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Business news
Gulf of Finland feels impact of change in Russia
03.07.2007 16:28

russian_shipyard By Jussi Konttinen in St. Petersburg

The clock strikes five and the workers start to flow out of the Admiralty shipyard in St. Petersburg. The silhouettes of the cranes stand out against the horizon on this cold winter day.

Peter the Great founded the Admiralty shipyard in 1704, after forcibly opening a window to the west - by taking the eastern end of the Gulf of Finland from the Swedes.

Now, 300 years later, the shipyard is doing good business again. Submarines are again being built, for export to China and India, as well as for Russia's own Navy. It is also building tankers for the needs of Russia's growing oil exports.

The shipyard's new 677 series Lada submarine is to be taken into use in the Baltic Sea. According to information from the Finnish Ministry of Defence, Russia plans to expand its naval forces in the Baltic with several submarines.

A new radar station and a new anti-missile system has been going up near St. Petersburg. It has been estimated that modernising the Russian armed forces will bring new fighters and missiles to the area.

Is the military significance of the Gulf of Finland growing again for Russia?

"No, it is not. The army is simply renewing its equipment. The economic significance of the sea is more important now", says Pavel Druzhino, a worker who is walking out of the shipyard.

Nikita Lomagin, a professor of economics, and the head of the Baltic Sea Research Centre agrees.

"In Russia's naval doctrine, the Baltic Sea has been given the least military significance. Developing the harbours, utilising the continental shelf, and unobstructed passage to Kaliningrad have priority."

Lomagin feels that the development of the Gulf of Finland is determined by businessmen, and not by generals.

"The Gulf of Finland is truly Russia's window to Europe. It is even more important than in the time of Peter the Great. Its importance in economics and transport is constantly increasing."

The Port of St. Petersburg is the busiest harbour in the Baltic Sea, and new container and car harbours are being built in Ust-Luga and Vistino on the southern shore of the Gulf of Finland.

The Gulf of Finland has become the most important westward conduit for Russian oil. Already 140 million tonnes of oil a year are passing through the body of water.

The oil terminals of Primorsk and Vysotsk lie at the far end of the small inland sea. The former is Russia's largest.

In the coming week, a decision is expected on expanding the Primorsk oil pipeline, which would double the capacity of the harbour.

The most ambitious project is still the planned 1,200 kilometre natural gas pipeline along the bottom of the Baltic Sea from Vyborg to Germany.

Lomagin feels that the countries on the Baltic Sea need to accept the fact that Russia is not a status quo country; it is undergoing change. It wants to develop rapidly. To this end, it needs new harbours, as well as oil and gas pipelines.

These need to be built in the Gulf of Finland, because Russia does not want to be dependent on the harbours of the Baltic countries and Ukraine, on Turkey, with its restrictions on the passage of tankers through the Bosporous, and on gas and oil pipelines that pass through Ukraine and Belarus.

Lomagin feels that Russia's neighbours need not worry about Russia's projects. It is a matter of mutual dependence. The EU needs Russian oil and gas, and Russia needs the EU to buy them.

"The militarisation of the Baltic Sea is definitely not in Russia's interests. The implementation of infrastructure projects would be impossible if there were an arms race in the area. The Baltic Sea is not a sea of confrontation - it should unify people."

A negative prospect in his view would be for NATO to become more active in the Baltic region and in Poland, and for Finland and Sweden to join NATO, because in such a case, Russia would have to react.

"However, I do not believe that it would be a good idea for Finland to join NATO. Russia does not threaten Finland, and trade between the countries is constantly growing."

And what about the common environment? Is that a concern for Russia?

"Russia has started to pay more attention to soft security. Already many times more money is being spent on environmental protection than a few years ago", he says, and mentions the sewage treatment plant in St. Petersburg that Russia has partly paid for itself.

"Nevertheless, the Baltic Sea is not an internal sea of the European Union or Russia, and it is not possible to directly implement the norms of either one there."

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