THE Finns of old were famed as wizards--and there has been more than a touch of wizardry in the way the Finnish people have rebuilt their country since the war. In paying Russia reparations valued at at least $570,000,000, in the eight years up to last September,[i] they achieved the seemingly impossible. The feat has attracted much attention, which is indeed deserved. But in focusing admiration on that achievement, the West has tended to overlook an even greater one--the maintenance of democracy in Finland. In the critical months of early 1948 the Finnish position was so grossly misinterpreted that in some quarters it was considered knowing to say "Czechoslovakia last week, Finland this week." And up to the time of the Olympic Games it was not uncommon to hear Finland described as virtually a Russian satellite, with the implication that if outspoken protagonists of the Western way of life ventured into Finland, they did so at their peril.

In the tense and dispiriting spring of 1948 morale in Western Europe was low as a result of a combination of economic and political setbacks. When, therefore, on February 26, Stalin addressed a personal note to the Finnish President, Juho K. Paasikivi, stating that he desired a "radical improvement" in Russo-Finnish relations and a Russo-Finnish "treaty of friendship, coöperation and mutual assistance analogous to the Hungarian-Soviet and Rumanian-Soviet treaties" everyone expected the worst. The now classical pattern of Communist domination seemed almost complete. The Prime Minister, Mauno Pekkala, was a fellow-traveler. The Minister of the Interior, Yrjö Leino, was a leading Communist, married to the most dangerous tactician in the Finnish Communist Party, Mme. Hertta Kuusinen-Leino, daughter of Otto Kuusinen, the President of the Finno-Karelian S.S.R. and onetime head of the inglorious puppet government set up by the Russians when they attacked Finland in November 1939. Her first husband, Tuure Lehen, an authority on street fighting, now a Russian citizen and Red Army brigadier, was training "barricade squads." The reorganized State Police were being developed under an ardent Party member into an instrument of Communist control directly responsible to the Minister of the Interior. The Minister of Justice was a fellow-traveler, the Minister of Social Affairs a Communist. Indeed, the whole Cabinet had a definitely pro-Communist bias.

Communists and fellow-travelers held 51 seats in a Parliament of 200 members and had received 24 percent of the total vote in the 1945 general elections. The Communist following in the trade unions was large and the Party controlled several key unions, among them the forest and transport workers. The Army was proving a more difficult nut to crack. There was not one Communist sympathizer among the officers, but in the lower ranks there was a sprinkling of Finns who had been trained as officers in the Red Army and were active in various ex-servicemen's organizatons. By the terms of the Reparations Agreement the Russians seemed to have an economic stranglehold on the country with almost limitless opportunities for political pressure, and the guns of the Red Army covered the Finnish capital from the new Russian base at Porkkala-Ud.

But, if one looked more closely, one saw that though the Communist tide had swept an alarming distance inland, it had reached a high-water mark; the solid obstacle with which it was confronted was, simply, the Finnish character. If any single factor is to be selected to account for the failure of the Finnish Communists, it is just that--the dogged patriotism and bold shrewdness of the Finns. Moreover, the historical experiences of the Finns were very different from those of the unfortunate Czechs. The Finns are not Slavs and have never entertained any Pan-Slav dreams which might incline them to take a too rosy view of Russian imperialism, whether under Tsar or Commissar. They have never been confused by any supposition that they were destined to play the rôle of a bridge between West and East. For centuries they have looked on themselves as an output of Western civilization: the Finnish lion on the country's coat of arms tramples a scimitar underfoot, while brandishing a straight "Crusader" sword. Nor have the Finnish people cause to fear German irredentism, the other great complicating factor for the Czechs.

Furthermore, the influences that helped to produce a large Communist Party in Finland served to unite non-Communists. At that time I had the illuminating and encouraging experience of hearing a leading Finnish industrialist describe how he, a staunch conservative and thorough capitalist, was deliberately aiding the Social Democrats in their activities aimed at thwarting the Communists. "I abhor Socialist policies," he said, "but I realize that our Social Democrats are the spearhead of our national resistance to Communism and possible foreign control, and to that extent I give them all the help I can." His help in this case had consisted of permission to hold union elections in working hours in the factory. The result was that every worker attended and the Communists, heavily outvoted, lost control of the important local branch of a key union which they had earlier gained by their customary device of spinning out meetings until only Communists remained to vote on crucial issues.

