IMPLICATIONS OF TRADE WITH THE SOVIET BLOC CASE STUDY 1 FINLAND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A001300120005-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 12, 2016
• Document Release Date: March 26, 2001
• Sequence Number: 5
• Publication Date: December 7, 1955
• Content Type: REPORT

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495i
iO DISSEM Al3Ruii0
ONO
25X1A
414)
IINTRAL INTELLIGPIACE AGENCY
Office of the Chief, Economic Rescarcl
Of'fice of fiesearch and. Reports
1
FOR?; Chief, Economic liesearen
Chief, naming and Review Staff
Transmission of Draft Reports, Chiii; Iroject No
Title Intlications of Trade with the Soviet Bloc
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.a3TOPIL:i''.`,?014,ect draft report (Original and two copies)
34closlize is forvesffe_d_ horewit'AreviewAacl.palalicato Am!Ci category
RA
iatainent of coordination attached, with initials of inilividuals am. !LI. units,
3.j;rrangewnts for map.) and/or graphics through St/F/3 with CarbographSt:'
4, Vie OCOM ride d 1,-AS Gemination : Standard LJLJ Reoaeto j
.Aibcommittee
Case Staly l_FINLAND
1,44..,..,31A.Maliwc=4311tnrandr 01602-0 ..........050,001.04000, 1.010.,.000.
25X1A
L::::::7 Other, fomirrn, eto, (attach 3arri
Has irl'orAation on LS military end product z or rtanrotrer been used
no
Q? Ilcz erect use been made of the intelligence or inforP,v,i,don of ane'aw?
yes
7, Ilave all sonrces been considered in the Areparation of repart
yes
Ilan-hours utilized by this division in producing this report:
13ranches of other ORR Divisions contributing to this re.)orts, and (it
mn-hours utilized by each: 9
9. Latinate Cards: . Haw been submitted to Centra;J. Leona/de
Are attached.
in......?seamwerrrs,
),, The analyst responsible for consultation is:
Milton Kovner
0.000?014.010*.01.4.11, 4110?01/401C,00
P'
OA Me
s/TF
Wanciir-
2085
yu,
en)
Gaps it Intelligence procedures of the Analysts' Manual. otics :? o)
a? Int,elliesenee information gaps disclosed in this 'project are JL:,,,,:$red
specifically in existing collection require:lents.
t. Those intraligence infer:dation gaps disclosed, in this stchly
not :?.oviotisl,,,r filed as requiremnts have been transmitted to
forme equArements memorandum, a copy of which i attached,,
Ifot:Ice Is inapplli.cable to this project.
1r 7
12., Ccmme.ltps:
A
1:0hief, "- 1
r.1 Lt. clasel'Ice.tion of this transmittal. sheet w3..11 be dzialiced o co.p.,:c1,. 1,:t
.1r1BsilfloF.;1.tion of the draft report which it covers
T
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_
Oi
110FACIATIM Or TRAM Mva INE sonar MOO
Waft Stuty ?MAIM
Olail Project te.see
30 recerber 205
41,2 *doe
AHOP,"
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NO DISY--Al ABROAD
A.
B.
C.
D.
eii
w0r00000000000 ft 00 000 00000
00000000000 0 WW000000400000000 11000 0 W000
0 0000,00 00000000 w 0 . 4000 0 000000000401
00000000000 00 w
fife Posturer Trade Pattern
AVeeidentS
000.000
Provisions
0000 M0
mm04600000,00 . 000 wwww
. 00000000000000404000 00000000000 ...
00000000 W00.00m000000000 00000
tel [phone]
000000000.10 000
000000000
61.00000
A. Went of limnieh Dependence on Soviet Bloc Trade . ..
B. lnplications and Consequences of Such Reliance . ........
C. The Finnish View .............................
ATOM
A
0100 SO
1 ADnnAn
'
Statistical Data
0,40
. . 000 000000000
and Caps ia IntelLigence
00000
06000000100000. . 000000.01.0000000 000 00000
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9
9
10
12
14
14
16
19
21
28
29
AI
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NO DISSFM ABROAD
;-CQ17M
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cotton ars now
Bloc e
of
of 1=2 end s
of which
?
Pet
of its reporationowtorn
taut
period of initial adjustment adopt itself to new
and trade vi
tern willinertess
bulk of mune e tradi
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Nifk
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Prior to the
Duchy -tembed to
?
M1600120005-6
position 611 an autonomous
inevitably
Russia secovated for ease 30 percett of total Finnish
clo ly Mash industz7 been geared to Russian imperrt requirements
that in
3 Raisin. absorbed. 6e percent of inreivi all pap and p evorts,
percent of its leather goods, 64 percent of its seta
96 percent of its stone and
of the spinniag sal waving
The Possian revolastion and sdbeequent F1fth independence sOstantially
altered rizganita tradi lonal foreign trade pettern4 and after 1920 the
production and 97 percent of the products
share of
total foreign trade of the um mash Rept)
'whet historically had beenrialandts chief export rrt vas due
implementation of the
sufficiency.
