Not Just Another Recession
Why the Global Economy May Never Be the Same
IT IS a measure of the steadiness of the character of the Finns that elections for the Finnish Parliament seem the most predictable in the world. There are no landslides. A loss or gain of a seat or two by this or that party is news. In the elections of March of this year, the Social Democrats gained one seat, the Agrarians two, the People's Democrats (the label under which the Communist Party operates) came out with exactly the same number as in 1951, the Conservatives lost four, the People's Party (successor to the Progressive Party) gained three, the Swede-Finns lost two. But even so, some predictions were upset; the Communists had been expected to lose seats in this election. And so sensitive is the area inhabited by these steady-going people that students of East-West relationships scan all information from Finland to determine whether "no news" is good or bad news.
It is good news that Finland is still staunchly on guard. It is interesting to note that the Soviet Union exerted no pressure on the Finns. The election campaign coincided, in part, with the Four Power Berlin Conference, where the Soviets made plain that they have every intention not only of holding on to all Communist gains in Europe and the Far East, but of pressing their aggressive designs. The proposal for a "European" security pact that would include the U.S.S.R. but exclude the United States was accompanied by intransigence toward Germany and Austria and intensification of the attack on Indo-China in keeping with the customary Communist tactics of global war, cold and hot. Yet, significantly perhaps, when the Russians were probing everywhere else, they were content to let their northern flank rest quiet. It is also important to remember that Finland stands guard there alone.
In the conflict between East and West, Finland has by now come to occupy a special position. Defeated in the two-phase war of 1939-44 caused by two Soviet attacks, the Finns were left by the acquiescing Western Allies to accept, unaided, Russian armistice and peace terms whereby Finland was to be crushed without military conquest. Economic chaos caused by territorial losses, severe reparations and conspiracy engineered by Finnish Communists were to do the trick. But neither the economic blood-letting of reparations payments (amounting, if total costs were included, to some $900,000,000 by the time the last delivery schedules were met in September 1952) nor the endeavors of the Communists had sufficed to bring the nation to heel.[i] Despite immense difficulties, the Finns managed to observe the onerous provisions of the peace treaty, solved a gigantic displaced persons problem involving more than one-tenth of the total population of the country, and maintained a standard of living high enough to sustain confidence in the future. Independence was also saved; tenacious adherence to the ways of democracy preserved self-government and freedom despite Soviet pressures, and demonstrated the strength that resides even in a small nation determined to remain its own master.
Meanwhile, the dike against domestic Communism held firm. The Communists lost a substantial part of their influence between 1945 and 1951: in 1945 they captured 49 seats in the national legislature; in 1951, the figure stood at 43. While the Communists held important Cabinet posts till 1948, they were included in no Cabinet after that date. During these years they also lost control of the national trade union leadership.[ii] It was thus abundantly clear that while her position was far from secure, Finland was not a hostage in the hands of the Soviets.
The elections of 1945, 1948 and 1951 had turned primarily on domestic economic issues--taxation, rationing, price and wage regulation, relief measures, and so on. Questions of foreign policy had been conspicuously absent in the campaign, mainly because no important difference of opinion regarding foreign policy had emerged among the Finns and no one challenged the wisdom of a policy of avoiding everything that might arouse the enmity of Moscow.
The March 1954 election followed a split between the two largest parties, the Social Democrats and the Agrarians, who formed a coalition government in January 1951. By the summer of 1953 they were hopelessly divided by pressing economic difficulties caused by a decline in the price abroad of certain vital Finnish export commodities. The Socialists withdrew from the Government, whereupon the Premier, U. Kekkonen (Agrarian), attempted to carry on without a Parliamentary majority. He introduced a budget in September designed to reduce government expenditures, and offered tax relief for interests hardest hit by the drop in export prices. But by the beginning of November his Cabinet was in difficulties that ultimately led to defeat and resignation.
The attempt to form another coalition government failed, and an interim caretaker Cabinet of experts was accepted by all concerned. It took office on November 16, 1953, headed by Mr. S. Tuomioja, Governor of the Bank of Finland. The new Government was composed mostly of members of the liberal People's Party and of the Conservatives. It marked the first return to Cabinet posts of the Conservatives since the war. Contrary to some predictions, their comeback did not disturb Finland's relations with the U.S.S.R. The Tuomioja Government concluded a new trade agreement with the Soviets within some two weeks of taking office, and in February negotiated another pact which improved Finland's trade situation with the U.S.S.R. by providing for the payment in gold or in Western currencies for exports to the Soviet Union.
