During the first millennium BC, various peoples settled in Finland, including the nomadic Saami who inhabited the north of the country and the Tavastians from central Europe. A notable feature of this migration was that the settlers spoke a language belonging to the Finno-Ugric group (which also includes Hungarian and Estonian), which is quite distinct from the Indo-European languages spoken throughout most of the rest of Europe. During the Viking Age, between the eighth and 11th centuries, Finland – an area larger than the present country, extending as far east as the Karel peninsula, now
part of the Russian Federation – provided the backdrop for expanding trade and occasional wars between Swedes, Russians and Germans. Competition for influence in the area increased thereafter. The Swedes predominated until 1240, when they were defeated by a force from the Russian province of Novgorod. The Swedes were not wholly expelled from the region, however, and at the Treaty of Pähkinäsaari in 1323, Finland was divided into Russian and Swedish spheres of influence.
The Swedish part – which roughly coincides with modern-day Finland – was granted the full rights of a Swedish province in 1362. As such, it became part of the Danish-led Kalmar Union and, when Sweden broke away from the Union, remained under Swedish control. The Russians continued to covet the territory and as Swedish influence in Europe waned at the beginning of the 18th century, Finland was briefly occupied by the Russians. The tug-of-war between Finland’s two powerful neighbors continued for the next 200 years, while the Finns concentrated on preserving their unique language, culture and institutions. In 1917, Finland was an autonomous region within the Russian Empire but, in the aftermath of the Bolshevik Revolution, Finland declared independence, which the new Soviet government accepted after brief efforts to re-assert control. Further fighting between the two took place on the fringes of World War II, between 1939 and 1941. Under a formal peace treaty signed in 1947, the Finns agreed to cede territory to the then USSR and pay reparation.
The existence of a Pact of Friendship, Co-operation and Mutual Assistance between the two countries has led to the term ‘Finlandization’. Bilateral relations improved after the arrival of Mikhail Gorbachev at the Kremlin and the two countries signed a 10-year treaty in 1992. Since joining the EU in 1995, given the Russian Federation’s preoccupation with its own situation and reduced international clout, the focus in Helsinki has not only principally switched towards Europe but also towards the development of relations with the newly independent Baltic states of the former USSR, with whom there are cultural and linguistic links. Finland’s appreciation of Moscow’s sensitivity remains acute, nonetheless, typified by its refusal to countenance future membership of NATO, which also remains deeply unpopular among the electorate. In the last few decades, domestic politics have been dominated by the Social Democratic Party (SDP) and the Center Party (known as ‘Kesk’), which have led a long series of coalition governments and presided over the evolution of a centrist consensus in Finnish political life.
In recent years, the main change in the political landscape has been caused by the emergence of the right-wing National Coalition Party (Kokoomus, referred to as ‘Kok’). Finland’s long-serving President, Mauno Koivisto, the architect of its delicate balancing act between East and West, stood down in 1993, after two terms. He was replaced by the SDP candidate, former senior UN official Martti Ahtisaari. He was succeeded in turn by another Social Democrat, Tarja Halonen – the first woman to hold the post – at the beginning of 2000.
The SDP has also dominated successive coalition governments. Paavo Lipponen, the leader of the SDP, assumed the post of Prime Minister following the general election of March 1995. Lipponen survived the 1999 general election, and finally ceded office following the most recent poll in March 2003. This was won by the Center Party, whose leader Anneli Jaatteenmaki took over as premier, although the Social Democrats were brought into the new coalition government along with the Swedish People’s party, which represents Finland’s ethnic Swedish population. Jaatteenmaki’s tenure was short-lived. Brought down by a political scandal, he was replaced in June 2003 by Martti Vanhanen.
GovernmentThe constitution allows for a President, who is Head of State, and a single-chamber Assembly, the Eduskunta. The President is elected by direct popular vote for a term of six years, while the 200-strong Parliament is elected every four years.
EconomyFinland is a highly industrialized country, producing a wide range of industrial and consumer goods. Timber and related industries are a key component of the economy, accounting for 40% of all Finnish exports, but the country is consequently vulnerable to fluctuations in world market prices and demand levels for timber, paper and finished products such as furniture. Per capita annual income is just over US$31,000 (2005).
Agriculture is relatively important by the standards of most European industrialized economies and, despite its climatic and geographical conditions (which only allow a very short growing season), Finland enjoys virtual self-sufficiency in basic foodstuffs such as grain, dairy products and root crops.
The largest industrial sector is engineering, where traditional ‘metal bashing’ industries are also relatively important by the standards of most industrialized countries. Mining is relatively small, although exportable quantities of gold are produced and diamond deposits were discovered in 1994. Industry is heavily dependent on imported components.
The service sector is notable for the spectacular growth of mobile communications to which Finns are now among the world’s highest per capita subscribers. A number of Finnish companies are also prominent in parts of the global telecommunications equipment market.
After a sharp decline in GDP growth in 2001 from 6% to under 1%, caused by a collapse in exports, Finland has undergone a gradual recovery. Estimated annual growth as of 2005 was 2.9%.
Through its geographical position and political neutrality, Finland has developed unique trading links with East and West. Its principal partners are now Germany, Sweden and the UK.
Finland joined the EU along with Sweden and Austria in January 1995. Since then, after meeting the required fiscal and budgetary targets, Finland has joined the European Monetary Union and adopted the Euro at its inception in 2001. Finland is also a member of the Nordic Council and the Organization for Economic Co-operation and Development.
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