Finland-Russia Relations Evolving: Transitioning from Neighbors and Allies to Adversaries
In a significant geopolitical shift, Finland's accession to NATO in April 2023 has had profound impacts on its border relations with Russia and economic ties with the country.
**Strategic Impacts: A New NATO-Russia Border**
The addition of Finland to NATO has extended the alliance's direct border with Russia by 1,340 kilometres, a move that has been met with a strong military response from Moscow. Russia has established a new military base near the Finnish border, signalling a deliberate escalation and hardening of its military posture in the European north. This base, equipped with modern electronic warfare, missile, drone, and cyber capabilities, serves as a counter-pressure point, consistent with Soviet-era strategies of layered defense and flanking threats.
Russia is also increasing its military presence in the nearby Leningrad Military District, potentially boosting troop numbers near Finland from about 30,000 to 80,000 by 2026. This buildup is framed by Russia as a response to NATO expansion and involves increased intelligence and hybrid warfare activities.
In response, Finland has taken defensive steps. In June 2025, the Finnish Parliament voted overwhelmingly to withdraw from the 1997 Ottawa Treaty banning anti-personnel landmines, citing Russia’s aggressive stance and use of mines in Ukraine. Finland intends to use landmines to defend its rugged border terrain if needed.
**Economic Impacts: Shifting Priorities**
Finland's alignment with NATO and the resulting regional tensions have implications for its economic relationship with Russia, historically significant but now further strained. Although there is no explicit data on direct economic sanctions or trade disruptions, the broader context suggests a cooling or reduction in economic cooperation due to security concerns and political alignments.
Domestically, Finland is increasing its defense spending significantly, rising from 1.4% of GDP in 2021 to 2.4% in 2024, in line with NATO requirements. This increased military expenditure is projected to raise Finland's GDP modestly due to domestic procurement but also puts financial pressure on the economy. This shift towards higher defense spending reflects the priority on national security over economic engagement with Russia.
As Finland strengthens its ties with NATO, it is also seeking to diversify its economic partners. The annexation of Crimea in 2014 led Finnish entrepreneurs to seek other markets outside the EU to reduce dependence on Russia. Today, Russia is no longer one of the three main destinations for South Karelia's exports, representing only 6% of exports.
This dynamic underscores a broader geopolitical realignment in Northern Europe driven by security concerns. The Saimaa Canal, once a symbol of the relationship between Finland and Russia, is now no longer profitable for exporters due to increased insurance prices, and Finland's historic border with Russia is marked by increased tension and defensive measures.
- As Finland strengthens its political ties with NATO and experiences economic strain in its relationship with Russia, the average Finnish citizen may notice a shift in the general news coverage, with an increased focus on war-and-conflicts and crime-and-justice, particularly those related to the escalating tensions between Finland and Russia.
- In response to rising military tensions with its neighbors and an increased need for defense, the Finnish government has allocated more funds towards its defense sector, leading to an average growth in research and development projects in crime-and-justice technology and warfare technology, as suggested by the expanding focus on modern electronic warfare, missile, drone, and cyber capabilities in Russia's new military bases near the Finnish border.