100
erehmaas or oods hetveen the
Ju*ofth
The
by that of
uati1 1953. In 1938# the lest
ing its imports to vitally needed
Gd effort made to expand the
vas abrogated by the coming of var.
of
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bioall ABROAD
.5
9.2
rte. AM
a
2,8 pereant
of the total output ill
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lmei
ions imposed by tbe armistice treaty of $eptaaber 19
t peace treaty of 1917. Under their provisions
pay in kind to the USSR war reperattona amounting to
300 Wilton 1938 %o11.ra payable within a. six-yeer period.
vent agreftienta re&teed the son to 226 million 1938 &glare and extended
t1 term of payment to eiisht years, the Soviet demand that reparations
previously exported by Finland
industrial production Y Aided
thg $373
ustrtes,
aber 21
however, U.S. and
loam
of
Table I
to
Year
dollars
1944
.2
115
91.2
1946
64.5
3.947
76.5
1948
84.9
949
74.2
950
34.1
1951
53.9
.27
8.17
saa
10.40
11.55
22.23
7.85
12.4o
.7
3
?
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4.3
614
27.6
16.7
3.7.0
35,7
8.7
6.2
5.0
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to meet
of the modifications in Pinlandts 1ndustria3. structure
Table I/
mikapkor ork.kalm kop
83.9
2.8
1.01.11411M
.1.111.10iNlk
27.8
72.2
31.2
35.3
5.7
0.0
77.6
3.0.7
WOMAN
W.140,
8.7
4.6
MORONI
3.7
8.0
100.0
100.0
100.0
6.40.1..061,k .kkk NS al
wary. f*. .4ra WM. k?kkelkiNkk..kgikill.iikkikkililit
laajor
Wile/1m fiabotries with 353o the
co
tal value a reperat
hipplas of various types, 2.2 percent to
5.7
of
?
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NO DLY'rv 'ROAD
4
show by the
Year
and
17
indices of i trie.3. develcgment.
1938
100
100
100
100
1945
87
117
09
32
166
109
235
1954
189
231
air wail* owarao***-.........m. *Me
OFIR *Ill 411,414.0.6 OH. *it
ly a Wine
total tyvirstrial
?J
41 n
; -?
percent of the country's
vs have seen, haa increased
19514 the metal Wm-tries
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or by 64 percent,
ice aa a idulde
industry Increased from 590 to 4,556 or by 670 percent IV
4,5
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rAbuNi
Once
MISR
Mat
State waved to be inevitable. The evension of Finnish emasercial exchanges
with. the WM, due in part to pressing postwar reconstruction weds, the
Y of 1947
IxteacegaibUity
of supply and the bear( burden of mem.
tiona,brought about important modifications in
the di-
of Finland's foreigia trade*
Wet striking, ot
Europe awl the USM in Finland's total trade picrtur.
inaigrdficant .5 Dement of total Finnish eavorta that
1938, the proportion hes reashrocesed to a peak of 25.4
Thia inarease depr
17Pf* the fi
-
Moe registemi s
a
e 1917. At the same time, the rest of the
agreements with Bloc nations
desimed to cosponeate for Finnish-Soviet trade imbeleuee
nasal. Imparts
34.4 pore
It 3 percent of total imports in 1947
year of 1953.*
It is isvortant to note, however, that the alarming pro?partixa of Mulish
trade with the Soviet Bloc in 3-Z3 was due less to an sizable iwrease
in purchases from the East then the steady decline in Finnish exports to
the Free World after the Korean War. See Table 2, Appendix A.
ABROAD
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NO DISSLM ho
iCW
Prior
7, P
7
ocernereial
a vith the osea were sore firmly
iple and the
ri
vas evident in the structure of mash
history, products ce the ar'eatly
roi s eissificaut share of
a rive yeer
FizzalskoSoviet trade ea:cement
rts to the
4, 34
0
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consist of daps. Wood aad 'wood
xemainder. Ifiraxish import ccnitzuts eat
for gmilat fodder, truism products, eurami *Atm.
In &ay 1954, aecond 54-year
43
coaciWied comingthe years 1956-3,960 gamal. the =mod& Y emSecomt
of Sovie wirizarish trade ramained ir
that, of previous sereetwonts?
