Russian State Duma deputy claims Moscow may revise the agreement on the lease of the Saimaa Canal if Finland joins NATO.
In 1962, for the first time in its history, the Soviet Union leased its land to a foreign country — Finland received 19.6 km of the Saimaa Canal. This narrow 43 km long artery connects the biggest Saimaa Lake in the country's southeast with the Baltic Sea and links the industrial centers of the Saimaa region with the European market.
The parties agreed on a lease for 50 years, and in 2013, they prolonged the treaty by 2063.
As Finland is hurtling towards joining NATO, Russia sends clear signals that such steps would mean the end of good-neighborly relations rooted back to the Paasikivi-Kekkonen line — Finland’s foreign policy of neutrality and friendship.
A harbinger of changes is the Russian Duma official’s statement that Moscow may revise the terms of the lease of the Saimaa Canal if Finland becomes a member of NATO.
“As Russia’s relations with any country deteriorate, treaties concluded during a period of better relations and that made sense at the time may be revised. That would be quite natural [to revise the lease of the Saimaa Canal]”, — Dmitry Novikov, the first deputy chairperson of the International State Duma Committee, told the Russian Izvestia newspaper.
The Ministry of Transport of Russia, as well as Rosmorrechflot marine agency, which oversees the Saimaa Canal, did not comment on the deputy's statement. The amendment of international treaties is at the level of the ministries of transport and foreign affairs.
The State Duma is responsible for the ratification of agreements on the lease of territories, but not for their denunciation or revision. However, the lower house of the Russian parliament has the power to submit this proposal for the government to review — and it might be quite persistent.
Finland is already included in the Russian list of ‘unfriendly’ nations among with the other EU members.
Revenge for NATO inclining
The statement of the State Duma official came as the Finnish Foreign Minister Pekka Haavisto noted on 26th of April that launching joint NATO membership bids for Finland and Sweden would be “useful”. But the countries had no fixed date for any potential application, he admitted. On 16-18th of May, the leaders of Finland and Sweden are to meet in Stockholm.
In response to a question about the revision of the agreement on the Saimaa Canal, the Russian embassy in Helsinki told Izvestia that “if Finland joins this bloc, Russia will need to take the measures necessary to ensure its interests”. The diplomats cited by the newspaper did not specify what these measures might look like.
The speaker of the Russian Foreign Ministry Maria Zakharova previously stated that the accession of Finland and Sweden to NATO will lead to negative consequences for peace in northern Europe. However, she also didn’t specify what these steps might entail.
The lease agreement stipulates that Finland has no right to use the Russian part of the Saimaa Canal for passage of military ships — neither under the flag of Finland, nor under any other. This means that NATO — if Finland takes it up a notch and joins the alliance — cannot use the Saimaa Canal for the legal passage of its warships to the inland waters of Finland by the terms of the current treaty.
From this point of view, the canal does not pose a military threat to Russia in the event of Finland’s accession to NATO.
As Nikolai Mezhevich, President of the Russian Association for Baltic Studies, noted in a conversation with Izvestia, Finland’s accession to NATO will certainly change the rules of the game and will mark the end of the current “special level of relations” between Finland and Russia.
Until recently, relations between the two countries were rated as of strategic importance, Mezhevich claims.
The special level of relations between Vladimir Putin and Finnish authorities date back to the days when Putin headed the Foreign Relations Committee of Leningrad (St. Petersburg) in 1991-1992, and was directly involved in talks with the Finnish trade delegations.
Historian at Helsinki University, Jyrki Paaskoski told Helsinki Times that the Saimaa canal agreement is bilateral, and thus, without negotiations with Finland, Russia can not change conditions single- handedly.
— Agreement was signed for 50 years and came into effect in 2010. According to the lease agreement, the term of notice is 12 months. I think it is possible that Russia can end the agreement, but it is not to it’s advantage, — the expert noted.
In his opinion, the Finnish forest industry will switch to road and rail transport if the agreement comes to an end. Imports from Russia are already subject to sanctions, Paaskoski continues, so the consequences of contracts breaking off will not be dire.
The prime commodities transported along the Saimaa Canal are logs, timber, cargo, fertilizers and paper.
In November 2021, Russia decided to halt the export of raw timber through the channel. Subsequently, this measure was discussed at the highest level during President Niinistö's visit to Russia last October.
The Finnish Prime Minister Sanna Marin then called Moscow's decision unfortunate. But she clarified that it had nothing to do with the talks held by the end of Autumn between the leaderships of Finland and NATO.
