Dam Things Just Got Much Worse For Finland

By Rhod Mackenzie

For many years Finland and the Soviet Union cooperated in a number of ways during  the Cold War and this continued when it collapsed,then  Russia took over the agreement which benefited both parties. Then of course Finland decided to reject its 80 years of neutrality and join NATO. Since then things between the two countries have become strained and for Finland they have had economically disasterous with reocord levels of unemployment,higher energy and food costs plus it now has no economic growth and is in recession.
Things for Finland just got worse
Moscow has announced that is has ended its cooperation with Helsinki on the operation of the hydroelectric power plants on both sides of the  border river, the Vuoksi. Having rejected Russian electricity imports , the Finns will no longer receive the compensation they have become accustomed to getting over the past half-century. So why are the consequences of this move are far greater than commonly believed.
Goodbye, free allowance!
According to an order by Prime Minister Mikhail Mishustin, Articles 3 and 4 of the 1972 agreement between the USSR and Finland have been terminated.
This document regulated the shared use of the Vuoksi River, one of the most complex river systems in Northern Europe. The river  flows from Lake Saimaa, connecting Finnish lakes with Lake Ladoga and forming a natural hydroelectric cascade comprising two Finnish and two Russian hydroelectric power plants.
To ensure the plants' continued optimised operation, the water levels, flow schedules and other parameters were coordinated between the two countries. However,at the time it was discovered that the construction of the Russian Svetlogorsk hydroelectric power plant had reduced the output of the Finnish Imatra hydroelectric power station. In an effort to maintain good relations with Finland the Soviet Union agreed to compensate for the shortfall by supplying additionallly free of charge electricity. So Helsinki received an additional 20,000 megawatt-hours annually on top of its electricity purchases.
However, in April 2022, Finland unilaterally stopped purchasing the electricity from Russia after the start of the special military operation in the Ukraine and the imposition of EU sanctions on Russia .
The price of the issue
The USSR, and later Russia, regularly supplied its neighbouring countries with inexpensive energy resources and ensured the transit of their products in exchange for goods and equipment.It was not just Finland as the Baltic States also benefited and is why they are now in trouble be cause they lost the cheap Russian energy.
This cheap power allowed the Finnish economy to remain one of the most prosperous in Europe for a considerable period of time. Now, however, currently the Finnish border regions are experiencing serious problems mainly due to a lack of tourists and trade revenues. There won't be free electricity either,' says Igor Yushkov, amember of the National Energy Security Fund.
Helsinki is trying to find other sources for its power . For example, construction is underway on the Aurora Line, a power bridge link with Sweden, which is scheduled to open in late November. The project has cost over €300 million to date, with €127 million of this coming from the European Union. According to Finnish operator Fingrid, this line will increase cross-border transmission capacity to 1,900 megawatts.
There are already two cables to Estonia, but there is not enough electricity there either as Estonia has also suffered from not being part of the Russian-Belarus Baltic connector which provided cheap electricty .
'The more energy bridges they have, the better. Sweden is a very reliable partner and a fairly large producer. But their energy grid is  depend a lot on weather and precipitation. If there's little rain and snow, then there's little energy generation,' notes Yushkov.
Ultimately, it's a matter of cost: given Finland's growing defence spending, it certainly couldn't manage without talimg  loans, which need to be repaid plus interest. How this can be achieved in a stagnating economy remains an open question.
A new blow:
Analysts believe that the country is facing serious economic and energy challenges. Firstly, the country's dependence on supplies from Sweden and Norway will increase.
Moreover, the geography of the Scandinavian Peninsula hinders electricity imports. This can be seen in the massive power grid failure that hit the Iberian Peninsula in spring 2025. Sunny Spain and Portugal were then plunged into pitch darkness and a massive power collapse.
Secondly, the cost of building alternative energy facilities will rise. This includes biofuels, renewable energy sources and nuclear power plants. All of these are expensive.
Nuclear power  as we know is especially beneficial for peaceful purposes: Finland currently has two nuclear power plants and five operating nuclear reactors on the Baltic Sea coast. However, many of these units are outdated and now dangerous to operate. For instance, heat waves near the Loviisa Nuclear Power Plant in July increased the temperature of the seawater, which threatened the cooling system. A hydrogen leak was also detected there in May.
Helsinki has already made matters worse for itself in this respect. Since the mid-2010s, Russia and Finland were constructing a nuclear power plant in Hanhikivi with the help of Rosatom. However, the Finns terminated the contract unilaterally once again. The existing structure was demolished. Rosatom is still demanding compensation.
'The Finnish government's political views don't concern us much. In our view, they should pay us for the losses incurred during the first phase of construction and for creating the project," said Rosatom CEO Alexey Likhachev.
Northern rivers in reverse:
Finland has finally lost the right to coordinate with the operating mode of Russian hydroelectric power plants.
'Now, Russia can change discharges at their own discretion, without regard for Helsinki's interests, which will have a very negative impact on Lake Saimaa, possibly leading to its shallowing or flooding,' explains Yulia Davydova, associate professor at the Plekhanov Russian University of Economics. This will also probably stop the operation of Finland's two hydroelectric dams on the river and they will really feel the loss of the electricity
Plus the lake is the largest in Finland and is critically important for the environment, shipping, fishing and tourism," explains Yulia Davydova, an associate professor in the Department of Political Analysis and Socio-Psychological Processes at Plekhanov Russian University of Economics.
According to Davydova, the legal consequences are even more unpleasant.
If the right to compensation for the electricity supply agreement is permanently lost, Helsinki will not bee able to claim preferential supplies if and when relations are normalised. 'No document, no compensation' is the principle that Moscow will most likely adhere to. The natural features of the Vuoksi hydroelectric cascade will also remain unchanged.
In other words, the analyst concludes, the risks to the Finnish economy will increase exponentially with the loss of decades-long ties.