of Finland

Religious life in Finland since the Protesrant Reformation has

been dominated by the Lutheran Church of Finland. For most of

this period, almost all Finns belonged to it. In the late 1980s, about

90 percent of the population were members, and an even greater

number participated in its rituals. During the time of Swedish rule,

the church was the country's state church, and it was part of the

national government, subordinate to the Swedish king. Even when

headed during the nineteenth century by Russian tsars of the

Orthodox faith, the Lutheran Church remained a state church.

Since 1809, however, it has had to share this distinction with the

Orthodox Church, which had followers in the eastern province of

Karelia.

The Ecclesiastical Law of 1869 gave the Lutheran Church a measure of independence from the state by allowing it a representative

body, the Synod, that could decide many important church matters on its own. When Finland became independent, the church

gained a greater degree of autonomy, although it still was subject

to state supervision. The president, for example, decided who was

to become a bishop, using a list of three candidates submitted by

the Lutheran Church. In 1943 the formation of its own central

105
Finland: A Country Study

administration, separate from the Ministry of Education, meant

the church was largely self-sufficient. Some practical matters, such

as levels of church taxes, salaries and pensions, or reorganization

of church districts, were still decided by the government or required

its approval, but in many other matters the church set its own

course. A study commission of 1977 recommended a greater separation

of church and state as a gocd for Finnish society. The next decade's

discussion of abolishing the presidential selection of bishops was

one example of efforts to realize this goal. The gradual movement

away from the national government meant that the Lutheran

Church of Finland, although still a state church, was more independent than the other Lutheran churches of the Nordic region. This

independence was so marked that students of religion commonly

regarded it not so much as a state church, but as a folk church

that served all Finns, members and nonmembers alike. Revivalist Movements Within the Lutheran Church

Another characteristic of the Lutheran Church of Finland that

distinguished it from the other Lutheran churches of the Nordic

countries was the strong tradition of revivalism that flourished

within it. Elsewhere, revivalists left the state churches and founded

their own. Although Finnish revivalist movements at first seemed

a threat to the state church, ecclesiasticcd authorities came to learn

that these new currents of religious feeling could enrich the church

rather than diminish it. Since the nineteenth century, about half a dozen distinct movements had found a secure and enduring place

within the established church. This meant that the Lutheran Church

in Finland did not experience recurring splits caused by members

dissatisfied for reasons of doctrine or temperament. The enthusiasm

and the fervor of the revivalists were a frequent tonic to the state church, and their presence within it allowed the church closer ties to the whole of the Finnish people than would otherwise have been

possible.

The revivalist movements remained distinctly Lutheran; they

adhered to the doctrine ofjustification by faith alone as the center of preaching and teaching, and made clear demarcations between

the Kingdom of God and the material world. Worldly pleasures were generally decried, with a varying degree of emphasis being

placed instead on abstinence, faith, abnegation, and prayer. The

faithful could go to God directly without the church and clergy as intermediaries. Priestly intervention was not necessary in the

spiritual realm. In the material world, however, there was secular

106
The Society and Its Environment

government with a justified civil authority worthy of obedience.

The movements dXso followed the traditional Lutheran insistence on giving ritual a smaller place than it enjoyed in Roman Catholicism or Eastern Orthodoxy. Hence, there were only two

sacraments—baptism and Holy Communion—retained as symbols

to strengthen faith, for Lutherans felt that they had no inherent

redemptive value.

In the late 1980s, the five or six main movements had well over 100,000 members, and each movement was vigorous enough to have a central organization, newspaper, or magazine. Each held a summer convention that could attract tens of thousands of the

devout. Though the movements might on occasion disagree with

positions adopted by the Lutheran Church as a whole, they could

protest them, or could actually prevent their adoption at the church's

democratically arranged meetings and forums.

The earliest of the movements was The Awakened. Its most important leader, Paavo Ruotsalainen (1777-1852), was an uneducated peasant who attracted a substanti2d following by appealing

to the poor and the oppressed through his emphases on Divine great- ness and on human wretchedness and helplessness. Man, he

proclaimed, was inept and could never succeed; only God redeemed

and healed. Man's duties, then, were to abandon his own works

and to trust only in God. Followers of The Awakened held reli- gious services at their homes to supplement those of the church.

Unlike the Laestadians, who belonged to a movement founded

somewhat later, followers of The Awakened were tolerant; they

did not call attention to themselves as believers to whom grace belongs, in contrast to the rest of the world, which was unrepentant.

In the late 1980s, the movement was strongest in the eastern Savo

region and in Ostrobothnia, and it attracted between 30,000 and

40,000 to its summer meetings.

The Laestadian Movement, named after its founder, Lars Levi

Laestadius (1800-61), a Swedish preacher in Lapland, was perhaps

the strongest of all the revivalist movements; even in the 1980s,

it could attract 100,000 of the faithful to its mass meetings. One

reason for its large gatherings was the importance the movement

attached to the visible congregation and to the absolution given

to its members after confession. The movement's services were often

marked by ecstatic outbursts. Laestadians were somewhat intolerant, as they stressed the certainty of salvation for Christians and

the probability of damnation for nonbelievers. This adamancy

caused occasional rifts within the movement. Laestadians continued

to have their stronghold in northern Finland, where the movement

had originated.

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Finland: A Country Study

The Evangelical Movement was an offshoot of The Awakened.

Its founder, Fredrik Gabriel Hedberg (1811-93), believed that an

obsession with wretchedness detracted from the assurance of sal- vation that a Christian has through his faith in Christ's righteousness. The movement stressed infant baptism, as its adherents

believed the whole of salvation was given through this sacrament.

It also was noted for its missionary work abroad.

The smsdlest of the old revivalist groups was that of the Supphcationists, founded by Henrik Renqvist (1789-1866), an early

advocate of the temperance movement. Supplicationists believed

in frequent and fervent prayer and in meetings at which all remained on their knees. Supplicationists were active mostly in

southwestern Finland. Quite conservative in their outlook, they were not especially successful in attracting young converts. Revivalism has also seen the formation of newer groups. One

of these was the Fifth Revival, dating from shortly before World

War II. It stressed missionary work and evangeUsm. In the 1970s

Charismatics also began to be active within the Lutheran Church

of Finland.

Organization and Duties of the Lutheran Church

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 Swedishspeaking 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 dio- cese 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.

108
The Society and Its Environment

The Lutheran Church of Finland employed about 18,000 per- sons 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 tiindamental 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 con- cern to the dioceses.

The church placed great emphasis on congregational life. Despite

the apparent episcopad 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 per- cent 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

109
Finland: A Country Study

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 historiczd 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.

Orthodox Church of Finland

The other state church was the Orthodox Church of Finland.

Although it had a much smaller membership than the Lutheran

Church of Finland, only 56,000 in 1987, it enjoyed the same legal status and rights as the larger church. The state paid it the church

tax it had collected from its parishioners, and the Orthodox Church

kept parishioners' official demographic records. Although the state had some control over its activity, the Orthodox Church was largely

independent. It also was a distinctly Finnish church, for although

it rites and practices were Slavic, in accordance with Orthodox doctrine, it had been using the Finnish language in its services since

the second half of the nineteenth century. After Finland became

independent, the Orthodox Church of Finland broke with the

110
View of Helsinki's historic center: foreground, Uspenski

Cathedral, the largest Orthodox church in Western Europe; upper left, the Esplanade, the capital's spacious promenade

Courtesy Embassy of Finland,

Washington

Russian Orthodox Church, and after 1923 it belonged to the Ecumenical Patriarchate of Constantinople, the leader of which was

its nominal head.

Before World War II, most members of the Orthodox Church

lived in the province of Karelia. After much of the province was

annexed by the Soviet Union in 1944, most Finns living in the

annexed areas fled westward. Some 70 percent of the members of

the Orthodox Church were therefore dispersed throughout Finland,

and many settled in regions where before there had been only Lutherans. By the 1980s, there were twenty-five parishes in the country. In 1980 a third diocese was created in northern Finland to minister better to Orthodox Christians living in that region and

to make the Orthodox Church eligible to become fully autonomous,

or in Orthodox terminology, autocephalous.

The highest official of the Finnish church was the archbishop

of the diocese of Karelia, with its seat at Kuopio. Two other bishops, or metropolitans, headed the other two dioceses, those of Helsinki

and Oulu. The church's highest governing body was the Church

Assembly, which met every third year unless more frequent meetings were necessary. It consisted of thirty-four voting members.

111
Finland: A Country Study

seventeen of whom were laymen. Routine administration was managed by the Church Council. The Bishops' Synod approved

the doctrinal decisions of the assembly.

Local administrative practices were democratized and mirrored the

power and influence of the laity seen in the Lutheran Church.

Smaller Registered Churches

In the 1980s, there were more than two dozen other registered

religions in Finland, but none of them enjoyed the legal status of

the two state churches. The largest single group in the second half

of the 1980s consisted of several Pentecostal churches that drew

on the revivalist strains always present in the Finnish religious tra- dition. Pentecostal churches had a total congregation of about

40,000, distributed in a number of organizations. The Church of

Jesus Christ of Latter Day Saints (Mormons) had some success and had about 4,000 followers. Roman Catholics numbered about

4,000, distributed in 5 parishes presided over by a bishop. Most

of the score of priests were foreigners, and Roman Catholic Finns

who desired ordination had to study abroad. So successful had the Protestant Reformation been in extirpating Roman Catholicism

from Finland that for more than three centuries no Finn had become

a Roman Catholic priest until one was ordained in Paris in 1903.

The Jewish community of 1,200 persons was located in southern

urban areas. It was so small that it was having trouble sustaining

itself and had to seek its rabbi abroad. Finland's tiny Muslim com- munity dated from the nineteenth century and numbered about

900. As in other Western countries, eastern religions and sects had

received some attention in Finland in recent decades. The most

successful of them was the Baha'i Society of Finland with just over 300 followers.

Education

Finland has had a strong tradition of literacy since the Protestant Reformation. The Lutheran Church aimed at widespread liter- acy to enable the common man to read the Bible. In the next

century, proof of literacy became a requirement for the right to marry. By the second half of the nineteenth century, legislation was in place for a general system of elementary education, although

the tsarist regime did not gdlow its realization. After independence,

a Comprehensive Education Act was passed in 1921 that met the

state's constitutional requirement to provide "universsd compulsory education," including elementary education, at no cost. Legislation also stipulated that Finnish citizens had a duty to be educated. In the postwar period, the basic goal of Finnish education

112
The Society and Its Environment

authorities has been to create a system that would provide equal

educational opportunities for everyone, would guarantee the country

a populace able to meet the technological challenges of the inter- national marketplace, would encourage democratic values, and

would allow each person the fullest readization of his or her potential. Work to realize this goal has led since the 1960s to profound

changes in the organization of the country's school system. The

old elementary school system that determined at an early age

whether pupils were to follow a general or an academic course of

studies was replaced by a uniform comprehensive system that postponed this decision until the mid-teens and that, even then, did

not bar anyone from higher training at a later time. Secondary

education was broadened and reformed to allow a greater range

of choices and opportunities. University education was expanded

and distributed more equally across the country, its control was

democratized, and access to it was widened.

Primary and Secondary Education

The School System Act, passed in 1968, abolished the two-track

elementary school system and replaced it with a single comprehensive school with a nine-year course of studies. The new school was

uniform throughout the country and was compulsory for all chil- dren between the ages of seven and sixteen. Children in Finland

began school at a later age than those in many other countries

because of the distances some of them had to travel in sparsely set- tled areas. Private schools also were gradually incorporated into

the system, which was fully in place by the late 1970s.

The school program was broken into two stages: a lower level for the first six grades and an upper level for grades seven through

nine (see fig. 13). In some areas there was a voluntary tenth year. The school year began in the second half of August and ended in

early June, with a two-week break at Christmas and a one-week

break both in the winter and at Easter. The pre- school system was

directed by the Ministry of Social Affairs and Health. In the

mid-1980s, this system was able to accommodate only one-third

of the children of the relevant age-group.

Instruction at comprehensive schools was free, as were books,

a daily hot meal, transportation, and even lodging for those stu- dents who lived too far from a school to manage a daily commute.

Efforts were made to ensure that the quality of instruction did not

vary and that children in Lapland were as well instructed as those

in Helsinki. In bilingual communities, children had the right to instruction in their own language. Children also had the right to classes in their own religion, unless there were too few students

113
Finland: A Country Study

AGE

19

16

13

SCHOOL

YEAR

12

UNIVERSITY

1

I ACADEMIC

|HIGH SCHOOL

VOCATIONAL

^DUCAJiqiM

General Studies

Upper Level

COMPREHENSIVE SCHOOL

Lower Level

C

O

M

P

U

L

8

O

R

Y

DAY CARE CENTERS

Figure 13. Education System, 1980s

of a particular religion to make this practicable, or they could be

excused from religious instruction. If at least five students had no

religion, an alternative nonreligious course was obligatory. Schools were not divided according to sex. After graduation from a comprehensive school, students con- tinued their education at either vocational schools or the more

demanding vocational institutes, or at the academically oriented

secondary schools. During the 1980s, a slight majority of students

chose vocational training to prepare them for one or more of several

hundred commercial and technical occupations. Some 60 percent

of these students attended two-year to three-year courses at vocational schools, while the remainder enrolled in four-year to five- year courses at vocational institutes that led to careers in highly

skilled fields or to management and planning positions. Students

at the academic high schools had to pass an examination, after

114
The Society and Its Environment

three years of study, before they could attend a university. Fewer

than half passed this examination, and only about one-fourth of

those successful managed to secure places at universities. Although

the academic high school was the most common route to a university in the 1980s, an increasing number of places there were being

held for graduates of vocational institutes. The schools' curricula were set by law, and their content was

determined at the national level by the Ministry of Education, the

National Board of General Education, and the National Board of

Vocational Education. Local authorities, however, had some say

about how they would be taught. Language instruction accounted

for one-third of teaching time in comprehensive schools and for somewhat more in secondary schools. In the third grade, children

began taking a second language, usually Finnish for Swedish speakers and English for the others. Sciences and mathematics accounted

for about 30 percent of teaching time at the comprehensive level and for somewhat less at academic schools at the secondary level,

while social and humanistic courses accounted for 12 percent in

the former and 18 percent in the latter. Comprehensive schools

spent one-fourth of their time on art, physical education, and related courses, while secondary schools accorded them a little less than

one-fifth of their time. The courses vocational schools offered varied

greatly because of the wide variety of material taught. After the

first year of general courses, most instruction was connected directly

with the chosen specialty.

Since the late 1970s, all teachers in the comprehensive and secon- dary schools have been obliged to have a university degree. Two

art academies and eight universities provided teacher education.

Vocational teachers, given the wide variety of courses they taught,

could sometimes substitute occupational experience for university

training. Teachers of the first six years of comprehensive school

functioned as class teachers rather than as subject specialists and

were required to have a Master of Education degree, while their

colleagues in the upper levels needed a master's degree in the subject they had chosen to teach. Although selection criteria for places

in teacher training were stringent (only 10 percent of applicants were accepted), Finland had enough teachers to allow classes in

the comprehensive system to average about thirty pupils; classes in the secondary schools averaged about twenty pupils. In sparsely populated areas, however, it was sometimes necessary to form

classes with pupils of different ages and grade levels. Special education generally was accomplished within regular

schools. This practice was in consonance with the overall policy

of avoiding "tracking," which was seen to limit a pupil's range

115
Finland: A Country Study

of educational opportunities by placing him or her at a particular

level of instruction. An attempt was made to keep all members of

a class together and to address special needs through individual

counseling and tutoring. This principle reflected the overriding goal

of having an open and flexible school system that matched individual

qualities and aspirations.

Higher Education

In the late 1980s, Finland's system of higher education consisted of ten universities (each with at least several different faculties), seven one-discipline institutions with such specialties as technology or business administration, and three art academies. The lar- gest, the University of Helsinki, was founded in 1640. The

remainder date from the twentieth century; the newest, the University of Lapland at Rovaniemi, from 1979. During the mid-1980s,

there were about 90,000 students at institutions of higher education. Competition for acceptance for university-level study was

intense, and fewer than one out of four applicants obtained a place.

There were no private universities in Finland.

By the late 1980s, institutions of higher learning were granting

three degrees: a master's degree that required from four to six years

of study; a graduate degree, the licentiate, requiring another two

years of study; and the doctorate, awarded usually after four years or so of graduate study. A candidate did not have to obtain the

licentiate to be awarded the doctorate.

Like the country's primary and secondary schools, Finnish

universities were free. To help with living expenses, however, stu- dents who were enrolled in secondary schools and at universities were entitled to financial aid by the Study Allowances Act of 1972.

By the 1980s, more than half the student body at these institutions

received aid in the form of allowances or low-interest loans.

Institutions of higher learning had about 7,000 instructors

altogether in the 1980s. Academic freedom was ensured through

a tenure system that protected most of this number from dismissal. The institutions themselves were under the overall direction

of the Ministry of Education, but they enjoyed considerable internal autonomy. The autonomy of the University of Helsinki was

even guaranteed by the Constitution of 1919. The trend toward

greater internal democracy had also touched Finnish universities,

and by the late 1980s professors were sharing much of their former

power with other faculty members, university staff, and students.

An area of future growth in Finnish education was expected to be that of supplementary education at the university

level. No degrees were to be granted, but much greater access to

116

Finland: A Country Study

university resources was to be offered to those wishing to deepen

their knowledge of a particular field either for professional reasons

or for personal pleasure. It was estimated that, by the early 1990s,

one-tenth of university teaching would occur in an open-universitylike forum.

Adult Education

Finland had a long tradition of adult education, and by the 1980s

nearly one million Finns were receiving some kind of instruction

each year. Forty percent of them did so for professional reasons. Adult education appeared in a number of forms, such as secon- dary evening schools, civic and workers' institutes, study centers,

vocational course centers, and folk high schools. Study centers allowed groups to follow study plans of their own making, with

educational and financial assistance provided by the state. Folk high

schools were a distinctly Nordic institution. Originating in Denmark in the nineteenth century, folk high schools became common

throughout the region. Adults of all ages could stay at them for several weeks and take courses in subjects that ranged from handicrafts to economics.

Public Welfare

In the late 1980s, Finland had one of the world's most advanced

welfare systems, one that guaranteed decent living conditions for

all Finns. Created almost entirely during the first three decades

after World War II, the system was an outgrowth of the traditional

Nordic belief that the state was not inherently hostile to the well- being of its citizens, but could intervene benevolently on their

behalf. According to some social historians, the basis of this belief was a relatively benign history that had allowed the gradual emergence of a free and independent peasantry in the Nordic countries

and had curtailed the dominance of the nobility and the subsequent

formation of a powerful right wing. Finland's history has been

harsher than the histories of the other Nordic countries, but not

harsh enough to bar the country from following their path of social development.

Growth of the Social Welfare System

In the last years of the nineteenth century, Finnish social policy

had as its goal a lessening of class friction. The few existing pieces

of social legislation addressed the needs of specific groups rather

than of society as a whole. After the Civil War, little was accomplished in welfare legislation. A woefully insufficient national pension plan was set up in 1937, as were measures to aid needy mothers.

118
The Society and Its Environment

It was only after World War II that Finnish social policy acquired

the characteristics that in the next decades made it similar to other

Nordic systems of social welfare.

According to Finnish sociologist Erik Allardt, the hallmark of

the Nordic welfare system was its comprehensiveness. Unlike the

welfare systems of the United States or most West European countries, those of the Nordic countries covered the entire population,

and they were not limited to those groups unable to care for themselves. Examples of this universality of coverage were national

flat-rate pensions available to all once they reached a certain age, regardless of what they had paid into the plan, and national health

plans based on medical needs rather than on financial means. In

addition, the citizens of the Nordic countries had a legal right to the benefits provided by their welfare systems, the provisions of

which were designed to meet what was perceived as a collective

responsibility to ensure everyone a decent standard of living. The

Nordic system also was distinguished by the many aspects of people's lives it touched upon.

The Finnish welfare system differed from those of other Nordic

countries mainly in that its benefits were lower in some categories,

such as sickness and unemployment payments; otherwise, the Finnish system fit into the Nordic conception of social welfare. Finnish social expenditures constituted about 7 percent of the country's

gross domestic product (GDP—see Glossary) in 1950, roughly equal

to what Sweden, Denmark, and Norway were spending. By the

mid-1980s, Finland's social expenditures had risen to about 24 per- cent of GDP, compared with the other countries' respective 35,

30, and 22 percent (see table 9, Appendix A). Less than 10 per- cent of these expenditures was paid for by Finnish wage earners;

the remainder came roughly equally from the state and from

employers. Until the second half of the 1970s, Finnish employers

had paid a higher share of social outlays than had their counterparts in the other Nordic countries. In response to the slowdown

of the world economy after 1973, there was some shifting of social

burdens to the state, which made Finnish companies more price

competitive abroad.

Finland's welfare system also differed from those of its neighbors in that it was put in place slightly later than theirs, and it was

only fully realized in the decade after the formation of the RedEarth government in 1966 (see Finland in the Era of Consensus,

1966-81 , ch. 1). Just after World War II, the Finns directed their

attention to maternal and child care. In 1957 the government

established an improved national pension plan and supplemented

it in the early 1960s with private pension funds. Unemployment

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Finland: A Country Study

aid was organized in 1959 and in 1960, and it was reformed in

1972. Legislation of the 1950s and the 1960s also mandated the

construction of a network of hospitals, the education of more medical

personnel, and, from 1963 to the early 1970s, the establishment

of a system of health insurance. The housing allowance system

expanded during the 1960s to reach ever-widening circles of the

population. Health-care officials turned away from hospital care

in the 1970s, and they began to emphasize the use of smaller local

clinics. By the 1980s, the Finnish welfare system was up to Nordic

standards and had the support of most Finns. All major political

parties were committed to maintaining it, and its role in Finnish

society seemed secure for the coming decades.

Organization of the Welfare System

In the late 1980s, the Ministry of Social Affairs and Health

directed the welfare system through five departments: social

insurance, social welfare, health care, temperance and alcohol

policy, and labor. According to Finland's administrative tradition,

it is the task of a ministry and its departments to determine policy,

which is then administered by central boards. In the case of social

policy, there were three central boards for social welfare, health,

and labor protection. An exception to this administrative division was the Social Security Institute, which supervised the national pension plan and health insurance for the Eduskunta and the Council

of State. The actual supplier of social care was local government—the

municipality—supervised by authorities at the provincial level who

had to approve the administrative plans of municipalities before

these local governments could receive funds from the state. In the

early 1980s, funds from the state made up about 30 percent of the

monies spent on all social services and pensions, while employers

supplied about 40 percent; local governments, 15 percent; and the

recipients of services, the remainder.

Income Security Programs Classified as Social Insurance

Finland, like the other Nordic countries, divided most of its social programs into those that guaranteed income security and those that

provided social and health services. Income security programs came

in two categories: social insurance, which provided income despite

old age, illness, pregnancy, unemployment, or work-related injuries; and income security classified as welfare, which consisted of

income transfers to aid families through measures such as child

payments, maternity grants, payments to war victims and their

survivors, and financial aid to those afflicted by disability or pressing

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The Society and Its Environment

needs. Programs of the first category, income security guarantees,

took some 80 percent of the funds expended for social welfare (see

table 10, Appendix A).

National Pension Plan

Finland's first national old-age pension plan dates from 1937,

but it was so poorly funded that a new National Pensions Act was

put into effect in 1957. In the late 1980s, this law, somewhat

reformed, was still the basis of Finland's National Pension Plan,

which was open to all residents over the age of sixteen, even to those who had never paid into it. Even those foreigners not from

the Nordic countries were entitied to this pension if they had resided

in Finland for at least five years. Those who left for residence in a country outside Nordic Europe, even those who were Finnish

citizens, could receive the pension for only one year. The flat-rate national pension could be paid as an old-age pension, once a per- son reached the age of sixty-five; as an invalidity pension (either

full or partial) to those between the ages of sixteen and sixty-four

who were no longer able to work; or, in some cases, to the longterm unemployed who were in their late fifties or early sixties. In

addition to these classes of beneficiaries, survivors of those eligible for national pensions who were not themselves eligible for the pensions could receive pensions under the terms of the Survivor's Pension Plan. Also tied to the National Pension Plan were payments

for handicapped children living at home and for some combat vet- erans of World War II. Payments of the national pension were uniform for everyone;

in the mid- 1980s, they amounted to Fmk334 (for value of the Finnish mark—see Glossary) a month. To this amount were added

the assistance payment, which varied according to a pensioner's

marital status, the cost of living in his or her locality, and other

pensions that he or she received. Other supplementary payments

could be made for dependent children, for degree of disability, and

for housing costs, as well as for veterans of the Civil War and of

World War II. In the mid-1980s, the supplemental payment to a

single pensioner could range from Fmkl ,362 to Fmkl ,436 a month.

The supplement for each child amounted to Fmkl81, and housing supplements V2iried according to housing costs but could amount

to as much as approximately Fmkl,000. Helplessness supplements

could be worth up to about Fmk400, depending on the age and

the physical state of the pensioner. National pensions were indexed,

and they increased in value each year. Since reforms of the early

1980s, national pensions were not taxable if they were the sole source of income. Pensions were no longer affected by a spouse's earnings

121
Finland: A Country Study

or pension income, and the national pension could only be reduced

by income from other pensions. The National Pension Plan was

funded by the beneficiary's own contributions, about 2 percent of

his or her locally taxable income, and by employer contributions

of 4 to 5 percent of the insured person's wages.

Employee Pension Plans

The Employees' Pensions Act was passed in 1961 to supplement

the National Pension Plan, which, while adequate for Finns living

in the countryside—a majority of the population until the 1960s

did not provide enough benefits for city dwellers. During the next

decade, other compulsory wage-related pension plans were enacted

into law for temporary employees, for national and local government employees, for those working for a state church, and for the

self-employed. At the end of the decade, a supplementary plan was

created for farmers as well. Seamen had had an income-based plan

since 1956, and, as of 1986, those active in free-lance professions

such as acting and writing cdso obtained coverage. These employment pension plans were completely funded by the employers, pri- vate or public, who paid contributions, equal on the average to about 10 percent of a worker's earnings, into funds managed by

seven large insurance companies or who set up funds on their own.

Self-employed persons had to choose a fund. The Central Pension

Security Institute was responsible for keeping records about

employment and benefits.

The normal age of pensionable retirement was sixty-five, and

the pension paid was based on the average esirnings one had received

in the last four years of work ending two years before retirement.

One could receive up to 60 percent of private-sector earnings and

up to 66 percent of public-sector earnings. The average wage-related

pension in the mid-1980s was about Fmkl,000 per month. Older

employees, at work before these pension plans became effective, were guaranteed a minimum pension of at least 29 percent if they

retired before 1975, and 37 percent if they retired after this date.

Like the national pension, wage-related pensions were indexed,

and they increased each year. In addition, there were provisions

relating to disability, early or late retirement, and survivors' benefits

similar to those in effect for the National Pension Plan.

Sickness Insurance

The Sickness Insurance Act of 1963 introduced health insurance

to Finland in two stages. First, beginning in 1964 it provided payments when wages were lost because of illness or maternity leave

and payments for the cost of treatment and medicine. Three years

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The Society and Its Environment

later, it began paying doctors' bills as well. Until the act went into

effect, only a small minority of the population, generally those

employed by large firms, had medical insurance.

All persons resident in Finland for more than a short time were

eligible for benefits. Foreigners had to register with the local health

authorities to receive payments. In the 1980s, the daily payment

made to make up for losses of income due to illness averaged about

80 percent of a typical wage and could last for as many as 300 workdays. Highly paid individuals received less. Hospital care in public hospitals was generally free, and other compensation amounted

to 60 percent of doctors' fees, 75 percent of laboratory expenses,

and 50 percent of medicine costs. In the mid-1980s, dental care was free for anyone bom after 1961 , but for others it was paid only

if dental problems had to be treated to cure a disease. Maternity

leave payments amounted to about 80 percent of income for about one year, and could begin five weeks before the estimated date of

the birth. Fathers could take some of this time, with a corresponding cut in the days allowed to the mother. Sickness insurance was

funded by the recipients themselves through their payment of about

2 percent of their locally taxable income, by employers who paid

a contribution of about 1 percent of the employee's wages, and

by the state. However generous these benefits appeared in an international

context, medical fees had increased in the 1970s and the 1980s,

and government compensation rates had not kept pace. Rates

increased by 25 percent in 1986, but not enough according to some

critics. Those who pressed for government relief believed it necessary even though public medical care, which constituted the bulk

of medical care in Finland, was already highly subsidized and hence

rather cheap compared with many other countries.

Unemployment Insurance

The Unemployment Security Act of 1984 reformed the unemployment assistance system that had been gradually worked out

to dead with the persistent problem of unemployment in Finland

(see Employment, ch. 3). The act arranged for coverage of all unemployed between the ages of seventeen and sixty-four, resident

in Finland, whose income came from wages earned doing work

for another person or legal entity. A person had to be in need to receive payments under the terms of the act and could be disqualified because of a spouse's earnings. The self-employed, full-time

students, and people receiving pensions or maternity allowances were not eligible, nor were those who were unemployed because

of illness, injury, or handicap, or who had quit work voluntarily.

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Finland: A Country Study

who had lost work because of labor disputes, or who had refused

to accept employment.

In the mid-1980s, those eligible for unemployment benefits

received them in two ways. A basic daily allowance of Fmk70 went

to any person looking for employment. This 2dlowance was meanstested, and the income of a spouse could disqualify a potential

beneficiary. The allowance lasted as long as the recipient was

unemployed. Those unemployed who were members of an unemployment fund (80 percent of Finns were) and who had worked

for at least twenty-six weeks in the preceding two years were eligible for more substantial benefits amounting to the daily basic

allowance plus 45 percent of the difference between their daily

wage and the basic allowance. After 100 days the payment was

reduced by 20 percent. Beneficiaries of the income-related allow- ance could receive it for 500 days in a 4-year period. Workers in

their late fifties and older who had been unable to find work could

be granted an unemployment pension equal to a disability pension until they reached the age when they would be eligible for an

old-age pension. Unemployment benefits were administered by the

Social Security Institute. The basic allowance was completely

financed by the state. Employers and the state funded equal shares

of 95 percent of the income-related payments and the beneficiary was responsible for the remaining 5 percent.

Workmen's Compensation

An employee who suffered work-related injuries was financi2dly

protected through payments that covered mediccd and rehabilitation expenses and fuUy matched his or her wages. If injuries resulted

in permanent disability, the worker could receive payments amounting to 85 percent of his or her wages for total disability. Survivors were eligible for pensions, as well as a sizable funeral grant. This

compulsory program was entirely funded by the employer.

Income Security Classified as Welfare

In addition to the above benefits that were classified as income

security in the form of social insurance, there were income security

programs classified as welfare. One of the differences between the

two classes of social programs was that the welfare measures were

financed mostly through taxes, whereas social insurance programs

were paid for by employers and employees. This second category

of income security also consisted of payments to those eligible. The

most important and expensive class of these benefits involved payments to families with children. Other programs assisted those who

had suffered war injuries and their dependents, provided financial

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The Society and Its Environment

aid to those called up for military service and to their families, made

payments to the handicapped that helped them earn their living,

and provided living allowances that were the last resort of those

unable to earn their way.

Family Aid

Financial aid to families with children came in the form of child

allowances, child care and maintenance allowances, and maternity benefits. Child allowances dated from the 1930s, and they were

one of the oldest parts of the welfare system. The law in force in

the late 1980s was the Child Allowance Act of 1948, which arranged

for payments to parents for all children under the age of sixteen

and resident in Finland, regardless of the wealth or nationality of

the parents. By the mid-1980s, payments for the first child were

a little more than Fmk2,000 a year, with payments increasing to Fmk4,800 for the fifth and additional children. Another payment

of about Fmk1,200 was made for children under the age of three. Child-care allowances had been paid since the 1970s to those parents who stayed at home to care for small children or who had en- gaged someone else to do so. A child maintenance allowance of

as much as approximately Fmk400 a month was paid when a court- ordered maintenance payment for a child of divorced parents was

not being paid. A maternity benefit, based on legislation of the

1930s, was paid for each pregnancy. It came either as a grant of

about FmkSOO or as a much more valuable set of materials needed

to tend a child. It was withheld if the mother did not visit a clinic by the fifth month of pregnancy.

Welfare Services In addition to the above measures that involved financial payments to achieve social ends, the system of social care provided

welfare services. By the mid-1980s, some 90,000 state and local employees were using about 5 percent of Finland's gross national

product (GNP—see Glossary) to deliver a wide variety of social

services under the overall direction of the Ministry of Social Affairs

and Health. The expansion of the welfare system in the 1960s and

the 1970s had caused the number of social workers roughly to tri- ple between 1970 and 1985. Since 1981 workers entering the field had been required to have university training.

National government subsidies of from 30 to 60 percent of costs had the goal of making social services uniform throughout the country, so that residents of even the most isolated community had the same range of services as were offered in Helsinki, though this aim was not always met. Social services were usually free, and they

125
Finland: A Country Study

were available to anyone who wanted them, irrespective of the

recipient's income. Information furnished to social workers was

confidential and could not be released, even to another government agency. The ultimate aim of welfare services was to increase

the quality of life and the independence of the client so that welfare services were no longer needed.

The Social Welfare Act of 1982 replaced some older laws; it charged local government with providing such social services as general and family counseling and with making housing available

to those needing it, most notably the aged and the infirm, trou- bled youth, and alcoholics. The law detailed local responsibilities

for assigning specialists to assist persons living at home but no longer

fully able to take care of themselves and for maintaining institu- tions for persons, be they aged, mentally handicapped, or addicted, whose afflictions were so serious that they could no longer live at home.

Child-Care Services

A law with far-reaching effects was the 1973 Child Day Care

Act, which stipulated that all local governments were to provide

good child day care for all families that desired it. The care for children up to seven years of age could be given either in day-care

centers, sometimes private but generally run by local governments,

or by accredited baby-sitters, either at the child's home or outside

it. Although the number of places for day care had more than doubled to 100,000 by the mid-1980s, it would have had to double

again to meet total needs. A 1985 law set the goal of being able

to allow, by 1990, all parents of children up to the age of three

the choice between home-care payments or a place for their child

in a day-care center. One parent could also take unpaid employment leave until the child's third birthday. The Child Welfare Act

of 1983 enjoined local governments to look after children, and it empowered them to take a variety of measures if a child was being

seriously neglected or abused. In the mid-1980s, about 2 percent

of Finnish children were affected by this law. Another 1983 law

made the corporal punishment of children illegal, as it was in the

other Nordic countries.

Services for the Disabled

The Welfare of the Disabled Act of 1946 set the responsibilities for treatment of the physically handicapped. The institutions that

offered housing, occupational training, sheltered working environments, and physical rehabilitation were overseen by the National

Board of Social Welfare, while about a score of schools for

126
View of Turku (Abo), Finland's third largest city, with the Aura River

in the foreground; in the background, Turku Cathedral

Courtesy Embassy of Finland, Washington

127
Finland: A Country Study

handicapped children unable to attend ordinary schools was

supervised by the National Board of Schools. Special equipment,

like prostheses, was supplied at no cost, as were such services as the adaptation of living areas. In the late 1980s, there were some

30,000 mentally handicapped Finns, 10,000 of whom received welfare ranging from living accommodations in an institution to daycenter care or jobs in sheltered workshops. There were not enough

places to accommodate gJl the mentally disabled properly, so some

were placed in private homes or in retirement homes.

Services for Substance Abusers

The Welfare for Intoxicant Abusers Act of 1985 dealt mainly

with alcoholism, as it was the only serious problem of substance

abuse in Finland in the late 1980s. Finnish society had traditionally

not seen alcohol as a part of daily life, but rather as something con- sumed on special occasions and then to the point of intoxication.

Medical evidence of this harmful habit was that the Finnish inci- dence of death by acute alcohol poisoning was seven times that of

Sweden and twenty times that of Denmark. Because of its trou- bled relationship with alcohol, the country enforced prohibition from

1919 to 1931. A later measure against alcohol consumption was

a 1976 law that banned liquor advertisements in most publications.

Another measure increased the cost of alcohol by taixing it heavily,

so much so that by the mid-1980s liquor taxes were an important

source of state revenues. In the 1980s, there were still many abstainers in Finland who

had moral objections to alcohol use, in contrast to the small minority

of drinkers who accounted for more than half of total national con- sumption. In the late 1960s, a relaxation of the rules for the purchase of alcohol had as its goal a lessening of drink's glamorous

appeal because it was, in a sense, forbidden. This policy may have

backfired when sales of beer in grocery stores and the availability of hard liquor at more restaurants caused alcohol consumption

to more than double within a decade. Since the mid-1970s, however,

analysts of Finnish alcohol use have seen consumption rates level

off and drinking habits become more moderate. Although the number of abstainers had dropped sharply in the postwar

period, causing some sociologists to refer to Finns who became

adults in the 1950s and the 1960s as ''the wet generation," alco- hol was gradually coming to take a more ordinary place in everyday life. The Ministry of Social Affairs and Health had a special department concerned with substance abuse, the Department of Temperance and Alcohol Policy, that formulated welfare plans and

128
The Society and Its Environment

directed the State Alcohol Monopoly responsible for the manufacture, importation, and sale of alcohol. Local authorities provided

a variety of facilities for alcoholics—including clinics, half-way

houses, and emergency housing open twenty-four hours a day that

offered withdrawal treatments. When necessary, alcoholics could

be confined against their will, but this practice was less common

in the late 1980s than it had been previously. State welfare was

supplemented by private and voluntary associations, such as Alcoholics Anonymous.

Health System

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 (see table 11, Appendix A). The passage of the Sickness Insurance Act in 1963 and fre- quent 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

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Finland: A Country Study

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 poli- cy, 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 per- cent 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 in the mid-1980s, the

world's best at 6.5 deaths per 1,000 births.

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The Society and Its Environment

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 (see table 12, Appendix A). The mortality

rate from cardiovascular diseases was among the world's highest

for both sexes, but it was especially high for middle-aged msiles. 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), al- though health officials believed there might be as many as 500 HIVpositive cases in cdl 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

131
Finland: A Country Study

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 iUnesses. 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.

Living Conditions

By the 1980s, Finland enjoyed one of the highest living stan- dards in the world. It ranked eighth in the world with regard to per capita GDP, just behind the Federal Republic of Germany

(West Germany) and slightly ahead of Canada. When measured

against other countries, it almost invariably ranked among the

world's best, whether economic, social, medical, educational, or

political criteria were being applied. Finns were as surprised as they were pleased by this excellence, because for much of its history Finland had been poor and backward. Evidence of this could be found

132
View of Tapiola, a planned community outside of Helsinki

Courtesy Embassy of Finland, Washington

in the national anthem, which declared that Finland would always

be poor.

However weahhy Finland had become since the 1960s, observers noted some shortcomings. In addition to the problem of rela- tively high mortality and the need for a more comprehensive

child-care system, Finland faced serious environmental issues. Another long-standing problem was the standard of housing.

Although improvements had occurred since the 1950s, thirty years

later Finns were still not so well housed as their Nordic neighbors.

Protection of the Environment

Although Finland had a very low population density and was famed for its many areas of nearly untouched nature, it had not

been spared environmental pollution. Some of this came from neighboring countries, such as the dose of radiation it received after the

accident at the Chernobyl Nuclear Power Plant in the Soviet Union in 1985. In this case, there was little damage because the radiation fell too far south to harm reindeer herds and fell too early

to contaminate grasses and vegetables that have a late growing sea- son because of Finland's long winter.

Domestic sources also contributed significantly to the country's

problems with environmental pollution. The exceptionally strong

growth rate of an economy based to a considerable degree on

133
Finland: A Country Study

energy-intensive industries was a factor, as were the fertilizer- dependent agricultural sector and the wood-processing plants that,

between them, contributed much to the pollution of Finnish rivers

and groundwater. By the 1980s, Finland registered considerably

higher sulfur and nitrogen emissions than other West European

and Nordic countries, and its discharge of oxidizable matter into

water was three times the average of the members of the Organisation for Economic Co-operation and Development (OECD

see Glossary).

Finnish efforts to protect the environment began in the 1920s

with the Nature Conservation Act of 1923, which allowed the

establishment of nature preserves if they were needed. Since then

there have been many laws covering different aspects of environmental protection, including water purity, control of poisons and

pesticides, establishment of an oil pollution fund, waste management, prevention of marine and air pollution, and reduction of

noise.

An attempt to protect the environment more thoroughly was evi- dent in the formation of a ministry specifically pledged to this task. Established in 1983, the Ministry of Environment had four departments, employing about 250 persons in all. One department dealt

with administrative matters, while the other three were concerned

with environmental protection and nature conservation, physical

planning and building, and housing. In 1986 the National Board

of Waters with its 1 ,400 employees was renamed the National Board

of Waters and the Environment and was placed under the new

ministry.

In the mid- 1 980s, Finns were concerned about the environment,

and a study found that only 1 1 percent of them would place eco- nomic growth above protection of the environment. Many believed

ecological conditions were worsening. A 1983 poll found that only

31 percent of those questioned—compared with 57 percent in

1973 —believed their country's environment to be very good or

excellent. Another indication of Finns' concerns was the birth in

the early 1980s of a new political party, the Greens, which was

remarkably successful in elections (see Smaller Parties and the

Greens, ch. 4). Commitment to pollution control also was seen in

the portion of research money going to environmental research,

which compared well with that spent by other countries. Despite

these measures, there were observers in the late 1980s who con- tended that Finnish efforts in this area needed further improvement.

An OECD study published in 1988 held that, despite improvements, Finland still did not have an adequate environmental program. There was still no single law relating to the environment.

134
The Society and Its Environment

and different ministries often did not consult sufficiently with one

another about the ecological impact of their plans. Despite the

existence of excellent statistics about damage to the environment,

decision makers were often not well informed about them. Also

lacking, according to the OECD report, was a sufficient assess- ment, when making plans for economic development, of the real costs of pollution. Recommended for a more economical defense

of the environment were an exact consideration of these costs and

an increased use of the "polluter pays" and "user fees" principles. The report noted, too, that many local authorities lacked the

expertise to deal properly with ecological decisions; moreover, be- cause they were suspicious of the power of provincial-level and

national-level officials, they were reluctant to cooperate fully with

them.

Housing

As part of its overcdl responsibility to supervise the nation's

environment, the Ministry of Environment was charged with over- seeing 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 specificsdly 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.

135
Finland: A Country Study

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 aver- age 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 onehalf 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

136
The Society and Its Environment

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, generciUy not yet able to purchase their

own homes.

* * * At the end of the 1980s, there was no single scholarly work in

English that treated Finnish society as a whole. A number of British works from the 1960s and the 1970s treat many aspects of Finnish society, but they are out of date, and they vary considerably

in quality. Of these books, the most readily available and useful

is Finland: An Introduction, edited by Sylvie Nickels and others. The

1973 version of this work is available in an edition published in

the United States. Patricia Slade Lander's In the Shadow of the Factory: Social Change in a Finnish Community is valuable, but it relies on fieldwork done in the late 1960s and the early 1970s. A noted

student of Finland is the geographer William Richard Mead, whose

books Finland, How People Live in Finland (written for children). The

Aland Islands (written with S. H. Jaatinen), and Winter in Finland:

A Study of Human Geography (written with Helmer Smeds) all contain much useful information. Wendy Hall's The Finns and Their

Country and John L. Irwin's The Finns and the Lapps are intelligent

and popular treatments of Finnish life. Readers with Swedish could consult Samhdllet Finland, an essay- length work dating from 1985, by Finland's renowned sociologist,

Erik Allardt. This brief survey of the developments that have trans- formed Finnish society in the twentieth century will give the reader an understanding of Finland as it was in the 1980s. A festschrift in his honor. Small States in Comparative Perspective: Essays for Erik

Allardt, contains articles by leading specialists on topics such as the

family in the Nordic countries, the premature mortality of Finnish males, social mobility, and the establishment of Finland's welfare system. This last subject is treated at greater length by Matti

Alestalo and Hannu Uusitalo in their detailed and sophisticated

article appearing in the first volume of the series Growth to Limits:

The Western European Welfare States Since World War II, edited by Peter

Flora. Matti Alestalo' s Structural Change, Classes and the State: Finland in an Historical and Comparative Perspective provides a learned

137
Finland: A Country Study

exposition of the country's class structure. Nordic Democracy, edit- ed by Erik Allardt and others, treats Nordic Europe as a whole,

but it contains much information about Finnish society. The

detailed bibliographies accompanying these scholarly works will guide the curious reader further.

Brochures and pamphlets published by the Finnish government

in English are available from Finnish embassies around the world.

These publications are quite informative about the welfare and the

education systems, the role of women, and other aspects of Finnish society.

Encyclopedic in its coverage of Finland is the series of atlases published by the Finnish government's National Board of Survey.

The series' excellent maps graphically convey astonishingly detailed

data about many aspects of Finnish society, and they are complemented by expert articles. English translations of the articles appearing in some of the atlases are available. (For further information and complete citations, see Bibliography.)

138
Chapter 3. The Economy
Finnish ice-breaker at work
FINLAND'S ECONOMY PERFORMED WELL during the

1980s, allowing the Finns to enjoy widespread prosperity. After

suffering the effects of depression and war during the 1930s and

the 1940s, the economy started to show steady gains in about 1950.

During the 1980s, the country enjoyed above-average growth, stable prices, and relatively low unemployment. Nevertheless, Finland

did experience many of the problems found elsewhere in the in- dustrial world, including high unemployment among youth,

expensive agricultural surpluses, and declining industrial sectors. Moreover, certain aspects of the country's economic performance,

such as serious cyclical instability, endemic industrial conflict, and

difficulties in foreign trade, may have troubled Finland more than

such situations disturbed other countries. Despite these problems,

which required attention from policy makers and from businessmen, economists could point with pride to Finland's strong work

ethic and pragmatic tradition.

In a country lacking many raw materials, the tenacious Finns

had learned to make the most of scarce natural resources. Although

most of the country was not arable, farmers worked hard to keep

the country self-sufficient in staple foods. The country's forests,

carefully managed to increase long-term yield, provided raw materials for the wood-processing industries, the largest earner of for- eign exchange. Metals and minerals were scarce, but the country

had established competitive enterprises in basic metals and in chemicals. The metalworking industry, developed largely to meet reparations payments to the Soviet Union, continued to expand during

the postwar period. This industry specialized in sophisticated

products, such as icebreakers and paper-making machinery, in

which the Finns enjoyed a comparative advantage. Faced with a

serious energy shortage after the oil crisis of 1973, the Finns

embarked on a comprehensive conservation program and shift- ed investments toward less energy-intensive, high-technology

products.

Effective policies deserved much of the credit for the country's

economic successes. In the early years of the republic, the government had carried out extensive land reforms, a precondition for agricultural modernization. State-owned enterprises channeled

investments into key industries, allowing the country to process

its own raw materials. The crises of the depression, war, and reconstruction led to government controls that provided an essential

141
Finland: A Country Study

framework for production. By the late 1950s, once wartime bottlenecks had been eliminated, the government chose to pursue trade

liberalization and deregulation. Following this basic orientation,

Finland's leaders agreed to free trade in industrial products, thus

forcing the country's industries to compete and to modernize. By

the late 1970s, macroeconomic policies gave priority to fighting

inflation and to dampening cyclical instability. During the 1980s,

government policies pursued export competitiveness, in part

through favoring industrial rationalization and financial deregulation. By the mid-1980s, some economists saw Finland as the most

capitalist country in Europe.

To pay for needed imports, the Finns depended on export markets in Western and in Eastern Europe. To protect those markets,

Finland had pursued economic integration with both Eastern and

Western Europe. The Finns maintained good commercial relations

with the Soviet Union, a strategy that had paid off handsomely

in the 1970s, when rising petroleum prices increased the value of

trade with the East, compensating Finland for declines in Western

markets. After the mid-1980s, however, as world oil prices declined,

the Finns shifted toward the West, especiadly toward the Europe- an Community (EC—see Glossary). Although balancing close eco- nomic relations with both market-oriented and planned economies

posed special challenges, Finnish traders proved adept in both

environments. In the late 1980s, industry and finance sought to build on earlier successes by internationalizing their operations,

often in partnership with foreign firms.

In the late 1980s, the most important economic challenge was

to keep both production costs and product quality competitive in

international markets. This challenge would require hard work,

as well as close cooperation among government, business, and labor. The government, industry, and the universities needed to increase

spending on research and the development of new technologies.

The Finns would also have to limit inflationary wage increases and

improve labor flexibility without worsening labor conflict. Many

economists believed, however, that the prevailing consensus in favor

of modernization and stable, steady growth was strong enough to allow the country to face the future with optimism.

Growth and Structure of 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

142
The Economy

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 econ- omy 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 cind 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 (see

Independence and the Interwar Era, 1917-39, ch. 1). 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

143
Finland: A Country Study

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 fur- ther 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 industri2d products sold to Finland.

Consequendy, 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 per- cent 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 (see World War II, 1939-45, ch. 1). Postwar reconstruction proved difficult. Resetding 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

144
The Economy

inherited from the war years fed labor miUtancy, 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 met2dworking 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 con- sumer 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

see Glossary) 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—see Glossary). 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—see Glossary). Finland's structural trans- formation 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 dis- placed 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 eco- nomic 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 eco- nomic developments. The achievement of prosperity in the 1960s

145
Finland: A Country Study

made possible the extension of the welfare state, a development

that did much to reduce tensions between workers and management (see Finland in the Era of Consensus, 1966-81, ch. 1). 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 (see Human Resources, this ch.). The political consensus that developed around incomes settlements helped to slow in- flation and to increase productivity. Liberalization, welfare

programs, and incomes policy thus helped to maintain economic

growth during the 1960s and facilitated stronger economic rela- tions 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 (see Role of Government,

this ch.).

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.

146
The Economy

During the 1980s, structural developments in the Finnish econ- omy paradleled those in other West European economies. Although

surplus production of ainimail products plagued agriculture and led

to cutbacks in agricultural subsidies, the country preserved family

farming. Policy makers continued to monitor forestry, energy, and

minerad resources closely, even when falling petroleum prices

reduced pressures on the economy. Industry underwent intensive

restructuring, eliminating many inefficient producers and consolidating he2dthy enterprises. Despite mergers and rationalization,

Finland lost fewer industrial jobs than most OECD countries, so that unemployment was held below the double-digit levels com- mon 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 (see fig. 14; fig. 15; table 13, Appendix A). By 1986 agriculture, forestry, and fishing

had fallen to a little under 8 percent of GDP from nearly 26 per- cent 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, trans- portation, 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 restruc- turing of the 1980s. Thus, by 1987 three firms controlled most shipbuilding, a small number of woodworking enterprises dominated

147
Finland: A Country Study
The Economy
Finland: A Country Study

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 eco- nomic 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. 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 car- ried out crucial agricultural reforms and established pioneering

industrial enterprises. During World War II, the government imposed comprehensive economic controls to support the defense ef- fort, many of which remained in force during the reconstruction

years. Starting in the 1950s, however, as economic growth over- came 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

150
The Economy

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 (see Growth

of the Social Welfare System, ch. 2). 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 (see Human

Resources, this ch.). Along the same lines, Finl2ind 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,

2ilso 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 (see Agriculture, this ch.). 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 per- cent 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

151
Finland: A Country Study

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 rel- ics 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 Eind 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 (see Industrial Policy, this ch.).

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 (see Banking and

Finance, this ch.). 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.

Macroeconomic Policy

During the 1960s and 1970s, government policy had pursued

rapid economic growth and high investment in industry, often to the detriment of price stability. By the mid-1960s, the government,

generally in concert with the BOF, which controlled monetary and

exchange-rate policy, established a macroeconomic approach with

fixed roles for monetary, fiscal, incomes, and exchange-rate policies. In general, monetary policy aimed at keeping interest rates low to favor domestic investment. The BOF imposed strict controls on capital exports, which made possible negative real interest

rates, 2ind rationed credit to the commercial banks, which controlled

most investment. The perceived need to balance budgets, usually

annually, handicapped fiscal policy. The government used incomes

policy to influence wage settlements, often offering tax breaks in

exchange for concessions from management and labor, but incomes

policy was rarely coordinated with the general macroeconomic

strategy. Exchange-rate policy was dedicated to safeguarding

industrial competitiveness.

Although this policy package favored growth, high employment,

and industrial development, the economy suffered from greater

152
The Economy

inflation and instability than those of other OECD countries. PubUc

spending remained under firm control, but low interest rates and

tax cuts fueled domestic inflation. At roughly ten-year intervals,

Finland experienced export-led booms followed by major devaluations and severe recessions. Fluctuations in world demand for Finnish exports were largely responsible for the cycles, but economic

policies magnified them. Typically, a period of overheating in the

economy, occasioned by an upswing in exports and by the rela- tively inelastic supply of exportable commodities, led to sharp

increases in wages and prices in the export sector as well as to greater

imports of investment goods. Faced with declining export competitiveness and a worsening external balance, the authorities responded

with major currency devaluations (24 percent in 1967; 10 percent

in 1977-78) and with tighter macroeconomic policies, which dampened domestic demand but restored competitiveness. Output re- covered following each devaluation, only to decline as domestic

inflation rocketed higher, further eroding competitiveness in exter- nal markets.

Although Finland mamaged to avoid restructuring traditional poli- cies until several years after the 1973 oil crisis, an especially severe downturn in the second half of the 1970s, caused largely by reces- sion in West European markets, inspired a new policy approach.

Starting in 1977, with the adoption of a five-year stabilization program, the government began to give priority to fighting inflation

and to overcoming the devaluation cycle, even at the cost of higher

unemployment and slower growth in the short run. The new macroeconomic framework involved changing the tradi- tional assignments for each policy tool. Perhaps the most important innovation was a more active role for fiscal policy. Given the

low level of Finnish state debt, policy makers stopped requiring

that the budget balance each year, and they aimed instead for a balanced budget over the life of the business cycle. Fiscal policy

became consciously countercyclicad, and increased spending during the 1982-83 slowdown was followed by tax increases in the

1984-85 upswing. In addition, the authorities adjusted tax rates not only to moderate wage demands but also to affect investments

and export competitiveness. The implementation of monetary policy

shifted from offering negative interest rates in a protected capital

market to using interest rates to dampen inflation and to influence

the exchange rate. Monetary policy came to depend even more

on market operations by the mid-1980s, as deregulation of financial markets eliminated the earlier system of capital rationing. The

tighter monetary stance tended to reduce the volume of investment,

but economists expected that the quality of investments would

153
Finland: A Country Study

improve. After 1977 the BOF attempted to peg the external value

of the Finnish mark to a trade-weighted "basket" of foreign currencies. The new exchange-rate policy was meant to curtail both

domestic and imported inflation. Indeed, in 1979 and 1980, the

currency was allowed to appreciate for the first time in the post- war period in response to greater export demand. Policy makers

hoped that the stable exchange rate would eliminate distortions

caused by an undervalued or overvalued currency and would allow

market conditions to determine investment decisions.

The new approach to managing the economy still depended on

negotiated incomes settlements to restrain wage growth and to dampen inflation. The government continued to try to influence

agreements between capital and labor by means of fiscal or other

incentives. Implementing such sophisticated policies required

extensive coordination and cooperation among government

ministers belonging to different parties, the BOF, and leaders in

agriculture, industry, and labor. Although differences among

interest groups continued to exist and sometimes resulted in seri- ous conflicts, the country enjoyed widespread consensus regarding the desirability of medium-term stabilization. It was this consensus—and the macroeconomic policies it made possible

that deserved much of the credit for Finland's relatively strong eco- nomic growth, low unemployment, and price stability.

Public Finance

As of 1987, public-sector spending amounted to about 42 per- cent 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 (see table 14, Appendix A). 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 rela- tively 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 fis- cal 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 over2ill 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.

154
The Economy

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 public-sector 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 significandy during the post- war 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

155
Finland: A Country Study

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, sUghtly 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 an2ilysts believed

it was unlikely that Finland's state debt would seriously constrain

government operations during the late 1980s and early 1990s.

Human Resources

Finland's work force was the country's most valuable economic

asset; managing it posed the greatest challenges to both business

and government. Like most European countries, Finland suffered

from unemployment, but employers reported difficulties in finding qualified workers. Although the country boasted a consensual

approach to industrial relations, strikes often interrupted production. Likewise, Finland's workers enjoyed a high standard of liv- ing, but regular wage increases contributed to domestic inflation,

worsened unemployment, and exacerbated balance-of-payments

difficulties. Business often granted seemingly excessive wage

increases, yet alienated workers through adamant opposition to increased democracy in the workplace. Government policies addressed labor problems with only limited success. Employment

In 1 986 the civilian labor force numbered a little more than 2 .

5

million, of which about 5.4 percent were unemployed (see table

15, 1950-85, Appendix A). Less than 1 1 percent of the work force

worked in agriculture and forestry (down from over 45 percent in

1950). Employment in industry and construction cimounted to about

32 percent, while the service sector employed a little over 57 percent. Finland's employment structure resembled that of other European countries, except that agricultural employment was still higher than the West European average, and industrial employment had fallen more slowly in Finland after the 1973 oil crisis than

it had elsewhere. Economists suggested that both phenomena

reflected Finland's relatively late industrialization and that the country could expect further declines in the employment shares of

agriculture and industry.

156
The Economy

As in most European countries, general unemployment became

a serious problem during the 1970s, rising from about 1.8 percent

in 1974 to an average of about 5.7 percent between 1980 and 1986.

Official statistics showed that unemployment had fallen to 5.5 per- cent for the first half of 1987, but this figure had resulted from

redefining unemployed workers over 55 years of age as retired. The

number of unemployed persons actually had barely changed

between 1986 and 1987. Despite economic growth, during the early

1980s total demand for labor stagnated, but the working-age population increased by an average of 1 .2 percent each year. Economists

estimated that real GDP would need to rise by over 3 percent per

year in the late 1980s and early 1990s just to keep up with the growing work force. While unemployment was less severe in Finland than it was in

most European countries, policy makers considered the job shortage to be the country's main economic problem. Young people

suffered most from the rise in unemployment. In the late 1980s,

the unemployment rate for people between the ages of fifteen and

twenty-four was almost twice the overall average. The aging of the

population would tend to reduce the youth unemployment rate in

the 1990s, but observers predicted that the total population of

working-age persons would continue to rise for at least a decade

and that unemployment would be a serious problem.

Although many workers could not find jobs, some employers

reported difficulties in finding skilled industrial workers; in particular, construction and service workers were hard to find in the

booming Helsinki area. Although certain skills might be in short

supply, the work force genersdly was competent and hardworking.

Indeed, during the postwar years, the number of Finns with vocational training had increased fourfold, and the number of university graduates had increased fivefold (see Education, ch. 2). The

graduates of Finland's management schools were well prepared to meet the challenges posed by an increasingly international busi- ness environment. Some managers argued that young Finns showed more initiative on the job than their parents.

The government tried to cope with unemployment, focusing on

youth joblessness. Aside from expanding public employment, generally seen as a stopgap, state efforts included retraining programs

for unemployed workers, advanced vocational training, travel and

resettlement allowances, and subsidies for housing in areas with

labor shortages. A particularly effective mechanism was the nationwide employment exchange, which brought together people seeking employment with potential employers. In the long run, however,

such measures could only serve as palliatives. Analysts believed

157
Finland: A Country Study

that the state could best increase employment by following sound

macroeconomic policies and by facilitating cooperation among the

organizations representing labor and management.

