8. Building Up the Welfare State

Detent

During his presidency, Paasikivi gained the trust of the Soviet leaders, and Finland was able to join the Nordic Council and the United Nations. 

In the 1950s, relationships between superpowers stabilized, encouraging the Soviet Union to seek peaceful coexistence in its international relations. Finland took advantage of the new attitude. In 1955, the YYA Treaty was renewed for 20 years. The Soviet Union returned Porkkala in 1956, earlier than agreed.

Domestic politics between parties was conflict-ridden, breaking up many governments. In 1956, Urho Kekkonen was elected as the president. His tenure was exceptionally long-- over 20 years.

President Kliment Voroshilo (left), the Chairman of the Communist Party, Nikita Khrushchev (center) and President Urho Kekkonen (1900 - 1986) in 1960.

Frozen Nights

In 1958, a political crisis developed between Finland and the Soviet Union. SKDL won the parliamentary elections, but Social Democrats and the Agrarian Party refused to let communists into the government. The Soviet Union declared it didn't trust the direction of Finland's foreign policy anymore. It stopped all trade with Finland, and called its ambassadors home. The Soviet Union was also concerned about West Germany, which had joined NATO in 1955.

The crisis was called the "Night Frost Crisis". The government resigned in order to help solve the crisis. President Kekkonen traveled to Moscow and convinced Khrushchev that Finland's foreign policy was persistent. The price Finland had to pay for getting over the crisis was the Soviet Union's continued interference in Finland's government.

Note Crisis

The cold war and strained relations between the super powers impacted Finland again in 1961. East Germany began to build the Berlin wall. The Soviet Union concluded that militarism and the threat of war had increased in Europe, and they were concerned about someone exploiting Finland's air space. The Soviets were also concerned about presidential elections in Finland, and if Kekkonen's rival, candidate Olavi Honka, would win and possibly disturb the delicate balance in Finland´s foreign policy.

The Soviet Union sent Finland a note demanding the initiation of military consultation according to the YYA Treaty. Kekkonen disbanded the Parliament and traveled to Siberia. Finally, the crisis was settled when Kekkonen convinced the Soviets that Finland's foreign policy wouldn't change during his tenure. The Soviet Union agreed to postpone consultation. Finland committed to reporting about the military situation in Scandinavia. Olavi Honka gave up his candidacy, and Kekkonen was re-elected.

The Berlin crisis and building of the wall was reflected in the Finland-Soviet relationship as well.

Fight for Neutrality

In the 1960s, the Soviet Union took a tighter ideological and military grip on its allies. The Soviets pressured Finland, interfering in domestic politics. After the 1968 occupation of Czechoslovakia, Kekkonen's attitude towards the Soviets changed to being more cautious. The Soviet Union was reluctant to accept Finland's aspirations to be a neutral state.

Finland's neutrality policy and role in international politics improved at the Etyk conference in Helsinki in 1975. The Soviet Union's objective to have post-war borders recognized in Europe was fulfilled at the conference. Western countries' statements on human rights and political rights were approved. These results had an impact on the unraveling of the "old Europe" in the early 1990s.

The conference on safety and co-operation in Europe. Helsinki in 1975.

Trade Policy

Finland had to pay attention to Soviet interests also in trading. After Finland had paid war reparations, trading with the Soviets significantly increased. Western markets were important as well. Finland marketed most of its products to West Europe, particularly to Great Britain.

Due to its close and sensitive relationship with the Soviet Union, Finland couldn’t join the European integration development. Economical integration in Western Europe started in 1957, when the European Economic Community (EEC) was established. Countries that didn't join the EEC formed the European Free Trade Association (EFTA) with Great Britain.

Joining EFTA was vital for Finland's economy. The Soviet Union, however, disapproved of membership plans. Soviet leaders were concerned about allowing Finland to move closer politically to industrialized Western countries, and were also concerned that the Soviet Union would also lose economic benefits. In the end, Finland negotiated a Finn-EFTA agreement in 1961 that ensured an associate membership status. The Soviet Union was granted the same economic terms.

In 1973, Great Britain left the EFTA and joined the EEC (European Economic Community). Finland wanted to join the EEC as well in order to remain competitive. Kekkonen had confidential negotiations about the EEC with Soviet leaders in Zavidovo. Leaks from the negotiations, approaching presidential elections, and conflicts among Finnish parties created a tense atmosphere. 

Finally, the crisis in domestic politics ended. An emergency law was passed to allow the re-election of Kekkonen as the president, and a free-trade agreement with the EEC was signed. The trade union for socialistic countries SEV (The Council for Mutual Economic Assistance) was granted respective trading terms.

Finlandization

The term "Finlandization", Finnlandisierung (evolving to a country like Finland) was adopted in West Germany in the 1960s. The term referred to a state that had fallen under the Soviet Union's authority. This interpretation was rejected in Finland. Finnish leaders emphasized that it was all about retaining the Soviet Union's trust instead of giving in to its will.

New research has shown that the Soviet Union actively interfered with Finland's domestic and foreign policies (for instance, Night Frost Crisis and Note Crisis). Self-censorship that was detectable in the media, cultural life, and business was common in the relations with the Soviet Union. The downsides of the Soviet system were not discussed, and criticism was avoided. The far-reaching power of Kekkonen is regarded as one form of "Finlandization" as well.

Structural Change

Finland's development from agricultural economy to an industrialized country was swift in the 1960s and 1970s. Baby-boomers had grown to working age. Simultaneously, the number of jobs in farming and forest work were declining. The population migrated to cities in southern Finland and Sweden, where a labor shortage raised salaries and where new apartments were available. Migration continued until the 1980s.

The mechanization of farming, more efficient production, and increased fertilization created an excess of farming products. The state started paying subsidies for uncultivated fields. Instead of being farmed, these fields were allowed to rest or re-forested.

In 1975, 60% of Finns lived in cities in southern Finland and in the main towns of the provinces. Near the cities, suburbs were built that provided housing, shopping malls, kindergartens, and schools. Extensive offerings of public services were created in order to establish a democratic welfare state. Reforms included housing allowances to families with children, the sickness insurance act, a comprehensive school system, the public health law and municipal day care.

The public sector offered plenty of jobs, turning Finland into a service society. Equalization of incomes increased consumer demand, ensured small income disparity, and improved equality in the society. A higher standard of living, prospering, increased leisure time, and urbanization were changing Finland into a consumer society as well. The birth rate returned to a lower level and family sizes decreased.

Cultural Shift

In the 1960s, entertainment and the arts embraced political and radical influences, which were also reflected in the literature and other arts. Books, like Under the North Star by Väinö Linna and Midsummer Dance by Hannu Salama, and plays, like The Lapua Opera by Arvo Salo, generated heated dialogue. 

The public broadcast corporation Yle actively participated in the dialogue with its programming. The media began to increasingly promote entertainment. Sports and beauty contests were the most popular types of shows.

The whole nation was excited when Armi Kuusela was nominated Miss Finland and Miss Universe in 1952.

Politics and leftist thought were eagerly adopted by students. People had strong positions about the Vietnam War and other international developments. Stalinists admired the Soviet Union and communism, and objected to conservatism. The commercial youth culture, especially music and fashion, was adopted from the United States and Europe. Free sex and non-marital relationships became more common.