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Finland (06/99)


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For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Republic of Finland

Geography
Area: 337,113 sq. km. (130,160 sq. mi.); about the size of New England, New Jersey, and New York combined.
Cities: Capital--Helsinki (pop. 525,000). Other cities--Tampere (182,700), Turku (164,700).
Terrain: Low but hilly, more than 70% forested, with more than 60,000 lakes.
Climate: Northern temperate.

People
Nationality: Noun--Finn(s). Adjective--Finnish.
Population: 5.13 million.
Population growth rate: 0.3%.
Ethnic groups: Finns, Swedes, Lapps, Roma, Tartars.
Religions: Lutheran 89%, Orthodox 1%.
Languages: Finnish 93%, Swedish 6% (both official); small Lapp- and Russian-speaking minorities.
Education: Years compulsory--9. Attendance--almost 100%. Literacy --almost 100%.
Health: Infant mortality rate--3.8/1,000. Life expectancy--males 72 yrs., females 80 yrs.
Work force (2.5 million; of which 2 million are employed): Public services--32%; industry--22%; commerce--14%; finance, insurance, and business services--10%; agriculture and forestry--8%. transport and communications--8%; construction--6%.

Government
Type: Constitutional republic.
Constitution: July 17, 1919.
Independence: December 6, 1917.
Branches: Executive--president (chief of state), prime minister (head of government), Council of State (cabinet). Legislative--unicameral parliament. Judicial--Supreme Court, regional appellate courts, local courts.
Subdivisions: 12 provinces, provincial self-rule for the Aland Islands.
Political parties: Social Democratic Party, Center Party, National Coalition (Conservative) Party, Leftist Alliance, Swedish People's Party, Green Party.
Suffrage: Universal at 18.

Economy (1996)
GDP: $124 billion.
GDP growth rate: 3.2%.
Per capita income: $16,000.
Inflation rate: 0.6%.
Natural resources: Forests, minerals (copper, zinc, iron), farmland.
Agriculture (3% of GDP): Products--meat (pork and beef), grain (wheat, rye, barley, oats), dairy products, potatoes, rapeseed.
Industry (31% of GDP): Types--metal and steel, forest products, chemicals, shipbuilding, foodstuffs, textiles and clothing.
Trade: Exports--$40 billion. Major markets--EU 58%, U.S. 7%, Russia 5%, Japan 2.5%. Imports--$29 billion. Major suppliers--EU 60%, U.S. 7%, Russia 7%, Japan 6%.

HISTORICAL HIGHLIGHTS
The origins of the Finnish people are still a matter of conjecture, although many scholars argue that their original home was in what is now west-central Siberia. The Finns arrived in their present territory thousands of years ago, pushing the indigenous Lapps into the more remote northern regions. Finnish and Lappish-- the language of Finland's small Lapp minority--both are Finno-Ugric languages and are in the Uralic rather than the Indo-European family.

Finland's nearly 700-year association with the Kingdom of Sweden began in 1154 with the introduction of Christianity by Sweden's King Eric. During the ensuing centuries, Finland played an important role in the political life of the Swedish-Finnish realm, and Finnish soldiers often predominated in Swedish armies. Finns also formed a significant proportion of the first "Swedish" settlers in 17th-century America.

Following Finland's incorporation into Sweden in the 12th century, Swedish became the dominant language, although Finnish recovered its predominance after a 19th-century resurgence of Finnish nationalism. Publication in 1835 of the Finnish national epic, The Kalevala --a collection of traditional myths and legends--first stirred the nationalism that later led to Finland's independence from Russia.

In 1809, Finland was conquered by the armies of Czar Alexander I and thereafter remained an autonomous grand duchy connected with the Russian Empire until the end of 1917. On December 6, 1917, shortly after the Bolshevik Revolution in Russia, Finland declared its independence. In 1918, the country experienced a brief but bitter civil war that colored domestic politics for many years. During World War II, Finland fought the Soviet Union twice--in the Winter War of 1939-40 and again in the Continuation War of 1941-44. This was followed by the Lapland War of 1944-45, when Finland fought against the Germans as they withdrew their forces from northern Finland.

Treaties signed in 1947 and 1948 with the Soviet Union included obligations and restraints on Finland vis-a-vis the U.S.S.R. as well as territorial concessions by Finland; both have been abrogated by Finland since the 1991 dissolution of the Soviet Union (see Foreign Relations).

