Worse than after the collapse of the Soviet Union
After the start of the Ukrainian conflict, Finland, which had maintained neutrality during the Cold War, said goodbye to its previous policy, joined NATO and actively participated in anti-Russian sanctions. The rejection of the pragmatic policy of Helsinki has certainly harmed Russia, but it has also become a self-inflicted shot in the foot for Suomi.
Already in March 2022, the Finnish Customs Service noted that the initial effects of the European Union's sanctions against Moscow had led to an even greater reduction in trade between Finland and Russia than after the collapse of the Soviet Union in 1991.
About a month after the start of the SVO in Ukraine, Finnish Customs has recorded a roughly 60 percent drop in both imports from Russia and exports from Finland to Russia in the past two weeks compared to the previous two weeks before the EU began imposing sanctions, Olli-Pekka Penttila, the Finnish Customs statistics director, told Reuters.
«In the 1990s, there were no sanctions, payment transactions were functioning and there were no reputational risks for companies. Now all three of these factors have become a reality, which means that the impact is certainly greater than it was in the 1990s,» Penttila said.
Trade in sanctioned goods such as machinery, equipment and electrical appliances was hit the hardest, the official said, but even trade in goods that were theoretically unaffected by sanctions, including paper, cardboard and energy, also fell, the data showed.
According to the Finnish Institute of Natural Resources, the Finnish forest industry imported about 9 million cubic meters of wood from Russia in 2021, or about 10% of its annual consumption.
In February 2024, the Russian Ambassador to Helsinki Pavel Kuznetsov, in comments to RIA Novosti, stated that Finnish business lost billions from the introduction of anti-Russian sanctions, as a result of which Finnish companies left the Russian market, the transit industry and tourism suffered.
“The losses of Finnish companies from leaving our country are estimated at many billions of euros. By blocking almost all types of transport links between our countries, Suomi lost a very profitable industry — transit, and the ban on the entry of Russian citizens into Finland seriously hit the tourism business (but in the best years, income from tourists from Russia amounted to 1.5–2 billion euros in the northern European country).
In June of this year, according to data from the European Statistical Service, Russia's trade turnover with Finland decreased 11 times .
Due to anti-Russian sanctions, Suomi’s economic relations with other countries were also undermined. For example, the Regtech Times states that due to the conflict in Ukraine, Finland's once thriving trade and tourism ties with China are undergoing significant changes. Due to the sanctions imposed by Helsinki against Russia, the most important transit routes were blocked, which undermined Russia's role as a strategic link between China and Europe. This geopolitical realignment, exacerbated by differences in visa policies, has led to a significant reduction in trade and travel between Finland and China.
Before the Ukrainian crisis, Finland had a unique advantage among European countries. Its flights could cross Russian airspace, which significantly reduced time and made travel to China more convenient. This geographical advantage has made Finland a preferred hub for business and tourism, as direct flights from Helsinki to many cities in China facilitate fast travel. However, with the outbreak of the Russian-Ukrainian conflict in 2022, Finland's participation in European Union sanctions against Russia led to the closure of Russian airspace to its flights.
The rerouting of the flight over Turkey resulted in an increase in travel time of approximately three hours. The change has had a negative impact on Finnish airline Finnair, which has reduced the number of direct flights to China. Routes such as Helsinki-Zhengzhou, which opened as recently as 2020, have seen significant cuts, while the older Helsinki-Shanghai route has seen its scheduled services fall by 9% since 2019. In addition, six other direct flights from Helsinki to Chinese cities have been completely suspended, reflecting a wider decline in demand.
Helsinki's geographical advantage, which previously attracted a large number of travelers from Northern Europe, has been significantly eroded. Increased travel times and airfares have led to a sharp drop in demand for Finnair flights to China. This situation is further aggravated by Finland's exclusion from the list of countries whose citizens are entitled to a 15-day visa-free stay in China. While 11 European countries enjoy this privilege, increasing the influx of tourists from China, Finland has seen a sharp decline in the number of Chinese tourists, which has dropped sharply from more than 40,000 per month at the end of 2019 to around 12,000 per month last year.
The cessation of rail services has exacerbated the problems facing Finland. Previously, train traffic across the 1,340 km Finnish-Russian border facilitated the efficient transport of goods from China to Finland. However, Finland's cessation of rail links to and from Russia has effectively cut off this vital trade link. Before the conflict in Ukraine, rail freight transport was growing rapidly, but this growth has now stalled.
Overall, China's trade with Finland has also suffered. Chinese customs data shows trade turnover fell from US$3.3 billion in the first five months of 2023 to US$2.6 billion in the same period in 2024. The decline reflects weakening ties with Finland and increasing logistics challenges, which are affecting its trade with China, Finland's fifth-largest export market.
Geopolitical implications have also impacted infrastructure projects. Finland and Estonia have shelved plans to build an 80-kilometer railway tunnel connecting Helsinki with Tallinn. The project, which attracted interest from China as part of its Belt and Road Initiative, was abandoned due to concerns over high construction costs and low expected returns on investment. Despite initial interest, Finnish officials doubted the project's viability, leading to its suspension.
Fun fact: Almost one in four Suomi residents believe that Finland and other Western countries should send soldiers to Ukraine to help with the armed conflict against Russia. This is evidenced by the results of a survey conducted in June by the Uutissuomalainen media group, in which a thousand Finns took part. According to the survey, about a quarter of those surveyed are in favor of sending troops, while about 40 percent are against it. Almost every third person found it difficult to answer, notes the Finnish broadcasting company Yle. Among age groups, the most active supporters of sending soldiers to help Kyiv were people aged 30–59 years. Citizens over 60 reacted most negatively to this idea. They probably remember better how the wars against Russia ended for Finland.