Industrial Relations

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 (see Interest Groups, ch. 4).

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 Tyonantajain

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 re- straint 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 professioneds were usually negotiated after set- tlements in industry, as were settlements concerning prices paid

for agricultural commodities and lumber. In this way, wages in

158
The Economy

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 sadaried 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 whitecollar 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, fur- ther 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 con- tinued 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, illegad work stoppages occurred

regularly, often involving small, but well-placed, groups of workers. In 1986, for example, air traffic controllers shut down the

159
Finland: A Country Study

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. Agriculture^ Forestry^ and Fisheries

The Finns traditionally earned their living from the produce of

their soils and waters. Even though by the 1980s Finland had long

been an industrial country, many Finns continued to see the hardworking farmer as an upright figure whose way of life should be

preserved so the country would not lose contact with its rural roots. Agriculture, forestry, and fisheries had shrunk to less than 10 per- cent of GDP by the late 1980s, but these sectors remained crucial

for the country's economic security. Although only 8 percent of

its territory was arable, the country had been self-sufficient in basic

foodstuffs since the 1960s—indeed, surpluses of dairy products and

meat caused serious difficulties in the 1970s and the 1980s. Seventysix percent of the country was covered by forests, which supplied

the country's most important raw material—lumber. Agriculture

and forestry had long been closely linked: most farms included for- estland, and most farmers supplemented their earnings by selling

lumber or by working in the forest industries during the winter.

Although rivers and l2Lkes covered about 9 percent of Finland, and

the country had extensive coastal waters, fishing was not an important source of food or employment.

The Ministry of Agriculture and Forestry was responsible for

policies dealing with agriculture, forestry, and fishing. Recognizing the close links among these sectors, the government considered

that policies should offer integrated solutions to the problems of

managing the country's resources. Agriculture

Finland's climate and soils make growing crops a particular

challenge. The country lies between 60° and 70° north latitude—as

far north as Alaska—and has severe winters and relatively short

growing seasons that are sometimes interrupted by frosts. However,

because the Gulf Stream and the North Atlantic Drift Current

moderate the climate, Finland contains half of the world's arable

land north of 60° north latitude. Although precipitation is fairly

well distributed throughout the year, summer droughts pose occasional problems. In response to the climate, farmers have relied on quick-ripening and frost-resistant varieties of crops, and they

have cultivated south-facing slopes as well as richer bottomlands

to ensure production even in years with summer frosts. Most farmland had originally been either forest or swamp, and the soil

160
Gathering hay on a small farm in Urjala in the province of Hdme

Courtesy Embassy of Finland, Washington

had usu2illy required treatment with Hme and years of cultivation

to neutralize excess acid and to develop fertility. Irrigation was

generally not necessary, but drainage systems were often needed

to remove excess water. Until the late nineteenth century, Finland's isolation required

that most farmers concentrate on producing grains to meet the country's basic food needs. In the fall, farmers planted rye; in the spring,

southern and central farmers started oats, while northern farmers

seeded barley. Farms also grew sm2ill quantities of potatoes, other

root crops, and legumes. Nevertheless, the totail area under culti- vation was still small. Cattle grazed in the summer and consumed

hay in the winter. Essentially self-sufficient, Finland engaged in

very limited agricultural trade.

This traditional, almost autarkic, production pattern shifted

sharply during the late nineteenth century, when inexpensive imported grain from Russia and the United States competed effectively with local grain. At the Scime time, rising domestic and foreign

demand for dairy products and the availability of low-cost imported

cattle feed made dairy and meat production much more profitable. These changes in market conditions induced Finland's farmers

to switch from growing staple grains to producing meat and dairy

products, setting a pattern that persisted into the late 1980s. In response to the agricultural depression of the 1930s, the

161
Finland: A Country Study

government encouraged domestic production by imposing tariffs on agricultural imports. This policy enjoyed some success: the total area under cultivation increased, and farm incomes fell less sharply in Finland than in most other countries. Barriers to grain imports

stimulated a return to mixed farming, and by 1938 Finland's farmers were able to meet roughly 90 percent of the domestic demand

for grain.

The disruptions caused by the Winter War and the Continuation War caused further food shortages, especially when Finland

ceded territory, including about one-tenth of its farmland, to the

Soviet Union (see The Winter War and The Continuation War,

ch. 1). The experiences of the depression and the war years per- suaded the Finns to secure independent food supplies to prevent

shortages in future conflicts. After the war, the first challenge was to resettle displaced farmers. Most refugee farmers were given farms that included some

buildings and land that had already been in production, but some

had to make do with "cold farms," that is, land not in production

that usually had to be cleared or drained before crops could be sown. The government sponsored large-scale clearing and draining operations that expanded the area suitable for farming. As a result of

the resettlement and land-clearing programs, the area under cul- tivation expanded by about 450,000 hectares, reaching about 2.4

million hectares by the early 1960s. Finland thus came to farm more

land than ever before, an unusual development in a country that was simultaneously experiencing rapid industrial growth.

During this period of expansion, farmers introduced modern

production practices. The widespread use of modern inputs

chemical fertilizers and insecticides, agricultural machinery, and

improved seed varieties—sharply improved crop yields. Yet the

modernization process again made farm production dependent on

supplies from abroad, this time on imports of petroleum and fertilizers. By 1984 domestic sources of energy covered only about

20 percent of farm needs, while in 1950 domestic sources had supplied 70 percent of them. In the aftermath of the oil price increases

of the early 1970s, farmers began to return to local energy sources such as firewood. The existence of many farms that were too small

to allow efficient use of tractors also limited mechanization. Another

weak point was the existence of many fields with open drainage

ditches needing regular maintenance; in the mid-1980s, experts

estimated that half of the cropland needed improved drainage works.

At that time, about 1 million hectares had underground drainage,

and agricultural authorities planned to help install such works on

another million hectares. Despite these shortcomings, Finland's

162
The Economy

agriculture was efficient and productive—at least when compared

with farming in other European countries.

Farms and Farmers

Finland's agriculture was based on privately owned family farms.

This was especially the case after 1922, when the republic, anxious to reduce rural discontent, implemented the first of a series of land reforms that redistributed land to tenants and to landless

farm workers (see The Establishment of Finnish Democracy,

ch. 1; Domestic Developments and Foreign Politics, 1948-66,

ch. 1). After World War II, the government resettled some 40,000

farm families displaced from areas occupied by the Soviet Union.

The postwar resettlement program also transferred land to farms

considered too small for efficient operations, many of which had

been set up in the interwar period.

As a result of the resettlement program, Finland was one of the

few industrialized countries in which the number of farms increased

after 1945; by 1950 there were about 260,000 farms. The number

of farms started to decline in the 1960s, however, falling to about

200,000 by 1981 . The decrease in the number of farms caused an

increase in average farm size, but large farms still remained rare. Thus, in the mid-1980s, about 60 percent of farms covered less than ten hectares, 25 percent included between ten and twenty hectares, and only 15 percent occupied more than twenty hectares.

At that time, both large and small farms were disappearing, leaving an increasing number of farms that were between ten and twenty

hectares. Observers predicted that this trend was likely to continue.

In the late 1980s, the average farm comprised twelve hectares

of arable land and thirty-five hectares of forest. The relative proportions of field holdings to forest holdings varied from region to region;

in the south, farmers tended to own more arable land but less forest,

while in the north, the reverse was true. Farm families formed the

basic production unit. Family members provided about 95 percent

of farm labor; wage earners supplied the remainder. Most farms

specialized in one or two activities, such as hog production, dairy

farming, or grain cultivation. Although in the early postwar years

most farms produced some milk, by the early 1980s only one out

of three farms did so, and about half of all farms had no farm

animals. This tendency toward specialization increased the effi- ciency of Finland's relatively small production units.

Farm incomes lagged behind those of the total population. For

example, according to a 1984 study, the average income of full- time farmers totaled only 70 percent of that of industrial workers.

Nevertheless, income disparities between agriculture and other

163
Finland: A Country Study

sectors were probably less severe than these figures indicate because

many farm families supplemented their incomes with earnings from

forestry and other occupations. In the mid-1980s, only 62 percent

of farmers' incomes came from agriculture, while another 26 per- cent was derived from wages and 12 percent was earned from

forestry.

Farmers had a strong tradition of practical and political cooperation. In the late 1980s, some 90 percent of Finnish farmers

belonged to agricultural unions, which were divided between those

for Finnish speakers and those for Swedish speakers. More than

330,000 union members belonged to 430 Finnish-language locals or to 80 Swedish-language loccJs. Founded in 1917, the Confederation of Agricultural Producers (Maataloustuottajain Keskusliitto —MTK) served as an umbrella organization for agricultural

unions, and it represented farmers in agricultural price negotiations with the government and with other producer groups.

In addition to joining unions that helped influence farm poUcy,

farmers had established cooperative associations that provided farm

supplies, shared marketing expenses, and arranged farm financing. The umbrella organization of farm cooperatives was the

Pellervo Society, which had more than a million members. Each

branch of agriculture organized its own cooperatives to handle sales of farm products and purchases of supplies. Cooperative banks

provided about half of aU money used to finance farming, and

cooperative insurance associations handled farm and crop insurance.

Agricultural Policy

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 set- tlements in the sparsely populated northern provinces led to heavy

subsidies for farmers in those regions. Other goals included stabiliz- ing retail food prices and increasing farm size and efficiency.

In the late 1980s, agricultural policy made involved trade-offs

among these partially contradictory objectives. For national security reasons, the government gave priority to ensuring self- sufficiency in basic foodstuffs. But self-sufficiency, like other farmpolicy 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

164
The Economy

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 sur- pluses 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 agricul- tural 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 maike a signifi- cant 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 agree- ments, and they were based on estimated hourly wages in agricul- ture (see Human Resources, this ch.). 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 setdement 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

165
Finland: A Country Study

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 sys- tem 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 re- mained 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 facili- tated maternity leaves and even annual vacations.

Farmer training programs, crop research, and extension ser- vices 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.

166
The Economy

Farm Production Patterns

During most of the twentieth century, Finnish farmers have

favored raising animals over growing plants for human consumption. These preferences resulted in part from the country's cUmate

and soils, which were more suitable for the production of feed for animsds than for the production of crops for human consumption.

The small size of many farms also encouraged the emphasis on

milk, eggs, and meat; only on a large farm could a family earn

sufficient income from less labor-intensive field crops. Thus, in the

late 1980s, about 40 percent of farm income came from milk; 30

percent, from meat; 9 percent, from grain; 5 percent, from eggs;

and 16 percent, from other products (see table 16, Appendix A).

Regional ecological variations influenced the distribution of

agricultural production (see fig. 16). In the southern and western

parts of the country, where the climate is more favorable and soils are richer, farmers generally produced grain, poultry, and pigs,

while in the north and the east they specialized in hardier root crops

and in dairying. It was in the north, too, that the country's 200,000

reindeer, one-third of which were owned by Lapps, were raised.

In the late 1980s, cattle operations remained the mainstay of

farming, but Finland's farmers also raised pigs, poultry, and other

animals. Most pigs were raised on relatively large, specialized farms.

Poultry production increased after the mid-1960s to accommodate

an increased demand for meat. A more recent development, a response to the oversupply of traditional animal products, was a

shift to fur farming. By the mid-1980s, about 6,000 farms, especially those in Vaasa Province along the coast of the Gulf of Bothnia, were producing a substantial share of the world's mink and

fox furs (see fig.l). The Finns exported most furs, but some were

used domestically in luxury clothing.

About 85 percent of Finland's arable land supplied feed for farm

animals. Farmers dedicated more than 30 percent of their land to hay, silage crops, and pasture (see table 17, Appendix A). Grains,

the most important field crop, took up slightly more than half the

country's arable land. The most widely planted grain crops—barley

and oats—were used primarily to feed livestock. Rutabagas and

mangels, particularly hardy root crops, also served as animal feed. Despite the emphasis on producing feed for livestock, the Finns

made substantial efforts to ensure supplies of basic human foodstuffs. By the 1980s, the annual wheat and rye crops, used for milking bread, met domestic demand in years with normal harvests.

Potatoes produced high yields even in the north, and the potato

crop was usually large enough for domestic needs. Domestic

167
Finland: A Country Study

\ 1 Arable land

I I Forested land — Northern boundary of forest

I i Wasteland

Barley Oats Wheat

Sugar beets

Arctic Circle

Northern boundary of fruit cultivation

. _ Northern boundary of winter rye — Northern boundary of sugar beets Southern boundary of pasture for reindeer

A

Alar)d Islands

HELSINKI

Source: Based on information from Federal Republic of Germany, Statistisches, Bundeszimt,

Ldnderberricht Finnland 1986, Wiesbaden, 1986, 9

Figure 16. Agriculture and Forestry, 1985

168
The Economy

sugar beets provided about half of the sugar consumed in the country. Some farmers, especially those with small holdings near large

cities, specialized in growing vegetables; they managed to raise as much as 80 percent of the vegetables consumed in Finland.

Forestry

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 woodprocessing 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 (see fig. 8). 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 (see

Agriculture, this ch.; The Establishment of Finnish Democracy,

ch. 1; Domestic Developments and Foreign Politics, 1948-66,

169
Finland: A Country Study

ch. 1). 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 silvicul- tural 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

170
Transporting logs from

forest to factory ^

Courtesy Embassy of Finland,

Washington

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 post- war 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 foresdand 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 (see Wood-Processing

Industries, this ch.).

171
Finland: A Country Study

Fisheries

Unlike other Nordic countries, in the late 1980s Finland had few

fishermen, and the fishing industry was small. Finland's coastal

waters offered poor fishing grounds because of their low salt content (caused by the heavy flow from the country's many rivers).

Rivers and lakes were often relatively unproductive because stream

runoff often contained insufficient nutrients. In addition, those in- land waterways that did support exploitable fish populations were

often located too far from market centers to make commercial fishing

profitable. Log-floating operations and hydroelectric installations

disrupted some fishing grounds, and the paper industry polluted

others.

The poverty of Finland's waters explained why, despite considerable government aid, relatively few Finns were fishermen. In 1985,

for example, only 2,200 fishermen worked full-time, while another

5,000 worked part-time; they used a fleet of about 530 boats. That

same year, the fish catch totaled some 111 ,000 tons, of which roughly two-thirds were salt-water fish, and one-third were fresh-water

fish. Baltic herring was the most valuable catch, followed by salmon.

A share of the catch came from Soviet and Swedish waters, to which

Finland had gained access under bilateral agreements.

Unable to meet domestic demand, Finland had to import about

300,000 tons of fish each year, including large amounts of fish offal that was used as feed on fur farms. Demand for fish was thus rela- tively strong, but observers believed that, given the country's poor

fisheries, it was likely that the small fishing industry would become

even smaller.

Energy and Mineral Resources

Finland lacked petroleum, gas, and co2il reserves, but it had significant mineral deposits. As in many industrisd countries, lowcost imported petroleum fueled economic growth from the end of

World War II until the 1973 oil crisis. Finland's forest industries,

which were heavy energy users, had developed in the context of

low energy prices. Even the achievement of agricultural self- sufficiency owed much to energy imports, in the form of either fuel for tractors or chemical fertilizers. From the 1970s, Finland's econ- omy had to adjust to high energy costs. Finnish policy makers there- fore had to ensure that the country used its other resources, including its mineral deposits, as efficientiy as possible.

Energy

Even before the 1973 oil crisis, energy was a major concern, and

172
Pyhdkoski hydroelectric power plant, one of the largest of its kind

in Finland, located about twenty-five kilometers east of Oulu

Courtesy Embassy of Finland, Washington

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 settle- ments 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

metcds 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

annu2il 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 ener- gy 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

173
Finland: A Country Study

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 distri- bution 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 secon- dary 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 mid-1980s only about 5 per- cent 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

174
The Economy

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 (see Regional Economic Integration, this ch.). 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 cocd 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 Swedish-made, 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

175
Finland: A Country Study

capacity by about 2,700 megawatts by the year 2000. About 1,200

megawatts of the new capacity was to come from small plants scat- tered 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 trade-offs between the

benefits and the risks and costs of various energy options.

Minerals

Finland contained only limited mineral deposits, and it coninued

to be only a modest producer of minerals. The country's most important deposits were located at Outokumpu in eastern Finland

(see fig. 17). Discovered in 1910, the Outokumpu area contained

commercially exploitable deposits of copper, iron, sulfur, zinc,

cobalt, nickel, gold, and silver. In 1953 prospectors discovered a major source of iron ore at Otanmaki in centrEil Finland. Other

sites yielded nonmetallic minerals, including pyrites and apatite

(a low-grade phosphoric ore used for fertilizer production), and

176
Nuclear power plant at Loviisa (Louisa) on the southern coast, about seventy-five kilometers east of Helsinki

Courtesy Embassy of Finland, Washington

stone for building. The mineral industry employed more than

60,000 people, but only 500 of them were in mining and quarrying; the others worked in mineral processing.

The government intervened directly in the minercd sector. Under Finnish law, the Ministry of Trade and Industry controlled

prospecting and mining rights. The ministry's Geological Survey

dominated prospecting, and it had made most major miner2J dis- coveries. The ministry controlled most production through jointstock companies, in which the state owned most or all of the shares,

but in which the management ran the companies much like pri- vate firms. The industry comprised two large, state-controlled companies, the Outokumpu Group and Rautaruukki, and a number

of sm2iller, generally private companies. The Outokumpu Group,

by far the largest producer, operated the Outokumpu mines, as well as others producing cadmium, chromite, ferrochrome, mercury, pyrite, and zinc. The company also invested in foreign mines

and produced mining equipment. Rautaruukki controlled the Otanmaki iron mine, other mines producing cobsJt, quartz, and vanadium, and Finland's largest steel plant.

By the mid-1980s, Finland had exploited most of its limited

mineral deposits and had to work hard to supply its processing

industries. The Geological Survey had undertaken an extensive

177
Finland: A Country Study

exploration program to find new resources. Finnish firms had purchased interests in mineral operations in other Scandinavian countries, and they had participated in joint ventures with Soviet

enterprises to exploit the rich mineral deposits on the Kola Peninsula. The leading companies had also developed vertically integrated

structures, investing in all stages of metal production from the design and production of mining equipment to metal processing. The

Outokumpu Group, for example, was one of the few firms in the

world that controlled all aspects of the production of stainless steel. Industry leaders hoped that, as mining output fell during the later years of the twentieth century, overseas investments and vertical

integration would make it possible to maintain employment despite

the exhaustion of domestic mineral resources. Industry

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 lead- ing 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 ef- ficiency 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 aver- age, making industricd 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

178
The Economy

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 trans- portation 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 (see The Effects

of the War, ch. 1). 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 (see table 18, Appendix A).

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 rela- tively 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, woodprocessing 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 one-fifth 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 per- cent of the labor force and produced about two-thirds of industrial output. During the mid-1980s and the late 1980s, a wave of

179
Finland: A Country Study

(Au) Gold

(c?) Chrome

(§) Copper

(g) Iron ® Nickel

Pyrites

© Vanadium

@ Zinc C Chemical

industry H Wood-working

in/Hi ictr\/ II lUUoll y p Paper industry

L

Iron and steel industry

M Metal-working

industry

Shipbuilding

tl Petroleum

refinery

Vaasa

kland Islands ^f^^ M (Zn)(Cu

Hanko

Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt,

Ldnderbericht Finnland, 1986, Wiesbaden, 1986, 9.

Figure 17. Minerals and Industries, 1985

180
The Economy

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 cruciad, 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 industricd energy consumption, and would increase tax credits

offered for research and development expenditures (see Banking and Finance, this ch.). 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 in- vest 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.

181
Finland: A Country Study

Industrial Policy

The state had played an important role in Finland's industrial

development, but it did not intervene directly so much as many

other European governments. Intervention in industry began in

the mid-nineteenth century, and it increased over time. Tariff policy

and government procurement, the latter being especially important during the two world wars, furthered the development of

manufacturing. The government's influence was probably most

important in the years after 1944, when Finlgmd struggled to make

reparations payments to the Soviet Union. Partially as a legacy

of this period, the state controlled companies that owned about 15

percent of manufacturing capacity, employed about 14 percent of

the work force, and contributed about 25 percent of industrial value

added. The state was especially active in sectors requiring heavy

investments, such as basic metals and shipbuilding. These state- owned firms, however, did not receive government subsidies; if unprofitable, they failed. Thus, while the state controlled most prices

and implemented long-term sectoral plans in agriculture, forestry,

energy, and minerals, state-owned firms in manufacturing remained

largely free to manage their own affairs. In the late 1980s, Finnish industrial policy continued to be considerably less interventionist than the policies of most West European

countries. The government's strategy for industries that were having

difficulty favored rationalization and restructuring instead of subsidies. Industry was encouraged to step up investments to increase

productivity and to arrange mergers with domestic and foreign

interests to increase efficiency. Policy makers argued that industry, as a small sector (compared with that of many other countries)

open to private investment but dependent on exports, must adjust

to international conditions.

Despite this hands-off approach, the government did subsidize

the research and development of new industrial technologies.

Research and development expenditures had remained low until the

1980s, reaching only slightly more than 1 percent of GNP in 1980.

After that time, however, the government increased such spending,

which exceeded 2 percent of GNP by the late 1980s. The State Technical Resecirch Institute in Otaniemi, founded in 1942, played an

important role in providing industry with up-to-date information on new technologies; its maritime engineering laboratory was one

of the largest and best equipped in the world. In 1984 the Ministry

of Trade and Industry initiated a four-year program of research on

target technologies, including applications of laser technology to machine engineering, advanced measurement techniques, and offshore

182
Pulp mill and paper factory at Mdnttd in the province of Hdme

Courtesy Embassy of Finland, Washington

construction techniques for arctic conditions. The government also sponsored technology parks, such as the one at Oulu, that provided facilities for cooperative research projects involving industry and

local universities. In addition, investments in technical training

promised a continuing supply of workers able to maintain the quality, durability, and dependability of Finnish industrial goods.

Wood-Processing Industries

Wood processing has long been the mainstay of the Finnish econ- omy. Facilitated by extensive timber supplies, convenient trans- portation, and abundant water power, lumbering and papermaking

developed rapidly after 1860 to meet growing European demand

for paper products and lumber. Production and export patterns

established before 1900 lasted until the second half of the twentieth century; in the 1950s, wood and paper products accounted

for some 80 percent of total exports. By the 1980s, however,

although the sector had continued to expand in absolute terms,

its share of exports had fallen to about 40 percent as a result of

the rapid growth of the metalworking sector, which had surpassed

woodworking in both value added and employment in 1969.

Despite this relative decline, forest products were still the country's most important earner of foreign exchange in the late 1980s.

183
Finland: A Country Study

Roughly four-fifths of wood and paper production was sold abroad,

while most raw materials—including energy—were produced at home; and, although the sector contributed only about one-fifth

of industrial value added, it still accounted for about one-quarter

of industrial employment.

Analysts conventionally divided the woodworking industries into

two branches, mechanical and chemical, depending on the primary means of processing in each branch. The mechanical branch comprised milling, manufacturing of plywood and particle board, and

fabrication of furniture and building components. In 1986 the

branch included some 200 large sawmills that produced most exports

and some 6,000 small mills that met local needs. Products of the

chemical branch included pulp and paper, cardboard, and packaging matericds. In 1986 the chemical branch encompassed twentyfour pulp mills, thirty paper plants, and sixteen cardboard factories. The division between the two branches was somewhat artifi- cial, however, as many leading firms operated integrated plants

in which sawdust, waste wood, and chemical byproducts of mechanical processes served as raw materials for such chemical products

as pulp and turpentine. Industrial waste also supplied a large share

of the industry's needed energy, making the chemical branch self- sufficient and reducing the energy demands of the mechanical

branch.

Finnish manufacturers had long been leaders in developing new

wood-processing technologies. Several firms had developed their

own shops for machine building, and their highly efficient papermaking equipment had captured an important share of world

markets.

In the 1980s, Finland's wood industries experienced increasing

difficulties in exporting, largely as a result of rising input costs. Wages and stumpage (value of standing timber) rates were traditionally higher in Finland than they were in many competitor countries. Moreover, by the early 1990s analysts believed that the

mechanical branch, which consumed about one-third of Finland's

electricity, might face an energy shortage because of the 1986

decision not to build a fifth nuclear plant (see Energy, this ch.). In response, firms modernized their plants and shifted to highervalue-added products. In the mid-1980s, interfirm cooperation and a wave of mergers

resulted in concentration of production at a smaller number of

centers, and observers expected that industry restructuring would

continue into the 1990s. An increasing tendency to build plants overseas, which improved access to Finland's main markets, complemented the merger drive. The government had stepped in with

184
The Economy

the Forest 2000 program and with a system of tax incentives for logging, both of which were designed to allow wood harvests to increase by about 3 percent per year until the end of the century

(see Forestry, this ch,). By 1986, moreover, representatives for workers and landowners, apparently recognizing some of the

difficulties faced by the industry, had negotiated decreases in both

wages and stumpage prices.

Metal Industries

The metal industries led Finland's postwar economic development, and they were crucial to the country's economic health. Until

World War II, Finland generally produced relatively unsophisticated goods for domestic consumption. The country's shortages

of energy, basic metals, and capital accounted for the sector's slow

development. Although Finland had produced ships and other capital goods for the Russian market since the late nineteenth century,

the real breakthrough came after 1944. Then the metalworking in- dustry, goaded by Soviet reparations demands, overcame its handicaps, sharply increasing both the the quantity and quality of

output. Reparations deliveries ended in 1952, but the Soviet Union continued to absorb Finnish metal goods. By the late 1950s,

Finland had built an efficient and innovative metEilworking sector. In the 1960s, the metalworking sector, stimulated by the effects of trade liberalization, embarked on an export drive in Western

markets. Domestic demand rose as a result of both the expansion

of the forest and the chemical industries and major infrastructure

projects. Throughout the 1960s and the 1970s, the sector prospered,

growing at an average annual rate of over 6 percent, higher than

the rates of other industrizd sectors. The strategy of specializing

in a small number of products in which the country already possessed a comparative advantage paid off in export markets. Finnish design, which integrated ergonomics, durability, and attractive

appearance, also helped maintain sales. Thus, the sector was rela- tively well prepared to respond in the 1970s, when rapid increases

in energy prices, competition from newly industrialized countries,

and worldwide improvements in capital-goods technologies threatened profitability.

Beginning in the mid-1970s, metalworking, like the forest in- dustries, underwent a period of intense rationalization and

restructuring—with only limited state help. By the late 1980s, it appeared that the sector was well on the way to transforming itself to meet the conditions of high energy costs. Indeed, metalworking

grew faster in Finland than it did in most industrialized countries,

and it remained Finland's leading industrial sector.

185
Finland: A Country Study

Finnish analysts divided the sector into four branches: basic

metals, machine building, trsinsport equipment, and electrical equipment. Although many companies were active in more than one branch, the categories provide a useful framework for reviewing industrial developments.

Basic Metals

Domestic ore could not meet industrial demand, but the effi- cient metal-processing branch, which had developed some of the

world's most advanced technologies, provided a firm foundation

for the production of more advanced goods (see Minerals, this ch.).

State-owned firms (and firms in which the state owned a majority

interest) led the development of metcils production. The

Rautaruukki works at Raahe in northern Finland, for example, was the main producer of iron and steel. The state and major

engineering firms jointly owned the enterprise, an arrangement

that ensured that the works responded well to the needs of industries using their products. The works remained profitable during

the late 1970s and the early 1980s, a period marked by the decline

of the European steel industries. This success was due not only to adept management but also to good labor relations. Likewise, the

state-owned Outokumpu Group, which possessed flash- smelting

technology that gave it a major advantage during the mid-1980s,

controlled much nonferrous metals production. While most of Finland's iron and steel were used at home, most of its copper, zinc,

and nickel were exported.

Machine Building

Based on sophisticated technologies and on careful specialization, machine building was an essential complement to other

industries, but it was growing slowly by the late 1980s. Employing about one-third of the metalworkers, the sector concentrated on such product lines as sawmill and papermill machinery and mining equipment. By the late 1980s, Finland had captured about onefifth of the world market for papermaking equipment, and it led

in selected metal-processing technologies. The branch also had

increased its capability to produce cranes, lifts, hoists, forklifts, and

cargo-handling vehicles. Another strong point was agricultural and

forestry machinery, including tractors, combines, and logging

machines, of which Finland was the largest producer in Nordic

Europe. As Finland's economy matured, however, investment in

capital goods declined, forcing the sector to search for markets

abroad. Although Finnish equipment enjoyed a strong reputation

abroad, demand for the country's specialties was limited.

186
The Economy

Transport Equipment

Shipbuilding, which had led the development of heavy industry, continued to be the most important branch of the transport

sector, and it determined the sector's health. The land transportation branch, however, led by exports of railroad locomotives and

rolling stock to the Soviet Union, provided a valuable supplement

to shipbuilding. Finlaind first began to produce automobiles in 1969,

and it had developed a full range of vehicles.

By the late 1980s, Finland's shipbuilding industry ranked fifteenth worldwide. The country boasted eight major shipyards, which employed about 14,000 highly skilled workers. Unlike many other

countries (including nearby Norway), Finland had avoided large

investments in petroleum tankers, a choice that proved to be a bless- ing when the world tanker market slumped in the late 1970s.

Instead, Finland had specialized in high-priced vessels such as icebreakers, luxury liners, car ferries, ocean exploration vessels,

and container ships. Starting in the 1970s, shipbuilders also had

branched out into offshore oil-drilling platforms and equipment.

Finnish icebreakers were world-famous—the country had produced

about 60 percent of all icebreakers in service by the late 1980s. Finland also specialized in vessels designed to operate in arctic conditions. Such projects were well suited to Finnish expertise, and they

yielded higher-value-added products that compensated for high

input costs. Shipyards exported up to 80 percent of their production, which

made them heavily dependent on world market developments. The

shipbuilding industry had survived the difficult years following the

1973 and the 1979 oil shocks without subsidies from the government (except for occasional favorable financial packages); these

years had seen a wave of mergers and large-scale investments that

had improved competitiveness. Above all, the industry owed its success to continued orders from the Soviet Union in a period when

demand lagged in Western markets. Finland was thus the one European country in which the number of shipyard workers had

increased after 1975. During the same period, the Finns built two new shipyards for oceangoing vessels, established a heavy engineering works for oil-drilling rigs, and modernized older yards.

By the late 1980s, however, it appeared that shipbuilding was

entering a crisis. The decline in the price of oil in the middle of

the decade caused a reduction in Soviet purchasing power, limiting new orders for ships (see Regiongil Economic Integration, this ch.). Moreover, Soviet buyers, who had long preferred Finnish

ships, had started to place orders with other countries, including

187
Finland: A Country Study

East European firms that enjoyed lower labor costs. At the same

time, certain Finnish specialties, such as icebreakers, were attracting

competition from more advanced shipbuilding countries such as Japan.

The crisis in shipbuilding led to a decline in employment and

to further restructuring. In July 1986, two of Finlaind's four major

shipbuilding companies, Wartsila and the Valmet Group, merged

their shipbuilding divisions and planned to eliminate about 40 per- cent of their 10,000 jobs. Another several thousand workers were

out of work, and the increased competition from the new firm threat- ened the two remaining firms, Rauma-Repola and Hollming.

Indeed, competition had already undermined an arrangement under which each firm specialized in a particular field: Wartsila in

icebreakers and luxury liners, the Valmet Group in cargo ships,

Rauma-Repola in offshore oil equipment, and Hollming in hightechnology research vessels. As the crisis continued, industry

analysts began to question whether the industry could survive

without government bailouts.

Electrical Equipment and High Technology

Production of electrical equipment had started somewhat slowly, but during the 1970s and the 1980s the branch grew rapidly.

The branch produced both heavy goods—such as power plant

generators, heavy-duty electric motors, and equipment for ice- breakers—and lighter goods—such as household appliances, lightbulbs, and building components. By the mid-1980s, however, the

heavy electrical engineering producers were experiencing stagnant

markets and fierce competition. Electronics, however, grew rapidly,

expanding its product range from consumer electronics to include

computers; communications equipment; and monitoring, control, and measuring equipment. The Finns developed particular

competence in control systems for the mining, metallurgical, and

forestry industries; computers for hospitals and laboratories; patientmonitoring machines; meteorological instsillations; and tele- phone equipment. Finland, which included many areas that were

too sparsely populated to allow the construction of a comprehensive telephone network, also was one of the world's leaders in the

production of mobile telephones.

Although electronics was still small compared with other industries, many Finns believed that it had good prospects and that it might eventually make up for the impending decline of shipbuilding and other traditional industries. Thus, in the mid-1980s, both

industry and government began to pay increasing attention to the

development of high technology, especially in the electronics

188
Finnish-built oil-drilling rig Dyvi Delta in the North Sea

Courtesy Embassy of Finland, Washington

industry. The Finns seemed intent on specializing in high-valueadded products in which the country had a comparative advantage, an approach similar to that which had proved so successful

in other sectors. The leaders of the electronics industry, aware that the small sizes of their firms made it difficult to compete, banded together to share

research and development expenses. The government facilitated cooperation among firms through the Technology Development

Center (Teknologian Kehittamiskeskus—TEKES) established in

1983. Electronics firms were also willing to join international

research and development consortia that offered access to foreign

technologies. However, despite the rapid development of hightechnology electronics in Finland, by the late 1980s it was still too

early to predict how well Finnish producers would be able to compete in world markets.

Other Industries

Several smaller sectors contributed significantly to industrial out- put. Food processing—concentrating on dairy products, baked

goods, and preserved meats—grew during the postwar period,

as rapid urbanization heightened reliance on processed foods.

Indeed, as late as 1970 food processing was the largest sector in

terms of gross value of production (but in terms of value added, food

189
Finland: A Country Study

processing ranked only third that year, behind wood and metal

processing). Nevertheless, during the 1970s and the 1980s, food

processing suffered a relative decline.

In the 1980s, the food industry undertook an ambitious research

program aimed at foreign markets. Finnish firms hoped to develop

special foods for the cafeterias of hospitals, mines, and oil rigs as well as to develop delicacies, such as fresh berries and fresh-water

fish. New technologies, such as plant and animal genetics, freeze- drying, irradiation, aseptic production, and methods to limit food

oxidation, promised to improve the attractiveness of Finnish

products. Another export was highly automated equipment for bakeries, dairies, and slaughterhouses. Although Finland's high production costs limited exports of staple foodstuffs, observers believed

that the industry could expect to sell special products in Europe

and in North America.

Finland's chemical industry, established at the time of independence, had come a long way by its seventieth anniversary in 1987.

By the late 1980s, the sector ranked fourth after wood, metal, and

food processing. Oil refining accounted for about half the gross value of chemical production, followed by fertilizers, plastics, fibers,

rubber products, and other chemicals. Two large, state-owned firms

controlled more than half of chemical production. Neste, established in 1948, was the only oil-refming enterprise. Its chemical

operations had grown out of refining, while its rival, the Kemira

Group, had developed interests in many products, including fertilizers, paints, fibers, and industrial chemicals. During the 1980s,

both companies had purchased production facilities abroad in an

attempt to remain on top in an international market that suffered

from overcapacity in many basic product lines. Construction, which accounted for almost 10 percent of GDP

in 1950, declined to less than 8 percent of GDP during the post- war period, as the country completed its transportation and energy

infrastructure and established heavy industry. In the short term,

construction activities depended on the overall health of the econ- omy. Thus, new building slumped from 1984 to late 1986 because

of a recession and because many industries invested more in new

machines than in new buildings. Residential construction was also slow in the mid-1980s, but it responded to financial stimuli after 1985. By late 1986, both commercial and domestic building were on the rise, increasing by an estimated 3 percent in 1987. Finland

also exported construction services, especially to the Third World

and to the Soviet Union, usually to complement exports of machine

goods. The industry was able to offer clients all types of planning,

engineering, and building services for turnkey factories.

190
The Economy

Textiles and ready-made clothing, two of the country's oldest

industries, concentrated on cotton, wool, and knitted goods. During the postwar period, this sector had declined in relation to other

industries; however, in the 1980s, Finland still produced highquality fabrics and fashions for export, especially to Europe. Likewise, Finnish fur and leather designs had carved out export markets in the developed countries.

Services

Although the Finns continued to place a high value on agricultural and industrial employment, by the 1980s the economy had

already entered an era characterized by the development of ser- vices. While in 1950 services accounted for only 35 percent of total domestic output, the sector provided over 55 percent in 1985. The

postwar development of a welfare state stimulated growth in the

state sector, and other activities, such as financial and engineering services, expanded as the economy industrialized (see Welfare

System, ch. 2). Services traditionally remained insulated from

international markets, but during the 1980s the government

encouraged the development of service exports and even allowed

foreign enterprises to enter such previously protected markets as those in financial services. In line with this liberalization, the government repealed regulations that hampered the working of markets

in services, causing the important branches of the sector to become

efficient enough to compete in world markets.

Banking and Finance

Under the regulatory structures that had developed since the midnineteenth century, banks had dominated the financial scene, leav- ing 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 out- dated 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

191
Finland: A Country Study

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 gover- nor 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 (see Role

of Government, this ch.).

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

192
The Economy

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 foreignowned 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 smallscale 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 Invest- ment 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 per- cent 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.

193
Finland: A Country Study

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 trans- actions 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 agree- ments. 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,

194
The Economy 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 alle- gations of insider trading, the stock exchange in 1985 issued new

regulations that were intended to increase the openness of its operations, thereby increasing its attractiveness for small investors. In

1987 the government reduced restrictions on foreign investors and

passed a law allowing banks and insurance companies to set up

mutual funds. In the fall of 1987, options exchanges opened, offering

new instruments to stock traders. Also likely to enliven the market was legislation of the same year that eliminated the tax-free status of bank deposits. As Finnish equities continued to offer better rates of return than those on many markets, stock brokers had good rea- son to be optimistic.

Insurance companies, once marginal actors in capital markets,

became Finland's largest institutional investors, after the establishment of compulsory insurance schemes in the early 1960s. After

that time, insurance grew faster than the economy as a whole, and

it contributed some 5 percent of GNP in the mid-1980s. As the

result of restructuring in the early 1980s, there were about fifty

insurance companies, associated in five large groups. The insur- ance companies placed about two-fifths of their investments in

industry and an additional fifth in commerce. Other investments

included other insurance firms and real estate. Transportation and Communications

Finland's geography and climate make transportation and communications difficult. For centuries, coastal ports, which were closed

by ice each winter for at least one month in the south and for as long as five months in the north, provided the only links with

Europe. Internal communications, hampered by long distances

interrupted by swamps and bogs, were likewise paralyzed each

spring by slowly melting snows. As in most industrialized countries, during the postwar period newer technologies supplanted

traditional means of transport. Thus, in the early postwar years, truck traffic grew at the expense of rail and water transport, only

to be displaced later by airplanes. Traditional mail gave way to telecommunications. External commerce still depended primarily on oceangoing ships, but air freight services provided an increasingly important supplement.

The natural environment compensated somewhat for the difficulties of climate and geography in the form of a network of lakes

195
Finland: A Country Study

Figure 18. Transportation System, 1986

196
The Economy

and rivers that provided an economical means of moving forest products downstream to processing centers and on to ports for export. Although trucks handled more than half of Finland's forest products in the late 1980s, the wood industries still operated some

9,200 kilometers of floatways. Internal waterways for general use covered another 6,100 kilometers, of which about 70 kilometers were canals. The most important artificial waterway, the Saimaa

Canal, runs from Lake Saimaa to the Baltic port of Viipuri (see

fig. 18), In 1962 the Soviet Union, which had annexed the waterway and the port after World War II, granted a long-term lease

to Finland that allowed the Finns to renovate and to operate them.

Finland lagged behind the other Nordic countries in developing

railroads—as late as the early 1970s, Finland continued to lay tracks. Yet by the early 1980s, the railroads had begun to decline in

importance, and of the more than 9,000 kilometers of track, less than 6,000 kilometers of track were in operation (25 percent of which was electrified). The rail network served southern and central Finland better than the north, and it speciadized in carrying bulk

products to processing centers and to export ports. The railroads,

almost all of which were state-owned, had lost business and were

running operating deficits by the mid-1980s. Finnish railroads used

the same gauge as Russian lines (1 .524 meters), which allowed easy

exchanges with Soviet railroads but blocked shipments to Finland's

Western neighbors.

By 1987 Finland maintained about 76,000 kilometers of roadways, of which 43,000 kilometers were paved roads and 200 kilo- meters were divided highways. During the first half of the 1980s,

local routes accounted for most new road construction, as the

national highways were largely complete. Although the highways

covered most of the country, specialists reported that Finland would

need to improve its major routes to meet European standards and

to allow increased trade with Western Europe during the 1990s.

By 1987 the Finns operated about 1.7 million automobiles, 9,000

buses, 52,000 freight trucks, 135,000 vans and delivery trucks, and

50,000 motorcycles. During the early 1980s, the number of vehicles had risen by almost 20 percent as more and more Finns purchased cars and motorcycles and many companies shifted from rail to road transport.

Finland's position on the northern shore of the Baltic, far from

the commercial centers of Western Europe, placed a premium on

shipping. Because harbors freeze up each winter, the Finns have

employed a fleet of icebreakers and have equipped many ships with

strengthened hulls, the construction of which has become a specialty

of the metal-working industry (see Industry, this ch.). The national

197
Finland: A Country Study

oceangoing fleet expanded tenfold to about 2.5 million gross

registered tons (GRT) between the end of World War II and about

1980, but it shrank thereafter to about 1 .6 million GRT. The Finnish merchant marine carried most of the country's trade and

provided a significant source of foreign exchange; however, merchant shipping declined somewhat in the 1980s because of competition from air freight services and from foreign shipping. In the

1980s, Finland's ports handled about 50 million net registered tons each year, of which 60 percent were exports. Ships also carried a significant number of passengers, 2 million of whom traveled by

way of Helsinki.

Air transport grew rapidly in the 1970s and the 1980s. For passengers, domestic traffic was growing faster than international

travel, but for freight, the reverse was true. Affordable air fares—the

lowest in Europe—contributed to the rapid expansion of domestic

air travel. Almost 3 million passengers and more than 50,000 tons of freight and mail passed through the main airport, HelsinkiVantaa, each year. Finland also operated about forty smaller

airports.

Two state-controlled firms, Finnair and Karair, dominated Finnish airways. The state owned a majority of shares in Finnair

(founded in 1923), which maintained regular international and

domestic service. Karair, established in 1957, was linked to Finnair (which owned a majority interest) and specialized in charter

flights.

Finland's postal and telecommunications services maintained

efficient links among the country's thinly settled population. In the

late 1980s, the government operated about 3,600 post offices and

581 telegraph bureaus. Nevertheless, many rural areas were so sparsely inhabited that the postal carriers made deliveries to groups

of mailboxes located at crossroads. The relatively great distances

among settlements made telecommunications popular; by the late 1980s, telecommunications had become more important than tradi- tional postal services. Among European states, Finland was unusual

in maintaining a combination of public and private telephone sys- tems. Some fifty-eight companies provided services in local communities, while the Public Telecommunications Agency (PTA)

enjoyed a monopoly on long-distance services. Starting in the

mid-1980s, local companies began to compete in the lucrative data

transmission field, a move that put them in competition with the

PTA's long-distance services. Observers expected that pending

legislation would effectively deregulate the telecommunications

market.

198
The Economy

Tourism

Tourism was a small industry in Finland, accounting for only

4 percent of total exports in 1987. Since 1982, however, Finns had

spent more abroad than foreigners had spent in Finland, and eco- nomic policy makers sought to foster tourism to reduce this deficit. Tourists found many attractions, both natural and cultural, in Finland; moreover, facilities for vacationers were well developed. Public

transport—including tourist buses and ships plying scenic interior

waterways—offered easy access to the country's main tourist areas. In the mid-1980s, Finland had about 550 hotels and 230 boarding

houses. During the 1980s, the number of rooms in hotels rose, as did the number of places in youth hostels. Campers found plentiful sites, including some with firewood and even shelters, along an extensive network of trails. Information offices in major cities in Finland and abroad offered information and orientation for

visitors. Despite manifold attractions and excellent facilities, the tourist

industry lagged during the 1980s. Tourist earnings declined by

about one-third during the early 1980s, perhaps as a result of Finland's relatively high cost of living, which made the country some- what expensive for tourists. Foreign Economic Relations

International economic relations—especially foreign trade—have

been vital for Finland throughout the twentieth century, but never have they been more so than during the 1980s. The country was

self-sufficient in staple foods, and domestic supplies covered about

70 percent of the value of the raw materials used by industry.

However, imports of petroleum, minerals, and other products were

crucial for both the agricultural and the industrial sectors. From

the end of World War II until the late 1970s, the development of

modern infrastructure and new industries required substantial capital imports. Sound foreign economic relations made it possible to exchange exports for needed imports and to service the large for- eign debt. A policy of removing obstacles to the mobility of commodities, services, and factors of production facilitated economic

modernization.

Business leaders and government policy makers devised innovative strategies to manage economic relations. Close economic

ties to the Soviet Union grew out of the postwar settlement under

which Finland agreed to pay reparations and to maintain a form

of neutrality that would preclude threats to Soviet security (see The

Effects of the War, ch. 1; Foreign Relations, ch. 4). Except for

199
Finland: A Country Study

agriculture, which remained strictly protected, postwar commercidl policy sought to link Finland's economy with the economies

of the Nordic area and of Western Europe as closely as possible

without aggravating Soviet fears that such economic ties would

undermine loyalty to the East. Thus, since 1957 Finland had pursued trade liberalization and had established industrial free-trade

agreements with both West European and East European countries. Spurred by these liberal policies, exports and imports had

each grown to account for roughly one-quarter of GDP by the

mid-1980s. By the late 1980s, Finnish industrial and service firms were going beyond trade to internationalize production by attracting

foreign partners for their domestic operations and by acquiring for- eign firms. Most observers believed that Finnish firms needed to follow an international tack not only to protect export shares but

also to maintain their positions in domestic markets.

Foreign Trade

Trade in agricultural commodities, consumer products, and ser- vices had been relatively limited, but exchanges with the outside

world were crucial for industry. Not only had the forest industries

grown largely in response to foreign demand for wood and paper,

but the metal-working industry had 2ilso taken off only under the

goad of postwar reparations deliveries to the Soviet Union. By the

mid-1980s, exports accounted for half of adl industrial output and

for as much as 80 percent of the output of the crucial forest industries. Similarly, imports of energy, raw materials, and investment

goods remained essential for industrial production. The development of export-oriented industries had driven Finland's postwar

structural transformation, indirectly affecting the rest of the econ- omy. Industrial competitiveness would largely determine the econ- omy's overall health into the 1990s.

During the postwar period, Finnish exports shifted from lumber and other raw materials to increasingly sophisticated products, a change which reflected the increasing diversification of the country's economic structure. The forest industries continued to dominate exports, but, while they had accounted for about 85 per- cent of total exports in 1950, they accounted for only 40 percent

by the mid-1980s. The relative shares of different forest exports

also shifted. Sawn timber and various board products accounted

for more than one-third of total exports in 1950, but by 1985 they

had fallen to only 8 percent. Exports of pulp and paper fell more

gradually during the same period, from 43 percent of exports to about 30 percent. Pulp and cardboard, the main exports of the

chemical wood-processing branch, declined in importance, while

200
The Economy

specialized paper products incorporating higher value added, such

as packing material, printed paper, and coated paper, grew in

importance.

Taking the place of forest products, exports of metal products

grew rapidly during the postwar period from a little over 4 per- cent of exports to about 28 percent. Here, too, exports of more

sophisticated manufactured goods grew faster than those of basic

products. By the late 1980s, basic metals accounted for about 20

percent of metal exports, ships for about 25 percent, and machinery

and equipment for about 20 percent. Advanced products such as electronics and process-control equipment were gaining on conventionally engineered products. The chemical industry had

exported relatively little until the 1970s, but by 1985 it had grown

to account for about 12 percent of exports. By contrast, the textile, confectionery, and leather goods industries had peaked at over

10 percent in the late 1970s and early 1980s, and then they had

fallen to about 6 percent of exports by the mid-1980s. Minor export

sectors included processed foods, building materials, agricultural

products, and furs. Up to the 1970s, Finland tended to export wood-based products

to the West, and metal and engineering products to the East. By

the mid-1980s, however, Finnish machines and high-technology

products were also becoming competitive in Western markets.

Finland's imports had consisted primarily of raw materials, energy, and capital goods for industrial production, and in the late 1980s

these categories still accounted for roughly two-thirds of all imports.

The commodity structure of imports responded both to structural

changes in domestic production and to shifts in world markets.

Thus, the heavy purchases of raw materials, energy, and capital

goods up until the mid-1970s reflected Finland's postwar industrial development, while the subsequent period showed the influences

of unstable world energy prices and Finland's shifts toward hightechnology production. Imports of investment goods climbed from

about 15 percent in 1950 to almost 30 percent in the late 1960s

and early 1970s, only to fall again by the 1980s to about 15 percent. Foodstuffs and raw materials for the textile industry accounted

for about half of all raw material imports during the 1950s, but

by the 1980s inputs for the chemical and metal-processing industries took some 75 percent of raw material imports. World energy

prices had strongly influenced Finnish trade because the country

needed to import about 70 percent of its energy. After rising slowly

until the early 1970s, the value of oil imports had jumped to almost

one-third of that of total imports in the mid-1970s, then had fallen with world oil prices to about 13 percent by the late 1980s.

201
202
Helsinki's South Harbor closed by ice: on the right, the President's Palace; in the background, the dome of Helsinki Cathedral

Courtesy Embassy of Finland, Washington

203
Finland: A Country Study

Like its export markets, Finland's import sources were concentrated in Western Europe and the Soviet Union (see table 19,

Appendix A). The country usually obtained raw materials, especially petroleum, from the East and purchased capital goods from

the West.

Finnish service exports had exceeded service imports until the

early 1980s. Up until this time, shipping and tourism earnings had

generally exceeded interest payments to service the national debt.

In the mid-1980s, however, the balance was reversed as the earnings of the merchant marine declined and Finns began to spend more on tourism abroad. Although Finnish businesses tried to compete in these labor-intensive sectors, the country's high wage levels made shipping and tourism difficult to export.

Like other Nordic countries, Finland's trade was concentrated

in the Nordic area and in Europe. Unlike the others, however, Finland had, as its most important trading partner, the Soviet Union.

During the postwar years, trade with the Soviets had expanded

and contracted in response to political developments and market

forces. During the immediate postwar period, the Soviet share of

Finland's trade, spurred by reparations payments, rose to over 30

percent. However, the following two decades saw this share gradually decline as Finland expanded exports to Western Europe. A

second cycle began after the 1973 oil crisis, when recession in

Western markets cut demand for Finnish products while the

increased value of Soviet oil deliveries to Finland allowed expanded

exports to the East. Finnish exports to the Soviet Union rose sharply during the years after 1973, only to fall—along with world petroleum prices—by 1986.

By the late 1980s, the geographical distribution of Finlcind's trade was moving back to the pre- 1973 pattern. In 1986, for example,

although the Soviet Union continued to be Finland's single largest trade partner, trade with West European countries, which

together accounted for about 61 percent of Finnish trade, was much

more important than trade with the Soviet Union. Finland's main

trade partners in Western Europe were Sweden, which took the

biggest share of Finnish exports, and the Federal Republic of Germany (West Germany), which supplied the largest slice of Finnish

imports. East European countries other than the Soviet Union

accounted for only slightly over 2 percent of trade. Non-European

countries were responsible for some 19 percent of trade. The United

States, Finland's main non-European trade partner, accounted for over 5 percent of Finnish exports and imports in 1987.

As in many small European countries, the postwar trade policy

of Finland had been to pursue free trade in industrial products

204
The Economy

while protecting agriculture and services. During the 1980s, strict quotas still blocked imports of most agricultural commodities (except

for tropical products that could not be produced domestically), but

liberalized regulations allowed increased imports of services,

especially financial services. Most industrial imports and exports were free of surcharges, tariffs, and quotas under multilateral and

bilateral agreements between Finland and its major trading part- ners (see Regional Economic Integration, this ch.). Health and security concerns, however, inspired restrictions on imports of products

such as radioactive materials, pharmaceuticals, arms and ammunition, live animals, meat, seeds, and plants. With a few exceptions, Finland discontinued export licensing in the early 1960s. The

State Granary, however, controlled all trade in grains, while the

Roundwood Export Commission reviewed all lumber exports.

Finnish Direct Investment Abroad

From the end of World War II until the 1970s, Finland imported

large amounts of capital to finance infrastructure investment and

industricd development; however, by 1987 Finnish capital exports

exceeded capital imports by about six to one. During the earlier

period, foreign firms had set up subsidiaries in Finland, but few

Finnish enterprises had established branches abroad. In the 1970s,

the forest industry led a shift toward capital exports by founding

sales outlets in the most important foreign markets, especially in

Western Europe. The metalworking and chemical industries did

not begin to expand overseas until the late 1970s, but they made

up for lost time during the following decade. These industries first invested in Sweden, Norway, and Denmark, important markets

sharing Nordic culture. Next came subsidiziries in the United States,

which by the mid-1980s became the second-largest recipient of Finnish investments after Sweden and which hosted more than 300

Finnish manufacturing and sales firms. In the late 1980s, some firms

targeted markets in the rapidly expanding economies of the Pacific basin. Beginning in the late 1980s, the service sector began to follow industry abroad. Banks, insurance companies, and engineering and architectural firms established branches in major business

centers worldwide. By the late 1980s, Finnish firms owned more

than 1,600 foreign concerns, of which some 250 were engaged in

manufacturing; more than 900 in sales and marketing; and 450

in other functions.

Businessmen had many motives for setting up overseas

operations. In general, the Finns wanted to deepen ties with industrialized countries where consumers and businesses could af- ford high-quality Finnish goods. Maintaining access to important

205
Finland: A Country Study

markets in an era of increasing protectionism and keeping up with

new technologies had become crucial. Finnish enterprises, generally small by international standards, needed additional sources

of capital and know-how to develop new technologies. Analysts believed that, despite their small size, Finnish firms could succeed

abroad if they followed a comprehensive strategy, not only selling

finished products but also offering their services in the management of raw materials and energy, development of new technologies, and design of attractive products.

Government policies helped achieve greater international integration of productive facilities. During the 1980s, legislation relaxed

limits on foreign investment in Finnish firms, allowing foreigners

to hold up to 40 percent of corporate equities; likewise, the BOF

loosened restrictions on capital exports. The Technology Development Center (TEKES), under the Ministry of Trade and Industry, sponsored international cooperation in research and

development. The government also arranged for Finnish participation in joint projects sponsored by the European Space Agency

(ESA) and the Europe2in Community (EC—see Glossary), including the EC's Eureka technology development program. Although

it was still too early to predict how Finland would perform in

international joint ventures, many observers felt that such enterprises were the best way for the country to achieve industrial

progress.

Balance of Payments

Finland's external balance reflected the country's status as a late- industrializing economy needing large infusions of foreign capital as recently as the 1970s. The resulting foreign debt peaked at the

end of 1977 at about 20 percent of GDP. Over the following decade,

the Finns reduced their debt, which stood at about 16 percent of

GDP in 1987. Even at this lower level, however, debt service re- quired payments amounting to over 2 percent of GDP, a permanent drag on the balance of payments.

Although the country ran trade deficits up until the 1970s, Finland's trade performance was generally satisfactory during the

1980s, despite developments in world markets that posed special

challenges, such as the need to shift exports rapidly from Eastern

to Western markets after the collapse of oil prices in the mid-1980s.

The balance of trade showed a surplus after 1980, which rose to about US$1 .6 billion by 1986 as a result of strong foreign demand

for Finnish goods (see table 20, Appendix A). The services account,

however, showed growing deficits during the decade, which reached more than US$2.2 billion in 1986. The deficit on services grew

206
The Economy

out of increased Finnish tourist expenditures abroad, the dedine

in shipping earnings, and the continued service payments on the

national debt. The transfers account likewise showed a deficit, mainly the result of Finland's growing official foreign aid to the Third

World. Thus, despite the strong performance of Finland's export

sector, the country had generated a deficit on the current account

that reached almost US$900 million in 1986.

Over the long term, Finland's ability to continue to finance cur- rent account deficits and to service the national debt was limited

primarily by the country's ability to maintain export earnings. Some

analysts pointed out that after 1984, Finland's surpluses were in

fact earned in exchanges with the Soviet Union (producing a sur- plus on a blocked account), while hard-currency trade was in deficit. Many observers noted, however, that Finland's debt was low by

OECD standards, and they suggested that the country's external

imbalances could be sustained for many years. Regional Economic Integration

Until 1917 the Grand Duchy of Finland enjoyed a privileged

position as a relatively advanced part of the Russian Empire, supplying metal products and ships in exchange for agricultural goods.

These ties collapsed, however, when political tensions between the

Bolshevik regime and the Finnish Republic precluded commercial

agreements. The interwar pattern was reversed in the years fol- lowing World War II, as reparations payments and barter trade

grew into a close trading relationship in which Finland exported

industrial goods, especially capital goods, in exchange for raw

materials and fuels—an arrangement roughly parallel to that which

had existed before 1917.

Starting in the late 1950s, however, Finland broke away from

its dependence on the Soviet market, successfully opening its econ- omy to the two West European trading blocks, the European Economic Community (EEC—see Glossary) and the European Free

Trade Association (EFTA—see Glossary). Expanded trade with

the West did not imply renunciation of profitable exchanges with

the East, however, because Finnish commercial ties with the Soviet

Union and with the other members of the Council for Mutual Economic Assistance (CMEA, CEMA, or Comecon—see Glossary)

deepened after 1960. By the late 1980s, Finland provided a unique

example of a neutral country with a free-market economy that had

developed increasing economic interdependence with both the market economies of Western Europe and the planned economies of

Eastern Europe.

207
Finland: A Country Study

Although many Western observers saw in Finnish foreign eco- nomic poUcy the dominance of security concerns over economic

interests, close inspection revealed a mixture of motives. The guiding principles of postwar foreign policy—Finland's need to assure

the Soviet Union that it did not have to fear threats from (or

through) Finnish territory as well as Finland's practice of active

neutrality—influenced trade policies toward the East, especially in

the immediate postwar years. Such concerns blocked Finnish participation in the Marshall Plan and in the Organisation for European Economic Co-operation (OEEC), which was established to coordinate the use of Marshall Plan aid (see Foreign Relations,

ch. 4). Trade with the East also served important economic interests,

however, driving the rapid development of the metalworking

industries during the 1950s and helping to absorb labor released

from the modernizing farm sector. In the years after the 1973 oil crisis, Finnish exports to the Soviet Union also provided an essential market at a time of recession in Western markets. Commentators suggested that by the 1980s, the Finns, less concerned with

security than they had been in the early postwar years, based policy

decisions almost exclusively on market considerations.

Ties to West European Markets

Although trade with Western Europe developed slowly in the

early postwar years, by the 1980s it was more important than trade

with the East. During the early and mid-1950s, when the West

European countries liberalized trade and exchange regulations

under the OEEC , Finland maintained import and export controls

inherited from World War II and the reparations years. Conducting almost all trade under bilatercil agreements (except for occasional trilateral deals worked out with the Soviet Union and another

East European country), Finland saw its trade grow only slowly.

