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Figure 1. Administrative Divisions of Finland, 1988

FINLAND HAS BEEN THE SITE of human habitation since the last ice age ended 10,000 years ago. When the first Swedish-speaking settlers arrived in the ninth century, the country was home to people speaking languages belonging to the distinctive Finno- Ugric linguistic group, unrelated to the more prevalent Indo- European language family. The first dates in Finnish history are connected with the Swedish crusade of the 1150s that, according to legend, aimed at conquering the "heathen" Finns and converting them to Christianity. There was, however, no Swedish conquest of Finland. The bodies of water that lay between Finland and Sweden, rather than making them enemies or separating them, brought them together. Trade and settlement between the two areas intensified, and a political entity, the dual kingdom of Sweden-Finland, gradually evolved (see The Era of Swedish Rule, 1150-1809 , ch. 1).

During the seven centuries of Swedish rule, Finland was brought more and more into the kingdom's administrative system. Finland's ruling elite, invariably drawn from the country's Swedish-speaking inhabitants, traveled to Stockholm to participate in the Diet of the Four Estates and to help manage the kingdom's affairs. Swedish became the language of law and commerce in Finland; Finnish was spoken by the peasantry living away from the coasts. The clergy (Lutheran after the Protestant Reformation), who needed to communicate with their parishioners, were the only members of the educated classes likely to know Finnish well.

Swedish rule was benevolent. Sweden and Finland were not separate countries, but rather were regions in a single state. The elite spoke a common language, and it was not until late in the eighteenth century that any separatist sentiments were heard within Finland. However, Finns occasionally suffered much from Sweden's wars with neighboring states. In the sixteenth and the seventeenth centuries, Sweden was one of Europe's great powers and had a considerable empire around the shores of the Baltic Sea. Wars were frequently the means of settling Finland's eastern border. In the long run, however, Sweden could not sustain its imperial pretensions, and military defeats obliged it to cede Finland to tsarist Russia in 1809.

Finland's new ruler, Tsar Alexander I, convinced of the strategic need to control Finland for the protection of his capital at St. Petersburg, decided it was more expedient to woo his Finnish subjects to allegiance than to subjugate them by force. He made the country the Grand Duchy of Finland and granted it an autonomous status within the empire (see The Russian Grand Duchy of Finland, 1809-1917 , ch. 1). The Grand Duchy kept its Swedish code of laws, its governmental structure and bureaucracy, its Lutheran religion, and its native languages. In addition, Finns remained free of obligations connected to the empire, such as the duty to serve in tsarist armies, and they enjoyed certain rights that citizens from other parts of the empire did not have.

Nevertheless, the Grand Duchy was not a democratic state. The tsar retained supreme power and ruled through the highest official in the land, the governor general, almost always a Russian officer. Alexander dissolved the Diet of the Four Estates shortly after convening it in 1809, and it did not meet again for half a century. The tsar's actions were in accordance with the royalist constitution Finland had inherited from Sweden. The Finns had no guarantees of liberty, but depended on the tsar's goodwill for any freedoms they enjoyed. When Alexander II, the Tsar Liberator, convened the Diet again in 1863, he did so not to fulfill any obligation but to meet growing pressures for reform within the empire as a whole. In the remaining decades of the century, the Diet enacted numerous legislative measures that modernized Finland's system of law, made its public administration more efficient, removed obstacles to commerce, and prepared the ground for the country's independence in the next century.

The wave of romantic nationalism that appeared in Europe in the first half of the nineteenth century had profound effects in Finland (see The Rise of Finnish Nationalism , ch. 1). For hundreds of years, Finland's Swedish-speaking minority had directed the country's affairs. The Finnish-speaking majority, settled mostly in the interior regions, was involved only marginally in the social and the commercial developments along the coast. Finnish-speakers wishing to rise in society learned Swedish. Few schools used Finnish as a means of instruction: higher education was conducted entirely in Swedish, and books in Finnish were usually on religious subjects. The nationalist movement in Finland created an interest in the language and the folklore of the Finnish-speaking majority. Scholars set out into the countryside to learn what they could of the traditional arts. Elias Lönnrot, the most important of these men, first published his collection of Finnish folk poems in 1835. This collection, the Kalevala, was quickly recognized as Finland's national epic. It became the cornerstone of the movement that aimed at transforming rural Finnish dialects into a language suitable for modern life and capable of displacing Swedish as the language of law, commerce, and culture.

