Petrol, electricity and gas price spikes inevitable if Iran chokes shipping
Australian petrol, electricity and gas price spikes are inevitable if Iran closes its shipping channels to the world, blocking the conduit for Middle Eastern energy exports representing about 20 per cent of globally traded oil and gas.
Iran's parliament is reported to have agreed to close the Strait of Hormuz, but it is unclear if the nation's military will implement a blockade, which could draw brutal retaliation from the US and its allies.
However, just the threat of global disruption can drive commodity prices higher. When Vladimir Putin invaded of Ukraine in 2022, fears over shortages due to widespread embargoes on Russia's oil and gas exports helped drive price spikes along with the physical shortage of fuel.
Any shift in global markets will impact local energy prices because Australia imports the vast majority of its petroleum. Despite Australia being a major gas exporter, local gas prices are set by the international market because buyers here compete with the rest of the world.
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Schneider Electric senior director Lisa Zembrodt, who advises some of Australia's biggest corporate energy users, said disruption to shipping through the Strait of Hormuz would affect 20 per cent of the world's petroleum liquids consumption and 20 per cent of liquified natural gas. She said more than 80 per cent of these exports go to Asian markets, which drives prices in Australia.
'When the price of oil rises, we see this at the pump. When the international price of gas rises, the price of gas as a fuel for heating may rise, despite that we produce twice as much as we consume domestically. The cost of gas-fired generation can also rise, causing electricity prices to rise at times when gas is setting the price in the market - for example recently during the cold snap in Victoria.'
And while only around 10 per cent of Australia's electricity is generated by gas, it is the most expensive compared to the dominant fuel sources of coal and renewable energy, which means it sets a benchmark price that drives all the others up if its price spikes.
The 2022 electricity crisis culminated in price spikes so high that the regulator imposed the first-ever suspension of the market, and bills have remained elevated ever since.
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Herald Sun
2 hours ago
- Herald Sun
Victoria: Priciest homes revealed including Toorak record-buster
New and old rich-listers splashed an eye-watering $540m-plus on Victoria's 20 most expensive homes of the past 12 months. A record-busting sale reported to fall between $115m to $135m for Toorak mansion Coonac topped the pile. It was also the nation's biggest deal for the 2024-25 financial year although industry sources indicated the transaction likely fell at the range's lower end. RELATED: Arrotex boss billionaire Dennis Bastas firming as buyer of $100m+ mansion PropTrack: Melb six months from record prices Geelong trophy home Raith on track to break record at circa $9m Other Toorak listings clocked up individual circa-$70m and $40m sales. Elsewhere, luxurious pads in Canterbury, South Yarra, Brighton and the Mornington Peninsula scored eight-figure sales. But it was the circa-1867 Italianate mansion Coonac that smashed Melbourne's $80.88m benchmark. Industry insiders linked the off-market sale to Kay & Burton managing director Ross Savas and chair Gerald Delany. While it's not been officially confirmed, billionaire Dennis Bastas was widely tipped to have purchased Coonac. Mr Bastas runs a healthcare empire through his leadership roles at Arrotex Pharmaceuticals, myDNA and DBG Health. Mr Savas said the upper end of the Melbourne market has remained resilient. 'Many are taking a generational view — prioritising long-term security, lifestyle alignment and legacy over short-term market fluctuations,' he said, 'At the same time, favourable economic conditions, including the low Australian dollar, continue to attract international interest — particularly from expatriates and global buyers looking to establish roots in Melbourne.' The luxurious six-bedroom mansion at 2-4 Macquarie Rd fetched a figure in the vicinity of $70m shortly before Christmas. Automation platform Neota chairman John Lord and his wife Sue sold the home where visitors are greeted with a sweeping marble staircase, and are likely to enjoy a dedicated basement cinema or the home's temperature-controlled wine cellar and tasting room. Forbes Global Properties' Michael Gibson handled the listing – along with another $40m Toorak pad that changed hands off market. Mr Gibson said there was often multiple buyers for homes prices at $10m to $30. 