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“Finland is heavily exposed to Russia both economically and militarily because the countries share a 1,300-kilometer (807-mile) border. After the breakup of the Soviet Union, Finland and Russia shared an understanding: Russia would not question Finland's independence, and in return Helsinki would stay out of NATO to avoid provoking Moscow. However, the current Finnish government is highlighting its right to conduct independent foreign policy maneuvers and is seeking closer collaboration with other Nordic countries.
The Nordic and Baltic states have small defense forces in comparison to those of Russia. The countries in the high north consider Russia a common threat. The weakening of the European Union and NATO has provided an impetus for greater regional cooperation. In late 2009, Iceland, Denmark, Norway, Sweden and Finland formed NORDEFCO. The grouping is not a military alliance that offers joint defense such as NATO; rather, it facilitates defense collaboration among the five countries and maximizes the benefits of such cooperation while reducing defense costs.
Iceland is a NATO member but does not have its own military and therefore relies on foreign defense support. Denmark and Norway, together with fellow NATO members, have been conducting air surveillance flights on a rotational basis over Iceland since the U.S. airbase in the country closed in 2006. For Finland, participating in the air surveillance mission in Iceland would be a modest gesture toward NORDEFCO and would reduce the costs of air surveillance for Norway and Denmark. Finnish Prime Minister Jyrki Katainen and President Sauli Niinisto said the tenuous plans should not be seen as a move toward NATO, as some Finnish politicians have feared. Rather, the plans are meant to ensure future cooperation and support from the other Nordic countries, which will increasingly serve Helsinki as a counterbalance to Russia.
Finland's historical and economic relationship with Russia – in addition to the two countries' long shared border – means that Helsinki has to weigh its actions against the possibility of Russian retaliation more than the other Nordic countries do. As a eurozone member, Finland is strongly integrated into Europe but it still depends heavily on Russia for energy and trade.
Finland imports approximately two-thirds of its energy from Russia, though Helsinki is trying to decrease this dependency by building more nuclear reactors and allowing nuclear energy to supplant coal, oil and natural gas from Russia in its energy mixture. However, as Europe's economic situation deteriorates, Finland will rely more on the Russian export market. Data from early 2012 showed that Finland's exports to EU countries contracted, while its exports to Russia grew to 9% of Finland's total exports. With Russia joining the World Trade Organisation, Finland hopes to increase exports to Russia as trade barriers are reduced. Furthermore, Finnish industry hopes to profit from infrastructure projects in Russia. For example, Nokia Siemens Networks – a joint Finnish-German collaboration – was selected to upgrade Russia's telecommunications network in late 2011.
Specific trade barriers with Russia have threatened the Finnish economy in the past. In 2007, Russia began increasing its export tariffs on timber. This affected the Finnish paper and pulp industry, which at the time accounted for 10 percent of Finland's gross domestic product. Russia can similarly use its trade relationship with Finland to limit Helsinki's ability to increase its national security by pursuing closer regional defense collaboration.
Finland's potential support for the Iceland air surveillance mission does not mean Helsinki is moving toward NATO. However, it illustrates the country's strengthening political will for overt defense collaboration among the Nordic countries. As the European Union's weakening drives Finland toward Russia economically, NATO's weakening drives Helsinki closer to NORDEFCO militarily."