Several generations of struggle were needed before the Finnish nationalist movement realized its objectives. Numerous members of the Swedish-speaking community entered the campaign, adopting Finnish as their language and exchanging their Swedish family names for Finnish ones. Finnish journals were founded, and Finnish became an official language in 1863. By the end of the century, there was a slight majority of Finnish-speaking students at the University of Helsinki, and Finnish-speakers made up sizable portions of the professions.

Finland's first political parties grew out of the language struggle. Those advocating full rights for Finnish-speakers formed the so-called Fennoman group that by the 1890s had split into the Old Finns and the Young Finns, the former mainly concerned with the language question, the latter urging the introduction of political liberalism. The Swedish-speaking community formed a short-lived Liberal Party. As the century drew to a close and the Fennoman movement had achieved its principal goals, economic issues and relations with the tsarist empire came to dominate politics.

Finland's economy had always been predominantly agricultural, and with the exception of a small merchant class along the coast, nearly all Finns were engaged in farming, mostly on small family farms (see Growth and Structure of the Economy , ch. 3). Despite the location of the country in the high north, long summer days usually allowed harvests sufficient to support the country's population, although many lived at a subsistence level. In years of poor harvests, however, famine was possible. In 1867--68, for example, about 8 percent of the population starved to death.

Sweden's political development had favored the formation of an independent peasantry rather than a class of large landowners. Even while part of the tsarist empire, Finland maintained this tradition. As a result, instead of serfs, there were many independent small farmers, who, in addition to owning their land, had stands of timber they could sell. When Western Europe began to buy Finnish timber on a large scale in the latter part of the nineteenth century, many farmers profited from the sale of Finland's only significant natural resource, and ready money transformed many of them into entrepreneurs. There was also demand for timber products, and, at sites close to both timber and means of transport, pulp and paper mills were constructed.

Liberalization of trade laws and the institution of a national currency not tied to the Russian ruble encouraged a quickening of the economy and the growth of other sectors. Finland's position within the Russian Empire was also beneficial. As Finnish products were not subject to import duties, they could be sold at lower prices than comparable goods coming from Western Europe.

The appearance of an industrial sector offered employment to a rural work force, many of whom owned no land and earned their living as tenant farmers or laborers. Much of the employment offered was of a seasonal nature, a circumstance that meant considerable hardship. In contrast to the larger European countries, most of this emerging proletariat did not live in concentrated urban areas, but near numerous small industrial centers around the country. This had two results: the one was that the Finnish working class retained much of its rural character; the other was that labor problems affected the entire country, not just urban centers.

Finland's modernizing economy encouraged the formation of social groups with specific, and sometimes opposing, interests. In addition to the Finnish movement's Old and Young Finns, other political organizations came into being. Because the existing political groups did not adequately represent labor's interests, a workers' party was formed at the end of the century. In 1903 it became the Finnish Social Democratic Party (Suomen Sosialidemokraatthinen Puolue--SDP). At the same time labor was organizing itself, the farmers began a cooperative movement; in 1907 they formed the Agrarian Party (Maalaisliitto--ML). The Swedish People's Party (Svenska Folkpartiet--SFP), also dating from this period, was formed to serve the entire Swedish-speaking population, not just those involved in commerce, an area where Swedish-speakers were still dominant.

The Grand Duchy's relationship with St. Petersburg began to deteriorate in the 1890s. The nervousness of tsarist officials about Finnish loyalty in wartime prompted measures to bind Finland more closely to the empire. The campaign of "Russification" ended only with Finland's independence in 1917 (see The Era of Russification , ch. 1). In retrospect the campaign can be seen as a failure, but for several decades it caused much turmoil within Finland, reaching its most extreme point with the assassination of the governor general in 1904. The first Russian revolution, that of 1905, allowed Finns to discard their antiquated Diet and to replace it with a unicameral legislature, the Eduskunta, elected through universal suffrage. Finland became the first European nation in which women had the franchise. The first national election, that of 1907, yielded Europe's largest social democratic parliamentary faction. In a single step, Finland went from being one of Europe's most politically backward countries to being one of its most advanced. Nonetheless, frequent dissolutions at the hands of the tsar permitted the Eduskunta to achieve little before independence.

The second Russian revolution allowed Finland to break away from the Russian empire, and independence was declared on December 6, 1917. Within weeks, domestic political differences led to an armed struggle among Finns themselves that lasted until May 1918, when right-wing forces, with some German assistance, were able to claim victory (see The Finnish Civil War , ch. 1). Whether seen as a civil war or as a war of independence, the conflict created bitter political divisions that endured for decades. As a consequence, Finland began its existence as an independent state with a considerable segment of its people estranged from the holders of power, a circumstance that caused much strife in Finnish politics.