GOVERNMENT AND POLITICAL CONDITIONS  
Finland has a mixed presidential/parliamentary system with executive powers divided between the president, who has primary responsibility for national security and foreign affairs, and the prime minister, who has primary responsibility for all other areas. Constitutional changes made in the late 1980s strengthened the prime minister --who must enjoy the confidence of the parliament (Eduskunta) --at the expense of the president. Finland's 1995 accession to the European Union has blurred the line between foreign and domestic policy; the respective roles of the president and prime minister are evolving, and plans are under consideration to rewrite the constitution to clarify these and other issues.

Finns enjoy individual and political freedoms, and suffrage is universal at 18. The country's population is ethnically homogeneous with no sizable immigrant population. Few tensions exist between the Finnish-speaking majority and the Swedish-speaking minority.

President and Cabinet. Elected for a 6-year term, the president:

--Handles foreign policy, except for certain international agreements and decisions of peace or war, which must be submitted to the parliament;
--Is commander-in-chief of the armed forces and has wide decree and appointive powers;
--May initiate legislation, block legislation by pocket veto, and call extraordinary parliamentary sessions; and
--Appoints the prime minister and the rest of the cabinet (Council of State).

The Council of State is made up of the prime minister and ministers for the various departments of the central government as well as an ex-officio member, the Chancellor of Justice. Ministers are not obliged to be members of the Eduskunta and need not be formally identified with any political party.

Parliament. Constitutionally, the 200-member, unicameral Eduskunta is the supreme authority in Finland. It may alter the constitution, bring about the resignation of the Council of State, and override presidential vetoes; its acts are not subject to judicial review. Legislation may be initiated by the president, the Council of State, or one of the Eduskunta members.

The Eduskunta is elected on the basis of proportional representation. All persons 18 or older, except military personnel on active duty and a few high judicial officials, are eligible for election. The regular parliamentary term is four years; however, the president may dissolve the Eduskunta and order new elections at the request of the prime minister and after consulting the speaker of parliament.

Judicial system. The judicial system is divided between courts with regular civil and criminal jurisdiction and special courts with responsibility for litigation between the public and the administrative organs of the state. Finnish law is codified. Although there is no writ of habeas corpus or bail, the maximum period of pre-trial detention has been reduced to four days. The Finnish court system consists of local courts, regional appellate courts, and a Supreme Court.

Administrative divisions. Finland has 12 provinces. Below the provincial level, they are divided into cities, townships, and communes administered by municipal and communal councils elected by proportional representation once every four years. At the provincial level, the 11 mainland provinces are administered by provincial boards composed of civil servants, each headed by a presidentially appointed governor. The boards are responsible to the Ministry of the Interior and play a supervisory and coordinating role within the provinces.

The island province of Aland is located near the 60th parallel between Sweden and Finland. It enjoys local autonomy by virtue of an international convention of 1921, implemented most recently by the Act on Aland Self-Government of 1951. The islands are further distinguished by the fact that they are entirely Swedish-speaking. Government is vested in the provincial council, which consists of 30 delegates elected directly by Aland's citizens.

Military. Finland's defense forces consist of 34,700 persons in uniform (27,300 army; 3,000 navy; and 4,400 air force); the country's defense budget equals about 2% of GDP. There is universal male conscription under which all men serve from eight to 11 months. As of 1995, women were permitted to serve as volunteers. A reserve force ensures that Finland can field 500,000 trained military personnel in case of need.

Political parties. Finland's proportional representation system encourages a multitude of political parties and has resulted in many coalition governments. Political activity by communists was legalized in 1944, and although four major parties have dominated the postwar political arena, none now has a majority position. The Social Democratic Party (SDP) gained a plurality in Finland's parliament in the general election of March 1995. But it won far less than an overall majority and so formed a five-party governing coalition.

The SDP won 28% of the vote in 1995, mainly among the urban working class but also with some support among small farmers, white-collar workers, and professionals. The Leftist Alliance (LA) -- the SDP's rival on the left--gained 11% of the vote in 1995 and joined the SDP-led government. The LA was formed in May 1990 and replaced the People's Democratic League, the group that represented the Finnish Communist Party in the Eduskunta.

Finland's two other major parties are the Center Party, traditionally representing rural interests, and the National Coalition--or Conservative--Party, which draws its major support from the business community and urban professionals. The Center won nearly 20% and the Conservatives 18% of the vote in 1995. The Conservatives are the second-largest party in the SDP-led coalition, which is rounded out by the Swedish People's Party and the Green Party. The Center Party leads the opposition in Parliament.