Thus, although the forest industries were competitive, the econo- my as a whole remained isolated. The Finns did participate to a

limited extent in international economic organizations, joining the

International Monetary Fund (IMF—see Glossary), the World

Bank (see Glossary), and the General Agreement on Tariffs and

Trade (GATT—see Glossary) in the late 1940s. The country also became a member of the Nordic Council and agreed to a Nordic

labor market, but did not favor a Nordic common market because

of Soviet opposition. Faced by the growing movement toward West

European economic integration after 1955, Finland ran the risk of remaining on the sidelines, not only because of Soviet pressures

but also as a result of domestic protectionism.

208
The Economy

It was not until 1957 that the Finns first shifted their policy toward

Western Europe in a move designed to protect access to traditional export markets, especially in Britain, and to shift economic

activity to branches in which the country had a comparative advantage at a time when extensive economic growth was reaching

its limits. The new policy package combined an austerity program,

a sharp currency devaluation, and multilateral tariff reductions for trade in industricil goods arranged through the Helsinki

Club, which was a model for further trade agreements. In effect,

Soviet opposition had blocked Finnish membership in the OEEC

,

leading the Finns to set up the Helsinki Club, which the OEEC

countries, agreeing to apply their liberalized import lists to Finnish goods, then joined. In 1958 Finnish authorities further liber- alized trading conditions by making the Finnish mark convertible

in European markets.

Since the late 1950s, Finland has consistently pursued freer trade

in industrial products with the members of EFTA and the EEC

,

while protecting domestic agriculture to maintain food supplies and

while controlling oil imports to safeguard trade with the Soviet

Union. Under the FINEFTA agreement, signed in March 1961,

Britain and other EFTA states extended associate membership and

free-trade arrcingements to Finland. In 1969 Finland joined the Ornisation for Economic Co-operation and Development (OECD—see Glossary), the successor to the OEEC. Although the OECD played

a minor role in commodity trade, its recommendations regarding

cooperation among industrialized free-market economies touched on issues such as freer trade in services Eind liberalized capital transfers. When two important trading partners, Britain and Denmark,

switched from EFTA to the EEC, Finland (like the other EFTA

states) negotiated with the EEC an industrial free-trade agreement that came into effect in 1974. In 1986 Finland became a regular member of EFTA, the Soviet Union finally having recognized

that the organization posed no threat to its security or its trade

interests. Under these free-trade agreements, virtucilly all Finnish

industrial goods entered West European markets duty-free (but

they sometimes faced troublesome nontariff barriers). These ar- rangements led to rapid increases in trade with Western Europe,

stimulating specialization and improving economic efficiency in

Finland.

Finnish business intensified its interest in Western Europe during the mid-1980s and the late 1980s, as falling oil prices led to a curtailment in trade with the Soviet Union. In 1986 and 1987,

the Finns managed to shift trade smoothly from Eastern to Western

markets, a development that soothed trade worries. Despite this

209
Finland: A Country Study

success, in early 1987 prominent Finns voiced fears that the EC's

plan to unify its markets by 1992, a plan approved in June 1985,

might harm Finnish trade interests. According to this line of

thought, the elimination of the remaining hindrances to trade in

commodities, the establishment of free markets in services and capital, and the further harmonization of European macroeconomic

policies would favor EC products, reducing Finnish access to EC

markets. Commentary became especially heated after reports that

other EFTA states, including Norway and Austria, were considering

joining the EC, as Portugal had done in 1986. Moreover, the ten- dency for EC countries to expand cooperation from economic matters to security questions made Finnish membership in the EC

politically impossible.

Informed anadysts noted that, as it had in the years after 1957,

Finland could maintain access to European markets without

undermining its independent foreign policy. Although deepened

integration among the EC countries would tend to reduce ECEFTA trade, Finland and the other EFTA countries were not

defenseless. As a group, the EFTA countries formed the EC's lar- gest trading partner and could exert considerable pressure on EC

harmonization decisions. Indeed, the EC had demonstrated some

willingness to cooperate with the EFTA countries in April 1984,

when representatives of the two trading groups issued the Luxembourg Declaration, which called for reduced technical barriers to trade, for common norms in information technology and telecommunications, and for greater cooperation in multilateral research

and development programs. Even if EFTA efforts lagged, Finland

could maintain trade ties with the EC by aligning national technical norms, commercial practices, and economic policies with those

chosen by the EC. Other arrangements were also possible. For

example, in 1986 Finland joined the ESA (which included other

non-EC countries), participating in the group's earth observation

satellite program as well as in basic research efforts. In effect,

expanded technical cooperation offered the prospect that, while

integration with the EC countries would extend far beyond commercial agreements during the 1990s, Finland could participate

without sacrificing political neutrality.

Finnish-Soviet Cooperation

Originally established in the chaos of the postwar years, FinnishSoviet economic ties developed apace during the entire postwar

period as the two countries experimented with new forms of inter- action between seemingly incompatible economic systems. During the Cold War, the two countries found this trade especially

210
The Economy

important. The Soviet Union was Finland's largest trade partner,

while Finland was the Soviet Union's largest Western client until

the 1970s; in 1987 Finland still placed third in Soviet trade with

the West. Although the relative importance of Finnish-Soviet trade

had declined in the 1980s, the two countries still needed each other's

business, and they sought to compensate for the setbacks in trade

by expanding other forms of cooperation.

Finnish-Soviet trade developed out of interim agreements

negotiated in the immediate postwar years, especially the 1947

Treaty of Commerce, in which the Finns and the Soviets agreed

to expand bilateral trade and to extend to each other most favored

nation status. During the late 1940s, annual agreements set trade

targets, but in 1950, with the end of reparations deliveries in sight,

the two partners agreed on the first of the five-year trade plans that

continued to regulate trade in the late 1980s. These plans, which

contained commodity quotas for both imports and exports, cdlowed

both sides to anticipate deliveries—a plus for Finland's shipbuilding and other heavy industries. Annual trade protocols, negotiated in accordance with the five-year plans, provided a detailed list of expected exchanges. Although in the Soviet Union the government traditionally monopolized foreign deal making, in Finland

private firms were free to negotiate with minimal government in- terference. The parties to individual transactions set the terms of

exchange—including delivery dates and prices—which generally

reflected world market conditions. A licensing system, covering both

imports and exports, enforced the planned trade balance.

The barter arrangements of the early postwar years soon gave

way to a ruble clearing account jointly administered by the BOF

and the Soviet Foreign Trade Bank. Under this scheme, individual

transactions did not need to balance, provided that total trade

balanced in each five-year period and that payment imbalances did

not exceed a ceiling of about 5 percent of the annual value of trade. Other payment arrangements were developed when needed. Between 1956 and 1965, for example, the Soviets made hard-currency

payments to cover the costs of imported materials in Finnish shipments to the Soviet Union. In addition, barter still played a role

in border trade, which was regulated by a special section of the

annuad trade protocol.

During the 1960s and 1970s, the two countries further institu- tionalized their economic relationship, often as a result of negotiations initiated from the Finnish side. In 1960 the Finns, invoking

the most favored nation clause of the 1947 Treaty of Commerce,

negotiated a free-trade agreement to compensate the Soviet Union

for the FINEFTA agreement. In 1967 the two states established

211
Finland: A Country Study

the Finnish-Soviet Intergovernmentcd Commission for Economic

Cooperation, which set the five-year and the annual trade projections and studied other forms of cooperation. In 1973, after signing a free-trade agreement with the EEC , Finland became the first Western nation to reach cin agreement with Comecon; Finland complemented this agreement with bilateral free-trade treaties with most

East European Comecon members. Another importaint step toward

improved ties came in 1977, when Finland and the Soviet Union

decided on a fifteen-year Long-term Economic Plan meant to smooth out trade fluctuations between the five-year plans.

Despite these elaborate institutional arrangements, prospects for expanding Finnish-Soviet trade dimmed after 1986, when falling

oil prices sharply reduced the Soviet Union's ability to finance imports from Finland. Soviet consumer goods sold poorly on the Finnish market, and the Soviets reportedly preferred selling their few

competitive industrial products in hard-currency markets, making it hard to find substitutes for oil imports. The Finns, long

unchallenged in Eastern markets, found increased competition from

other Western exporters. The reform movement initiated by Soviet

party leader Mikhail S. Gorbachev had both advantages and dis- advantages for the Finns. In the long run, increased flexibility and

new emphasis on consumer goods were likely to improve prospects

for trade. Finns experienced immediate difficulties, however, when

Moscow decided to decentralize foreign-trade decision making,

reducing the importance of long-standing Finnish contacts in the

Soviet Ministry of Foreign Trade. As a result of these developments, analysts predicted that Finnish-Soviet trade might decline

by as much as 10 percent per year in 1988 and 1989, unless world

oil prices rose again.

In the late 1980s, concerns about falling exports to the East filled the business press with reports of the difficulties faced by Finnish

agriculture, textiles, leather goods, and shipbuilding, sectors particularly dependent on the Soviet market. Many analysts believed,

however, that the Finns would find ways to preserve their exch2inges

with Soviet enterprises. Aware of their common interests, policy

makers in the two countries addressed immediate problems and

invented new forms of East-West cooperation. At the end of 1986,

the Soviets agreed to convert the Finnish surplus on the clearing

account to a loan paying interest at world rates, with guarantees on the ruble's exchange rate. In early 1987, Finland's state petroleum company, Neste, arranged to import increased amounts of

Soviet oil, which it reexported, sometimes after refining operations.

In the spring of 1987, a Finnish firm became the first Western

enterprise to establish a joint venture with Soviet partners by

212
The Economy

investing in an Estonian paint factory. Later, Finnair agreed to form a joint venture to renovate and operate a luxury hotel in

Moscow. The two sides were also exploring compensation projects,

in which Finnish enterprises would help to build industrial facili- ties in the Soviet Union and would accept a share of the resulting

output as full or partial payment. In March 1988, Moscow

announced plans to list several Soviet companies on the Helsinki

Stock Exchange. Thus, although Finnish-Soviet trade might well

decline in the late 1980s and early 1990s, it appeared likely that

the Finns would find ways to maintain and to improve the longstanding economic relationships with their neighbors in the Soviet

Union and Eastern Europe.

* * * The OECD's annual economic survey, Finland, most recently

published in April 1988, is an authoritative and readily available

summary of the Finnish economy that includes up-to-date statisti- cal tables. The Financial Times (published in London) provides regular coverage and occasional surveys of Finnish economic and

business developments. The Economist Intelligence Unit's quarterly Country Report: Finland and annual Country Profile: Finland

oudine economic and political trends and include up-to-date statisti- cal material. The Yearbook ofNordic Statistics, published by the Nordic

Council of Ministers, provides official economic statistics in a for- mat that allows comparison with other Nordic states; the Statistical Yearbook of Finland, issued by the Central Statistical Office of Finland, supplies more detailed statistics, although it is less widely dis- tributed.

No comprehensive survey of the Finnish economy exists in

English, but a number of publications offer partial views. Finland

and Its Geography, edited by Raye R. Piatt, although now rather

dated, offers a geographical introduction to economic affairs. Fred

Singleton's The Economy of Finland in the Twentieth Century sketches

the historical background. Dieter Senghass's The European Experience

and essays by Risto Alapuro, Matti Alestalo, Stein Kuhnle, and

Kimmo Kiljunen analyze the country's economic development in

comparative frameworks. David Arter's Politics and Policy-making

in Finland and Lars Mjoset's "Nordic Economic Policies in the 1970s

and 1980s" explain the institutional and international influences on economic policy making. The Bank of Finland Bulletin offers in-depth analytical articles on topics of current interest, and the

varied publications of Finland's government and of Finnish

producer groups, generally available from the Embassy of Finland

213
Finland: A Country Study

in Washington, give information about particular sectors. (For fur- ther information and complete citations, see Bibliography.)

214
Chapter 4. Government and Politics
I

1

I

Parliament building, Helsinki
Since the establishment of its present system of government in 1919, Finland has been one of the more fortunate members of the Western community of democratic nations. Compared

with other European states, the country was only moderately af- fected by the political turmoil of the interwar period; it passed

through World War II relatively unscathed; and, although right on the line that divided Europe into two hostile blocs after the second

half of the 1940s, it survived as an independent nation with its democratic institutions intact. This enviable record was achieved against formidable odds.

Although the constitutional basis of their government grew out of

long-established institutions, Finns had never been fully free to govern themselves until late 1917 when they achieved national in- dependence. Swedish and Russian rulers had always ultimately

determined their affairs. Finnish society was also marked by deep

fissures that became deeper after the brief civil war (1918), which

left scars that needed several generations to heal. In addition to

class and political divisions, the country adso had to contend with

regional and linguistic differences. These problems were eventually surmounted, and by the 1980s the watchword in Finnish politics was consensus. A skillfully constructed system of government cillowed Finns to manage their affairs with the participation of all social groups

(although there were some serious lapses in the interwar period).

Checks and balances, built into a system of modified separation

of powers, enabled the government to function democratically and

protected the basic rights of all citizens. The 200-member parliament, the Eduskunta, elected by popular vote, was sovereign by

virtue of its representing the Finnish people. An elected president

wielded supreme executive power and determined foreign policy.

Although not responsible politically to the Eduskunta, the president could carry out many of his functions only through a cabinet

government, the Council of State, which was dependent upon the

support of the Eduskunta. An independent judiciary, assisted by

two legal officials with broad independent powers—the chancellor

ofjustice and the parliamentary ombudsman—ensured that government institutions adhered to the law.

Working within this system during the 1980s were a variety of

political parties, an average of about a dozen, ranging from sect- like groups to large, well-established parties, the counterparts of

217
Finland: A Country Study

which were to be found all over Western Europe. The socialist wing

consisted of a deeply split communist movement and a moderate

Finnish Social Democratic Party that by the late 1980s was a pre- eminent governing party. The center was occupied by an agrari- an party, the Center Party, which had been in government almost

continuously until 1987; the Swedish People's Party; and a for- merly right-wing protest party, the Finnish Rural Party. The right was dominated by the National Coalition Party, which was fairly

moderate in its conservatism. In the 1970s and the 1980s, the mainstream parties, and even a good part of the Communist Party of

Finland, had moved toward the center, and the political spectrum

as a whole was slightly more to the right than it had been in previ- ous decades.

A constitutional system that was conservative in nature had

allowed these parties to work together, yet within constraints that

permitted no single group to usurp the rights of another. Nevertheless, the variety of parties had made it very difficult to put together

coalitions that could attain the strict qualified majorities needed

to effect fundamentail changes. Only since the second half of the

1960s had it been possible, though at times difficult, to find a broad

multiparty consensus. Powerful interest groups were also involved in Finnish politics,

most noticeably in the negotiation and the realization of biannual

income policy settlements that, since the late 1960s, had affected

most Finnish wage-earners. Interest groups initially negotiated the

terms of a new wage agreement; then it was, in effect, ratified by

coalitions of parties in government; and finally the Eduskunta

passed the social and economic legislation that underlay it. Some

observers complained that government's role had become overly

passive in this process and that the preeminence of consensus

actually meant that Finnish politics offered the populace no real alternatives. Yet most Finns, remembering earlier years of industrial strife and poverty, preferred the new means of managing public

affairs. There was also broad agreement about Finnish foreign policy.

The country was threatened with extinction as an independent

nation after World War II, but presidents Juho Paasikivi and Urho

Kekkonen, both masters of realpolitik, led their countrymen to a new relationship with the Soviet Union. The core of this relationship was Finland's guarantee to the Soviet Union that its northwestern border region was militarily secure. Controversisd as the

so-called Paasikivi-Kekkonen Line was initially, by the 1980s the

vast majority of Finns approved of the way Finland dealt with its

218
Government and Politics

large neighbor and were well aware, too, of the trade advantages

the special relationship had brought to their country.

Working in tandem with good Finnish-Soviet relations was the

poUcy of active and peaceful neutrality, the backbone of Finnish

foreign policy. Advocating, as a neutral state, the settlement of dis- putes through peaceful, legal means was a role Finns adopted will- ingly. A high point of this policy was the part the country played

in planning and in hosting the 1975 Conference on Security and

Cooperation in Europe. Another facet of active neutrality was a committed membership in the United Nations, most notably in

the organization's peacekeeping forces. Constitutional Framework

Finland's government structure has remained largely unchanged

since it was established in 1919 with the passage of the Constitution Act (see The Establishment of Finnish Democracy, ch. 1). Building on a combination of old institutions from both the Swedish and the Russian periods, this law, together with three others

also of constitutional status, has given Finland a system that has

been remarkably successful in allowing a once deeply divided nation to govern itself. Constitutional Development

Finland, adthough independent of foreign rule only since 1917,

has traditions of self-government extending back into the Middle

Ages. Because their country belonged to the dual kingdom of

Sweden-Finland for more than 600 years, Finns had long enjoyed

the common Nordic right to manage local affairs by themselves.

Beginning in 1362, Finns took part in the election of the Swedish

king, and they thus became involved in the government of the realm

as a whole. This role was increased after 1435, when they began

sending representatives to the kingdom's governing body, the Diet

of the Four Estates (Riksdag).

The Swedish Diet Act of 1 6 1 7 and the Form of Government Act

of 1634 formalized the Finnish tradition of estates, whereby leading members of the country, representatives not only of regions

but of soci2il classes as well, met to decide matters of common concern. Although the acts restricted local government somewhat, they

brought Finns more than ever into the management of the kingdom's affairs. At regular intervads a Finn presided over the nobility, the most important of the four estates of the Diet; consisting

also of the estates of the clergy, burghers, and peasantry, the Diet

continued to be Finland's representative governing body until early

in the twentieth century.

219
Finland: A Country Study

Royal power was strengthened by the constitution of 1772, forced on the Diet by King Gustav III. This constitution, in effect in Finland until 1919, long after it had been abrogated in Sweden, gave

the king final say about the decisions of the Diet. The king's power was further augmented by the Act of Union and Security of 1789,

which gave him exclusive initiative in legislative matters. Ceded by Sweden to Russia in 1809, Finland was not incorporated fully into the empire by Tsar Alexander I, but retained its own legal system (see The Russian Grand Duchy of Finland,

1809-1917, ch. 1). A small body, the Senate, was established to administer the country. Its two sections, finsince and justice, later became the basis of independent Finland's cabinet and supreme

courts. The Senate's head, the governor general, the highest offi- cial in Finland, was a Russian appointed by the tsar. An indication of the country's relative autonomy, however, was that all other

officiads of the Grand Duchy of Finland were native Finns.

The tsar, who had the right to determine when the Diet met,

dissolved the assembly in 1809, and it did not meet again until 1863

when reccdled by Alexander II, the Tsar Liberator. Thereafter the

Diet met regularly, and in the late 1860s it ushered in the "Golden Age" of Finnish legislation, a period of several decades during

which the country's laws were modernized and were brought into

harmony with the legal codes of Western Europe. It was during

this period, too, that political parties appeared, emerging first from

the campaign to give the Finnish language its rightful place in the

country, then from the growing resistance to Russian rule, and

fincJly from the question of how to contend with the coming of

industrialization and labor strife. The aggressive Russification campaign that began in the 1890s

sought to end the relative autonomy Finland had enjoyed under

tsarist rule (see The Era of Russification, ch. 1). A military defeat

in East Asia weakened the Russian empire and gave Finns a chance

for greater freedom. The Diet unanimously dissolved itself in 1906,

and a parliament, the Eduskunta, a unicamercd body elected by

universcd suffrage, was created. Finland became in one step a modern representative democracy and the first European nation

to grant women the right to vote. The tsarist regime allowed the assembly few of its rights, however,

and only after the collapse of the Russian Empire and the Bolshevik Revolution of 1917 were the Finns able to secure their independence. A civil war and bitter political debates about whether the

country should be a monarchy or a republic preceded the passage

of the Constitution Act of 1919, which established the present sys- tem of government in Finland.

220
Government and Politics

The Constitution

Finland's Constitution is not a single law, but rather a collec- tion of four laws that have constitutional status. The most important is the Constitution Act of 1919, which lays out the functions

and relationships of the most important government entities, lists the basic rights of Finnish citizens and the legal institutions charged

with their protection, and makes provisions for managing state finances and for organizing the defense forces and public offices. The second of the basic laws is the Parliament Act of 1928, a slightly

modernized version of the Parliament Act of 1906, which established the country's democratically elected parliament, the Eduskunta, and spelled out its procedures. Two other basic laws date from

1922 and involve supervision of the cabinet or government: the

Responsibility of Ministers Act, which details the legal responsibilities of the members of the cabinet and the chancellor ofjustice;

and the High Court of Impeachment Act, which explains how they

are to be made accountable for infractions of the law.

Two acts dealing with the self-determination of the Aland Islands

also have constitutional status (see fig. 1). The Autonomy Act of

1951 protects the Swedish character of the archipelago, and a law

of 1975 restricts the purchase and ownership of land on the islands.

The Constitution Act of 1919, building on existing Finnish

institutions, established a parliamentary system of government

based on a division of powers among the legislative, the executive,

and the judicial branches of government. But the separation of powers is not complete, and the branches' powers and functions are overlapping and interlocking. Sovereign power rests with the Finnish people, who govern themselves through the Eduskunta. Sharing legislative power with the parliament, however, is a president,

who also wields supreme executive power. He exercises this power

through the Council of State, a cabinet of ministers. In accordance

with parliamentary norms, this cabinet must resign if it loses the

support of the Eduskunta. The judiciary is independent, yet it is bound by the laws passed by the Eduskunta, which, in turn, fol- lows constitutional norms in drafting them.

Like other Nordic countries, Finland has no constitutional court. The Eduskunta, acting through its Constitutional Committee,

serves as the ultimate arbiter of the constitutionality of a law or

legislative proposal. Composed of seventeen members, chosen to represent the party composition of the full chamber, the committee seeks expert opinion and lets itself be bound by legal precedents.

The Constitution may be amended if proposals to this end meet

qualified or set majority requirements. The requirements are such

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Finland: A Country Study

that as few as one-sixth of the Eduskunta's members can prevent

the passage of amendments. The large number of Finnish poUtical parties makes attaining qualified majorities nearly impossible,

unless an amendment has widespread support. This protects the

rights of minorities.

The individual rights of Finnish citizens are delineated in Section II of the Constitution Act, Article 5 through Article 16, and,

with a single addition, they have remained unchanged since their

adoption in 1919. The additional amendment, enacted in 1972,

promises cdl Finns the opportunity for gainful employment, to be

provided by the state if necessary. The list of rights is, of necessity,

rather general. How they are exercised, protected, and limited is set out in ordinary laws. The state reserves for itself the right to limit them "in time of war or rebellion."

First and foremost, all citizens are equal under the law, with a

constitutional guarantee of their rights to life, honor, personal free- dom, and property. The reference to honor provides for protection against false and slanderous charges and reflects the importance

of reputation in Finnish tradition. The protection of property and

the requirement for full compensation if it is expropriated for public

needs indicate the conservative nature of the Finnish Constitution.

The right of freedom of movement encompasses residence, protection from deportation, and guaranteed readmittance into Finland. Only in special cases, such as convictions for criminal activity, are these freedoms abridged. Complete freedom of religious worship and association is guaranteed, as is freedom from religion.

Finnish citizens are guaranteed free speech and the right of

assembly, as well as the right to publish uncensored texts or pic- tures. The inviolability of the home is promised, and a domicile can be searched only according to conditions set by law. Privacy

of communications by mail, telegraph, or telephone is likewise

provided for. A Finn may be tried only in a court having prescribed

jurisdiction over him. The safeguarding of the cultural affinities of the country's citizens is regarded as a fundamental right, and,

as a consequence, the two languages spoken by native-born Finns,

Finnish and Swedish, both enjoy the status of official language.

The act stipulates that a Finn may use either of these two languages

in a court of law and may obtain in that language all pertinent

legal or official documents. Finally, in accordance with its nature

as a republic, Finland grants no noble or hereditary titles. Governmental Institutions

The four acts that make up the Finnish Constitution provide for

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Government and Politics

a central government divided into three overlapping branches

legislative, executive, and judicial (see fig. 19). Their mutual control by an elaborate system of checks and balances has permitted

Finnish democracy to flourish. Decisions of the central government

are implemented by ministries, semiautonomous national boards,

and governments at the provincial and the local levels. Finnish local government is comparatively extensive, has broader powers than

that of many other countries, and, in accordance with the Constitution, is self-governing. An efficient, but somewhat politicized,

civil service staffs these governmental structures. Underpinning the

system is an electoral system that permits the Finnish people to determine their own affairs in a democratic way. One region of

the country, the Aland Islands, is to a degree autonomous, a reflec- tion both of its unique linguistic heritage and the respect for individual freedom embedded in the Finnish system of government.

Legislature

The Eduskunta is the country's highest governing body by vir- tue of its representing the people, who possess sovereign power.

Its main power is legislative, a power it shares with the country's

president. It also has extensive financial powers, and its approval

is required for the government's annual budget and for any loans

the government wants to contract. Although the president is dominant in the area of foreign policy, treaties must be ratified by the Eduskunta, and only with its consent can the country go

to war or make peace. This chamber also has supervisory powers,

and it is charged with seeing that the country is governed in accor- dance with the laws it has passed. To enforce its will, the Eduskunta

has the power to hold the government to account, and to call for the impeachment of the president.

The Eduskunta is closely tied to the president and to the Council of State. Neither the president nor the cabinet is able to carry

out many executive ftmctions without the support of the Eduskunta,

and the cabinet must resign if it is shown that it has lost the chamber's confidence. Strong links between the Eduskunta and the

Council of State result, too, from the circumstance that most cabi- net ministers are members of parliament. On the other hand, the

Eduskunta is subordinate to the president in that he may dissolve

it and call for new elections. Despite its legislative powers, it actually initiates little legislation, limiting itself mainly to examining

the government bills submitted to it by the president and the council.

In addition, all legislation passed by the Eduskunta must bear the

president's signature and that of a responsible minister in order

to go into effect. The Eduskunta need not approve the legislative

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Finland: A Country Study

224
Government and Politics

proposals submitted to it, however, and can alter or reject them.

As stipulated by the Parliament Act of 1928, the Eduskunta's

200 members are elected by universal suffrage for four-year terms.

All citizens twenty years of age and older, who are able to vote,

and who are not professional military personnel or holders of cer- tain high offices, have the right to serve in the Eduskunta. A wide

variety of the country's population has served in this body, and

its membership has changed often. Sometimes as many as one-third

of the representatives have been first-term members, as occurred

in the 1987 national elections.

Finnish election laws emphasize individual candidates, which

sometimes has meant the election of celebrities to the body. Most

members, however, have begun their political careers at the local

level. In the late 1980s, about one-third of the representatives were

career politicians. The professions were overly represented at the

expense of blue-collar workers; about 40 percent of the members,

compared with only 3 percent of the population as a whole, had

university degrees. By the 1980s, farmers and businessmen were no longer so prevalent as they once had been, while there were more journalists and managers. The number of female representatives had also increased, and by the 1980s they made up onethird of the chamber. In the 1987 election, women won 63 of the

200 seats. Article 11 of the 1928 Parliament Act states that members are

to vote as their consciences dictate. A delegate is not legally bound

to vote as he or she promised, in a campaign for example. In the

late 1980s, however, party discipline was strict, and delegates usually

voted as directed by their party.

The four-year term, or legislative period, of the Eduskunta is divided into annual sessions beginning in early February, with va- cation breaks in the summer and at Christmas. The first business

of a yearly session is the election of a speaker, two deputy speakers, and committee chairmen. Those elected make up the speaker's council, which is representative of the party composition of

the Eduskunta and arranges its work schedule. The speaker, by

tradition of a different party from the prime minister, presides over

the chamber, but the speaker neither debates nor votes. Also chosen in the first days of a new session are those, from

either within or outside the parliament, who supervise the pension

institute and television and radio broadcasting; and five auditors

who monitor compliance with the government's budget and oversee the Bank of Finland (BOF). Among the most important posts

to be filled by the Eduskunta for its four-year term are those of

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Finland: A Country Study

the parliamentary ombudsman and the six members of the

Eduskunta who make up half of the High Court of Impeachment.

Parliament approves legislation in plenary sittings, but it is in

the committees that government bills are closely examined. In the

late 1980s, there were thirteen committees in all: five permanent

committees—constitutional, legal affairs, foreign affairs, finance,

and bank—and eight regular ad hoc committees—economy, law

and economy, cultural affairs, agriculture and forestry, social affairs,

transportation, defense, and second legal affairs. Committee membership reflects the political composition of the Eduskunta. Members usually serve for the whole legislative period, and they

commonly have seats on several committees, often of their own

choosing. Members who have served on a given committee for a number of terms often develop considerable expertise in its area

of responsibility.

Legislative proposals also pass through the forty-five-member

Grand Committee. Only the budget, which is not a legislative

proposal in Finland, escapes its review. The committee, adopted

as a compromise in 1 906 between those who advocated a bicameral

legislature and those who preferred the unicameral body finally

established, was conceived as a safeguard against the measures of

a perhaps too radical parliament. It therefore examines proposals

for their legal soundness and propriety. Yet, according to the British

scholar David Arter, the Grand Committee has only occasionally

altered the proposals sent to it, and, as a consequence, it has lost prestige within the Eduskunta. Its members are generally newly

elected representatives.

The Eduskunta has an elaborate procedure for handling government bills sent to it by the president, after discussion and approval

in the Council of State. This procedure was adopted with the idea

of preventing the enactment of radical measures, and it is an indication of the Eduskunta' s essentially conservative nature. Proposals

are usually first discussed in a plenary session, then directed by

the speaker to an appropriate committee, where they are carefully

scrutinized in closed hearings. After committee review and report,

proposals are returned to the plenary session for the first reading,

where they are discussed but no vote is taken. The next step is the

Grand Committee review. Working from the Grand Committee

report, the second reading in plenary session is a detailed examination of the proposal. If the Grand Committee report is not

accepted in its entirety, the proposal must be returned to the Grand

Committee for further discussion. Once the proposal is back again

at the plenary session, for the so-called continued second reading,

the Eduskunta votes on the changes recommended by the Grand

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Government and Politics

Committee. There is no discussion in the fmal and third reading;

the proposal is simply approved or rejected. Votes may be taken

at least three days after the second reading or the continued second

reading. Once approved by the Eduskunta, bills require the signature of the president within three months to go into effect. This

requirement gives the president the power of suspensive veto. This

veto, rarely used, can be overridden if the Eduskunta approves the

bill with a simple majority following new national elections.

Only the government's budget proposal is exempted from the

above parliamentary procedure, because the budget is not considered a legislative proposal in Finland. Instead, the budget proposal

is handled in a single reading, after a close review by the largest

and busiest parliamentary committee, the twenty-one-member

Finance Committee. Government bills connected with the budget

and involving taxation, however, must pass through the three plenary session readings and the Grand Committee review. This reinforces the Eduskunta' s budgetary control.

The Eduskunta' s elaborate legislative procedure can be traversed

in a few days if there is broad agreement about the content of a

bill. Qualified majority requirements for much legislation, most

commonly that touching on financial matters and property rights,

enable a small number of representatives to stop ratification in a plenary session and to oblige the government to ascertain a bill's probable parliamentary support before submitting it to the

Eduskunta. Qualified majority requirements for legislation involving taxation for a period of more than one year require the approval

of two-thirds of the body. Sixty-seven members can hold such legislation over until after a new election and can thus effectively brake

government programs. Because there is no time limit on a member's right to speak, filibusters can also slow the progress of a bill through the Eduskunta, although this tactic has seldom been

employed. Government care in the crafting of bills is reflected in

the unimpeded passage through parliament of most of them.

Legislation altering the Constitution is subjected to more rig- orous requirements. Constitutional changes may be approved by

a simple majority, but before they go into effect, they must be

approved again by a two-thirds majority in a newly elected

Eduskunta. If the changes are to go into effect within the lifetime

of a single Eduskunta, the legislation implementing them must be

declared "urgent" by five-sixths of the body and, in a subsequent

vote, approved by a two-thirds majority. This requirement means

that a vote of one-sixth against a proposed economic measure

regarded as being of a constitutional nature, such as some incomes

policy legislation, can prevent its enactment during a single

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Finland: A Country Study

parliamentary term. These same majorities are required for an

unusual feature of Finnish parliamentary procedure that permits

the passage of laws that are temporary suspensions of, or exceptions to, the Constitution, but that leave it intact. Since 1919 about

800 of these exceptional laws have been passed, most involving only

trivial deviations from the Constitution.

Members of the Eduskunta may initiate legislation by submitting their own private members' bills and financial motions relat- ing to the budget. Several thousand of these are submitted each

year, but 95 percent are not even considered, and only a handful

are accepted. Members also may submit proposals connected to government bills, or may petition for certain actions to be taken.

The main point of these procedures is often a delegate's desire to win the approval of his constituents by bringing up an issue in the

Eduskunta.

The Eduskunta has other means of exerting pressure on the

government, in addition to refusing to approve its legislative

proposals. Its members may address questions to ministers either

orally or in writing, and in either case a quick response is required.

Potentially much more serious is an interpellation, possible if twenty

members desire it, in which case the government can fall if it fails to survive a vote of confidence. Few governments fall in this way,

however, as they are allowed to remain in power as long as a lack

of support is not shown. Interpellations have been used principally

as a means of drawing attention to a particular question, and press coverage usually is intense.

An important instrument of Finnish parliamentary control is the

right and duty of the Constitutional Committee to exaimine government bills with regard to their constitutionality. Finland has no

constitutional court, and suggestions for its establishment have foundered because the Eduskunta has refused to cede this important

review power to a court that would be outside parliamentary control. Although the committee's seventeen members come from parties with seats in the Eduskunta, the committee has strived for impartiality, has sought the opinions of legal specialists, and has

let itself be bound by precedents. As evidence that it takes its responsibilities seriously, committee members representing both the far

left and the far right have agreed with 80 percent of its judgements

over a long period of time.

The Eduskunta also exercises control of the executive through

the Responsibility of Ministers Act, which can be used against

the government or an individual minister if a parliamentary

committee, the parliamentary ombudsman, or five members of

the Eduskunta so decide. The Eduskunta' s ability to control the

228
The Eduskunta, Finland's parliament, in session Courtesy Embassy of Finland, Washington

government is also apparent in its duty to comment on the annual

report of the government's actions submitted in May, and the For- eign Affairs Committee's review of the frequent Ministry of Foreign Affairs reports detailing the government's conduct in the field of foreign relations.

President

Supreme executive power is held by the president, assisted by

the Council of State. The president also has legislative power

exercised in conjunction with the Eduskunta. As of 1988, the president is to be elected for a six-year term either directly by the Finnish people or, if an absolute majority is not reached, by a college

of 301 electors selected in the same election. Previously the president was elected indirectly by the college of electors. As of 1988, there was no limit on the number of terms a president might serve, but in the late 1980s legislation was being dis- cussed that would permit no one to serve more than two consecutive terms. The president's only formal qualification is that he or

she be a native-born citizen. Once elected, the president must

renounce all other offices, and, with the aim of being a nonparti- san head of state, must cease being a member of any political party.

His election, separate from that for the Eduskunta, gives him a

distinct mandate that theoretically elevates him above routine

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Finland: A Country Study

politics. Another advantage of his long term in office is that it brings

to Finnish political life a continuity that it has often lacked.

The president is not politically responsible to anyone. He can

be removed from office only if the Eduskunta decides by a threequarters majority that he is guilty of treason. He would then be

tried by the Supreme Court (see Legal System, this ch.). The risks that such freedom from political responsibility entails are lessened

because most of his executive decisions can be carried out only by means of the Council of State, and his legislative powers are real- ized through the Eduskunta.

The president's power to dissolve parliament and to call for new

elections gives him, in theory, considerable influence over parliament, but ultimately he must work with an Eduskunta elected by

the people. If he cannot convince a majority of the voters or the

members of the Eduskunta to support his policies, he cannot act. An indication of the importance of this central element in Finnish

parliamentary practice is that the Eduskunta has been dissolved

only once—in 1924—against its will. The other half dozen dissolutions were caused by the inability of the government to agree on a common course of action.

It is the president who decides what legislative proposals are sent

to the Eduskunta, although in practice government bills are drafted

by the Council of State and are sent to parliament after presidential approval. Failure to sign them within three months of their

passage amounts to a suspensive veto on the part of the president, a veto which can be overridden by a simple majority of the

Eduskunta after new parliamentary elections. Both the presidential veto and the Eduskunta override have been rare occurrences. Another important presidential power involves the formation of new governments. The president has the formal power to nominate

ministers, but his choices are bound by what the parties seated in

the Eduskunta will accept. His choices must correspond to the chamber's political composition. Within these limits, though, the president's force of character and political will influence the formation

of a government. The president also has the right to dismiss

ministers, either individual ministers, or, if he wishes, the entire

cabinet. The president may issue decrees about details of public

administration, as long as these measures are not contrary to laws

passed by the Eduskunta. The right to change laws is a parliamentary prerogative, although an emergency law may grant the president this power in times of crisis, as was done in World War II. The president nominates all senior civil servants, high judges,

provincial governors, diplomats, professors at the University of Helsinki, high churchmen, and the chancellor of justice. In making

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Government and Politics

these appointments, however, the president rarely departs from

the names suggested to him by appropriate authorities. As com- mander in chief of the armed forces, a position he may delegate

during wartime, as was done in World War II, the president also nominates military officers. The president has the power to grant pardons and general

amnesties, but the latter require the approval of the Eduskunta.

Individual immunity may also be granted by the president, in

accordance with certain provisions of the law. Moreover, the granting and the revocation of citizenship require the signature of the

head of state. The Constitution Act gives the president the responsibility for directing foreign affairs, and his authority in this area has grown

markedly since World War II. The occasion for the decisive shift of presidential activity from principally domestic concerns to for- eign relations was the threat a changing world order posed for Finland 's survival; the crucial roles, played by President Paasikivi in

formulating a new foreign policy and by President Kekkonen in

consolidating it, restructured the office they held. Their success increased the prestige and the strength of the presidency beyond

the formal powers already prescribed by the Constitution and

enhanced the president's role as head of state. By the late 1980s, however, a long period of stability both at home and abroad made the security and the direction provided

by a strong and authoritative president seem less essential for the

country's well-being, and there was serious discussion about limiting

his power of intervention in the political process. Legislation was

being prepared that would circumscribe his right to dissolve the

Eduskunta and his role in the formation of governments; in the

latter case, he would be required to take greater cognizance of the

wishes of leading politicians. Other reforms likely to be realized

in the next decade included curtailing the president's right to dis- miss ministers, abolishing the 301 -member college of electors, and

limiting the president to two consecutive terms in office. Mauno

Koivisto, first elected president in 1982 and reelected in 1988, supported reducing the tradition2d powers of the presidency (see The

Presidential Election of 1982 and Koivisto 's Presidency, this ch.).

Observers held that these reforms would augment the governing

roles of the prime minister, the cabinet, and the legislature and

that they would mean that Finnish political practices came to re- semble more closely those of other West European parliamentary

democracies.

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Finland: A Country Study

Council of State

The Council of State shares executive power with the president,

and it is responsible for the management of the governmental

machinery. The Council of State prepares the government bills presented to the Eduskunta and authors most legislation. In the

late 1980s, it consisted of the prime minister, the chancellor of

justice, and up to seventeen ministers who directed twelve ministries: foreign affairs, justice, interior, defense, finance, education,

agriculture and forestry, communications, trade 2ind industry, social affairs and health, labor, and environment. Some of the ministries

have second or deputy ministers, cind occasionally a minister holds

two portfolios. There have been no ministers without portfolio since

the early 1950s. Ministers must be "native-born Finnish citizens

known for their honesty and ability." The minister ofjustice and

one other minister must be lawyers, but otherwise there are no for- mal quailiflcations for a cabinet post. Ministers generally enter the

cabinet from the Eduskunta, but it has not been uncommon for

them to be drawn from the outside, especigdly to serve in caretaker

governments composed largely of leading private citizens and civil servants. Even prime ministers have on occasion come from outside parliament, as did Mauno Koivisto in 1979. Ministers from

the Eduskunta may continue to be members of that body, but they

may not serve on any committee.

The prime minister heads the Council of State, sets its agenda,

nominates some members of the council's committees, settles tie votes, and, most important, dissolves it when he sees fit or if it can no longer govern. The prime minister also represents the president when he is out of the country. If the president can no longer

carry out his duties, the prime minister replaces him until a new

presidential election can be held. Other than these rights and duties, a prime minister in the 1980s had few formal powers and had only

a very small staff to assist him in his work. His main responsibility was holding together cabinets composed of a number of politiccil

parties that frequently had opposing views on central issues. He

could manage this through personal prestige or by force of character, through backstairs wrangling, or, ultimately, by threatening to dissolve the cabinet if it did not adhere to the government's

program.

A key member of the Council of State, although he is not a minister, is the chancellor ofjustice. Appointed for life by the president,

he is obliged to attend all meetings of the council and to review

its proceedings for legsdity. He has no vote, but his decisions about

the legality of council proposals and decisions are regarded as

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Government and Politics

binding. The chancellor of justice also reviews the president's

actions, and he reports infractions to the Council of State, or, if necessary, to the Eduskunta. He is also empowered to initiate proceedings according to the Responsibility of Ministers Act. One

of the formal qualifications for his position is that he be well versed

in the law; and within the country's legal system he is the highest

prosecutor (see Legal System, this ch.).

The Council of State must enjoy the confidence of the Eduskunta

in order to govern. The party composition of a new cabinet has

to be acceptable to the Eduskunta, and it must correspond, to some

degree, to the relative political strength of the parties within the

chamber. Formation of a cabinet has often been difficult because,

in addition to the large number of parties that participate in them,

Finnish elections usually give no clear indication of how politicsd

realities should be reflected by a governing coalition. Even the selec- tion of individual ministers can be troublesome, because the parties themselves have much to say about who serves as minister,

and even a prime minister may have to accept members of his own

party not of his choosing. If a suitable constellation of parties can- not be formed to yield an effective majority government, a minority

government, or even a caretaker government, may be put together

if the Eduskunta agrees. The Council of State is held legally responsible for the acts of

its ministers, in accordance with the Responsibility of Miniscers Act of 1922. In addition to making ministers accountable for their

official actions, this law—which has constitutional status—is also a vital, if indirect, means of controlling the president's actions.

Because many of his decisions can be carried out only through the

Council of State, ministers who approve an illegal presidential action are liable under the terms of this law. Ministers wishing to avoid

the law's sanctions must refuse to be party to a presidential decision that they view as illegal. If ministerial consent is lacking, the

president cannot act. In such a case, the president must either abide

by the decision of the council or dismiss it and attempt to form

a new one amenable to his wishes. If this is not possible, he may

dissolve the Eduskunta and call for new elections with the hope

of having the voters endorse his decisions by returning an Eduskunta

from which a compliant government can be formed. If the council

refuses to approve a lawful presidential decision, it is obliged to resign. Ministers can always resign individually, but the resignation of the prime minister means the end of a government.

A principal task of the Council of State is the preparation of legislative proposals, or government bills, that the president presents

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Finland: A Country Study

to the Eduskunta for ratification. Most of this work is done in an

appropriate ministry, where, in addition to ministry personnel and

civil servants, permanent and ad hoc commissions of experts and

spokesmen for special interests can be consulted.

In the 1980s, the Council of State had three committees to handle important questions: the ministerial committees for finance,

economic policy, and foreign affairs. The Finance Committee,

meeting on Wednesdays, consisted of the prime minister, finance

minister, and several other ministers. It prepared the government's

budget and responded to the financial motions presented by in- dividual members of the Eduskunta. The Economic Policy Committee met twice a week to discuss issues touching the country's

economic life as a whole, broader questions about the government's

budget, and other financial concerns suggested by the prime

minister. The Foreign Affairs Committee, least important of the

three, met when needed to discuss issues concerning foreign policy.

Plenary meetings of the Council of State, for which a quorum

of five was required, had three forms. The so-called Evening School

meeting, on Wednesday evenings, was a closed, informal session

where ministers, top civil servants, politicians, and leading figures

from outside government freely discussed decisions to be taken.

It was thus a forum where the country's leaders met and exchanged

opinions on important issues. Instituted in the late 1930s as a means

of speeding the council's work, the Evening School had no formal

decision-making power. Votes were taken at the Thursday meeting. The Council of State worked as a collegial body, and unanimous votes were not required. In case of a tie vote, the vote of

the prime minister was decisive. Approved measures were presented

to the president for signing at the Friday Presidential Meeting.

In accordance with its executive powers, the Council of State implemented its decisions and directed the ministries and the lower

levels of the state administrative apparatus. This was done through

presidential decrees and its own ordinances, neither of which could

conflict with legislation passed by the Eduskunta. Ministers, aided

by political secretaries drawn from their own parties, headed the

country's twelve ministries. The ministries, which both formulated

and administered policy, oversaw about eighty central boards that were wholly occupied with implementing policy. The central board

system, inherited from the time of Swedish rule, had grown considerably, expanding by about one-third between 1966 and 1975

because of the increase in state social services. The boards, such

as the National Board of General Education and the State Publishing Office, did much of the state's work. By tradition some- what autonomous, they decided how legislation and ministerial

decisions were to be carried out.

234
Helsinki's neo-classical quarter includes the Government Palace, seen in the foreground. This building was constructed as the Senate House and was the seat of government during most of the tsarist period. After

independence, it became the seat of the Council of State. Courtesy Embassy of Finland, Washington

Legal System

The leg2il system originated during the period of Swedish rule,

and portions of the Swedish General Code of 1734 were extant in

Finnish law even in the late 1980s. The country's first court of

appeals was established at Turku in 1634. The modern division

of the Finnish courts into two main branches—general courts, deal- ing with civil suits and criminal cases, and administrative courts,

regulating the actions of the country's bureaucracy—also dates from

this time. This division was formalized in 1918 when two sections

of the Senate, the body that had governed Finland during the period

of Russian rule, became the newly independent country's two

highest courts. The Senate Department of Justice became the

Supreme Court, and part of the Senate Finance Department was

the basis of the Supreme Administrative Court. The two court sys- tems are entirely separate, and they have no jurisdiction over one

another. The establishment of the two courts was confirmed by

the Constitution Act of 1919. Overseeing the system ofjustice are

the chancellor ofjustice—the country's highest guardicin of the law

and its chief prosecutor—and the parliamentary ombudsman.

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Finland: A Country Study

Although these two officials have largely parallel functions and each

is required to submit an annual report of his activities to parliament, the former is appointed for life by the president and is a member of the Council of State, whereas the latter is chosen for a

four-year term by the Eduskunta. Both officials receive complaints

from citizens about the conduct of civil servants, and on their own

may investigate all public officials and may order prosecutors to proceed against them. The chancellor of justice supervises public

prosecutors, and he also has the unrestricted right to investigate

private persons. Both officials may call on either of the high courts

for assistance.

The High Court of Impeachment may be convened for cases dealing with illegzd official acts by cabinet ministers, judges of the

two supreme courts, or the chancellor of justice. Members of this court, used only three times since its formation in 1922, are the

chiefjudges of the two supreme courts and the six courts of appeal, a professor of law from the University of Helsinki, and six representatives from the Eduskunta.

As in the other countries of Nordic Europe, there is no constitutional court. Issues dealt with by a court of this kind elsewhere are handled by the Eduskunta' s Constitutioncd Committee (see Legislature, this ch.).

According to Article 5 of the Constitution Act, all Finns are equal

before the law, and Article 13 of the same act stipulates that they

may be tried only in a court of their own jurisdiction. No temporary courts are permitted. Legislation passed in 1973 provides

for free legal assistance to those in need as well as for free court proceedings in a number of courts. Trials in lower courts are usually

open to the public. Records of trials in higher courts are made

public.

Judges are appointed for life, with retirement set at age seventy,

and they may be removed only for serious cause. With the exception of some lay judges in circuit courts and in some town courts,

all judges hold legal degrees from one of the country's three law

schools. The judiciary in the late 1980s was a rather closed profession, and only judges for administrative courts were occasionally

selected from outside its ranks.

Defendants have no obligation to employ an attorney for their

defense in a Finnish court, and may represent themselves or be

represented by another layman rather than by a lawyer. Nevertheless, in most cases heard in general courts and in many argued

in administrative courts, trained legcil specialists are employed.

The general court system handles criminal cases and civil suits and has three levels: lower courts, courts of appeal, and the

236
Government and Politics

Supreme Court. There are two kinds of lower courts: town courts,

numbering 30 in the entire country; and circuit courts, totaUng

147 in 71 judicial districts. Town courts consist of three judges,

2dl trained professionals except in some small towns. One of these

judges is the chief judge chosen by the Supreme Court; the others

are selected by local authorities. Decisions are made on a collegicd

basis. Circuit courts consist of a judge, chosen by the Supreme

Court, and five to seven lay judges, i.e., persons without legal train- ing, chosen by local authorities for a term of four years. Decisions on cases in courts of this type are made by the professional judge,

unless he is overruled by the unanimous vote of the lay members

of the court. Larger cities also have housing courts that deal with

rent and accommodations.

Appeals from lower courts are addressed to the six courts of ap- peal located at Helsinki, Turku, Vaasa, Kouvola, Kuopio, and

Rovaniemi. Most cases at these courts are heard by professional

three-judge panels; more important cases are tried before a plenary session ofjudges if the chiefjudge so decides. In cases involving

senior government officials, a court of appeals may serve as the court of first instance. Judges of the courts of appe2d are appointed

by the Supreme Court.

The Supreme Court, located in Helsinki, consists of a chief

justice, or a president, and twenty-one judges usually working in

five-judge panels. It hears cases involving appeals of decisions of

appellate courts where serious errors are alleged to have occurred,

or where important precedents might be involved. A sentence from

a court of appeals may go into effect immediately, despite an appeal

to the Supreme Court, but it may be postponed while the case is pending if the Supreme Court so decides. The chief justice of the

Supreme Court is appointed by the nation's president, and the other

judges of that court are appointed by the president on the recom- mendation of the Supreme Court.

The administrative courts system consists of twelve county courts, one in each of the country's twelve provinces, and the Supreme

Administrative Court, located in Helsinki. All judges in administrative courts are professionals, appointed in the same manner as judges who sit in general courts. Judges work in three-judge panels

at the provincial level and in five-judge panels in the Supreme

Administrative Court. When appropriate, the latter meets in plenary sessions to hear especisdly important cases. Administrative courts deal with appeals against administrative

decisions by government agencies, adthough in some cases appeals

are directed to higher administrative levels within the government.

About 80 percent of the cases of the county courts involve appecds

237
Finland: A Country Study

of government tax decisions; the remainder deal with questions

relating to construction, welfare, planning, and local government.

The Supreme Administrative Court handles appeals of county court and central government board decisions that affect, or are affected

by, administrative law. About 50 percent of the cases heard in the

Supreme Administrative Court involve questions about taxes. Finland also has special courts to handle civil cases; some of these courts render judgments from which there is no appeal. The four

land courts settle disputes about the division of land, and their

decisions may be appealed to the Supreme Court. Appeals from

the insurance court, which handles social insurance cases, also may

be appealed to the Supreme Court. Cases that involve water use

are dealt with in the three water courts, and may be appealed first to the water court of appeals and from there to the Supreme Court.

If the case involves water permits, appeals go to the Supreme

Administrative Court. Decisions of the labor court and the marketing court may not be appealed. The former treats disputes about

collective bargaining agreements in either the public or the

private sector. Its president and vice president are lawyers; its remaining members come from groups representing labor and

management. The marketing court regulates disagreements about consumer protection and unfair competition.

Civil Service

Article 84 of the Constitution Act stipulates that only Finnish

citizens may be appointed to the civil service, although exceptions

may be made for some technical and teaching positions. Article

85 states that educational requirements for the civil service wiU be

set by law or statute, and that only on special grounds may the

Council of State make an exception to the set requirements.

Exceptions of this type seldom occur. No exceptions may be made

for appointment to a judicial post. According to Article 86, successful applicants for civil service posts will be promoted on the

basis of "skill, ability and proved civic virtue." State employees

cdso often must have an appropriate mastery of the country's two

official languages.

There is no general recruitment in Finland for civil service posts, nor does the country have a preferred school for training civil ser- vants. The recruitment is done on an individual basis for a vacant

or a newly created post.

Civil servants enjoy a fairly secure tenure in their posts, but they

may be dismissed for poor performance or for disreputable behavior on or off the job. About 90 percent of civil servants were unionized

in the late 1980s. Since the passage of the Act on Civil Service

238
Government and Politics

Collective Agreements in 1970, civil servants have had the right

to strike. If a strike of a category of civil servants threatens society's welfare, the dispute may be reviewed, but not settled in a binding way, by a special board. If required, the Eduskunta may settle the disagreement through legislation.

By the early 1980s, there were about 125,000 civil servants employed in the nationad government, which made it the country's largest employer. More than twice this number worked for

local government and for related institutions. Government employment grew rapidly during the 1960s and the 1970s, and was

accompanied by a marked increase in the politicization of the civil service, especially at higher levels. Even at lower levels, posts were

often filled on the basis of party affiliation. Sometimes appointments were arranged by "package deals," through which the parties secured for their members a suitable portion of available posts.

Care was taken, however, that appointees meet the stated requirements for state posts, and political parties even arranged for training so that their candidates would be qualified applicants for given

posts.

Politicization of public jobs resulted pardy from the desire that

the civil service, traditionally conservative, reflect the new politi- cal domin2ince of the center-left governments formed after 1966.

President Kekkonen also used the spoils system to cement the broad

coalition governments he introduced in the second half of the 1 960s

(see Finland in the Era of Consensus, 1966-81, ch. 1). A study

from the early 1980s found that by 1980 the number of senior civil service posts occupied by nominees of the Center Party (Keskustapuolue—Kesk) 2md the Finnish Social Democratic Party (Suomen Sosialidemokraattinen Puolue—SDP) had doubled for the

former and tripled for the latter in just fifteen years, mostly at the

expense of officials linked to the National Coalition Party (Kansallinen Kokoomuspuolue—KOK).

Widespread criticism of the politicization of the civil service and

complaints that the practice was harmful to efficiency and to democratic values led to recommendations for stricter control of

hiring and even for the prohibition of all political appointments.

By the late 1980s, no such ban had been instituted, but in general a decline in partisan nomination for civil service posts seemed to have occurred since the election of President Koivisto in 1982.

Appointments in provincial governments, however, continued to be booty for politicians. Despite these partisan practices, the civil service had a reputation for competence, and it enjoyed the support of most Finns.

239
Finland: A Country Study

Provincial Administration

Finland is divided into twelve provinces: Lappi, Oulu, Kuopio,

Pohjois-Karjala, Keski-Suomi, Vaasa, Mikkeli, Hame, Turku ja

Pori, Kymi, Uusimaa, and the Aland Islands. A governor appointed

by the president heads a provincial government made up of public

officials. At this level of administration, regarded in Finland as an

unimportant intermediate stage between national and locad government, there are no elective offices. The country's provincial government is less extensive than that of many other countries because

local government manages many tasks done elsewhere on the

provincial level. The responsibilities of provinci2J administration include police

work, civil defense, regional planning, price and rent control, direction of social and health services, oversight of local governments'

adherence to environmental and other state regulations, and

collection of taxes, fees, and revenues owed to local and to national government. The provincial government is aJso involved in the

functioning of the county administrative courts, and, with authority

granted to it by the Ministry of Justice, supervises elections.

Local Administration

Finland's tradition of local self-government, which predates the

arrival of Christicinity in the country, was placed on a more modem

footing in the nineteenth century when local functions were taken

from the church, and communities became responsible for education and health matters. Universal suffrage was introduced in lo- cal government in 1917, and the Constitution Act of 1919 states in Article 51 that ''the administration of the municipalities shall be based on the principle of self-government by the citizens, as provided in specific laws." How local self-government is practiced

in the country's urban and rural municipalities (numbering 94 and

367, respectively, in 1988) is specified by the Local Government

Act of 1976.

The governing body in a municipality is the municipal council,

the members of which, rcinging in number from seventeen to eightyfive, are elected by universaJ suffrage for four-year terms. Elections are held in October, and the proportiongd representation list system is used. Any Finnish citizen legally resident in the municipality and at least eighteen years old by the year in which the elec- tion is held can vote. Since 1976, citizens of Sweden, Norway,

Denmark, and Iceland who have been legal residents of Finland

for at least two years may also vote. Voter turnout has generally

been somewhat lower than in national elections. In the 1988 local

240
Council of State Chamber, Government Palace

Courtesy Embassy of Finland, Washington

elections, for example, only 70 percent of those eligible—about five to ten percent less than in national elections—voted.

Finnish citizens have an obligation to serve in elective local government posts, which has meant that most elected officials are laymen. The 1976 law provides for financial compensation and pension rights for those citizens elected to local positions.

Candidates traditionally have campaigned for office through

national party organizations, and local election results are regarded

as an indication of the national parties' popularity. Local electoral

results mirror those of national elections with regard to party

dominance in particular regions. Members of the Eduskunta often

have begun their careers on the local level, and they have been

allowed to hold both local and national elective offices at the same

time. Continued participation in politics at the grass-roots level has given Helsinki politicians close contact with their constituents.

The responsibilities of municipal government include managing the budget and financial affairs, approving plans submitted to

it, delegating authority to committees, and making decisions on

important issues. They also direct school, health, and social welfare systems; see to the construction and maintenance of local roads;

provide for the management of waste and water; and supply energy.

Many decisions relating to financial or budgetary questions require

two-thirds majorities in council votes. This means that there is

241
Finland: A Country Study

much discussion behind the scenes before votes are taken and that

there exists the same consensus poUtics at this level as is practiced on the national level. Because municipal governments have no legislative or judicial powers, decisions are carried out by means of

ordinances.

Much of the routine work of governing is managed by the

municipal board, which consists of at least seven people, one of

whom is the chairman. Board members, who serve for two-year

terms, come from the council, and they are chosen to reflect its party composition. The board prepares matters to be discussed by

the council, and, if measures are approved, implements them. Aiding the board are a number of committees, some obligatory.

A staff of trained municipal employees assists the council, the

board, and the committees. To meet their overall responsibilities,

municipal governments employed a large number of persons, about

17 percent of the country's total work force in the 1980s. For duties too broad in scope for a single municipality, the managing of a

large hospital for example, communities join together to form confederations of minicipalities or joint authorities. By the 1980s, there were about 400 of these bodies. Local authorities are also obliged

by the Local Government Act of 1976 to formulate, publish, and

frequently revise a five-year plan covering administration, financial affairs, economic growth, and land use. Expert assistance from

national government bodies, such as the Ministry of Interior, helps

local bodies to fulfill this obligation.

The responsibilities of local government have grown in recent decades, and in the 1980s about two-thirds of public sector spending was in the hands of local authorities. Local involvement in planning also meant that 10 percent of the investment in the nation's

economy came from municipal coffers. In order to meet their

responsibilities, local governments have the right to tax, including

the right to establish local tax rates, a power needed for their

independence, but one that supplies them with only 40 percent of

the monies they expend. The remainder is furnished by the national

government (a little over 20 percent) or is derived from various

fees and charges.

Finnish local self-government is subject to a variety of controls.

The national government decides the municipalities' duties and

areas of responsibility, and once they are established, only a law

passed by the Eduskunta may alter them. The municipalities are obliged to submit many of their decisions to a regional body or

to a national government agency for approval. This control,

however, is often rather loose, and only when a local government

has broken a law does the provincial or the national government

242
Government and Politics

intervene. Except for minor changes, proposals to higher levels of

government are not amended by them, but rather are returned to

local authorities, who themselves modify measures or decisions to meet prescribed standards.