In mid-1919, Finns agreed on a new Constitution, one that constructed a modern parliamentary system of government from existing political institutions and traditions. The 200-seat unicameral parliament, the Eduskunta, was retained. A cabinet, the Council of State, was fashioned from the Senate of the tsarist period. A powerful presidency, derived, in part at least, from the office of governor general, was created and provided with a mixture of powers and duties that, in other countries, might be shared by such figures as king, president, and prime minister. Also included in the new governmental system was an independent judiciary. The powers of the three branches of government were controlled through an overlapping of powers, rather than a strict separation of powers (see Governmental Institutions , ch. 4).

Finland faced numerous political and economic difficulties in the interwar years, but it surmounted them better than many other European countries (see Independence and the Interwar Era, 1917-39 , ch. 1). Despite the instability of many short-lived governments, the political system held together during the first decades of independence. While other countries succumbed to right-wing forces, Finland had only a brush with fascism. Communist organizations were banned, and their representatives in the Eduskunta arrested, but the SDP was able to recover from wounds sustained during the Civil War and was returned to power. In 1937 the party formed the first of the so-called Red-Earth coalitions with the ML, the most common party combination of the next fifty years, one that brought together the parties representing the two largest social groups. The language problem was largely resolved by provisions in the Constitution that protected the rights of the Swedish-speaking minority. Bitterness about the past dominance of Swedish-speaking Finns remained alive in some segments of the population, but Finnish at last had a just place in the country's economic and social life.

Finland's economy diversified further during the the 1920s and the 1930s. Timber, the country's "green gold," remained essential, but timber products such as pulp and paper came to displace timber as the most important export. Government measures, such as nationalization of some industries and public investment in others, encouraged the growth and strengthening of the mining, chemical, and metallurgical industries. Nevertheless, agriculture continued to be more important in Finland than it was in many other countries of Western Europe. Government-enforced redistribution of plots of land reduced the number of landless workers and fostered the development of the family farm. Survival during the Great Depression dictated that Finnish farmers switch from animal products for export to grains for domestic consumption.

Finland's official foreign policy of neutrality in the interwar period could not offset the strategic importance of the country's territory to Nazi Germany and to the Soviet Union (see World War II, 1939-45 , ch. 1). The latter was convinced that it had a defensive need to ensure that Finland would not be used as an avenue for attack on its northwestern areas, especially on Leningrad. When Finland refused to accede to its demands for some territory, the Soviet Union launched an attack in November 1939. A valiant Finnish defense, led by Carl Gustaf Emil Mannerheim, slowed the invaders, but in March 1940 the Winter War ended when Finland agreed to cede to the Soviets about 10 percent of Finnish territory and to permit a Soviet military base on Finnish soil. In June 1941, Finland joined Germany as cobelligerent in its attack on the Soviet Union. In what Finns call the Continuation War, Finland confined its military actions to areas near its prewar borders. In the fall of 1944, Finland made a separate peace with the Soviet Union, one that was conditional on its ceding territory, granting basing rights, agreeing to onerous reparation payments, and expelling German forces from its territory. However, although Finland suffered greatly during World War II and lost some territory, it was never occupied, and it survived the war with its independence intact.

Finland faced daunting challenges in the immediate postwar years. The most pressing perhaps was the settlement of 400,000 Finns formerly residing in territory ceded to the Soviet Union. Most were natives of Karelia. Legislation that sequestered land throughout the country and levied sacrifices on the whole population provided homes for these displaced Finns. Another hurdle was getting the economy in shape to make reparation payments equivalent to US$300 million, most of it in kind, to the Soviet Union. This payment entailed a huge effort, successfully completed in 1952.

A less concrete problem, but ultimately a more important one, was the regulation of Finland's international relations (see The Cold War and the Treaty of 1948 , ch. 1; Foreign Relations , ch. 4). The Treaty of Paris, signed in 1947, limited the size and the nature of Finland's armed forces. Weapons were to be solely defensive. A deepening of postwar tensions led a year later to the Treaty of Friendship, Cooperation, and Mutual Assistance (FCMA--see Appendix B) with the Soviet Union, the treaty that has been the foundation of Finnish foreign relations in the postwar era. Under the terms of the treaty, Finland is bound to confer with the Soviets and perhaps to accept their aid if an attack from Germany, or countries allied with Germany, seems likely. The treaty prescribes consultations between the two countries, but it is not a mechanism for automatic Soviet intervention in a time of crisis. The treaty has worked well, and it has been renewed several times, the last time in 1983. What the Soviet Union saw as its strategic defensive need--a secure northwestern border-- was met. The Finns also achieved their objective in that Finland remained an independent nation.