Russia is Finland’s third largest trading partner, trailing only Germany and Sweden. Statistics Finland estimates the value of Finland’s exports of goods and services to Russia in 2021 at 4.4 billion euros. Russia accounted for 5% of Finland’s exports.
As for the Russian market, Finland was only 15th in the country’s 2021 foreign trade turnover.
Survey published by the Finnish Ministry of Finance on 13th April predicts a negative impact of Ukrainian crisis on the economy of Finland — growth is predicted at 1.5 percent this year, less than previously anticipated.
"The sanctions will practically stop Finland's foreign trade with Russia, which will cut Finland's economic growth this year," the ministry said.
The economic benefits of the Saimaa Canal are best seen from the results of a survey conducted by The Finnish Waterways in 2019. It showed that transporting goods from Joensoo to Düsseldorf by ship via the Saimaa Canal is 2 times cheaper and 3 times faster than using alternatives such as trucks, ferries and trains through Karelia.
From Tsar to Khrushchev
The Saimaa Canal was first opened in 1856 and it was the largest construction ever completed in what back then was called the Grand Duchess of Finland.
Until the Second World War, the Saimaa Canal and adjacent territories were the domain of Finland. But in 1944, the USSR captured the southern half of the canal, with then the second largest city of the country — Viipuri or Vyborg. And the channel’s traffic came to an abrupt halt.
Finland did not belong to the Soviet bloc, but Moscow saw it as its bailiwick since the mid-1930s, and the USSR had a mighty intelligence sprout in the country, the number of KGB personnel there was second only to that in the United States. Even Nazi Germany back then hosted fewer.
Moscow coerced Finland into joining the Soviet security system through the Treaty of Friendship, Cooperation and Mutual Assistance signed in 1948, which ensured that Helsinki would not gamble in the brewing Cold War.
The USSR viewed the 1962 Saimaa Agreement as a guarantee of Finland’s neutrality in the looming conflict with the West and also as an act of support for the President Urho Kekkonen, newly elected for his second term.
The international climate at a time was bleak as the Caribbean crisis was unfolding between the USSR and the USA. Only a year had passed since the erection of the Berlin Wall in August 1961, which culminated an open confrontation between the Great Powers in a divided Germany.
Relations between Helsinki and Moscow cooled sharply in 1961 — the USSR demanded Finland to hold consultations on security issues in the Baltic and to dissolve the pro-Western government of Karl- August Fagerholm, who was eager to end the Treaty of Friendship with the Soviet Union and thus, seen by Moscow as a warmonger.
Stemming from its “national security interests”, Moscow was blocking ongoing negotiations on the Saimaa Canal and mutual trade. Eventually, President Kekkonen was forced to dissolve the parliament. That move appeased Khrushchev, and he in one fell swoop unfrozen the negotiations path on Saimaa.
After the reconstruction of the canal and its opening in 1968, Finland’s GDP in 1969 grew by 9.6% compared to the previous year.
One of the first steps taken by Nikita Khrushchev to tweak relations with Helsinki was the decision to close the Porkkala Udd naval base in 1955, which the USSR was leasing, and withdraw Soviet armed forces from the territory.
“I thought that keeping a knife as a military base under their throats was not the best way to win the trust of the Finnish people,” Khruschev wrote in his diaries about that time.
The Saimaa Canal cannot be regarded as an analogue of a "knife" under the throat of the Finnish economy, since possible losses due to the termination of the agreement do not put the existence of the country at stake.
According to Timo Soikkanen, a professor of political history at the University of Turku, “the economic consequences of breaking the lease agreement for the Saimaa Canal will not be so severe. The cultural and historical significance of this waterway is much more important”.
Seeking for alternatives
While Russia is upping the ante and hinting at a revision of the Saimaa Treaty, Finland is already seeking alternative routes to transfer commodities from the Saimaa lakes.
There are two options — digging a new channel through the Kymijoki or through Mäntyharju.
The distance from Saimaa to the sea along these routes is about 200 km and includes 13 locks. This is four times longer than the Saimaa Canal, which is only 43 km long.
The current Kymijoki canal runs along the coast of the Gulf of Finland between Kotka and Hamina, along Lake Pyhäjärvi.
The construction of the Saimaa Canal in the 1840s-1850s costed Russia 3 million rubles, which exceeded the annual GDP of the Grand Duchess of Finland. Switching from the existing corridor to Kymijoki or Mäntyharju may not be as attractive economically, but if Russia goes ahead with its plans to end the lease, Finland will have to weigh the need for such water alternatives.