1938: Finland

Neutral Foreign Policy.

Finland, feeling increasingly menaced during 1938 by its exposed position between Germany and the Soviet Union, sought to follow a neutral foreign policy. It cooperated in the steps taken to form a neutral bloc of Scandinavian states which, in case of a European war, would act together to preserve their neutrality and independence against belligerent encroachments. While avoiding a military alliance, the four Foreign Ministers agreed, on April 5 and 6, to stand clear of European coalitions of great powers. In May, they signed an agreement accepting similar neutrality rules, to be applied in case of a general war. In July and September. Finland joined with the other six 'Oslo powers' in declaring itself under no obligation to take part in sanctions imposed by the League of Nations against an aggressor state.

Fortification of Aaland Islands.

Germany's rearmament in the Baltic and its antagonism to the Soviet Union restored the Aaland Islands to their former strategic importance. These islands, located at the northern end of the Baltic Sea, could, if fortified and controlled by a strong power, command the sea routes to the Soviet Union, Finland, and northern Sweden. After the World War, they were placed under the sovereignty of Finland and, in 1921, were by international agreement permanently demilitarized. Since 1935, however, German naval officials, counting on Finland's sympathy and possibly desiring a strong base for an attack on the Soviet Union, suggested that the islands be fortified. The Soviet government strongly opposed the move. Early in September 1938, the Finnish and Swedish governments announced that they had begun negotiations looking toward an agreement that would allow Finland to block off the Gulf of Bothnia against other navies. Despite Soviet suspicions, this move seemed calculated rather to prevent other powers from making use of Finnish territory as bases of attack than to afford such use. The Aaland islanders themselves strongly opposed fortification. The Government supplemented its plans for fortification of the islands by launching an armaments program designed to strengthen its general defenses. In May, Parliament voted a program calling for the expenditure of about $60,000,000 during the next seven years.

German Nazi Influence Opposed.

Germany's increased prestige after the Munich agreement of Sept. 30 was reflected in the resignation, on Nov. 16, of Dr. Rudolf Holsti, the Finnish Foreign Minister. Dr. Holsti had been antagonistic to National Socialism, and his retirement was interpreted as a measure aimed at maintaining good relations with Germany. On the other hand, the Government, on Nov. 22, dissolved the Fascist-inclined Patriotic National Party, which had 373 local organizations and 14 of the 200 seats in Parliament, and suppressed its 18 newspapers. The party was charged with violating the law by enrolling schoolboys and by conducting itself along the lines of the 'Lapua' movement which was dissolved as illegal three years ago. The Fascist newspapers took action in the courts to have the measures against them removed.

Other Foreign Relations.

In July. Finland sent a delegation to the United States to take part in the celebration of the 300th anniversary of the founding of the Swedish colony in America. In the same month, it decided to hold the Olympic Games of 1940 in Heisingfors.

Finland's foreign trade relations were placed on a more stable basis when, on Oct. 19, Parliament enacted the first permanent tariff law. The world decline in prices, especially for timber, however, caused a marked fall in the year's exports.