The Finnish architect of the treaty, Juho Kusti Paasikivi, a leading conservative politician, saw that an essential element of Finnish foreign policy must be a credible guarantee to the Soviet Union that it need not fear attack from, or through, Finnish territory. Because a policy of neutrality was a political component of this guarantee, Finland would ally itself with no one. Another aspect of the guarantee was that Finnish defenses had to be sufficiently strong to defend the nation's territory (see Concepts of National Security , ch. 5). This policy, continued after Paasikivi's term as president (1946-56) by Urho Kekkonen (1956-81) and Mauno Koivisto (1982- ), remained the core of Finland's foreign relations.

In the following decades, Finland maintained its neutrality and independence. It had moved from temporary isolation in the immediate postwar years to full membership in the community of nations by the end of the 1980s. Finland joined the United Nations (UN) and the Nordic Council in 1955. It became an associate member of the European Free Trade Association (EFTA-- see Glossary) in 1961 and a full member in 1986. Relations with the European Community (EC--see Glossary) and the Council of Mutual Economic Assistance (CMEA, CEMA, or Comecon--see Glossary) date from the first half of the 1970s. In mid-1989, Finland joined the Council of Europe (see Glossary). The policy of neutrality became more active in the 1960s, when Finland began to play a larger role in the UN, most notably in its peacekeeping forces. Measures aiming at increasing world peace have also been a hallmark of this policy. Since the 1960s, Finland has urged the formation of a Nordic Nuclear-Weapons-Free Zone (Nordic NWFZ), and in the 1970s was the host of the Conference on Security and Cooperation in Europe (CSCE), which culminated in the signing of the Helsinki Accords in 1975. By the end of the 1980s, the most serious question for Finland in international relations was how the country's economy, heavily dependent on exports, would fare once the EC had achieved its goal of a single market in 1992. Finland's neutrality seemed to preclude membership in an organization where foreign policy concerns were no longer left to individual member nations.

Finland also dealt effectively with domestic political problems in the postwar era (see Domestic Developments and Foreign Politics, 1948-66 , ch. 1; Political Dynamics , ch. 4). By the early 1950s, the patterns of postwar Finnish politics were established. No one group was dominant, but the ML under the leadership of Kekkonen, who became president in 1956, became an almost permanent governing party until the late 1980s. In 1966 it changed its name to the Center Party (Keskustapuolue--Kesk) in an attempt to appeal to a broader segment of the electorate, but it still was not successful in penetrating southern coastal Finland. The SDP remained strong, but it was often riven by dissension. In addition, it had to share the socialist vote with the Communist Party of Finland (Suomen Kommunistinen Puolue--SKP). As a consequence, nonsocialist parties never had to face a united left. In the 1980s, the communists had severe problems adjusting to new social conditions, and they split into several warring groups. As a result, their movement had a marginal position in Finnish politics. The SFP, a moderate centrist party with liberal and conservative wings, had a slightly declining number of seats in the Eduskunta, but its position in the middle of the political spectrum often made it indispensable for coalition governments. The National Coalition Party (Kansallinen Kokoomuspuoue--KOK), rigidly conservative in the interwar period, gradually became more moderate and grew stronger, surpassing Kesk in the number of parliamentary seats in 1979. Excluded from a role in government for decades, possibly because it had been so right-wing earlier, th KOK Party participated in the government formed after the national elections of 1987, supplying the prime minister, Harri Holkeri. The Liberal Party of the postwar period was never strong, and it had a negligible role by the 1980s.

A number of smaller parties, protest parties, and parties representing quite distinct groups filled out the list of about a dozen organizations that regularly vied for public office. Pensioners and activist Christians each had their own party, and environmentalists won several seats in the 1983 and the 1987 national elections. The most active of the protest parties was the Finnish Rural Party (Suomen Maaseudun Puolue--SMP), which managed to take votes from both Kesk and the socialist groups. It scored its first big successes in the 1970 national elections. Since then its electoral results have varied considerably. By late 1980s, it seemed a spent force.

After the 1966 national elections, President Kekkonen succeeded in forming a popular front coalition government that contained communists, socialists, and members of Kesk. Although this government lasted only two years and was succeeded for another decade by short-lived coalition and caretaker civil service governments, it was the beginning of what Finns call the politics of consensus (see Finland in the Era of Consensus , ch. 1). By the 1980s, consensus politics had become so dominant that some observers claimed that Finnish politics, long so bitter and contentious, had become the most boring in Western Europe. Although the larger parties differed on specific issues, and personal rivalries could be poisonous, there was broad agreement about domestic and foreign policy. The cabinet put in place after the 1983 elections, consisting mainly of social democrats and members of Kesk, completed its whole term of office, the first government to do so in the postwar period. Observers believed that the next government, formed in 1987 and composed mainly of conservatives and social democrats, would also serve out its term.