On the recommendation of the new Government, the date of elections for a new Parliament, which would normally have been held in July of this year, was advanced to March 6-7. The election campaign was in full swing for three months. Again internal issues held the center of the stage. Only the Communists attempted to underscore foreign policy; they contended that Finland's main problem was "friendship" with the U.S.S.R. or membership in the line-up of Western "imperialists." The other parties took the stand that had been generally accepted for years: Finland should remain outside all Big Power conflicts, must avoid measures and policies that might seem inimical to the U.S.S.R., and maintain normal, friendly relations with all countries. The Communists labored hard to recapture the ground they had lost between 1945 and 1951 and hoped to gain sufficient following to entitle them to ministerial portfolios. Moscow attempted no direct intervention; the election was fully free. Nor did the non-Communist parties fear to label the Communists openly as tools of a conspiracy designed to destroy democracy and to rivet a hateful dictatorship on the nation. The non-Communist press in Finland has been consistently and effectively critical of Communism ever since the last war, and in the weeks before the elections attacked the Communist Party program and candidates in strong terms. The Conservative Party inserted a large advertisement in the leading Finnish liberal daily enumerating and condemning a long list of Communist undertakings, especially those of the years 1945-48 when the "People's Democrats" held important Cabinet posts and controlled a substantial part of organized labor. And the attack on the Communists by the Social Democrats was especially skillful, persistent and undisguised.
Finland has a unicameral Parliament, to which members are elected by proportional representation, that devastatingly logical system of representative government which, almost everywhere in Europe, prevents one party from obtaining a majority. Coalition cabinets were the rule in Finland before 1939, and since the war no party has received a majority vote; the Social Democrats, the largest party, have never held more than 54 of the 200 seats in the Parliament. There have been no sharp swings of the political pendulum, and changes in relative party strength have been gradual and minor, except when a party has literally disappeared as happened in 1930 when the Communist Party was outlawed as a treasonable conspiracy.
When the ballots had been counted last March, it was shown that some 2,020,000 voters, or 80 percent of those registered, had gone to the polls. (The total population is about 4,130,000.) New and young voters appear to have turned out in larger numbers than usual. The new Parliament differs but slightly from its predecessor. Broadly speaking, there was a shift toward the left, illustrated by the loss of four seats by the Conservatives (from 28 to 24), the gain of one seat by the Social Democrats (from 53 to 54), the relatively substantial increase in the strength of the liberal People's Party (from 10 to 13 seats), and the fact that the Communists succeeded, contrary to preëlection surmises, in holding their 43 seats. The trend was also underscored by the unexpected increase of two seats in the strength of the moderate Agrarians.
There was a good deal of post-election comment in Finland to the effect that while the bourgeois parties had not captured control of the Parliament, they had scored well enough to prevent a "leftist majority" in that the Social Democrats and the Communists together hold 97 seats or four short of an absolute majority. But such interpretations are rather meaningless because of the incompatibility of the Social Democrats and the Communists. The Socialists have borne the main brunt of the anti-Communist campaign for the past half-dozen years, and deep-seated animosities divide the two representatives of the "left" in Finland as elsewhere. They give every promise of retaining irreconcilable antipathies. To measure the results of the Finnish election in terms of a "balance" between "right" and "left" is a sterile exercise.
But the Communists' ability to retain their strength of 1951 was a real surprise. Part of the explanation lies in the way proportional representation operates: their popular vote was only slightly higher (some 15,000 votes) than the combined vote of Conservatives and the People's Party, yet they received 43 seats while the other two parties captured a total of only 37. The evidence of the past several years suggests, however, that the growth of Communism has been stopped and the perquisites the Communists enjoyed in 1945, when they held 49 seats, will not be recaptured.
This does not suffice, however, to explain the baffling fact that some 430,000 Finns voted Communist. The explanation is compounded of several additional elements. The first and perhaps the most obvious is that in the last election, as in earlier ones, the number of voters who chose the Communist ticket greatly exceeded the membership of the Communist Party. No official figures have been published showing how large the C.P. membership is, but it is estimated to be about 50,000. Apparently some 380,000 Finns who are not in the party voted Communist, in protest against something or somebody, or in the expectation that the Communists could be relied upon more than, say, the Socialists, to carry through measures considered important by the voter. Also, Communism still benefits to a certain degree from the prestige it enjoyed in Finland and elsewhere during the years immediately after the war, when it was the fashion among the Western allies to speak with confidence and enthusiasm about coöperation with the U.S.S.R. for peace and tranquillity in the world. The propinquity of the Soviet Union also lends it a certain amount of weight.