In the general mood of 1945, and particularly since Russia had treated Finland better than had been feared, it was not surprising that many Finns supported the party which seemed to offer the best chance of obtaining reasonable treatment from their mighty neighbor and late enemy. Nevertheless, the number of Communist Party members proper was, in early 1948, only about 35,000, or about one-tenth of the voting strength of the Communist-affiliated Democratic League. In a population of just under 4,000,000, however, with a pro-Communist vote of more than ten times the Party membership, this might well have been sufficient to ensure a Communist triumph. In the event, although the "workers militia," such as it was, did make a vague attempt to emulate the recent triumphs of their Czechoslovak comrades, the Communists never came near to gaining control.

Squabbles between the "Parliamentarists" and the "Activists" in the Party leadership prevented agreement on a Communist plan of campaign. And the Social Democrats, after a period of uncertainty and divided counsels, had begun by 1947 to regroup their forces. In the early summer of 1948, it was not uncommon to hear Communists complain of "unfair" penetration of their organizations by the Social Democrats. This renewal of confidence by the Socialists provided a rallying-point in Parliament against the more dangerous manœuvres of the Cabinet. In May, a vote of no confidence was passed on Leino, the Communist Minister of the Interior, and when he refused to resign he was dismissed, under Article 36 of the Form of Government Act, which states that Members of the Council of State "must enjoy the confidence of the Diet," and which the stout and cool Finns had the nerve to apply.

The Finnish Constitution divides the executive power between the President and the Cabinet. As a result the President, particularly one so wise, experienced and forceful as M. Paasikivi, is always able to control the Cabinet to some extent. Indeed, as a last resort, he may dismiss it. Moreover, as happened during the Popular Democratic (Communist) régime, President and Parliament together can prevent the Cabinet from carrying out an extreme policy. Thus, the nature of the Finnish Constitution helped frustrate the customary Communist technique of gaining control of the whole machinery of government by gaining control of the Cabinet. It was aided by the stubborn determination of the Finn to see that his constitution is observed.

Of the other standard components of a Communist coup, the Army, as already noted, was barely affected by Communist intrigues, and the ordinary police--not the Communist-led State Police--were similarly immune. They were not under the orders of the Minister of the Interior, but of the local civil authorities. This had the valuable effect, on occasion, of virtually limiting the authority of the Communist Minister of the Interior to Helsinki, and there his few hundred ruffians were vastly outnumbered. Finally, the trade unions as a body were increasingly anti-Communist.

One other factor in the Finnish situation was unusual. The policy of the Kremlin, as distinct from the activities of the local Communist Party, was correct and at times almost helpful. Indeed, two staunch Communists who took part in the Finno-Russian treaty negotiations are said to have been so disillusioned by their revered leader's readiness to disregard them and treat with bourgeois members of the delegation that they took to the bottle and drank themselves out of politics. Various rather unconvincing explanations of this Russian restraint are offered: that Finnish reparation deliveries were too valuable to be jeopardized; that Stalin was repaying a debt for good treatment which he received during a short stay in Finland as a political refugee in his early days; that the Finns, from long coexistence, know how to handle the Russians, and so on. The truth seems more likely to be simply that it pays Russia at present to leave Finland alone. An independent Finland ensures a neutral Sweden and supplies certain useful goods; and it provides an illustration of Russian toleration that is valuable for propaganda purposes. Be that as it may, the net result of all these factors was that only the active intervention of the Red Army would have been able to impose Communism on the unwilling Finns in early 1948. And by that time such an action could no longer have been confined to Finland.


Such, then, was the general mood of confidence when a Social Democratic Government took office at the end of July. Elections at the beginning of that month had reduced the Popular Democrats' following in the Diet to 38 members, with a corresponding gain for the Socialist and the bourgeois parties. The very act of forming a Social Democratic regime was a risk, for the Finnish Communists and Moscow Radio kept threatening dire results from such an "anti-Soviet" move. But the risk that Karl-August Fagerholm, Social Democratic Prime Minister, then took has been handsomely justified, for in the next year and a half his government set the country on a firm foundation as a free and democratic state. The stress of war, the influence of the Allied Control Commission and the activities of the Popular Democratic Cabinet had all tended to reduce the power of the Diet. M. Fagerholm's conduct of affairs during his term of office not only restored it to its rightful position but raised its authority to new heights.