Principal Government Officials
President--Martti Ahtisaari
Prime Minister--Paavo Lipponen
Foreign Minister--Tarja Halonen
Ambassador to the United States--Jaakko Laajava
Ambassador to the United Nations--Wilhelm Breitenstein

Finland's embassy in the United States is at 3301 Massachusetts Avenue, NW, Washington, DC 20008; tel: 202-298-5800; fax: 202-298-6030.

ECONOMY
Finland has a dynamic industrial economy based on abundant forest resources, capital investments, and technology. Traditionally, Finland has been a net importer of capital to finance industrial growth. In the 1980s, Finland's economic growth rate was one of the highest of industrialized countries.

In 1991, Finland fell into a deep recession caused by economic overheating, depressed foreign markets, and the dismantling of the barter system between Finland and the former Soviet Union. The same year, Finland devalued the markka to promote export competitiveness. This helped stabilize the economy; the recession bottomed out in 1993, with continued growth through 1995. Unemployment continues to be a problem for Finland, and in late 1996 it was around 19%.

Exports of goods contribute more than 20% of Finland's GDP; combined exports of goods and services amount to at least 25% of GDP. Exports and imports of goods equal about 40% of GDP. Timber and metalworking are Finland's main industries, but other industries produce manufactured goods ranging from electronics to motor vehicles. Finnish-designed consumer products such as textiles, porcelain, and glassware are world-famous.

Except for timber and several minerals, Finland depends on imported raw materials, energy, and some components for its manufactured products. Farms tend to be small, but sizable timber stands are harvested for supplementary income in winter. The country's main agricultural products are dairy, meat, and grains. Finland's EU accession has accelerated the process of restructuring and downsizing of this sector.

An extensive social welfare system, constituting about one-fifth of the national income, includes a variety of pension and assistance programs and a comprehensive health insurance program. Although free education through the university level also is available, only about one child in four receives a higher education in the highly competitive system. In the mid-1970s, the educational system was reformed with the goal of equalizing educational opportunities. Beginning at age seven, all Finnish children are required to attend a "basic school" of nine grade levels. After this, they may elect to continue along an academic (lukio) or vocational (ammat-tikoulu) line. But most pursue vocational studies, since the number of openings in higher educational institutions is less than the demand.

FOREIGN RELATIONS
Finland's basic foreign policy goal from the end of the Continuation War with the U.S.S.R. in 1944 until 1991 was to avoid great-power conflicts and to build mutual confidence with the Soviet Union. Although the country was culturally, socially, and politically Western, Finns realized they must live in peace with the U.S.S.R. and take no action that might be interpreted as a security threat. The dissolution of the Soviet Union in 1991 opened up dramatic new possibilities for Finland and has resulted in the Finns actively seeking greater participation in Western political and economic structures.

Relations With the Soviet Union and With Russia
The principal architect of the post-1944 foreign policy of neutrality was J.K. Paasikivi, who was President from 1946 to 1956. Urho Kekkonen, President from 1956 until 1981, further developed this policy, stressing that Finland should be an active rather than a passive neutral. This policy is now popularly known as the "Paasikivi-Kekkonen Line."

Finland and the U.S.S.R. signed a peace treaty at Paris in February 1947 limiting the size of Finland's defense forces and providing for the cession to the Soviet Union of the Petsamo area on the Arctic coast, the Karelian Isthmus in southeastern Finland, and other territory along the former eastern border. Another provision, terminated in 1956, leased the Porkkala area near Helsinki to the U.S.S.R. for use as a naval base and gave free access to this area across Finnish territory.

The 1947 treaty also called for Finland to pay to the Soviet Union reparations of 300 million gold dollars (amounting to an estimated $570 million in 1952, the year the payments ended). Although an ally of the Soviet Union in World War II, the United States was not a signatory to this treaty because it had not been at war with Finland.

In April 1948, Finland signed an Agreement of Friendship, Cooperation, and Mutual Assistance with the Soviet Union. Under this mutual assistance pact, Finland was obligated -- with the aid of the Soviet Union, if necessary -- to resist armed attacks by Germany or its allies against Finland or against the U.S.S.R. through Finland. At the same time, the agreement recognized Finland's desire to remain outside great-power conflicts. This agreement was renewed for 20 years in 1955, in 1970, and again in 1983 to the year 2003.

The Finns responded cautiously in 1990-91 to the decline of Soviet power and the U.S.S.R.'s subsequent dissolution. They unilaterally abrogated restrictions imposed by the 1947 and 1948 treaties, joined in voicing Nordic concern over the coup against Soviet leader Mikhail Gorbachev, and gave increasing unofficial encouragement to Baltic independence.

