INCREASING SOVIET POTENTIAL FOR UNDERMINING FINNISH STABILITY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00890A000100070031-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: May 18, 2000
• Sequence Number: 31
• Publication Date: August 4, 1953
• Content Type: REPORT

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4 August 1953
Increasing Soviet Potential for Undermining Finnish Stability:
The Soviet potential for disrupting the Finnish economy
and hence the country's stability has seriously increased.
For many months Finland's economic situation has been deterior-
a
ating. This has been accompanied by/marked increase in Finnish
trade with the orbit to the extent that the USSR has become
Finland's principal market.
Finland's economic situation has deteriorated as a result
of the lagging world market for its traditional exports of
wood products. High production costs have also made it dif-
ficult for Finnish goods to compete in Western markets.
These developments have forced Finland to increase marked-
ly its trade with the Soviet bloc. As a result the orbit this
year is expected to receive 34 percent of Finland's exports
compared to 23 percent in 1952 and 16 percent from 1947
through 1951.
The USSR has not yet attempted to exploit the favorable
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economic position it has obtained. It could, however, create
a serious economic and political crisis in Finland at any
time by exerting economic pressure, This could take the
form of A threat to cancel its trade agreements, a refusal
to accept Finnish goods, or failure to make agreed deliveries.,
Any solution to the problem is complicated by several
factors, Under existing trade agreements Finland is com-
mitted to maintain approximately its 1953 volume of trade
with the orbit through 1955. The delicate balance of Soviet-
Finnish relations have militated against any American reme-
dial steps which might result in strong Soviet countermeasures
affecting Finnish stability. Finally, Finnish political
parties have been unable to agree on any practical solution
to the country's economic:-problems, These differences have
provoked the continuing parliamentary crisis.
Since last October an American inter-agency working group
has been studying the Finnish economic situation. It partic-
ularly examined the possibility of increasing US purchases
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1%000 '4410le
of Finnish products as a means of reducing Finland's economic
dependence on the bloc. This group, however, has recently
concluded that this approach cannot possibly yield results
commensurate with the size and seriousness of the,problem,
Even if the US undertook to purchase all of Finland's exports
to the bloc, which will total approximately 200 million dollars
during 1953, the program would probably be unfeasible because
of Finland's sensitivity regarding its relations with the
USSR.
On the other hand, the loss of Finland to the USSR through
economic absorption would not only have a profound shock on
the American public, but would also adversely affect the
Western strategic position in Scandinavia.
Approved For Release. CIA-RQP79R00890A000100070031-5