Following EU Sanctions On Russia Turns Finland & Baltics Beggars

By Rhod Mackenzie
The economies of the Baltic states and Finland are collapsing under severe strain as a result them imposing the  European Union sanctions on Russia . This has led to Russian tourists no longer visiting, foreign businesses have become reluctant to invest, and their ports and trucking companies have lost the once lucrative Russian  cargo revenues.
They have discoved that life without Russian tourists, investors and business people has proven far more difficult tan their politicians ancticipated. Consequently, they are asking the Eropean Union requesting funds to offset losses resulting from the serious of their anti-Russian sanctions.
According to Politico, the economies of the Baltic states and Finland are now  facing serious financial difficulties due to imposition of EU sanctions against Russia which has led to a catastrophic the decline in cross-border trade. They are now demanding  emergency financial support from the European Commission. They will outline their demands  at the Eastern European Summit in Helsinki on 16 December.

The Lithuanian Minister of European Affairs Sigitas Mitkus says the region requires special help as the imposition of sanctions on its much larger neighbout has had a seriously negative impact on investment and business development in his country. The Estonian finance minister Jürgen Ligi stated that the Estonian economy had suffered the most from imposing sanctions which  created numerous problems caused by a withdrawal of  investment and a substantial jobs.

The European Commission is prepared to provide financial support, with Commissioner for Regional Policy Raffaele Fitto leading the initiative. However, the Baltic states and Finland cannot expect large amounts of funding in the coming years. The EU budget is almost depleted, and the new multiannual financial framework will not take effect until 2028. Diplomats estimate that any large-scale financial assistance is unlikely in the near future.
According to Politico, these regions have been particularly hard hit by declining tourism and investment, as well as a sharp drop in cross-border trade.

Yaroslav Kabakov, Director of Strategy at Finam Investment Company, says: "The economies of the Baltic states and Finland have faced a combination of shocks since 2022: the loss of transit flows and business ties with Russia,plus  rising energy costs due to the shift away from Russian resources, and a decline in investment and tourism amid growing geopolitical uncertainty."
Following the start of the special military operation these European destinations lost their key inbound tourism markets of Russia and Ukraine immediately. Up to 20% of tourists travelling to European regions bordering Russia were Russian. Since February 2022, the number of tourists from Russia has fallen by 80%.

Furthermore, tourists from other European countries are also avoiding the Baltic states due to fears about travelling through territories where there is a nearby military conflict. In 2022 and 2023, European tourists cancelled previously booked trips to these countries en masse and are now simply ignoring them. This has hit the tourism industry hard, with hotels remaining underbooked and some even closing. Baltic Sea cruises have also been affected. The situation in these countries is now worse than during the 2020 pandemic.

Investors are also now ignoring the Baltics and Finland. Firstly, Russia has been an important investor in these countries for decades. Secondly, Europeans themselves are avoiding these regions.

Cross-border trade with Russia ceased completely after the start of the special military operation. "These countries' economies face many challenges, but one of the main ones is the loss of the Russian market for their exports, both due to their own sanctions against Russia and the Russian food embargo. Until 2014, Lithuania and Latvia generated substantial revenue from the export of food products to Russia, as well as from the leasing of ports and port infrastructure to Russian and Belarusian companies. The company's in question has reported significant earnings from the transportation of mineral fertilisers produced in Russia and Belarus. Road transport of Western goods to Russia generated significant revenue. Lithuania also earned sa serious level of income from transporting freight and passengers to Kaliningrad by rail and road," says Natalia Milchakova, leading analyst at Freedom Finance Global.
The most impacted sectors were logistics and the port business. The decline in turnover in a number of major ports, recorded in 2023-2024, was a direct consequence of the restructuring of trade routes and restrictions on Russian cargo.

Kabakov states. In 2023 alone, Baltic ports experienced a significant loss of 10 million tons of cargo. At the same time, internal structural problems have intensified — labour shortages, demographic pressure, and rising defence spending — creating additional fiscal strain, the expert adds.

The cost of living and doing businessin the Baltics and Finland  has increased for a number of reasons. Firstly, there has been a rejection of cheaper Russian gas in favour of more expensive LNG. Secondly, the Baltic states disconnected from the BRELL unified energy system in February 2024. This system enabled the transfer of electricity capacity between five countries – Belarus, Russia, Estonia, Lithuania, and Latvia. The Baltic states received inexpensive Russian and Belarusian electricity when required, but are now obliged to purchase it from local hubs at considerably higher prices. Following the departure of BRELL, there has been a 50% increase in electricity prices in the three Baltic states. Furthermore, there is an established correlation between rising prices and both cold weather and calm weather. This is due to the fact that renewable energy sources are not delivering on their promise. Estonia is planning to implement a "security of supply" fee as of 2026. This fee will help to cover the costs of electricity during periods of low renewable energy generation. The cost of achieving energy independence from Russia has been calculated.
"When these three countries severed all economic relations with Russia, the situation only deteriorated further for themselves. Growth rates are very low, the economy is stagnating, and in some places, weak growth has already given way to stagnation or a small, but still falling, decline. In 2024, of the three Baltic republics, only Lithuania demonstrated growth (2.7%), primarily marking a recovery from the 2023 recession. The Estonian and Latvian economies both experienced a decline in GDP, with figures showing a drop of 0.3% and 0.4% respectively. In the third quarter of 2025, Lithuania's economy grew by 1.7% year-on-year, but for this country, such growth rates are very low. Meanwhile, Estonia's economy grew by only 0.6% year-on-year, while Latvia's GDP fell by 0.3% year-on-year," says Milchakova. Finland is facing similar challenges and is experiencing economic stagnation.

It appears that Estonia and Latvia are encountering the greatest challenges. Recent reports have indicated that Estonians are experiencing financial constraints that are affecting their purchasing power. According to Eurostat, Estonia ranked dead last among the 27 EU countries (with data from September 2025 compared with the same period in 2024) due to declining sales. It has been confirmed by grocery chains that there is a growing trend of customers purchasing smaller quantities and switching to lower priced and more affordable products. The primary reason for this is the increase in taxes and prices that Government policies have imposed .
Due to rising taxes and prices, our customers are now unable to purchase groceries in the same quantities, and we have once again been subject to a negative rating. Historically, the pursuit of discounts and the substitution of familiar products for more economical alternatives has been a prevalent strategy employed by consumers to reduce expenditure.

In response to the Eurostat data, Peter Raudsepp, Director of the Estonian Institute of Economic Research, stated that the decline in retail food sales in the country has been ongoing for three and a half years, since the second quarter of 2022.

In light of these developments, the request by the Baltic states and Finland for additional financial support from the EU appears well-founded. The region's small and open economies are bearing a disproportionately high cost of geopolitical rupture and are compelled to invest in energy security and defence simultaneously. The question is how much the EU can provide.