. "
national intelligence estimate
S1
Prospects for Finland and Their Implications for the Other Scandinavian Countries
by Id. DIRECTOR OF CENTRAL INTELLIGENCE
Concurred in by Af UNITED STATES INTELLIGENCE BOARD Ai indicotod oywW2
The following fntef/jgenc* organizations participotwd in th* preparation
The Cen'rol Intet&gence Agency ond the intelligence Ofgontictioni of lha Deport-
menti of Siale, Defonio,y, the Navy, the Airnd The Joint Staff.
<' . >'
Dirtcior of Intelligence and Rewa-oS. Department of State Director. Defense Intelligence Agency
Aulitanl Chief of Staff for Intelligence, Deportment of the Army
Auiitant Chief of Naval Operation*eportment of lbe Navy
AwiHont Chief of Staff, Intelligence, USA*
Director for Intelligence, Joint Staff
Director of the Notionol Security
Abstaining!
The Atomic Energy Commiwion Repreientorivv to the USW, and the Auiitant Director, Federal fereou of Instigation, lhebeing ouhide of their iurHdietion. .
PROSPECTS FOR FINLAND AND THEIR IMPLICATIONS FOR THE OTHERCOUNTRIES
THE PROBLEM
To assess Finland's current relations with the USSR and with the West, its ability to withstand Soviet pressures, and the implications of Finnish-Soviet developments for other Scandinavian countries, over the next two or three years.
CONCLUSIONS
Since World War II, the basic dilemma of Finnish policy has been to preserve the country's independence and its Western orientation, while recognizing that Sovietand Soviet power require Finland to make someto Soviet interests.
Over the last few years, these accommodations have appeared to increase under President Kekkonen's direction of Finnish policy.
However, hisskin fiVhandling Finnish-
Soviet relations in recent years has won him widespreadWe believe that he will not wittingly prejudicebasic independence and essentially Western character.)
he USSR will probably continue to view Finland moreever for promoting its policies against the Westand particularly in Scandinavia, thanarget per se. Moscow has cogent reasons for not pressing Finland to
seo^et
the wall, including its recognition of the political costs of any attempt to acquire direct control. For the present, the Soviet aim is gradually totronger voice in Finnish political decisions, especially in those related to foreign policy.)
The basic Finnish dilemma will continue to manifest itself, and perhaps even sharpen, as new situations arise. The development of the Common Market (EEC) is already presentingase. To preserve its vital trade ties with the West, Finland will have to have some sort ofwith the EEC, but Moscow is suspicious of the EEC's political implications and will strongly oppose tooinnish tie. )
Finland's military weakness invites Soviet demands to participate in the defense of Finland under the terms of8 Mutual Assistance Pact between them. To reduce the likelihood of such demands, Finland is seeking toits military capabilities, in part through theof air defense missiles. The USSR is favorably disposed towardevelopment in hopes of gaining an influence over the Finnish military establishment and some extension of the Soviet air defense system.)
The Scandinavian countries recognize the imperatives of Finnish policy and see in it some protection for their own independence. Their policies are not likely to shift sharply so long as they believe that Finland's basic independence is not seriously threatened. However, Soviet action toFinland to satellite status would probably lead Norway and Denmark to tighten their ties with NATO and cause Swedish pressuresink-up with the West to rise sharply.)
:et
discussion
introduction
since the end of world war ii, finland's principal preoccupation has been to preserve its national integrity and essentially western character in the presence of overwhelming soviet power. in the early postwar period president paasikivi directed the nation'stoward rebuilding the country,heavy reparation payments to the ussr, and assuring the soviets that under nowould finland ever againhreat to the ussr. finnish confidence in the efficacy of the "paasikivis this policy came to be known, waxed strong when the communists were ousted8 without provoking sovietthen, during the first half ofs, the soviet attitude toward finlandto grow more relaxed.
encouraged by these signs, and believingenuine neutrality was possible, many finns departed from their sell-imposedand, particularly after the denigration of stalinentured public criticism of the ussr and its policies.aino tanner, one of the most outspoken critics of moscow and of the new president urho kek-konen, who had succeeded paasikivi theyear, assumed open leadership of the social democratic partyndroad coalition government led by thedemocrats came tohiswhich included persons objectionable to moscow and for the first time in the postwar period brought the conservative party into government, was strongly western oriented. at the same time, finland expanded its trade with the west,erious imbalance in soviet-finnish trade developed. these de-
' seereakdown of finnish party strengths in the postwar period, velopmentsharp departure from the finnish-soviet relationship which hadunder paasikivi, andrend toward greater finnish independence from moscow.