'The premier market over the past year has been as strong as ever … one thing we are short on is properties to sell,' he added. When it came to luxury features it wasn't uncommon for homeowners to want double-level basements for entertaining, exercising and storing car collections, said Forbes Global Properties director Robert Fletcher, who oversaw a $29m Toorak deal in March. 'I think people who have a large amount of cars tend to look for space for between six to eight cars,' he said. Forbes colleague, senior associate Tracy Tian Belcher said some buyers were more hesitant to buy amid uncertainty about many cuts will be made to Australia's official cash rate across the second half of 2025. Ms Belcher said that even if clients were quite well off, the 13 hikes interest rates across the nation between May 2022 and November 2023 had affected many of them – while reporting on current economic conditions could impact people's emotions. 'Last year, one of my buyers was involved in a six-month long negotiation process for a Toorak home,' Ms Belcher said. Melbourne Sotheby's International Realty managing director Antoinette Nido and colleague Max Ruttner oversaw a $25.6m South Yarra transaction in December. 'Look at me addresses' were important to many recently cashed-up buyers, Ms Nido said. 'What's notable is that a lot of young business people who have made money in IPOs are doing very well,' she said. 'People who you have never heard of will call and when you ask how much they want to spent, it can be $40m to $50m.' Marshall White group sales director John Bongiorno said demand in the Melbourne prestige market's top end had consolidated in the past 12 months as the city's population boomed. 'I think that there are more buyers in the $10m-plus category,' Mr Bongiorno said. 'The amount of people out there with substantial wealth, it's a far bigger than what it was 12 months ago, two years ago, five years ago.' Marshall White handled the $30m-plus sale of a French Provincial-inspired Canterbury house boasting a 16-car showroom, eight bathrooms, a cinema and day spa with a sauna in March, listed by agents Andy Nasr and Marcus Chiminello. Many top-end buyers were taking a long view, prioritising the security, prestige and practicality of homes over price movements, Kay & Burton Stonnington director Darren Lewenberg said. 'These aren't short-term flips, they're generational homes,' Mr Lewenberg said. Many homes that transacted had been fully rebuilt or renovated by architects and interior designers well before being listed. 'Buyers at this level don't want to lift a finger. They want to walk in and start living,' Mr Lewenberg said. Industry Insider Property founder and prestige buyers agent Andrew Date said the surge in off-market deals was one of the most notable shifts in 2024–25. 'Most of the biggest sales never hit the portals. They're done over lunch, through networks, and only involve a few key people,' Mr Date said. 'These homes are so rare, they're not just about location, but land, architectural pedigree, and lifestyle.' Mr Date said prestige demand had also crept further afield especially towards the Mornington Peninsula. Additional reporting by David Bonaddio VICTORIA'S MOST EXPENSIVE HOME SALES, 2024-25 FINANCIAL YEAR Coonac, Toorak Price: $115m-$135m Agents: industry sources linked the off-market sale to Kay & Burton's Ross Savas and Gerald Delany. 2-4 Macquarie Rd, Toorak circa $70m Agent: Forbes Global Properties' Michael Gibson Address withheld, Toorak $40m Agent: Forbes Global Properties' Michael Gibson 38 Monomeath Ave, Canterbury circa $30m+ Agents: Marshall White's Andy Nasr and Marcus Chiminello. 27 St Georges Rd, Toorak circa $29m Agent: Forbes Global Properties director Robert Fletcher 177-181 Walsh St, South Yarra $25.6m Agent: Melbourne Sotheby's International Realty Antoinette Nido and Max Ruttner 5 St Ninians Rd, Brighton $23m Agents: Marshall White's Ben Vieth and Andy Nasr 10 Struan St, Toorak $22m Agents: Marshall White's Marcus Chiminello and Nicole French Address withheld, South Yarra $21.2m Agency: Withheld 12 Lansell Rd, Toorak $21m Agent: Kay & Burton's Gowan Stubbings 7 Gawith Court, Toorak circa $20-22m Agents: Marshall White's Marcus Chiminello and Nicole French 3520 Point Nepean Rd, Sorrento $20m+ Agents: Kay & Burton's Liz Jensen and Gerald Delany 6 Macquarie Rd, Toorak circa $20m Agents: Marshall White's Marcus Chiminello and Nicole French 10 Highgate Hill, Toorak $19.3m