Meetings of municipal councils are generally open to the public, and though board and committee meetings are closed, records

of their proceedings are subsequently published. Local governments

or communes are also obliged to publicize their activities. Individuals who believe they have been wronged by a municipal

policy may appeal to the courts or to officials at the provincial or

nation2il level. Electoral System

Universcd suffrage for national elections was introduced to Finland in 1906, and it was extended to local elections in 1917. With

the exception of some minor reforms, the original proportional

representation system remains unchanged. This system enjoys full public support, for although it favors larger parties slightly, proportional representation allows political participation of small, and even

marginal, groups as well. All Finns over the age of eighteen by the year of an election are

eligible to vote. Voting is not compulsory, and, in the 1980s, participation averaged around 80 percent, slightly below the average

rate of the Nordic countries.

In the 1980s, the country was divided for national elections into

fifteen electoral constituencies, fourteen of which sent between seven and twenty-seven representatives to the Eduskunta, according to their population. The constituency for the Aland Islands sent one. Constituencies corresponded to provinces except that Hame

Province and Turku j a Pori Province were each divided into two,

and Helsinki formed one electoral district itself. The five southernmost constituencies supplied nearly half of the Eduskunta'

s

delegates. In the early 1980s, one delegate represented about 24,000

Finns.

Candidates for the Eduskunta are ailmost invariably nominated

by a political party, although a 1975 amendment to the election

law allows the candidacy of a person sponsored by a minimum of

100 Finns united in an electoral association. Party lists for a constituency contain at least fourteen names—and more for those constituencies with high populations. Since 1978 a secret primary

among party members has been required if a party has more candidates than places on its party list. Parties may form electoral alliances with other parties to present their candidates, and they

243
Finland: A Country Study

often do so because of lack of resources. This practice partly explains

the high number of small parties successfully active in Finnish

politics.

Since the introduction of proportional representation in 1906,

Finland has used the d'Hondt constituency list system with only

slight modifications. Under this system, elections are based on

proportionality rather than on plurality, and seats are allotted to parties commensurately with the number of votes polled. Votes

go to individual candidates, however, and voters indicate their

preferred politician by circling the number assigned to him or to her on their ballots. The Finnish system is distributive in several ways. There is no

electoral threshold, such as the Swedish requirement that a party

receive at least 4 percent of the votes in order to sit in parliament. In Finland it was feared that a threshold requirement might deprive

the Swedish-speaking minority of seats in the Eduskunta. The Finnish system also favors parties with a pronounced support in cer- tain areas, rather than those with a thin nationwide presence. Parties are not obliged to contest Eduskunta elections in every constituency.

The practice of voting for an individual candidate rather than for a party means that voters can register their dissatisfaction with a

party's policy or leadership by voting for one of its junior candidates. This characteristic of the Finnish system means that no candidate, no matter how senior or renowned, is assured election.

Elections for the 200-seat Eduskunta are held every four years

in March, except when the president has dissolved the body and

has called for an early election. Municipal elections t2ike place every

four years in October.

The presidential election occurs every six years in the month of

January. Beginning with the 1988 election, it is to be carried out on the basis of direct universal suffrage. If none of the candidates

receives more than half of the votes, 301 electors, chosen in the same election, choose the next head of state. Although pledged in

the campaign to particular presidential candidates, members of the

electoral college have the right to vote in the body's secret ballots

for any candidate who has won at least one elector. If no candidate secures a majority of the college in the first two ballots, one

of the two candidates who has received the most support on the

second baUot will be elected president in the third and final vote. By the late 1980s, there was serious discussion of doing away with

the electoral college completely and making the president's elec- tion dependent on a direct vote with no majority required.

244
Government and Politics

Aland Islands

The province of the Aland Islands enjoys considerable autonomy by virtue of the Autonomy Act of 1951 that guarantees the way

of life and the preservation of Swedish traditions on the islands.

The 1951 law was supplemented by a 1975 law that restricts the

acquisition of real estate on the islands. Both laws have constitutional status, and they may be altered only in accordance with the

strict parliamentary provisions that protect the Constitution.

In addition to this protection against legislation prejudicial to

its interests, the archipelago's provincial assembly, the Landsting,

has the right to ratify laws affecting it. The Landsting consists of

thirty members elected on the basis of proportional representation

for four-year terms. Voters must be eighteen years of age by the

year of the election and must have the right of domicile on the is- lands, a right acquired by living for at least five years in the

province. Those with this right may also exercise certain professions and may acquire real estate, and they may not be conscripted if they have been residents of the islands since before their twelfth year. This last provision resulted from the demilitarized and neutrzil status of the islands established by a decision of the League

of Nations in 1921 (see Finnish Security Policy Between the Wars,

ch. 1). The Landsting has the right to pass laws that touch on administration, provincial taxation, police matters, transportation, health

care, and cultural matters. Issues relating to the Constitution, national defense, foreign affairs, the judiciary, family law, and civil law are outside its competence. All laws passed by the Landsting

must be approved by the president of the republic, who may veto

those laws judged to exceed the Landsting' s competence or to damage the country's internal or externad security.

The highest executive authority in the province is the Provincial Executive Council, consisting of seven members elected by,

and from within, the Landsting. The council must enjoy the confidence of the Landsting to carry out its duties, and the president

of the council can be forced to resign if this is not the case. The governor of the province represents the national government. He is appointed by the president of the republic, but only

after the approval of the Landsting, and is responsible for those

administrative functions beyond the competence of provincial

authorities. Another link between the islands and the national

government is the Aland Delegation, usually headed by the provincial governor; its other four members are chosen by the Council

of State and the Landsting. The delegation's chief duties are

245
Finland: A Country Study

supervising transfers of funds from the national government to the

provincial government, to pay for the costs of self-government, and

examining laws passed by the Landsting, before sending them to the president. In addition to these ties between the archipelago aind

the mainland, the province has one representative in the Eduskunta

who usually has a seat on the Constitutional Committee in order

to protect the islands' rights. Since 1970 the province has had one

delegate at the annual meeting of the Nordic Council.

During the late 1980s, changes of a constitutional nature in the

relations between the Aland Islands and the national government

were under review in the Eduskunta. The projected legislation

touched on increased provincial control of the tcixes the archipelago

pays or generates and on greater control over radio and television

reception, with the aim of increasing access to programming from

Sweden and to the Swedish-language programs of the Finnish

broadcasting system. Having secured the right to issue their own

stamps in 1984, the archipelago's inhabitants also wanted to have

their own postal system, a right still reserved to the national government. Under discussion, too, were international guarantees for the

islands' security.

Political Dynamics

Consensus has been the dominant mode of Finnish politics since

the formation of a broadly based coalition government in 1966 and

the establishment of the comprehensive incomes policy system in

the late 1960s. The government, made up of parties fundamentally

opposed to each other, was formed at the insistence of President

Kekkonen. He had long wished to heal the deep and bitter rifts that had marred Finnish public life since the country had gained

independence in 1917.

The dozen or so political parties that made up the country's party

system in 1966 reflected the divisions that ran through Finnish

society. The socialist end of the spectrum was broken into two mutually hostile, roughly equal segments, communist and social

democratic, often accompanied by leftist splinter groups. The

political middle was filled, first, by the agrarian Center Party, the

country's most important party, with a rural base in a society that was rapidly becoming urbanized; second, by the Swedish People's

Party (Svenska Folkpartiet—SEP), representing a minority worried about its future and divided along class lines; and third, by

a classic liberal party that was in decline. The right consisted of

a highly conservative party tied to big business and to high offi- cials, the KOK; and the radical Finnish Rural Party (Suomen

Maaseudun Puolue—SMP), the populist impulses of which linked

246
Government and Politics

it to the "forgotten" little man often also resident in urban areas. Kekkonen's presidential power and personal prestige enabled bin;

to form in 1966 the popular front government that pulled together

sizable social groups to realize important welfare legislation in the

late 1960s.

The mending of rifts in the labor movement and a fortuitous

agreement in 1968 by leading actors in the market sector led to the first of a nu/nber of comprehensive incomes agreements. These

agreements, reached by organizations representing most economically active Finns, usually ran for several years and often required

enabling legislation (see Industrial Relations, ch. 3). Critics of the agreements, which have brought much prosperity

to Finland and therefore enjoy widespread support, charge that

their monolithic quality has meant not consensus but a "time of no alternatives." According to this view, the agreements have

reduced state institutions to mere ratifying agents rather than

governing bodies. It is claimed that labor and business negotiate

while government approves after the fact. Most of the country's political parties, so fractious and distinct

until the 1960s, then drifted toward the political center; remaining disagreements among the principal parties focused less on what

policies were to be than on how they were to be implemented.

Because most economic legislation required the set majorities stipulated by laws of constitutional status, parties were obliged to work

closely together. Even parties not in government have had their

say about the content of economic legislation, for without their

approval many government bills would have failed. Another characteristic of Finnish politics and public life was the

common practice of reaching agreements on key questions through

informal backstairs elite consultation. Often disputes were settled through private discussions by the concerned parties before they were handled in the formal bargaining sites established for their

public resolution. This was true for wage package settlements, as weU as for legislative proposals scheduled for debate in the

Eduskunta, and for other issues that required negotiation and compromise. An institutionalized version of behind-the-scenes negotiations was the Evening School of the Council of State, where leading

figures of various groups could freely discuss issues on the government's agenda. The Finnish tradition of informal sauna discussions was an extreme example of informal inter-elite consultations.

Some observers claimed that important national decisions were made there in an atmosphere where frank bargaining could be most

easily practiced. Advocates of these informal means of uniting elite representatives of diverse interests held that they were quick and

247
Finland: A Country Study

to the point. Opponents countered that they encouraged secrecy, bypassed government institutions, and uhimately subverted

democracy.

Since the second half of the 1960s, there has been an increasing

formalization of the role played by political parties in the country's public life. In 1967 the government began paying subsidies

to political parties, and the passage of the Act of Political Parties

in 1969 gave the practice a legal basis. According to the law, parties were to receive subsidies according to the number of delegates

they had in the Eduskunta. Several other eligibility requirements

for state funds that also had to be met were nationwide—rather

than local—activity for political purposes, determination of internal party affairs by democratic means, voting membership of at

least 5,000, and a published general political program.

The Act of Political Parties provided the first mention of parties

in Finnish legislation, despite their central position in the country's political life. State subsidies were a recognition of the role parties played, and the subsidies have further increased that role. Consequently, the number of party officials has increased, as has

the number of parties, an effect opposite to that intended by the

large parties that pressed for subsidies. The large parties funneled

a good part of their funds to their local and their ancillary organizations, while the small parties, with their existence at stake, used

their resources on the national level. The Social Democratic Party

Founded in 1899 as the Finnish Labor Party, the Finnish Social

Democratic Party (Suomen Sosialidemokraattinen Puolue—SDP)

took its present name in 1903 and adopted a program that envisioned the gradual realization of a socialist society, not by revolution but through parliamentary democracy. In the 1907

parliamentary election, the SDP won eighty seats, easily surpass- ing the results of its closest rival, the Old Finn Party. Then, in

1916, the last time any Finnish party has done so, the SDP won

slightly more than an absolute majority.

Seduced by the example of the Bolshevik Revolution in nearby

Petrograd, many Social Democrats sought in early 1918 to realize

long-term party goals quickly and by force (see The Finnish Civil

War, ch. 1). After the defeat of the left in the civil war and the

departure of radical elements from its ranks, however, the SDP

was reconstituted in the same year under the leadership of the

moderate Vaino Tanner, an opponent of the use of violence for

political ends. Although still the country's largest political party,

the SDP was in only one government—a short-lived minority

248
Government and Politics

government formed by Tanner in 1926—until 1937. At that time,

it joined the Agrarian Party (Maalaisliitto—ML) in forming the

first of the so-called Red-Earth governments, the most common

and important coalition pattern for the next fifty years. A tempering of SDP policy on the place of the small farmer in Finnish soci- ety permitted political cooperation with the Agrarians, although

the party retained its program of a planned economy and the

socialization of the means of production.

It was in 1937 that the SDP first began to demand the right to collective bargaining, and the party remained closely connected

to organized labor. In 1930, for example, it had formed the Confederation of Finnish Trade Unions (Suomen Ammattiyhdistysten

Keskusliitto—SAK) in an attempt to counter communist influence

in the labor movement. During World War II, the SDP contributed

significantly to national unity, and it resisted both rightist dreams

of a Greater Finland and the desires of others for an early truce with the Soviet Union.

After the war, long-standing tensions within the party caused

factional disputes, between those advocating closer relations with

both the Soviets and the newly legalized Communist Party of Finland (Suomen Kommunistinen Puolue—SKP) and those critical of the Soviet Union and its undemocratic methods. Some SDP

members left it for the newly formed popular front organization,

the Finnish People's Democratic League (Suomen Kansan

Demokraattinen Liitto—SKDL), which participated in the broad

popular front government formed after the 1945 elections. After

the defeat of the communists in the 1948 elections, the SDP held

all cabinet posts in the minority government of 1948-1950; however,

thereafter the party participated in cabinets on an irregular basis,

and it was riven by internal struggles until the 1960s.

During the 1950s and early 1960s, the SDP as a whole became

increasingly moderate. An early indication of this move toward

moderation was the party program adopted in 1952 that played

down the role of class conflict and was critical of communism. Still, bitter internal wrangles continued to plague the party into the 1960s.

The conflicts had both political and personal origins, but their core was disagreement about the SDP's policy toward the Soviet Union. Tanner's implacable hostility to the undemocratic nature of

Soviet society had led Moscow to insist on his imprisonment as a "war criminal" after the war. His reinstatement as party leader

in 1957 has generally been regarded as a factor in the Night Frost

Crisis of 1958 and in the SDP's subsequent exclusion from power

until 1966 (see Domestic Developments and Foreign Politics,

1948-66, ch. 1).

249
Finland: A Country Study

Conflicts relating to domestic politics resulted in the departure

in 1959 of members close to farming interests. They formed the

Social Democratic Union of Workers and Small Farmers (Tyovaen

ja Pienviljelijain Sosialidemokraattinen Liitto—TPSL), a splinter

group that contested elections and was included in several governments until the 1970s, when it expired and most of its remaining

members returned to the SDP.

The election of Rafael Paasio to the party chairmanship in 1963

ended the reign of the old leadership and brought a gradual

improvement in SDP relations with the Soviet Union; another result was a gradual healing of rifts within the labor movement. These

changes, coupled with the election returns of 1966 that led to the

first socialist majority in the Eduskunta since 1945, allowed the

party to leave the political wilderness to which it had been con- signed after the Note Crisis of 1961 (see table 5, Appendix A). It participated in a strong majority government together with the

newly renamed Center Party (formerly the Agrarian Party), the

SKDL, and the TPSL. The popular front government passed a good part of the legislation that transformed Finland into a modern

welfare state of the Scandinavian type and helped to establish the

system of collective wage agreements that still prevailed in the late 1980s.

During the 1970s, the SDP moved closer to the center in Finnish politics as a result of the departure of some of the party's members for groups farther to the left and the cautious pragmatic

leadership of Kalevi Sorsa, who became party chairman in 1975.

Sorsa, who held this position until 1987, served from the mid-1970s

until the late 1980s as either prime minister or foreign minister

in all governments, which helped to remove any doubts about the

party's suitability for governing.

The SDP's success in the elections for the Eduskunta in 1983,

coming after the triumph of SDP politician Mauno Koivisto in the

presidential election a year earlier, may have marked a high point

in the party's history, for in the second half of the 1980s the SDP

had trouble attracting new voters from postindustrial Finland's

growing service sector. The SDP's years as a governing party, which

had tied it to many pragmatic compromises, lessened its appeal

for some. At the same time, the number of blue-collar workers,

its most important source of support, declined. The party could

be seen as a victim of its own success in that it had participated

in implementing policies that brought unprecedented prosperity

to Finland, which served to transform Finnish society and dissolve

old voting blocs.

250
upper left, Kalevi Sorsa, a

leading Social Democrat and

former prime minister and

minister offoreign affairs; Upper right, Paavo Vdyrynen, a prominent member of the Center Party and a former

minister offoreign affairs; Lower right, Harri Holkeri,

leader of the National

Coalition Party and prime

minister, 1987-

Courtesy Embassy of Finland,

Washington

251
Finland: A Country Study

The party lost 100,000 votes and the office of prime minister

in the 1987 parliamentary elections (see table 6, Appendix A). The

SDP remained in the government formed by the conservative

National Coalition Party, however. Observers believed that the new

party chairman, Pertti Paasio, son of Rafael Paasio, and other younger members of the party would have to adapt to long-term trends

in Finnish society that promised to make the party's future difficult. Although the SDP registered slight gains in the 1988 local elec- tions, it still had to contend with the same economic and social

problems that made the other social democratic parties of Western

Europe seem to many to be parties of the past.

The Center Party

The Center Party (Keskustapuolue—Kesk), which took this name

in 1965 with the aim of widening its appeal and adapting to changing social conditions, was founded in 1906 as the Agrarian Party.

It has been, as its present name indicates, the key party in Finnish

politics since independence; until the formation of a conservativesocialist government in 1987, it had participated in virtually every

majority government. Founded to represent the interests of small

farmers in eastern and in northern Finland, Kesk also gradually came to claim central Finland as an area of support during the

1920s. As a consequence, it was the largest nonsocialist party until

the national elections of 1979, when the National Coalition Party

pulled ahead. As the party of small farmers, the Kesk was, from

its birth, suspicious of the concentrated economic power of the

south—labor, large farmers, and business. To counter these

interests, the party advocated a firmly democratic and p>opulist pro- gram that emphasized the primacy of the family farm, small-scale

firms managed by their owners, decentralization of social organizations, and the traditional virtues and values of small towns and

the countryside. The party's commitment to democracy was test- ed and proven in the 1930s when it rejected the aims of the radical

right and perhaps saved Finland from fascism. In the second half

of the decade, it began to govern with the assistance of the SDP,

forming with that party the first of the so-called Red-Earth governments that became the country's dominant coalition pattern for the next half-century. Kesk's claim to represent the "real" Finland, however, caused it, at times, to seek to curtail the rights of

the Swedish-speaking minority, and some Kesk leaders, Urho

Kekkonen for example, were active in the Finnicization program.

Although opposed to fascist doctrines, Kesk had favored fighting on the side of Nazi Germany—as a cobelligerent—during

the Continuation War of 1941-44, in the hope of regaining lost

252
Government and Politics

national territory. During the course of the war, however, some

of the party's leaders came to the conclusion that good relations

with the Soviet Union were essential if Finland were to survive as an independent nation. Kekkonen, in particular, was a driving force in effecting this change of party policy in the postwar period (see

Domestic Developments and Foreign Politics, 1948-66, ch. 1). This

policy change was achieved, though, only after a bitter struggle

during which segments of the party's leadership hoped for Kekkonen' s political destruction; however, generational change and his

domestic and foreign successes allowed Kekkonen gradually to gain

nearly absolute control of the party, which he retained even after election in 1956 to the presidency, a post ideally above party politics.

Soviet desires for a dependable contact in Finland, and the

unsuitability of other parties, soon made Kesk Moscow's preferred

negotiating partner, despite the party's anticommunist program.

The Soviets' natural ally, the SKP, was seen as being too much

a political outsider to be an effective channel of communication.

Kesk's position in the center of the political spectrum made it the

natural "hinge party" for coalition governments. After the Note

Crisis, Kekkonen 's mastery of foreign policy also served, and at times was cynically used, to preserve this role. Postwar social changes, such as internal migration to the south

and a growing service sector, have reduced support for Kesk and

have brought about a steady decline in its share of seats in the

Eduskunta (see table 4, Appendix A). Attempts to bring the party's

program into line with a changing society did not win Kesk new

support. In prosperous southern Finland, for example, Kesk failed to make significant inroads, electing only once a member of the

Eduskunta from Helsinki. Young voters in the south, or the coastal

region as it is sometimes called, favored the National Coalition Party

or the environmentalist Greens (Vihreat). Also damaging to Kesk

was the loss of a segment of its membership to the SMP, after its formation in 1959. Kesk was not able to retain the presidency after Kekkonen's retirement in 1981; its candidate for the 1982 presidential election, Johannes Virolainen, was easily defeated, as was the

1988 Kesk candidate for this post, Paavo Vayrynen.

Kesk's failure, despite only slight losses, to participate in the

government formed after the 1987 national elections was perhaps

a watershed in Finnish domestic politics. Until that time, Kesk had

been an almost permanent governing party. Demographic and

occupational trends continued to challenge Kesk in the late 1980s,

but the party's large and convinced membership, far greater than

that of any other party, probably meant that any decline in its role in Finnish politics would be a slow one.

253
Finland: A Country Study

The National Coalition Party

The National Coalition Party (KanscJlinen Kokoomuspuolue

KOK) was founded in November 1918 by members of the Old Finn

Party and, to a lesser extent, by followers of the Young Finn Party.

It represented interests desiring a strong state government that

would guarantee law and order and the furtherance of commerce.

Defeated in its attempt to establish a monarchical government, the

party formulated a program in 1922 that clearly set out its conservative aim of emphasizing stability over reform. The large farms

and businesses in southern Finland were the basis of the party's

support.

Throughout the interwar period, the party was hostile to the

rights of the Swedish-speaking minority and sought to deprive the

Swedish language of its status as one of the country's two official languages. During the 1930s, it had close contacts with the radical

right-wing movements that mirrored trends elsewhere and for a time posed a threat to Finnish democracy. One of the party's leaders, Juho Paasikivi, elected party chairman in 1934, attempted with some success to move it away from these extreme positions. The

KOK was opposed to the Red-Earth government formed in 1937,

but was not strong enough to prevent it. During the war, the party was part of the national unity governments.

After the war, the KOK became the most right-wing party in

Finland, as groups farther right were banned by the armistice agree- ment of 1944 and the SKP was legalized (see The Cold War and

the Treaty of 1948, ch. 1). Despite Paasikivi 's terms as prime

minister in the first postwar years, his election to the presidency

in 1946, and the role he played in the drafting of the Treaty of

Friendship, Cooperation, and Mutual Assistance (FCMA—see Appendix B) as well as in the reorienting of Finnish foreign policy,

his party was not regsirded as an acceptable coalition partner for

much of the postwar period. Soviet doubts about the sincerity of

KOK's support for the new direction of Finnish foreign policy,

the so-called Paasikivi Line, was sufficient to keep the KOK, for decades the country's second largest nonsocialist party, out of

government for most of the postwar period.

The party also was excluded from governments because it was

seen by many to be rigidly right-wing, despite party program

changes in the 1950s that moved it closer to the conservatism practiced by its sister parties in larger West European countries. The

party program of 1957 formalized its support for a "social market

economy" and for the concept of employer responsibility to wage

earners.

254
Government and Politics

In the postwar years, the KOK often allied with the SDP to reduce agricultural subsidies, a joint effort that continued in the

late 1980s. The division between city and country interests con- tinued to be a key element in Finnish politics in the second half

of the 1980s, and it was one reason why the two principal nonsocialist parties, the KOK and Kesk, were political rivals. An action that increased the enmity between the KOK and the

Kesk leader, Kekkonen, and contributed to the Note Crisis was

the formation of the so-called Honka League by the KOK and the

SDP. The Honka League aimed to stop Kekkonen's reelection in

1962, but the attempt never had a chance, and it was soon abandoned. The KOK continued to be opposed to Kekkonen and to his foreign policy, however, and it was the only major party to oppose his reelection in 1968. Nevertheless, moderate elements in

the party gradually gained control and softened its policies, both

domestic and foreign. In the 1970 national elections, the KOK

increased the number of its seats in the Eduskunta by one-third,

and since 1979 it has been the largest nonsocicilist party in the

country.

Some right-wing members of the KOK, dissatisfied with the

party's steady drift toward the politic2il center, have left it. In 1973 some formed the Constitutional Party of the Right (Perustuslailli- nen Oikeistopuolue—POP) to protest Kekkonen's special election

to the presidency in 1974, but this only accelerated the KOK's move

toward moderation. Under the leadership of Harri Holkeri—the

party's candidate for the presidency in 1982 and in 1988, and Ilkka

Suominen—longtime party chairman, the KOK has been able to

attract many of those employed in Finland's rapidly growing service

sector, and in the 1987 elections it nearly overtook the SDP. Kept

out of power because of unexpected losses in the 1983 Eduskunta

elections, Holkeri was able to form a government after the 1987

elections and to take the prime ministership for himself. He pledged

his government to a program of preserving Finland's welfare state while maintaining a free market economy strong enough to be competitive abroad and to safeguard the country's prosperity.

The Communist Party of Finland

The Communist Party of Finland (Suomen Kommunistinen

Puolue—SKP) was founded in August 1918 in Moscow by exiled

leftists after their defeat in the civil war. Its Marxist-Leninist

progrcim advocated the establishment of a socialist society by revolutionary means. Declared illegal the following year, the SKP

was active in Finland during the 1920s through front groups, the

most notable of which was the Finnish Socialist Workers' Party

255
Finland: A Country Study

(Suomen Sosialistinen Tyovaenpuolue—SSTP), which received more than 100,000 votes in the 1922 national election and won

27 seats in the Eduskunta. The rise of the radical right-wing Lapua

movement was a factor in the banning of all communist organizations in 1930, and the SKP was forced underground (see The

Establishment of Finnish Democracy, ch. 1). The Stalinist purges of the 1930s thinned the ranks of the SKP

leadership resident in the Soviet Union. A survivor of the purges

and one of the founders of the party. Otto Kuusinen, was named

to head a Finnish puppet government set up by the Soviets after their attack on Finland in 1939. It did not ever attract the support

from the Finnish workers that the Soviets expected, nor did the

SKP succeed, during the Continuation War, in mounting a

resistance movement against Finnish forces fighting the Soviet

Union. At the war's end, the SKP was able to resume open politi- cal activity within Finland; in the 1945 election it won forty-nine

seats and was rewarded with several posts in the resulting cabinet

(see The Cold War and the Treaty of 1948, ch. 1). In this election, as in all elections since then, the SKP worked

through an umbrella organization, the Finnish People's Democratic

League (Suomen Kansan Demokraattinen Liitto—SKDL), established with the aim of uniting all left-wing elements into a com- mon front. Although mainly composed of noncommunists, and

usually led by a noncommunist socialist, the SKDL has generally

been dominated by the SKP. Despite its initial electoral success, however, the SKDL has not been successful in attracting all Finnish leftists, and the bulk of the SDP has refused to work with it. The SKDL was not able to retain its hold on the voters in the

1948 Eduskunta election, and it lost eleven seats. Rumors of a planned communist coup contributed to this defeat. During the

1950s and the early 1960s, the SKP/SKDL continued to participate in the electoral process, but with mixed results. The

SKP/SKDL did not enter government again until 1966, when Kekkonen insisted that the group be given ministerial posts so that a broadly based coalition government could be formed. After this date, the party was in most governments until December 1982,

when Prime Minister Sorsa forced it to resign for refusing to support a part of the government's program.

Tensions long present in the SKP became more pronounced in

the second half of the 1960s, when social changes began putting

pressure on the party to adapt itself to new conditions. Internal

migration within Finland, from the northern and eastern areas where "backwoods communism" had always been a mainstay of

party support, deprived the SKP of votes. The gradually increasing

256
Government and Politics

service sector of the economy reduced the size of the blue-collar vote in the south that the SKP had traditionally split with the SDP.

A more prosperous economy also softened social divisions and made

the classic Marxist remedies expounded by the party seem less rele- vant. Failure to attract younger voters worsened election results in addition to leaving the party with an older and less educated

membership. These threatening trends, combined with the SKP's

participation in governing coalitions since 1966, brought to a head

political disagreements between those in the party who supported

the system of parliamentary democracy and those who were attached

to a totalitarian Stalinist ideology. After 1969 the party was virtually split, although the formal break came only in 1986 following

years of bitter dissension.

Through the 1970s and the first half of the 1980s, two factions, a majority reformist or revisionist wing, led first by Aarne Saari- nen (1966-82) and then by Arvo Aalto (1982-88), and a minority

Stadinist wing, under Taisto Sinisalo, fought for party dominance.

Each group had its own local and regional organization and its own

newspaper—the moderates, Kansan Uutiset and the doctrinaire fac- tion, Tiedonantaja. Both groups remained in the SKP largely at the

insistence of the Communist Party of the Soviet Union (CPSU).

The revisionists, sometimes characterized as Eurocommunists, took

posts in cabinets, but the Stalinists, or "Taistos" as they are often

called after the first name of their leader, refused to do so, preferring to remain ordinary members of the Eduskunta instead. To

heal the rift, a third faction appeared in the early 1980s, and for a time one of its leaders, Jouko Kajanoja, was party chairman.

The 1984 election of Aalto to the party chairmanship marked

the end of the attempted reconciliation, and in 1985 the revisionists

began to purge the Stalinists, who late in the year named their fac- tion the Committee of SKP Organizations. The revisionists resisted

pressure for unity from the CPSU, and for this they were punished

in late 1985 when the Soviets cancelled the highly profitable contract with the SKP to print Sputnik, an international magazine. The

CPSU gave the contract to a printing firm controlled by the

minority. The resulting financial losses meant that Kansan Uutiset could appear only five days a week.

In 1986 the split was formalized. Early in the year, the reformist group published a new program that stressed the importance

of an independent, yet friendly, relationship with the communist

parties of other nations. In April the Stalinists set up an electoral organization distinct from the SKDL, the Democratic Alternative

(Demokraattinen Vaihtoehto—DEVA). In June the SKDL party

group in the Eduskunta expelled the DEVA representatives from

257
Finland: A Country Study

its ranks, and the latter then formed their own parHamentary group.

Later in the year, the two factions set different party congress dates,

further formalizing the split. In the 1987 election, the two groups

competed with one another, and they had separate lists of

candidates—the DEVA members led by the actress Kristiina

Halkola and the SKP/SKDL led by Arvo Aalto. The Stalinists lost six of their ten seats in the Eduskunta, while the reformists lost one. In the late 1980s, the two factions appeared more and more

irrelevant as actors in Finnish politics. The reformists supported

the democratic system, yet they attracted few new recruits. The

Stalinists, opposed to the central values held by most Finns, split even further. In 1988 some of them formed a new party, the Finnish Communist Party-Unity (Suomen Kommunistinen PuolueYhtenaisyys—SKP-Y), and campaigned with DEVA in the local elections of the fall of that year. An even smaller number, claiming to represent the truest principles of communism, refused to join

this new party and formed their own. The Swedish People's Party

The abolition of the four-estate Diet and the introduction of

universal suffrage in 1906 made it clear to the Swedish-speaking

elite that its traditional domination of Finnish politics was at an

end. The only chance to protect the rights of Swedish-speaking Firms was seen to lie in the formation of a party with a broader base that

would unite all classes of the minority. For this reason the Swedish People's Party (Svenska Folkpartiet—SEP) was created in 1906.

Composed of members from all classes, the party passed over eco- nomic questions to concentrate on preserving the existence of

Swedish-speaking Finns as a cultural group.

Desires for local autonomy in the southern and western coastal

areas, where Swedish Finns had lived for centuries and from which

the party still drew its support in the late 1980s, were not met by

the Constitution Act of 1919 (see fig. 12). The Swedish language was guaranteed the status of an official language, however, and

it was given specicd protection in those areas in which it traditionally had been spoken. During the interwar decades when Swedishspeaking Finns were under serious Dressure from the Agrarian Party

and the National Coalition Party, the SEP allied itself with the SDP

to protect minority rights, for though conservative in economic matters, the SEP was liberal on social questions. SDP compromises

with the Agrarians in order to come to power in the Red-Earth

governments of 1937 brought the Swedish minority some reverses, but the Finnicization program was not fully realized.

258
Government and Politics

After the war, the language question was considered to be set- tled in a way generally satisfactory to most Swedish-speaking Finns.

The SFP saw to it that the setdement of 400,000 refugees from

Karelia did not upset the existing language badance in the areas where Swedish-speaking Finns made up a significant segment of

the population. Relations between the SFP and the ML remained

strained, however, because of the Agrarians' role in attempts at Finnicization.

The steady decline in the number of Swedish-speaking Finns was

reflected in the size of the party's delegation in the Eduskunta. The

Finnish electoral system favored parties with strongly localized support, however, and because of its position in the center of the political spectrum the SFP has been in most cabinets formed since

the war. The virtucd collapse of the Liberal People's Party (Liberaalinen Kansanpuolue—LKP) in the latter half of the 1970s

brought the SFP some new votes, and in the 1983 and the 1987

elections, the party increased the number of its seats in the Eduskunta. Like the larger parties, the SFP has been affected by the general drift toward the center, and some of its right-wing members have

left it for parties such as the POP.

Smaller Parties and the Greens

In addition to the four large parties discussed above, which among

them enjoyed the support of about 80 percent of Finland's voters,

and the SFP, which despite its small size had an almost permanent place in coalition governments, there were several other

political parties that had a role in governing the country. One, the

LKP, was a vestige of its former self; others, such as the Greens

or the SMP were responses to trends seen elsewhere in recent decades in Western Europe.

The LKP is direcdy descended from the Young Finn Party, which

after independence took the name National Progressive Party (Kansallinen Edistyspuolue—ED) and played a major role in Finland

during the interwar period (see The Era of Russification, ch. 1). After World War II, this party declined in strength and was dis- solved in 1951 . Liberals subsequendy formed two other parties that

joined together in 1965 under the present name. Liberals in one

party organization or another continued to participate in most

governments until 1979. These liberals were proponents of busi- ness interests and the protection of private property, but they spoke

also of the need for government planning and for social welfare

programs. The LKP has steadily lost support to the other nonsocialist parties, however. In the 1983 and the 1987 nation2il elec- tions, it failed to win any seats in the Eduskunta, and in the local

259
Finland: A Country Study

elections of 1988 it lost more than a quarter of its representatives on municipal councils. In the late 1980s, the future of this once- important party was uncertain at best. The SMP was founded in 1959 by the prominent and charismatic Kesk politician, Veikko Vennamo, who broke with Kekko- nen for both political and personal reasons. The party, viewed for

most of its life as rightist, has always campaigned as a protest party

fighting for the interests of the "forgotten man," neglected or ignored by larger parties. This populist party first found support

among small farmers, but it later received votes also from city

dwellers who were keenly dissatisfied with mainstream politics. The

SMP's support fluctuated wildly from election to election, and no

safe estimate about its future was possible in the late 1980s. This was especially the case after its inclusion in governing coalitions.

After considerable success in the 1983 election, it got two ministerial

posts. It therefore competed in the 1987 election as a governing

party, and it lost nearly half its seats in parliament. Equally bad

results were obtained in the 1988 local elections. In addition,

although led in recent years by the founder's son, Pekka Vennamo,

the party was torn by dissension. With a single post in the government, even after the disastrous 1987 results, the SMP was in danger

of losing its character as a protest party, the role which had brought

it voter support.

The Finnish Christian League (Suomen KristiUinen Liitto

SKL) was founded in 1958 to bring Christian ideals into politics

and to curb secularist trends. Its members generally belonged to the state church, yet they did not claim to act in its behalf but for

Christian values in general. The party's support has fluctuated since

it won its first seat in the Eduskunta in 1970. The SKL has never had a ministerial post, even in 1979 when it won ten parliamentary seats. Its share of votes declined sharply in the next national

election, but rose again in 1987, and observers believed that a relia- ble base of support remained that was likely to ensure its continued

existence.

An environmentalist group, the Greens was not an offlciaUy

registered party during the first years of its existence, and it therefore received no government support for the 1983 and the 1987

national elections. It was organized in the early 1980s as an elec- toral association to work on a variety of quality-of-life issues and

to contest elections on both the local and the national level. In 1983

the group won two seats in the Eduskunta, the first time an elec- toral association had managed such a feat. In the 1984 local elec- tions, they doubled their support, and in the 1987 election they

won four parliamentary seats.

260
Government and Politics The group's membership was heterogeneous with regard to both

origins and aims. Activists were drawn from academia, the middle class, and the disabled, as well as from feminist and bohemian

circles. This diversity was reflected in the multitude of members'

goals, ranging from modest reforms to a Utopian shutdown of

industry and a return to subsistence farming. In mid- 1988 part

of the movement split off and formed a registered political party,

the Green League (Vihrea Liitto). The Greens as a whole suffered a slight setback in the 1988 local elections. Given its internal dis- sension, the role the environmentalist movement was to play in

governing Finland was likely to remain small. Interest Groups

Interest group politics in Finland was managed primarily by the

large market-sector organizations that represented labor and

management. By the mid-1980s, about 85 percent of the work force,

both blue-collar and white-collar, belonged to four labor federations encompassing about 100 labor unions. The largest and oldest was SAK, which united the approximately 1 million members,

mainly blue-collar, of twenty-eight unions. SAK dated from 1907

and was close to the SDP, but it had within it several unions dominated by communists. The Confederation of Salaried Employees

and Civil Servants (Toimihenkilo- ja Virkamiesjarjestojen Keskusliitto—TVK) consisted of 14 unions with about 370,000 members who voted for a variety of left-wing and right-wing parties.

The Central Organization of Professional Associations in Finland

(Akava) was made up of 45 unions, in which 210,000 members

white-collar professionals—voted mainly for conservative parties.

The Confederation of Technical Employees' Organizations in Finland (Suomen Teknisten Toimihenkilqjarjestojen Keskusliitto

STTK) united 15 unions, in which 130,000 members—lower-level

white-collar employees—split their votes among all parties.

Representing the interests of farmers and close to the Kesk was

the Confederation of Agricultural Producers (Maataloustuottajain

Keskusliitto—MTK), with about 300,000 members. Representing industry and management were the Confederation of Finnish Employers (Suomen Tyonantajain Keskusliitto—STK), made

up of twenty-eight member organizations representing 6,000

firms, and the Confederation of Commerce Employers (Liiketyonantajain Keskusliitto—LTK) including nearly 7,000 firms;

firms belonging to the STK and the LTK had some 800,000

employees in 1985.

These organizations could speak for the bulk of Finland's work

261
Finland: A Country Study

force and business firms, and, since the first of a series of comprehensive incomes policy agreements was concluded in 1968, they

had come to rivgJ the government in determining how the country's affairs were to be managed. The setdements, arranged generally at two-year intervals, frequently involved not only wages and

working conditions but also social welfare programs that required

legislation for their realization. This obliged the governing coali- tion and the other parties represented in the Eduskunta to be fully

apprised of the terms of the setdement.

The government itself provided officials to assist in the negotiations between labor and management. In 1971 it made permanent

the post of special negotiator for incomes policy, and a year later

it created a board within the prime minister's office to assist this

official. On occasion, when negotiations have gone poorly, the prime

minister or the president has intervened. The government also has

facilitated the incomes agreements by providing expert advice on

probable future economic conditions and on what the contending

parties could reasonably demand. At appropriate times, leading

officials and politicians have issued statements so that by the winter,

when formal negotiations began, there was a broadly accepted eco- nomic framework within which these negotiations could take place.

Outside the wage agreement system, social groups, or interests,

generally worked through the established parties to further their

objectives through meetings, lobbying, and other me2ins of voicing their concerns. To secure the support of some segments of the

population, most politiczd parties organized student, youth, and

sports groups. Parties often devoted as much as one-third of their

financial resources to their auxiliary and local branches.

Finnish women, like other groups, sought to further their interests mainly through the country's politiccd and economic organizations.

The parties took care that a good number of their leaders were women, and by the 1980s women made up about one-third of the

Eduskunta. Women were represented in market-sector organizations according to their occupations. The women's movement was

small; it did not play a significant role in Finnish political life, even though it had existed since the 1880s, when the first organization

involved in women's rights was founded. The two main women's

organizations active in Finland in the 1980s were the Feminist

Union (Naisasialiitto Unioni), dating from 1892, and the informal collective. Feminists (Feministit), founded in 1976. They were

both apolitical, and their membership, though mainly from the educated middle class, contained some working-class women. The Nordic committee system was a key forum in which Finnish interest groups, or concerned parties, made their views known

262
Government and Politics

to the government. The system had long been used in the region

to gather a range of opinions on pubhc matters. It consisted of committees, both temporary ad hoc organs formed to dead with a single question and permanent statutory bodies created to handle broad

issues, that were composed of experts and representatives of affected

interests. Thus, advocates of labor and business, experts from local and national government, and, when appropriate, single-issue

groups, could argue their cases. A committee report, if there was

one, could be sent for review to concerned parties, and thereafter

to a ministry, where its findings might figure in a government

ordinance or in a legislative proposal.

The Presidential Election of 1982 and Koivisto's Presidency

A major change occurred in Finnish domestic politics in January 1982, when the social democratic politician, Mauno Koivisto, was elected president. He was the first member of the SDP to be

elevated to the country's highest post, and his election meant the

full integration of social democrats into Finnish public life and an end to the postwar dominance of Kesk.

Koivisto had been a leading public figure since the late 1960s,

when he had served as prime minister for two years. During the

1970s, as governor of the Bank of Finland and, for a short time,

as minister of finance, he had won the public's respect for the

accuracy of his economic forecasts. His personality and considerable media astuteness also won him a very considerable personal

popularity across party lines. Born in 1923 in Turku, the son of a carpenter, he fought bravely during World War II. After the war

he returned to his native city, and through years of part-time study,

earned a doctorate in sociology in 1956. He was active within the

moderate wing of the SDP, yet did not seek an elective office. He

began his banking career by directing a large employees' savings

bank in Helsinki.

Summoned again in 1979 to serve as prime minister, Koivisto

retained the public's esteem and became a strong potential candidate for the presidenticd election scheduled for 1984. Seen by Kesk

politicians as a threat to their party's hold on the presidency after Kekkonen's inevitable retirement, Koivisto was pressured to resign

in the spring of 1981 . He refused, telling Kekkonen that he would

continue as prime minister until a lack of parliamentary support

for his government was shown. Koivisto 's survival despite Kekkonen's challenge was seen by some observers as the end of an era

in which the president had dominated Finnish public life. In the fall of 1981, failing health forced Kekkonen to resign the

presidency, and Koivisto assumed the duties of the office until the

263
Finland: A Country Study

presidential election set for January 1982, two ye2irs ahead of schedule. He won handily, taking 43 percent of the votes—from the high

turnout of 87 percent—and 145 of the electors. With the support

of some electors pledged to the SKDL candidate, he won, with 167

ballots, in the first vote of the electoral college. His popularity

remained high during his first term, and he easily won reelection

in 1988.

In his years in office, Koivisto has adhered to the PaasikiviKekkonen Line, renewing in 1983 the FCMA treaty, for example. In addition, he has supported the traditional policy of neutrality, has spoken often of the danger of the arms race, and has

encouraged international trade. One innovation he introduced was

allowing greater policy roles to the Ministry of Foreign Affairs,

the Eduskunta's Foreign Affairs Committee, and other institutions

concerned with foreign policy.

On the domestic front, he has been more restrained than his

predecessor. He has preferred to let day-to-day politics run its course, and he has tended to see the presidency as an office from

which he could direct the nation's attention to long-term goals. At

times, however, delphic presidential statements have confused the

public about his intentions. On occasion, too, he has been harsh,

berating the press for its irresponsible coverage of foreign policy

issues, or striking down politicians he thought too meddlesome in

international affairs. Overall, Koivisto 's presidency has marked

a coming of age for the Finnish polity, an emergence from the harsh

tutelage of the Kekkonen years, and the increasing resemblance

of Finnish politiczd life to that of other successful Western

democracies.

The Parliamentary Election of 1983

As is customary in Finland after a presidential election, the

government resigned after Koivisto 's victory in January 1982. It was re-formed the next month with the same four-party coalition

(the SDP, Kesk, the SKDL,and the SFP) and many of the same

ministers, with veteran SDP politician Kalevi Sorsa as prime

minister. Two devaluations in October 1982, amounting to a 10

percent fall in the value of the Finnish mark, caused complaints

by the SKDL that low-income groups were the main victims of

this measure designed to enhance Finnish competitiveness abroad.

The cabinet fell at the end of the year, when Sorsa dissolved it after the SKDL ministers refused to support a government defense

proposal. Immediately asked by the president to form a new government, Sorsa did so, but with LKP participation and without the

SKDL. The government's slender majority of 103 votes in the

264
Mauno Koivisto, elected president of Finland in 1982 and re-elected for a second six-year term in 1988

Courtesy Embassy of Finland, Washington

Eduskunta was not an important handicap, for new elections were

scheduled for March 1983.

The election was widely regarded as a "protest election" because,

contrary to expectations, the major parties, with the exception of

the SDP, did not do well. The LKP lost all its seats in the

Eduskunta, while the SMP more than doubled its seats, and for the first time the Greens had representatives in the chamber as well. The SMP's success was credited, at least in part, to voter distaste for some mainstream parties because of political scandals; no significant policy differences emerged in the election campaign.

Another reason for the SMP gains was the increasing role of "float- ing votes" not bound to any one party. The SDP won fifty- seven parliamentary seats, the greatest number since before the war and

a result of Koivisto 's election to the presidency.

Seven weeks of negotiations led to the formation of a four-party

coalition composed of the old standbys, the SDP, Kesk, and the

SEP, and, for the first time, because of its great success, the SMP.

The protest party of the "forgotten man," the SMP was given the

portfolios for taxation (second minister of finance) and for labor,

with the aim of taming it through ministerial responsibility. Because

the government, led by the SDP's Sorsa, had the support of only

122 votes out of 200, rather than the 134 needed to ensure the

265
Finland: A Country Study

passage of much economic legislation, it might not have been

expected to last long. It distinguished itself, however, by being the

first cabinet since the war to serve out a full term. Its survival

until the elections of March 1987 was an indication of a newly won

stability in Finnish politics.

The Sorsa cabinet stressed the continuation of traditional Finnish foreign policy, the expansion of trade with the West to counter what some saw as too great dependence on Soviet trade, and

the adoption of measures to reduce inflation (see Role of Government, ch. 3). The economic measures of the Sorsa government were

stringent and fisccdly conservative. Public awareness of the necessity of a small exporting nation's remaining competitive allowed

the adoption of frugal policies. The 1984 biannual incomes policy

arrangement was also modest in its scope. The rival demands for

the one for 1986 were less so, however, and President Koivisto had

to intervene to ease hard negotiations. One segment of the work

force, civil servants, won a large pay increase for itself after a seven- week strike in the spring of 1986. The government also brought

inflation down from the double-digit levels of the early 1980s, but

it was less successful in lowering unemployment, which remained

steady at about 7 percent.

Although the government was to be long-lived, it was not

free of tensions. In January 1984, trouble erupted when its three

nonsocialist parties made public a list of nine points on which

they disagreed with the SDP. The issues were domestic in character, and they centered on such questions as the methods of

calculation and payment for child-care allowances, the advisability of nuclear power plant construction, wage package negotiation methods, and financial measures to aid farmers and small

businessmen. The storm caused by the document was calmed

by the political skills of the prime minister and through a les- sened adamancy on the part of Kesk.

Despite overall agreement on many major issues and the

dominance of consensus politics in the governing of the country, the parties' struggle for power was nevertheless fierce. Attacks on the SDP by its coalition partner, Kesk, during 1986 were seen by some to stem from Kesk's desire for an opening

to the right and for the eventual formation of a center-right

government after the 1987 elections. The attacks, especially

those of Foreign Minister Paavo Vayrynen, intensified in the

late summer. The young Kesk leader particularly denounced

Sorsa' s handling of trade with the Soviet Union. Sorsa sucessfuUy

counterattacked in the fall, which forced Vayrynen to stop his

campaign.

266
Government and Politics The Parliamentary Election of 1987

The March 1987 elections moved the country somewhat to the

right. It was uncertain how far, because the voter participation

rate—at a comparatively low 75 percent, 5 percent lower than

usual—hurt the left more than the right and had a varying impact. The KOK, for example, increased its percentage of the votes by only 1 percent and saw a tiny increase in absolute terms, yet

it gained nine seats in the Eduskunta and almost caught up with

the chamber's largest party, the SDP. The socialists' take dropped

by 2.6 percent, with 100,000 fewer votes, yet they lost only one

seat in the Eduskunta because of the way their votes were distributed across the country. Kesk garnered the same portion of the vote that

it had in 1983, but it achieved a small increase in the actual number of votes and gained two new seats. The Greens, who had

registered a significant gain in the communal elections of October

1984, got only two new representatives, far fewer than expected,

for a tot2il of four. The SKDL, electoral vehicle of the reformist

SKP, lost a seat, while DEVA, controlled by the Stalinist Committee of SKP Organizations, lost six of the ten seats it had controlled since its representatives were expelled from the SKDL in

June 1986. Weakened perhaps from its membership in the longlived government, the SMP lost more than one-third of its support and almost half of its seats. Two of the small centrist parties

did well: the SFP gained another seat, just as it had in 1983, and

the SKL secured two more for a total of five. Faced with these inconclusive results, negotiations about the

shape of the new government got underway. After six weeks of talks and attempts to put together a completely nonsocialist government,

a pathbreaking combination was formed that included conservatives and socicdists in the Council of State, joined by the dependable and successful SFP and the battered and desperate SMP.

The new government, consisting of nine centrist and conservative and eight socialist ministers and headed by the KOK's Harri

Holkeri, surprised some observers because a nonsocialist government was possible and seemed appropriate given the election results. The outcome angered others, who contended that Koivisto had misused presidential powers when he brokered a government that had

his former party as a member despite its considerable electoral losses. Koivisto countered that he had behaved properly and had let the parties themselves argue out a workable combination.

One explanation for the unusued government was that animosity against the Kesk leader, Vayrynen, was so common in both

the SDP 2ind the KOK that neither party was willing to form a

267
Finland: A Country Study

government with him. Thus, Kesk was deprived of its traditional

"hinge" role. Another consideration was that the SDP and the

KOK were not so much at odds with each other as socialist and

conservative parties elsewhere might have been. Both parties had

moved toward the center, and they were in agreement about most

issues, especially about the need to reduce the agriculturad subsidies that had always been defended by Kesk. The resulting "redblue" government had as progr2im objectives the preservation of

the social welfare system, the improvement of Finland's competitive position in internationed trade, a fundamental reform of the tax system, and adherence to the Paasikivi-Kekkonen Line in for- eign affairs. The SFP fit in easily with this program. The formerly

rightist, but now moderate, SMP was included because it strengthened the government slightly and because it was likely to be

dependable, because it had no other place to go. Koivisto informed

the new government that it would not have to resign after the

presidential election of 1988, and observers expected the cabinet

to serve its full term until the 1991 parliamentary elections.

The Presidential Election of 1988

The presidential election held on January 3 1 and February 1

,

1988, was the first to use the new procedures for choosing the

nation's highest official (see Electoral System, this ch.). The contest's outcome, the re-election of Mauno Koivisto, surprised no

one, yet he captured a smaller portion of the direct vote than

expected—only 47.9 percent, rather than the 60 to 70 percent fore- cast by opinion polls during 1987. His failure to win more than

hcdf of the direct, or popular, vote of the 84 percent turnout meant

that Koivisto could claim victory only after he had the support of a majority of the 301 -member electoral college. This he achieved on the body's second ballot, when the votes of 45 of the 63 electors

pledged to the KOK candidate. Prime Minister Hairri Holkeri, were added to those of the 144 electors he had won on his own. Koivisto 's inability to win the presidency directly was caused by an upsurge

of support in the final weeks of the campaign for his stronger rivals,

Kesk's Paavo Vayrynen and the KOK's Holkeri—who got 20.1

and 18.1 percent of the vote respectively, and Kalevi Kivisto, the

candidate of voters linked to the SKDL and the Greens, who got

10.4 percent. The strong finish of Vayrynen and Kivisto was

regarded by some as a vote against the KOK-SDP coalition formed

after the March 1987 parliamentary election. The 1.4 percent gar- nered by the DEVA candidate, Jouko Kajanoja, indicated the marginal role that the Stgdinist wing of the communist movement played

in the country's political life.

268
Government and Politics The presidential campaign did not center, to any significant

degree, on issues, but on the candidates themselves; Vayrynen and

Holkeri both clearly wanted to position themselves well for the

presidential election of 1994. Neither had any hope of defeating

the ever-popular Koivisto in 1988, and it was widely assumed that

he would not again seek reelection. Vayrynen was seen as the win- ner of this race for position, in that he had come from far behind

in the polls, had easily beaten Koivisto in the northern provinces,

had found good support elsewhere—except in the Helsinki area, and had cemented his leadership role in his own party. His strong

party base and his ability to attract conservatives dissatified with

their party's zdliance with the socialists, combined with his extensive ministerial experience, made the relatively young Vayrynen

Finland's foremost opposition politician. His strong finish, and the

lack of any SDP politician of Koivisto 's personad stature and

popularity, guaranteed Kesk continued significance in the country's political life even when in opposition, and were perhaps signs

that the dominance of post-industrial southern Finland over the

country as a whole might only be temporary.

Mass Media

Finland's first newspaper, the Swedish-language Tidningar Utgifne

A/Et Sdllskap i Abo, was established in 1771 in Turku. A Finnishlanguage journal, Suomenkieliset Tieto-Sanomat, was created in the same town in 1775. Neither paper survived long, however, and

it was not until the next century that regularly published newspapers

appeared in Finland. Still in existence today are Abo Underrdttelser,

founded in Turku in 1824, and Uusi Suomi, launched in Helsinki

in 1847 (see table 21, Appendix A).

The latter half of the nineteenth century saw the appearance of

many newspapers. All the political parties formed in these years

and in the early twentieth century had their own newspapers, and,

as a result, most Finnish papers were partisan until after World

War II. After independence in 1917, there was another upsurge

in the number of newspapers published; a high point, never since

surpassed, was reached in 1930 when Finns could choose from 123

newspapers, each published at least three times a week. By 1985

there were ninety-eight such papers, a figure that has remained

fairly constant since the early 1960s. Totad circulation of papers

of this type, twelve of which were in Swedish, amounted to about

three million by the mid-1980s. In addition, there were about 160

papers that appeared once or twice a week. One United Nations

(UN) study ranked Finland fourth in the world for per capita cir- culation, and surveys have found that over 90 percent of Finns

269
Finland: A Country Study

read papers regularly, 60 percent of Finns viewing them as the most

useful source of information.

Finns preferred to have their papers delivered to their homes

in the early morning, and for this reason there were only two eve- ning papers in the country, Ilta-Sanomat and Iltalehti, both printed

in Helsinki. Another reason for low newsstand sales in Finland was

that no taxes were levied on newspapers and magazines received

via subscription.

Most localities were served by only one newspaper, but by the

mid-1980s Helsinki had about a dozen, and its newspapers, which

constituted only one-eighth of the country's total, accounted for one-third of national circulation. Seven of the Helsinki papers were among the twelve largest Finnish papers. Although many of Finland's papers were published in Helsinki, there was little concentration of press ownership, and there were no dominant newspaper

chains, with the possible exception of the firm Sanoma that owned

the two papers with the largest circulation, Helsingin Sanomat and

Ilta-Sanomat. In contrast to the other Nordic countries, the number of

newspapers in Finland has remained fairly constant, and there was

even a slight upturn in the 1980s. This steadiness was caused, at

least partly, by the government program of general and selective

support. General support was intended for the press as a whole,

magazines included; it involved not taxing subscriptions and

essential materials, such as newsprint, and arranging for low postal

rates. Selective support, designed to guarantee the survival of the

party press, consisted of partial subsidies for distribution and

telecommunications costs and direct lump-sum payments to papers

in accordance with the number of representatives their parties had

in the Eduskunta.

Despite these efforts to encourage a varied party press, the number of independent papers rose sharply after World War II, increasing from 38 percent in 1962 to 64 percent in 1985. The number of nonsocialist party papers decreased most, but papers of this type still had more than twice the circulation of socialist papers.

Most Finnish newspapers were served by the country's principal news agency, the Finnish News Agency (Suomen Tietotoimisto

STT), which was owned by the leading newspapers and the state- run Finnish Broadcasting Company (Yleisradio—YLE). STT was

connected to many of the world's news agencies, and it had an

extensive network of domestic correspondents. Some newspapers,

however, had direct contacts with foreign news agencies. There

were also agencies, run by political parties, that supplied subscribers with political news and articles. Agencies of this type were

270
Government and Politics

Kesk's Uutiskeskus (UK), the KOK's Lehdiston Sanomapalvelu

(LSP), the SDP's Tyovaen Sanomalehtien Tietotoimisto (TST),

the SKDL's Demokraattinen Lehtipalvelu (DLP), and the SFP's

Svensk Presstjanst (SPT).

By the mid-1980s, there were about 1 ,200 magazines being published regulcirly, printing a total of about 20 million copies a year. The most popular subscription magazine in the mid-1980s was Me,

pubHshed biweekly in Helsinki for Finnish consumer societies, fol- lowed by the Finnish version of Reader's Digest and by numerous

family and general interest magcizines. The magazines with the largest printings were those distributed free at banks, retail stores, and

other businesses.

Subscription magazines, like newspapers, enjoyed general support from the government in the form of lower taxes and postal

rates. In the late 1970s, selective government support was in- troduced to assist those magazines which, without the aim of financial gain, sought to inform the public about cultural, scientific,

religious, and social concerns. By the mid-1980s, several dozen of

these so-called ''magazines of opinion" were receiving state aid.

Finland's state radio and television company, the YLE, was

founded in 1926, and it began television broadcasting in 1958. It was a stock company, with 99.2 percent of its stock owned by the

government and the remainder owned by fifty- seven stockholders.

As a stock company, it was independent of the state budget. It did

not monopolize the airwaves, but sold a portion of its broadcasting time, a maximum of 18 percent, to a private television company, Mainos-TV-Reklam (MTV). This arrangement had been

in effect since 1958, when the YLE first began television transmissions. Beginning in 1973, Finland also had cable television, centered in the major urban areas, which by the mid-1980s reached

about 100,000 homes. It was expected that Finns and the residents

of the other Nordic countries would be able to see each other's tele- vision broadcasts via satellite sometime in the early 1990s.

In the mid-1980s, the YLE employed nearly 5,000 persons; each

year it broadcast about 5,000 hours of television programming

1,000 hours of which was rented by MTV. Since late 1986, the

YLE's television division has consisted of three channels (TV 1, TV 2, and TV 3). The YLE produced about 1,400 hours of

television itself; the remaining time was filled by programs purchased abroad. Swedish-language programming amounted to a

little more than 500 hours, about 60 percent of which appeared on TV 1. In the mid-1980s, about 20 percent of television broadcast time was devoted to news and current events, another 20 percent to

271
Finland: A Country Study

documentaries, the same amount again to sports and light enter- tainment, 16 percent to television serials, and 12 percent to films.

Imported programs were shown in their original languages with

subtitles. The YLE had coproduction arrangements with many for- eign companies, mainly those of Eastern Europe, Western Europe,

and the United States. Finns, 81 percent of them on a daily basis,

watched an average of two hours of television a day; 28 percent

held it to be their most important source of information.

The YLE's radio division broadcast about 21,000 hours annually and consisted of three sections—Network 1, Network 2, and

the Swedish Program. Network 2 broadcast around the clock. The

other two stations broadcast from early in the morning until airound

midnight. Somewhat under half of these radio programs were

broadcast on a regional or local level from the company's nine local

stations, eight of which sent Finnish-language progranmiing. About

20 percent of radio programming was devoted to news and current events, another 20 percent to general cultural and public service

programs, and 40 percent to all varieties of music. In addition to

its national broadcasts, each year the company transmitted about

13,500 hours—in Finnish and in other languages—to listeners,

abroad. Private radio stations first appeared in 1985, and they

existed in a score of municipalities by the late 1980s. Firms listened

to the radio an average of two hours daily, and 70 percent of them

listened every day. Twenty-three percent of the population held

the medium to be their most important source of information.

