In the 1980s, the Finnish economy boomed, and people were optimistic about the future. The country had developed into a prosperous society, and there was a strong emphasis on the Nordic welfare state. People had more money than ever before, and they used it to buy property, to travel, and to start new hobbies like windsurfing and downhill skiing. The country was turning into a postindustrial society with services responsible for up to 58% of the GDP and the agriculture sector making up just 8%.
Until the 1980s, the Finnish banking sector and international capital flows were heavily regulated. Financial deregulation began during this decade, just like in many other countries. Foreign credit started to flow into Finland, and this led to an investment boom. Finnish banks ventured to foreign markets, establishing offices from New York to Singapore. Credit was cheap and wages were improving in addition to the ever-expanding social safety net. Finns celebrated consumerism, took large loans and admired American yuppies. Public spending grew rapidly, and the economy overheated.
Finns followed American pop culture very closely and found a lot of inspiration from the U.S. Thousands of young Finns spent time with American families as exchange students and a large section of Finnish academics made use of Fulbright Grants and other sources of funding to work and study at American universities. The youth adopted rap music, rollerblading and skateboarding, and "Dallas" was one of the most popular TV shows of the decade. The first McDonald’s in Finland opened in Tampere in 1984.
During the 1980s, Finland became more prosperous and international. The country became a full member of the European Free Trade Association in 1986, and joined the Council of Europe in 1989. Yet the realities of the Cold War were still present.
In 1978, Finns got an unwelcome reminder that Finland still lived next to an unpredictable superpower. Soviet Minister of Defense Dmitri Ustinov proposed to President Urho Kekkonen a joint peacetime military exercise between Soviet and Finnish forces under the 1948 FCMA Treaty. President Kekkonen rejected the proposal immediately, but just the mere proposal shocked Finns who had thought that the Helsinki Spirit of 1975 would mean a permanent thaw in international affairs.
President Kekkonen resigned in 1981, and in 1982 Mauno Koivisto was elected as his successor. Urho Kekkonen had been Finland’s president for 25 years, and had created a very president-centered political system. President Koivisto provided continuity by practicing a cautious foreign policy that stressed Finland’s neutrality. In the domestic sphere, he sought a better balance between the Executive and the Legislative branches by strengthening the role of the Finnish parliament and the Cabinet at the expense of the President.
President Koivisto maintained strong relations both with the Soviet Union and the U.S. The Soviet leadership was reassured in 1983 by the renewal of the FCMA Treaty of 1948 between Finland and the Soviet Union years before it expired. President Koivisto, who had as a young man fought against the Soviet Union in the frontline, also had a deep knowledge of Russian culture and history. He put it to a good use when building personal relationships with a succession of aging Soviet leaders.
That same summer of 1983, Vice President George Bush visited Helsinki, and two months later President Koivisto travelled to Washington, D.C. These visits provided major symbolic and concrete displays of Finland’s strong links to the United States.
During his visit in Helsinki, Vice President Bush won over Finnish hearts by bathing in a Finnish sauna. The Vice President was issued a VIP sauna diploma, and in his thank you note to the head of the Sauna Society he wrote, "True sauna will be in my memory until I die.” When Ambassador Kirsti Kauppi met with the retired President G.H.W. Bush in 2015 in Houston, he still remembered the occasion and said "I have visited your sauna!"
Secretary of State George Shultz stopped in Finland several times in 1985–1988 on his way to meetings in Moscow. This was an indirect way for the U.S. to show its support to Finland and recognize its difficult role between the East and the West. It also provided the American leadership the opportunity to prepare for its meetings with Soviet leaders by talking with President Koivisto who was among the best informed Western leaders on the state of affairs in the Soviet Union. Secretary Shultz was kind enough to give a video greeting to Finland on the occasion of the Centennial of Finnish independence, and reminisced on one of his visits to Helsinki.
The Centennial Story of Finland Part 1: The Path up to 1917
The Centennial Story of Finland Part 2: First Years of Independence 1917–1927
The Centennial Story of Finland Part 3: Interwar Instability 1927–1937
The Centennial Story of Finland Part 4: Finland Fights Bravely for Her Independence 1937–1947
The Centennial Story of Finland Part 5: Recovering from War and Hosting Olympic Games 1947–1957
The Centennial Story of Finland Part 6: Navigation in Cold War Turbulence Requires Skill 1957–1967
The Centennial Story of Finland Part 7: Developing Welfare Services and Hosting Major Helsinki Conference 1967-1977