Agent: Kay & Burton's Oliver Booth 4 Grant Ave, Toorak $19m Agent: Forbes Global Properties' Mike Gibson 8 Robertson St, Toorak $19m Agent: RT Edgar's Mark Wridgway 3786 Point Nepean Rd, Portsea $19m Agents: RT Edgar's David Gillham and Ilze Moran 11 Berkeley Street, Hawthorn $18,888,999 Agents: Jellis Craig's Perry Zhou and Elsa Li 11 Kent Court, Toorak circa $18m Agents: RT Edgar's Tim Brown and Sarah Case 14 Grandview Grove, Hawthorn East $17.5m Agents: Marshall White's James Tostevin and John Bongiorno 444 Musk Creek Road, Flinders circa $17.5m Agency: Forbes Global Properties Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox. MORE: Leo's Fine Food & Wine Kew sale linked to James Packer Time-capsule house of Aussie artist to the stars for sale Luxe hotel hits market for just $2 — but there's a catch
Sky News AU
4 hours ago
- Sky News AU
Labor's Veteran Affairs Minister Matt Keogh's 'strategically incoherent' naivety on the Middle East war is cause for concern
Neville Shute's haunting Cold War parable On the Beach imagines Australia as the final, fading refuge from a nuclear apocalypse. 'The world will go on just the same,' says naval officer Peter Holmes, 'only we shan't be in it. I dare say it will get along all right without us.' The line captures a persistent illusion in Australian foreign policy: that we can remain untouched by conflicts beyond our shores. This delusion has become dangerously entrenched, reflected most recently in the Albanese government's hesitant response to war in the Middle East. On Wednesday, Veterans Affairs Minister Matt Keogh provided the standard government response to a question on ABC Perth about potential involvement in the Middle East. "It's not our primary focus area," he replied. "We are very much focused on our region." Yet only two days earlier, a Qantas Boeing 787 from Perth to Paris was forced to turn back more than seven hours into its flight, prevented from reaching its destination by the closure of air space over the Gulf. The geographical reality for an open trading nation like ours is that Australia has had a stake in peace in the Middle East since 1869, when the opening of the Suez Canal reduced the journey to Europe by weeks. Australian troops fought and died in the Middle East in two world wars, not just out of imperial loyalty but because it was in our interests. Our trading links have diversified, and freight handling is more sophisticated. Yet, Dubai, Doha, and Abu Dhabi are the first or last ports of call for nearly 400,000 passengers a month arriving or departing from Australia. Last year, more than 100,000 tonnes of air freight came by that route. As Australians, we should understand better than most that the threat to aircraft flying 30,000 feet over a war zone is not merely theoretical. Malaysian Airlines flight MH 17 Is one of three commercial airliners confirmed to have been brought down by surface-to-air missiles. Among the 298 people who died when the plane came down over eastern Ukraine were 38 Australians. What is unfolding in the Middle East is not an isolated conflict - it is part of a broader confrontation between liberal democracies and revisionist regimes. Iran, through its proxies, joins Russia and China in challenging the rules-based order that underpins global security. Australia's security and prosperity depend on that order. We are a trading nation that relies on open sea lanes, established legal norms, and stable regions. The notion that we can "focus on our region" while ignoring wider threats is strategically incoherent. In short, trade routes, military engagements, and energy security irrevocably bind Australia to the region. Far from being a distant or irrelevant conflict zone, the Middle East is - and always has been - part of Australia's geopolitical backyard. The Middle Eastern diaspora in Australia provides a human link to countries across the region and a profound interest in maintaining their sovereignty. Add to that Australia's historic resistance to nuclear proliferation and naivety of the Albanese government's attempts to distance itself from events in the Middle East becomes screamingly clear. Australia was drawn irreversibly into the geopolitics of the Middle East and, more broadly, the global system that binds the liberal democratic world together. The idea that we can stand aside from today's conflicts - whether in Gaza, the Red Sea, or the broader confrontation between open societies and authoritarian powers - is not just naïve. It is dangerous. Yet there is more to Albanese's foreign policy error than cartographic illiteracy and