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World War II

The Soviet Union launched the Winter War on 30 November 1939 to annex Finland in accordance with the Molotov-Ribbentrop Pact with Nazi Germany to divide Europe into spheres of influence between the two dictatorships. The Finnish Democratic Republic was set up by Joseph Stalin at the beginning of the war to govern Finland after Soviet conquest. There was widespread international condemnation of the unprovoked attack and it led to the Soviet Union being expelled from the League of Nations. The Red Army was defeated in numerous battles, most notably the Battle of Suomussalmi. After two months of negligible progress on the battlefield, as well as heavy losses in men and material, Soviet forces began to advance in February and reached Vyborg (Finnish: Viipuri) in March. The Moscow Peace Treaty was signed on 12 March 1940, and the war ended the following day. Finland had defended its independence, but ceded 9% of its territory to the Soviet Union.

Hostilities resumed in June 1941 with the Continuation War, when Finland allied itself with Germany following the latter's invasion of the Soviet Union; the main aim was to regain the territory lost to the Soviets barely a year earlier. Finnish troops occupied Eastern Karelia from 1941 to 1944. The massive Soviet Vyborg-Petrozavodsk offensive in the summer of 1944 led to a breakthrough until the Finns finally repulsed it at Tali-Ihantala. This partial Soviet success led to a stalemate and later an armistice. This was followed by the Lapland War of 1944–1945, when Finland fought retreating German forces in northern Finland.

The Armistice and treaty signed with the Soviet Union in 1944 and 1948 included Finnish obligations, restraints, and reparations, as well as further territorial concessions. As a result of the two wars, Finland lost 12% of its land area, 20% of its industrial capacity, its second largest city, Vyborg (Finnish: Viipuri), and the ice-free port of Liinakhamari (Finnish: Liinahamari). The Finns lost 97,000 soldiers and were forced to pay war reparations of $300 million ($ 4.1 billion in 2023). However, the country avoided occupation by Soviet forces and managed to retain its independence. Along with Great Britain, Finland emerged from the war as the only European country to have taken part in hostilities that was never occupied and managed to preserve its democracy throughout.

For a few decades after 1944, the Communists were a strong political party. Furthermore, the Soviet Union persuaded Finland to refuse Marshall Plan aid. However, in the hope of preserving Finland's independence, the United States provided secret development aid and supported the Social Democratic Party.