LETTER TO W. ALLEN WALLIS FROM MAURICE C. ERNST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-01156R000100040024-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 21, 2016
• Document Release Date: August 4, 2008
• Sequence Number: 24
• Publication Date: November 22, 1982
• Content Type: LETTER

THE DIRECTOR OF
CENTRAL INTELLIGENCE
Honorable W. Allen Wallis
Under Secretary for Economic Affairs
Department of State
You may be interested in this informal
comment on Soviet-Finnish economic issues. 25X1
Maurice G. Eft-st
NIO for Economics
Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
 THE DIRECTOR OF
CENTRAL INTELLIGENCE
National Intelligence Council
22 November 1982
Dr. Norman A. Bailey
Director, Planning & Evaluation
National Security Council
You may be interested in this informal
comment on Soviet-Finnish economic issues.
Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
Maurice C. Ernst
NIO for Economics
Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
 Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
18 November 1982
MEMORANDUM FOR: Maurice C. Ernst
NIO/Economics
FROM : 25X1
Western Europe Division
Office of European Analysis
SUBJECT : Potential Impact of a Soviet Limitation of
Finnish Exports to the USSR
reported earlier this month that Yuri Andropov 25X1
(prior to Brezhnev's death) threatened Finnish Prime Minister Sorsa with an
unspecified limitation on Finnish exports to the USSR unless steps were taken
to reduce Finland's growing bilateral trade surplus. Andropov made two
suggestions: that the Finns purchase a 1000 MW nuclear reactor, and that they
extend a gas pipeline from the USSR so that it can serve the population
centers of Helsinki and Tampere. 25X1
We see this as largely a political move intended to test the commitment
of Finnish President Koivisto to the foreign policy line of his predecessor
Kekkonen. The Soviet threat undoubtedly has a large element of bluff, but it
is not one that the Finns can ignore. Approximately 9 percent of Finnish GNP
is exported to the USSR; about 50 percent of shipbuilding is dedicated to the
Soviet market. The metals industry as a whole depends on the Soviet market
for a quarter of its exports. Trade is conducted under a 'series of five-year
protocols with a clearing account arrangement obviating the need for a hard
currency flow in either direction. Although the Soviets are unlikely to take
any extreme measure, efforts to frustrate Finnish sales would send strong
ripples through the industrial sector at a time when the economy is weak.
The Finns may have to cave in to Soviet pressure to some degree to avoid
disturbing political and economic relations over the longer term. Substitutes
for Finnish goods can be found elsewhere (albeit for hard currency), and
Helsinki wants to avoid giving the Soviets any pretexts for demanding the
closer military cooperation hinted at by a Soviet general recently. Given the
magnitude of Finnish-Soviet economic cooperation, it is difficult to imagine
the United States offering any lasting alternatives. The Finns would
undoubtedly welcome some US orders for Finnish ships -- icebreakers by the
Coast Guard, for example -- to ease their situation, but only if done
discreetly. Any grandiose "coming to the aid of Finland" schemes without a
major reassessment by the US of the political, economic, and military
repercussions probably would be counterproductive.
25X1
25X1
Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
 Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7
? UNCLASSIFIED 49
Finland's Exports to the USSR
(January-August 1982)
Percent of total
exports to USSR
Exports to USSR
As Percent of
Total Exports
Value
($ million)
Foodstuffs
5.8
52.3.
133
Chemicals
7.2
35.0
166
Basic Manufactures
32.2
22.3
741
Machinery
34.0
39.6
783
Transport
13.7
49.2
315
Ships
12.8
62.1
295
Miscellaneous
15.9
38.8
366
Clothing
7.5
39.9
173
Shoes
4.6
84.7
106
Total of above
95.1
31.4
2,189
Other goods
4.9
6.5
113
Grand total
100%
26.4%
$2,302
* Office does not receive any current statistical breakdowns at a more
detailed level.
.._.... Approved For Release 2008/08/26: CIA-RDP85-01156R000100040024-7