topographical detachment. The insistence of the intellectual Left to view every conflict through a colonial lens has created uncertainty about which side to support. The framing of Israel as a Western colonising force is no longer a fringe position on the Left. The resale to acknowledge the Jewish people's ancient historical ties to the Middle East and brush aside the significance of international involvement in Israel's creation has become mainstream thinking in Labor. Counter-evidence is dismissed through the selective use of colonial framing. The October 7, 2023, atrocities have not tarnished Hamas' reputation as freedom fighters. Open calls for the destruction of Israel, a genocidal objective incompatible with any liberation narrative, are discounted or justified. The narrative ignores genuine colonial regimes like China in Tibet or Russia in Ukraine, where national cultures are actively suppressed. Nick Cater is a senior fellow at Menzies Research Centre and a regular contributor to Sky News Australia
The Age
4 hours ago
- The Age
‘A question of when': Why Russia's next move could be on the Baltics
What and where, exactly, are the Baltic states? Those who live there have heard this so often they've learned to hide their eye-rolls and offer up some ready-made responses instead. Hence, Tallinn, the capital of Estonia, a picturesque cobblestoned city on the Baltic Sea in Northern Europe, is sometimes described as a chilly version of (Italy's) Milan or a southern alternative to (Finland's) Helsinki. Nearby Lithuania's enterprising tourist board made a tote bag that said, 'I only date people who know where [the capital] Vilnius is' and dreamed up a famously risque campaign showing a woman tangled up in bedsheets with the slogan: 'Vilnius. The G-spot of Europe. Nobody knows where it is, but when you find it – it's amazing.' Nearby Latvia, meanwhile, has tried the somewhat tamer ad line ' Neighbours tend to surprise ' to raise awareness of the medieval architecture of its ancient capital, Riga, and its food culture (try sparkling birch sap or the pelēkie zirņi ar speķi, a traditional stew of peas and bacon). Nobody who studies geopolitics, however, is in any doubt about the regional importance of the Baltics. The three little nations, wedged between Russia and the Nordic countries, would likely be first in line should Vladimir Putin send his armies westward into Europe. Memories run deep here: many in these states, which were occupied by the Soviet Union for half a century from 1940, have not-so-distant recollections of harsh totalitarian rule. The war in Ukraine has revived these fears: are they next on Vladimir Putin's to-do list? Complicating the picture is the Baltic states', and their neighbours', memberships of NATO , the North Atlantic Treaty Organisation – which met in The Hague for its annual summit on June 24 – and its critical Article 5, which considers an attack on an individual member nation an attack on them all. Unlike Russia's 2022 attack on Ukraine (which is not in NATO so did not automatically trigger a response), if Putin's tanks roll over the 'Friendship Bridge' into the Estonian border town of Narva, a wider conflict could rapidly develop. 'This will not be a walk in the park,' Artis Pabriks, former Latvian Minister for Defence, tells us from Riga. But how likely is Russian aggression in the Baltics? What efforts are the Baltic states making to prepare for it? And what is the 'choke point' known as the Suwalki Gap? What's been going on in the Baltic Sea? It has quite a bottleneck, the Baltic Sea. A major shipping route in northern Europe – stretching from the Russian port of St Petersburg in the east to Denmark's Copenhagen in the west – it is completely enclosed, like a vast lake, to its north, south and east, fed by rivers pouring off glaciers in Sweden and Finland. It's shallow and brackish in parts and full of fishing vessels, commercial cargo, ferries, warships, submarines, wind farms and all manner of underground cables and pipelines. Where it meets the Atlantic, in the west, ships must navigate an archipelago of some 400 islands, a handful of which are big enough to warrant joining up with bridges or ferries, others so tiny they are classified as skerries, derived from the Old Norse word for 'rock in the sea'. Many vessels pass through here at a pinch point called The Sound, or Oresund, an occasionally shallow passage that's just four kilometres across at one point and that can ice over in winter. To the east, meanwhile, the sea broadens and forks into a Y, one leg stretching towards the Baltic states and St Petersburg, the other separating Finland and Sweden. 