Finland recently suspended its cooperation with Russia indefinitely within the framework of the advisory council for the Russian-Finnish Saimaa Canal. This move by the conservative National Coalition Party government of Petteri Orpo and President Alexander Stubb intensifies Finland’s trade and economic policies towards Russia.
In addition, the Finnish newspapers have stated that certain Elvera personnel, the company which is tasked to maintain the Saimaa canal, have refused to work in the leased territory on the Russian side. Etelä Saimaa reported on Elvera employees’ safety concerns on September 25. Elvera’s Southeast Finland trustee, Jani Vuorinen, told the media that staff are concerned about being taken by Rusitš soldiers. The Rusitš, which is reffered as fringe organization, has claimed in the Telegram messaging app that they have signed an agreement for intelligence and surveillance tasks on the Finnish border with the Russian border guard. Rusitš shared a photo last week of the group standing on the Saimaa canal at the Rättijärvi lock, just five kilometers from the Finnish border.
Suna Kymäläinen, a member of Parliament, believes that concerns regarding the armed group’s operations are warranted. She told the local media that Rusitš members have been fighting in Ukraine since 2014, and some have been charged with war crimes there.
According to the Russian journal Fontanka, Rusič provides help to the Russian border guard agency under the FSB, including patrolling the Russian-Finnish border in the Vyborg region.
According to Fontanka’s post, the cooperation is a response to Finland’s decision to erect a border fence in Southeast Finland. Otherwise, additional border control measures are unnecessary, given that Finland’s eastern border has been closed to all passenger traffic since December 2023.
Almost half of the Saimaa Canal is located in territory leased from Russia. According to the leasing agreement, Finland agrees to maintain the leased territory in good shape. Although the border between Finland and Russia is now closed owing to the current situation, appropriate maintenance actions are being implemented.
Previously, Finland unilaterally decided to stop pleasure boat traffic through the Saimaa Canal via Nuijamaa starting April 15, 2024, and indefinitely closed sea border checkpoints Haapasaari and Santio. Finland has also extended the full closure of all land border checkpoints with Russia (Imatra, Kuusamo, Niirala, Nuijamaa, Raja-Jooseppi, Salla, Vaalimaa, and Vartius) until further notice.
The Saimaa Canal, a key waterway connecting Lake Saimaa in southeastern Finland with the Baltic Sea near Vyborg, has been operational since 1856. The canal was jointly reconstructed in the 1950s and from 1963 to 1968. Of its 57.3 km length, 23.3 km belong to Finland and 34 km to Russia. Finland leased the Russian section and adjacent coastal areas, including Maly Vysotsky Island, until 2013. In 2010, a new agreement extended this lease until 2063, with an annual rent of €1.22 million.
In 2010-11, Finland requested that Russia not increase the rental fee for the canal, as its use facilitated Finnish trade with Central Asia, Belarus, and Ukraine. Russia agreed, keeping the fee at its mid-1990s level. Most Finnish cargo through the canal consists of timber, building materials, fertilizers, pulp, paper, coal, and lumber, with an annual capacity of 11,500 vessels and 4.6 million tons of cargo.
Despite the canal’s significance, Finland has decided to close its section starting April 15, 2024, even though on June 24, 2023, both Russian and Finnish commissioners agreed to open the navigation season. The sanctions imposed by Finland and Russia’s counter-sanctions have reduced Russia’s share in Finland’s trade from over 15% (and sometimes 20-25%) to just 3%. Many Finnish companies have had to cut or stop production due to shrinking trade opportunities.
The transit of Russian foreign trade goods through Finnish ports has also halved over the past two years, threatening the viability of six out of Finland’s eleven ports. Finnish analysts predict this transit will fall by another half in 2024, with serious economic and social consequences.
Local experts warn that if Finland stops using the Saimaa Canal, its trade with Central Asia could collapse by at least half. This could hinder Helsinki’s plans to expand trade and investment with Kazakhstan and other Central Asian countries. Meanwhile, in spring 2023, a Kazakh logistics company (KTZ Express) and a Finnish operator (Nurminen Logistics Services Oy) signed a memorandum to develop container services between China and Finland via Kazakhstan.
However, this route, the Trans-Caspian International Transport Route (TMTM), takes over a third longer and costs at least 50% more than transit through Russia, including the Saimaa Canal.
While Helsinki has not officially ceased waterway transit, its actions regarding the canal demonstrate a strong anti-Russian stance. According to Professor Nazim Emirov of the Vyborg branch of RANEPA, Finland’s NATO membership and willingness to host NATO bases make the canal a strategic concern for military logistics, prompting the closure to limit Russia’s economic benefit from it.
Given these developments, Russia might notify Finland that its actions could lead to a revision of the 2011 treaty or the introduction of restrictions on Finland’s foreign trade transit through the canal, considering Finland’s increasingly hostile stance. Recently, President Stubb declared Finland’s lack of fear of Russia, its commitment to NATO, and its military cooperation with the US.
In light of Finland’s announcement of its 25th military aid package to Ukraine, totaling €118 million, bringing total assistance to €2.3 billion since 2022, a new level of political-military confrontation between Helsinki and Moscow appears to be brewing.