Russo-Finnish Trade: A Research Proposal
Finland started by paying Russia a large sum in "reparations."
Thereafter trade was conducted as barter, with an accounting system to keep track of which country owed how much to which. Russians provided Finns with raw materials, especially oil, at a price said to be somewhat below the current world price. Finns provided Russians with a variety of manufactured items--it isn't clear how the prices were determined. No money was actually supposed to change hands. At the end of the period, when the Soviet Union collapsed, it turned out that the Soviets owed quite a lot to the Finns; Russia has now paid off the debt.
The obvious conjecture, given the reparations, the relative strength of the two countries, and their previous history, is that the trade was a form of disguised tribute, that the Finns were paying off the Russians not to attack them. Several people in the conversation, however, who claimed to be familiar with the facts--Finns and an American long resident in Finland--claimed that it was the other way around. The Russians provided the Finns oil at below market prices and accepted low quality manufactured goods from the Finns at prices higher than they could have sold them for elsewhere.
In the course of the exchange, three different explanations were offered for this pattern of trade:
1. The Russians were bribing the Finns to provide them political support. Finland was the one democratic and capitalist country that was in some sense an ally of the Soviet Union; the relation could be used by the Soviets as evidence of their interest in peaceful coexistence.
2. The Russians were constrained by their own ideology in ways that either made them relatively indifferent to the real terms of the exchange or made it hard for them to trade with other capitalist countries and so forced them to accept the terms they could get from the Finns.
3. The Finns were smarter than the Russians, or at least understood trade better, and so tricked the Russians into trading on terms favorable to the Finns.
Of these explanations, the first strikes me as plausible, the others considerably less so.
The project I am suggesting is to figure out, on net, whether the exchange was profitable for Finland at the expense of Russia, profitable for Russia at the expense of Finland, profitable for both, or a loss for both. The Finns seem sure that it was in the economic interest of Finland, perhaps in the political interest of Russia, but they did not offer a lot of evidence. The trade and the terms were arranged government to government, providing lots of opportunities to fudge the figures. In particular, it was possible for the Soviets to accumulate a substantial interest free debt, as they eventually did. It is claimed that that happened only late in the relationship. It is also claimed that the people concerned were surprised when they discovered how much the Soviets, on net, owed--which suggests that nobody had been keeping very careful track of it.
The hardest part of project, supposing one could get data on what each side delivered to the other when, would be pricing the goods--figuring out what they would have sold for elsewhere.
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