soviets moved quickly tospecial interest in finnish affairs byheavy economic pressure. as athis pressure, kekkonen and hiswithdrew their support from thethereby causing its fall. anminority government dominated bywas then formed, and amicablerelations were restored on theunderstanding that personsto moscow would not be included inthis concession closedto the social democratsleadership and deepened thehad developed within the sdptannerlst majorityinoritysplinter group (skogtsts) whichin addition, it brought thedemocratic and conservative partiesin opposition to kekkonen andparty, and criticism ofto moscow spread among
the fallhe soviets tookof the berlin crisis to demandconsultations underhis step waseminder of soviet concernrelations with nato, but also
8 Mutual Assistance Pact, Finland and the USSR agreed to provide mutual support In case of attack on the USSR by West Germany or any of its Allies, through Finland. It also provided that the two countries should consult In casehreat of such attack. This Pact, originally valid forears, was extendedS for an additionalears.
3
SECfcJET
lo influence the Finnish presidential elections scheduled forpersonal Intervention withwho then withdrew Soviet demands, reinforced his claim to be the indispensable man for conducting Finnish relations with tbe USSR, In the circumstances, Kekkonen's principal opponent, who had been severely criticized by Moscow, withdrew, assuringre-election.
sharp contrast to their angryafter8 crisis, even the mostof Kekkonen appeared to viewrecent crisisituation to bewith realism and managed withstill strongly anti-Russian inFinns recognize their country'sto Soviet pressures and acceptof aggressive assertions of FinnishThe feeling has becomein Finland that, in present andcircumstances, key Finnishmust enjoy the approval of thealthough many still deplore whatas Kekkonen's haste to placate
II. KEKKONEN'S ROLE
Finnish political life bythe broad powers of his office and byof the Agrarian Party, whichthe last elections as Finland'shis re-election In2 heabout the formation of agovernment which excludesTannerite majority wing of the SDPCommunists, and which is almostto his will on foreign policy.field he enjoys the general support ofImportant political groups,the Tannerite wing of the SDPdistrust of Kekkonenthe strongly antt-Sovlet militaryfinds Kekkonen's leadership
Kekkonen's basic policies stem from what he considers to be the central fact of Finnish life: the unlikelihood that the West would be willing and able to support Finland against major Soviet pressures and thenecessity for accommodation with Moscow. Impressed with Soviet military and economic progress, he appears to feel that no basic shift In the East-West balance of power which would reduce Finland's vulnerability is likely to occur in the foreseeable future. He also believes that the USSR will continue to exert pressures on and through Finland, and that these will rise and fall with the barometer of cold war tensions, especially as they relate to Germany.
Thus Kekkonen believes that, if Finland is to retain Its essentially Western character and the maximum possible degree ofit must pursue foreign and even certain domestic policies designed to retain Soviet confidence in Its desire for friendly relations with the USSR. Because Kekkonen is aware of the strong anti-Russian bias ot most Finns, he believes that the government must act inay as to check political and popular manifestations which couldMoscow. Moreover, he hashimself that he alone among Finnish political leaders Is capable of conducting Finnish-Soviet relations inay as to reassure the Soviets without sacrificing the essential conditions of Finnish independence.
In line with these convictions,has used bis official powers extensively to restrain the Finns from the publicof antl-Sovlet sentiments. In addition. In order to give evidence of Finland'sof the realities of its positionls Moscow, he has acted to increase political, economic, and cultural contacts with tbe USSR. He has also sought to break down the resistance of the Finnish military to high level exchanges with their Soviet counterparts.
he extent to which Kekkonen hassome aspects ol Finnish domesticfor what he considers to bepolicy imperatives has lowered Finnish popular morale. Political tensions have also arisen from his use of the Soviet threat
| arid Irom the lacV that he has had ro reiy at times on the Communist-dominated Finnish Peoples' Democratic Leagueor political support.
