Economic Statecraft
Baltic Sea Region: New Realities and New Problems

Within a short period of time, the situation in the Baltic Sea region has changed radically, writes Konstantin Khudoley, head of the Department of European Studies at the Faculty of International Relations of St. Petersburg State University.

During the Cold War, the Baltic Sea had a low level of confrontation, and after it ended, the region was clearly dominated by trends towards the development of mutually beneficial cooperation in different areas, both on a bilateral and multilateral basis. Now the situation is completely opposite – a mighty cold wind is raging over the Baltic Sea and the countries adjacent to it. First of all, there was consolidation of the positions of the West – after Finland joined NATO and Sweden applied to join, all countries in the region, except Russia, became members of the two most influential Western associations – NATO and the EU.

Russia does not have such acute contradictions with Sweden and Finland as it does with Ukraine, but the positive potential of their non-aligned policy has now been exhausted. Therefore, the current confrontation between Russia and the West manifests itself here more and more openly. On the most important international issues, Russia and the other countries of the Baltic Sea region take different and sometimes diametrically opposed positions. This is especially evident in relation to the events in Ukraine, which receives significant political, economic and military support from the West.

The most acute confrontation between Russia and the West, including the countries of the Baltic Sea region, occurs in the economic sphere. Within the EU, the countries of the Baltic Sea region not only support the sanctions against Russia, but sometimes take the toughest positions. This is also evident at the national level, where a number of them have unilaterally introduced their own restrictive measures, directed against not only official structures and business corporations, but also ordinary citizens. The consequences of this stance include a sharp reduction in the volume of trade and economic relations and the abandonment of many mutually beneficial cooperation projects. This was also a strong blow to cooperation in the humanitarian sphere. Despite the economic difficulties of recent years and restrictions associated with the coronavirus pandemic, ties in the fields of culture, science, education, sports, cross-border cooperation, student exchanges, tourism and others successfully developed. Now they have been reduced to a minimum. Even cross-border cooperation takes place only in cases where it is impossible to do without it. The border between Russia and Finland, which has always been distinguished by hitch-free cooperation and goodwill, is now practically closed.

Of particular note is the dramatic change in the general atmosphere in the region. If earlier it was characterised by general goodwill and a certain degree of trust, now suspicion, distrust and even hostility prevail.

Thus, in the Baltic Sea region, a zone of mutually beneficial cooperation has been replaced with a deep rift, with Russia on the one side and the Western countries on the other. The situation is to a certain extent reminiscent of the situation in Central Europe during the Cold War, where the two blocs directly opposed each other. Therefore, there is now a tendency to transform the Baltic Sea region into a second (after Ukraine) area of tension between Russia and the West. It should be taken into account that, if Central Europe during the Cold War had flanks with a lower degree of tension (Northern Europe and the Mediterranean), now the Baltic Sea region may be directly affected in the event of the intensification and expansion of the zone of military operations in Ukraine. There is a lesser degree of probability, but one cannot ignore the danger of a serious deterioration of the situation in the Arctic, which also can affect the Baltic Sea region.

Now the West has chosen a course to transform the Baltic Sea into a so-called “internal sea of the EU and NATO.” The main direction of pressure on Russia, as now, will apparently be in the economic sphere – the “war of attrition” will continue in the foreseeable future. In this case, a variety of methods will be used, and not only sanctions and restrictions. The blowing up of the Nord Stream 2 pipeline is very indicative in this regard. There is no doubt that significant obstacles will arise for Russian shipping both within the Baltic Sea itself and in the Danish Straits. It is unlikely that things will come to a complete blockade, but a number of new problems will undoubtedly arise. We are talking primarily about Kaliningrad. It seems quite likely that the situation with the city will be to a certain extent reminiscent of West Berlin in the 1950s and 1960s. At that time, the USSR did not take military measures, but strictly observed the agreements on the lines of transit for the United States, Britain and France to West Berlin. It is quite possible that transit links between the Russian mainland and Kaliningrad will only remain within the limits defined by international law. This could lead to higher transportation costs and the emergence of other economic problems, which is fully consistent with the logic of “war of attrition.”

In the context of NATO expansion and the signing of US military cooperation agreements with Sweden and Finland, it is quite possible that the military presence of the US and other NATO countries will increase in the Baltic Sea region, although the deployment of nuclear weapons there is unlikely to happen at this point. Under these conditions, Russia is also increasing its military potential in the north-western direction. All this cannot but lead to increased military tension. However, the experience of Central Europe during the Cold War showed that this mechanism can be successfully regulated – not a single clash occurred there for several decades. Now it will be easier to implement this (the military potential of both sides in the Baltic Sea region is now less than in Central Europe during the Cold War), and at the same time more difficult – in modern conditions, the written and unwritten agreements that guided both blocs at that time do not function. All this makes the situation less predictable and controllable, and increases the risk of a crisis arising due to some accident, carelessness or misunderstanding by one of the parties of the intentions of the other one.

A feature of the modern confrontation between Russia and the West is that, unlike during the Cold War, when rising tensions interchanged with détente, the line of escalation now prevails. The situation is unlikely to change until the end of hostilities in Ukraine. However, after this, the question of a more comprehensive settlement will undoubtedly arise. These processes will be much more complex and unique than those that took place at the Congress of Vienna in 1815, the Paris Conference in 1919 or the 1945 Yalta and Potsdam meetings of the three great powers’ leaders. Since the confrontation between Russia and the West is taking place on several planes (both global and regional, each of them having its own dynamics and using different methods of struggle), then the settlement will most likely consist of a series of agreements on individual issues. Moreover, they may be distant from each other in time, signed by different states and not connected with each other in formal legal terms. Here one cannot but agree with the well-known German political scientist Alexander Rahr that the normalisation of Russia’s relations with European states and associations could begin precisely in the Baltic Sea region. Of course, this is not a matter of the near future, but it is also necessary to keep this prospect in mind.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.