(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61S00527A000100180098-1
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 12, 2016
• Document Release Date: March 28, 2000
• Sequence Number: 98
• Publication Date: July 12, 1957
• Content Type: MEMO

Approved For Release 2001/08/30 CIA-RDP61 S00527A000100180098-1
Attac?unent 1,
L a O1 FINLAND
D. C.
Memorandum
.zabassy of Finland and the Department of State about the possible granting of a
loan to Finland by making use of American Finnmark-assets, accrued from sales
of-agricultural surpluses to Finland under Public Law 480.
Preliminary discussions have been going on for some time between the
During these. discussions the representatives of the State Department
have pointed out that the granting of a Government Loan to Finland would require
a waiver of certain provisions of the Battle Act by the President of the United
states. In this connection the State Department inquired about the views of the
Finnish Government as to the desirability of a possible waiver in favor of
Finland..
The attitude of tle Finnish Government to this question was explained
as follows:
,regularly being published by the Finnish authorities.
A waiver of the provisions of the Battle Act is a unilateral measure
by the United States Government, entirely within United States jurisdiction.
Consequently, such a measure can not raise any objections on the part of
Finland. However, it would not be in the interest of Finland to have her trade
relations with other powers publicly debated in the United States.in connection
.with a possible waiver.
It is therefore requested that any reports by the United States Govern-
ment to the Congress in connection with a possible waiver in favor of Finland
might be treated strictly confidentially.
On the part of the-State Department the opinion was expressed that the
stipulations in force do not exclude such a procedure.
During the discussions the Embassy of Finland confirmed that no items
mentioned under Title I List--Category A of the Battle Act are being exported
from Finland. A further study of the Finnish exports showed that a compara-
tively limited number of its mentioned under Title I List--Category B of the
.attls Act, mainly ships and cables, are being exported from-Finland under
bilateral agreements with East European Countries in exchange for grain, steel,
oil and other important commodities imported by Finland. During the pre-
limrin:ary discussions it was further estimated that the total value of such
Finnish exports for which a waiver would be necessary amounted to about
5% of the value of all Finnish expo*ts. Bilateral trade agreements, including
specified lists of agreed quotas for export- and import-commodities are
*State Department Declassification/Release Instructions on File*
Approved For Release 2001/08/30 : CIA-RDP61S00527A000100180098-1
 Approved For Release 20151/08130: CIA-RDP61SO0527A000100180098-1
had to pay according to the Paris Peace Treaty of 1947.
n
Finland of ships and other commodities mentioned in the Battle Act is largely
a consequence of the great expansion of the shipbuilding and other metal
working industries which was made necessary by the war reparations Finland
I this connection it should be remembered that the exports from
be made for not applying the loan restrictions o t a e g
Finland.
has a o
maintain good relations with all countries, a strong case could undoubtedly
f L. B ttl Act a ainst
into consideration all the other'postwar problems Finland
Takin
g
h d t face on her own and in view of the necessity for Finland to
As to the Finnmark-assets of the United States Government, they are in
the greater part still unused, in spite of continuous efforts for their dis-
posal. According to the latest estimates, the counter-part of about
25 million dollars is available at present.
Actiiig under instructions received from the Finnish Government, the
Dnbassy of Finland respectfully submits for the consideration of the United
States Government the following proposal:
That the United States Government releases the counterpart of the
aforementioned sum as a loan to the Mortgage Bank of Finland to be used
primarily for the financing of,power plants and the further development of
other industrial construction in Finland.
The Finnish capital market, overstrained by postwar rehabilitation
financing, is today unable to supply capital enough to secure the normal
growth of the Finnish economy. In order to put an end to the postwar in?-
flation, the Bank of Finland is pursuing a tight money policy--rejecting
any inflationary financing of economic development. However, the supply of
capital for basic industrial expansion, such as for power plant construction,
can not be withheld without seriously impairing the further development of the
economy of the whole country. Thus the lending of the now unused Finnmarkv-
assets of the United States to the Mortgage Bank of Finland would bring
valuable help to the Finnish economy in the present difficulties. The
Mortgage Bank of Finland having been founded by the Bank of Finland for the
purpose of handling international development loan transactions, any loans
granted to the Mortgage Bank will be fully in line with the financial
policy of the Bank of Finland. Thus any inflationary impact of such a loan
would be avoided.
In this connection it should be further pointed out that a Finnmark
loan of the aforementioned size for basic industrial expansion would mean
substantial orders for the Finnish metal industry. It would thus reduce
unemployment which this year has been substantial, causing an exceptionally
heavy drain on the Finnish. Treasury and diverting large funds from the
private money market into government unemployment financing.
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