The party has likewise benefited from the fact that circumstances have made anti-Communist effort rather difficult. The Finns sincerely want to avoid everything that might arouse the enmity of the Soviets. While it has been easy enough to attack Communism and its Finnish followers in general--they have in fact long been attacked with skill and determination--it has not been possible openly to label the Finnish C.P. as a tool of the U.S.S.R. and to fight it as a conspiracy serving the interest of a foreign Power. The Communists have therefore been able to function as a normal parliamentary political party and to enjoy the advantages of that status. The use of the label "People's Democrats" instead of "Communist Party" since 1945 also has had the effect of obscuring the distinctions between the Social Democrats and the Communists to the advantage of the latter in the minds of the more uncritical voters.
However, despite these and other advantages, the Communists failed in the 1954 election, as they have failed in every election since 1944, to obtain anything like mass support. They had to be satisfied with 21.5 percent of the seats in the legislature. Nor were they able to obtain concessions leading to ministerial posts after the election. The Cabinet negotiations were completed after the newly-elected Parliament convened on April 1, and when the results were announced on May 5, it was disclosed that the Communists had been completely ignored.
The new Cabinet is a coalition and therefore represents compromise arrangements. Headed by Premier R. Torngren, the leader of the Swede-Finn minority group that holds only 13 seats in the Parliament, it is composed, in addition to the Premier, of six Social Democrats, six Agrarians and one Conservative (the Minister of Justice). The parties represented in it, and the groups that are likely to support it, command some 75 percent of the seats in the Parliament. The Torngren Government is composed of men of tested talent and capacity, and promises a level of achievement substantially higher than that of some of its predecessors.
It is thus clear that as regards Finland herself, the 1954 election was significant primarily because it confirmed and continued a familiar order of things. The degree in which Finland's citizens participated gave a flattering measure of support to the most basic of all democratic processes, the free use of the secret ballot. The long established multi-party system underwent no real change, and the coalition cabinet that emerged in May conformed to a well-known pattern. The Communists were prevented from advancing beyond the limits imposed on them by the voters several years ago and have not the slightest chance of enticing the Finns to accept a "people's democracy" or of engineering a process whereby Finland would "slide" behind the Iron Curtain. The election showed once again that the country's democratic institutions are unimpaired and functioning in full vigor. The Iron Curtain still runs to the east of Finland.
The very studiousness with which questions of foreign relations were avoided in the campaign, however, underlines the incontrovertible fact that they figured significantly in it. The outcome of the war and the subsequent conflict between the Western democratic world and Soviet imperialism have placed Finland in a precarious position. Clearly, the only threat to Finland comes from the Soviet Union. The Finns know that their neighbors on the west, the other Scandinavian states, as well as the whole Western democratic community of nations, are friends whose assistance might well be decisive in the event that the policy-makers in the Kremlin once again resort to military conquest in Europe.
During the ominous early years of the fulfillment of the reparations and related clauses of the treaty with Russia, Finland was subjected to various Soviet pressures, political as well as economic: the Kremlin's hostility to a foreign policy dictated by Finland's own preferences and interests was undisguised. In 1947-1948, for example, when Sweden, Denmark, Norway and Finland were considering the formation of a Scandinavian bloc free from all Big Power affiliation, the U.S.S.R. chose to see in the plan a potential anti-Soviet military coalition, and her opposition sufficed to keep Finland from participating in the discussions. Under normal conditions, Finland, which is Scandinavia's first line of defense against Soviet attack, would have been an active member of the group of northern states attempting to devise security arrangements for the area.
The high-water mark of Soviet influence was reached in April 1948, when, at Russia's suggestion, Finland signed a ten-year mutual assistance treaty. It provided in substance that, if Finland were attacked by "Germany or another state allied with her," or if the Soviet Union were attacked through Finland, Finland would fight, if necessary "with the assistance . . . of the Soviet Union or together with it." The question when the Soviet would actually assist was to be decided by "mutual agreement," and, if the possibility of a military attack emerged (within the meaning and area specified by the treaty), the two signatories were to "consult each other."
All Finns except the Communists were solidly opposed to the conclusion of the treaty. In the circumstances, however, the Finns felt that they had no choice save to yield to the Soviet proposal, despite awareness of the record of the U.S.S.R. as a breaker of treaties and the knowledge that, if and when it became necessary to interpret the terms "attack," "assistance," "across the territory of Finland" and other key words and phrases of the treaty, the Russian rather than Finnish interpretation would prevail. The treaty was therefore ratified, and observers abroad prophesied that Finland would henceforth be solidly anchored to Russia's block of satellite states and more exposed than ever to Soviet interference in her internal affairs.