It was not easy for him to do this, for the largest party in Parliament was not the Socialists, but the Agrarians, who had 56 seats against 54 Social Democrats. Their leader, Urho Kekkonen, was an able man and an ambitious politician. He felt slighted by his Party's exclusion from office, and his personal relations with M. Fagerholm were not of the best. He therefore began a series of attacks which three times in 1949 came within an ace of bringing the Fagerholm Government down. The reasons for his failure are significant. First, all non-Communist parties except the Agrarians supported the Social Democrats in the critical votes, feeling that a party triumph over the Socialists was too big a price to pay for the possible return to office of the Communists. And, second, an influential part of the Agrarian Party itself counselled restraint. It is an encouraging fact, and greatly to M. Kekkonen's credit that, now in office, he has so matured that in March and October of last year it was he who disciplined his own followers with the threat of resignation in order to obtain their support for measures which benefited the nation rather than the party.

The Fagerholm Government abolished the infamous State Police, after a commission of inquiry revealed not only that it had grossly exceeded its powers (by tapping Cabinet Ministers' telephone lines, among other practices), but also that most of its members lacked educational qualifications, and that many had criminal records. This was the last of a series of battles in a campaign already won. The government was addressing itself with success to the more prosaic but not less important task of damping down inflation when M. Paasikivi began his second term as President on March 1, 1950. But the Social Democrat Government, in accordance with Finnish political tradition, had to hand in its resignation at that time.

It was hoped--and half expected--that the next government would be a "Red-Green" coalition between the Socialists and the Agrarians, which the Socialists had favored for nearly two years. But in the middle of March, M. Kekkonen formed a predominantly Agrarian régime without Socialist participation. It was generally interpreted as a move toward more cordial relations with Russia. When Finns explain their policy toward the U.S.S.R. they are given to speaking of the "Paasikivi line." In essence, this means an acknowledgement of the fact that Russia has legitimate strategic interests in Finland, which it is folly to deny, and that up to a certain point Finland must, and will, collaborate with Russia. But it also means that all non-Communist Finns will oppose any Russian advance beyond a certain point --in other words, that the Finns must honorably carry out their obligations to the Soviet Government, but will oppose the spread of Russian-sponsored Communism inside their country. The general line of demarcation is fairly clear. But there are sometimes strong disagreements on its application. Granted, for example, it is said, that Finland must admit that certain Soviet interests are legitimate: should it be Finnish policy to help the Soviets secure them, or should the Finns merely not oppose the Russians in their efforts? For example, when Prime Minister Kekkonen made his now famous statement from his sick-bed in January 1952, to the effect that the Swedish policy of neutrality should be adopted by all the Scandinavian countries, he was making what the Finns call an "active" application of the Paasikivi line, for which he was criticized by M. Fagerholm. Earlier, in June 1950, the Kekkonen Government had concluded a five-year trade agreement with the Soviet Union, hoping thereby to find use for the industries which had been built in order to supply reparations to Russia.

On January 17, 1950, after a period of labor unrest, which included the threat of a general strike, M. Kekkonen at last agreed to a coalition of seven Agrarians, seven Social Democrats and three members of minor parties. The formation of this coalition, reorganized in January 1951, marked a new epoch in postwar Finnish politics. The sterling work of M. Fagerholm's Government had secured the continued existence of democratic government in Finland. The coalition now set about building on this foundation a stronger and more durable structure than the previously narrow interpretation of party loyalties had permitted. It is a development that does great credit to the political sagacity and patriotism of the Finnish leaders and one which gives encouragement and pleasure to Finland's foreign friends. Of course, old habits die hard, and there are plenty of internal stresses in the government. But the really significant aspect of the situation is the fact that they are no longer allowed to disrupt it.

This development was undoubtedly helped by the export boom of 1951. The Finnish net national income then rose to 611 milliard marks, an increase of 32 percent over 1950 at current prices, and of 10 percent at fixed prices. When there is prosperity all round, there is likely to be little disagreement on economic matters. But when times are bad, sectional interests tend to predominate as each party strives to maintain its own position at the expense of the others.

