Competing interests threaten Baltic pressure on Russia

These competing forces will make it hard for the Baltics to maintain an aggressive stance on Russia, forcing them to react to events rather than move proactively in the stand-off between Moscow and the West.

The Baltic states of Estonia, Latvia and Lithuania are, along with Poland and Romania, among the most aggressive EU and NATO countries toward Russia. Geography is a key factor in these countries’ position: They are all in close proximity to Russia and its military forces, some to Russia proper and others to the Russian exclave of Kaliningrad and the pro-Russian breakaway region of Transdiniestria. The Baltic states are particularly vulnerable because they are the closest to the Russian heartland, and their small size and location on the Baltic Sea makes them within easy reach of Russian power projection.

Reasons for pressure

This proximity to Russia and the wish to secure Western economic and military backing against the Russian threat were key factors in the Baltic states’ decisions to join the European Union and NATO. The expansion of NATO and the European Union into Central and Eastern Europe in 2004 included the Baltics, and the states were the only former Soviet republics to join the two blocs. (The other countries were Soviet satellite states rather than republics)

However, membership in these blocs has failed to completely assuage security concerns, especially in the latest stand-off between Russia and the West over Ukraine. Despite being parties to NATO’s Article 5, the bloc’s collective defence clause, the Baltics have always doubted whether NATO would actually intervene in the event of Russian military action in their territory. This fear has pushed Baltic leaders to lobby NATO to step up its presence in the region and to establish permanent military bases in their countries. The United States and European countries such as Germany have rejected the idea, though NATO has increased the size and frequency of its military exercises in the Baltic countries, establishing a semi-permanent presence on a rotational basis in the region until the end of the year.

But even this has not diminished the concerns about Russia. Along with their vulnerability to Russian military action, Baltic states also fear Russian political and security influence from within their countries. Each Baltic nation has a significant Russian minority population — 25 percent of its total population in Estonia, 30 percent in Latvia and around 8 percent in Lithuania. In some cases, these minorities are in a legal limbo, unable to acquire citizenship in the countries in which they reside — a situation that creates significant resentment among ethnic Russians. Pro-Russia demonstrations have historically been an issue in Baltic states, and each has political parties that cater to ethnic Russian interests, such as Harmony Centre in Latvia and Centre Party in Estonia.

Because Russian military action in Crimea and in eastern Ukraine was preceded by pro-Russia protests, this is an issue that the Baltic countries are deeply concerned about. Indeed, there have been small pro-Russia demonstrations in the Baltics since the Ukraine crisis began. Baltic countries continue to face other issues with Russia as well, including the recent abduction of an Estonian security official near the Russian border and by the seizure of a Lithuanian fishing boat by a Russian naval vessel. The Baltics have also been vulnerable to Russian cyber attacks in the past.

These factors have led the nations to be vocal in their response to Russian actions in Ukraine, especially when it comes to sanctions. Aware that NATO is not prepared or willing to challenge Russia militarily in Ukraine, the Baltics have been staunch supporters of strong sanctions to pressure Russia economically. They have also supported bringing Ukraine, the former Soviet states Belarus and Moldova, and the Caucasus countries closer to the European Union. This has increased tensions between the Baltic countries and Russia, but the Baltics have tried to minimize the damage by seeking greater security commitments from the West, while hoping that increased economic pressure will cause Russia to back down.

Maintaining pressure is difficult

Despite the incentives of maintaining pressure on Russia, the Baltics are also operating under tremendous constraints, the biggest of which is their economic dependence on Russia. Russia is the single largest export destination for every Baltic state, accounting for 18 percent of Estonia’s exports, 12 percent of Latvia’s, and 20 percent of Lithuania’s. Moreover, since the European Union adopted and increased sanctions against Russia, Moscow has responded with its own trade restrictions against the Europeans, especially on agricultural products.

This has been detrimental to the Baltic countries, which strongly rely on agricultural exports to Russia. Estonia’s statistical agency reported in early September that the country’s exports to Russia had decreased by 9.3 percent, driven by a fall in the sale of animal products. On 23 September, Bank of Latvia President Ilmars Rimsevics said that sanctions had driven down Latvia’s growth forecast from 3.5 percent to 3 percent in 2014, and Latvian Prime Minister Laimdota Straujuma said that Russia’s food embargo had already cost the country 55 million euros (about $70 million) in losses. Furthermore, Lithuanian financial analysts have warned that the country could see as much as a 5 percent gross domestic product contraction in the event of increased sanctions.

This worries the Baltics, as greater economic costs on the population, especially in sectors hard hit like agriculture, could undermine public support for a strong stance against Russia. The Baltic states have sought to offset the financial shortfall the sanctions caused by requesting greater financial assistance from the European Union. Lithuania asked the European Commission on 5 September for 46 million euros (about $59 million) in compensation for Russian food embargo losses, while other EU countries such as Poland and Slovakia have followed suit. However, with its own lingering financial problems, the European Union has only granted part of the compensation that has been requested, which could further raise the political cost of continuing to impose sanctions on Russia in the Baltics and elsewhere.

Another issue that the Baltic states face is the interest of larger and more powerful EU countries such as Germany and Italy that wish to de-escalate the situation with Russia. If the cease-fire established between Ukraine and pro-Russia rebels 5 September continues to hold, there will be greater pressure for an easing of sanctions against Russia in order to rebuild ties between Moscow and the West.

A full-scale easing or reversal of sanctions may not happen 30 September when the issue is first considered, but the desire to ease sanctions against Russia may grow before subsequent reviews, assuming the cease-fire is maintained. The combination of growing economic pressure and the competing interests of larger EU players may ultimately force the Baltic states to ease their economic stance on Russia, but they will likely continue to seek stronger security guarantees from the West.