At the same time, by replacing the Soviet-Finnish mutual assistance pact with treaties on general cooperation and trade, Finns put themselves on an equal footing while retaining a friendly bilateral relationship. Finland now is boosting cross-border commercial ties and touting its potential as a commercial gateway to Russia. It has reassured Russia that it will not raise claims for Finnish territory seized by the U.S.S.R., and continues to reaffirm the importance of good bilateral relations.

Multilateral Relations
Finnish foreign policy emphasizes its participation in multilateral organizations. Finland joined the United Nations in 1955 and the EU in 1995. As noted, the country also is a member of NATO's Partnership for Peace as well as an observer in the North Atlantic Cooperation Council and the Western European Union.

Finland is well represented in the UN civil service in proportion to its population and belongs to several of its specialized and related agencies. Finnish troops have participated in UN peacekeeping activities since 1956, and the Finns continue to be one of the largest per capita contributors of peacekeepers in the world. Finland is an active participant in the Organization for Security and Cooperation in Europe (OSCE) and in early 1995 assumed the co-chairmanship of the OSCE's Minsk Group on the Nagorno-Karabakh conflict.

Cooperation with the other Scandinavian countries also is important to Finland, and it has been a member of the Nordic Council since 1955. Under the council's auspices, the Nordic countries have created a common labor market and have abolished immigration controls among themselves. The council also serves to coordinate social and cultural policies of the participating countries and has promoted increased cooperation in many fields.

In addition to the organizations already mentioned, Finland is a member of the International Bank for Reconstruction and Development, the International Monetary Fund, the World Trade Organization, the International Finance Corporation, the International Development Association, the Bank for International Settlements, the Asian Development Bank, the Inter-American Development Bank, the Council of Europe, the Organization for Economic Cooperation and Development, and INTELSAT.

U.S.-FINLAND RELATIONS
Relations between the United States and Finland are warm. Some 200,000 U.S. citizens visit Finland annually, and about 3,000 U.S. citizens are resident there. The U.S. has an educational exchange program in Finland which is comparatively large for a Western European country of Finland's size. It is financed in part from a trust fund established in 1976 from Finland's final repayment of a U.S. loan made in the aftermath of World War I.

Finland is bordered on the east by Russia and, as one of the former Soviet Union's neighbors, has been of particular interest and importance to the U.S. both during the Cold War and in its aftermath. Before the U.S.S.R. dissolved in 1991, longstanding U.S. policy was to support Finnish neutrality while maintaining and reinforcing Finland's historic, cultural, and economic ties with the West. The U.S. has welcomed Finland's increased participation since 1991 in Western economic and political structures.

Following the dissolution of the Soviet Union, Finland has moved steadily toward integration into Western institutions and abandoned its formal policy of neutrality, which has been recast as a policy of military nonalliance coupled with the maintenance of a credible, independent defense. Finland's 1994 decision to buy 64 F-18 fighter planes from the United States signaled the abandonment of the country's policy of balanced arms purchases from East and West.

In 1994, Finland joined NATO's Partnership for Peace; the country also is an observer in the North Atlantic Cooperation Council. Finland became a full member of the European Union (EU) in January 1995, at the same time acquiring observer status in the EU's defense arm, the Western European Union.

Economic and trade relations between Finland and the United States are active and were bolstered by the F-18 purchase. U.S.-Finland trade totals almost $5 billion annually. The U.S. receives about 7% of Finland's exports--mainly pulp and paper, ships, and machinery --and provides about 7% of its imports--principally computers, semiconductors, aircraft, and machinery.

Finland generally welcomes foreign investment. Areas of particular interest for U.S. investors are specialized high-tech companies and investments that take advantage of Finland's position as a gateway to Russia and the Baltic countries.

Principal U.S. Embassy Officials
Ambassador--Eric Edelman
Deputy Chief of Mission--Michael Cleverley
Political Officer--Stephen Cristina
Economic Officer--Ingrid Kollist
Commercial Officer--Peter Frederick (resident in Stockholm, Sweden)
Consular Officer--Lisa Vickers
Administrative Officer--Suneta Halliburton
Regional Security Officer--David Benson
Agricultural Officer--Robert Tetro (resident in Stockholm, Sweden)
Public Affairs Officer (USIS)--Phillippe Duchateau
Labor Attache--Frank Collins

The U.S. embassy in Finland is at Itainen Puistotie 14, Helsinki 00140; tel: 358-9-171931; fax: 358-9-174681.



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