UNSTABLE ECONOMIC AND POLITICAL SITUATION IN FINLAND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000200310014-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 15, 2016
• Document Release Date: June 15, 2004
• Sequence Number: 14
• Publication Date: June 11, 1953
• Content Type: SUMMARY

Approved For Re 'se 2004 R09K00310014-2
OCI No. 4480
Copy No. l
25X1
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
11 JUNE 1953
UNSTABLE ECONOMIC AND POLITICAL SITUATION IN FINLAND
25X1
25X1
The indecision of the Finnish government concerning the
resolution of the country's pressing internal economic problems,
the drift toward closer economic ties with the Soviet bloc, and
the gradual loss of western markets are key factors in Finland's
increasingly unfavorable economic and political position. Des-
pite this situation the USSR has so far refrained from outright
interference in Finnish domestic affairs.
The recent signature in Peiping of a Chinese-Finnish bilat-
eral trade agreement is a further step in the orientation of
Finnish trade toward the Orbit, which now holds an influential
position in Finland's foreign trade. Approximately one third
of Finland's total foreign trade in 1953 will be with the Soviet
bloc, as compared to approximately 23 percent in 1952. This
gives the Soviet Union a powerful lever with which it could in-
fluence internal Finnish political developments.
In order to avoid widespread unemployment, Finland has been
forced to divert an increasingly large share of its exports
to the Soviet bloc because of tighter markets in the West and
high domestic production costs which are gradually pricing
most Finnish exports out of the world market.
Despite predictions of a record postwar unemployment of
approximately 100,000 workers next winter and of even further
reductions in exports to the West, the Agrarian-Social Democrat-
ic coalition government has hesitated to take effective econom-
ic countermeasures such as devaluation or altering the system of
tying wages to the cost-of-living index. The Social Democrats,
who primarily represent labor, remain adamantly opposed to al-
tering the wage index system in view of its possible unfavorable
effects on the labor vote in the communal elections in October
and the parliamentary elections next summer. It is generally
conceded in Finnish political circles that any new economic
program would retain the wage-index principle.
Document No. _ d 25_X-1'
Class. s a .a d To: TS S C
A..as _
Approved For Release 2004/07/01 79
6117e?R S ~~ T 2 Br,
 Approved For Re' se 20 14107104YAQW91 T01 ROO0200310014-2
I
The present government's preoccupation with the immediate
political consequences of the proposed countermeasures could
result in a further deterioration of the country's weak economic
position and result in the defection to the Communists of a sig-
nificant number of labor votes in the forthcoming elections.
The strong competition between the Communists and the Social
Democrats for this vote is illustrated by the fact that in the
1951 parliamentary elections the latter polled 480,000 and the
Communists about 390,000 votes.
Assuming a further contraction of Finland's Western export
markets, and barring effective action by the government to re-
store economic stability, the Communists could emerge from the
forthcoming elections with sufficient strength to demand a voice
in the government. In view of the Orbit's strong position in
Finland's economic life, the USSR would then be in a position
to exert considerable pressure on the Finns to give the Com-
munists a greater voice in Finnish affairs.
25X1
Approved For Release 2004/07/095 N ? 1T01172R000200310014-2