Europe

Finland
Last reviewed: 21 May 2009

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HISTORY

Recent History

Finland's recent history has been a time of enormous change with the transformation from a desperately poor, primarily agricultural society in the 1920s to one of the world's most advanced nations in the space of one lifetime. The late 1990s were dominated by the growth of the Finnish economy and Finland's development as an EU Member State including their successful EU Presidencies in 1999 and 2006.

The rapid growth of the 1980s had been abruptly checked by the collapse of the Soviet Union (Finland's single largest trading partner - but on a clearing basis): between 1991 and 1993, Finnish GDP fell by 10%, unemployment quadrupled to 20% and public debt rose to record levels. This encouraged the Finns to refocus the economy towards high technology products aimed at Western Europe - a decision that has now paid off handsomely.

The collapse of the Soviet Union allowed Finland to step out of its political shadow. Finland saw its interests best represented within the European Union and became a full member in 1995. Membership of the EU did not change long standing de-facto commitment to its non-aligned status. The Maastricht Treaty did not establish a military alliance and allowed individual countries to continue with their own defence arrangements. Finland considered these provisions to be compatible with non-aligned status.

The government, (led by Paavo Lipponen 1999 - 2003) pursued economic policies, to meet the Maastricht Criteria for EMU. This included reining in public spending and cutting unemployment benefits despite strong union opposition. Finland was among the first wave of EU member states to adopt the euro. This followed a public debate that centred on Finland’s vulnerability to asymmetric shocks (such as the collapse of the Russian Rouble in 1998). As a result of the debate, Finland developed a unique "buffer fund" solution under which funds are set aside against possible future hard times. Finland became the only Nordic EU member to adopt the euro as the national currency.

The current Finnish Government has identified a number of areas that could be addressed over the coming years in order to improve Finland's international competitiveness:

further reform of the world leading education system focusing on universities and adult learning
more resources into Research and Development: target of +4% of GDP
addressing the growing demographic deficit
measures to attract more foreign investments
prioritising infrastructure investment on links crucial for international competitiveness.

Finland last held the EU Presidency from July-December 2006. A key theme was innovation. Other priority areas included improving the EU's global competitiveness, climate change;enlargement, developing a coherent external energy policy and EU-Russia relations. Finland held the Presidency in the Nordic Council of Ministers in 2007, was President of the Nordic Council (a separate role from the Nordic Council of Ministers) in 2008 and is currently (2009) chair of the Nordic Defence Co-operation Council.

Finland also held the 2-year chairmanship of the Barents Euro-Arctic Council (BEAC) until 15 November 2007, when they handed over to the Russian Federation. Finland held the Organisation for Security and Co-operation in Europe (OSCE) chairmanship in 2008.

Longer Historical Perspective

The earliest Finns lived in isolation until the Viking incursions around AD 800. Swedish-Russian rivalry over the area stamp much of subsequent Finnish history. For over 500 years, from the 12th century, Finland was a Swedish dependency. Close Finno-Swedish ties are today a legacy of those times. As a result of the Treaty of Tilsit in 1809 Finland became part of Russia as a Grand Duchy of the Czar, enjoying a high degree of autonomy. The 19th century was a period of national assertion, against the ancient dominance of the Swedish language, and from the 1890s against Czarist measures to impose Russian culture and political control.

On 6 December 1917 following the overthrow of the Kerensky Government in Russia, Finland declared its independence. In the civil war of 1918 a Finnish-German alliance defeated Finnish Communist faction and drove out the Russians. In 1919 the Finnish Republic was established and a new constitution introduced. In 1920 Finland joined the League of Nations. Mutual suspicions strained Finnish-Soviet relations in the 1920s and 1930s.

On 30 November 1939 the Soviet Union invaded Finland, starting the Winter War concluded with the Treaty of Moscow in March 1940. When Hitler’s Germany attacked the USSR in June 1941 the Finns were co-belligerents. In 1944 Finland signed an Armistice with the USSR. It ceded 12% of its territory to the Soviet Union and agreed to pay heavy reparations and to rid Finland of German troops still in its terrority (Lapland War). In 1947 Finland concluded a Peace Treaty with the Allied Powers; and in 1948 the Treaty of Friendship, Co-operation and Mutual Assistance with the USSR (the FCMA). It committed Finland to repelling attacks mounted by Germany or its allies on Finnish territory or on the Soviet Union through Finnish territory. It provided for joint military consultations in face of an 'established' threat of attack.

In 1955 Finland joined the Nordic Council and the UN. In 1956 Urho Kekkonen succeeded Paasikivi as Finland’s president, continuing his foreign policy of combining Finnish neutrality with special relations with the USSR (the 'Paasakivi-Kekkonen Line'). In October 1961 (the 'Note Crisis') Finland resisted Soviet pressure to invoke the consultation clause of the 1948 FCMA Treaty. Finland became an associate member of EFTA in the same year, joining the OECD in 1967 and entering agreements with the EEC on trade and with CMEA on scientific and economic co-operation in 1973.

In 1975 Helsinki was host to the Final Act of the Conference on Security and Co-operation in Europe (CSCE), a tribute to Finland's neutral standing in the international community. In 1982 Social Democrat Prime Minister Mauno Koivisto took over the Finnish presidency committed to maintaining the Paasikivi-Kekkonen Line in foreign policy. Fears of Soviet objections to the transition proved groundless. In 1986 Finland became a full member of EFTA and joined the Council of Europe in 1989. The Finns joined the European Union in 1995 and were founder members of the Eurozone.

BBC Timeline of Finland

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Useful Links

BBC Timeline of Finland
UK Trade & Investment Country Profile: Finland
Virtual Finland is a comprehensive website administered by the Finnish Ministry of Foreign Affairs with links to government, NGOs and other Finland–related sites.
The national broadcaster YLE has its own site in English including live Finnish radio and a recorded news summary in English.
The leading daily newspaper is: Helsingin Sanomat - a Helsinki newspaper that has a wide readership in the rest of Finland.
Finnish Statistics