On the other hand, even his more bitter opponents concede that Kekkonen is aanti-Communist seriously concerned with maintaining Finland's independence and Western character. His trips to the West1 were almost certainly designed toore explicit Western acceptance ofneutrality and thus to strengthen his political hand against both Moscow and his internal critics. His performancen obtaining Soviet consent to Finland's association with the European Free Trade(EFTA) Indicates that he Is aware of the vital importance of Finnish trade links to the West. Moreover, he has vigorously fought the Communists In domestic political campaigns, and we believe he is aware of the threat to his own political position which would develop if Communists were allowed to occupy key government posts.
There is no way of firmly predicting how far Kekkonen would go to accommodate the USSR. He hasillingness to make piecemeal concessions, albeit largely in ways which have helped him establish hismonopoly of political authority. On the other hand, he clearly recognizes that there are limits to accommodation if he Is to maintain his political ascendancy and ifis toosition generallyto the West as well as the East.
ET
In present circumstances, therefore, we believe that Kekkonen does not contemplate permitting Communists tooice Inand does not intend to alterrelations with key countries. He will try to avoid actions strongly opposed by either the East or West and will refrain fromFinland with any political or military organization exclusively identified with either side. At the same time, while Kekkonen will welcome discreet expressions of Westernfor Finland's position, he willto discourage and, if necessary, oppose moves by the Western Powers which suggest Finnish collusion with the West against Moscow.
Kekkonen will probably seek to continue Finland's present policy of maintainingtrade relations with both Germanics, while not extending diplomatic recognition to either. If Moscow were to press Finland hard for recognition of East Germany, Kekkonen might give in, but he would simultaneously recognize West Germany. The chances of Kekkonen's conceding on this Issue would go up quite sharply It he was able to gainfrom Moscow in return, suchinnish link to the EEC. Finland will also support broad proposals for disarmament and denuclearized zones affecting Northern and Central Europe, in the hope that progress along these lines would help reduce tensions In the Scandinavian area.
III. THE SOVIET ROLE
The most critical factor affectingfuture will obviously be Moscow'sand actions. Given the power situation and geographic factors, Moscow will continue to be able at times of its own choosing to bring great pressure on the Finns throughdiplomatic, and military means.
The record of Soviet policies In the last decade suggests that Finland has not been staked outirect satellite status, at least
secret
the foreseeable future. Instead thehave sought to acquire gradually an even stronger voice in Finnish Internal politics, and to impose strict limits on Finnish external policies. Underolicy, Moscow haseadiness to provoke periodic crises designed to check Finnish tendenciesWestern orientation and to insure that Finland's "positive neutrality" toward the East is maintained and even strengthened. It is not too much to say that the USSR now possesses what amounts virtuallyower of veto over major Finnish policies and those Finns aspiring to key national posts.
Under present circumstances Moscow will continue to have important reasons for not pressing Finland beyond this point. In general, the Soviets probably regard Finland less as an object per se thanever. In view of Finnish popular acceptance of Kek-konen's policies of accommodation, the Soviets have no Immediate concern over internaland arc probably convinced that in the long run the strategic position ofcan be exploited to draw Finland into still closer association with the USSR. The Soviets almost certainly believe that the abrupt extinction of Finnish independence would require military occupation and that the political cost would be greater than the increase to Soviet security would warrant.
Moreover, in its present status Finland continues in the Soviet view toseful hostage in dealing with the othercountries and,egree, with the West in general. Danish and Norwegian reluctance to accept nuclear weapons, and Swedish hesitancy to tie up closely with the EEC, areonsiderable degree influenced byfears that such steps mightoviet response adverse tobroaderFinally, Soviet tolerance of Finnish independence servesemonstration of the Sovietcoexistence" line.
seems likely, therefore, that as apolicy the USSR will be satisfied tomoving toward alignment withprodded only occasionally bypressures. However, since SovietFinland has often developed lesswith Finland Itself than as abroader cold war developments andto use Finlandeans tothe present staterecariouslySoviet-Finnish relationship mightat any time In the context ofdevelopments. For example, achange in the West German ormilitary positions, particularly Inof nuclear armament, mightoccasion used by the Soviets asto extract major militarythe Finns.