'The most obvious thing the countries share is the sea itself,' writes Oliver Moody in his recently published overview of the region, Baltic: The Future of Europe. 'They have had to learn to collectively steward a heavily polluted and ecologically fragile body of water, laced with daisy chains of gas pipelines, electricity and data cables, and above all the shipping routes on which most of their imports and exports depend. Most glaringly, they have been thrust together by Vladimir Putin and his war on Ukraine.' Here and there, up pops an island of particular strategic importance. Sweden's Gotland, the largest, sits slap-bang between Scandinavia and Latvia and is directly in the path of Russian traffic departing St Petersburg for the Atlantic. It's been called 'Sweden's unsinkable aircraft carrier': in a time of crisis, it could host thousands of troops (as it did during the Cold War) and fighter jets that could strike passing vessels. Since 2022, Gotland has endured a series of odd events, including a mysterious pump failure that could have left its inhabitants without drinking water and a severed internet cable, prompting Sweden to deploy warships to monitor the Baltic for 'potential sabotage'. The attacks were widely suspected to be Russian dirty tricks, part of a shadow war of cyber warfare, propaganda hacks, cables damaged by ships 'accidentally' dragging their anchors, GPS jamming that affects commercial flights, even attempts to sabotage cargo aircraft with incendiary devices disguised as parcels. 'They are fragmenting the West, trying simply to penetrate us and to make us weaker,' says Artis Pabriks, now chairman of Latvia's Military Technology, Drones and Robotics Association. Few attacks, if any, have been directly linked to, or claimed by, Russia; yet all have been apparently designed to destabilise and unsettle, observers believe. The incidents have been largely concentrated on NATO's eastern flank, where Estonia, Finland, Norway, Latvia, Lithuania and Poland brush up against Russia, according to the Centre for Strategic and International Studies. 'It's a hybrid war,' said General Veiko-Vello Palm, Deputy Commander of the Estonian Defence Forces, in 2023. 'The most serious threat is cyber-related, our communications and IT systems are under constant attack.' In April, NATO's top commander, US general Christopher Cavoli, said Russia intended to triple the size of its military after the war in Ukraine ends and would build up its military presence on its borders with Finland and the Baltic states. First in the firing line could be Lithuania, former CIA director general David Petraeus told a webinar run by UK think tank Policy Exchange in late May. 'Lithuania has featured prominently in [Putin's] speeches – and we should be listening.' In December, Finland impounded an oil tanker while it investigated the suspected sabotage of undersea cables at Russia's behest. 'We've witnessed unattributed incidents against critical infrastructure, but we don't really know who the perpetrator is,' Matti Pesu tells us from the Finnish Institute of International Affairs, where he is a senior research fellow. 'The incidents may have been accidents, but they've been so frequent that it's unlikely that all of them would be.' Finland's president, Alexander Stubb, last year told a gathering of security experts in Helsinki to expect a rise in information war, sabotage, cyber attacks and attacks on civilian infrastructure. Finland is no stranger to Russian belligerence. It was forced to cede a tenth of its territory to its neighbour after the brutal Winter War of November 1939, when Russia opportunistically invaded while the rest of the world was distracted by events elsewhere. Since Russia's invasion of Ukraine, Finland has closed its 1340-kilometre border with Russia, cut trade ties and now has enough underground bomb shelters to house 4.8 million of its 5.6 million people. Some are big enough to house heated swimming pools, skate parks and soccer pitches, for use in normal times, with spartan bunk rooms ready to accommodate families should the worst happen. Norway also shares a border with Russia, way up in the Arctic, just 195 kilometres long and with a single formal crossing. Between the Norwegian town of Storskog and Borisoglebsky in Russia, it's not more than a few hours' drive to Severomorsk, Russia's primary base for its fleet of nuclear submarines. Norway closed its side of the border to most traffic in May last year, though there are some exceptions, such as Russians allowed to cross to visit