The past six years have shown that such surmises were off the mark. The Treaty remains, but despite the fact that since 1948 the Finns have fought domestic Communism to a standstill and completely freed themselves from the onerous reparations burden by making the last payments, on schedule, in September 1952, there have been no reinterpretations of the Treaty by the Kremlin. Meanwhile, Finnish-Soviet trade relations have improved and Finland's position as an exporter to the U.S.S.R. has been strengthened. Perhaps the best single illustration of the trend of the times is offered by the Soviet $10,000,000 loan to Finland, of February 1954, and the conclusion of an agreement which provides that henceforth Finnish trade balances will be paid by the Soviets either in gold or in Western currencies. (The loan, incidentally, roughly corresponds to the sum of the trade balance in Finland's favor at the time, and therefore may be considered a device for paying the sum involved.) But trade relations appear to be considered more desirable to the Soviets than an effort to subvert the existing Finnish political and social order. In 1953, the Soviet share in Finnish foreign trade came roughly to one-third. Some observers have seen in this circumstance an ominous threat and a deliberate Communist plan to destroy Finland's economy by isolating it from its traditional, vitally important Western markets and sources of raw materials. As soon as the U.S.S.R. has acquired a dominant position as a buyer of Finnish goods, the argument runs, the Finns will be exposed to economic strangulation and the country will thereupon fall victim to a Communist régime. But this prediction lacks foundation in fact. The recent growth of the Russian share in Finland's foreign trade appears to be only temporary, resting partly on an accidental combination of circumstances, and represents an actual increase in Finland's foreign trade dependence on the East that is but a fraction of her total annual foreign trade. It is probably not more than $5,000,000 to $10,000,000.
The U.S.S.R. apparently also wants to keep Finland from moving toward a more open and active alignment with the West. It may well be that the hands-off policy of the past few years, and other modifications of earlier Soviet hostility, constitute recognition of a circumstance which developments in Finland have suggested for some time, namely, that Finland has moved farther and farther from the precipice at which she found herself from 1944-1948, and that her independent position has been strengthened in similar degree as the East-West conflict has become more acute.
It is also true that the Kremlin knows how to play a waiting game. Whether Finland's position will grow stronger or weaker during the years that lie ahead depends in large measure on circumstances beyond the control of the Finns. There is not the slightest doubt but that, if left alone to consult their own interests and preferences, they would undeviatingly pursue their pre-1939 policy of peace, neutrality and friendship toward all nations. They would identify themselves especially with the endeavors of their neighbors in the north, for by all criteria that have meaning, Finland belongs in the Scandinavian family of nations. In the world of blood and iron, however, which emerged after the Hitler-Stalin Pact and which still persists, her coöperation with her northern fellow democracies has perforce been cautious and restrained. A new and important organ of Scandinavian coöperation, the Nordic Council, was launched in Copenhagen on February 13, 1954, but though the Statutes of the Council provide for Finnish membership, Finland did not feel free to join. She was represented only by an observer, while the other members were represented by their Prime Ministers and other leading dignitaries. Under normal conditions Finland's participation would unquestionably have been active and conspicuous.
The same kind of caution and subtle isolation also characterizes Finland's position toward the larger Powers of the West. She has constantly shown her desire not to arouse Soviet suspicions in her relations with the West, especially since the East-West conflict has spread. The result has at times been behavior and idiom which have invited the conclusion that Finland's leaders are no longer men unafraid to speak freely and stand erect among the free.
Such a conclusion disregards one of the basic realities of the whole situation. There has never been a pronouncement by a responsible statesman to indicate that Finland has been directly included in Western plans to contain or reduce Communist expansion in Europe. Never have the terms of Western measures of defense been defined in a way that specifically places Finland within the area that the U.S.S.R. can touch only at its own peril. In the grim and largely-silent contest for self-government, democracy and national survival which has been going on in Finland since the Finnish nation was brought to the brink of destruction by Soviet aggression, this circumstance has been and is of utmost importance.
Since the beginning of the war in Korea in June 1950, Western--and specifically American--defense commitments have been greatly expanded. They have not sufficed, however, to prevent significant Communist gains in Korea and Indo-China. Events now unfolding will show whether an analogous situation will emerge in Europe. It would seem that the Soviet menace in Europe is not likely to diminish as long as Communism registers victories elsewhere. On the contrary, it is likely to grow. In any event, the danger will continue to force the West to study its preparations for defense. There seems need for a more detailed and accurate definition of the areas that will be resolutely defended, and those that will be abandoned, if any are going to be abandoned. In the Scandinavian North the choice will involve Finland especially, but possibly Sweden as well. To abandon either would mean appeasement of a kind that might have fatal consequences. Considerations of morality and of military security suggest that a "No Trespassing" sign, boldly lettered and facing East, be placed along Finland's Soviet border, and that the line thus marked be openly recognized as a frontier to be defended and not as one at which accommodation of the aggressor begins.
[i]cf. John H. Wuorinen, "The Finnish Treaty," The Annals, The American Academy of Political and Social Science, May 1948.
[ii]cf. Arthur Spencer, "Finland Maintains Democracy," Foreign Affairs, January 1953.