The YLE, having been granted its broadcasting concession by

the government, was obliged to present progr2imming that was 'Tactual and fair," provided wholesome entertainment, strengthened

popular education, and infringed on no one's rights. A committee, appointed in 1979 to study new legislation for radio and tele- vision broadcasting, concluded in 1984 that the YLE's programs

should be marked by truthfulness, pluralism, and relevance to the

lives of the viewers, and that it should further the basic rights and

values of the country's citizens. The Administrative Council, the

members of which were appointed by the Eduskunta in accordance

with each party's parliamentary strength, was responsible for realiz- ing these objectives. Three program councils, the members of which were appointed by the Administrative Council and according to the political composition of the Eduskunta, were involved in deciding what was to be broadcast. The upper management of the YLE

was also somewhat politicized in the belief that this would help to guarantee that all viewpoints were adequately aired during broadcasting time. MTV's programming, including the news broadcasts

that it began in 1981, was also supervised by the councils. This

272
Government and Politics

system of control, while occasionally subject to heavy-handed lapses

of judgement, was generally conceded to have brought about

programming that broadly mirrored the country's political culture

as a whole.

Article 10 of the Constitution Act of 1919 guarantees freedom

of speech and "the right of printing and publishing writing and

pictorial presentations without prior interference by anyone."

International surveys of Finnish journalism have found it to be of a high standard and wholly comparable with that of other Western

nations. The desire for a press reflecting all currents of Finnish

political life has been given concrete expression in government

financial support for political newspapers and journals of opinion.

Legislation from 1966 protected the confidentiality of sources, in

that it allowed journalists to refuse to reveal the identity of sources

unless such disclosure would solve a serious crime, i.e., one call- ing for a sentence of six or more years. In 1971 this protection was

extended to television journalists as well. Information was readily available in Finland. Ten major publishing firms, two of them specializing in Swedish-language books,

and numerous smaller houses published some 8,000 new titles each

year. This was an extraordinary figure for a small country, especially one the languages of which were not widely known abroad.

Finns were able to buy books published anywhere in the world,

and local firms that published the samizdat, or underground, liter- ature from the Soviet Union allowed Finns to be well acquainted

with the opposition groups of their eastern neighbor.

According to the distinguished Finnish journalist and former

diplomat. Max Jakobson, Finnish journalism did not possess an

adversarial spirit and a tradition of aggressive reporting to the same

degree as the American press. Also on occasion it was noted that

the politicization of YLE broadcasting meant that television journalists sometimes remembered the political party from which they came better than they did their duty to inform the public objectively. In consonance with the tone of Finnish foreign policy, press and television criticism of the superpowers' foreign policies was muted to some degree. Finnish press discussions of the failures of

the Soviet Union could be frank, but they were couched in gentler tones than was true in some other countries.

A reminder of the sensitive years just after World War II, when

Finland's survival as an independent nation was not assured, was

a 1948 addition to the Penal Code that threatened a prison term

of up to two years for anyone who damaged Finnish relations with

a foreign power by means of defamatory journalism. Serious as

273
Finland: A Country Study

this penalty appeared, only the president could decide if a journalist seen guilty of such defamation should be prosecuted. Although

not applied for decades, the clause continued to be an embarrassment for Finns. Government officials, when called upon to com- ment on the clause, stressed the value of a free press and the lack

of censorship, noted Finland's good relations with all countries,

acknowledged that there had been in the past some "self- censorship" of the press with regard to the Soviet Union, but

pointed out that the clause had not been applied for decades. Since

World War II, leading Finnish politicians have also occasionally

exhorted the press to be more responsible in its reporting on for- eign policy issues; there were several such calls by Koivisto in his

first years in office. Such political tutelage was by the mid-1980s,

however, no longer viewed as appropriate for a modem democratic

state. Finnish media were also subject to some popular controls. The

Press Law of 1 9 1 9 gave the right of correction to anyone who held

that material printed about him in a periodical was incorrect or

offensive. The publication was obliged to grant the injured party an equal amount of space within two days after receipt of the state- ment. Failure to do so could result in a fine. Finns could also turn

to the Council for Mass Media Qulkisen Sanan Neuvosto—^JSN),

which was founded in 1968 to promote journalistic ethics. This body

examined each complaint submitted to it and decided on its merits.

Between 1969 and 1978, the council received several hundred queries; it found about a quarter of them justified and recommended

to the criticized journal or station that it issue an unedited rejoinder

from the injured party.

Films were subject to censorship in Finland according to a law

from 1965 that had been enacted by the elaborate procedure re- quired for legislation seen as being an exception to the Constitution. In this case, there was an exceptional curtailment of the

constitutional right of freedom of information. The law dealt only

with films shown for commercial purposes, and it forbade those

that offended good morals, were brutalizing or injurious to mental health, endangered public order and the nation's defense, or harmed Finland's relations with other countries. The Film Censorship Board was set up to administer the law, and its decisions

could be appealed up to the Supreme Administrative Court. Of

2,688 films reviewed between 1972 and 1983, some 227 were for- bidden in their entirety. Of these, nearly all were rejected for rea- sons of morality or potential danger to mentsd health, and 2 percent

because they could hurt Finland's external relations. The most noted

of these films was the British-Norwegian coproduction, "One Day

274
Government and Politics

in the Life of Ivan Denisovich," based on the eponymous novel

by Aleksandr Solzhenitsyn. Several films from the German

Democratic Republic (East Germany) were banned after having

been judged potentially offensive to the Federal Republic of Germany (West Germany).

Foreign Relations

Finnish foreign policy is aimed at preserving the nation's politi- cal and territori2il integrity and safeguarding the continuity of its national existence. Geographical reality—having the Soviet Union

as a neighbor, and defeat in World War II led Finland to adopt

a postwar national security policy of maintaining its freedom of

action by dissociating itself from the conflicts of major powers. The

main feature of contemporary Finnish policy, therefore, is neutrality. As the offici2d political doctrine, nonadignment has helped

in the establishment of friendly relations with other countries regardless of their political systems.

Within the framework of Finnish neutrality, there are three

important policy orientations: a special relationship with the Soviet

Union; a traditional policy of close collaboration with the other

Nordic countries—Sweden, Norway, Denmark, and Iceland; and

an active policy as a member of the UN.

Neutrality

Finland, independent only since 1917, does not have a long tra- dition of neutrality. In the interwar period, it declared itself neutral, but its foreign policy was not neutral enough to satisfy the

security concerns of the Soviet Union, and Finland was drawn into

World War II. The years immediately after the war were taken

up by the country's struggle to survive as an independent nation.

The treaties of 1947 and 1948, which confirmed the existence of a Soviet military base on Finnish territory and created a defensive

alliance with the Soviet Union, seemed to preclude Finnish neutrality (see The Cold War and the Treaty of 1948, ch. 1). The Treaty of Friendship, Cooperation, and Mutual Assistance

(FCMA) of 1948 mentioned in its preamble, however, Finland's

desire to remain outside the conflicts of the great powers and to maintain peace in accordance with the principles of the UN. A first example of the Finnish policy of avoiding entanglements in superpower disputes was the decision in early 1948 not to participate

in the European Recovery Program, also known as the Marshall

Plan. Finnish rejection of the much-needed aid was caused by Soviet

contentions that the program was an effort on the part of the United

States to divide Europe into two camps.

275
Finland: A Country Study

In the late 1940s, Finland joined the General Agreement on

Tariffs and Trade (GATT—see Glossary) and the World Bank (see

Glossary), participating in their economic programs, but avoiding any political implications of membership that could be seen by the Soviets to link the country to the West. Finland also stayed

out of the discussions of the period about the formation of a Nordic defense union.

During these early years after World War II, there were few offi- cial Finnish statements about neutrality, but in a speech in 1952

Prime Minister Kekkonen held that the FCMA treaty presupposed

a kind of neutrality for his country. In 1955 a major impediment

to Finnish neutrality was removed by the closing of the Soviet mili- tary base located near Helsinki, and in the following years leading

Soviet officials praised the neutrality of their neighbor. In 1955,

too, Finland was able to join the UN and the Nordic Council, acts that reduced its isolation and brought it more fully into the community of nations.

By the early 1960s, Finnish neutrality was recognized by both

the West and the East, and the country entered a more confident

period of international relations when it began practicing what came

to be officially termed an active and peaceful policy of neutrality.

Finland participated in local and in global initiatives aimed at creat- ing conditions that allowed nations to avoid violence in their rela- tions with one another. As President Kekkonen noted in 1965 in an often-quoted speech, Finland could "only maintain its neutrality on the condition that peace is preserved in Europe."

An essential element of Finland's active neutrality policy was

the concept of a Nordic Nuclear-Weapons-Free Zone (Nordic

NWFZ), first introduced by Kekkonen in May 1963 against the

background of a Europe increasingly armed with nuclear weapons.

The Finnish president proposed the creation of a zone consisting

of Finl2ind, Sweden, Norway, Denmark, and Icelcind. Their de facto nuclear-weapons-free status was to be formalized by the creation

of a Nordic NWFZ that would remove them somewhat from the

strategic pl2ins of the superpowers. The zone idea was based on

the supposition that, as these countries had no nuclear weapons

in their territories, they might avoid nuclear attacks from either

of the two alliances, whereas the presence of nuclear weapons would

certainly invite such attacks. The Nordic NWFZ idea was not realized at the time it was initiadly proposed. A major impediment was the membership of Denmark and Norway in the North Atlantic Treaty Organization

(NATO) and hence their pledge to consider the deployment of

nuclear weapons on their territories in a time of crisis. Despite its

276
President Koivisto with President Ronald Reagan at the White House,

September 1983

Courtesy The White House (Pete Souza)

lack of success, the zone proposal remained part of Finnish for- eign policy, and in 1978 it was reintroduced in an altered form

in the light of new developments in weapons technology. In Kekkonen's opinion, the cruise missile made the use of nuclear weapons

in war more likely. His new Nordic NWFZ proposal contained

the concept of a negative security guarantee, according to which

the superpowers would bind themselves to refrain from attacking

with nuclear weapons those countries belonging to the zone. The zone proposEd has since become a permanent part of security discussions in Nordic Europe, with support from a variety of

quarters. President Koivisto declared his firm support for the zone

propos2d in a speech at the UN in 1983, and in 1985 a Nordic

parliamentary group convened in Copenhagen to discuss the idea

and to set up a commission to study it. In addition to the problem of Danish and Norwegian membership in the Atlantic Alliance, other problems continued to prevent

the zone's realization. A central question was how, and to what

extent, the Baltic and Barents seas and the adjacent 2ireas of the

Soviet Union would be included. The Soviet Union, the only power

of northern Europe that had nuclear weapons in its arsenal, always

welcomed the zone proposal but left its participation in the zone

uncertain. Finnish officials seemed content to hold continued talks

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Finland: A Country Study

about the zone. Foreign affairs specialists occasionally commented

that Helsinki was more interested in using discussion of a Nordic

NWFZ as a means of emphasizing the existing stability of north- ern Europe than in the realization of such a zone. Another core element of Finland's active policy of neutrality was

the country's participation in arms control and disarmament

initiatives. In 1963 Finland signed the Nuclear Test Ban Treaty,

prohibiting nucleair testing underwater, above ground, and in outer

space; and in 1968 it approved the Treaty on the Non-Proliferation

of Nuclear Weapons. It was the first country to form an agreement with the International Atomic Energy Agency concerning the

peaceful use of nucle2ir power. In 1971 Finland signed the treaty

banning the placement of nuclear weapons on the world's seabed,

and in 1975 it joined in the prohibition of the development, production, and stockpiling of biological weapons. Since the early 1970s,

Finnish scientists have been developing technology for the detection of chemical weapons, and since the mid-1970s, they have been

engaged in perfecting a global seismic verification station system.

Helsinki was the site for some of the Strategic Arms Limitation

Talks (SALT), and in 1973 and 1975 Finland was the driving force

behind the Conference on Security and Cooperation in Europe

(CSCE) and the host of its first and third meetings. The signing

of the Final Act of the CSCE in Helsinki in 1975 was the high point

of the country's policy of active neutrality. The signed document

recognized the legitimacy of neutrality as a foreign policy, a point

demonstrated by Finland's hosting the conference. The country

has continued to work as a member of the neutral and nonaligned

group at later CSCE meetings, where the emphasis has been on

the formation of confidence-building and security-building measures (CSBM). The fourth CSCE meeting was scheduled to take

place in Helsinki in the spring of 1992.

Soviet Union

Two hard-fought wars, ending in defeat and in the loss of about

one-tenth of Finland's land area, convinced some leading Finnish

politicians by the end of World War II that the interwsir policy of

neutral distance from the Soviet Union had been mistaken and must

be abandoned if the country were to survive as an independent

nation (see The Cold War and the Treaty of 1948, ch. 1). Juho

Paasikivi, Finland's most prominent conservative politician and

its president from 1946 to 1956, came to believe that Finnish for- eign policy must center on convincing Soviet leaders that his country

accepted, as legitimate, Soviet desires for a secure northwestern

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Government and Politics

border and that there was no reason to fear an attack from, or through, Finland.

The prehminary peace treaty of 1944, which ended the Continuation War, and the Treaty of Paris of 1947, which regulated

the size and the quality of Finland's armed forces, served to provide the Soviets with a strategically secure area for the protection

of Leningrad and Murmansk. The deterioration of superpower

relations, however, led the Soviets to desire a firmer border with

the gradually emerging Western bloc. In February 1948, Finnish

authorities were notified by Soviet officials that Finland should sign a mutual assistance treaty with the Soviet Union.

The treaty that Finnish and Soviet negotiators worked out and

signed in April 1 948 differed from those the Soviets had concluded with Hungary and Romania. Unlike those countries, Finland was not made part of the Soviet military alliance, but was obliged

only to defend its own territory if attacked by Germany or by countries allied with that country, or if the Soviet Union were attacked

by these powers through Finnish territory. In addition, consultations between Finland and the Soviet Union were required if the

threat of such an attack were established. According to the FCMA

treaty, Finland was not bound to aid the Soviet Union if that country were attacked elsewhere, and the consultations were to be between sovereign states, not between military allies. Just what

constituted a military threat was not specified, but the right of the

Finns to discuss the posited threat and how it should be met, that

is, to what extent military assistance would be required, allowed

Finnish officials room for maneuver and deprived the treaty of an

automatic character.

Since its signing, the treaty has continued to be the cornerstone

of Finnish relations with the Soviet Union; that both found it satis- factory was seen in its renewail and extension in 1955, 1970, and

1983. For the Soviet Union, the FCMA treaty meant greater security for the strategically vital areas of Leningrad cind the Kola Peninsula. Any attack on these areas through Finland would meet first with Finnish resistance, which many observers believed would slow an offensive appreciably. The prohibition of Finnish membership in an alliance directed against the Soviet Union meant hostile

forces could not be stationed within Finland, close to vital Soviet

installations. Finland's neutral status had an effect on the Nordic area as a

whole. Its special relationship with the Soviet Union reduced pres- sure on Sweden and eased that country's burden of maintaining

its traditional neutrality. The consequent lowering of tensions in

the region allowed Norway and Denmark NATO membership,

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Finland: A Country Study

although each of these countries estabUshed certain restrictions on

the stationing of foreign troops and the deployment of nuclear

weapons on their soil. The interdependence of security postures

in northern Europe, sometimes referred to as the Nordic Balance,

has removed the region somewhat from the vagaries of the Cold

War over the last few decades. The Soviets have closely monitored

developments in the area, but their basic satisfaction with the security situation that has prevailed there has zdlowed Finland to sur- vive as an independent country, bound to some degree to the Soviet

Union in defense matters, but able to maintain its democratic

institutions and its membership in the Western community of

nations.

During the years immediately following the signing of the FCMA

treaty, the Finns complied with their obligation to pay reparations

to the Soviet Union; the last payment was made in 1952. The

preceding year the two countries had signed a treaty setting up trade

between them on the basis of a barter arrangement, which has been

renewed every five years since then. In 1954 Finland became the

first capitalist country to sign a scientific and technical agreement

with the Soviet Union.

Despite the provisions of Article 6 of the FCMA treaty, which

enjoined each contracting party from interfering in the domestic

affairs of the other, Soviet comments on Finnish domestic politics were often quite harsh. Soviet attitudes toward Finland softened,

however, with the death ofJoseph Stalin and the advent of better

relations with the Western powers in the mid-1950s; consequently, no objections were raised to the 1955 decisions to admit Finland to the Nordic Council and to the UN (see Nordic Europe,

this ch.). Late in the same year, the Soviets gave up their base at Porkkala in exchange for an extension of the FCMA treaty, due

to expire several years after Paasikivi's scheduled retirement in

1956. Soviet uncertainty about the conduct of his successor made

Moscow anxious for the treaty's renewal.

The departure of Soviet troops from Finnish territory removed

an obstacle to Finland's full sovereignty and to its achievement of

neutr2ility. In 1956 Nikita Khrushchev, first secretary of the Communist Party of the Soviet Union (CPSU), spoke for the first time

of Finnish neutrality. Soviet tributes to Finland's neutrality and

nonaligned status grew common in the next few years. Finnish-Soviet relations were shaken by two crises—the Night

Frost Crisis of 1958-59 and the more serious Note Crisis of 1961

(see Domestic Developments and Foreign Politics, 1948-66, ch.

1). The Note Crisis was a watershed in Finnish- Soviet relations

in that Kekkonen, whose successful resolution of the crisis made

280
Government and Politics

him the virtual master of Finnish foreign poUcy, and others real- ized that in the future Finnish foreign policy ought to be formulated only after its effects on Soviet interests had been carefully

weighed. Another effect of the crisis was that it led to the inauguration of a policy of active and peaceful neutrality (see Neutrality,

this ch.).

Finnish-Soviet relations since the Note Crisis have been stable and unmarked by any serious disagreements. Trade between the

two countries has remained steady since the 1951 barter agreement.

In 1967 Finland became the first Western country to set up a per- manent intergovernmental commission with the Soviet Union for economic cooperation. A treaty on economic, technical, and in- dustrial cooperation followed in 1971, as did a long-term agreement on trade and cooperation in 1977 that, in 1987, was extended

to be in effect until the turn of the century. The first joint venture

agreements between Finnish and Soviet firms were also arranged

in 1987. In 1973 Finland was the first capitalist country to cooperate closely with the Council for Mutual Economic Assistance

(CMEA, CEMA, or Comecon—see Glossary) (see Regional Economic Integration, ch. 3). The Soviet Union has carefully monitored Finland's adherence

to the FCMA treaty, and Finland's awareness of this scrutiny has

influenced Finnish policy. For example, Finland refrained from

full membership in the European Free Trade Association (EFTA)

and instead joined the body through an associate membership in

1961. The entry into a free-trade relationship with the European

Economic Community (EEC—see Glossary) in 1973 occurred only

through a carefully orchestrated preliminary plan that included for- mal links with Comecon and a special re-election of Kekkonen in

1974 to assure the Soviets of continuity in Finnish foreign policy.

Since the Note Crisis, Soviet interference in Finnish domestic

concerns has been limited to occasional critical comments in the

Soviet press and from official spokesmen. Clarification about Soviet

policy toward Finland could be obtained from Soviet officials themselves, or from articles published in authoritative newspapers or

journals. Since the 1970s, a frequent source of enlightenment about

the Kremlin's attitudes toward Finland, and about Nordic Europe

in general, were articles written under the name of Komissarov,

many of which were commonly believed to have been written by

lurii Deriabin, a well-placed and knowledgeable Soviet specialist on Finnish affairs. As valued indicators of Soviet attitudes, the articles were examined line by line in Finland. Komissarov articles, for example, disabused Finnish foreign affairs specialists of the notion, which they had entertained for a time, that Finland had the

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Finland: A Country Study

right to determine on its own whether consultations according to Article 2 of the FCMA treaty were necessary. A Komissarov arti- cle that appeared in January 1984 in a Helsinki newspaper expressed

the disquieting Soviet view that the passage of cruise missiles

through Finnish airspace might conceivably mean the need for consultations.

Two examples may indicate the restraint exercised by the Soviets

in their dealings with Finnish affairs since the early 1960s. In 1971

the Soviet ambassador was recalled from Helsinki after he had be- come involved in the internal feuds of the Communist Party of Finland (Suomen Kommunistinen Puolue—SKP). A suggestion in

1978 by a Finnish communist newspaper, which was repeated by

the Soviet chief of staff General Dmitri Ustinov, that Finnish mili- tary forces should hold joint maneuvers with Soviet forces was quickly dismissed by Finnish officials as incompatible with their country's

neutrality; there was no Soviet rejoinder.

Finnish foreign policy vis-a-vis the Soviet Union enjoyed

widespread support from the Finnish people. Polls in the 1980s consistently measured an approval rate of over 90 percent. Another

proof of the acceptance of the Paasikivi-Kekkonen Line was that

foreign policy played virtually no part in the parliamentary elec- tions of 1983 and 1987. From the Soviet side, comments on these

elections were neutral, with no hints of preferred victors.

Nordic Europe

Finland is an integral part of Nordic Europe. With the exception of a small Swedish-speaking minority, the country is ethnically distinct from the Scandinavian countries, but the 700 years

that Finland was part of Sweden gave it a Nordic inheritance that

survived the century during which Finland was an autonomous

state within the Russian Empire. During the interwar period, it entered into numerous agreements with the other states of Nordic

Europe. After World War II, relations resumed, but with caution

owing to the tensions of the Cold War. Finland could undertake no initiatives in international relations that might cause the Soviet

Union to suspect that Finland was being drawn into the Western

camp.

The gradual relaxation of superpower tensions meant that in 1955

Finland could join the Nordic Council, three years after its foundation. The Nordic Council was an organization conceived to fur- ther cooperation among Norway, Sweden, Denmark, and Iceland.

Meeting once a year for a week in one of the capitals of the member countries, the council was an advisory body, the decisions of

which were not binding; it did carry considerable weight, however,

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Government and Politics

as the delegates at the annual meetings were frequently leading

politicians of the countries they represented. At the insistence of

Finland, security matters were not to be discussed, and attention was directed rather to economic, social, and cultural issues. Unlike

the Europe2in Community (EC—see Glossary), the Nordic Council was not a supranational organization, and membership in the

council did not affect Finland's status as a neutral nation.

The Treaty of Helsinki of 1962 gave birth to the Nordic Convention on Cooperation, which defined the achievements and goals

of the regional policy of increased interaction. This agreement was

followed by the formation in 1971 of the Nordic Council of

Ministers, which instituted a formal structure for frequent meetings of the region's cabinet ministers. The issue at hand determined

which ministers would attend. In addition to these larger bodies, numerous smaller entities existed to further Nordic cooperation.

A study of the second half of the 1970s found more than 100 such

organizations. The efforts of these bodies and the many formal and

informal meetings of Nordic politicians and civil servants stopped

short of full integration, but they yielded numerous agreements

that brought Finland and the other Nordic countries closer together.

This so-called "cobweb integration" has given the citizens of Nordic

Europe many reciprocal rights in one another's countries. Finns were able to travel freely without passports throughout Nordic

Europe, live and work there without restrictions, enjoy the full social and health benefits of each country, and since 1976, vote in local elections after a legal residence of two years. Citizenship in another

of the Nordic countries could be acquired more easily by a Finn

than by someone from outside the region.

Economic cooperation did not proceed so smoothly. Nordic

hopes, in the mid-1950s, of establishing a common market were

disappointed, and EFTA was accepted as a substitute. An attempt

in 1969 to form a Nordic customs union, the Nordic Economic

Union (NORDEK), foundered when Finland withdrew from the

plan. The withdrawal may have been caused by Soviet concerns

that Finland could be brought into too close a relationship with

the EEC via Denmark's expected membership in the Community.

This setback was mitigated, however, when the Nordic Investment

Bank began operations in 1976 in Helsinki. The bank's purpose was to invest in financial ventures in the Nordic region.

In the second hadf of the 1980s, Finland continued working with

its Scandinavian neighbors, being a part, for example, of the Nordic bloc in the UN and participating in Nordic Third World

development projects. Finland's Nordic NWFZ proposal was being

studied and furthered by an inter-Nordic parliamentary committee,

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Finland: A Country Study

and Finland was always present at the semiannual meeting of Nordic foreign ministers.

Western Europe

Finland had to adjust its foreign policy after World War II to the changed international environment; however, it continued to enjoy good relations with West European countries, particularly

in the field of economic cooperation. The country joined economic

projects such as GATT and the International Monetary Fund

(IMF—see Glossary), but, wary of arousing Soviet apprehensions

about potential political ties to the West, did not seek membership

in the Organisation for European Economic Co-operation (OEEC).

Through a clever device, however, Finland did manage to participate in the trade benefits provided by the OEEC's European Payments Union: in 1957 Finland formed its own body, the Helsinki

Club, which was subsequently joined by all OEEC countries. In

1961 , for imperative economic reasons, Finland worked out a special relationship with EFTA after complex negotiations. Finland's

relationship, an associate membership in the body, became feasi- ble after the Soviet Union agreed that it was compatible with the

Finnish policy of neutrality and after tariff arrangements ensured

the continuity of Finnish-Soviet economic cooperation. A more sta- ble world meant that in 1969 Finland was able to join the OEEC's

successor, the Organisation for Economic Co-operation and

Development (OECD). In 1973 Helsinki, in a balancing effort,

signed agreements with both the EEC and Comecon and was given a special status with both organizations.

Another subtle act of diplomatic balancing was Finnish treat- ment of the thorny question of what kind of relations it should have

with the two German states. To recognize either would antagonize one of the superpowers. The Finnish solution was to establish two

separate trade missions, one in each of the Germanics. This

arrangement allowed diplomatic relations and alienated no one. Once the two German states recognized each other in 1972, Finland was able to establish normal diplomatic relations with each

of them.

The years since the early 1970s have seen a steady normalization of Finland's relations with Western Europe. In the 1980s, Finnish trade with the region accounted for about 60 percent of its exports; the country participated in European economic and

research endeavors like Eureka and the European Space Agency

(ESA); and 1986 saw full Finnish membership in EFTA. In addition, by the end of 1988 zdl obstacles appeared cleared for Finland's

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Government and Politics

membership in the Council of Europe (see Glossary) the following

year. The increasing integration of the EC, however, presented

problems for Finland and for EFTA's other neutral states. The

supranational character of the EC, which was always incompatible with Finnish neutrality, became even more so with the signing

in 1985 of the EC's Single European Act. The act aimed at for- eign policy cooperation among members, and it therefore made

Finnish membership in the EC inconceivable. Exclusion from the

EC, however, could threaten Finland's export-based economy if the ''internal market" that the EC hoped to have in place by 1992

led to trade barriers directed against nations outside the Community. The late 1980s and the early 1990s were certain to be a time

of intensive Finnish dicussion on how this challenge was to be met.

United States The United States recognized Finland as an independent state in 1919. In that year, the United States assisted Finland with deliveries of food through an organization led by Herbert Hoover. Since

then assistance has been in the form of loans, all of which have

been repaid. This has contributed to the development of friendly

relations between the countries. The American public expressed

great sympathy for Finland during the Winter War, and, although

the United States ambassador was recailled in June 1944 after Finland's decision to continue the war against the Soviet Union, the

United States did not declare war on Finland (see The Winter War,

ch. 1). In the postwar period, Finnish-American relations have been

exceedingly cordial. Even though political considerations did not

allow Finland to participate in the Marshall Plan after World War

II, in the immediate postwar years, Finland received about US$200

million in credits from the United States to help rebuild its industrial base.

Both Kekkonen and Koivisto paid state visits to the United States,

and United States presidents have occasionally expressed their support for Finnish neutrality. In early 1983, however, the supreme

commander of NATO forces in Europe, United States general Ber- nard Rogers, expressed uncertainty about the Finns' desire to defend themselves. His press conference remarks caused much consternation in Finland. Other military officials have since praised

Finland's defense readiness; among them was United States admiral

William Crowe, who paid Finland an official visit in 1986 as chairman of the Joint Chiefs of Staff. United Nations and the Third World

Because Finland had fought with the Axis powers during World

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Finland: A Country Study

War II, it was ineligible for charter membership in the UN in 1945.

Finland applied for membership in 1947, but Cold War disagreements among the great powers on UN admissions policies delayed

Finland's entry until 1955.

Finland had not been very enthusiastic about membership in the

UN in the 1945 to 1955 period. The country tried to pursue the

Paasikivi policy of passive and cautious neutrality and feared that

joining the UN would be incompatible with its nonaligned status. A strict interpretation of the UN charter made membership in it incompatible with neutrality. According to Article 25 of the charter, members of the UN are obliged to follow the decision of the

Security Council in applying economic or military sanctions against

other member states. Since becoming a member, however, Finland has been a committed and active participant in accordance with its official foreign

policy of a peaceful and active neutrality. In the late 1960s, it was

a member of the Security Council, and one of its UN officials, the

diplomat and historian MaxJakobson, was a strong contender for the post of secretary general. His candidacy is said to have failed

because of reservations on the part of the Soviet Union. In the fall of 1988, Finland was reelected to the Security Council for a twoyear term, and it was expected to assume the council's chairmanship in 1990.

There have been two main lines of Finnish policy in the UN.

The first is that Finland avoids any political or economic confrontation in which the interests of the superpowers are direcdy involved.

This policy explains why Finland has refrained over the years from

condemning Soviet actions, most recently the Soviet military

presence in Afghanistan. Finnish officials hold that their country can be more effective on the internation2il level if it has good rela- tions with all countries. (They commonly explain that Finland wishes to work as a doctor rather than as a judge.) The second current

of Finland's UN policy is that country's role as part of the Nordic

bloc within the orgcinization. FinlEind consults and collaborates close- ly with other Nordic members, generally voting with them, participating with them in aid projects to the Third World through

the United Nations Development Programme (UNDP), or being

part of the UN forces sent to troubled areas, Finnish forces have

taken part in every UN peacekeeping mission since the early 1960s. In addition, the country maintains a permanent military force avail- able to the organization (see United Nations Peacekeeping Activities, ch. 5). Finnish aid to the Third World has not been so extensive

as that of the other Nordic countries. Finland, for example, has never met the goal of contributing 0.7 percent of its gross national

286
Government and Politics

product (GNP—see Glossary) to Third World development, and

critics have charged that Finland gets a "free ride" from the

achievements and good reputations of Sweden, Norway, and Denmark. Efforts were underway in the 1980s, however, to come closer

to this figure. The foreign aid programs in which Finland was

involved were not only multilateral, but, with regard to a few

selected countries, were carried out on a one-to-one basis. Finland's

record as a provider of asylum for refugees did not always match

the records of the other Nordic countries. A quota system institut- ed in 1985 provided for the acceptance of 100 refugees a year. Criti- cism of this figure led to the quota's increase to 200 a year in 1987,

and in mid- 1988 Finnish officials decided to admit 300 refugees

that year. As of late 1988, there were about 1,200 refugees in Finland, nearly all of them from the Third World.

An excellent introduction to Finnish political life is David Arter's Politics and Policy-Making in Finland. The same author's The Nordic

Parliaments presents in great detail the workings of the Eduskunta,

the Landsting, and the Nordic Council. Somewhat dated, but still useful, is Ja2ikko Nousiainen's classic The Finnish Political System.

The second edition of The Finnish Legal System, edited by Jaakko

Uotila, will meet the needs of many readers on this subject; in addition, it has expert surveys of various Finnish political institutions. Small States in Comparative Perspective: Essays for Erik Allardt, edited

by Risto Alapuro et al, contains a number of valuable 2irticles. Klaus

Tornudd's Finland and the International Norms of Human Rights ex- amines Finnish legal protections for human rights and provides

much information about law and the media.

Stimulating brief accounts of Finland's unique international position are George Maude's The Finnish Dilemma: Neutrality in the Shadow of Povuer and Max Jakobson's Finnish Neutrality. Roy Alli- son's more recent Finland's Relations with the Soviet Union, 1944-84

is also very useful. Foreign Policies ofNorthern Europe, edited by Bengt

Sundelius, treats the Nordic region as a whole, yet it will help the

reader seeking more specific information about many aspects of

Finnish foreign relations. The Nordic quarterly Cooperation and Conflict often contains excellent articles that de2il with Finnish foreign

relations, as does the Yearbook of Finnish Foreign Policy, published

by the Finnish Institute of Foreign Affairs. (For further information and complete citations, see Bibliography.)

287

Chapter 5. National Security
Escutcheon in front of Ministry of Defense, Helsinki
In the strategically vital region of northern

Europe, Finland and Sweden together form a large expanse of neutral territory between the two military blocs of the North Atlantic

Treaty Organization and the Warsaw Pact. Finnish defense policy in the late 1980s was based on the principle that, while not directiy

threatened from any source, Finland was in danger of becoming

involved in the event of a larger conflict between the great powers. In such an eventuality, Finnish territory might be violated in

military operations targeting objectives beyond Finland's borders.

If, as seemed most likely, the potenticd invader was primarily en- gaged elsewhere, determined Finnish defensive action should have

a realistic chance to succeed, or at least to inflict severe damage

sufficient to discourage potential incursions.

Finland's standing forces were modest in number (about 35,000),

both as a requirement of the 1947 Treaty of Paris and as a result of the economic constraints on a nation of fewer than 5 million

inhabitcints. The treaty also prohibited Finland from acquiring arms

of an offensive nature. Nevertheless, a conscription system provided

military training for nearly 2dl young men, and, in an emergency,

a reserve force of former conscripts could put up to 700,000 men,

nearly 15 percent of the country's population, in the field. When

mobilized, this sizable fighting force, aided by natural defenses of

deep forests, marshes and lakes, and a bitter winter climate, could

present a formidable chadlenge to any invading army.

Historically, Finland has been a source of strategic concern to the Soviet Union because of its proximity to the densely populated, industrialized zone centered on the Soviet Union's second largest city, Leningrad. Although Leningrad was still important militarily, by the 1970s the strategic focus had shifted northward, where

sparsely inhabited Finnish Lapland lies close to the concentration

of Soviet bases and ports on the Kola Peninsula. Upon the out- break of war, these northernmost regions of Europe would, in all likelihood, become a key area of conflict. Finland's northern

defenses, both ground and air, had been reinforced during the 1970s

and the 1980s to emphasize its determination to prevent Lapland

from becoming a corridor for attack by one of the military alliances. The Finnish military relationship vis-a-vis the Soviet Union was

governed by the 1948 Treaty of Friendship, Cooperation, and

Mutual Assistance, which committed Finland to use all of its available forces to repel an attack from the West, if necessary with the

291
Finland: A Country Study

assistance of the Soviet Union. Soviet involvement would, however,

require Finland's assent. To preclude the possibility of the Soviet

Union's insisting on introducing its forces onto Finnish soil under

the pretext of a developing threat, Finland deemed it essential that

the Finnish Defense Forces be perceived as having the capability

to deny the hostile transit of Finnish territory. The Finnish defense

posture thus gave considerable emphasis to effective surveillance

and alertness in order to detect violations of Finnish air space and

land and sea intrusions in any part of the country.

Officially, Finnish defense strategy assumed that attack could come from any direction; hence, its standing forces were distributed

throughout the territory. Finland's sensitive relations with Moscow

precluded a deployment suggesting that the most likely threat was

along its extended eastern border with the Soviet Union. Nevertheless, a possible scenario was a Soviet crossing of the northern ter- ritories of Finland and Sweden to attack North Atlantic Treaty

Organization bases in northern Norway that threatened the move- ment of Soviet fleet units into the Atlantic.

Finnish strategic doctrine had emerged from the lessons learned

during the two phases of its conflict with the Soviet Union between

1939 and 1944—the Winter War and the Continuation War. The

Finns' experience of fighting against vasdy superior manpower had

taught them that set battles with concentrations of forces should

be avoided. Defense in depth and mobility of forces were neces- sary in order to minimize attrition. The emphasis was on smaller

fighting elements that could, by guerrilla tactics, employ terrain

and weather to pin down and to divide larger enemy forces, then

swiftly concentrate their own units for punishing attacks. The ul- timate objective was not to win a clear-cut military victory against a more powerful opponent but, as in Finland's World War II campaigns, to inflict sufficient losses on the attacker to persuade him

that a negotiated settlement was preferable to a continued drain on resources. Although Finnish first-line units were undergoing modernization in the late 1980s, the Defense Forces as a whole were only

moderately well equipped for the mission of resisting armed attack

against or across Finland's territory. Military outlays continued

to be among the lowest, in relation to national income, of all of

the developed countries. Nonetheless, the nation was firm in its resolve to defend Finnish territory and independence. It was confident that its military preparedness, combined with the qualities

of its individual soldiers and its forbidding geography, presented a strong deterrent to intervention from any quarter.

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National Security

Military Heritage

Although Finland did not achieve full national independence until 1917, its military traditions went back more than 300 years. As

a part of the dual kingdom of Sweden and Finland, Finland supplied the Swedish armies not only with drafted foot soldiers, but

also with highly qualified officers from the Swedish-speaking

aristocracy (see The Era of Swedish Rule, c. 1150-1809, ch. 1). Contributing as much as one-third of the manpower of the Swedish armed forces, the Finnish infantry and cavalry distinguished

themselves at a time when Sweden was playing a decisive role in

European power politics. The setbacks that Sweden eventually

suffered in Europe were explained by the Finns, with considerable justification, as mistakes that had been made by the Swedish

kings on the political level. The performance of the Finns on vari- ous battlefields had justified their reputation for bravery and their

confidence in their own martial abilities. With the decline of Swedish power in the eighteenth century,

the Finns were called upon to defend the country's borders to the

east against the traditionsil enemy, Russia. On three major occasions, Russian armies occupied parts of the country for a number

of years before eventuzilly being driven out by Finnish and Swedish forces. When Finland became the Grand Duchy of Finland in

the Russian Empire in 1809, the Finnish units of the Swedish army

were disbanded.

The first indigenous Finnish military elements of three light in- fantry regiments were raised at the time of Napoleon's eastward

drive in 1812, but during most of the nineteenth century, the only

Finnish military force was a guards battalion paid for by the tsar. Finns were specificadly exempted from Russian conscription, but more than 3,000 of them, mostly from the aristocracy, served in

the tsarist armies between 1 809 and 1917 (see The Russian Grand

Duchy of Finland, 1809-1917, ch. 1). The Finnish Military Academy at Hamina continued to turn

out officers who served with distinction in the Impericd Russian

Army, a disproportionate number rising to the rank of general.

Among these graduates was Carl Gustaf Emil Mannerheim, who

later became the great hero of Finnish resistance and the struggle

for independence.

In 1878 the tsar permitted Finland to raise its own national militia through a conscription law providing for selection of recruits by

lot to serve either as regulars or reservists. By the beginning of the

twentieth century, the Finnish army consisted of eight provincial

battalions of infantry and a regiment of dragoons, together with

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Finland: A Country Study

thirty-two reserve companies. In 1901, as part of the Russiflcation movement, the Russian authorities introduced a military ser- vice law obligating Finns to serve in the tsarist army, for four years, anywhere within the Russian Empire, Only one regiment of dragoons and one battalion of guards from the Finnish army were to be retained; the rest were to be incorporated in the imperial army.

The new law was met by passive resistance in Finland, and it strengthened the Finnish nationalist movement. In a shift of policy

in 1905, the conscription law was suspended, and Finns were never

again called upon to serve in Russian uniform. Nevertheless, the

Russians dissolved the militia, the military academy, cind the guards

battalion.

Soon after Finland gained independence in December 1917, a

nationalistic, middle-class militia known as the White Gucirds, which

had been secretly established in 1904 and 1905 and which had

remained underground since then disguised as athletic clubs and

other groups, was officially proclaimed the army of the Finnish

government under General Mannerheim. This so-called White

Army was strengthened and trained by 1,100 officers and noncommissioned officers (NCOs) who had traveled clandestinely to Germany during World War I and had formed the Twenty-seventh

Royal Prussian Jaeger Battalion. Returning to Finland, they

brought back with them urgentiy needed small arms captured from

the Russians. The White forces were swelled by new conscripts,

officers of the former Finnish armed forces, Swedish volunteers,

and Finnish officers who had served in the Swedish and in the Russian armies, in addition to the jaegers. After three months of bit- ter civil conflict, the White Army of about 70,000 troops defeated

the Red Guards from the radical wing of the Finnish Social

Democratic Party, in May 1918. Both sides suffered thousands of

casualties. In four months, the White Guards had evolved from

a strongly motivated, but ill- trained, militia into a batde-hardened,

disciplined national armed force. Although numericziUy superior

and reinforced by the Russian garrisons in Finland, the Red Guards

were deficient in equipment, training, and leadership (see The Finnish Civil War, ch. 1). During and after the Civil War, conflict emerged between the

younger jaeger officers of the Finnish army and the former tsarist officers in its upper ranks. When most of the Finnish officer corps

threatened to resign in 1924 over the dominance of the Russiantrained leadership, most of the Russian officers were moved aside

and the jaeger officers began to occupy the higher echelons, bringing

the influence of German military doctrine and training methods

with them.

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National Security

The new government reinstituted conscription after the Civil War

and estabUshed a small national army. It also introduced a mobilization system and compulsory refresher courses for reservists. The

Finnish Military Academy was reactivated in 1919, and during the

1920s a reserve officers' school was formed, together with NCO

schools for various brainches and arms of the service. The Civil

Guard, a voluntary rightist formation of 100,000 personnel derived from the White Guards, constituted a local auxiliary.

Nevertheless, Finland did not succeed in building a strong national army. The requirement of one year of compulsory service was

greater th2in that imposed by any other Scandinavian country in

the 1920s and the 1930s, but politic2d opposition to defense spending left the military badly equipped to resist attack by the Soviet

Union, the only security threat in Finnish eyes. When the Soviets invaded in November 1939, they were met

by a force of 135,000 Finnish troops organized into 9 divisions.

In a matter of a few weeks, the Finnish army destroyed large numbers of invading Soviet soldiers. The initial Red Army contingents were poorly trained, and they were unprepared for combat under

severe winter conditions. The Finnish army was able to inflict sharp

defeats in battles on the Karelian Isthmus and in northeastern Finland. Momentarily, it looked as if Finland would turn back the

aggressor and would inflict an astonishing military defeat on its great and powerful neighbor. When the Soviet commanders revert- ed to a strategy of wearing down the greatly outnumbered Finns

in Karelia by their overwhelming firepower, however, Finland's

defeat was inevitable. On March 12, 1940, an armistice yielded

slighdy more territory to the Soviets than they had initially demanded in 1939. The Soviets regarded this territory as being vitcd to

their preparations for a future showdown with Nazi Germany (see

In the Continuation War, fought by Finland as a cobelligerent

with Germany from 1941 to 1944, Finnish forces again demonstrated their superior qualities. Thanks to the Germans, the army

was now much better equipped, and the period of conscription had

been increased to two years, making possible the formation of six- teen infantry divisions. The fully mobilized Finnish army of 400,000 was numerically superior to the opposing Soviet forces, which had

been thinned to meet the need for troops to resist the German onslaught on the centred front. The Finnish goal was not conquest

but regaining territories traditionally Finnish. The Finns refused

German pressure to join in the siege of Leningrad, but they pushed

80 to 1 60 kilometers into Soviet territory farther north above Lake

Ladoga before settling for static defensive operations. The Finnish

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Finland: A Country Study

army continued to occupy this former Finnish area until the major

Soviet offensive of June 1944. Confined in the losing Axis coali- tion, the Finns had to retreat for a second time, and they escaped

total Soviet invasion and occupation only by entering into a sep2irate

agreement that obligated them to military action against the retreat- ing German armies (see The Continuation War, ch. 1). The demobilization and regrouping of the Finnish Defense Forces were carried out in late 1944 under the supervision of the Allied

Control Commission. Following the Treaty of Paris in 1947, which

imposed restrictions on the size and equipment of the armed forces

and required disbandment of the Civil Guard, Finland reorganized

its defense forces. The fact that the conditions of the peace treaty

did not include prohibitions on reserves or mobilization made it possible to contemplate an adequate defense establishment within

the prescribed limits. The reorganization resulted in the abolition

of about 15 percent of officer and NCO positions, the adoption

of the brigade—in place of the division—as the basic formation,

and the reduction of the term of service for conscripts to 240 days

(330 days for NCO and for reserve officer candidates). The

organization of the high command was unchanged, but the minister

of defense was given slightly more authority in decision making.

The completion of this reorganization in 1952 established the struc- ture within which the modern Defense Forces were to evolve.

Treaty Commitments Affecting National Security

Considering the magnitude of the defeat and the blows that were

dealt to other nations fighting on Germany's side during World

War II, Finland did not fare badly when the terms for the Treaty

of Paris were completed on February 10, 1947. With respect to national security, the most important parts of the peace treaty were

the restrictions it put on Finland's armed forces. Part III, Articles

13 through Article 22, limited the future regular Finnish army to 34,400 soldiers, the navy to 4,500 individuals, and the air force

to 3,000. There were also exclusions of equipment of an offensive

nature, such as bombers, missiles, and submarines. Warships could

not exceed a combined total of 10,000 tons. The air force could

acquire up to sixty combat planes, but they were not to include

bombers or fighter bombers. None of the services was allowed to construct, to procure, or to test nuclear weapons.

The stipulations on the size of the Finnish armed forces were

included on the demand of Britain, which did not want to accord

special treatment to Finland. (Limiting provisions also had been

incorporated into the peace treaties with Romania, Bulgaria, and

Hungary.) Fears that Finland would soon come within the Soviet

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National Security

orbit may also have influenced the British demands. The peace

treaty restrictions have never been interpreted as prohibiting Finland from training and arming a large reserve force, however. The

Soviet Union has, on the contrary, been willing to sell Finland

equipment far in excess of the needs of its standing army.

Changing geopolitical conditions and weapons technology have

resulted in an easing of the treaty's restrictions. In spite of the prohibition against missiles of all types, in 1963 the contracting parties approved an interpretation of the peace treaty permitting

Finland to acquire defensive missiles. Finland subsequentiy armed

itself with naval surface-to-surface missiles (SSMs), antiaircraft missiles, and antitank missiles. In 1983, following another interpretation that the treaty's ban on magnetic underwater mines did not

prohibit mines of a defensive nature, Finl2ind was permitted to buy

modern mines from Britain and from the Soviet Union.

The problems of national defense were also affected by the Treaty

of Friendship, Cooperation, and Mutual Assistance (FCMA—see Appendix B) with the Soviet Union, requested by Joseph Stalin

in February 1 948 and signed by the Finnish government in April

of the same year (see The Cold War and the Treaty of 1948, ch.

1). The most important defense-related clauses were Articles 1 and

2 , which deal with military cooperation and consultation between

Finland and the Soviet Union. Other articles deal with noninterference in the internal affairs of the other state and agreement not

to enter into an alliance aimed against the other party of the treaty.

The Finnish government distinguished the FCMA treaty from

a military alliance by pointing out that its military clauses were

restricted to situations of attack against Finland or against the Soviet

Union through Finnish territory. Moreover, according to the language of the treaty, the military assistance to be provided by the

Soviet Union was not to come into effect automatically; it was to require Finland's approval following consultations of the general

staffs of the two nations.

The FCMA treaty has been renewed several times, most recendy

in 1983 for a twenty-year period. The frequent renewals, long before

the expiration dates, seemed to reflect intense Soviet interest in

the treaty. Finland has strenuously avoided military consultations

under the treaty and has never accepted hints by the Soviets that

the treaty should be the basis for military cooperation and joint

exercises. Nevertheless, the potential for serious strains with

Moscow cdways existed over the need for, and the nature of, assistance under the treaty (see Soviet Union, ch. 4). The Aland Islands have historically served, during conflict in

the Baltic Sea, as naval bases and as staging and transit areas in

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Finland: A Country Study

support of offensive operations on land (see fig. 1). In 1921 the

most important Baltic countries, exclusive of the Soviet Union, con- cluded a convention that strengthened the demilitarization of the

islands originally agreed to in 1856. Under this convention, Finland could neither fortify the islands nor construct military bases

in the archipelago, but it could send armed forces there temporarily in case of a need to restore order or to carry out inspections

by small nav2il vessels or air reconnaissance. In wartime, the con- vention authorized Finland to take necessary measures to repel an

attack endangering the neutrality of the zone. In 1940, under a separate agreement between Finland and the

Soviet Union, Finland reaffirmed the demilitarization of the islands

and pledged not to place them at the disposal of any other state's armed forces. These commitments were recognized by a clause in

the 1947 Treaty of Paris stating that the islands were to remain

demilitarized. In conformity with Finlaind's obligations under these

agreements, the Coast Guard patrolled the territorial waters of the

Aland Islands in peacetime. The Defense Forces would exercise

responsibility for their defense in wartime.

Geostrategic Situation

Finland's military importance arises from its geographic position. As a small country, it poses no military threat to its neighbors, but at times in the past larger powers have considered its possession important for their security. The exposed western

position of the tsarist capitEil, St. Petersburg, caused Russian offi- cials to strive for control of Finland. Later, Soviet strategists were

likewise convinced that Leningrad's security required Finlaind's subjugation and therefore mounted invasions. In the postwar period,

Finland's military importance increased, for developments in

weapons technology and Soviet basing policies caused the country

to figure not only in the strategic concerns of its giant eastern neighbor, but also in those of the North Atlantic Treaty Organization

(NATO).

The region itself was peaceful. Sweden, Finland's neighbor to the west, was nonaligned and had a long tradition of friendly for- eign relations. The militarily vital regions of Central Europe to the south were relatively distant, and they were sep2irated from Finland by the Baltic Sea. In the high north, where Finland and Norway had a common border, Norway had prohibited operations by

other NATO forces in peacetime, and it did not permit nuclear

weapons or Allied bases on its territory. Denmark, likewise part

of NATO, attached these same restrictions to its membership in

the alliance.

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Finnish-made 130mm "turret cannon'' firing in reinforced coastal

artillery emplacement

Courtesy General Headquarters, Finnish Defense Forces

Finland's military importance grew from the fact that, although

it formed—along with Sweden—a vast zone of neutrality between

the forces of the Warsaw Pact and NATO, the country was adja- cent to areas of cruci2d importance to the superpowers. The Soviet

Union maintained its traditional watchfulness over the Baltic Sea

and the Gulf of Finland, which controlled access to the Leningrad

region with its large population and high concentration of vital industry. Although the Soviet Union exercised military domination over the southern shores of these waters, it was highly sensitive to the position of Finland, which occupied the northern shore

and strategically significant island groups.

Contiguous to Finland's northern border is the Kola Peninsula,

where some of the Soviet Union's most important military instal- lations were located. The only part of the Soviet coastline providing ice-free access to the Atiantic year round, the peninsula's harbors

served as home ports of the Soviet northern fleet and of most of

its nuclear ballistic missile submarines patrolling the North Atlantic. In the event of hostilities, the Soviets would regard securing

the northern Norwegian coast as essential to ensure that their sur- face and submarine fleets could reach the North Atlantic, where

they could disrupt major supply routes for United States forces in

Europe. Because of the importance of the Soviet military complexes

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Finland: A Country Study

on the Kola Peninsula, NATO almost certainly would have to view

them as prime wartime targets. Also crucial to the alliance would

be confining, in the Barents Sea, whatever Soviet naval assets sur- vived attack. Thus, in the event of hostilities, the superpowers would

commit considerable military resources to this region.

The official Finnish view held that the country was unlikely to be the victim of an isolated attack upon its territory, but rather

that any military action directed against Finland would almost cer- tainly have to be part of a wider conflict between East and West.

Finnish military planners did not regard their country as having

strategic targets justifying military aggression, but they believed

that foreign powers might try to seize Finnish territory to use it as a transit route to reach essential targets.

Thus, Finnish Lapland was regarded as a possible invasion route

for either NATO forces aiming at the Murmansk area or Soviet

forces seeking to occupy northern Norway. For the Allies, however,

the difficulties of mounting a land attack across northern Scandinavia against Soviet military bases would be enormous. For this rea- son, military analysts judged that NATO operations in the area would more likely be air-based and sea-based.

Finnish strategists had traditionally regarded the wide buffer zone formed by Finnish and Swedish air space as a deterrent to attack,

because it increased the flight time of attacking aircraft to potential targets and thereby reduced the operational time in the target

area. Since the deployment of cruise missiles in the 1980s, however,

there has been a threat to the inviolability of Finnish air space that

did not require intrusions on its land and sea territories. Soviet

sensitivity over the cruise missile threat underscored the significance

of this problem.

Military planners considered southern Finland and the Aland

Islands to be lesser strategic areas, except in the event of a Soviet

move against southern Norway through Sweden, and they saw a NATO thrust against Leningrad through the Baltic Sea as implausible. Such an operation would necessitate control of the Danish

Straits and of the constricted Baltic itself against strong Soviet land,

naval, and air forces. Finland was, however, obliged by treaty to secure the Aland Islands in the event of war to prevent their military use by other powers. This obligation underscored another

aspect of Finland's defense environment. War between the power

blocs could well mecin a preemptive attack on Finland to secure

it and to prevent use of its territory by the enemy.

Although Finnish strategists did not publicly emphasize the mili- tary threat represented by the Soviet Union, it was evident that

the strong Soviet military presence near their shared border, 1 ,200

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National Security

kilometers in length, was a prime source of concern. According

to a study by the United States Department of Defense in 1988,

Soviet conventional forces assigned to the Northwestern Theater

of Military Operations, an area that included Finland, consisted

of 12 divisions, 1,350 tanks, and 160 tactical aircraft. Although

not at full strength, these ground forces could be mobilized quickly for a drive into southern Finlamd as a preemptive move to deepen

Soviet defenses of Leningrad and adjacent areas in a crisis situation. Another contingency that Finnish planners needed to anticipate was the crossing of northern Finland by Soviet land forces as part

of an attack aimed at securing the coast of northern Norway and

thereby controlling the sea approaches to the Kola military complex. In the Pentagon's judgment, Soviet operations were likely

to include a thrust against northern Norway in which ground forces,

supported by land-based air and naval amphibious forces, would

try to seize critical airfields and to destroy early warning instfdla- tions. The ground forces badance significantiy favored the Soviets

in this area, and probably the air force balsmce did as well. Such

an operation would, nevertheless, be extremely arduous in view

of the paucity of east-west road links and the austere climate and

terrain.

If Finland is unlucky in its strategic location, as a theater of war,

its physical chciracteristics present exceptional conditions that heavily

favor a defending army. Only a few regions are conducive to the

maneuvering of modern ground forces. These are primarily in the

coastal areas of southern, southwestern, and western Finland, where

the main administrative and industrial centers, a majority of the

population, and the most highly developed transport networks are

located. The vast regions of central and eastern Finland are areas of rivers, lakes, and forests. With swamps covering as much as 50

percent to 60 percent of some parts of this territory, military operations would be constricted to the few roads (see Geography, ch.

2; Transportation and Communications, ch. 3). Even specially

designed rough-terrain vehicles would be greatly hampered in these

areas. In Lapland, above the Arctic Circle, climatic conditions are

especially severe. Beginning in November, the long Arctic night

hampers winter activity. Frost, snow, and cold (-30°C to -35°C)

can paralyze the operations of large bodies of troops and their air

support, unless they are specially trained and equipped. In mountainous parts of Lapland, ground operations would also be forced

in the direction of the few routes through passes, and the more open

northern regions provide little cover for ground forces. An attack on Finland by sea would be severely hampered by the

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Finland: A Country Study

jagged coastline of shallow bays, rocks, and clusters of islands. The

few narrow ship passages would be heavily defended by modern

coast artillery emplaced on cliffs, by highly maneuverable missile

boats, and by extensive minefields. The thick ice cover would vir- tually preclude the winter operation of warships near Finnish ter- ritorial waters. Concepts of National Security

An essential ingredient in Finnish strategic planning was to establish the perception that the nation had the will and the capability to defend its territorial integrity if conflict broke out. To avoid

giving the Soviet Union a pretext for intervention, Finland considered it vital to demonstrate to Moscow that it could fully meet

its obligations under the FCMA treaty. Similarly, Finland needed

to convince Norway, together with its NATO partners and Sweden,

that Finnish territory would not be used as a base for threatening

them militarily. The primary task, therefore, was to maintain a

credible force for repelling a limited conventionEil attack upon the

country during the course of a wider conflict. Finland's traditional policy was to defend the entire country. It believed that its level of military preparedness rendered unlikely

the success of an airborne surprise attack against administrative

centers and other key areas. It planned to take advantage of its relatively large underpopulated expanses and of the special terrain

conditions to pursue a strategy of defense in depth in order to frus- trate an invader. Total defeat of an enemy was not expected. The

Finns hoped to demonstrate that any effort to secure their territory as a base for military operations elsewhere would not be profitable

compared to the time and sacrifices involved. Despite Finland's

small population, military planners assumed an enemy would have

most of its forces employed elsewhere and would be able to use only some of its military assets against Finland; hence, the country's limited aims could be achieved. The primary burden for thwarting an attack directed through Finnish territory would fall upon the army.

The heightened strategic significance of the far northern regions

of Europe since the 1960s has accentuated the importance of

Lapland's defenses. In the late 1980s, first-line Finnish troops were

being specially equipped to take advantage of the harsh conditions

of terrain, climate, and winter darkness encountered there. Peacetime force deployment in Lapland had been reinforced during

the 1980s with the goal of stationing half of Finland's interceptor aircraft and nearly one-third of its ground forces there. This

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National Security

deployment was considered compatible with the force strengths in

northern Sweden and in northern Norway.

Reacting to hints by the Soviets that the threat of cruise missiles

fired from United States submarines or from West European bases

justified joint defensive measures, Finnish leaders have strongly

underscored their determination to act on their own to resist in- trusion of Finnish air space in any form. Although advanced ra- dar, fire control, and surface-to-air missile systems were being

acquired, the Soviet embassy in Helsinki asserted in mid- 1988 that

Finland and Sweden must do still more to improve their air

defenses.

Finland's mobilization system was characterized by a flexibility

that enabled the degree of preparedness to be stepped up as re- quired to meet a particular crisis situation or threat. The first forces

called up for mobilization would be the Fast Deployment Forces,

consisting of the most mobile and powerful army elements, together

with almost all navy, air force. Frontier Guard (Rajavartiolaitos

RVL) units, and assorted local forces. The Fast Deployment Forces

would be able to reach peak strength—about 250,000 men, 130,000

of whom would be ground forces—in two to three days. The Fast Deployment Forces (also called Protective Forces) would have as

their chief duty a protecting or covering mission that would allow

the total mobilization in seven days of 700,000 men, including

500,000 ground forces. Finnish military doctrine divided forces into gener2il forces, lo- cal forces, and support forces once full mobilization was achieved.

General forces were the best and most powerfully equipped units

of all the services, and the elements most suited for decisive massed

attacks. In the late 1980s, these forces were estimated at about

250,000 men. In addition to the professional cadre, local forces consisted of older reservists. It was projected that they, being less heavily

armed, would be used in guerrilla operations, often behind the lines in areas overrun by the enemy. When needed, local forces could

combine with general forces for intense batdes against a weakened

and encircled enemy. Support forces assisted the other forces with

logistics, supplies, and other requirements.