family members. How worried are people in the Baltic nations? Until recently, Narva, a town with an ancient fortress by the River Narva on Estonia's eastern border, was a thoroughfare for Russian trade and tourism. Ninety-five per cent of its residents are native Russian speakers, many descended from people who relocated here (voluntarily or otherwise) from the USSR after it annexed Estonia in 1940. Today, they look across the Friendship Bridge that joins the two nations and wonder when tanks might roll across it. All eyes are on Narva, wine importer Giuseppe Bassi tells us from Limoncello, the wine bar he runs in the old part of Estonia's capital, Tallinn. Were a 'provocation' to happen, he says, fears are it would go down in Narva, which he calls 'the most Russian city in Estonia'. Lithuanians, too, have long memories of Russian brutality, says Daiva Sveikackaitė, an artist and commentator in the capital, Vilnius. 'The older generation remembers the USSR very well,' she tells us. 'The planned economy seemed to provide planned security. But that censorship of real history, the lack of freedom of speech, the fear in the memory of the elders about the deportations after World War II … the Lithuanian people did not forget their roots and former independence.' The Baltics each declared their independence from Russia in 1918, after its defeat in World War I, only to fall under its rule again during World War II, in 1940. As the USSR began to fray in the late 1980s, pro-independence movements gathered steam in the Singing Revolution, events where protesters gathered to sing patriotic songs in defiance of their Soviet overlords. On August 23, 1989, some 500,000 people formed a human chain linking Tallinn, Riga and Vilnius; the following year, all three countries held free elections and declared their independence from the USSR. 'Similar but different' is one way to describe the neighbours, who have shared common enemies and some traditions (celebrating the summer solstice is a big deal in the Baltics) but who speak different languages and follow different branches of Christianity (Lithuania is majority Catholic while Estonia and Latvia have traditionally leaned more Orthodox or Lutheran). All three joined NATO in 2004; Poland joined in 1999, Finland in 2023, Sweden in 2024; Norway is a founding member from 1949. Since Russia invaded Ukraine, relatively porous borders are being reinforced to at least prevent the kind of surprise attack that Russia launched on the Ukrainian capital, Kiev, in 2022 (which ultimately failed). Narva's Friendship Bridge is closed to vehicles and pitted with 'dragon's teeth' – the anti-tank obstacles that have proved successful at slowing armoured advances in Ukraine. 'It's a question of when they will start the next war,' said Kaja Kallas, Estonia's then-prime minister, in 2024. NATO's eastern flank is undergoing 'serious rearmament', Joris Van Bladel tells us from the Egmont Institute in Brussels. 'Russia talks in big numbers but often underdelivers. There is a structural gap between declared intent and actual capability. Russian forces are rarely efficient but they are effective. They persist. That is their strength.' Lithuania's intelligence agency believes Russia aims to increase its stocks of troops, equipment and weapons on its Baltic and Scandinavian borders by up to 50 per cent. 'In the medium term, Russia is unlikely to be able to build up the capabilities needed for a large-scale conventional war against NATO,' it said. 'However, Russia may develop military capabilities sufficient to launch a limited military action against one or several NATO countries.' Loading At its summit in The Hague this week, NATO committed each member nation to increasing their military spend t o their 5 per cent of GDP by 2035 (though only 3.5 per cent will be in core military spending, with the remainder on the likes of infrastructure, intelligence and cybersecurity). The three Baltic states had already pledged to increase their defence budgets: Estonia to 5.4 per cent of GDP by 2029, Latvia to 3.45 per cent of GDP for 2025 and Lithuania to between 5 and 6 per cent of GDP from 2026 to 2030. Compared to Russia, the nations are minnows: Estonia (population 1.4 million) has just over 7000 of its own regular military personnel; Latvia (population 1.9 million) has 6500; Lithuania, the largest with 2.8 million people, has some 23,000 in active service. All have reserves and volunteer forces; Latvia has reintroduced military compulsory service for men aged 18 to 27 (it's optional for women). NATO also has an 'enhanced forward presence' in