The Second World War had a heavy impact on Finland. Out of a population of some 3,7 million people, approximately 86,000 died in the war and 57,000 were permanently disabled. There were 24,000 war widows and 50,000 orphans. Nearly half a million refugees, Finns from the ceded areas, needed to be resettled.
Finland started to change rapidly after World War II. The country transformed from a predominantly agrarian society into an increasingly industrial one. Finland had to harness its industries in order to pay the extensive war reparations to the Soviet Union. This was a huge effort that consumed the resources of the country in the first years following the war. After the war reparations were paid off in 1952, the Soviet-Finnish trade did not decline, but rather increased. To a large extent, the trade consisted of Finland's selling industrial goods to the Soviets in exchange for crude oil. During the 1950s, the Finnish GDP grew approximately 5% per year.
After World War II, Finland had to be fundamentally reshaped its relationship to the Soviet Union. At the same time, Finland wanted to retain its close ties with the Western European countries and the U.S., and to gradually join the emerging Western and global institutions to the extent possible.
Domestic politics just after the war were characterized by uncertainty and instability. During 1946–1956, there were nine government coalitions, almost one a year. The President – first the war-time leader Marshall C.G.E. Mannerheim, then the long-time politician and diplomat Juho Kusti Paasikivi – brought stability and continuity to political life. The Soviet-controlled Allied Control Commission (the British who were also members of the Commission largely deferred to the Soviets) demanded a change of faces in the political life. This included the conviction of former President Risto Ryti and members of war time cabinets. However, the political institutions remained intact and the democratic system continued to function normally. The Commission left Finland at the conclusion of the Paris Peace Agreements in 1947.
Year 1948 was pivotal in Finland’s post-war history. Finland proved that it could not be maneuvered and would not slide to the Soviet camp despite of having lost the war. The Communist Party (SKDL) suffered a major defeat in the parliamentary elections and lost 11 seats. The Communists were accordingly excluded from the government. The Communist Party did not become a major political force in Finland. Finland would not follow the path of those countries in Central and Eastern Europe where genuine democracy was overruled and which became part of the Soviet bloc.
During the first decades of the Cold War, Finland adopted a foreign policy that became known as the “Paasikivi-Kekkonen line,” named after two successive presidents. This policy could be described as a combination of neutrality and a posture of avoiding major disagreements with the Soviet Union.
The 1948 Treaty of Friendship, Cooperation and Mutual Assistance was the cornerstone of Finnish-Soviet relations during the Cold War and it determined certain limits as far as the international position of Finland was concerned. In February 1948 Stalin invited President Paasikivi to Moscow to negotiate a treaty. President Paasikivi was worried that the treaty would tie Finland to the Eastern bloc. However, the end result mentioned "Finland’s desire to stay outside the conflicts of interest between the great powers" which allowed Finland to pursue a policy and position of neutrality.
Nonetheless, the provisions of the Treaty meant that Finland could not join Western organizations that would have security and defense commitments or implications. Under the treaty, Finland was obliged to resist armed attacks by "Germany or its allies" against Finland, or against the Soviet Union through Finland. If necessary, Finland was to ask for Soviet military aid to do so, but the Soviet military could not enter Finland without a separate agreement. This was the best result that Finland could have achieved under the circumstances. At the time, it was also the wish of the United States and other Western countries that Finland could somehow build a relationship with the Soviet Union that would not be adversarial, but would allow Finland to remain a free country.
In 1955, the Soviet Union returned the Porkkala peninsula to Finland, well before the fifty-year lease granted in 1944 would have ended. The return of Porkkala meant that Soviet troops withdrew from Finland, and this strengthened Finland’s possibilities to claim neutrality.
Finland’s cautious and realistic foreign policy turned out to be a success. Finland wanted to gain recognition for its neutrality, and did have success in this respect. Finland joined the United Nations, as well as the Nordic Council in 1955. These two organizations were very important for Finland, and proved that the country belonged to the Nordic group and in the UN to the Western regional group. Finland started to build a profile internationally as a country that contributes to peace and stability. Finland, for instance, joined the first-ever armed UN peacekeeping operation that was deployed in 1956 to address the Suez Crisis. Some 50,000 Finns were to serve in peacekeeping and crisis management in the following decades.
Immediately after the end of the Second World War, most Americans expected the Soviet Union to include Finland in the Eastern bloc the same way it had done to Poland, Hungary and other countries in Eastern and Central Europe. When this did not happen, the primary objective of U.S. policy became to support Finland in remaining an independent, sovereign and democratic state. This had to be done carefully so as not to provoke an intervention from the Soviet Union. The U.S. supported Finland’s membership in the United Nations, but considered NATO membership to be out of the question.
In 1949, the U.S. Congress decided to reinvest Finland’s World War I loan repayments in academic exchanges to enable Finns to study, train and conduct research in the U.S. The first Finnish Fulbright grantees travelled to the U.S. in 1950. The educational exchanges turned out to be hugely important, as they gave Finns opportunities that did not exist in their own country. Finns gained a lot of academic influences from the States, and for example sociology as a discipline came to Finland from the U.S.
The year 1952 can be seen as a symbolic turning point in Finnish history. During that year, Helsinki hosted the Summer Olympics, Armi Kuusela was crowned Miss Universe and Finland payed its last war reparations to the Soviet Union. These three events gave a significant boost to Finland’s self-esteem.
The proximity of war was visible in Finland during the Olympic Games. The war had ended just seven years ago, and for example coffee and sugar were still rationed. The Olympics had originally been prepared already for 1940, but due to the war, Finland had to wait an extra 12 years to host the games.
Close to 70,000 tourists arrived in Helsinki and saw first-hand that Finland was a hospitable and modern – even if poor – Western country. Thanks to the Olympic Games, many iconic buildings were built in Helsinki. The team from the U.S. was the most successful participant, followed by the Soviet Union which participated in the Olympics for the very first time.
The Olympic Games left two marks in the Finnish culinary scene. Finns got to taste Coca-Cola for the first time during the Olympics. Finland did not have a local bottler, so more than 30,000 cases of Coke were brought to the event from the Netherlands. Finnish war veterans were in charge of selling the Coke, and they also got the profits. In addition, Finnish brewery Hartwall created two pre-mixed long drinks, Gin Long Drink and Brandy Long Drink for the Summer Olympics. The production of the brandy version came to an end in the 1970s, but the gin-grapefruit mix became an instant hit and is still available in most stores and restaurants in Finland.
By the 1950s, Finland had established itself as a country full of innovative designers. Finnish designers gained exposure and won several prizes at the highly influential Milan Triennales. Particularly Kaj Franck, Timo Sarpaneva and Tapio Wirkkala gained international recognition. Finland, Sweden and Denmark created the “Scandinavian Design” brand and this enabled the countries to promote their designs internationally. The highpoint was the “Design in Scandinavia” exhibition which toured 24 museums across the U.S. between 1954 and 1957, bringing Finnish design to a new audience of over a million.