IV. SPECIAL PROBLEMS
basic problems discussed aboveIn Finland's political characterposition. In addition there areof issues currently emergingput new strains on the delicate balancepolitical life. Over the nextany one of them might open thea new round of Soviet intrusion inaffairs.
The Domestic Communist Problem
large Communist-dominateda constant threat to Finnishstability and offers the Soviets ameans of undermining FinnishAlthough the SKDL lost severalthe last election, it couldontinuing split in thesplit which has already contributed tostrengthening of CommunistIn the trade unions. If the SDPnot healed, and If SKDLgrows substantially, it willincreasingly difficult for Kekkonen
;ret
Sr^RI
emand (or at least someCommunists in the government
n these circumstances, if Moscow was to press for Communist inclusion (something it has not done in the past) Kekkonen might recommend the inclusion of tho SKDL In the government. However, he would havein persuading even his own Agrarian Party to adoptourse, and it Isthat the other parties, with the possible exception of the minority Social Democratsouldabinet including Communists. Should Communistsbe Included. Kekkonen would almostuse his powers to prevent SKDLfrom securing key positions affectingpolicy, defense, or Internal security. At the same time, we believe he will continue to strive to check SKDL growth. To this end, Kekkonen may alter his present hard line against the Social Democrats when theTanner steps down as Socialleader.
Trade Policies
he development of the EEC couldFinlandritical dilemmaIts political and trade relationships with the West and with Moscow. The EECa serious threat to Finnish trade, but any attempt to establish direct ties with the EEC risks encountering strong opposition from Moscow.
oreign trade Is the key factor In the country's economy, and the government is concerned to maintain the present highlevel, particularly to trade with the West Roughly four-fifths of Finland's trade is with the West: the remainder is with thehe Finnsontinuance of this trade
'The percentage of Finland's trade withteady decline In recent years, and It it were not for periodic Soviet pressures the present percentage would probably sink even lower. Bee Table IX pattern as essential to their economic well being and ultimately to their politicalThey are already apprehensive that the expansion of EEC membership will create serious difficulties in maintaining their competitive position in Western markets, at least over the longer term.
espite some diversification since World Wur II, about three-quarters of Finland'sstill consist of wood products. prospects for trade expansion and overall prosperity depend upon Increasing sales of these products to the West. more thanercent of thesego to Western Europe, with the UK alone takingercent. If the UK.chief customer, and Sweden, Finland's main competitor, affiliate with the EEC,may be hard put to retain Its Western markets. If the common external tariff of the EEC on items affecting Finnish exports were held down, or if new markets outside Europe were opened, Finland's problem would be considerably mitigated. However, even this would probably not prevent someof Finland's access to Western markets, thus probably increasing Its dependence upon the USSR for export markets in lesseconomic fields.
ekkonen probably hopes to persuade the USSR toinnish link with the EEC after the fashion of Finland's looseto EFTAowever,would expect the USSR to insist upon assurances that Finnish-Soviet trade would be maintained at least at the present level, and that Finland's relations with the EEC would Involve no political commitmentsFinnish neutrality. Kekkonen also hopes that such an arrangement would be acceptable to the West, and expects the Swedes and the UK to champion the Finnish cause. IX this did not prove to be the case, Finnish disillusionment with the West and pessimism regarding Finland's ability to slay
RET
of Moscow would greatly
f the EEC were willing to admiton the terms noted above as probable Soviet requirements, the Finns would press the Soviets hard for their approval, and we believe that there Is an even chance that the Soviets would accede. Kekkonen would probably be witling to make some additional concessionsecognition of East Oer-many, and possibly even the Inclusion of the SKDL in minor government posts) if he felt Soviet acceptance could be obtained thereby.