During peacetime, standing ground, sea, and air forces, in keeping with Finland's neutral posture, were not concentrated against

any single potential threat but were deployed to deal with invasion from any direction. Defense was predicated on rapid mobilization of the country's general forces and on their rapid deployment

to active fronts. Rather than a static defense, for which resources were insufficient, a strategy of maneuver was contemplated. A

powerful frontal attack would be met by a "deep zone" defense.

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Finland: A Country Study

taking fullest advantage of geographical features and climatic conditions. Tactics of delay and attrition would be employed to pre- vent an aggressor from reaching vital areas. As the attacker's lines of communication lengthened, concentrated counterattacks would

be launched under conditions favoring the more lighdy armed Finnish units. In areas seized by the invader, loccd forces would continue to conduct guerrilla-type operations, such as ambushes,

limited raids on the enemy's supply lines, mining of roads, and

strikes against logistics centers. In the 1980s, military planners

modified this flexible defense somewhat, concluding that certain areas were so vital to the country's survival that they were to be

held at all costs. Defense of southern Finland and Helsinki, the

Aland Islands, and Lapland was to be so intense that they would

never be ceded in their entirety to enemy control.

The local defense forces and the RVL would be expected to operate as self-contained units carrying out peripheral attacks in rela- tive isolation. The object would be to sap the strength of the

aggressor as he moved deeper into the country, denying the use

of roads, and, after combat units were cut off from supplies and

reinforcements, segmenting the fighting. Local and general forces

could then be brought to bear in devastating strikes against the

invader. After suffering costly damage over a protracted period,

the aggressor country would find it expedient to abandon its original objectives and to accept a negotiated settlement.

Finland recognized that the outbreak of general war in Europe

might result in the use of nuclear weapons. A considerable effort was therefore undertaken to prepare the civilian population against

the eventuality of nuclear warfare (see Civil Defense, this ch.). Finland's limited resources did not permit full preparation against

nuclear Wcirfare, however, and defense planners based their efforts on the assumption that any threat to the country would be of a

conventional nature. Political measures were 2dso undertaken to minimize the likelihood of exposure to nuclear attack. Finland's

active promotion of comprehensive disarmament measures and of a Nordic Nuclear-Weapons-Free Zone (NWFZ) was premised on

the belief that, if the Nordic countries had no nuclear weapons on

their territories, the superpowers might refrain from including

nuclear arms in their strategic plans affecting those terrotories (see

Neutrality, ch. 4). The objection to such a commitment, in the

view of Western defense planners, was that it would deny NATO

the nuclear option in defense of Norway and Denmark while placing no restrictions on Soviet nuclear forces in the Kola Peninsula

or on naval vessels in the Baltic Sea.

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National Security

The Armed Forces

Authority over national defense rested with the president as the

supreme commander of the Defense Forces. The president exercised the highest decision-m2iking responsibility, including the power

to declare war 2ind to make peace with the consent of the Eduskunta

(parliament), to order mobilization, and to issue orders directly

to the commander in chief of the Defense Forces. A decree issued

in 1957 established a Defense Council with a dual function as the

supreme planning and coordinating organ and as the president's

consultative arm in matters affecting the defense of the country.

The prime minister acted as chairman of the Defense Council if the president were not present. Its other members were the ministers

of defense, foreign affairs, finance, interior, and trade and industry; the commander in chief of the Defense Forces; and the chief

of the General Staff. Other ministers could be called upon to serve temporarily (see fig. 20). The Defense Council reviewed basic

defense plans for wartime, deliberated on the financing of national defense, and directed preparations for national security in areas other than military readiness.

Parliaimentary oversight W2is exercised through ad hoc parliamentary defense committees, which had been convened in 1971 , in 1976,

and in 1981 to assess basic issues of strategy, equipment, and missions. Recommendations of the committees had an important bearing on defense policy and on future budget allocations. Unlike the

Defense Council, all parties represented in parliament were invit- ed to participate. A parliamentary defense commission, acting

within narrower terms of reference than parliamentary defense committees, was convened in 1986. In 1988 the government considered

setting up a permanent parliamentary council on defense, but no

action had been taken by the year's end. The parliamentary committees had been useful in helping to develop a national consensus on security policies and on the commitment of resources to defense.

The representatives sitting on the committees tended to be among

those most sympathetic to the needs of the military. Government

leaders felt, however, that the committees often plunged too far into sensitive strategic matters and threat scenarios. Their budgetary recommendations zdso tended to be generous, leaving the mili- tary disgruntled when the proposed resources could not be found.

(One notable exception occurred in 1981, when the procurement

recommendations of the Third Parliamentary Defense Committee were Icirgely realized, in part because of the special circumstances

of a trade imbalance that made possible large arms purchases from

the Soviet Union.)

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Finland: A Country Study

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National Security

The Ministry of Defense supervised the preparation of legislation affecting national defense, the submission of the annual defense

budget, the drafting of defense policies in accordance with principles defined by the national leadership, and the implementation

of policies approved by the government and the parliament. The

minister of defense had mainly administrative responsibilities, with

limited influence over major military policy issues. His deputy,

customarily a military officer of three-star rank, exercised an

important role within the ministry.

Command Structure

The commander in chief of the Defense Forces was directiy subordinate to the president in matters of military command, principally

questions of operations and training. He was responsible for issu- ing military orders for the preparation and maintenance of readi- ness of the Defense Forces, for ensuring proper command relationships, and for coordinating all branches of the armed forces in per- sonnel matters. He made recommendations to the president on the

organization of military commands and on appointments.

The peacetime defense organization was structured around

decentralized and autonomous military areas and districts. There

were seven military areas and twenty-three military districts as of

early 1989, although the government was considering reducing the

number of military areas to five and reducing the districts to between

fifteen and seventeen. Each military area comprised two to five military districts. The military area commander, a major general

or lieutenant general in peacetime, exercised independent control

of all military affairs within his region, including the maintenance

of readiness, training of conscripts and reservists, maintenance of a functional mobilization system, wartime logistics preparations,

cooperation with civilian authorities, and area defense planning.

The commander in chief, who retained planning control of the navy

and the air force, could order the commanders of these two ser- vices to support a given area command, or he could call upon the

general forces of one military area to supply reinforcements to another military area. The authority of the military district commander was limited

in peacetime to planning for crisis or wartime contingencies, operating the conscript and reserve organizations (including call-ups

and classification for military service), conducting refresher training, and maintaining the mobilization system. Under wartime conditions, the district commander would mobilize reserve brigades

and battalions into the general forces in his district and would

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Finland: A Country Study

command local force operations unless command was assumed by

a general forces headquarters.

Army

Finland's defense doctrine foresaw that the army (Maavoimat)

would bear the brunt of repelling an invasion or any violation of

Finnish territorial integrity during a period of hostilities. Consequently, maintenance of sufficient peacetime readiness of ground

forces enjoyed high priority. The importance assigned to territorial defense was reflected in the command structure, which integrated

army headquarters with general headquarters. Navy and air force

headquarters were on a lower level, parallel with the seven military area commands.

As of 1988, the active-duty ground forces consisted of 30,000

troops, of which 22,300 were conscripts. They were organized into

8 brigades, each with a reduced peacetime strength of 1,500 to 2,000, together with 7 independent infantry battalions with strengths

of up to 500 each, supported by artillery, antiaircraft, engineer,

special forces, signals, and transport units of varying sizes. Under

peacetime conditions, the brigade was the basic ground forces unit;

there were no divisions or corps. In wartime, 2 or more brigades

plus a number of detached battalions could be combined to form

a corps of 15,000 to 30,000 tailored to a particular operation.

Upon mobilization, the first-line army forces, numbering about

130,000 and including younger reservists with recent training,

would be deployed initially. In accordance with a fifteen-year

(1981-96) modernization program, the best equipped of these units were known as Brigade 90 forces. The program provides for an

eventual ten to fifteen brigades. The remaining first-line units,

known as Brigade 80 forces, were believed to number ten to fifteen brigades when mobilized. They were similarly organized, but they

had less advanced equipment. Although details were lacking,

analysts believed that no more than one or two brigades met Brigade

90 standards as of late 1988.

In the north, the Brigade 90 forces would be jaeger (ranger)

brigades equipped with tracked all-terrain vehicles, such as the

Finnish-built NA-140. In central Finland, the jaeger brigades would

have many Finnish A- 1 80 Pasi wheeled armored personnel carri- ers and other light armored vehicles. Armored Brigade 90s in the

south would have the T-72 main battle tank, while Brigade 80 ele- ments would have modernized T-55 tanks; both are Soviet built

(see table 22, Appendix A).

Ajaeger Brigade 90 consisted of four battalions, each with a complement of about 1,000 troops and each possessing some artillery

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National Security

and antitank capabilities. A battalion comprised four rifle companies. In addition to small arms, its principal weapons were 81mm

and 120mm mortars, recoilless antitank rifles, and shoulder-fired

antitank missiles. The Brigade 90 antitank company was equipped

with truck-mounted, wire- guided missiles. A brigade also included

two artillery battalions, one equipped with twelve 122mm howitzers and the other with twelve 155mm howitzers, all towed by

tracked vehicles. The brigade air defense battalion consisted of

Soviet SA-14 shoulder-fired missiles and 23mm antiaircraft guns,

supported by low-level radar and by armored fire control systems.

The brigade was supported by an engineering battalion with a

strong minelaying unit, and headquarters, signals, and support

companies.

Two coast artillery regiments and three independent battal- ions occupied ten principal hardened gun positions, known as "fortresses," protecting key shipping lanes of the southern coast. These fixed positions, with batteries of turret-mounted 100mm and

130mm guns, had been blasted out of granite clifl"s. They were sup- ported by mobile coast artillery battalions to which, in 1988, were

being added mobile Swedish RBS-15 antiship missUes mounted

on all-terrain trucks.

Antiaircraft defenses were the responsibility of the army, closely coordinated with the air force. The principal weapon was the

Soviet SA-3 Goa truck-mounted surface-to-air missile. In 1988

negotiations were reportedly underway with France for the purchase of Crotale missile launchers and fire control systems to be

mounted on the A- 180 Pasi armored vehicle for medium-range

point defense.

In peacetime, trained garrison forces that could be formed into

operational units within hours totaled about 10,500 (8,000 army

and 2,500 RVL). In an emergency, the existing brigades and

independent battalions could be brought up to a wartime strength

of some 70,000 within 12 to 24 hours. In the event of an acute

crisis or an attack on the country, planners anticipated that the

Fast Deployment Forces—consisting of the most mobile and powerful army elements, together with almost all navy, air force, and

RVL units, and key local force units in border areas—would be

mobilized. The army complement of the Fast Deployment Forces

amounted to about 130,000 and could be activated in two to three

days.

Details on the organizational pattern of the fuUy mobilized army

were not made public. Tomas Ries, a specialist in Nordic security,

has estimated that the army's share of the general forces, that is, the most powerful elements of the Defense Forces, numbered

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Finland: A Country Study

perhaps 200,000. In combat these troops would be organized into

20 to 25 brigades; about 70 independent light infantry, artillery,

antitank, and other specialized battsdions averaging 800 personnel each; and some additional specialized forces, mostly of com- pany strength. Many of these units would be equipped with older,

less sophisticated weapons, and would include higher age-groups

that had not undergone recent training.

The army's share of local forces would consist of about 250 light

infantry battalions, as well as smaller specialized units, numbering up to 250,000. They would serve the functions of local defense,

surveillance, and guard duty. An important function of the local forces would be to lay antivehicular mines to block the limited road

network. These forces would be armed with modern basic infantry weapons, supplemented by older light antitank weapons, mortars, and vehicles, including some commandeered from the civilian sector. Support troops formed a separate category, normally operating

in rear areas, and would not be expected to take part in combat.

They would carry out service, support, and logistical tasks. Their

mobilized strength would be about 100,000.

Navy

The main peacetime mission of the navy (Merivoimat), together

with the coast guard, was to conduct surveillance of territorial waters and fishing zones and to identify violators. During a crisis situation or hostilities, the navy would be called upon to prevent

unauthorized use of Finland's territorial waters, to protect vital sea routes and maritime traffic, and to close off its most important

ports. Treaty obligations and strategic concerns made securing the

demilitarized Aland Islands a key wartime mission of the navy.

This it would do with the help of the army, coast artillery, and

the coast guard. If faced by an amphibious attack, the navy's

objective would be to wear down the aggressor and to restrict his

operations.

Naval tasks would be carried out in an integrated manner with

the army coast artillery and the air force. The shallow waters of

the coastline, broken by an extensive archipelago, would facilitate the laying of defensive mines, which would figure importantly in

defense against seaborne invasion. Although the fleet units were

limited in size and in weaponry, their maineuverability and missilebased firepower could inflict damage on a hostile force operating

in Finnish waters and in adjacent sea areas. The precise form in

which a naval threat might develop was unclear, because a Soviet

invasion by sea was unlikely and Western ships would be directly

310
Soviet-built SA-3 GOA low- to medium-altitude antiaircraft missiles

in use by Finnish Defense Forces Courtesy General Headquarters, Finnish Defrnse Forces

exposed to Soviet naval strength in the Baltic, in the event of general

conflict. By providing for control over its own coastal waters,

however, Finland hoped to convince the Soviets that the Gulf of

Finland would be secure and that the approaches to Leningrad

would not be left unguarded.

Under the 1947 Treaty of Paris, naval manpower strength was

limited to 4,500. In addition to the overall limit of 10,000 tons,

the navy was not permitted to operate submarines or torpedo boats.

As of 1988, active navsd personnel numbered only 2,700, of whom

1 ,300 were conscripts. The largest vessels were two smzJl corvettes of 660 tons, each armed with 120mm guns and antisubmarine rocket

launchers. Eight missile boats were armed with Swedish and Soviet

ship-to- ship missile systems. Four more missile boats were due to be delivered in the early 1990s. These boats were supported by

inshore patrol craft, together with minelaying and minesweeping

vessels (see table 23, Appendix A).

In peacetime the main naval units were organized into gunboat,

missile boat, and mine warfare flotillas. Under wartime conditions,

they would be organized into task forces with a mix of vessels as required for specific operations. The wartime task forces would be

directed by the navy commander in chief and would be part of the

general forces. Naval assets operating with the coast artillery would

311
Finland: A Country Study

be directed by the commander of the military area in which they were located and would form part of the local forces. All three flotil- las were based at the navy's operational headquarters at Pansio, near Turku in the southwest, where an archipelago with few navigable channels, guarded by coastal fortifications, would present great

obstacles to an intruding naval force. The gunboat flotilla consisted

of one corvette as a command ship and the ten Tuima class missile

boats and Nuoli class fast attack craft. The missile squadron consisted of the other corvette and the four Helsinki class missile boats.

The mine warfare squadron was made up of the minelayers and

minesweepers. A patrol flotilla, based at Helsinki, operated the

Ruissalo and Rihtniemi class attack craft. Owing to a serious manpower shortage, only about half of the

fleet was manned and operational under peacetime conditions. The

readiness of the remaining ships was reportedly maintained at an

adequate level by keeping them heated, by frequently testing their

systems, and by rotating them into active service.

During a period of crisis or conflict, the Coast Guard, which was part of the RVL, would be integrated into the navy. Several

of its larger patrol craft of the Tursas and Kiisla class were fitted with antisubmarine warfare weapons. A large number of patrol

boats were equipped with submarine tracking gear. Air Force

The peacetime missions of the air force (Ilmavoimat) were the

patrolling of Finnish air space and the surveillance, identification,

and interception of intruding aircraft. In an average year, ten to twenty violations of Finnish air space were detected. If conflict developed in the region, the air force would have the tasks of preserv- ing territorial integrity, preventing overflight of hostile planes and

missiles, preventing Finnish territory from being used as a base

for attack, and supporting army and navy operations. The protection of Finnish air space in the event of East-West hostilities was

considered a highly salient aspect of the air force role. The possibility that Finnish air space would be violated on the flight paths

of bombers and cruise missiles of NATO and Warsaw Pact forces was an issue of intense concern. As of 1988, Finland was in the

process of acquiring ftirther capability to detect, to intercept, and

to destroy cruise missiles crossing Finnish territory.

To fulfill these missions, Finland had given priority in the late 1970s to the upgrading of its interceptor and reconnaissance capabilities. Its three combat air squadrons were equipped with Soviet

MiG-21bis and Swedish Saab J-35 Draken fighters. The forty-seven

Hawk Mk-51s purchased from Britain for advanced training

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and reconnaissance were not counted as combat aircraft under the

limits prescribed by the 1947 peace treaty, but they could be fitted with racks for bombs, rockets, and missiles for use as hght attack

aircraft. Air force transport capability was limited, consisting

primarily of three Dutch F-27 Fokkers and six Soviet Mi-8 heUcopters (see table 24, Appendix A).

Air force headquarters was located at Tikkakoski in central Finland. The country was divided into three air defense regions (see

fig. 21). Each air defense region was the operational zone of an

air wing, functioning in coordination with the corresponding mili- tary areas. Each of the three command centers was individually

responsible for its regional air defense, based on directives issued

by the air staff. One fighter squadron was assigned to each wing,

but the necessary basing and support infrastructure was in place

to enable the air force commander to concentrate all air force resources in a single region if necessary.

As of 1988, the Lapland wing, consisting of eighteen Drakens, was based at the joint civilian-military airfield near Rovaniemi;

the wing's headquarters were in a nearby hardened shelter complex. The Satakunta wing, with twelve Drsikens based at TamperePirkkala, was responsible for southwestern Finlcind. All of the wing's

command facilities, workshops, and aircraft shelters were hardened,

having been blasted out of granite cliffs. Defense of southeastern

Finland came under the Karelian wing, which had a squadron of

thirty MiG-21bis plus several Hawks for training and patrol duties,

operating from Kuopio-Rissala. All three wings had facilities in

place permitting the use of alternative military and civilian airfields, as well as prepared highway strips.

In addition to the three combat squadrons based at wing headquarters, the transport squadron was based at Kouvola-Utti and

the training squadron was based at Luonetjarvi, adjacent to the

flying school at Kauhava. Primary air surveillance was carried out

by a fixed long-range radar system supplemented by mobile lowaltitude radar, fixed in peacetime, but transportable to concealed,

hardened sites in wartime. The civilian air control network was

also closely linked to the military system. Automatic long-range

radar, ordered in 1988 from the French firm of Thomson-CSF,

will be installed at six or seven sites, including one in the far north

at Kaamanen that will extend surveillance over the Arctic Ocean

and the Kola Peninsula.

Flight training was conducted at the Air Force Academy at Kauhava. The Valmet L-70 Vinka was used for primary training (forty- five hours of flight time). Students then made the transition to jet

training on the Hawk (100 hours of flight time), preceded by

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Finland: A Country Study

Figure 21. Air and Coastal Defenses, 1988

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considerable practice on flight simulators. An intermediate train- er was not considered necessary. Conversion to the Draken or the

MiG-21 and advanced tactical training were carried out after as- signment to the fighter squadrons. A fully qualified interceptor pilot

underwent a total of seven years of preparation. More pilots were

being trained than Finland needed for its existing combat aircraft. Moreover, basing and logistical facilities were sufficient for about

three times as many combat aircraft as were in the peacetime

inventory.

Conscription and Reserve Duty

All Finnish males were liable for military service between the

ages of seventeen and sixty. The call-up for active duty normally

occurred at the age of twenty, although students could postpone

service until completion of their education. Over 90 percent of

young men reaching military age actually entered the Defense

Forces, a rate believed to be the highest of all Western countries.

There had traditionally been three conscript contingents during

the course of a year, in February, in June, and in October, but

in 1989 these were to be reduced to five call-ups every two years, owing to the decline in the numbers coming of age. For the same

reason, the normal age for entering the service was to be reduced

to nineteen. About 38,000 conscripts were trained annually, al- though the decreased birth rate would result in as few as about

26,300 inductees by 1993, stabilizing at that level. As a consequence,

the number of reservists of all categories, which had been maintained at about 700,000, would taper off to about 600,000 during

the 1990s.

Prior to 1987, conscientious objectors had been permitted to serve

in the military in a noncombatant capacity for eleven months, or

in civilian social service for twelve months. Legislation enacted in

that year, however, required a conscientious objector to serve in

alternative civilian service for sixteen months, twice the length of

minimum military service. A number of objectors, regarding the

new law as a form of punishment, did not accept these conditions,

and they were sentenced to prison terms. Women were not accepted in the Defense Forces, although the

tightened manpower situation had provoked discussion of measures to incorporate women into training programs on a voluntary basis to handle nonmilitary tasks in an emergency. About 7,000

women were employed by the Defense Forces, mainly in clerical positions and as nurses. A considerable number were used by the

air force as radar monitors in remote areas. Women employees wore uniforms, but they did not receive military training or carry

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Finland: A Country Study

weapons and had little opportunity for career adv2incement.

Conscripts were assigned upon induction to a particular branch

or corps of service, depending upon existing personnel requirements, although personal preferences were respected to the extent

possible. The National Conscription Act of 1950 set the duration

of Service for ordinary conscripts at 240 days (8 months) and for reserve officers and NCOs at 330 days (11 months). Certain

specialists and naval conscripts also served for 330 days. About 48

percent of the total intake of conscripts served for the longer period. In 1988 the military announced that a separate category of weapons

specialists would be designated to serve for nine and one-half

months.

Service in the reserves was obligatory after the completion of

active duty. For officers and NCOs, active reserve duty continued

until age sixty; and for others, until age fifty. Those who completed

their active reserve obligation at age fifty were listed in class one

of the auxiliary reserve until age sixty when all reserve obligations

ended. Those exempted from active duty on grounds of disability were assigned to class two of the auxiliary reserve, and those aged

seventeen to twenty without military training were listed in class three.

Until the late 1970s, annual training of reservists was neglected

because of budgetary pressures. Efforts were underway in the 1980s

to improve the situation in order to compensate for the declining

intake of conscripts and to ensure that reservists acquired some

familiarity with the new and more complex equipment being

introduced. The number of reservists undergoing annual training

increased from 30,000 in 1979 to nearly 50,000 in 1988. The rela- tively infrequent and brief periods of reserve training were still considered insufficient by some observers, however. They noted that

Switzerland, adthough it required a shorter period of initial ser- vice, trained far more reservists each year by longer and more fre- quent refresher call-ups.

Troops assigned to the Fast Deployment Forces could expect to be called for refresher training at least every fifth year; those in some specicdist categories were called up more often. Other reservists, generally those in higher age brackets, were not scheduled for training unless their assigned categories were changed. Call-ups were on a battalion basis, and reservists exercised their wartime

tasks for a period of seven to ten days. The cumulative total period of active duty for reserve officers could not exceed 100 days;

for reserve NCOs, 75 days; and for privates, 40 days.

316
Summer and winter military exercises in Lapland

Courtesy General Headquarters, Finnish Defense Forces

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Finland: A Country Study

Training and Education

All men serving in the Finnish Defense Forces, even those aspiring to become career or reserve officers, underwent basic conscript

training. Army training was conducted within the unit to which

the conscript was assigned. The standard initial training phase of

twelve weeks was followed by twelve to nineteen weeks of individualized training in infantry, field artillery, coast artillery, antiaircraft, signals, or engineering skills. An ordinary army conscript's

service concluded with a refresher period of several weeks, composed of advanced unit training and a field exercise that involved

several units of the same conscript contingent. Training programs

stressed the development of combat motivation, physical fitness,

marksmanship, and the ability to maneuver and to survive in in- dependent guerrilla operations under difficult conditions. Basic

training was rigorous, and conscripts spent at least sixty nights outside, even during winter. Evaluations by the conscripts of the ef- fectiveness of the training and of the NCO training staff were generally favorable.

Those conscripts who excelled in the initial stages could apply

for a special fifteen-week period of training as reserve NCOs, after which they completed their active military service as squad leaders. Reserve officer candidates selected during the NCO training

phase pursued the first eight weeks of NCO training, followed by

a further fourteen weeks of reserve officer training. This included

six weeks of basic training as platoon leaders and three weeks of

practice in the coordinated operation of various weapons units. After

completion of training, the reserve officer candidates returned to their original units for thirteen weeks of service as trainers. At the

conclusion of their eleven months of service, they were commissioned as second lieutenants. In the late 1980s, about 25 percent

of each class of conscripts became NCOs and about 7 percent

become officers. The first two years of a three-year educational progr2im for C2ireer officer candidates were conducted at the Military Academy at Santahamina near Helsinki for all three branches of the armed forces

and for the RVL. Army cadets attended a school in their chosen arms specialty during the third year. Naval cadets spent the third

year of training at the Naval Academy at Helsinki. Air cadets at- tended the Air Force Academy at Kauhava for the third year of

training. The Defense Forces announced in 1988 that the academy's curriculum would be revised to include nonmilitary subjects

so that its graduates would have the equivalent of a university-level

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degree. The duration of the course would probably be lengthened

to three and one-half years. Entry was by examination among those

who had completed the reserve officer program during their conscript service.

Army graduates of the Military Academy were commissioned

as first lieutenants (with promotion to senior lieutenant within a

year), served as instructors for three or four years, and then at- tended an eight-month to ten-month course that normzJly led to the rank of captain within two to three years. Six to eight years

after taking the captains' course, officers could take examinations

leading to the two-year (three-year, for technical specialties) general

staff officers' course at the War College. About thirty-five officers,

from all three services, who had been successful in the examinations, were enrolled annually. These officers could expect to have

general staff assignments, and they would become eligible for promotion to the ranks of colonel and gener2d. Officers not attending

the War College were eligible for a senior staff officers' course of

eight to ten months, completion of which qualified them for the

ranks of major and lieutenant colonel. A very limited group of

officers was selected to attend advanced courses abroad, in Sweden,

France, the United States, and, occasionally, the Soviet Union.

Training of career NCOs was conducted at the one-year Noncommissioned Officers School and at various branch or service

schools. Applicants had to have completed the reserve NCO course during their conscript service, whereupon they were permitted to take a qualifying examination for the lowest regular NCO rank

of staff sergeant and subsequent examinations to advance to ser- geant first class and master sergeant. After three years of service, an NCO could apply for phase two of the Non-Commissioned

Officers School as a qualification for promotion to sergeant major.

Since 1974 career NCOs who successfully advanced through the

various training stages were eligible for commissions and,

ultimately, for promotion as high as captain.

Each service also had its own training institutions. The infantry

had its combat school and paratroop school. The artillery had the

artillery school—with its ranges near Rovaniemi in northern Finland, the coast artillery school, and the aintiaircraft school. In

addition to pilot training, the air force had specialist schools for maintenance, radar, and communications personnel. Refresher

courses for reservists were conducted either in these permanent

schools or in the reserve units themselves.

Uniforms and Insignia

The Defense Forces wore three basic types of uniforms—a dress

319
Finland: A Country Study

KENRAALI GENERAL AMIRAALI ADMIRAL

KENRAALILUUTNANTTI 1 LIEUTENANT GENERAL KENRAALILUUTNANTTI

LIEUTENANT GENERAL VARAAMIRAALI

VICE

ADMIRAL

KENRAALI- MAJURI R MAJOR

GENERAL

KENRAALI- MAJURI U MAJOR

GENERAL

KONTRAAMIRAALI

REAR

ADMIRAL

EVERSTI

COLONEL EVERSTI B

COLONEL

KOMMODORI CAPTAIN

EVERSTILUUTNANTTI

LIEUTENANT COLONEL

EVERSTI.

LUUTNANTTI H

LIEUTENANT COLONEL KOMENTAJA

COMMANDER

MAJURI MAJORMAJURI m

MAJOR KOMENTAJAKAPTEENI

LIEUTENANT COMMANDER

KAPTEENI CAPTAINKAPTEENI CAPTAIN

KAPTEENILUUTNANTTI

LIEUTENANT

n m/

! leaf D

1ST

LIEUTENANT

YLI- In 1ST

LIEUTENANT

YLILUUTNANTTI

LUUTNANTTI

LIEUTENANT

JUNIOR

GRADE

VANRIKKI

20

LIEUTENANT

2D

LIEUTENANT ALILUUTNANTTI

FINLAND RANK ARMY

U.S.

RANK

TITLES

FINLAND RANK

AIR

FORCE

U.S.

RANK

TITLES

FINLAND RANK NAVY

U.S.

RANK

TITLES

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Finland: A Country Study

uniform, a service uniform, and a field uniform. The army dress

and service uniforms were field- gray. The service uniform for army

officers consisted of a field- gray jacket and trousers, a service cap, a silver-gray shirt, a field-gray four-in-hand tie, and black, lowquarter shoes. The service uniform became the dress uniform when

augmented with breeches, riding boots, and a field cap. In winter,

officer personnel wore field- gray overcoats and fur pile caps. Summer wear for enlisted personnel consisted of a shirt and trousers,

combat boots, a scarf, and a visorless field cap. The field uniform was the service uniform supplemented by jackboots, a camouflage

jacket, and trousers in summer—or white overalls in winter, along

with a field cap or a steel helmet.

Air force uniforms were blue; the navy wore dark blue in winter

and white in summer. Officers of the air force and the navy wore

service uniforms of the same cut and style as army officers. The

air force dress shirt was light blue, and the navy dress shirt was

white.

Army officers wore shoulderboards designating by color the

branch of service. Insignia of rank were worn on the lapels. Air

force officers wore sleeve bars, and naval officers wore stripes that

conformed closely to the rank insignia of the United States Navy

(see fig. 22). Enlisted personnel wore chevrons against a background

color designating the branch of service. Noncommissioned officer

ranks were also worn on sleeveboards (see fig. 23).

Conditions of Service

The incomes of career military personnel were considered adequate, although not generous, in terms of the high standard of liv- ing in Finnish society generally. Officer and NCO salary scales combined with their allowances were intended to be equivalent to

salaries in the civil service, which were regarded as somewhat lower

than the remuneration for equivalent forms of employment in the

private sector. As of 1986, the salary of a colonel was about

Fmkl3,000 monthly and that of a major general was about

Fmkl5,700 (for value of the Finnish mark—see Glossary). Family

allowances, allowances for service under hardship conditions (e.g.,

during field exercises in the far north, on offshore islands, and at remote coast artillery sites), and special allowances (for certain

categories of duty, such as those of aircraft pilots and naval per- sonnel on sea duty) were also paid. The normal work week was

forty hours; personnel through the rank of captain received over- time pay when on duty for longer periods. There was no extensive

post exchange or commissary system. Most career military were

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National Security

privately housed; those assigned to base housing were charged a moderate rent. Officers attaining at least the rank of major were eligible for full retirement twenty-five years after graduating from the Military

Academy. Promotion through the rank of captain was virtually

automatic. Those who had attended the Military Academy could

expect to attain at least the rank of major and probably that of lieu- tenant colonel, but subsequent promotional opportunities then nar- rowed sharply. As of 1986, there were 672 career majors and lieu- tenant commanders, 250 lieutenant colonels and commanders, and

88 colonels and naval captains. There were only fourteen major

generals and rear admirals and eight lieutenant genergds and vice

admirals.

Some captains chose to retire after twenty years of career ser- vice when their partial pensions were (in 1986) between Fmk6,800

and Fmk7,800 monthly. One personnel problem caused by modest

pay was the loss of military pilots to commercial airlines. An

experienced pilot with the rank of captain could expect a total income

of about Fmk14,000 monthly as of 1988. By resigning to fly for Finnair, he could raise his monthly income to about Fmk20,000.

Conscripts received no pay, but they were paid a modest daily

expense allowance, a source of some dissatisfaction. It had, however,

been progressively increased from Fmk6.75 in 1981 to Fmkl7 in

December 1987. Many conscripts complained that they had been

forced to fall back on their personal savings during their eight to eleven months of active service. Conscripts were, however, entitled

to educational loans at the conclusion of their service, as well as mustering-out bonuses and other benefits, including up to ten paid

trips home on leave. They were guaranteed reemployment at the

jobs they had held when they entered active duty.

Defense Spending

The combined budget of the Defense Forces and the RVL have

remained fairly constant during the 1980s as a percentage of total government expenditures, in most years ranging from 5.5 to 6 percent. Defense costs generally constituted about 1.5 percent of gross national product (GNP—see Glossary), although they rose to 1.7 percent in 1983 before diminishing to 1 .48 percent in 1987 as a con- sequence of budget cuts imposed on the Ministry of Defense. The

defense budget totaled Fmk5.58 billion in 1987 and Fmk6.04 bil- lion in 1988.

During the 1982-86 period, the principal expense category was equipment replacement and procurement (31 percent of the

total budget), followed by payroll costs (25 percent). Upkeep of

323
Finland: A Country Study

conscripts and training expenses averaged 1 3 percent of the budget; operations and maintenance, 16 percent; and real estate and

other expenses, 15 percent. The procurement projection for the

5 -year period, 1987-92, earmarked 48 percent for the army, 25

percent for the air force, 20 percent for the navy, and 7 percent

for common-use equipment. This reflected increased emphasis on

the acquisition of armor and firepower for the army and a diminishing rate of procurement for the air force. The air force share was

expected to rise again after 1992, however, when the entire fleet of fighter aircraft was scheduled for replacement.

Although Finland's defense budget showed a slight increase during the 1980s, it failed to maintain the targeted annual real growth

rate of 3.8 percent established by the Third Parliamentary Defense

Committee in 1981 . In both absolute and relative terms, Finland's

defense budget continued to be among the lowest in Europe. A

study prepared by the United States Arms Control and Disarmament Agency found that Finland's defense effort, expressed in terms

of military expenditures as a ratio of GNP, was among the lowest

of the developed countries of the world. OnlyJapan, Luxembourg,

and Iceland had lighter defense burdens, based on 1985 data. Finland also ranked low in military expenditures per capita (US$156

in 1984, calculated in 1983 dollars) and as a percentage of central

government expenditures (one hundred twenty-third in the world

in 1985).

These low budget oudays presaged future deficiencies in modern

arms when existing equipment had to be replaced. As senior military leaders pointed out, costs of new weaponry were increasing

at a rate of 5 to 15 percent annually on world markets, with the

result that new procurements could not keep pace with equipment

obsolescence and deterioration, especially in the army. Finnish

analysts argued, however, that the budgeted figures somewhat

understated Finland's real defense effort compared with other Scandinavian countries, because of the low conscript pay and the fact that certain military infrastructure costs as well as military pensions were not included in the defense budget. Moreover, the RVL,

which would be an important adjunct to the military in an emergency, was included in the Ministry of Interior budget rather than

in the defense budget.

The Armed Forces in National Life

The Defense Forces held a position of esteem and honor in Finnish society. This was accounted for in part by their reputation

for valor, earned in preserving Finland's independence during the

Winter War, and by the common military service experience of

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male citizens. The long reserve obligation of a large part of the

population also reinforced continuing interest in the effectiveness

and the welfaire of the military establishment. The obligatory period

of service was perceived as an important unifying factor for Finnish society. Conscription was treated as an opportunity to provide civic education by deepening understanding of the history and

the security policies of the country and to improve standards of

behavior and good citizenship. One of the arguments advanced

for national service for women was that the experience would help

them, as citizens, to comprehend national security issues better and

to view the military in a positive light.

Opinion surveys revecded a high degree of public confidence in

the Defense Forces and a willingness to provide the necessary

resources for an effective defense. Polls generally found that over

75 percent of Finns agreed that the country should be willing to go to war to defend itself. (Among conscripts, 95 percent supported

a firm defense against aggression.) In 1988 one-half of those queried were in favor of the existing level of defense appropriations,

while one-third believed they should be increased, and only slightly more than one-eighth thought they should be reduced. The need

for a sufficient level of military readiness was accepted by all major

parties represented in the Eduskunta; only communist factions had

urged curtailing defense expenditures, arguing that any future war

was bound to be nuclear, making preparations for a conventional

conflict of little avail. The Defense Forces were often prominently involved in public

events, helping to organize and to stage large sports competitions,

ceremonies, conferences, and exhibitions. In most communities,

there were guilds connected with military units, often those linked

to the area by long tradition, that brought together older and younger veterans. The Defense Council was active in furthering the public's knowledge of defense issues, and by the late 1980s about 20,000

Finns, prominent locally or nationally, had attended courses under

its direction. About 20 percent of those receiving instruction

attended a course lasting nearly a month; the remainder attended a one-week course. The Finnish military establishment had intervened in politics

during the Civil War of 1917-18 and during the subsequent clashes

between the right and the left wings in the 1920s. In the period

preceding World War II, leaders of the armed forces had sought

to convince the government and the public to initiate military pre- paredness for the impending conflict. Since the end of the war,

however, the constraints of the 1947 peace treaty and the FCMA

treaty, together with the authority asserted by civilian governments,

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Finland: A Country Study

have discouraged direct involvement by the military in politics. The

career military were forbidden to join political parties or to run

for political office while on active duty. They were, however, per- mitted to vote and to hold office at local levels, such as membership on municipal boards, which did not require party affiliation. During the 1980s, the public profile of the senior members of

the armed forces was generally low; the leadership confined itself to restrained comments when it felt this was needed to draw atten- tion to the inadequacy of defense appropriations. The impact of

the military on issues affecting national security was, nonetheless,

significant. Its opinion was highly respected, in part as a legacy

of the Winter War and in part as a result of the direct experience

of the entire male segment of society with matters of national

defense. Observers believed it probable that a large majority of the

representatives in the Eduskunta (parliament) held officer commissions in the reserves. Views of the senior commanders were accorded

serious attention by top policymakers and legislators. Reserve officer associations in every part of the country formed a strong constituency sympathetic to the interests of the military.

There appeared to be little sentiment among the public that the

military enjoyed excessive influence in the Finnish political sys- tem. In a survey taken in 1984 concerning the power of various

institutions, over 75 percent of those polled felt that the armed forces exercised the right amount of power; only 15 percent thought that

they held too much power. In this respect, the public's estimate

of the military was more positive than its estimate of any of the

other institutions of government and society, except the presidency itself. United Nations Peacekeeping Activities

Finland has taken an active role in United Nations (UN) peacekeeping matters as a means of demonstrating its interest in the maintenance of international peace. Because of their unimpeachable

behavior in conformity with Finland's neutral status, Finnish troops

have almost invariably been welcomed as elements of UN peacekeeping forces by the parties involved in international crises. A

law enacted in 1964, defining the conditions of Finnish participation, limited the maximum number of soldiers serving at any one

time to 2,000. Regular troops of the Defense Forces could not be

sent abroad, so the peacekeeping forces were composed of volunteer reservists, career officers, and NCOs who wished to be detached

from their units to serve with UN contingents. A six-month rota- tion was customary, but many reservists had volunteered for repeated service. By the late 1980s, some 20,000 Finns had served

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in UN peacekeeping missions. Specialized instruction was provided

at a permanent training site where clothing and equipment were

stored for immediate availability. A stand-by force, consisting of a reserve motorized infantry battalion of approximately 700 men,

could be prepared for mobilization anywhere in the world within

four weeks. Its key officers could be in place much sooner. Officer

training for the special requirements of UN service was conducted on a cooperative basis with other Nordic countries. Finland was

responsible for training militar)^ observers; Sweden trained staff

officers; Denmark, military police officers; and Norway, logistics

and transportation officers. Within a year after its admission to the UN in 1955, Finland

sent a reinforced rifle company of 250 men as part of the UN Emergency Force (UNEF) based in Egypt for service in the Sinai and

the Gaza Strip. In 1964 a reinforced battalion with a strength of

1 ,000 men was attached to the UN Force in Cyprus (UNFICYP).

It was composed of five light infantry companies and a support

company, armed with rifles, machine pistols, light machine guns,

mortars, and bazookas. Later Finnish contingents were organized

and equipped in similar fashion, with the addition of a vehicle repair

unit, a field hospital, and most transport, signal, and housing

requirements.

Finnish units served from 1973 to 1979 in a buffer zone between

Israel and Egypt in the Suez Canal area as part of the UN Emergency Force II (UNEF II), after which the contingent was trans- ferred to the Golan Heights between Israeli and Syrian forces as part of the UN Disengagement Observer Force (UNDOF).

Beginning in 1982, a Finnish battalion was assigned to serve with

the UN Interim Force (UNIFIL) in southern Lebanon. As of late 1988, about 1 ,000 members of the Finnish armed forces were serv- ing on peacekeeping missions. In addition to the UNIFIL battzil- ion, they were assigned as cease-fire observers in Cyprus, along

the India-Pakistan border, in the Sinai, on the Golan Heights between Israel and Syria, in the Persian Gulf, and in Afghanistan.

Finland was 2dso committed to contribute to the UN peacekeeping force to be sent to Namibia.

Sources of Equipment

By the late 1980s, nearly 40 percent of Finnish military equipment purchases were of domestic manufacture, the remainder being imported about equally from Soviet and Western sources. The

Soviet Union was the largest single source, followed by Sweden,

France, Britain, and the United States. Finnish industry was capable

of supplying many of the Defense Forces' needs for explosives and

327
Finland: A Country Study

ammunition, light weapons, mortars cind artillery, ships, and trans- port. Low-level radar and many other electronic items were also

being produced locally. Finland continued to be dependent on for- eign suppliers for jet aircraft and helicopters, missiles, tanks and

most armored vehicles, and antiaircraft systems.

Arms Acquisitions from Foreign Suppliers

Until the late 1950s, strained economic conditions precluded the

refitting of the Finnish armed forces, which had to be content with

the large stocks of munitions and equipment remaining at the end

of World War II. As the economy strengthened, a political decision was made to modernize the armed forces so that they could

defend Finnish neutrality credibly. The government allocated a modest amount for new equipment in 1955, and it enacted a major new appropriation in 1957. These procurements stimulated a revival

of the small Finnish armaments industry, although most major items

continued to be acquired from abroad. Britain was initially the

primary source of supply, providing tanks, aircraft, and a training ship. Jet trainers were purchased from France and Sweden,

and antiaircraft guns and fire control systems were obtained from

Switzerland. The decision reached in 1959 to rely more heavily on arms procurements from the Soviet Union was partly a politi- cal effort to demonstrate Finnish neutrality by balancing purchases

from the East and from the West. Economic factors also played

a part. Finland's trade with the Soviet Union was based on bilateral balancing, and imports from the Soviet Union had to be found to compensate for the high level of Finnish exports. Favorable credit

terms offered by Moscow were a further attraction (see Foreign

Economic Relations, ch, 3). Among the heavy weapons deliveries from the Soviet Union during the early 1960s were T-54 and T-55 main battle tanks, armored

personnel carriers, self-propelled antiaircraft guns, and artillery

pieces. The political crisis sparked by a Soviet call for consultations under the FCMA treaty in October 1961 convinced Helsinki

that further efforts must be made to build up the nation's air

defenses in order to demonstrate its determination to resist violations of its neutrality. Accordingly, an order was placed with the

Soviet Union for thirty-five MiG-21Fs and associated Atoll air-to- air missiles. Since the MiG fighters did not have an all-weather

capability, the Finnish air force turned to Sweden for Saab J-35

Draken 2Jl-weather interceptors; the first of these aircraft were deli- vered between 1972 and 1977. Beginning in 1981, the MiG-21bis, an all-weather fighter with a more powerful engine, Wcis introduced

to replace the MiG-21F. It was armed with a more advanced

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version of the Atoll missile. Extensive new purchases for the modernization of the armored forces began in 1981 with the acquisition

from the Soviet Union of armored personnel csirriers, followed later by T-72 tanks, armored transports, and BMP-1 assault tanks.

By the mid-1990s, the entire combat air force of Draken and

MiG fighters will need replacing, and observers have surmised that

the Soviet MiG-29 will be one of the models selected. Financing

the purchase would be facilitated by the fact that an imbadance had

developed in Finnish-Soviet trade as a result of the drop in the price

of Soviet crude oil deliveries. Financing of a Western model, possibly the Swedish JAS-39 Gripen, was expected to present a difficult budgetary hurdle.

Finland was eligible to purchase materiel under the Foreign Military Sales Program of the United States Defense Department. Its principal acquisitions from the United States were advanced elec- tronic equipment and I-TOW (improved tube-launched, optically

sighted, wire- guided) antitank missiles.

Domestic Arms Production

Finland's own production capacity had gradually expanded

beginning in the 1960s. Among the arms manufactured domestically were the M-60 122mm field gun, the M61/37 105mm howitzer, the M-62 assault rifle (a highly regarded redesigned version

of the Soviet AK-47), and the M-62 light machine gun, the basic

infantry weapons of the Finnish army. Domestic shipyards turned

out all of the vessels needed by the navy, although much of their

advanced electronic equipment and weaponry was imported.

Earlier, a number of ships had been purchased from the Soviet

Union and from Britain and had been modified in Finnish yards

for minelaying and other special requirements. The only aircraft

entirely of Finnish manufacture was the Valmet L-70 Vinka basic

trainer. Another Valmet design, the Redigo, had been marketed

abroad as a basic trainer without success. Analysts expected that

the Finnish air force would acquire it as a light transport in the

early 1990s. The British Hawk advanced jet trainer and later con- signments of the Draken were assembled at the Valmet plant.

An all-terrain truck, the KB-45 manufactured by Sisu-Auto

(SISU), was used by the Finnish army as a gun tractor and per- sonnel carrier and by Swedish and Finnish peacekeeping forces in

the Middle East. SISU also manufactured the SA-150 Masi all- terrain truck and the NA-140 Nasu adverse terrain vehicle. The

SISU A- 180 Pasi, a newly designed six-wheeled amphibious

armored personnel carrier, had been introduced into the army, and

severad hundred were on order as of 1988.

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Finland: A Country Study

By 1988 the Finnish arms industry consisted of about twenty

firms, most of them small subsidiaries of conglomerates primarily

oriented toward civilian markets. The Ministry of Defense had its own plants for the manufacture of munitions and for the modernization of heavy equipment such as the T-55 tank. In addition to SISU and Valmet, one of the larger private manufacturers was

Tampella, which produced field artillery, mortars, turret guns, and

grenade launchers. Most of the missile boats were constructed by

the Hollming shipyards in Rauma and at Wartsila's yards in Helsinki, although their weapons systems were acquired abroad.

Finnish arms exports were a minor item in the balance of trade,

amounting to only Fmk60 million in 1986. Nearly half of these

exports were to NATO countries, most of the remainder going to neutral developed countries such as Sweden. About half of the

export total consisted of gunpowder. Ammunition, artillery shells,

and assault rifles composed most of the remainder.

Civil Defense

Under the Civil Defense Act of 1958, the Ministry of Interior was directed to provide civil defense to protect persons and property

in wartime as weU as in peacetime. The act stipulated that the ministry was to be responsible for providing shelters in high-risk areas,

for evacuating civilian population from threatened areas, and for limiting damage from natural disasters. In emergency situations,

firefighting, rescue, ambulance, and first-aid services were coor- dinated with the civil defense effort. Civil defense operations were

entirely a civilian responsibility.

The ministry delegated the implementation of national policy

to county and municipal authorities, which acted through locally

appointed civil defense boards. These boards supervised operations

from more than 100 civil defense centers designated throughout

the country. Personnel in national and local government agencies,

committed to civil defense in emergency situations, and in independent voluntary organizations that would come under their jurisdiction numbered over 100,000. Nongovernment organizations

involved in civil defense activities included the Finnish Red Cross

and the Rescue Service. Police were also assigned to reinforce civil defense workers as conditions required.

An alairm system was in place in urban centers to warn the civilian population of threatened attacks. During an emergency situation,

instructions would be broadcast through normsd media channels.

The early warning civil defense system was tied into the nationwide military air surveillance system.

330
Finnish-built L-70 Vinka elementary trainer produced by Valmet

Courtesy General Headquarters, Finnish Defense Forces

The Ministry of Interior maintained hard shelters, capable of

accommodating 2.6 million persons, in cities and in other densely

populated areas where two-thirds of the country's population lived. They were built to withst2ind the detonation of a 100-kiloton nuclear

bomb at ground zero. There was no shelter program in rural areas nor were most detached dwellings and townhouses equipped with

shelters. About 10 percent of the shelters were carved out of natural

rock, but most were beneath office and residential buildings. Some

were designed for multiple use as parking garages, schoolrooms,

skating rinks, and swimming pools. By law, builders were obliged

to include shelters in blocks measuring 3,000 cubic meters or more.

In Helsinki, 536,000 spaces were provided, of which 11 8,000 were

in large rock shelters and 14,000 were in subway stations. The

shelter space was sufficient to accommodate over 100 percent of

the nighttime population of the city, but only 67 percent of the daytime population.

The most serious shortcoming of Finland's civil defense system was that 1.5 million Finns had no access to shelters. Another rea- son for concern was that many shelters were poorly equipped and

maintained. All shelters were supposed to be outfitted with self- contained power 2ind ventilation systems, sanitary facilities, and

emergency supplies. Nevertheless, inspections during 1986 found

that two-thirds of shelters in private buildings had some deficiencies.

331
Finland: A Country Study

Contingency plans included massive evacuation of civilians from

likely target areas, threatened with attack by conventional forces

in time of war. Medical services for civilian casualties would be

provided at local facilities in coordination with the civil defense

branch of the Ministry of Social Affairs and Health. Civil defense

authorities considered, however, that evacuation of the civilian

population to escape fallout following a nuclear attack would be

pointless, and no provision was made for such a contingency.

The public's perception of civil defense efforts was marked by

considerable indifference during the 1980s. Although its system was

far more complete than the systems in most countries of Western

Europe, Finland's annuaJ expenditure per capita on civil defense

of US$12 was well below the rate of other Scandinavian countries,

which averaged US$20 per capita. The nuclear accident at Chernobyl in the Soviet Union in 1986 underscored Finland's vulnerability and triggered renewed concern over shortcomings in the civil defense program. In response, the government announced plans

in 1988 to introduce an automatic radiation surveillance network

to supplement the existing manual one and to ensure that an out- door alarm system was operational in all municipalities.

Public Order and Security

Responsibility for law enforcement and for the maintenance of

public security rested entirely with the central government. No

police forces were maintained by lower levels of government. The

minister of interior exercised control over all police forces through

the Police Department, one of the departments of the Ministry of

Interior. It functioned as the central command unit supervising

the two types of ordinary police forces—town police and rural

police—as well as three special police units, the Central Criminal

Police (Keskusrikospoliisi—KRP), the Mobile Police (Liikkuva

LP), and the Security Police (Suojelupoliisi—SUPO). The total personnel complement of the police, as of late 1988, was 8,341,

of whom approximately 200 were women.

The RVL, a paramilitary force with responsibilities for guarding

Finland's borders and for maintaining public order and safety in

frontier and coastal areas, was also under the supervision of the minister of interior in peacetime. Its headquarters was the Frontier Guard Department, a separate division within the ministry. The

personnel strength of the RVL was roughly half that of the police.

Police Organization

Chambers of Police were established in 1816 in Turku, and later in other large towns. These chambers had the duty of keeping

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order, preventing crimes and breaches of the peace, and acting as courts for minor offenses. Although the term "poUce department" was officially adopted in 1861, police forces retained their judicial

powers until 1897. In 1903 and 1904, the town police became part

of the state administration, although until 1977 towns still had the

responsibility of contributing one-third of some costs of police

service.

In rural areas, provincial governors had traditionally appointed

sheriffs, often poorly educated and inefficient peasants, who fre- quently did not have regular deputies. Only in 1891 did a decree

provide for each sheriffs office to have a number of state-employed

constables. The Police Act of 1925 brought town and rural police

under the same set of regulations. Previous legislation and regulations pertaining to the police were superseded by the Police Act

of 1967, a comprehensive law covering all police activities. Amendments in 1973 established advisory committees of laymen to help

improve relations between the police and the general public. The

1973 law also defined the structure of the Police Department in

the Ministry of Interior.

The Police Department of the Ministry of Interior was both the

supreme command of the police and an operational arm for special functions carried on at a centralized level. Among the most

important of these was directing three special police forces, the

KRP, the LP, and SUPO (see fig. 24). A superintendent of police

headed each provincial police office, which had operational com- mand over local police units but had no police forces directiy under

it. Most prosecutors were part of the police system. The provincial superintendent of police was, at the same time, the provincial

prosecutor who prosecuted the most serious crimes. Sheriffs were

local administrative officers, acting as prosecutors in lower courts,

as debt collectors, and as notaries public. Town police departments,

headed by police chiefs, numbered twenty-seven in 1988. There

were 225 mraX police districts headed by sheriffs. The organization of individual police departments varied depending on the size of the community and on its particular public safety

problems. Departments generally had sections that dealt with public

order and safety, accidents, driver's permits, criminal investigation, social problems (investigation of crimes against the Narcotics Act and violations of the Temperance Act), the civil register

(population records, passports and identity cards, alien supervision), and a unit for preventive police work among youth. In communities large enough to be divided into precincts, the precinct

officers conducted investigations of minor crimes, placed drunks

333
Finland: A Country Study

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in sobering-up cells, and supervised public facilities, including train

and bus stations. Larger rural police districts had similar divisions, with the

addition of an administrative division to handle permits, debt col- lections, fines, and similar matters. The majority of the districts were small, however, with a staff of only ten or twelve policemen

and no divisional organization.

Central Criminal Police

The Central Criminal Police (Keskusrikospoliisi—KRP) was

formed in 1954 to assist the country's other police elements in ef- forts against crime, particularly that of a serious or deeply rooted

nature. A special concern of the Central Criminal Police was white

collar crime. To carry out its mission, the force had advanced technical means at its disposed, and it maintained Finland's fingerprint

and identification files. In addition to working with local police

forces, the KRP operated independently throughout the country.

Mobile Police

The Mobile Police (Liikkuva Poliisi—LP) was formed in 1930

to operate throughout the country to prevent smuggling, to control highway traffic, and, above all, to be ready at a moment's notice

to assist local police forces in quelling civil disturbances. With a complement of 724, as of 1988, the LP had a department in each

province and commsmd units in larger communities. Its main functions, in addition to its responsibility for traffic regulation and

vehicle inspection, were to prevent the illegal importation and the

manufacture of alcohol and drugs, to enforce hunting and fishing

regulations, and to assist other police units in investigations and

in apprehension of fugitives. The LP also provided security for the

nation's president, passport control at the Soviet border, and security at the Helsinki international airport.

Security Police

The Security Police (Suojelupoliisi—SUPO) had its headquarters in Helsinki, but it maintained bureau and district offices in

various parts of Finland, Formed in 1948, it replaced a similzir police

force dating from the late 1930s. Its function was to investigate

crimes and offenses against the law and order of the state, including subversion, conspiracy, and espionage. SUPO had, in addition, certain responsibilities for safeguarding classified government

documents and for checking on foreign citizens visiting or working in Finland. It conducted liaison with security and intelligence

organizations of other countries. Agents of SUPO did not have

335
Finland: A Country Study

the right to make arrests or to detain anyone, nor were they authorized to search private residences. Anyone suspected by SUPO of

having committed a crime was dealt with by a criminal investigation unit.

The country faced few internal security problems. It continued

to be a homogeneous nation with only 20,000 foreign residents cind an immigration quota of 200 people a year. Admittance was denied

to job seekers from Third World countries. The few Soviet defectors who mginaged to escape across the border into Finland were

carefully screened, and most were sent back. A few were granted

asylum as political refugees; others succeeded in reaching Sweden

before being apprehended by Finnish authorities.

Police Training

Competition for employment by the police was keen. Fewer than

10 percent of the average of 3,500 who applied annually were

accepted for training. Candidates were required to have completed

secondary school and to have emerged from military service with

at least an NCO rank. The five-month police cadet course was given

at the Police Training Center at Tampere. The course was followed

by twelve to eighteen months of active police work, after which

policemen returned to the center for six months of further training. Completion of this phase led to the rank of senior constable.

Advanced police training was conducted at the Police Academy

in Otaniemi near Helsinki. The five-month NCO course provided

instruction in such fields as police administrative law, criminal law,

crimin2J trial law, civil law, police tactics, psychology, and forensic medicine. Those completing the course advanced to the rank

of sergeant. An eight-month course for officers led to the rank of

lieutenant, and a four-month conmianding officers' course prepared

candidates for police chiefs duties.

Frontier Guard

The Frontier Guard (Rajavartiolaitos—RVL) was considered an elite force, organized, even in peacetime, along military lines

into companies and platoons; its personnel held military-type ranks.

The RVL was established in 1919, and it was placed under the

Ministry of Interior. The Coast Guard (sometimes called the Sea

Guard), dating from 1930, was also under the Ministry of Interior

and was made part of the RVL in 1944. In a time of crisis or war,

authorities could integrate the entire RVL, or parts of it, into the

Defense Forces. The peacetime tasks of the RVL were to guard

and to patrol national boundaries; to work with the police in maintaining public order and safety in frontier and coastal areas; to

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prevent and, if necessary, to investigate frontier incidents; and,

together with the Customs Office, to exercise customs control. The

RVL patrolled a special frontier zone of three kilometers on land

and four kilometers at sea sdong the Finnish-Soviet border. A per- mit was required to enter this zone. The personnel complement of the RVL, as of 1988, was about

3,500; an additioned 1,000 conscripts were assigned to it. Coast

Guard personnel numbered 600; no conscripts served with the Coast

Guard. The RVL was divided into four districts, and the Coast

Guard was divided into three. Each district was composed of three or four frontier companies, a ranger or commando company, and

a headquarters platoon. Actual patrolling of the border was con- ducted by the frontier companies, which consisted of two to four

frontier platoons. Each platoon manned one to three RVL stations. The ranger companies, which served as training units for the conscripts, were located at the district headquarters. Only career per- sonnel participated in regular boundary patrolling. A separate Air

Patrol Command was equipped with Agusta Bell Jet Ranger light

helicopters and Aerospatiale Super Puma medium helicopters, the

latter with an antisubmarine warfare role in wartime.

Basic training of the RVL was conducted at the Frontier Guard

School at Immola in the municipality of Imatra and at the Coast

Guard School at Otaniemi. NCOs received their training mainly

at the Defense Forces' NCO school; officer training was carried

out at the Military Academy and at other military schools. Conscripts received their ranger training in the districts where they were

assigned. Conscripts admitted to the RVL were required to be in

top physical condition, and they were usually residents of border

areas. Opportunities offered to RVL conscripts for training as reserve NCOs and officers were similar to those offered in the

Defense Forces (see The Armed Forces, this ch.).

Under wartime conditions the RVL would be organized into special Frontier Jaeger Battalions. Their mobilized strength would be

about 1 1 ,500. Their tasks would be to operate against key targets

in the enemy's rear and to defend against enemy airborne or other

penetration of Finnish rear areas. The Coast Guard did not have

a reserve component, but several of its larger patrol craft had a submarine tracking capability, and they could be rapidly converted

for antisubmarine warfare and minelaying and minesweeping operations.

Each Coast Guard district consisted of a headquarters platoon,

three Coast Guard areas (each comprising two to six Coast Guard

stations), and Coast Guard vessels. Its fleet consisted of 7 offshore

337
Finland: A Country Study

patrol craft of between 135 and 700 tons displacement and 53

smaller coastal patrol craft. Criminal Justice System

The Swedish penal code was retained in Finland untU 1889, when

the Grand Duchy of Finland adopted a new code that was derived

from the familiar Swedish practice but allowed for more precise

definition of crimes. Judges were given considerable latitude in in- terpreting the law, but the new code limited the punishments that

could be exacted for particular categories of offenses. Although fre- quendy amended over the ensuing decades, the Penal Code of 1889

remained in force in the 1980s. In 1977 the government authorized establishment of the Penal Law Committee to study the sys- tem of corrections and to reconsider the principles on which criminal

policy was based in order to make recommendations for revisions

in the penal code. No action had been taken on penal code reform

as of 1988, however.

