Finland had to adjust its foreign policy after World War II to the changed international environment however, it continued to enjoy good relations with West European countries, particularly in the field of economic cooperation. The country joined economic projects such as GATT and the International Monetary Fund (IMF--see Glossary), but, wary of arousing Soviet apprehensions about potential political ties to the West, did not seek membership in the Organisation for European Economic Co-operation (OEEC). Through a clever device, however, Finland did manage to participate in the trade benefits provided by the OEEC's European Payments Union: in 1957 Finland formed its own body, the Helsinki Club, which was subsequently joined by all OEEC countries. In 1961, for imperative economic reasons, Finland worked out a special relationship with EFTA after complex negotiations. Finland's relationship, an associate membership in the body, became feasible after the Soviet Union agreed that it was compatible with the Finnish policy of neutrality and after tariff arrangements ensured the continuity of Finnish-Soviet economic cooperation. A more stable world meant that in 1969 Finland was able to join the OEEC's successor, the Organisation for Economic Co-operation and Development (OECD). In 1973 Helsinki, in a balancing effort, signed agreements with both the EEC and Comecon and was given a special status with both organizations.

Another subtle act of diplomatic balancing was Finnish treatment of the thorny question of what kind of relations it should have with the two German states. To recognize either would antagonize one of the superpowers. The Finnish solution was to establish two separate trade missions, one in each of the Germanies. This arrangement allowed diplomatic relations and alienated no one. Once the two German states recognized each other in 1972, Finland was able to establish normal diplomatic relations with each of them.

The years since the early 1970s have seen a steady normalization of Finland's relations with Western Europe. In the 1980s, Finnish trade with the region accounted for about 60 percent of its exports the country participated in European economic and research endeavors like Eureka and the European Space Agency (ESA) and 1986 saw full Finnish membership in EFTA. In addition, by the end of 1988 all obstacles appeared cleared for Finland's membership in the Council of Europe (see Glossary) the following year.

The increasing integration of the EC, however, presented problems for Finland and for EFTA's other neutral states. The supranational character of the EC, which was always incompatible with Finnish neutrality, became even more so with the signing in 1985 of the EC's Single European Act. The act aimed at foreign policy cooperation among members, and it therefore made Finnish membership in the EC inconceivable. Exclusion from the EC, however, could threaten Finland's export-based economy if the "internal market" that the EC hoped to have in place by 19921f6 92 led to trade barriers directed against nations outside the Community. The late 1980s and the early 1990s were certain to be a time of intensive Finnish dicussion on how this challenge was to be met.

Data as of December 1988