each of the three countries with a few thousands troops in multinational battle groups. Russia, in contrast, has some 1.3 million personnel on active service and an additional 2 million in reserve. In theory, all NATO states would come to the immediate aid of a Baltic nation under threat. However, says Van Bladel, 'the Kremlin increasingly perceives the alliance as being in crisis due to erratic and chaotic signals from the Trump administration, persistent European military weaknesses, and dissenting voices on the Russian threat, particularly from Hungary [led by strongman Viktor Orban] and Slovakia [led by Robert Fico whose visit to the Kremlin in January set off a wave of protests at home]. This perception may tempt the Kremlin to test NATO's resolve under Article 5, or at the very least, to adopt a more risk-tolerant posture.' While Article 5 is generally taken to mean that member nations will come to the aid of others in the alliance that come under attack, in practice each country can make its own decision on how it responds in the circumstances, according to NATO. 'This assistance is taken forward in concert with other Allies. It is not necessarily military and depends on the material resources of each country. It is therefore left to the judgment of each individual member country to determine how it will contribute.' The risk of increasing NATO's presence in the Baltics, meanwhile, is that it would be characterised by Russia as a provocation. In April, the Russian director of foreign intelligence, Sergey Naryshkin, told a state news agency that Poland and the Baltic states, in particular, would be targeted by Russia in the event of NATO 'aggression'. 'Poland and the Baltic republics are particularly aggressive, at least in words, they are constantly rattling their weapons,' he said. 'They should understand, although they do not yet understand, that in the event of aggression from the North Atlantic Alliance against the Union State [Russia], damage will certainly be inflicted on the entire NATO bloc, but to a greater extent the first to suffer will be the bearers of such ideas among the political circles of Poland and the Baltic countries.' NATO strategy, claimed former Estonian prime minister Kaja Kallas in 2022, was for Baltic forces to briefly frustrate a Russian advance while a counter-punch could be mustered from NATO's main forces to push them back. But, she said, 'If you compare the sizes of Ukraine and the Baltic countries, it would mean the complete destruction of countries and our culture.' This is not particularly appealing to everyday people in the Baltics. 'It turns out,' says Daiva Sveikackaitė, 'that if an aggressor attacked Lithuania, NATO [main forces] would reach us in maybe a week, which would allow the enemy to enter the depths of the country and only then begin to stop the enemy. Our country is small – from west to east the border is only up to 400 kilometres – so, war would devastate in an instant.' All in the Baltics remember the catastrophic damage inflicted in World War II when Russian and German armies fought over this contested turf. Each lost between 15 and 30 per cent of their populations to brutal fighting and successive waves of deportations (the Russians shipping thousands of suspected political prisoners to Siberian gulags; the Germans rounding up and murdering much of the Baltics' Jewish population). Narva itself was almost completely obliterated and was later rebuilt as a Soviet model town of grey-brick apartment blocks, to house some of the half-million or so Russians who migrated, or were moved, to Estonia for a (slightly) better life than they had on the windswept steppe. Some Russians, or Russian-speakers born there, now exist in a legal limbo: after independence, Estonia decreed that only those who had lived there before the Russian occupation in 1940, and their descendants, automatically qualified for citizenship. Others could try passing a test. Some were issued with so-called grey passports, giving them right of abode but limited access to the wider EU; some still have only Russian passports. As Estonia cracks down on Russian culture – pulling down old monuments, banning Russian cable TV channels – there's a risk of internal friction between the old-timers and the Russian 'newcomers'. Moreover, 'There remains, in certain quarters, an undercurrent of loyalty to Russia within the Russian community,' notes The Economist. Russia, for its part, has accused Estonia of 'total Russophobia'. What could happen next? Of the three nations, Lithuania is in a unique predicament, wedged between