Defense Policies
o date Finland has not even built up Its. forces to the low limits set by7 Peacen the last two years,Finland has taken steps to strengthen its military capabilities. The apparentfor these steps is the conviction ofand the Finnish military leaders that they are necessary in order to forestallSovietforeshadowed In Soviet allusions to Finnish militarySoviet participation in the defense of Finland under the terms ofssistance Pact. Currently, Finland Is pressing both the UK and Moscow, the main signatories of7 Peace Treaty, forof the treaty restrictions in order to permit it to maintain larger forces and to possess guided missiles, the latter mainly for air defense.
hile the initiative for this military build-up Is Finnish, Moscow is almostfavorably disposed toward it, hoping
' Under7 Peace Treaty which was signed byations Including the USSR and the UK. Finland la not permitted military forces la excessr certain modern weapons including guidedFinnish military expenditures during tho last decade have been extremely modest, rangingone to two percent annually of Finland's ONP thereby to increase Soviet influence over the Finnish military and possibly to extendthe Soviet air defense system. The Finns have apparently indicated theirtooviet ground-to-air missile system, and have allocated nearlyercent of an earlier Soviet credit of5 million for military purchases. There Is also some evidence that Finnish resistance toSoviet instructors to train military personnel in tbe use and maintenance of new equipment is weakening, andimited number of Soviet technicians would now probably be accepted.
On the other hand. Kekkonen and the Finnish military leadership are anxious to balance off this miliiary reliance on Moscow wilh considerable purchases from the West, and also to seek further Finnish-Western contactsigh military level. The Finns have recentlyaval training vessel and early warning radars from the UK, as well as AA guns from Switzerland and Sweden. They are also interested Inantitank missiles from the UK. and other modern equipment from the West.
If the West refuses to modify7 treaty so as to allow the Finns to obtain guided missiles this would probably haltFinnish efforts to obtainefusal would tend toFinnish rapport with the West and in the long run would provide no assuranceinnish decision to overrideobjections and to acquire such weaponsater date, with even greater dependence on Soviet sources.
The contemplated build-up ofmilitary forces would giveimited air defense capability, but would not significantly increase Finland's capabilities for defenseajor attack. While it would provide an opening for an increase of Soviet influence In Finnish military affairs, it would be unlikely to alter the basically
s
bias of the Finnish miliiary. It might strengthen Finland's case inSoviet pressures for military cooperation in future times ot crisis, particularly the stationing of Soviet forces on Finnish soil.
V. SCANDINAVIAN REACTIONS TO POSSIBLE FINNISH DEVELOPMENTS
he Scandinavian countries,Sweden, wish to see Finland remain Independent anduffer betweenand the USSR The Scandinavians, many of whom alsopecial sense of obligation to Finland, believe that in present circumstances Finland Isealistic course, and that the Finns themselves best understand the policies which their situation demands. They are, therefore, generallyto any Western demonstrations offor Finland which couldtrong adverse Soviet reaction. Similaror possible Soviet reactions will also continue to Influence Norwegian and Danish policy against permitting nuclear weapons on their soli, and make Sweden even more cautious about association with the EEC.
If it appeared that the Finnishwas deteriorating markedly, Norway and Denmark would probably lean even closer to their NATO allies. At the same time, in some quarters in Scandinavia there woiid be interest In the creationeutralgrouping. The governments of those countries would only favor pressing forrouping, however, if they saw uchance of NATO acquiescence.
Sweden, most sensitive to Finnishwould regard any major change in Soviet-Finnish relations as having anImplication for Its own policyituation where Finland'swas deteriorating markedly, Sweden would probably emphasize its neutralwhile at the same time taking steps lo Increase Its military strength. If Finland were tooviet Satellite, pressureswedish link-up with the West would probably rise sliarply.
tahi.i: i
PARTY STANDINGS IN Tilt FINNISH PARLIAMKNT
IMI 4 liSR 2
'
of VoletVote*VoiraXom Seat* of Vows Voire Sou
SKDLt
Dominated)
S
0
Demo-
|
(Led
2
1
0
t
4
7
9
*
6.3
.
1
S
3
0
8
i
U
ii
Ten Social Democratic depulie*lo iheimmediately after Uie election ia July aod
' Oa* Agrarian deputy defected inorated ihe Small Peasant Parly ia
I
FINNISH FOREIGN TRADE
Import. Krpotu Import. Eaporta lenportj Kiporu Import* Kipoct* Import* Fipon*
Vnlue* la mOhoo. of US dollar*
1
3
id
A
v
:
Kingdom
otin-
;
6
5
5
-
(Wntaay
*
8
2
KEC ooun-
0
8
Bloe
8
-
;
Poland
5.2
3.4
3.1
2.6
2 9
2.1
t.
i
I.S
3.2
Hoe coantrie*
0
5
Stalea
3
other
3
)
5
- n
0
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