Putin Faces Economic Shock If NATO Closes Baltic Sea

Closing the Baltic Sea could inflict a significant economic shock on Russia, costing it approximately $90 billion (830 billion Swedish kronor) annually, according to a new analysis. The report, commissioned by Sweden's Armed Forces and conducted by the security policy firm Politea, explores the geopolitical and economic consequences of such a drastic measure.

While the primary target of such a blockade would be Russia, the analysis also highlights that Sweden would suffer considerable economic damage, potentially equivalent to the 2008 financial crisis, with its GDP shrinking by 10.5 percent. Finland and the Baltic states would also be severely impacted.

The report outlines several scenarios, including a total military blockade by NATO countries involving measures like mining and naval patrols. This would likely be a defensive response to an extreme military threat, as Björn Fägersten, CEO of Politea, explains. However, such a move could provoke escalation from Russia, ranging from hybrid attacks and nuclear threats to direct military action.

A less severe scenario involves a partial blockade where NATO countries, such as Sweden and Denmark, stop, inspect, and temporarily detain Russian vessels and their owning companies. This would be enforced by coast guards and other authorities rather than a full military operation. In this case, Russia's annual losses would be up to $30 billion (280 billion kronor). The pressure on Russia would intensify if Ukraine simultaneously disrupted Russian oil transports in the Black Sea.