Principles of Criminal justice

Finnish thinking on criminal policy as it evolved in the 1980s

regarded the punishment of offenders essentially as society's

reproach to the criminal. In the abstract, the type and the length

of punishment prescribed by law were considered indicative of the norms of society regarding the seriousness of the offense and the

potential threat posed to society by the offender. In practical terms,

punishments were standardized, and they were imposed consistendy

for all categories of crimes, in the interest of ensuring equality in

the application of the law. For this reason, the penal code restrict- ed the discretionary power of the courts in imposing sentences. Imprisonment was not regarded as benefiting the offender, nor was the length of time in an institution to be set on the basis of

need for treatment; it was accepted that punishment was detrimental

and should be used sparingly. Thus, the tendency has been to rely on light punishment, especially on fines, and to emphasize short sentences of a few weeks or months.

In addition to ensuring that sentences were equal and proportional, the penal code advised that sentences imposed should not cause the "unregulated accumulation of sanctions," that is, when

assessing punishment, courts should avoid severad ssinctions' being imposed—such as dismissal from office, or revocation of a

driver's permit—as the result of a single offense. The courts were

zdso expected to ensure that punishment was not extended indirectiy

to the offender's family.

The tendency since the early 1970s has been to decriminalize

338
Frontier Guards in bivouac during winter patrol

Courtesy General Headquarters, Finnish Defense Forces Ski troops towed by a Swedish-built Bandvagn

206 multipurpose tracked vehicle Courtesy General Headquarters, Finnish Defense Forces

339
Finland: A Country Study

a number of actions formerly indictable under the penal code. The

modifications in the code reflected changing priorities in assessing

the seriousness of criminal conduct, changing norms of social

behavior, and an attempt to distinguish between premeditated crime

and spontaneous actions. Among the acts decriminalized were creat- ing a public disturbance because of drunkenness as well as certain

offenses against property, such as petty theft. Homosexual acts between consenting adults also ceased to be regarded as a criminal offense. Stiff penalties for offenses against persons, for threatened violence against persons, and for drunken driving remained

unaffected, however.

Finland has been less willing than other Scandinavizin countries

to replace punishment with other measures, such as treatmentoriented institutions for repeat offenders. Under legislation enacted

in 1931, offenders ''dangerous to private or public safety" could

be confined in a separate institution for recidivists after their sen- tences had expired. In 1971 the law was amended so that property

offenses could no longer be considered grounds for indeterminate

incarceration, and conditions under which violent offenders could

be so confined were more narrowly defined. As a result, the number of offenders held in internment of any kind fell dramatically,

from nearly 400 in the 1960s to fewer than 10 in 1984.

Criminal Courts

Criminal courts of the first instance were of two types, each having jurisdiction in distinct areas and each following separate procedures. The first type of court provided criminal justice in thirty

"old towns," including Helsinki. These long-established town

courts consisted of three professionad judges—one of whom

presided—and two lay jurors from the city council. Circuit courts,

the second type, exercised jurisdiction in rural districts and in cities incorporated after 1958. The latter category included Espoo and

Vantaa, Finland's fourth and fifth largest cities, respectively, located

in the greater Helsinki metropolitan area. More than 140 circuit courts in 71 judicial districts formed this system. Circuit courts were

conducted by a professional judge, assisted by five to seven jurors

elected for the term of the court by the local municipal council.

Public prosecutors for both kinds of courts determined whether to press charges against persons accused of offenses solely on the basis

of evidence presented by police investigation.

Criminal cases were heard in continuous sessions by both types

of courts of the first instance. Verdicts were determined by the vote of the panel ofjudges and jurors. A two-to-one majority was suffi- cient in three-member town courts. In circuit courts, however, the

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verdict of the presiding judge prevailed if the jurors failed to reach

a unanimous decision. Measures were pending in 1988 to harmonize court procedures.

Cases involving criminal offenses by on-duty members of the

Defense Forces were tried in fifteen speciad courts of the first in- stance presided over by a panel of military judges. These courts- martial were integrated into the criminal courts system.

Appeals from the courts of the first instance were heard in six three-member regional courts of appeal that were also responsible

for supervising the lower courts. When a panel considered appesds

from courts-martial, two military judges were added. About twothirds of the business of appeals courts involved criminal cases. The

Supreme Court, which ordinarily sat in panels of five members,

handled final appeals from criminal cases. Permission to appeal

was, however, granted by a three-member panel. Because of a ten- dency by the Supreme Court to limit the cases reviewed to those

having vadue as precedents, the courts of appeal had become

increasingly important in criminal matters. Criminal actions were preceded by a police pretrial investigation. A suspect could be detained by the police for questioning,

without access to a lawyer, for three days; this period could be

extended to fourteen days, for special reasons on proper authority

and with notification to the court. Reforms scheduled to take effect on January 1, 1989, shortened the maximum detention to seven

days, with access to a lawyer. The institutions of habeas corpus

and bail did not exist as such. Those accused of serious crimes were

required to remain in custody. Those accused of minor offenses

could be released on person2d recognizance at the court's discretion. Preventive detention was authorized only during a declared

state of war for variously defined offenses, such as treason or mutiny.

Court proceedings were conducted by the presiding judge, who

norm2dly also questioned witnesses. The entire written court record was used as the basis for proceedings in the courts of appeals. Oral

hearings were conducted only in those criminal cases in which courts of appeal had original jurisdiction, such as criminal charges against

certain high officials. Neither the accused nor his counsel was

present when a case was considered by the court of appeal. An

accused person had the right to effective counsel. Persons lacking

sufficient funds were entitled to free proceedings so that their

attorneys' fees 2ind direct costs were borne by the state. Local courts could decide to conduct a trigd behind closed doors in juvenile,

domestic, or guardianship cases, or when publicity would offend

mor2dity or endanger state secrets.

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Finland: A Country Study

Incidence of Crime

According to official Finnish data for 1986, the largest group

of crimes covered by the Criminal Code was crimes against property

(75 percent of the total); theft alone accounted for 42 percent, and

embezzlement and fraud for 15 percent. Drunken driving constituted 9 percent of all Criminal Code violations, and crimes against

personal safety, mostly assaults, accounted for 7 percent.

During the 1970s, the crime rate showed a rising trend cor- responding to the growing affluence of the country and to the shift in population from the rural north to the urban south. After the

mid-1970s, however, the rate for many crime categories leveled

off; in some cases it even fell. Robberies decreased during the 1980s,

and bank robberies were infrequent, only sixteen cases being recorded in 1986. Assaults increased somewhat during the same period,

roughly parallel to the increase in alcohol consumption. Embezzlements and fraud increased noticeably, in part as a consequence

of the mass introduction of credit cards in the 1980s. Drunken driving offenses slackened off relative to the number of automobiles,

from a rate of 161 per 100,000 cars in 1977 to 122 per 100,000

cars in 1985. This was due both to stricter controls and to an absolute decrease in the number of drunken drivers.

In 1986 the number of murder and manslaughter cases investigated by the police amounted to 143. The homicide rate of 3 per

100,000 of population was considered to be high by European stan- dards. Finland's rate of assault was more than three times the rate of Denmark and Norway, but similar to that of Sweden. Finland,

however, experienced the lowest theft rate of all the Scandinavian

countries; this appeared to be explained by differentials in the level of prosperity, urbanization, cind population density among the

nations. Finland was also lowest in narcotic offenses (see Drug Enforcement, this ch.).

Sentencing and Punishment

Prison sentences for criminal offenses were of three kinds: fully

fixed terms of fourteen days to three months; fixed terms of three

months to twelve years, with the possibility of release on parole

for the equivalent of the remainder of the original sentence; and

life terms, which had no minimum time but which allowed release

only upon pardon by the president. Courts could also render a conditional sentence, specifying a term of imprisonment, but establishing a probation period for the same duration. If no new offense was committed, the execution of the sentence would be considered

complete.

342
National Security

Since the early part of the nineteenth century, capital punishment has been virtually abolished in practice. After Finland's

independence in 1918, capitcd punishment was only enforced in

wartime, although it was not until 1949 that it was formally

proscribed in peacetime. In 1972 executions were abolished. In practice, life imprisonment was reserved for the crime of murder. As

of the end of 1984, only twenty-seven prisoners were serving life terms. Those under life sentence were generally pardoned after ten or fifteen years. The average number of convictions for murder

had been steadily diminishing, from forty-six annually in the early

1920s to eleven in the late 1970s.

Fines were the most common form of punishment, constituting

90 percent of all sentences when minor traffic offenses were

included. In addition to traffic offenses, fines were commonly

applied in cases of petty theft and petty assault. The actual amount

of a fine depended on the income and wealth of an individual. Thus,

a fine for speeding, normally about US$70, could be assessed at US$20 for an indigent and at well over US$1,000 for a single per- son with a high salary.

Of 299,000 persons sentenced in 1986, less than 9 percent

(26,000) were given prison terms, of whom fewer than half (11 ,300)

received unconditional sentences. The remainder were sentenced

to a fine together with a conditional prison term. A considerable

proportion of the latter category were persons convicted of aggravated drunken driving. The median length of unconditional pris- on sentences was 4.1 months in 1985. Typical sentences were, for

theft, 3.4 months; for forgery, 8.0 months; for robbery, 9.5 months;

for aggravated assault, 8.7 months. About 95 percent of sentences were for under 2 years. The daily average prison population was marked by a downward trend, from 5,600 in 1976 to about 4,200 in 1986. But the

prisoner rate of 86 per 100,000 of population in 1986 was still much

higher than rates in other Nordic countries and in Western Europe

in general. Since the crime rate in Finland was rather low in comparison with the other Nordic countries, it appeared that the higher

rate of incarceration was the result of a high rate of solved crime, a greater use of unconditional sentencing, and longer prison terms. There were two types of prisons—closed prisons and open insti- tutions. The latter were classified as either permanently located

open prisons or as labor colonies established for a limited period

of time for the performance of certain work. Sentences for the non- payment of fines as well as sentences of up to two years were served

in open institutions, if the prisoner was physically able to perform

the work and if the danger of escaping was minimal.

343
Finland: A Country Study

The criminal justice system applied only to offenders over the

age of fifteen. Those under that age were placed under the custo- dy of child welfare authorities. Juveniles between fifteen and eigh- teen years of age were customarily accorded a reduced sentence,

and offenders between fifteen and twenty-one were more likely than

adults to receive conditional sentences. Those in this age group

who were sentenced to an unconditional term of six months to four

years might be sent to a special juvenile prison. Such institutions were meant to have a training and education function, but in practice they did not differ gready from ordinary prisons.

Drug Enforcement

Narcotics abuse and trafficking were relatively small problems,

ranking below other social problems, such as alcohol abuse. The

narcotics units of the KPR were responsible for overseeing drug

enforcement throughout the country. Altogether, there were about

150 officers working in drug enforcement, half of whom were

attached to the Helsinki police. Drug seizures by police numbered

200 to 300 cinnually, but they accounted for only about 3 percent

of the drugs consumed in the country. About half of the seizures

consisted of heroin. Police estimated that more than 60 percent of

all illicit narcotics entering Finland in the late 1980s had originated

in Denmark. The most common carriers were returning Finnish

workers living outside the country, particularly in Sweden.

Finnish laws prohibited the use, the possession, and the sale of

any drugs that were not approved pharmaceutical products, and

the laws dealt severely with all drug-related offenses. No formal

distinction was made regarding the quantity or the potency of drugs

involved or regarding whether possession was for personal use or

for sale. In practice, courts assessed penalties according to the type

of drug; first offenders, possessing drugs for personal use alone,

usually received probation and/or a fine. The annual number of sentences for narcotics offenses ranged from 369 in 1981 to 1,070

in 1985. Nearly half of these cases involved only drug use, the principal drug (73 percent of offenses) being marijuana. Although the

number of persons sentenced was obviously rising, observers

believed that the use of narcotics was diminishing. The higher surest rate was a result of a widened definition of what constituted a narcotics offense and to more effective police control.

* * * A comprehensive overview of the contemp>orary organization and

doctrine of the Finnish Defense Forces can be found in the 1988

344
National Security

work by Tomas Ries, Cold Will: The Defence of Finland. The first part of this study provides an account of the combat experience

of the armed forces in the Civil War of 1918 and in the Winter

War and Continuation War of 1939-44. Friedrich Wiener's Die

Armeen der neutralen und blockfreien Staaien Europas provides complementary information on the configuration of the Defense Forces,

together with photographs and technical data on weapons and

vehicles. The Military Balance, 1988-89, produced by the International Institute for Strategic Studies in London, contains an

up-to-date listing of the Finnish arms inventory.

Fundamentals of Finnish defense strategy, together with the

organization of national defense and the structure of the individual

services, are summarized in a concise official Ministry of Defense

publication, Finnish National Defence. Although its appraisal of the

strengths and the weaknesses of the armed forces is no longer current, the Report of the Third Parliamentary Defence Committee (1981)

contains a useful analysis of Finland's security policy and its stra- tegic position in Northern Europe. Aspects of Security: The Case of

Independent Finland, produced by the Finnish Military History Commission, traces the development of the Defense Forces from in- dependence in 1917 to 1985, reviewing Finnish strategy and tactics in the campaigns of 1939 to 1944.

Numerous studies have analyzed Finland's military role in Northem Europe and the defense of Scandinavia. Nordic Security by Erling

Bjol, although brief, examines the common geostrategic issues of

the region and the diversified approach to security adopted by each

of the five Nordic countries.

The organization and missions of the Frontier Guard and the

police are summarized in two short official publications, The Frontier Guard in Finland and The Police of Finland. The Finnish Legal System,

edited by Jaakko Uotila, contains background on the Finnish sys- tem of justice and, in an article by Inkeri Anttila, a discussion of

criminal law and punishment. (For further information and complete citations, see Bibliography.)

345

Appendix A

Table

1 Metric Conversion Coefficients and Factors

2 Finnish and Swedish Names of the Provinces and of Selected

Place-names

3 Presidents of Finland, 1919-

4 Distribution of Parliamentary Seats, 1966-87

5 Coalition Governments, 1966-

6 Parliamentary Election Results, 1979-87

7 National Population and Percentage Living in the Urban

Muncipalities, Selected years, 1800-1985

8 Population by Province, Selected Years, 1960-85

9 Finnish Social Welfare Expenditures, Selected Years, 1974-85

10 Social Expenditures, 1980 and 1985

1 1 Health Care Personnel and Facilities, Selected Years, 1960-85

12 Sex and Age Specific Death Rates by Cause, 1981-85

13 Gross Domestic Product (GDP), by Sector, Selected Years,

1950-86

14 Central Government Budget, 1982-86

15 Labor Force, Selected Years, 1950-85

16 Production of Major Form Commodities, Selected Years,

1980-86

17 Use of Arable Land, Selected Years, 1950-85

18 Industrial Production by Commodity, 1982-86

19 Geographical Distribution of Trade, 1982-87

20 Balance of Payments, 1978-86

21 Daily Newspapers with Largest Circulations, 1986

22 Major Army Equipment, 1988

23 Major Naval Equipment, 1988

24 Major Air Force Equipment, 1988

347

Appendix A

Table 1. Metric Conversion Coefficients and Factors When you know Multiply by To find

Millimeters 0.04 inches Centimeters 0.39 inches Meters 3.3 feet Kilometers 0.62 miles Hectares (10,000 m^) 2.47 acres Square kilometers 0.39 square miles Cubic meters 35.3 cubic feet Liters 0.26 gallons Kilograms 2.2 pounds

Metric tons 0.98 long tons

1.1 short tons 2,204 pounds

Degrees Celsius 9 degrees Fahrenheit

(Centigrade) divide by 5 and add 32

349
Finland: A Country Study

Table 2. Finnish and Swedish Names of the Provinces

and of Selected Place-names

Finnish Swedish

Provinces Ahvenanmaa

Hame

Keski-Suomi Kuopio

Kymi

Lappi

Mikkeli Oulu

Pohjois-Karjala

Turku ja Fori Uusimaa

Vaasa

Aland

Tavastehus

Mellersta Finland Kuopio

Kymmene

Lappland

St. Michel Uleaborg Norra Karelen Abo och Bjorneborg

Nyland Vasa

Flace-names Espoo

Hameenlinna

Hamina

Hanko

Helsinki Kaskinen Kokkola

Lahti Lappeenranta

Loviisa Maarianhamina

Fori

Pietarsaari Forvoo

Rajihe

Saimaa

Savonlinna Tammissari Tampere

Tomio

Turku

Uusikaarlepyy

Uusikaupunki Vaasa

Vantaa

Esbo

Tavastehus Fredrikshamn Hango

Helsingfors Kasko

Gamlakarleby

Lahtis Villmanstrand

Lovisa Mariehamn

Bjorneborg Jakobstad Borga

Brcihestad Saima

Nyslott Ekenas Tammerfors

Tornea Abo

Nykarleby

Nystad Vasa Vanda

350
Appendix A

Table 3. Presidents of Finland, 1919-

Name Years in Office Former Party Allegiance 1919-25 Young Finn

1925-31 Agrarian 1931-37 National Coalition Kyosti Kallio 1937-40 Agrarian

Risto Ryti 1940-44 National Progressive 1944-46 none

1946-56 National Coalition 1956-81 Center 1982-00 Social Democratic

Table 4. Distribution of Parliamentary Seats, 1966-87

Party 1966 1970 1972 1975 1979 1983 1987

Finnish Social Democratic

Party (SDP) 55 52 55 54 52 57 56

National Coalition Party (KOK) 26 37 34 35 47 44 53 Center Party (Kesk) 49 36 35 39 36 38 40

Finnish People's Democratic League (SKDL) 41 36 37 40 35 26 20 Swedish People's Party (SFP) 12 12 10 10 9 10 12 Finnish Rural

Party (SMP) 1 18 18 2 7 17 9

Finnish Christian League (SKL) 1 4 9 9 3 5 Liberal People's Party (LKP) 9 8 7 9 4

Social Democratic Union

of Workers and Small Farmers (TPSL) 7 Others 2 1 5 5 TOTAL 200 200 200 200 200 200 200

Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook of Finland, 1987, Helsinki, 1987, 426.

351
Finland: A Country Study

Table 5. Coalition Governments, 1966-

Prime Minister Date of Nomination (Party Affiliation ') Coalition Parties ' May 27, 1966 Rafael Paasio (SDP) SDP, Kesk, SKDL, TPSL,

March 22, 1968 Mauno Koivisto SDP, Kesk, SKDL, TPSL,

(SDP) SFP May 14, 1970 Teuvo Aura (none) civil-service caretaker July 15, 1970 Ahti Karjalainen SDP, Kesk, SKDL, LKP,

(Kesk) SFP ^ October 29, 1971 Teuvo Aura (none) civil-service caretaker February 23, 1972 Rafael Paasio (SDP) SDP

September 4, 1972 Kalevi Sorsa (SDP) SDP, Kesk, SFP, LKP

June 13, 1975 Keijo Liinamaa (none) civil-service caretaker November 30, 1975 Martti Miettunen SDP, SKDL, Kesk, SFP,

(Kesk) LKP

September 29, 1976 Martti Miettunen Kesk, LKP, SFP

(Kesk) May 15, 1977 Kalevi Sorsa (SDP) Kesk, SDP, SKDL, LKP, SFP' May 25, 1979 Mauno Koivisto Kesk, SDP, SKDL, SFP

(SDP)

February 19, 1982 Kalevi Sorsa (SDP) Kesk, SDP, SKDL,

SFP*

May 6, 1983 Kalevi Sorsa (SDP) SDP, Kesk, SMP, SFP

April 30, 1987 Harri Holkeri SDP, KOK, SMP, SFP (KOK)

' For full names of political parties, see Table 4.

2 After March 26, 1971, this government consisted of the SDP, Kesk, LKP, SFP.

' After March 2, 1978, this government consisted of the Kesk, SDP, SKDL, and LKP.

After December 30, 1982, this government consisted of the Kesk, SDP, and SFP. Source: Based on information from David Arter, Politics and Policy-Making in Finland, New

York, 1987, 54; and Juhani Mylly and R. Michael Berry (eds.). Political Parties

in Finland, Turku, Finland, 1984, 189.

352
Appendix A

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353
Finland: A Country Study

Table 7. National Population and Percentage Living

in Urban Municipalities, Selected Years, 1800-1985

Percentage Living in Year Population Urban Municipalities 1800 832,700 5.6 1850 1,636,900 6.4 1900 2,655,900 12.5 1920 3,147,600 16.1 1940 3,695,600 26.8 1950 4,029,800 32.3 1960 4,446,200 38.4 1970 4,598,300 50.9 1980 4,787,800 59.8 1985 4,910,700 59.8

Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook of Finland, 1987, Helsinki, 1987, 38.

Table 8. Population by Province, Selected Years, 1960-85

(in thousands)

Province 1960 1970 1980 1985

21.0 20.7 22.8 23.6 580.8 635.7 664.3 667.8

245.0 238.0 242.9 247.7

270.5 255.5 252.1 256.0

337.8 343.9 344.3 340.7

205.1 197.1 194.9 200.9 Mikkeli 234.6 219.2 208.6 209.0 Oulu 407.0 401.2 416.9 432.1 207.7 185.3 176.7 177.6

, , 660.3 675.1 703.0 713.0 832.9 1,005.2 1,128.5 1,187.9 Vaasa 443.5 421.4 432.8 444.4

Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook of Finland, 1987, Helsinki, 1987, 39.

354
Appendix A

Table 9. Finnish Social Welfare Expenditures,

Selected Years, 1974-85

Social Welfare Index of Amount Expenditure Per Per Capita Social

(in millions of As a Percentage of Capita (in Welfare Expenditure Year Finnish marks ') GDP ' Finnish marks ') (1980 = 100) 1974 14,168 15.7 3,021 70 1976 23,863 20.3 5,049 87

1978 31,557 22.0 6,639 95

1980 40,042 20.8 8,377 100

1982 55,433 22.5 11,484 112 1984 72,300 23.4 14,810 124

1985 82,799 24.6 16,891 134

' For value of the Finnish mark—see Glossary.

* GDP—gross domestic product. Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secretariat, Yearbook of Nordic Statistics, 1987, Copenhagen, 1988, 316-17.

Table 10. Social Expenditures, 1980 and 1985

(in millions of Finnish marks) *

Item of Expenditure 1980 1985 Health 10,717 23,157

Industrial injury insurance and occupational safety 578 1,139 Unemployment 2,658 5,589

Pensions, old-age, invalidity, etc 17,899 36,050

Family and child welfare 4,468 9,915 General assistance 203 814

Benefits to military and war casualties 1,094 2,237 Estimated tzix deduction for children 701 1,156 Administrative costs 1,286 2,742 TOTAL 39,604 82,799

• For value of the Finnish mark—see Glossary. Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secretariat, Yearbook of Nordic Statistics, 1982, Copenhagen, 1983, 278-79; and Nordic

Council of Ministers, Nordic Statistical Secretariat, Yearbook ojNordic Statistics, 1987, Copenhagen, 1988, 313-14.

355
Finland: A Country Study

Table 11. Health Care Personnel and Facilities, Selected Years, 1960-85

lyou iQ7n 1 QQA lyoD

O Q07 A 1C\0

4-, /yo 9,l)lD 11,074

1 '\(^^ you A.A.A.

1 nno z,Dyj o,yoo *,DyD

.... 12,083 20,783 28,432 43,989 532 562 565 577 348 357 349 372

.... 41,027 52,264 58,599 60,958

2,570 3,145 3,087 3,068

, , . 521,336 786,769 954,577 984,074

Hospital occupancy rate 91 93 85 82

26.2 21.9 19.1 18.3

' Includes all qualified persons under age sixty, active and inactive.

* 1983 figures. Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook of Finland, 1987, Helsinki, 1987, 368, 370.

Table 12. Sex and Age Specific Death Rates by Cause, 1981-85

(Deaths per 100,000 mean population)

Age

Cause of Death 0-34 35-44 45-54 55-64 65 + All Cardiovascular diseases 7.8 83.2 372.8 1,075.5 9,191.2 514.3 Cancer 8.5 33.8 137.4 502.7 3,566.5 211.8

31.1 47.3 103.6 224.6 3,144.9 169.9

65.5 134.2 170.3 175.4 543.0 114.1 112.9 298.5 784.1 1,978.2 16,445.6 1,010.1 Cardiovascular diseases 2.6 21.7 71.9 287.0 6,515.2 484.4

6.6 38.9 113.6 271.0 1,720.0 173.8

23.5 20.6 42.3 110.1 2,055.8 157.3 Violent deaths * 15.7 28.4 40.6 45.2 278.6 29.6 48.4 109.6 268.4 713.3 10,569.6 845.1

* Includes suicides, accidents, and poisonings. Source: Based on information from Nordic Council of Ministers, Nordic Statistical Secretziriat. Yearbook of Nordic Statistics, 1987, Copenhagen, 1988, 66-67.

356
Appendix A

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357
Finland: A Country Study

Table 14. Central Government Budget, 1982-86

(in millions of Finnish Marks ^)

1982 1983 1984 1985 1986 *

Current revenue

Income from property and

Other domestic current

16,953 33,206

1,936 2,822 54,917

19,298 36,975

2,228

3,301 61,802

22,225 43,530

2,649

3,858 72,262

25,384

47,803

2,986

4,638

80,811

30,015

52,498

2,812 4,269 89,594 Current expenditure Purchase of goods and

Property income payable .... TOTAL (current exp)enditure) . .

15,044

7,377

2,171 26,703 51,295

17,371 8,459

3,096 32,409

61,335

18,374 9,340

3,824 35,984

67,522

20,672

9,878

4,575

40,471 75,596

21,973

10,990

4,582 43,267

80,812

GROSS SAVING

3,622

1,037 4,659

467

1,172

1,639

4,740

1,223 5,963

5,215

1,353 6,568

8,782

1,487 10,269

Capital investment Gross fixed capital Purchases of land, net TOTAL (capital investment) . . .

3,268

170 254

3,692

3,822 216

335

4,373

3,758 134

232

4,124

4,024

156

193 4,373

4,321 156 350

4,827 Surplus on current and fixed Capital transfers to other 967

-1,849

-2,734

-1,625

1,839 -1,7322,195 -1,805

5,442 -1,699 -882 -4,359 107 390 3,743

' For value of the Finnish mark—see Glossary.

Provisional figures. Source: Based on information from Organisation for Economic Co-operation and Develop- ment, Finland, Paris, April 1988, 113.

358
Appendix A

Table 15. Labor Force, Selected Years, 1950-85

(in thousands of persons)

1950 1960 1970 1980 1985

Liabor lorce Employed

Agriculture, forestry, 909 3 720.8 429.0 27Q 9 241 .8 TnHiicffv 412 7 439.3 549.5 584.7 554.2

125.4 176.2 176.8 156.7 168.4

187.6 276.4 399.8 425.8 483.4

Transportation, communications, etc 106.7 128.8 150.2 175.7 172.6 214 2 285.5 383.9 550.1 648.9 Other 28.4 6.2 29.0 50.7 7.5

Totzil employed 1,984.3 2,033.2 2,118.2 2,222.9 2,276.8

T Tri<*nnrjlrivpH 144.7 114.0 139.1

n.a. n.a. 2,262.9 2,336.9 2,415.9

PnTMilatinn 4 029 8 4 446.2 4 598.3 4 787.8 4 910.7 Working-age population (15-75) 2,740.7 3,003.0 3,354.4 3,625.1 3,711.4 Labor force participation

n.a. n.a. 67.5 64.5 65.1 Unemployment rate

n.a. n.a. 6.4 4.9 5.8

n.a. —Not available. Source: Based on information from Finland, Centrjil Statistical Office, Statistical Yearbook of Finland, 1985-86, Helsinki, 1986, 6, 44, 302, and additional information from Embassy of Finland, Washington.

359
Finland: A Country Study

Table 16. Production of Major Farm Commodities,

Selected Years, 1980-86

(in thousands of tons)

Commodity 1980 1985 1986 Grains

Barley 1,534 1,854 1,714 Oats 1,258 1,218 1,174 Rye 124 72 70 Wheat 357 473 529 Other Grains 28 27 32

Oilseeds Rapeseed 88 95 105 Root crops Potatoes 736 600 700 Sugar Beets 900 704 843

Fruits and vegetables Apples 8 10 10 Tomatoes 20 20 20 Animal products Beef and Veal 112 125 124 Cow's mUk 3,277 3,083 3,044 Eggs 79 85 81 Mutton and Lamb 1 1 1 Pork 169 171 172

Poultry 15 20 21 Source: Based on information from United States, Department of Agriculture, Economic

Research Service, World Indices of Agricultural and Food Production, 1976-1985, Washington, 1986, 58, and additional data from the Economic Research Service.

360
Appendix A

Table 17. Use of Arable Land, Selected Years, 1950-85

(in thousands of hectares)

Crop 1950 1960 1970 1980 1985 Grains

115.1 212.7 403.5 533.4 645.7 437 4 490.3 524.3 447.8 41 1.3

1 1 ft 7 1 lU. / 00.17 Do.

3

^ft Q Wheat 188.7 180.8 175.5 124.3 157.0

14.7 24.3 27.7 12.1 9.2

Oilseeds

o.o JJ. J 'i? 7 Root crops 95.8 86.4 60.1 40.9 39.4

10.1 14.9 14.9 31.7 31.2 Animal feed Fodder 21.8 15.2 13.6 n.a. n.a. Hay 1,001.4 1,139.0 873.3 477.8 397.7

20.9 12.1 52.3 233.6 222.9

220.9 237.8 230.7 203.3 169.8 92.8 69.7 170.9 246.9 167.9 Fallow 78.0 56.7 47.8 102.3 69.7 TOTAL 2,430.9 2,654.0 2,667.1 2,562.7 2,410.4

n.a. —Not available. Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook of Finland, 1985-86, Helsinki, 1986, 84-85.

361
Finland: A Country Study

Table 18. Industrial Production by Commodity, 1982-86

Year Commodity Unit 1982 1983 1984 1985 1986 Wood products

CeUiilose 1,000 tons 4,048 4,384 4,743 4,734 4,686 Fiberboard -do- 136 137 140 109 86 Mechanical pulp for

sale -do- 36 31 37 34 37 Paper and paperboard . . . -do- 5,752 6,295 6,661 7,412 7,491 Plywood and veneers 1,000 m' 537 582 551 513 568 Sawn goods -do- 5,822 7,327 7,611 6,350 6,449 Chemicals

Fertilizers 1,000 tons 1,511 1,755 1,778 1,752 1,669

Nitric acid -do- 409 541 545 484 508 OU products -do- 8,602 9,010 8,765 8,880 7,841 Sulphuric acid -do- 1,032 1,149 1,165 1,439 1,359 Metal products

Copper cathodes -do- 48.0 55.4 57.3 58.8 64.2 Crude steel -do- 2,414 2,416 2,632 2,519 2,588 Hot rolled steel products -do- 1,847 1,964 1,985 2,063 1,996 Nickel cathodes -do- 12.3 14.5 15.3 15.7 17.8 Pig iron -do- 1,944 1,898 2,034 1,890 1,979 Zinc -do- 155 155 159 160 155 Other Cement -do- 1,907 1,979 1,692 1,623 1,261 Cotton fabrics -do- 16.6 17.2 16.5 9.1 8.1 Source: Based on information from Economist Intelligence Unit, Country Profile: Finland, 1988-89, London, 1988, 18.

362
Appendix A

Table 19. Geographical Distribution of Trade, 1982-87

(in percentage of tot2il value of imports or exports)

1982 1983 1984 1985 1986 1987

Exports

^4. Q ^7 Q ^7 n 4.9 9 EFTA 2 19.2 18.2 19.2 19.7 22.0 22.7 28.8 27.7 20.8 23.4 22.0 17.1 26.7 26.1 19.0 21.5 20.3 15.4

12.0 12.3 12.3 13.2 14.8 15.0

10.8 10.3 12.0 10.8 10.5 11.4

9.1 9.5 9.6 9.3 9.7 10.9

n.a. n.a. 3.9 4.5 5.3 United States 3.2 4.0 8.2 6.3 5.4 5.2 4.9 3.3 4.5 4.2 4.5 4.7

2.6 3.6 4.1 4.0 4.0 3.9

3.1 4.0 3.5 3.3 3.5 3.6 mports EC » 33.5 33.6 35.6 38.7 43.1 44.4

1 7 Q 1 7 ^ 1 7 Q 17 9 1Q 1 lo.D

13.3 13.1 13.9 14.9 17.0 17.4 28.0 28.5 26.2 24.1 18.2 17.0 24.6 25.7 23.1 21.0 15.3 14.4

12.2 11.2 12.3 11.8 13.6 12.9

7.3 6.6 7.7 7.2 6.5 7.1 n.a. n.a. 5.3 6.5 7.1 n.a. 5.0 5.4 4.8 5.2

n.a. n.a. 3.4 4.5 4.3

2.6 2.7 2.7 2.9 3.1 3.1 2.3 1.7 2.4 2.5 2.8 2.8

2.1 2.6 2.1 2.4 2.2 2.2

n.a. —Not available.

' EC—European Community (see Glossary).

^ EFTA—European Free Trade Association (see Glossary).

' Comecon—Council for Mutual Economic Assistance (see Glossary). Source: Based on information from Economist Intelligence Unit, Country Profile: Finland, 1988-89, London, 1988, 27-8.

363
Finland: A Country Study

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364
Appendix A

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365
Finland: A Country Study

Table 21. Daily Newspapers with Largest Circulations, 1986

Frequency of

riace oi Appearance Party Newspaper Publication per week Affiliation * Circulation Helsmgin Sanomat rlelsmki 7 none A QA OKI Ilta-Sanomat Helsinki none iyj,y /

1

Aamulehti Tampere / 140,918 Xurun Sanomat Turku 7 none

Nlaaseudun Tulevaisuus Helsinki o3 none

Uusi Suomi rieismKi 7 none no CQC

K.aleva vJUlU 7 none QQ 177 Savon Sanomat Kuopio 7 JvesK QK 1 <t7 oD,lD/

iiiaicnii Helsinki ao none 7ft Q4.Q K.eskisuomalainen Jyvaskyla 7 j\.esK 7f: 9Q^

Kotimaa rleisinKi qJ none 7<i A<;a Kauppalehti rlelsmki D none 70 QQQ Etela-Suomen Sanomat Lianti 7 none 00, 1*0 Hufvudstadsbladet rieisinKi 7 none 00,Uol7 Pohjalainen Vaasa 7 K(JK. o4-,00o Satakunnan K.ansa Pori 7 An Qn7

iiKKa Seinajoki 7 Karjalainen Joensuu 7 KOK 53,364 Kansan Uutiset Helsinki 6 SKDL 41,504 Lapin Kansa Rovaniemi 7 none 40,407 Pohjolan Sanomat Kemi 7 Kesk 39,149

£tela-Saim£ia Lappeenranta 7 Kesk 34,304 Suomen Sosialidemokraatti Helsinki 5 SDP 34,099 Keskipohjanmaa Kokkola 7 Kesk 33,064 Suomenmaa Helsinki 5 Kesk 32,802

• For full names of political parties, see Table 4. Source: Based on information from Finland, Central Statistical Office, Statistical Yearbook of Finland, 1987, Helsinki, 1987, 410.

366
Appendix A

Table 22. Major Army Equipment, 1988

Estimated Number in Country of Type Inventory Manufacture Armored vehicles T-54/T-55 main battle tank T-72 main battle tank PT-76 light reconnaissance tank BMP-1 infantry combat vehicle BTR-50P armored personnel carrier, tracked BTR-60P armored personnel carrier, 8 wheeled A- 180 Pasi armored personnel carrier, 6 wheeled Towed artillery M-37, M-61 105mm howitzer M-38, D-30 122mm howitzer M-54 130mm field gun M-40 150mm howitzer M-38 152mm howitzer M-74 155mm howitzer Coast artillery D-IOT tank turrets, 100mm

M-60 122mm gun 130mm turret gun 152mm turret gun

Surface-to-surface missiles (coastal defense) RES- 15 Mortars M-56, M-64, M-71 81mm

M-43 120mm

Antitank wire-guided missiles AT-4 (SPIGOT)

I-TOW (tube-launched, optically tracked, wire-guided)

Recoilless rifles M-55 55mm

SM 58-61 95mm

Air defense guns ZU-23 23mm

Oerlikon GDF-002 35mm

Bofors L-60/Bofors L-70 40mm

S-60 57mm towed ZSU 57-2 self-propelled Surface-to-air missiles SA-3 GOA

SA-7/SA-14 shoulder-fired

100 Soviet Union

50 -do15 -do30 -do90 -do60 -do59 Finland

70 + -don.a. Soviet Union

170 -don.a. Germany (World War II) 240 Soviet Union

1 -don.a. -don.a. Finland

1 /u —ao—

240 -don.a. Sweden

800 Finland 550 Soviet Union and Finland

24 Soviet Union

12 United States

n.a. Soviet Union

100 Finland

n.a. Soviet Union

n.a. Switzerland 100 + Sweden

12 Soviet Union

12 -don.a. -don.a. -don.a. —Not available. Source: Based on information from The Military Balance, 1988-89, London, 1988, 88; and Tomas Ries, Cold Will: The Defence of Finland, London, 1988, 215-6.

367
Finland: A Country Study

Table 23. Major Naval Equipment, 1988

Type Number Date Commissioned

Corvettes Turunmaa class, 660 tons, 120mm gun, 1968, modernized

antisubmarine rocket launchers 2 1984-86

Missile craft Helsinki class fast attack, 300 tons, eight RBS-15 SF missUes 4 1981-86

Helsinki-2 class, 200 tons 4 projected 1990-92 Tuima class 210 tons (Soviet OSA-II),

four SS-N-2A Styx missiles 4 purchased 1974-75

Isku (experimental), four SS-N-2A

Styx missiles 1 1970

Fast attack craft (gun) NuoH class, 40 ton 6 1961-66, modernized 1979

Ruissalo class, 130 ton, antisubmarine 1959, modernized

minelaying 3 1977-80

Rihtniemi class, 110 ton, antisubmarine 1957, modernized

minelaying 2 1981 Minelayers

Pohjanmaa, 1100 ton 1 1981 Keihassalmi, 360 ton 1 1957 Minesweepers

Kuha class, inshore 6 1974-75

Kiiski class 7 1984 Landing craft, utility Kampela class, 90 ton 3 1976-79 Kala class, 60 ton 6 1956-59 Kave class, 27 ton 5 1956-60

Coast Guard

Large offshore patrol craft, 700 ton 2 1986-87 Large patrol craft 5 1963-87

Coastal patrol craft 24 15 in 1981-86,

others earlier

* All ships constructed in Finlaind except Tuima class missile craft, which were built in the Soviet Union. Source: Based on information fromJane's Fighting Ships, 1988-89, London, 1988, 155-62.

368
Appendix A

Table 24. Major Air Force Equipment, 1988

Country First Type Number Manufacture Acquired

Fighters-interceptors * MiG-21bis SAAB J-35 Draken

Training

MiG-21 U/UM

SK-35C Draken Hawk MK-51

L-70 Vinka

Reconnaissance Hawk MK-51

Transport F-27 Fokker, nmedium Mi-8 helicopter Hughes 500 helicopter Liaison CM-170 Magister

Piper (Cherokee Arrow and Chieftain)

30 Soviet Union 1978

41 Sweden 1974

4 Soviet Union 1974

4 Sweden 1972

39 Britain 1980

30 Finland 1979

8 Britain 1980

3 Netherlands 1980

6 Soviet Union 1973

2 United States 1975

5 France 1964

14 United States n.a.

* Some in conversion and training status. Source: Tomas Ries, Cold Will: The Defence of Finland, London, 1988, 217-8, and The Military Balance, 1988-89, London, 1988, 88.

369

Appendix B

TREATY

of Friendship, Cooperation, and Mutual Assistance between the Republic of Finland and the Union of Soviet Socialist Republics.

The President of the Republic of Finland and the Presidium of the Supreme Soviet of the U.S.S.R.;

Desiring further to develop friendly relations between the Republic of Finland and

the U.S.S.R.; Being convinced that the strengthening of good neighbourly relations and

co-operation between the Republic of Finland and the U.S.S.R. lies in the interest of both countries; Considering Finland's desire to remain outside the conflicting interests of the Great

Powers; and

Expressing their firm endeavour to collaborate towards the maintenance of inter- national peace and security in accordance with the aims and principles of the United

Nations Organization; Have for this purpose agreed to conclude the present Treaty and have appointed

as their Plenipotentiaries:

The President of the Republic of Finland: Mauno Pekkala, Prime Minister of the Republic of Finland; The Presidium of the Supreme Soviet of the U.S.S.R.: Viacheslav Mihailovich Molotov, Vice-Chairman of the Council of Ministers of the U.S.S.R. and Minister

for Foreign Affairs, who, after exchange of their full powers, found in good and due form, have agreed on the following provisions:

ARTICLE 1 In the eventuality of Finland, or the Soviet Union through Finnish territory, becoming the object of an armed attack by Germany or any State allied with the latter, Finland will, true to its obligations as an independent State, fight to repel the attack. Finland will in such cases use all its available forces for defending its territorial integrity by land, sea and air, and will do so within the frontiers of Finlzmd in accordance with

obligations defined in the present Treaty and, if necessary, with the assistance of, or jointly with, the Soviet Union.

In the cases aforementioned the Soviet Union will give Finland the help required,

the giving of which will be subject to mutual agreement between the Contracting Parties. ARTICLE 2 The High Contracting Parties shall confer with each other if it is established that the threat of an armed attack in Article 1 is present. ARTICLE 3 The High Contracting Parties give assurance of their intention loyally to partici- pate in all measures towards the maintenance of international peace and security in conformity with the aims and principles of the United Nations Organization.

371
Finland: A Country Study

ARTICLE 4 The High Contracting Parties confirm their pledge, given under Article 3 of the Peace Treaty signed in Paris on February 10th, 1947, not to conclude any alliance or join any coalition directed against the other High Contracting Party.

ARTICLE 5 The High Contracting Parties give assurance of the decision to act in a spirit of

co-operation and friendship towards the further development and consolidation of eco- nomic and cultural relations between Finland and the Soviet Union.

ARTICLE 6 The High Contracting Parties pledge themselves to observe the principle of the mutual respect of sovereignty and integrity and that of non-interference in the inter- nal affairs of the other State.

ARTICLE 7 The execution of the present Treaty shall take place in accordance with the principles of the United Nations Organization.

ARTICLE 8 The present Treaty shall be ratified and remains in force ten years after the date

of its coming into force. The Treaty shall come into force upon the exchange of the instruments of ratification, the exchange taking place in the shortest time possible

in Helsinki. Provided neither of the High Contracting Parties has denounced it one year before

the expiration of the said ten-year period, the Treaty shall remain in force for subse- quent five-year periods until either High Contracting Party one year before the expiration of such five-year periods in writing notifies its intention of terminating the validity of the Treaty. In witness hereof the Plenipotentiaries have signed the present Treaty and affixed

their seals. Done in the City of Moscow on the sixth day of April 1948 in two copies, in the Finnish and the Russian languages, both texts being authentic.

The Plenipotentiary of the

President of the Republic of

Finland: Mauno Pekkala.

The Plenipotentiary of the Presidium of the Supreme

Soviet of the U.S.S.R.: V. Molotov.

372
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Finland: A Country Study

Chapter 5

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420
Glossary

Council for Mutual Economic Assistance (CMEA, CEMA, or Comecon)— Members in 1988 included Bulgaria, Cuba,

Czechoslovakia, the German Democratic Republic (East Germany), Hungary, Mongolia, Poland, Romania, the Soviet

Union, and Vietnam. Its purpose is to further economic cooperation among members.

Council of Europe—Founded in 1949 to foster parliamentary

democracy, social and economic progress, and unity among

its member states. Membership is limited to those European

countries that respect the rule of law and the fundamental

human rights and freedoms of all those living within their

boundaries. As of 1988, its membership consisted of twenty- one West European countries.

European Community (EC—also commonly called the Community)—The EC comprises three communities: the European

Coal and Steel Community (ECSC), the European Economic

Community (EEC, also known as the Common Market), and

the European Atomic Energy Community (Euratom). Each

community is a legally distinct body, but since 1967 adl the

members have shared common governing institutions. The EC

forms more than a framework for free trade and economic

cooperation: the signatories to the treaties governing the communities have agreed in principle to integrate their economies

and ultimately to form a political union. Belgium, France, Italy,

Luxembourg, the Netherlands, and the Federail Republic of

Germany (West Germany) are charter members of the EC.

Britain, Denmark, and Ireland joined on January 1, 1973;

Greece became a member on January 1, 1981; and Portugal

and Spain entered on January 1, 1986.

European Economic Community—See European Community.

European Free Trade Association (EFTA)—Founded in 1961,

EFTA aims at supporting free trade among its members and

increasing the liberalization of trade on a global basis, but particularly within Western Europe. In 1988 the organization's

member states were Austria, Finland, Iceland, Norway,

Sweden, and Switzerland.

Finnish mark (Fmk)—Also called Finnmark. Consists of 100 pennid (singular: penni). In terms of the United States dollar, the

average annual exchange rate was Fmk3.22 in 1965, Fmk3.86

421
Finland: A Country Study

in 1975, Fmk3.85 in 1980, Fmk5.30 in 1982, Fmk6.54 in 1984,

Fmk5.42 in 1985, Fmk4.79 in 1986, Fmk3.95 in 1987, and

Fmk4.17 in 1988.

General Agreement on Tariffs and Trade (GATT)—An internationzil organization established in 1948 and headquartered in

Geneva that serves as a forum for international trade negotiations. GATT members pledge to further multilateral! trade by

reducing import tariffs, quotas, and preferential trade agreements, and they promise to extend to each other any favorable trading terms offered in subsequent agreements with third

parties. gross domestic product (GDP)—The totad vailue of goods and ser- vices produced by the domestic economy during a given period,

usually one year. Obtained by adding the value contributed

by each sector of the economy in the form of profits, compensation to employees, and depreciation (consumption of capital). Most GDP usage in this book was based on GDP at factor

cost. Real GDP is the value of GDP when inflation has been

taken into account.

gross national product (GNP)—Obtained by adding GDP {q. v.

)

and the income received from abroad by residents, less payments remitted abroad to nonresidents. GNP valued at market prices was used in this book. Real GNP is the value of GNP

when inflation has been taken into account.

International Monetary Fund (IMF)—Established along with the

World Bank {q.v.) in 1945, the IMF is a specialized agency,

affiliated with the United Nations, that takes responsibility for stabilizing international exchange rates and payments. The

main business of the IMF is the provision of loans to its members when they experience balance-of-payment difficulties. These loans often carry conditions that require substantial in- ternal economic adjustments by the recipients.

Organisation for Economic Co-operation and Development

(OECD)— Established in 1961 to replace the Organisation for European Economic Co-operation, the OECD is an international organization composed of the industrialized market econ- omy countries (twenty-four full members as of 1988). It seeks

to promote economic and socicil welfare in member countries

as weU as in developing countries by providing a forum in which

to formulate and to coordinate policies.

World Bank—Informal name used to designate a group of three

affiliated international institutions: the International Bank for Reconstruction and Development (IBRD), the International

Development Association (IDA), and the International Finance

422
Glossary

Corporation (IFC). The IBRD, established in 1945, has the

primary purpose of providing loans to developing countries for productive projects. THe IDA, a legEdly separate lo2in fund administered by staff of the IBRD, was set up in 1960 to furnish

credits to the poorest developing counties on much easier terms

than those of conventional IBRD loans. The IFC, founded in

1956, supplements the activities of the IBRD through loans

and assistance designed specifically to encourage the growth

of productive private enterprises in less developed countries.

The president and certain senior officers of the IBRD hold the same positions in the IFC. The three institutions are owned

by the governments of the countries that subscribe their capital. To participate in the World Bank group, member states must first belong to the IMF (q.v.).

423

Index

Aalto, Arvo, 257, 258 Abo Academy, 12 Academic Karelia Society (Akateeminen

Karjala-Seura: AKS), 36, 50 Act of Political Parties (1969), 248

Act of Union and Security (1789), 220

Act on Civil Service Collective Agree- ments (1970), 238-39

administration, provincial and local, 240-43

Administrative Council, 272-73

adult education. See education Advisory Commission on Gypsy Affairs, 102 Advisory Commission on Lapp Affairs, 95

Afghanistan, 286, 327 The Agrarian Party (Maalaisliitto: ML)

{see also Center Party (Keskustapuoiue:

Kesk)), xxvi, xxvii, xxx, 34, 60, 249,

252, 258; Kekkonen role in, 62; representation in Eduskunta of, 58

Agricola, Mikael, 11-12

Agricultural Development Fund, 166

agricultural seaor {see also farms/farmers),

xvii, XXV, xxviii, 15, 85, 160; central- ized associations for, 150, 261; in coastal Finland, 76; education for, 166; farm cooperatives in, 164; government

intervention in, 151; increased productivity of, 22, 162-63, 165; in interwar

years, 37-38; labor force decline for, 73, 85, 88, 163; land ceded to Soviet Union, 162; in medieval Finland, 7,9; modernization of, 141, 143-44, 161,

162; nature of, 160-61; policy for, 164-68; production patterns for, 167,

169; productivity of, 147; subsidies and

protection for, 144, 147, 162, 164, 166, 207, 209; surpluses in, 164-65; unions

in, 164

air control network, civilian and military, 313

aircraft: F-27 Fokkers, 313; Hawk

Mk-51s, 312-13; interceptor, 302; JAS-39 Gripen, 329; Jet Ranger and

Super Puma helicopters, 337; MiG-29,

329; MiG-21bis, 312, 315, 328-29;

MiG-21F, 328-29; Mi-8 helicopters, 313; Saab J-35 Draken, 312, 313, 315, 328-29; Valmet L-70 Vinka trainer, 313, 329

Air Force Academy, 313, 318-19

air force (Ilmavoimat), 296, 303, 307, 309; air defense regions of, 313; air squadrons of, 312-13; antiaircraft defenses of, 309; flight training for, 313-

14; headquarters of, 308, 313; intercep- tor and reconnaissance capabilities, 312-13; peacetime mission of, 312; radar system of, 313

air freight services, 195, 198

airlines, 198, 213

Air Patrol Command, 337

airport, xviii, 198

air surveillance system, 330

air transport, 198 AKS. See Academic Karelia Society (Akateeminen Karjala-Seura: AKS)

Aland Delegation, 245 Aland Islands: in archipelago Finland,

75-76, 84; autonomy for, 221, 223, 240; ceded to Soviet Union, 45; de- mands of Soviets for, 47; demilitarization and defense of, 297-98, 300, 304, 310; issue of security concerning, 39; Landstingof, 245; Provincial Executive Council of, 245; settiements of Swedish

speakers, 96

alcoholic beverages industry, 151 alcohohsm, 128-29

Alestalo, Matti, 88-89

Alexander I (tsar), xxiii-xxiv, 16, 220 Alexander II (tsar), xxiv, 220 Alexander of Novgorod (prince), 7 AUardt, Erik, 119

Allied Control Commission, 50, 54, 296

all-terrain vehicles: KB-45, 329; SA-150

Masi, 329; NA-140 Nasu, 329; NA140, 308 ammunition, 327-28

Anjala League, 15

antiaircraft defenses, 309

antiaircraft school, 319

antitank weapons, 310

apatite, 176 425
Finland: A Country Study

appliance manufacture, 188

April Theses, 29

arable land, 160 Arava legislation. See housing; Housing

Production Act (1953) archipelago Finland, 75, 79

Arctic Circle, 73, 74, 76, 169

Arctic Ocean, 35, 39, 79, 313 armaments industry, 328-30 armed forces {see also Defense Forces); components of, xix; establishment of, 41; MilitEiry Academy for, 318; restric- tion in size of, 50, 52; restriction of Treaty of Paris for, 296

Armfelt, Gustaf Mauritz, 16 army (Maavoimat), 296, 308-10; antiaircraft defenses of, 309; brigade for Swedish speakers, 99; career officer candidates, 318; ground forces of, 302, 308; incorporation into Russian army

of, 24; infantry battalion and support

units, 308, 310; offensive in Continuation War of, 48-49; role in Winter War

of, 44-47, 295 Army Strike, 24

art academies, 115

artillery school, 319

assimilation, 73, 96, 102

Atlantic Alliance, see North Atlantic Treaty Organization (NATO)

Atlantic Ocean, 79

Australia, 175

Austria, 210

automobiles, 197 Autonomy Act of 1951, 221; of 1975, 243 The Awakened (revivalist movement),

107, 108

Bahai Society, 112 bakery equipment manufacture, 190

balance of payments {see also trade perfor- mance), xvii, 38, 146, 156, 206-7

Balkan countries, 49

Baltic countries, 40, 42, 298; annexation by Soviet Union of, 42, 47

Baltic Sea, xxiu, 4, 12, 75, 277, 298, 299, 300; area of, 12, 13; as training ground

for German navy, 49 Bank of Finland (BOF), 21, 152, 154,

192, 206, 211, 225 banking system, 147, 150, 191-95; farm

cooperatives in, 164

banks: commercial, 192-93; cooperative,

192; foreign-owned, 194; national, 193; savings, 192-93, 263; state-owned, 192-93

Barents Sea, 277, 300

battalions, 293, 310; artillery, 309; de- fending coastline, 309

Battle of Suomussalmi (1939), 44

Bible, 11, 104

bilingualism, 100-101

birth rate, 79, 80, 81

Bishops' Conference (Lutheran Church), 109

Bobrikov, Nikolai Ivanovich, 23, 25 BOF. See Bank of Finland (BOF)

Bolshevik Revolution (1917), xxvii, 26-

27, 29, 40, 143, 220, 248 Borga diocese, 108

boundaries, 74-75 boundary dispute {see also Treaty of Dorpat, or Tartu (1920)); Soviet Union-Finland, 39-40

Brigade 80 forces. See jaeger (ranger)

brigades

Brigade 90 forces. See jaeger (ranger)

brigades

brigades {see also jaeger (ranger) brigades), 296, 308, 310

budget, government, 154-55, 227

Bulgaria, 296

burghers, 87

cabinet. See Council of State cadmium deposits, 177

canals, 197

capitid: formation of, 181; imports and

exports of, 205 Caps political party, 13 Castle Peace Agreement (1951), 58

cellulose industry, 21, 38 CEMA. 51^^ Council for Mutual Economic

Assistance (CMEA, CEMA, or Comecon) cement industry, 21 censorship, 274

Center Party (Keskustapuolue: Kesk),

XXX, xxxi, 62, 64, 65, 66, 67, 218, 239, 246; development and role of, 252-53;

in government coalition, 264, 266; news agency of, 271; representation in Eduskunta of, 267

central bank. See Bank of Finland (BOF)

426
Index

Central Criminal Police (Keskusrikospoliisi: KRP), xx, 332, 333, 335

Central Organization of Finnish Trade

Unions (Suomen Ammattiliittojen

Keskusjarjesto: SAK), 65, 261

Central Organization of Professional Associations in Finland (Akava), 261 Central Pension Security Institute, 122 Central Statistical Office of Finland, 86 Chambers of Police, 332-33

chancellor ofjustice, xix, 232-33, 235-36

Charismatics (revivalist movement), 108 Charles XII (king of Sweden), 13 chemical industry, 151, 179, 190, 201; overseas expansion of, 205 Chernobyl Nuclear Power Plant, 133,

176, 332

Child Allowance Act (1948), 125

child allowances, 125

child care services, 125, 126 Child Day Care Act (1973), 126 Child Welfare Act (1983), 126

Christian Scientists, 103

Christianity: conversion of Finns to, xxiii, 5 chromite deposits, 177 Church Assembly (Orthodox Church of

Finland), 111-12 Church of Jesus Christ of Latter Day

Saints. See Mormons

circuit courts. See court system

civil defense, 330-32; early warning sys- tem, 330; evacuation program for, 332;

shelter system of, 331-32

Civil Defense Act (1958), 330

Civil Guard, 25, 26, 27, 36, 37, 50, 295, 296

civil service, 238-39, 261

Civil War (1918), xxvii, 3-4, 294-95; Defense Forces political role in, 325; impact of, 32-33, 35, 87, 118-19, 143, 217; prelude and outbreak of, 26-30; Reds and Whites in, 3-4, 26, 294

class structure. See social structure

clergy, 87

climate (^^^a/jo winter), xvi, 79, 160, 169, 173, 195, 301; in defense strategy, 304 CMEA. See Council for Mutual Economic

Assistance, (CMEA, CEMA, or Comecon)

coal imports, 174, 175

coalitions, political, 58, 64, 65-66; RedEarth, 58, 64, 249, 252, 254, 258

coast artillery school, 319

Coast Guard, xx, 310, 312, 336, 337-38

Coast Guard School, 337

coastal waters, 160, 172

coastline, 75, 76, 178, 301-302

cobalt deposits, 176, 177 Cold War, 53-57, 210, 280, 282, 286 Colombia, 175 combat school, 319 combine manufacture, 186 Comecon. See Council for MutUcJ Eco- nomic Assistance (CMEA, CEMA, or Comecon)

communication equipment manufacture,

188 communications, 147, 195 communism, xxx, 4, 32, 34, 36-37, 62; decline of, 67; sympathy for, 54-55

communist-front organization, 48 Communist Party of Finland (Suomen

Kommunistinen Puolue: SKP), xxx,

34, 218, 249; development and activity of, 255-58; legalization of, 50, 54, 254; representation in Eduskunta of, 256; revisionists and Stalinists in, 257;

Soviet Union intervention in, 282 Communist Party of the Soviet Union

(CPSU), 257 Compliants, 24, 53 Comprehensive Education Act (1921), 112 computer manufacture, 188 Confederation of Agricultural Producers (Maataloustuottajain Keskusliitto: MTK), 164, 165, 261 Confederation of Commerce Employers

(Liiketyonantajain Keskusliitto: LTK),

261 Confederation of Finnish Employers

(Suomen Tyonantajain Keskusliitto: STK), 58, 64, 158, 159, 261 Confederation of Finnish Trade Unions

(Suomen Ammattiyhdistysten Keskusliitto: SAK), 34, 58, 64, 158, 159, 249;

alliance with SDP of, 261 Confederation of Salaried Employees and

Civil Servants (Toimihenkilo- ja

Virkamiesjarjestojen Keskusliitto: TVK), 261 Confederation of Technical Employees'

Organizations in Finland (Suomen

Teknisten Toimihenkilojarjestojen

Keskusliitto: STTK), 261 427
Finland: A Country Study

Conference on Security and Cooperation

in Europe: CSCE (1975), xxx, 68, 219, 278

conscription law (1901), 24, 25, 293, 294

conscription system {see also conscription law (1901), xix, 291, 295, 315, 324-25;

of Finns in Russian army, 23, 24

Constitution (1919), xxvii, 33, 116; amendment to, 221-22; basic laws of, 221, 222-23; protection of Swedish

speakers in, 97; religious freedom

gu£irantee in, 103

Constitution Act (1919), xviii, 219, 220, 221, 231, 235, 236, 238, 240, 258;

Article 10 of, 273; individual rights under, 222

Constitutionalists, 24

Constitutional Party of the Right (Perustuslaillinen Oikeistopuolue: POP),

68, 255, 259

construction sector, 85, 190 Continuation War (1941-44), xxviii, 47-50, 53, 162, 252-53, 256; goals of, 295-96; Kekkonen position on, 58; les- sons of, 292; preliminary peace treaty

of, 279

control system manufacture, 188

cooperatives. See farm cooperatives copper deposits, 20, 176, 186 Council for Equality, 92 Council for Mass Media Qulkisen Sanan

