Background Note--Finland 3/97

U.S. Department of State Background Note: Finland, March 1997

Released by the Bureau of European and Canadian Affairs

Official Name: Republic of Finland

PROFILE

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%. Official exchange rate (December 1995): 4.59 
Finnish markkas=U.S.$1.

U.S.-FINNISH 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, long-standing 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 non-alliance 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 -- Derek Shearer 
Deputy Chief of Mission -- Michael Cleverley 
Political Officer - Richard DeVillafranca 
Economic Officer -- Michael Delaney 
Commercial Officer -- Peter Frederick (resident in Stockholm, Sweden) 
Consular Officer -- :Lisa Vickers 
Administrative Officer -- Thomas Ryan Regional 
Security Officer -- Jeremy Zeikel 
Agricultural Officer -- Thomas Hamby (resident in Stockholm, Sweden)
Public Affairs Officer (USIS) -- Phillippe Duchateau 
Labor Attache -- Kevin Johnson

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

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.

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 six-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.

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. 

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).

TRAVEL AND BUSINESS INFORMATION

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