Times are bad now. The 1952 balance of trade is expected to show a deficit of 15 to 20 milliard marks; and the harvest was ruined by the catastrophic autumn weather. Thus it was not surprising that, last October, certain elements in the Agrarian Party, which had opposed M. Kekkonen in spring when prices for farm produce were fixed, again protested against the restraints which the government's policy, in the interests of economic stability, imposed on agricultural incomes. Yet once again M. Kekkonen, after resigning for a week, prevailed. For to have given in to the sectional interests of his more extreme supporters would have made nonsense of the whole policy of stabilization which, after many difficulties, had been thrashed out and applied so successfully in the previous two years.


This conscious and sustained drive for political unity based on economic stability affords strong grounds for a reasonably optimistic view of Finland's future--assuming always that she is left to her own devices. The country's outstanding weakness is twofold. She depends on virtually a single commodity (forest products) for her vital foreign trade; and her whole economy has been distorted and her costs inflated in the process of paying reparations.

As early as the middle of 1948 a committee was set up to work out a long-term plan for counteracting the potentially adverse effects on Finland's economy of the ending of reparations payments, and although no full report has been published, the main points of the committee's proposals are known. Agricultural output is to be increased until Finland can produce sufficient food for herself and, if possible, eventually export grain. The metal industry in the long run will probably be scaled down, though the industry is resisting this recommendation, since NATO's strategic controls on trade with Russia in other Western European countries hold out the prospect of increasing orders for Finland from the Soviet bloc. But, in the long run, reduction of Finland's metal industry is undoubtedly sound on both economic and political grounds. The growth of this industry has included a development of mining, mainly iron at Otanmäki and copper at Outokumpu and Ylöjärvi, and of steel production; but though all this is intrinsically valuable, it is not likely to solve the problem of selling machinery at a competitive cost on the world market.

The vital forest industry is to be rationalized and reëquipped. Various changes in financial policy, in particular an increase in rents, are also suggested. But the main aim in this sector is to ensure continued stability while channeling investment into specific projects to increase the country's productive capacity. Arrears of capital investment have to be made up. Financial policy has included the ruthless and realistic use of the bank note to stop inflation; the official minimum rate is 5.75 percent at the time of writing. For most of 1951 it was as high as 7.75 percent.

It may also be noted that over the last two or three years reparations have been less of a burden on Finland than rearmament has been on other Western countries. Finland's expenditure for defense is very small, since her armed forces are strictly limited by the Peace Treaty. Indeed, in 1950, 1951 and 1952, expenditure on reparations and defense together ran at only about 2.5 percent of the gross national product. Now that the Finns have proved to themselves what they really can do when faced with a stiff problem, they have a new pride in developing the country; and what is more, they have learned that they can afford to do it. Perhaps this outlook is best epitomized in the book which M. Kekkonen produced last spring with the significant title, "Has Our Country the Patience to Prosper?" The industrialization of northern Finland, where schemes are afoot to convert the Kemi Valley into a miniature T.V.A., is the most dramatic of the visions. But the true significance of this book, as of the work of the long-term planning committee, is that they suggest that Finland, having triumphantly paid off enormous war indemnities, has a new "cause" which captures the imagination of the people. The road to success in the development of Finland is not short or easy. The opposition of a section of M. Kekkonen's own supporters to his program shows that many problems will have to be met. Fluctuations on world markets will add to Finland's difficulties. But in the light of the achievement since 1945, one would indeed be a pessimist to discount the ability of the Finns to plod along their road to the end.

[i] The basic agreement on reparations of December 17, 1944, required the delivery of goods worth 300,000,000 "reparation dollars" in six years. A "reparation dollar" was equivalent (with certain small adjustments for some categories of goods) to the 1938 U.S. dollar at its gold parity. In December 1945, the period of payment was extended to eight years. Half the deliveries were made after July 1948, with the result that final payments were worth 226,-500,000 reparation dollars. Professor Bruno Suviranta estimates that this is equivalent to $570,000,000 (current U.S.) on the assumption that the Finnish mark is overvalued. The Bank of Finland, using official exchange rates, gives a figure of $720,000,000. In Professor Suviranta's calculation the whole Finnish war indemnity, including reparations, amounted to $949,000,000 (cf. Nordiska Foreningsbanken's Quarterly Review, No. 3, August 1952, p. 77).

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