Finnish Prime Minister Declares Transition to ‘War Economy’ Amid Energy Crunch

The Nordic nation joined its European Union allies in shooting itself in the foot economically by unilaterally slashing energy purchases from Russia. Helsinki added to its troubles by restricting visas for Russians – who ordinarily make up a big chunk of the country’s income from tourism.

Finnish Prime Minister Sanna Marin has compared the exceptional energy crisis being faced by her country to a “war economy.”

“We seem to be living in a war economy. This is not a normal economic situation,” Marin said, adding that the current crunch is the third calamity faced by her government since she came into office in 2019.

Marin laid the blame for the crisis at Russian President Vladimir Putin’s feet.

“The first [crisis] was the pandemic, the second was the tide of war coming in Europe, and the third is the energy crisis, which both Finland and all other European countries in the grip of, due to the war and the fact that Putin is using energy as a weapon against Europe,” Marin said.

The Finnish prime minister did not elaborate on how the Russian president, who has repeatedly said that Moscow remains ready to sign new long-term gas contracts with European countries, is responsible for the energy crunch pummeling the Nordic nation.

Economists expect the Finnish economy to slide into a recession in 2023 amid a downturn caused in part by a spike in energy prices and the country’s rejection of low-priced and reliable Russian supplies after refusing to pay in rubles.

Before the escalation of the Ukrainian crisis, Finland depended on Russia for nearly 70 percent of its natural gas and 35 percent of its oil, as well as 14 percent of its electricity. Along with the halt in imports of Russian gas, Helsinki joined its EU partners in banning Russian oil.

Tourism Losses

Helsinki poured salt on its economic wounds by placing restrictions on Russian tourists by cutting visa applications in half from an average of 1,000 per day to 500 per day starting September 1, and setting quotas on tourism visas to about 100, with the rest reserved for family ties, work and study.

Finnish authorities sounded the alarm about the potential implications of the loss of Russian tourists at the beginning of the summer. Russians typically make up about 20 percent of the country’s tourism earnings and its 15 billion euros-a-year in revenue. Earlier this year, Travel/Visit Finland director Kristiina Hietasaari estimated that the sector could lose over 600 million euros without Russian travelers.

In addition to curbing Russian energy purchases and cutting access to Russian tourists, Finland has applied for NATO membership, and is expected to become a formal member of the bloc together with Sweden if and when all 30 of the alliance’s current members ratify the Nordic nations’ bids for entry. Russian officials have emphasized that Moscow has no qualms with either Finland or Sweden when it comes to security matters, but warned that if NATO infrastructure was deployed near Russia, Moscow would respond in kind to “create the same threats in the territories from which they threaten us.”