EVOrtli Will 11403.,Udit 414915 ting to 3&.0 percent of the value at total
exports to the UM) products of the Natal izeustales unting to 22.0
percent and wood and product* totaling 3344 per. .12/ nuatith
.c.vozto to argi imports from the OM are scheduled. to shirm a steady increase
during the 9564060. An annual flattish cavort surplus? of $40 zillion
is to be atewasated partly by trilateral li'veries from the European
Satellites and partly by comertible yummy ausgaied by the USSR. A ceiling
at 60 aMion riblea is established for the deficit Vetch may be eoat1ated
by either party
or sem Voir mutially agreed%m 2il
In
drain upcn either
The asount borrowed within the
at 2.5 percent and is to be repaid in the awe **dim over a
years. Th.iso the first instance of a Soviet go34 or ort;
at the
No r,.1,14-1v, ppm.),An
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111
iTrn
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NO PSSEM ABROAD
loan embed. to a aces-Bloc
credit attended
, tt
a
Mimi in aunlant 1955* Mae far Fisaaud has drums a
tote/ ot $7,5 adllion to import cuminicy reserve* of the Beak of mined
wM for goecially selected productive purposes*
The trilateral tweezes:its with Satellite ccasstries tocompensate
for a surouwarsalitalevorte to the sant has bees) lavvided in the 1950
Lan g tarn ispeenent end in all sameguent te eivemixte with the USSR*
isdbalsuces
at
1951
with
except Warta and Mania* At the eel of 15% the Finnish
clearing account with the
comma
34)r 3) Walden rubles a
'Hem
at tile Peek aurihS 1954* ra en effort to reduce its tMtss, the
USSR not May eneoureaed trilateral trade armaments with other Soviet
Bloc hut also nide direct settlements with Finlend in gold sod
foreign
totaling 40 million b1 during 1,954,,
The nixie clearing arzengcnente* however* have substantially
night have accriasd from Finlarsite ox to
find suitable imports from tbe Soviet Moe and in
reed a obliged to offer ruble
mK.i".Q.Lly! ImpnA:r?
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ED
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NO DISSEM ABROAD
pigment for ITtwit& exports were Blade in bard
NO DISSEM ABROAD
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NO MSSEM ABROAD
A.
induatriel products, bas in turn angezdered *what swears to be a thatti?
dependence von the Dc as a iwurce of supply. Ibtrithetesslieg,
re.exportat ived from the East
In au effort both to rid herself of 11te4 iart ind to wrchase needed
a significant share of
products or
-the
4.5 percent
data tor 1554 indicate that Masa
Naat kt to itBindustrial output. Marty-six percent of the
value of ship exports went
vejae as sell as SO pereatt of all exports of sealtinery (muter
and oopper woducts. lane Pinlecer forest products ism marlinteti largely
in the West, 95 wawa of all prefabricated houses sag:ports were *eat to
the OM in 190. On the twat side the USSR implied 72 percent by
valimt of Pinlandis treat grain imports, %, pewees% of its petroleum products
(largely of Rummaien origirk) 7/ percent or its sugar" 143 percent of its cotton*
NO MSSF5.-1 ARROAD
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tiMrjto
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52
a
rvc,orlit Appn.AD
0
of
inn in 2Z5,1
16
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NO ABRUAD
The commie
L31 Finland's trade
LIMITED
by at
arid out of
the illartioli stdpbuilding end metal industries continue to rely almost
ego way on the Swiet market. Fiztnish relisece for alpplies on the
Wm* and the USSI1 in particular is nos virtually cowlete for petroleum*
coals bread Waittai sugar, tbader end fertilizers and aiepificent in the
caseof iron end steels ft:Imo-alloys* cotton end a mamas? other
industrialra
hi
received in
East Germny.
'Mat su all a depandeme )4ton the Soviet nee eonitistes a latent danger
liiklorte of meallinerys tractors and ealtonobiles
tly been
to the countree independence end
volzerableto vet reau, hae bee
of occas t receut
over dependence ea Soviet
market for Finnish exports of prefth1
decreased fres apprcetimstely MA, million in
in 1953 to leas than t24.1 million in 1954.* Finniah. enticipet
patiticsaly and economically
of
Finlendis dependence upon the Soviet market is evidenced by the tACt
that of a total 1954 evort of 'MAW KW= meters* the VeSR took
7541.000 square amtezs.
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1,74
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DiSa111 ABK6AD
150 thousand square meter exosual evert to the WM as provided for in
1956, was frustrated
250 eqiera meters in 15.
to bi4b.coat induirtaT are indeed slim,e at this point
it is ult to gauge the
of igoluctiort in one of Finland $ wet imortent branches of lataatinr,
oceesions
On the other hard,
for t
inreillate threat to Finnish
Unicevera to cut ber trade
=tate eauld Wiz
th
it
24 If the Soviet
Firtla wad adjust to new patterns of production, consumption sal foreign
trade with
but zt fatal,
? The period of adjustment wad be uncomfortOle
working imbistries already sell 70 to 80
percent, Vet their output to the hew neeket? If costs mild be measumbly
decreased, or subsidies arranged, sodernisat
fleet, repair of roiling stock, etc. coui4 r
stdpyardst and
supplies of grain, oil aM coal could
World. On the Wort side in tense of Weetez
requirements of 200 000 tone of wheat aM 2,C
The failure of Ruseian
be made good frail
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