Belarus to the east (a Russian puppet state that's given safe harbour to Russian nuclear weapons) and, to the west, the Baltic Sea and Kaliningrad Oblast, a Russian 'exclave' that's home to Russia's Baltic naval fleet. Kaliningrad is a curious territory, an accident of history. Once known as Königsberg, part of Germany, the Allies gave it to Russia at the end of World War II, but it was cut off from the motherland when the Baltics gained independence, leaving it a strange, albeit strategically useful, island in a sea of NATO allies. A map, above, helps to visualise this geographic oddity, but what's critical is the distance from Russian ally Belarus to Russia's Kaliningrad – just 100 kilometres, a few hours by tank, along the border between Poland and Lithuania, a stretch that has become known as the Suwałki Gap (named after a Polish town). Should hostilities break out, Russian troops would be expected to swarm out of Belarus, across the Gap, cutting off Lithuania and its Baltic neighbours from Poland and the rest of Europe. (Side note: Belarus fell into line with Russia after the Kremlin helped its strongman president, Alexander Lukashenko, to quash protests following his election win in 2020, which was widely considered to have been rigged. Belarus's opposition leader, Sviatlana Tsikhanouskaya, was forced into exile in Vilnius, where she lives in a home heavily secured against interference by Russian agents.) To give themselves more of a fighting chance, last year, Lithuania withdrew from the international convention banning cluster munitions, tiny 'bomblets' that can scatter over wide areas of land to surprise advancing forces (but can harm civilians for decades thereafter); earlier this year, both Estonia and Latvia also pulled out of an international convention banning anti-personnel mines, allowing them to mine their borders against Russia. The United Nations believes that Russia, which is not a signatory to the cluster munition convention, has deployed cluster munitions at least two dozen times to date in Ukraine. Leaving the convention was not something taken lightly, says Pabriks, who was Latvia's foreign minister when the tiny nation signed up to the anti-mine Ottawa Convention in 2005. 'For the last one-and-a-half years, I have been arguing we have to go out of this convention because Russians are using these mines already now in Ukraine,' he says. 'It doesn't mean that we will use them immediately and that we will dig them in tomorrow, right? We simply want to say, just like nuclear deterrence, 'If you come we might use them.' We don't want to tie our hands when we need to defend our families.' More than three years of war in Ukraine has at least given the Baltics time to prepare, says Daiva Sveikackaitė from Vilnius. 'We became convinced that we will have to defend our country with our own strength. Society has become more patriotic, active with humanitarian support. We have many discussions about defence options. The plan is to resist and hold out. In reality, Lithuanians have received three safe years for preparation, understanding that Russia is a monster, that we do not intend to give up our homeland and will defend ourselves by all means.' Earlier this month, all three Baltic states signed a deal to co-operate should a mass evacuation be needed. 'It is important for the Baltic countries to maintain a unified approach and co-ordinate actions when threats arise, in order to ensure the safety of our people,' said Lithuania's Interior Minister Vladislav Kondratovic, 'especially in the event of large-scale evacuation.' Loading In the short term, with war in Ukraine ongoing, the risk of Russian assault is limited, says Van Bladel. 'Russia's capacity for a second major ground campaign is constrained,' he says. 'Most forces are tied down in Ukraine, focused on training, rotating reservists and adapting to drone warfare.' Over a longer term, he says, it's a different story. 'We must not confuse short-term limitations with long-term strategic intent. Russian doctrine is clear: NATO's eastern flank is a theatre of interest. Over the midterm, five to seven years, especially if the regime consolidates post-Ukraine, the threat could become real.' Says Matti Pesu from Finland: 'We don't want to see any escalation but then NATO, and particularly Finland, wants to also signal strength and resolve.' Is war in the region inevitable? No, says Pabriks. 'Maybe it will never happen.' But we have to learn from history, he says. 'We have been living through the Soviet occupation, deportations, killings. We are not afraid to die for our freedom.'