A foundation of the politics of consensus was the success of the system of broad incomes agreements that has characterized Finland's employee-employer relations in recent decades. The first of these, the Liinamaa Agreement, dated from 1968. By the 1980s, the process was so regular as to seem institutionalized. With about 80 percent of the work force as members, unions negotiated incomes agreements with employers' organizations (see Industrial Relations , ch. 3). The government often helped in the talks and subsequently proposed legislation embodying social welfare measures or financial measures that underpinned the agreements. The process was successful at increasing labor peace in a country that had been racked by strikes for the first decades after World War II. Although there were complaints that the agreements bypassed political channels or excluded minority opinion, the obvious prosperity they had helped bring about made the incomes policy system and the politics of consensus highly popular.

For much of its history, Finland had been a poor country, but in the postwar era it gradually become one of the world's most prosperous. At the end of the war, the country's economy faced serious hurdles. Although it was never occupied, Finland had suffered extensive material damage, especially in the north. The burden of reparations, to be paid in kind, meant that much rebuilding had to occur quickly and the economy had to be diversified (see Industry , ch. 3). The Finns were successful, and by the early 1950s the country had an economy well poised to compete in the world market. Timber and timber products remained important, but a skillful selection of export objectives and the general high quality of its manufactures allowed Finnish products to penetrate the international economy at many points. Careful government fiscal policies and selected state supports combined with liberal trade policies and financial deregulation to create an economy among the most capitalistic of Western Europe (see Role of Government , ch. 3). In the 1980s, Finnish businessmen began to invest some of their profits abroad. Faced with the prospect of being closed out of the EC's single market, they bought into many firms located within the EC's member states. Finland's membership in EFTA, an important trading partner of the EC, also served to allay worries about the future of Finland's export trade (see Foreign Economic Relations , ch. 3).

Finland's access to the Soviet Union's economy, through an arrangement whereby Finnish products were exchanged for raw materials, had for decades provided a fairly secure market for many of Finland's exports (see Finnish-Soviet Cooperation , ch. 3). By the late 1980s, trade with the Soviet Union was declining because of the long-term drop in the price of oil, but sophisticated joint venture agreements were being adopted to meet changed circumstances.

The economic transformation of Finland caused a social transformation as well. In 1950, approximately 40 percent of the work force was engaged in agricultural and forest work. By the 1980s, fewer than 10 percent were employed in this sector. Rather, the service sector became the largest single source of work (see Occupational and Wage Structure , ch. 2; Employment , ch. 3). As the country became wealthier, between 1950 and the 1980s, the number of persons retired or being educated increased dramatically and accounted for a significant portion of the population. An advanced economy required a skilled work force, and enrollment at the university level alone had quadrupled.

A changing economy changed ways of life. Finns moved to areas where jobs were available, mainly to the south coastal region (see Internal Migration , ch. 2). This area saw a tremendous expansion, while other regions, most notably the central-eastern area, lost population. Finns call this movement of people from the countryside to the urbanized south the "Great Migration." It gave Finns improved living conditions, but it caused much uprooting with predictable social effects: loss of traditional social ties, psychological disorders, and asocial behavior. Not all of the new settlements constructed in the south were as famed for their design as the garden town Tapiola in greater Helsinki (see Urbanization , ch. 2).

The new prosperity was widely distributed, and people of all classes benefited from it. Labor was highly organized, and the broad incomes agreements involved nearly all of the working population. Those not in the active work force got a decent share of the country's wealth via an extensive system of social welfare programs (see Public Welfare , ch. 2). Worries about health or old age were no longer pressing because government assistance was available for those who needed it. Some social measures dealt with family welfare. Paid maternity leave lasted for nearly a year, and in the 1980s increasing resources were earmarked for childcare, as most mothers were employed outside the home. Finland's welfare system was based on the model developed in the other Nordic countries in which coverage was universal and was seen as a right, not as a privilege. Faced with special problems, and beginning with smaller means, Finland put its welfare system in place somewhat later than did the Scandinavian countries. By the late 1980s, however, it had become a member of that small community of nations that combined an extensive state welfare system with a highly competitive, privately owned market economy.

August 7, 1989
Eric Solsten

Data as of December 1988


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