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Finland Regional Economic Integration
Until 1917 the Grand Duchy of Finland enjoyed a
privileged
position as a relatively advanced part of the Russian
Empire,
supplying metal products and ships in exchange for
agricultural
goods. These ties collapsed, however, when political
tensions
between the Bolshevik regime and the Finnish Republic
precluded
commercial agreements. The interwar pattern was reversed
in the
years following World War II, as reparations payments and
barter
trade grew into a close trading relationship in which
Finland
exported industrial goods, especially capital goods, in
exchange
for raw materials and fuels--an arrangement roughly
parallel to
that which had existed before 1917.
Starting in the late 1950s, however, Finland broke away
from
its dependence on the Soviet market, successfully opening
its
economy to the two West European trading blocks, the
European Economic Community
(EEC--see Glossary) and the
European Free Trade Association
(EFTA--see Glossary). Expanded trade
with the
West did not imply renunciation of profitable exchanges
with the
East, however, because Finnish commercial ties with the
Soviet
Union and with the other members of the Council for Mutual
Economic Assistance
(CMEA, CEMA, or Comecon--see Glossary)
deepened after 1960. By the late 1980s, Finland provided a
unique
example of a neutral country with a free-market economy
that had
developed increasing economic interdependence with both
the
market economies of Western Europe and the planned
economies of
Eastern Europe.
Although many Western observers saw in Finnish foreign
economic policy the dominance of security concerns over
economic
interests, close inspection revealed a mixture of motives.
The
guiding principles of postwar foreign policy--Finland's
need to
assure the Soviet Union that it did not have to fear
threats from
(or through) Finnish territory as well as Finland's
practice of
active neutrality--influenced trade policies toward the
East,
especially in the immediate postwar years. Such concerns
blocked
Finnish participation in the Marshall Plan and in the
Organisation for European Economic Co-operation (OEEC),
which was
established to coordinate the use of Marshall Plan aid
(see Foreign Relations
, ch. 4). Trade with the East also served
important economic interests, however, driving the rapid
development of the metalworking industries during the
1950s and
helping to absorb labor released from the modernizing farm
sector. In the years after the 1973 oil crisis, Finnish
exports
to the Soviet Union also provided an essential market at a
time
of recession in Western markets. Commentators suggested
that by
the 1980s, the Finns, less concerned with security than
they had
been in the early postwar years, based policy decisions
almost
exclusively on market considerations.
Data as of December 1988
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