POSSIBLE BATTLE ACT EXCEPTION FOR FINLAND.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61S00527A000100180097-2
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: March 23, 2000
• Sequence Number: 97
• Publication Date: August 2, 1957
• Content Type: MEMO

J, JAMM,
Approved For Release 2001/08/30: CIA-RDP61S00527A0001O
cCPdr IDDi TI AL
Chainaan, Economic Defense Advisory Committee
Department of State Member
SUBJECT : Possible Battle Act.Exception for Finland.
OONFID34TIAL
4. The question
State Dept. declassification & release instructions on file
To determine the EDAC position in implementation of the CCC3's
recoimiendation of June 12 that the possibility be explored of .granting
a Battle Act exception to Finland.
Discussion
1. The Finnish Government has requested that the U.S. lend for
Finnish economic development purposes the Finnmark proceeds of previous
PL 480 programs. Up to now Battle Act considerations have been deeaa.ed
to preclude such loans. We have unsuccessfully sought to :isl~~se of
these Finnmarks (the equivalent of approximately q25 million) through
U. S. purchases in Finland, and, as a result of our inability to 3perld
theta, they are subject to loss of value through inflation and/or
possible devaluation. Such a loan would be denominated in-dollars and
would ccntain provisions designed to maintain the dollar value of loan
disbursements. Further, the Finns have offered to repay the loan in
dollars. Of equal importance, disposition of the Finnznar cs in this
fashion would facilitate consideration of additional Finnish requests
for PL 480 programs.
2. It is generally agreed that a Finnmark loan to Finland is
highly desirable for both foreign policy and economic. reasons, The
political need for helping the Finnish economy is recognized in
1ISC 5403 which calls for consideration of a waiver of the Battle Act
if necessary to permit the extension of assistance to the Finns. It
may be expected that Finland's ability to obtain American loan assist-
ance will strengthen her in dealing with the Sino-Soviet blot oDuntries.
3. Over and above the advantage of solving the problem of main-
taining the value of our Finnmarks, lending therm to the Finns to make
investments in development projects should tend to reduce Finnish
economic dependence on the Soviet bloc. Since the war the Finns have
built up a number of new industries for deliveries to the USSR under
the reparations program. It is hoped that by developing other re--
sources, enabling Finland to tie its economy more closely with the
West, the emphasis on these uneconomic industries will be lessened.
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 Approved For Releaa k C~ A~RDP61S00527A0
i'a3sed that the efficacy 0f t
.
w
u
significantly, and would not cons 6
i%4 nh 4 pt nuatomarv for Or L"'-'
v
ditions where Finland would not pro
cooperation, would not be in a position to reduce strategic shipmeinrt
S. and provide x
ith the U
1t
The ;;;; by granting an exception to Finland, under
ide the usual assurances of
aia-recipienTj ~iU4ilN~~oo. - --
Fi Finnish shipments of Title I B items to the soviet bloc. (Fin] an
--~ _.....,.~ .,ht. q4 +.1 A T A goods to t
g
larly of vessels, have been declining, an
reduc the
o
th~~ Department has been informed that shipments ,
,,4 inn, resources into dt
resources into the.
A ttin
Aowever, the $2v million Further
which might qualify as exceptions under our new Polish policy. ,
the bloc particu-.
t
naa a va..ue V.J c?wLLw v-- ~-- --- ---
value of all items for which exceptions have to date been granted.
4-1-des exports to Poland of abouton
has assurea us T,na>r ilia - - -.7---
bloc. ) Analysis of information received indicates that these s ipanents
-:-_ nCL nlmnc+ na are9 as" ,the
amount of goods available to the ol.o(;.
r Td~ a.L ....---A' +.n +.ha affect of an exception for Fii 7:and on i;he
g
establishment o new
should not) be expected to bring about the complete cessation of trade
such as that in which Finland is forced to engage. Although the cir-
cumstances are not the same as in the case of Finland, it may-be noted
that our refusal for several years to extend aid to Ceylon had no
effect on that country's desire or ability to ship rubber to Communist
China; and our eventual extension} of assistance was not accompanied by
assurances that such trade be discontinued. Since. it is recognized
that Finland's strategic shipments to the bloc cannot be stopped, it
would be unrealistic for the Battle Act to continue to be a deterrent
to the extension of assistance which the NSC and the OCB have already
geographic location and the political situation resulting nom
War II. While the Battle Act might be effective in preventing the
ic trade with the bloc, it cannot (and
strate
o
Title I B shxpmen s
or not aid is extended. These shipments are a consequence of Finland's
f ! . Y rld
Ln1S cUii7iuas QUJ.wa ?+M . ?~--r-- - -
the bloc will continue regardless of itrhether
t +
implementation of the Rattle Act, the ueparuuwu Ui. -Cl--- -_-_
' - - ..i' +1,n f Nr+. +hat Finland's
agreed is desirable.
Conclusions
consideratiops which favor the :granting of a Battle Acte a
s
the opinion that on balance, there are rung g
Vti
large in relation to previous exceptions, the Departmentof St,t ,
t foreicilicy and?
r~
6. While Finnish" shipments of Title I B items are 'atam~ttea y
r
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CONFID IIiAL
Finland. The Department feels that other countries' cooperation under
the Act would not be appreciably affected since almost everyone is
aware of Finland's vulnerable position vis-a-vis the USSR. They would.,
therefore, not expect similar treatment. If necessary, it might be
advisable to inform COCON of our intended action and the reasons
therefor in order that there would be no misunderstanding at some 3a ter
date.
7. The Department believes that an exception for Finland would
be viewed sympathetically by Congressional leaders. The general
good reputation of Finland in the United States would tend to outbalance
the broad interpretation of the Battle Act. In advance of any
publication of the action, the Executive Branch should discuss it
k~1th appropriate members of Congress, or Congressional committees,
so as to enlist support. The results of this discussion should be
reported to the President, and taken into account in any public
anrowicement. Care should be taken to avoid undue publicity.
Recommendation
The Department of State recommends that EDAC
a) agree that for overriding foreign policy considerations Finland
is eligible for assistance under the Battle Act in spite of continuing
shipments of Title I B goods;
b) review its position on Finland's eligibility in the light of
current conditions at the time a Presidential.exception is required.
Attachments
1. Finnish Embassy Memorandum of July 12, 1957
2. List of Items Exported by Finland to the Soviet Bloc.
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