The Soviet Union demanded to move the Finnish border further away from Leningrad. The USSR also insisted that Finland lease the Hanko Peninsula (or similar territory at the entrance to the Gulf of Finland) for the creation of a Red Baltic Fleet naval base. However, Finland refused and the Soviet Union invaded the country, initiating the Winter War. The USSR set up the Finnish Democratic Republic (), a short-lived Soviet puppet regime in the occupied Karelian territories. The Soviets also occupied the Petsamo municipality in the Barents Sea coast during the war.