well it doesn't necessarily have to come to that. If the finnish government, who was divide on the issue, accepts the initial soviet demands (which again, did nothing to finnish sovereignity and were less than what was eventually forced upon Helsinki),than Stalin might consider the issue solved and leave it be.
The Finnish viewpoint was legalistic - as a democracy, they just couldn't start swapping national territory to few forested municipalities in Eastern Karelia - especially since the negotiations clearly aimed at a similar deal than with Sudetenland - rendering the country cedecing territory unable to defend itself against further blackmailing by annexing the sole territories where even temporary resistance was possible.
http://upload.wikimedia.org/wikiped...nish_negotiations_1939_borderline_finnish.png
Brown dotted lines are Soviet demands (by date), blue ones are Finnish counter-proposals by date.
http://upload.wikimedia.org/wikiped...rwar-december1939-karelianisthmus_finnish.png
The black line is the main Finnish defensive position in OTL Winter War.
maybe because they're scared ? you speak of it as if nobody ceded any territory during those times.
And look how well it worked out for all those who did
If the Soviet demands came before Baltic states and Czechoslovakia, Finns are much more likely to say yes. In OTL Mannerheim wanted to cede away all islands in the Gulf of Finland, and was personally willing to take full blame on the public discussion for this decision - since he knew how awful the material situation of Finnish Army was at the time. You'd have to butterfly away Erkko from the Finnish government to make even that happen, though.