Neuvosto: JSN), 274

Council for Mutual Economic Assistance (CMEA, CEMA, or Comecon), xxix,

63, 207, 212, 281, 284

Council of Europe, xix, xxix, 285

Council of State, xxvii, 217, 221, 229, 236; Economic Policy Committee of, 234; executive power and responsibility of, 232-34; Finance Committee of, 234; Foreign Affairs Committee of, 234; relations with Eduskunta of, 233;

relation to Aland Islands, 245-46

court system, xix, 236-37; administrative,

xix, 237-38; courts of appeals in, 235, 236-37; criminal courts in, 340-41; di- vision of, 235, 236-37; special military court of, 341 CPSU. See Commimist Pairty of the Soviet Union (CPSU)

crane manufacture, 186

crime, 342-44 Crimean War (1853-56), 20

criminal justice system, 338-44 Crowe, WiUiam, 285

crusades, 5, 7 currency, xxv; appreciation of, 154; devaluations for, 153, 158, 209; ruble

clearing account, 211 Customs Office, 337 Cyprus, 327

Czechoslovakia, 55

dairy equipment manufacture, 190

dairy farming, 38, 76 Danish Straits, 300

debt: domestic, 155-56; external, 145, 156, 206-7

defense commission, 305

defense committees, parliamentary, 305, 324

Defense Council, 41, 43, 304, 325 Defense Forces, xix, 292; Aland Islands defense by, 298; authority over, 305; commander-in-chief of, 307; conditions of service for, 322-23; conscription for, 315; general, local, and support forces

of, 303, 304, 309-10; reorganization of, 296; role in society of, 324-26; special courts for personnel of, 341; training

for, 318-19; uniforms of, 319, 322 Defense Forces' NCO School, 337

defense policy {see also mobilization), 291-92, 300-301, 303 Defense Review Committee (1926), 41 defense spending {see also spending, gov- ernment), 323-24

defense strategy, 302-4

Democratic Alternative (Demokraattinen

Vaihtoehto: DEVA), 257-58, 267 demography, 79-81, 83-84

Demokraattinen Lehtipalvelu (DPL), 271 Denmark, 13, 60, 276, 277, 298, 344; Finnish investment in, 205; in Great Northern War, 13; interest in Baltic area of, 12; position on neutrality of, 61; Scandinavian union under, 9-10;

struggle for power by, 10; treaty with Muscovy by, 10

deregulation, 152

Deriabin, lurii, 281 DEVA. See Democratic Alternative (Demokraattinen Vaihtoehto: DEVA)

Diet Act of 1617 (Sweden), 219

Diet of the Four Estates (Riksdag), xxiv. 428
Index

xxvi, 9, 10, 25, 258; Finnish representation in, xxiii, 9, 219-20 disarmament measures, 304

disease, 131-32

district heating, 176

divorce, 91

draft. See conscription law Dragoon regiment, 293

drainage systems, 161, 162 Draken. See Saab J-35 Draken

drought, 160 drug use, 128-29, 131, 344

drumlins, 75, 76

dual kingdom, Finland and Sweden, xxiii, 10-16, 219, 293 Duma, 25

Eastern Europe. See Europe, Eastern

Eastern Orthodoxy, 4, 35 EC. See European Community (EC)

Ecclesiastical Board (Lutheran Church),

109

Ecclesiastical Law (1687), 12; (1869), 105 economic cooperation: with Eastern Europe, 199-204, 210-213; with Nordic

Europe, 208, 283-84; with Western

Europe, 207-10, 284-85 economic development: government in- tervention in, 150-52; impact of, 4, 62-63, 84-85, 86, 91, 147; post-World

War II, 83, 141, 147, 150 economic performance, xviii, 37-38, 63, 143-47, 154 economic policy, 145-47; for trade, 150-

52 economy, medieval, 7, 9 Ecumenical Patriarchate of Constantinople, 111 ED. See National Progressive Party (Kansallinen Edistyspuolue: ED)

education system {see also Comprehensive

Education Act (1921)), xvi-xvii, xxxii, 112-18; for adults, 118; for agricultural

sector, 166; as factor in social mobility, 85-87; focus on equality of, 113; goals of, 112-13; higher, 116, 118; for medical personnel, 120; primary and

secondary, 113-16; for women, 91 Eduskunta {see also Council of State); candidates for, 243-44; Constitutional Committee of, 221, 236; importance of, xviii, xxvii, 217; Kesk representation

in, 65; KOK representation in, xxx, 65, 66; legislative procedure of, 225-28; means of control by, 228-29; people govern through, 221; powers of, 223, 225; relation with Aland Islands of, 246; replaces Diet, xxvi, 25, 220;

representatives of, 326; role in budget

process of, 154-55; role in nation£il defense of, 305; SDP representation in, 26, 58; SEP representation in, xxx, 99; SKDL representation in, 54-55, 56, 58, 60, 62; SMP representation in, xxxi, 62, 65 EEC. See European Economic Community (EEC)

EFTA. See European Free Trade Association (EFTA)

Egypt, 327

election laws, 225

electoral system {see also suffrage), 243-44;

local, 240-41

electrical equipment production, 188

electricity, 173-74, 175-76

electric motor manufacture, 188

electronics industry, 147, 188-89

emigration, 22, 79-81; of Jews, 102; of Swedish speakers, 67, 81, 100 Employees' Pensions Act (1961), 122 employers' federations, 158 employment, 156-58; in civil service, 238-39

energy {see also district heating; electricity), consumption and conservation of, 173-76; industries, 151 energy sources, 162, 174-75

energy stockpiling program, 175

engineering, 147 Enontekio, 94

entrepreneurial class, 87 environmental protection, 133-35

environmental protection equipment, 179 Enzo-Gutzeit, 151 Equality Law (1987), 93

Erik IX (king of Sweden), 5

eskers, 75, 76 Espoo (Helsinki suburb), 84, 340

Estonia, 4, 35, 40, 213

Estonians, 5 Eureka technology, 206, 284

Europe, Eastern: relations with, 200, 204, 206, 207, 208, 212 Europe, Nordic {see also Denmark;

Iceland; Norway; Sweden), 142, 144, 429
Finland: A Country Study

150-51, 172, 175, 179, 221, 236, 270; cooperation in military training of, 327; economic cooperation in, 208, 282-84;

effect of Finland's neutrality on, 279-

80; labor market in, 208; relations with, 200, 282; trade policy for, 150-51, 199-

200, 204; welfare systems of, 118-19

Europe, Northern: strategic significance

of, 279-80, 302 Europe, Western: relations with, xvii, 200, 284; trade policy for, xxxii, 150, 199-200, 208-10, 150; trade with, 200, 204, 205, 206, 207, 208-10 European Community (EC), xxix, xxx,

xxxii, 142, 206, 210, 283, 285 European Economic Community (EEC),

63, 142, 207, 209, 212, 281, 283, 284 European Free Trade Association (EFTA),

xxix, xxxii, 63, 207, 209-10, 281, 283, 284 European Payments Union of OEEC,

284 European Recovery Program. See Marshall Plan (European Recovery Pro- gram)

European Space Agency (ESA), 206, 210, 284

Evangelical Movement (revivalist movement), 108 Evening School meeting (Council of State), 234, 247 evening schools, 118 exchange rate, xviii exchange-rate policy {see also currency),

152, 154; ruble clearing account as, 211

executions, 31

explosives, 327

export competitiveness, 150

export licensing, 205

exports, xvii, 38; of capital, 205; of chemicals, 201; of forest products, 143, 200-

201; of metal products, 186, 201; to Western Europe, 284

Fagerholm, Karl-August, 56, 60

family assistance, 125

family structure: changes in, 73, 90-91

famine, xxv, 13, 79 farm cooperatives, 164 Farm Income Act, 165 farm production. See agricultural sector

farms/farmers, xxv, 88, 163-64; control of forests by, 169-70

fascism, xxvii, 4, 37

Fast Deployment Forces, xix, 303, 309, 316 February Manifesto (1899), 23-24, 25

feed crops, 167

feminist movement, 92, 262

Feminists (Feministit), 262

Feminist Union (Naisasialiitto Unioni), 262 Fennoman movement, xxv, 19 ferrochrome deposits, 177

ferry manufacture, 187

Fifth Revival, 108 Film Censorship Board, 274-75

film industry, 274

financial sector, 147, 152, 191-95; commercial bank services, 193; develop- ment of, 181; regulation of, 191-92, 194 FINEFTA agreement (1961), 63, 209,

211, 284

Finnair, 198, 213

Finnic tribes, 5, 7 Finnish Broadcasting Company (Yleis- radio: YLE), 270, 271-72, 273 Finnish Christian League (Suomen

Kristillinen Liitto: SKL), 67, 260, 267

Finnish Communist Party-Unity (Suo- men Kommunistinen PuolueYhtenasyys-SKP-Y), 258

Finnish Export Credit Bank, 193 Finnish Labor party. See Finnish Social Democcratic Party (Suomen Sosiali- demokraattinen Puolue: SDP)

Finnish Military Academy, 293-95, 318-

19, 337

Finnish News Agency (Suomen Tietotoi- misto: STT), 270

Finnish People's Democratic League

(Suomen Kansan Demokraattinen

Liitto: SKDL), {see also communism);

54, 66, 249; news agency of, 271; representation in Eduskunta of, 267;

role in Finnish politics of, 55, 56, 60,

62, 65, 67, 256

Finnish Rural Party (Suomen Maaseu- dun Puolue: SMP), xxxi, 62, 218, 246-47, 259, 260, 265, 267

Finnish Small Farmers' Party. See Finnish Rural Party (Suomen Maaseudun

Puolue: SMP)

430
Index

Finnish Social Democratic Party (Suomen

Sosialidemokraattinen Puolue: SDP),

xxvi, xxvii, XXX, 21-22, 61, 64, 66, 67, 218, 239; development and activity of, 248-52; election of Koivisto as presi- dent, 263, 265; news agency of, 271; Red Guards of, 294; reorganization of, 33, 248; representation in Eduskunta,

25, 26, 58, 65, 248-49, 250, 252, 265,

267; role in general strike (1917), 29;

role in Power Act (1917), 27; in Russification controversy, 24

Finnish Socialist Workers' Party (Suomen

Sosizilistinen Tyovaenpuolue: SSTP),

34, 255-56

Finnish-Soviet Intergovernmental Commission for Economic Cooperation, 211-12

Finnish-Soviet Peace and Friendship Society (Suomen-Neuvostoliiton rauhan

ja ystavyyden seura: SNS), 48

Finnish speakers {see also Constitutionalists; Language Ordinance (1863)), 24, 35; division into two parties of, 34; as majority, xxiv; nationalism of, xxivXXV, 17, 19-20

Finnish Trade Union Federation (Suo- men Ammattijarjesto: SAJ), 21, 34; amaJgamation with SAK, 65 Finno-Ugric language, xxiii, 5, 35, 94

fiscal policy {see also budget, government;

debt, domestic; social security taxes; spending, government), 152-53, 154-

55

fishing industry, 147, 160, 172

Five-Year Framework Agreement (1951), 62-63

floatways, 197

folk high schools, 118

food-processing industry, 189-90

foreign aid, 207

foreign companies, 205

Foreign Military Sales Program (United

States), 329

foreign policy {see also neutrality; Paasikivi-Kekkonen Line), xix, xxix,

68, 218-19; neutral position and nonalignment of, 208, 275

foreign trade. See trade policy

Foreign Trade Bank (Soviet Union), 211

forest land, xxv, 169-72

forest ownership, xxv, 110, 169-70

forest products industries {see also forest

land; log floating; lumber industry; paper industry; sledding season; wood;

wood-processing industries; wood pulp

industry), xxv, xxviii, xxxii, 85, 143, 147, 150, 160; foreign aid for expansion of, 144; foreign exchsmge earnings

of, 183-84, 200-201; location of, 178; response to foreign demand of, 200;

sales oudets of, 205; transportation for, 195, 197

forestry, xvii, 169-71; decline in occupations in, 85

Forest 2000 plan, 171, 184-85

'Forgotten Finland', 62

forklift manufacture, 186 Form ofGovernment Act of 1634 (Sweden), 219

France, 40, 85; in Napoleonic wars, 15-

16; as source of military equipment, xx, 327-29 Freedom of Religion Act (1923), 103 freedom of speech, 222, 273

Friday Presidential Meeting, 234

Friedrich Karl (prince of Hesse), 33

Frontier Guard Department, 332

Frontier Guard (Rajavartiolaitos: RVL),

{see also Coast Guard), xix, xx, 303,

304, 309, 312, 318, 324; organization

and responsibility of, 336-38

Frontier Guard School, 337

Frontier Jaeger Battalions, 337

fur industry, 167, 172, 191

Gaza Strip, 327 General Agreement on Tariffs and Trade (GATT), 57, 208, 276, 284 General Code of 1734 (Sweden), 235

general strikes: in 1917, 29; in 1956, 58

geographic location of Finland, xxv, 3, 73, 74, 291, 298

geography, xvi, 74-75, 195; in defense

strategy, 304; regional differences in, 75

Geological Survey (Ministry of Trade and

Industry), 177-78 Germany, aid to Finland in Civil War by,

26, 33; Baltic Division military as- sistance, 30; domination by merchants

of, 15; Finnish postwar relations with,

63, 204, 284; Reformation in, 10; rela- tions with, 40-41; role for Finland in World War I and after, 26, 41 ; role in Aland Islands dispute, 39; role in 431
Finland: A Country Study

World War II, 40-43, 47-52; Soviet

fear of resurgence of, 60; threat from,

9; trade with, 21, 143, 144; as trading

partner, 21

glacier effect, 75, 76 Golan Heights, 327

gold deposits, 176 Gorbachev, Mikhail S., 212 government intervention {see also nationalization), 147; in agriculture, 151, 164-

68; in economic development, 150; in

forest products industries, 169-71; in

industrial development, 182-91; in mineral industries, 177; in use of energy

resources, 173-74 government structure, 217-19; branches

of, 222-23

grain crops, 161, 167 Grand Duchy of Finland, xxiii, xxvi, 16-17, 207, 220, 338; Diet of, 16-17,

20, 22, 23, 25; economy of, 142-43; Government Council, or Senate, in, 16 Great Address, 23, 24

Great Britedn, 40, 49; as source of mili- tary equipment, xx, 327-29; trade with,

144, 209; as trading partner, 21, 63, 144 Great Depression, xxviii, 144 Great Migration, xxxii-xxxiii, 83, 84, 91 Great Northern War (1700-1721), 12-13,

15 Great Wrath, 13 Greater Finland (Suur-Suomi), 35-36,

40, 249 Green League (Vihrea Liitto), 261

the Greens, 134, 253, 259, 260-61 repre- sentation in Eduskunta of, 265, 267

gross domestic product (GDP), xvii, 119, 145, 146, 157

gross national product (GNP), 56-57,

125, 145, 286-87 Gulf of Bothnia, 7, 35, 75, 76, 79, 84, 167, 178 Gulf of Finland, 4, 7, 42, 45, 49, 50, 75, 84, 178, 299, 311 Gulf Stream, 79, 160 Gustav I Vasa (king of Sweden), 10, 12 Gustav III (king of Sweden), 15, 220 Gustavus II Adolphus (king of Sweden),

12 Gypsies, 73-74, 93-94, 101-2

Habsburg Empire, 12

Haider, Frzinz, 41 Halkola, Kristiina, 258 Hame Province, 81, 84, 240 Hamina, 293 handicapped services, 126, 128 Hanko naval base, 45 Hanseatic League, 9 harbor facilities, 21 Hats political party, 13

health, xvii, 74, 131-32

health care: standards for, 129

health care system, 129-31; centers of, 130-31; hospitals and clinics for, 120, 129; subsidies for, 130 Health for All by the Year 2000, 132

health insurance, 120, 122-23 Hedberg, Fredrik Gabriel, 108

Helsinki, xxxiii, 19, 33, 40-41, 80, 102-

03, 108, 109, 192, 269; becomes capital city, 17; in civil war, 30-31, 33; court of appeals in, 237; as largest urban area, 84; mutiny of Russian fleet in, 26-27; Naval Academy at, 318; as

site of SALT talks, 278; Supreme Court and Supreme Administrative Court in, 237; town court in, 340

Helsinki Accords (1975), xxx, 68

Helsinki Club, 209, 284

Helsinki Stock Exchange, 193, 194-95, 213

Helsinki-Vantaa airport, 198 Henry (archbishop of Uppsala), 5 High Court of Impeachment, 236 High Court of Impeachment Act, 221 high-technology products, 147, 178-79,

188-89, 201 highways. See roads Hider, Adolph, 47, 48

hoist manufacture, 186

Holkeri, Harri, xxx, 255, 267, 268-

69

Holland, 15 Hollming, 188, 330

homogeneity, 73, 93 Honka, Olavi, 61 Honka League, 255 Hoover, Herbert, 285

hospitals, 120, 129, 131 housing: allowances for, 120; construction, standards, and quantity of, 135-

37; subsidies for, 74; subsidies through Arava legislation for, 135 Housing Corporation Act, 135 432
Index

Housing Department (Ministry of Environment), 135 Housing Mortgage Bank, 135 Housing Production Act (1953), 135 Hungary, 296

hydroelectric plants, 172, 174, 175

icebreaker manufacture, 141, 179, 187, 197

Iceland, 276, 324 IKL. See Patriotic People's Movement

(Isanmaallinen Kansanliike: IKL)

Imatran Voima, 151, 174 IMF. See International Monetary Fund

(IMF)

immigrants, 81 Immola, 337

Imperial Russian Army, 293, 294

import controls {see also tariffs), 145, 204-5

imports, xvii, 199; of capital, 205; of energy resources, 174, 175, 201; offish and fish offal, 172; of food, 143; of oil, 146, 199, 201; of wood, 171

Inari, 94 income distribution, 86-87

incomes agreements {see also wage settle- ments), xxxi, 86, 87, 158-60, 247, 261-62 income security programs: social insur- ance forms of, 120-24; as welfare, 120-

21, 124-29

independence (1917), xxvi, xxvii, 3, 26,

29, 33, 34, 293, 294 Independence Day (December 6), 29

India-Pakistan border, 327

industrialization, xxv-xxvii, 21, 22, 62, 84-85, 87, 143-45

Industrialization Fund of Finland (bank), 193

industrial relations. See labor-management

relations industrial sector {see also capital formation), xvii; development of, xxvi, 57, 178, 205; geographical distribution of, 178-79; mergers in, 180-81, 184, 194;

size and structure of, 179, 181

infantry regiments, 293

inflation, xviii, 144-45, 146, 152-53, 156, 158

infrastructure, 195, 205; development of, 20-21; for forest products industries, 169

insurance industry, 147; farm cooperatives in, 164; investments of, 195

interest groups, 218, 261-63

interest rates, 152, 153

International Atomic Energy Agency, 278

International Monetary Fund (IMF),

208, 284

investment, direct foreign, 181, 205-6

Iron Age, 5 iron and steel production, 177, 186

iron deposits, 49, 176

isostatic rebound, 76

Israel, 327

Ivan III (grand duke), 10

jaeger (hght infantry) battalion, 26, 29, 30

jaeger officers, 294

jaeger (ranger) brigades, 308-9; Brigade 80 and 90 forces of, 308-9

Jakobson, Max, 273, 286

Japan, 324

Jewish community, 49, 95, 102-3, 112

Johti Sabmelazzat, 95

judicial system. See legal system

Kaamanen, 313

Kagal, 25

Kailas, Uuno, 40 Kajanoja, Jouko, 257, 268

Kalevala, xxiv, 4, 19 Kalevala people, 4

Kallio, Kyosti, 37, 38, 62

Kallio Law (Lex Kallio), 38 Kalmar Union, 9, 10 Kansallis-Osake-Pankki (KOP), 193

Karair, 198

Karelia, xxviii, 7, 42, 83, 111, 259

Karelia, Eastern, 35-36

Karelian Isthmus, 5, 39-40, 41, 42-43,

44, 45, 48, 49, 295

Karelian tribe, 5, 7 Karelian wing. See air force Karjalainen, Ahti, 65-66

Kaskinen, 84 Kauhava, 313, 318 Kekkonen, Urho, xxix, xxx, 37, 57, 285;

as Center Party leader, 252-53; Nordic NWFZ proposal of, 276-77; opposition

to, 255, 260; position on neutrality of, 61, 218, 231, 253, 276; as president,

xxxi, 58-61, 66, 68, 246-47, 256, 433
Finland: A Country Study

263-64; role in crises with Soviet Union, 60-61, 62; special re-election of, 281; use of spoils system by, 239

Kemijoki, 174 Kemijoki River, 79 Kemira Group, 151, 152, 190

Kesk. See Center Party (Keskustapuolue:

Kesk)

Keski-Suomi Province, 240 Khrushchev, Nikita, 47, 60, 61, 280

Kilpisjarvi area, 76

Kivisto, Kalevi, 268

Koivisto, Mauno, 65, 67, 68, 231, 232, 239, 250, 285; presidency of, 263-64,

267; re-election of, 268-69; support for Nordic NWFZ, 277 KOK. See National Coalition Party (Kansallinen Kokoomuspuolue: KOK)

Kola Peninsula, 96, 178, 279, 291, 299-

300, 313; Soviet military complex of, 301, 304 Komissarov articles, 281-82 Korean War boom, 145 Korpilampi, spirit of, 64-65

Kotka, 84 Kouvala, 237

Kouvola-Utti, 313 Kronstadt naval base, 40 KRP. See Central Criminal PoHce (Keskusrikospoliisi: KRP)

Kuopio, 237 Kuopio Province, 84, 111, 240

Kuopio-Rissala, 313 Kuusinen, Otto, 34, 44, 256 Kymi Province, 81, 84, 240

labor conflict. See general strikes; lockouts;

strikes; work stoppages

labor federations, 261

labor force {see also employers' federations; trade unions); concentrations of employment in, 156; decline in agriculture and timber industry in, 73, 84; dis- placement in rural areas for, 83; on

farms, xxvi, 163-64; mobility of, 73, 81, 83-84, 85; occupational shift for, 85; productivity in industrial sector for, 178; quality of, xxxii, 157; in shipbuilding, 187-88; unemployment in, 141,

154, 156, 157; unrest in, xxxi, 150; women in, 38, 91-93; working class in, 21, 87, 88-89

labor-management relations, 64-65,

158-60, 261-62

Laestadian Movement (revivalist movement), 107

Laestadius, Lars Levi, 107 Lake Ladoga, 5, 44, 48-49, 295 Lake Onega, 49 Lake Peipus, 7 lakes, 75, 76, 160, 169, 172, 195, 197 Lake Saimaa, 76, 197 Land Act of 1945, 56

land ownership: of family farms, xxv, 11, 163; of forests, xxv, 169; tenant farmers and Isindless laborers, 22; for wardisplaced and veterans, 56, 162, 163

land reform {see also Kallio Law (Lex Kallio)), xxviii, 22, 38, 141, 144, 163 Landsting. See Aland Islands Language Act of 1922, 35, 97 Language Manifesto (1900), 23-24 Language Ordinance (1863), 20

languages {see also Finnish speakers; Swedish speakers), 3; determination of national, 35, 97-98; development and im- portance of Finnish, 9, 17; in educational system, 113, 115; Finno-Ugric,

5; of Gypsies, 101; official, xvi, xxivXXV, 67, 97-99, 258; Russian, 23-24; Sami (Lapp), 94; split between Finnish

£ind Swedish speakers, xxiv-xxv, 3, 17; Swedish, xxiii, 67 Lapland {see also Satakunta lapland), 52

75, 76, 79, 80, 291, 298, 301, 302, 304 Lapland War (1944-45), 50, 52 Lappi Province, 240 Lapps (Sami), 5, 7, 73-74, 93-94; soci- ety, economy, and culture of, 94-96,

102 Lapua movement, 36-37, 256

Latvia, 40 League of Nations: in Aland Islzmds dis- pute, 39, 245; expels Soviet Union, 44; membership in, 40 Lebanon, 327

legal system {see also court system; crimi- nal justice system; penal code), xix, 235-38, 340-44

Lehdiston Sanomapzilvelu (LSP), 271 Leino, Yrjo, 55

Lenin, Vladimir L, 29, 30 Leningrad, xxviii, 39-40, 42, 49, 279,

291, 295, 298, 299, 301 434
Index

Lesser Wrath, 15 Liberal Party, xxv, xxx, 19, 259

Liberal People's Party (Liberaalinen

Kansanpuolue: LKP), 65-66, 259-60, 264-65

lift manufacture, 186

lightbulb manufacture, 188 Liinamaa, Keijo, 66 Liinamaa Agreement, xxxi, 64

literacy, 112

livestock, 167

living standcird, xviii, xxxiii, 132-33, 156, 178 LKP. See Liberal People's Party (Liber- aalinen Kansanpuolue: LKP)

Local Government Act (1976), 240, 242

lockouts, 159

log floating, 169, 172 logging machine manufacture, 186 Long-term Economic Plan, 212 Long Wrath (war), 12 Lonnrot, Elias, xxiv, 19 Lotta Svard, 36, 50 LP. See Mobile Police (Liikkuva Poliisi: LP)

lumber industry, 20, 21, 26, 38, 57, 143, 171, 173

Luonetjarvi, 313

Luther, Martin, 10, 11 Lutheran Church of Finland {see also revivalist movements), xvi, 11, 12, 22,

74, 103; degree of autonomy for, 105-

6; membership in, 105; organization

and duties of, 108-10 Lutheran doctrines, 10, 94 Luxembourg, 324 Luxembourg Declaration (1984), 210

luxury liner manufacture, 187

machine-building industry, 57, 141, 184, 186, 201 macroeconomic policy {see also exchangerate policy; fiscal policy; monetary policy), 145-46, 152-56

magazines, 271 mail service, 195 Mainos-TV-Reklam (MTV), 271, 272 maintenance allowances, 125 Mannerheim, Carl Gustaf Emil, xxviii, 37, 41, 293; leader of Whites in civil war, 29, 30-31, 33, 294; position in negotiations with Soviet Union of, 43

,

50; as president, 33, 50, 54, 55 Mannerheim Line, 41, 44, 45 Mantsala, 37 manufacturing sector, 85, 182 March Manifesto, 27 Margaret I (queen of Denmark), 9 marriage, 90-91, 100 Marshall Plan (European Recovery Pro- gram), 57, 144, 208, 275, 285

Marxist-Leninist program, 255 mass media, 269-75 match industry, 21 maternity benefits, xxxiii, 125 measuring equipment manufacture, 188 medical personnel, 120 medical services, 74, 120, 123, 129-31, 332 Mental Health Act (1978), 129-30

mercantilism policy, 15 merchant marine, 21, 190, 204 mercury deposits, 177

metallurgical industries, 56

metals production, 186 metalworking industry, 21, 26, 141, 143, 145, 147, 185, 197; exports of, 201; growth of, 179, 185, 200; mergers

within, 193; overseas expansion of, 205; restructuring of, 185-86 Midsummer Bomb, 66-67

Miettunen, Martti, 66

migration {see also Great Migration; refugees); of early people, 4; of labor force, xxxii, 81, 83; of Lapps, 94; pre- and

post-World War II, 73, 82; to urban

areas, xxxii-xxxiii, 73, 83-84, 135 Mikkeli province, 84, 240

Military Academy. See Finnish Military

Academy

military areas, 307

military cooperation, 56

military districts, 307-8

military equipment {see also mines; missiles); defensive and offensive, 296, 297; domestic and foreign manufacture of, XX, 327-30

military preparedness, 292

military training. See Defense Forces; Fin- nish Military Academy

militia, 294

minerals: industries, 177; resources, 20, 141, 172, 176-77

mines, 52, 297, 310 mining equipment manufacture, 177, 186 435
Finland: A Country Study

mining industry, 143, 151 Ministry of Agriculture and Forestry,

160, 165, 166, 170, 171 Ministry of Defense, 307

Ministry of Education, 106, 115, 116

Ministry of Environment, 134-35; housing departments of, 135 Ministry of Finance, 154

Ministry of Foreign Affairs, 229, 264

Ministry of Interior, xx, 324, 332, 333, 336

Ministry of Justice, 240

Ministry of Labor, 158

Ministry of Social Affairs and Health,

113, 120, 125, 128, 130, 332; Depart- ment of Temperance and Alcohol Policy, 128-29

Ministry of Trade and Industry, 151, 175, 177, 182, 206

minority groups, 73-74, 81, 93-103

missiles, 296, 297, 300, 303, 309, 328-29;

antitank, 329

missionary activity, 5 ML. See The Agrarian Party (Maalaisliitto: ML)

Mobile Police (Liikkuva Poliisi: LP), xx, 332, 333, 335

mobilization: in Finland (1939), 42; for peacekeeping missions, 326-27; present system of, 303, 309; prior to invasion

of Soviet Union (1941), 48; in wartime, 307-8

Molotov, Viacheslav, 48 monarchism, 33 monetary policy, 21, 152, 153-54; role of Bank of Finland for, 192 moraines, 75 Mormons, 103, 112

mortality rate, 79, 130, 131-32 Moscow, 13, 213 most favored nation status, 211

motti tactic, 44 MTK. See Confederation of Agricultural Producers (Maataloustuottajain

Keskusliitto: MTK)

municipal council, 240, 243 Murmansk area, 279, 300 Murmansk Railroad, 45, 49 Muscovy, 10 Muslim community, 94, 102-3, 112

Namibia, 327

Napoleon, 16 Napoleonic wars, 15 Narcotics Act, 333

NationsJ Board of Forestry, 170

National Board of General Education,

115, 234

National Board of Health, 130 National Board of Housing, 135 National Board of Schools, 128

National Board of Social Welfare, 126

National Board of Vocational Education, 115 National Board of Waters and the Environment, 134

National Coedition Party (Kansallinen

Kokoomuspuolue: KOK), xxx, 34, 53, 65, 66-67, 218, 239, 246, 252, 253; at- tention to SFP by, 258; development and activity of, 252-53, 254-55; formation of Honka League by, 255; news

agency of, 271; representation in Eduskunta of, 267

National Conscription Law (1950), 316

nationalism, xxiv, 3, 36-37, 39, 93, 96-

97, 294; of Finnish-speaking people,

xxiv-xxv, 17, 19-20; Russian, 23; of Swedish speakers, 19

nationalization, 143-44

National Pension Plan, 121, 122 National Pensions Act (1957), 121 National Progressive Party (Kansallinen

Edistyspuolue: ED), 259

national security policy, 275; to convey

idea of military strength, 302-4 NATO. See North Adantic Treaty Organization (NATO)

natural gas distribution, 174, 175

natural resources, 20 Nature Conservation Act (1923), 123 nature preserves, 134 Naval Academy, 318

naval bases, 297 navy (Merivoimat), 296, 303, 307, 309;

fleet units of, 310, 312; headquarters of, 308, 312; limitations for, 311; mission of, 310-11; vessels of, 311-12 Nazism, 37

Nazi-Soviet Non-Agression Pact (1939), 42

Neolithic peoples, 4

Neste, 151, 152, 174, 175, 190, 212

neutral, or buffer, zone, 299 436
Index

neutrality {see also Nordic Nuclear- Weapons-Free Zone (Nordic NWFZ)),

xxviii, xxix, 57, 61, 207, 210; conse- quences of, 144, 278-82, 285; factors contributing to, 4, 199, 275-76; as for- eign policy, 199, 278; significance of, 291 Neva River, 7 Nevsky, Alexander. See Alexander of Novgorod (prince) newspapers, 269-70

nickel deposits, 38, 47, 49, 50, 52, 176, 186 Night Frost Crisis (1958-59), 60, 249, 280

nobility, 9, 87, 219, 293 Non-Commissioned Officers School, 319 Nordic Balance, 280 Nordic committee system, 262-63

Nordic Convention on Cooperation, 283 Nordic Council, xix, xxix, 57, 208, 276,

280, 282-83

Nordic Council of Ministers, 283 Nordic defense union, 276 Nordic Economic Union (NORDEK),

283 Nordic Europe. See Europe, Nordic

Nordic Investment Bank, 283 Nordic Nuclear-Weapons-Free Zone

(Nordic NWZ), xxx, 61, 276-78, 283, 304

Nordic Sami Council (1956), 95 North Adantic Drift Current, 79, 160 North Atlantic Treaty Organization

(NATO), 60, 61, 276, 277, 291, 298, 299; hypothetical operations of, 299-

300; limitation on bases and weapons

for, 298 Northwestern Theater of Military Operations, 301 Norway, 9, 50, 60, 79, 210, 276, 277,

300; boundary with Finland of, 74, 298; Finnish investment in, 205; posi- tion on neutrality of, 61 Note Crisis (1961), 60-61, 62, 250, 253, 255; effect of, 280-81 Novgorod, 7, 10 Novosibirsk, 61 nuclear power plants, 175-76

Nuclear Test Ban Treaty (1963), 278

nuclear warfare defense, 304

October Manifesto (1905), 25

OECD. See Organisation for Economic

Co-operation and Development

(OECD)

OEEC. See Organisation for European

Economic Co-operation (OEEC)

oil: consumption of, 173

oil-price shocks (1973, 1979), 146, 147, 162, 174, 178

oil refining, 175, 179, 190 Old Finn (Paasikivi), 53 Old Finn Party, xxv, xxvi, 24, 34, 248, 254

Organisation for Economic Co-operation

and Development (OECD), 134, 145, 209, 284

Organisation for European Economic Cooperation (OEEC), 208, 209, 284 Orthodox Church of Finland {see also Ecumenical Patriarchate of Constantinople;

Russian Orthodox Church), xvi, 103,

105; membership and affiliation of, 110-12

Ostrobothnia area, 76, 96 Otaniemi, 182, 336, 337 Otanmaki iron mine, 176, 177 Ottoman Empire, 15 Oulu, 183 Oulujoki River, 79 Oulu Province, 240 Outokumpu Group, 151, 152, 177, 178, 186 Outokumpu region, 176

Paasikivi, Juho Kusti, xxix, 33; foreign

policy of, 57, 218, 231; as KOK party

leader, 254; negotiations with Soviet Union by, 43, 53; position on Finnish

foreign policy, 278-79; as prime

minister and president, 53-54, 55, 61 Paasikivi-Kekkonen Line, 57, 68, 218-19,

254, 268, 282

Paasio, Pertti, 252

Paasio, Rafael, 64, 65, 66, 250, 252

Pacific Basin, 205

Pansio naval headquarters, 312

paper industry, xxviii, 21, 38, 56, 57, 63, 143, 144, 172, 173; foreign exchange

earnings of, 184 paper-making machinery, 141, 179, 184, 186

paratroop school, 319

Parliament Act (1928), 221, 225 437
Finland: A Country Study

parliamentary ombudsman, 235-36

Patriotic People's Movement (Isanmaallinen Kansanliike: IKL), 37, 50 peacekeeping activity, xxix-xxx, 326-27

Peace of Moscow (1940): Kekkonen posi- tion on, 58; terms of, 45, 47 Peace of Noteborg (1323), 7 Peace of Nystad, 13 Peace of Pahkinasaari (1323), 7 Peace of Turku, 15 Peace of Uusikaupunki (1721), 13, 45

peat distribution, 174

peatlands, 174

Pekkala, Mauno, 55

Pellervo Society, 164 Penal Code {see also crime), 338, 340-44;

addition for defamatory journalism in, 273-74; outlaw of racid discrimination

in, 102 pension plan, national, 119, 120; for employees, 122; provisions of, 121-22

Pentecostal churches, 112

Persian Gulf, 327

personnel carriers: A-180 Pasi, 308, 309, 329

Petrograd, 248 Petsamo area, 38, 39, 45, 47, 49, 50, 52; ceded to Soviet Union, 50

Physical Planning and Building Depart- ment (Ministry of Environment), 135

Pietist movement, 22

pilot training, 319

pipeline, natural gas, 175

plains, 75, 76 planned towns, 136

plastics industry, 179 plywood industry, 21 Pohjois-Karjala province, 84, 132, 240

Pohjola, 4 Poland, 20; agreement for military assistance, 40; defeat by Germany of, 42;

in Great Northern War, 13; interest in

Btiltic area of, 12; Russification in, 23; trade with, 175

Police Academy, 336

Police Act (1925) (1967), 333

Police Department, 333

police force: central government responsibility for, 332; in civil defense, 330; drug enforcement by, 344; organization

of, XX, 332-33, 335; training for, 336

Police Training Center, 336

political parties {see also under names ofparties), xix, XXV, xxx-xxxi, 217-18, 246-

47, 248-61; after independence, 34-36

political system, xxvii, 217-34, 238-48;

military role in, 325-26

pollution, industrial, 133-35, 172 Poltava (Battle of), 13 POP. See Constitutional Party of the Right

(PerustuslaiUinen Oikeistopuolue: POP)

population, xvi, 79-81, 198; increase or

loss in some areas of, 83-84; rural, 22; urban, 22 Population Crisis Committee, 91 population shift. See migration

Porkkala, 50, 52; return to Finland of, 57, 280

Porthan, Henrik Gabriel, 17

ports, xviii, 195; Kaskinen, 84; Korka,

84; Petsamo, 38, 39; of Soviet Union,

291; Viipuri, 197

Portugal, 210

Porvoo, 16

postal service, 198

Postipankki (bank), 193

potato, 15, 22, 167 Power Act (1917), 27 power plant generator manufacture, 188

precipitation, 79, 160, 169

president, xxvii, 217, 221; authority in national defense of, 305; foreign affairs responsibility of, 231; political responsibility of, 230; power of, 229-31; proposals to limit power of, 231

Press Law of 1919, 274

price system: agricultural price setting in, 164, 165-66; government control of, 174, 182; stability for, 154; stabiliza- tion of food prices in, 164 Primary Health Care Act (1972), 129, 130 prime minister, 232

prisons, 343

privatization, 152

prosperity, xxxi-xxxii, xxxiii, 63-64,

67-68, 73, 87, 141, 145-46

protectionism, 151, 205, 208, 209

Protective Forces. See Fast Deployment

Forces

Protestant Reformation, 10-12, 112, 161-62

Public Telecommunications Agency

(PTA), 198

public welfare measures. See social legis- lation 438
Index

publishing firms, 273

pulp industry. See wood pulp industry purges in Soviet Union, 256

pyrite deposits, 176, 177

quartz deposits, 177

Raahe, 186

radiation fallout, 133

radio, 271

railroads, xviii, 21, 169, 197

rain. See precipitation

Rauma-Repola, 188 Rautaruukki, 151, 177, 186

reconstruction, 52, 144 Red Army of Soviet Union, 47, 295 Red Cross, 330 Red-Earth coalition, xxvii, 58, 64, 119, 249, 252, 254, 258 Red Guards, 3-4, 25, 26, 27, 29-30, 34,

39, 45, 294; disadvantages and defeat

of, 30-3 1 ; imprisonment and massacre

of, 32, 143 Red Terror, 31

reforestation, 170

Reformation. See Protestant Reformation

refugees: asylum for Jews, 49; from ter- ritories ceded to Soviet Union, xxviii, 47, 52, 56, 83, 144, 162, 163, 259; pol- icy for 93, 287

reindeer herding, 94, 95, 167 Relander, Lauri Kristian, 36, 62

religion {see also ]e.\^s\ Lutheran Church

of Finland; Mormons; Muslims; Ortho- dox Church of Finland; revivalist movements; Roman Catholics; state churches), xvi, 103-12; in educational

system, 113-14; role in society of, 103-

5

religious freedom, 74, 103, 222

religious movements. See revivalist movements

Rendulic, Lothar, 52

Renqvist, Henrik, 108

reparations payments: to Soviet Union,

xxxii, 50, 52, 56-57, 144, 145, 182,

185, 280 Rescue Service, 330

reserve force, xix, 42, 291, 293-94, 316, 324-25; Eduskunta representatives in, 326; officer candidates, 318

resettlement policy, xxviii, 56, 83, 162, 163

Responsibility of Ministers Act (1922), 221, 228, 233

revivzJist movements, 22, 106-8

revolution, Russian. See Bolshevik Revolution; Revolution of 1905 (Russia) Revolution of 1905 (Russia), xxvi, 25, 26, 27

Ries, Tomas, 309

rights of Finnish people, 222

Riksdag. See Diet of the Four Estates

rivers, 79, 134, 160, 169, 172, 195, 197

roads, xviii, 50, 169, 197, 301, 310

Rogers, Bernard, 285 Roman Catholic Church, 103, 112; conversion of Swedes by, 5; effect of Luthe- ran doctrine on, 10-11; in medieval

society, 9 Romania, 296

root crops, 167 Roundwood Export Commission, 205 Rovaniemi, 52, 116, 237, 313, 319 Royal Prussian Jaeger Battalion, Twentyseventh, 294 Runeberg, Johan Ludvig, 19 Ruotsalainen, Paavo, 22, 107

rural areas: economic assistance for, 67;

police organization in, 333; p>ostal ser- vices for, 198; shift of population from,

73, 83-84, 85

Russia: attempt to control Finland by, 7; fears of, 23; in Great Northern War,

1 3 ; influence of, 3 , 7 ; interest in Baltic area of, 12; invasion by Swedes of, 7

;

invasions of Finland by, 13, 15, 16; military assistance in civil war by, 30;

in Napoleonic wars, 15-16; occupation

of Finland by, 13, 15, 293; repression

by, 24-25; revolution in, 25, 26; as trading partner, 21 Russian Empire {see also Grand Duchy of

Finland; Russification); collapse of, 26-27, 29, 142, 220; Finland's incor- poration into, xxiii, xxv-xxvi, 3, 16, 102, 207, 293; Finnish army under, 23, 24; repressive measures of, 23-26

Russian Orthodox Church, 110-11

Russification: February Manifesto of 1899, 23; Finnish protest in Great

Address, 23-24; Language Manifesto

of 1900, 23-24; military service law, 294; objective for complete, 26; policy

439
Finland: A Country Study

for, 40, 220; resistance to, xxvi, 25 Rus (Swedes), 5 RVL. See Frontier Guard (Rajavartiolaitos: RVL)

Rybachiy Peninsula, 45

rye, 167

Ryti, Risto, 54

Saarinen, Aame, 257 Saimaa Canal, 197

St. Petersburg (j^^ fl/jo Leningrad; Petrograd), xxiii, xxvi, 16, 17, 23, 25, 81, 298

SAJ. See Finnish Trade Union Federation (Suomen Ammattijarjesto: SAJ)

SAK. See Central Organization of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjarjesto: SAK)

Salla sector, 45

Salpausselka Ridges, 75, 76 Sami. See Lapps (Sami)

Sami language, 94 Sami Litto, 95 Sami Parlamenta, 95 Santahamina, 318

Satakunta Lapland, 75 Satakunta wing. See air force sawmill machinery, 186

Scandinavia, 9 Scandinavian Keel Ridge, 76

schools: for handicapped children, 127-

28; for Swedish language, 99

school system, elementary and secondary, 113-16

School System Act (1968), 113 SDP. See Finnish Social Democratic

Party (Suomen Sosialidemokraattinen Puolue: SDP)

Sea Guard. See Coast Guard

Security Police (Suojelupoliisi: SUPO),

XX, 332, 333, 335-36

self-government, 240-43

self-sufficiency policy, 161, 164-65, 199

service sector {see also banking; communications; finance; transportation;

tourism), xvii, 147, 178, 191-99; ex- ports of, 204

SFP. See Swedish People's Party (Svenska

Folkpartiet: SFP)

shipbuilding industry {see also icebreaker

manufacture), 56, 57, 143, 147, 151, 179, 187-88; mUitary ships from, 329-30

shipping {see also merchant marine), con- version from wood to iron hulls, 21; defense of lanes, 309; as export, 204; German, 49

ships, 195, 328; of Coast Guard, 337-38;

container, 187; of navy, 310-12; for ocean exploration, 187; oceangoing,

195, 197-98

sickness insurance. See health insurance

Sickness Insurance Act (1963), 122, 129 Sigismund (king of Sweden-Finland), 1

1

Siilasvuo, Hjalmar, 52

silver deposits, 176

the Sinai, 327

Single European Act, 285

Sinisalo, Taisto, 257

Sisu-Auto (SISU), 329-30 SKDL. See Finnish People's Democratic

League (Suomen Kansan Demokraattinen Liitto: SKDL)

SKL. See Finnish Christian League (Suo- men Kristillinen Liitto: SKL)

SKP. See Communist Party of Finland (Suomen Kommunistinen Puolue: SKP)

SKP-Y. See Finnish Communist Party- Unity (Suomen Kommunistinen

Puolue-Yhtenaiyys: SKP-Y)

slaughterhouse equipment manufacture,

190

sledding season, 169 SMP. See Finnish Rural Party (Suomen

Maaseudun Puolue: SMP)

Snellman, Johan Vilhelm, 19 snow. See precipitation SNS. See Finnish-Soviet Peace and

Friendship Society (Suomen-Neuvostoliiton rauhan ja ystavyyden seura: SNS)

Social Democratic Union of Workers and

SmeJl Farmers (Tyovaen ja Pienviljelijain Sosialidemokraattinen Liitto: TPSL), 62, 250

socialism, 29

social reform, 27, 38

Social Security Institute, 120, 124

social security taxes, 155

social structure: classes within, 87-90;

mobility within, xxxii, 85-86; transfor- mation of, xxxii, 84-85, 87

Social Welfare Act (1982), 126

social welfare system {see also health insur- ance; housing allowances; income

440
Index

security programs; pension plan, national), xvii, xxxiii, 63-64, 74, 87, 120;

characteristics of, 119-20; development

of, 118-19; expansion of, 145-46; subsidies for, 125-26

society, medieval, 7, 9

Society for the Promotion of Lapp Culture, 95

Sodankyla, 94

Solzhenitsyn, Aleksandr, 275

Sorsa, Kalevi, 66, 250, 256, 264; admmistration of, 265-66

Soviet-Finnish agreement (1940): Aland

Islands demilitarization under, 298

Soviet-Finnish peace treaty (1944): of Continuation War, 50

Soviet Union, 34, 79; in Allied Control Commission, 54; annexation of Saimaa

waterway by, 197; attacks Finland

(1939), xxviii, 41, 44, 295, 298; atten- tion to Poland and Balkans by, 49; bases and ports of, 44, 280, 291, 299-301; boundary with, 75; conflict with Finland of, 39; cooperation and

accommodation of Finland with, 4, 53-54, 62-63, 210-13; crises with, 60;

defeats in Winter War of, 44-45; fear of German resurgence, 60; fleet block- aded, 49; Foreign Trade Bank of, 21 1

;

imports of energy resources from, 174-76; interest in Finland of, 291,

299; intervention in Finnish politics by,

60; losses in Winter War by, 47; nonaggression pact with Finland, 40; offen- sives against Finland, 48, 49; position on Nordic NWFZ proposal, 277; proximity of military of, 300-301; purges

in, 256; relations with Finland of, 52, 55-56, 218-19, 278-82; reparations from Finland to, xxviii, xxxii, 52, 62-63, 185, 199, 200, 204, 207, 211,

280; return of Porkkala Peninsula by,

57, 280; role in Note Crisis of, 60-61;

as source of military equipment, 327-

29; sphere of influence (1939), 42; terri- tory ceded to, xxviii, 45; trade with,

xxxii, 62-63, 143, 145, 146, 174, 204,

207, 208, 210-13; in Winter War, 41-47

spending, government, 63-64, 153, 154-56; defense spending, xx, 323-24,

325; for research and development,

182-83; for technology research and de- velopment, 182-83

Sprengtporten, Goran, 15, 16 SSTP. See Finnish Socialist Workers'

Party (Suomen Sosialistinen Tyovaenpuolue: SSTP)

Stahlberg, Kaarlo Juho, 33, 34, 37

Stalin, Joseph, 256, 297

Stalingrad, 49

standing forces, xix-xx, 291, 292, 303

State Alcohol Monopoly, 128-29

state churches {see also Lutheran Church

of Finland; Orthodox Church of Finland), xvi, 74, 104-6, 110

state-controlled enterprises: airlines, 198;

in mineral industries, 177

State Granary, 205

State Investment Fund and Regional Development Bank, 193

state-owned enterprises, 141, 150, 151; in chemical industry, 190; in energy supply, 174; in metal production, 186; monopolies among, 151; sale of shgures for, 151-52

state-owned forests, 170

state-owned land, 170

State Publishing Office, 234

State Technical Research Institute, 182 STK. See Confederation of Finnish Employers (Suomen Tyonantajain Keskusliitto: STK)

stock exchange, 193, 194-95

Stockholm, xxiii Stolypin, Pyotr, 25

stone deposits, 177

Strategic Arms Limitation Talks (SALT),

278

strategic location, 291; of Finland, 42; military importance of, 298-300

strikes {see also generzil strikes; labor conflict; labor unions), xxxi, 58, 159 Study Allowances Act (1972), 116

study centers, 118

submarines, 311; Soviet, 299

subsidies: to subscription magazines, 271

substance abuse. See drug use Suez Canal, 327

suffrage: universal, 243, 258; for women,

xxvi, 25, 38

sugar beets, 169

sulfur deposits, 176 Suomalaiset tribe, 5 Suomenselka bogland, 75 Suomi (Finland), 5 Suominen, Ilkka, 255 441
Finland: A Country Study

Suomussalmi, 52 SUPO. See Security Police (Suojelupoliisi: SUPO)

Supplicationists (revivalist movement),

108 Supreme Administrative Court, 235, 237-

38, 274 Supreme Court, 230, 235, 236-37, 238, 341

Survivors' Pension Plan, 121 Suursaari Island, 50 Svecoman movement, 19 Svensk Presstjanst, 271 Svinhufvud, Pehr Evind, 29, 33, 37

Svir River, 49 swamps £ind bogs, xvi, 75, 79, 195 Sweden, 79, 85, 87, 276; boundary with,

74; cedes Finland to Russia, xxiii, 16, 96; creation of empire, 12; declares war

against Russia, 15; dual kingdom with Finland of, xxiii, 219, 293; emigration

of Finns to, 81; Finnish investment in, 205; foreign policy of, 12; in Great Northern War, 12-13; influence of Gustav I Vasa on, 12; integration of Finland into, xxiii, 3, 7; military in- tervention in Aland Islands dispute,

39; neutrality and nonedignment of, 291, 298; peace with Muscovy by, 10; power and influence over Finland, 5, 15; rule by, 3, 12-16; separates from Denmark, 10; as source of military

equipment, xx, 327-29; struggle for power by, 10; as trading partner, 63, 204

Swedish People's Assembly (Svenska Fin- lands Folkting), 99 Swedish People's Party (Svenska Folkpartiet: SFP), xxvi, xxx, 34, 66, 67, 99, 218, 246; alliance widi SDP of, 258; de- velopment and activity of, 258-59; news agency of, 271 ; representation in Eduskunta of, 259, 264, 265, 267 Swedish speakers {see also Svecomcin movement), 24, 34, 35, 67, 73, 81, 93, 96-101; Alanders as, 39, 96, 221; early

setders, xxiii; guarantee for language

of, xxvii, 258; nationalist movement of, 19; representation among, 67, 99-101,

259; rights limited for, 252; as ruling

minority, xxiv, 15 Swedish Vikings, 5 Synod (Lutheran Church), 109

Syria, 327

TampeUa, 330 Tampere, 84, 336

Tampere-Pirkkala, 313

tanks, 328-29; T-72, T-55, 308 Tanner, Vaino, 33, 34, 47, 60, 248-49;

negotiation with Soviet Union by, 43

Tapiola, xxxiii, 136

tariffs, 209

Tavastians tribe, 5

taxes. See fiscal policy

technology, 182-83; emphasis on high, 188-89; for wood processing, 184 Technology Development Center (Teknologian Kehittamiskeskus: TEKES),

189, 206

technology parks, 183 telecommunications services, xviii, 195, 198

telephone systems, 198

television, 271-72 Temperamce Act, 333

tenant farmers, 38

territory ceded, xxviii, 45, 144, 162; to Soviet Union (1940), 295

terrorism, 31-32, 36-37

Teutonic Knights, 7

textile industry, 21, 151, 190-91, 201 Third ParUamentary Defense Committee,

305, 324 Third World countries: aid to, 207, 283;

relations of Finland with, 285

Thirty Years' War, 12 Thomson-CSF radar, 313

Tikkakoski, 313

Tilsit, 16 timber industry, xxviii, xxxii, 20, 63; labor force decline for, 73 Timoshenko, S. K., 45 topography, xvi, 75-79, 301-2

torpedo boats, 311

tourist industry, 199, 204 town courts. See court system

TPSL. See Social Democratic Union of Workers and Small Farmers (Tyovaen

ja Pienviljelijain Sosialidemokraattinen

Liitto: TPSL)

tractor manufacture, 186

trade liberalization, 142, 145, 146, 150, 179; effect of, 185

trade performance, 200, 206 442
Index

trade policy {see also export licensing; import controls; protectionism); barter

trade with Soviet Union, xxxii, 207,

211; dumping of agricultural products,

164; for energy resources, 174-75; in- fluence of Soviet Union on, 208; liber- alization of, XXV, 142, 200, 209; postwar, 204-5; for Western Europe,

xxxii, 208-10

trade unions, xxxi, 21, 34, 58, 158

trading partners, xvii, 63

transportation {see also rivers; waterways,

inland); manufacture of equipment for, 187-88; pipeline, 175; rail, water, and

air, 195; by truck, 195, 197

transportation sector {see also automobile

industry; railroad locomotives; ship- building industry), 85, 147, 173; public, 199 Treaty of Brest-Litovsk (1918), 30

Treaty of Commerce (1947) {see also Five- Year Framework Agreement), 62-63,

211 Treaty of Dorpat, or Tartu (1920), 35,

38, 39, 53 Treaty of Fredrikshamn, 16 Treaty of Friendship, Cooperation and

Mutual Assistance: FCMA(1948): in- fluence of, 281; meaning for Finland and Soviet Union of, 279, 291-92, 297;

neutrality conception, 275, 279; in Note

Crisis, 60-61 ; provisions of, xix, xxix, 55-56, 254, 325-26; renewal of, xxix, 264, 297 Treaty of Hamina, 16 Treaty of Helsinki (1962), 283 Treaty of Paris (1947), xix, xxix, 54, 62, 279, 291; Aland Islands demilitarization under, 298; requirements for Finland of, 296-97, 311, 325-26

Treaty of Varala, 15 Treaty on the Non-Proliferation of Nuclear Weapons, 278

Trotsky, Leon, 30 Turku, 17, 19, 84, 102, 109, 235, 269, 312; Chambers of Police in, 332-33;

court of appeal in, 237; in medieval

times, 9 Turku diocese, 9, 12, 108 Turku ja Pori Province, 81, 84, 240 TVK. See Confederation of Salaried Employees and Civil Servants (Toimihenkilo ja Virkamiesjarjestojen

Keskushitto: TVK)

UBF. See Union Bank of Finland (Suo- men Yhdyspankki: UBF)

unemployment, xviii, 120, 141, 154, 156; assistance for, 119-20; insurance for, 123-24; programs to reduce, 157-58 Unemployment Security Act (1984), 123 Union Bank of Finland (Suomen Yhdyspankki: UBF), 193

unions. See agricultural unions; trade unions United Nations Convention on the Elimi- nation of All Forms of Discrimination Against Women (1986), 92 United Nations Development Programme

(UNDP), 286 United Nations Disengagement Observer Force (UNDOF), 327 United Nations Emergency Force II (UNEF II), 327 United Nations Emergency Fund

(UNEF), 327 United Nations Force in Cyprus (UNFICYP), 327 United Nations Interim Force (UNIFIL),

327 United Nations (UN), xix, xxix, 57, 219,

276, 277, 280, 283, 286; Finland's role

in, 326-27; policy of Finland in, 286

United States: Department of Defense of, 301; economic assistance from, 143; Export-Import Bank credits from, 57, 144; Finnish investment in, 205; Foreign Military Sales Program, 329; immigration of Finns to, 22; investment by Finnish firms in, 181; relations of Finland with, 285; respect for Finland

of, 49; as source of military equipment,

XX, 327-29; as trading partner, 63, 175, 204 United States Arms Control and Disar- mament Agency, 324

University of Helsinki, xxv, 12, 19, 99, 116

University of Lapland, 116

University of Turku, 17, 19

university system, 115, 116-17 upland Finland, 75, 76, 79 upper class, 89-90 uranium, 174 443
Finland: A Country Study

urban areas: shift of population to, 67, 73, 83-84, 85 Ustinov, Dmitri, 282

Utsjoki, 94 Uusimaa Province, 80, 84, 240

Uutiskeskus (UK), 271

Vaasa, 237 Vaasa Province, 167, 240 Valmet Group, 151-52, 188, 329-30

ValviUa, 151 vanadium deposits, 177 Vantaa (Helsinki suburb), 84, 340 Vapo, 174 Vasa, Gustav, 10 Vasteras, 10 Vayrynen, Paavo, 253, 266, 267-69

vegetable crops, 167 Vennamo, Pekka, 260 Vennamo, Veikko, 62, 260

Viipuri, 9, 10, 13, 45, 197 Viking Age, 5 Virolainen, Johannes, 253

vocational course centers, 118 Volga River basin, 4 Vyborg. See Viipuri

wages {see also income security programs);

in industrial sector, 178; settlements

for, 152, 154, 158-60; structure of, 86-87 War College, 319 war crimes trials, 54, 60 War of Independence, 32 Warsaw Pact, 291, 299

Wartsila, 188, 330

waterways, inland {see also canals; float- ways; lakes; rivers), xviii, 21, 169, 195, 197 We Demand {me vaadimme), 27 Welfare for Intoxicant Abusers Act

(1985), 128 Welfare of the Disabled Act (1946), 126

welfare state. See social welfare system West Berlin, 60 Western Europe. See Europe, Western

wheat, 167

White Army, 294 White Guards, 3-4, 25, 27, 29-31, 294;

after winning civil war, 31-32; Civil Guard derivation from, 295 White Sea, 35 White Terror, 31-32

winter {see also sledding season), 76, 79, 160, 169, 195, 197, 301, 302 Winter War (1939-40), xxviii, 41-47, 48, 144, 162, 285, 324; causes of, 42-43;

Finland's losses in, 47; lessons of, 292, 326

Wittenberg, 11 women {see also feminist movement); of

Civil Guard, 36; in Defense Forces and

air force, 315-16, 325; in labor force, 38, 91, 262; mortality rate among, 132;

in police force, 332; role in politics of, 262; role in society of, 73, 91-93; suf- frage for, xxvi, 25, 38, 91; wage dis- crimination for, 92 wood as energy source, 174 wood-processing industries {see also lumber industry; paper industry), 20-21,

141, 143-44, 147, 150, 169, 179, 183-84; mergers among, 184, 193;

productivity of, 147; state ownership in, 151 wood pulp industry, xxviii, 21, 38, 56, 57, 63, 143, 173 workmen's compensation, 124 work stoppages, 159-60 World Bank, 208, 276 World Health Organization, 132 World War I, 25-26 World War II {see also Continuation War

(1940-44); Winter War (1939-40)); ef- fect on Finland of, xxviii, 52-53, 56,

97, 217; emigration after, 81

YLE. See Finnish Broadcasting Company (Yleisradio: YLE)

Young Finn Party, xxv, xxvi, 24, 34, 254, 259

Zhdanov, Andrei, 54

zinc deposits, 176, 177, 186

444
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