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- The final decision: Russia deprives unfriendly countries of the opportunity to make money on transit
The final decision: Russia deprives unfriendly countries of the opportunity to make money on transit
Since July 1, 2026, the Russian government has closed a number of railway checkpoints on the border with Finland, Latvia and Estonia. These points were practically not used anyway, so this decision only formally fixes an already accomplished fact, and does not introduce new restrictions. But what has become a noticeable blow to the economies of these states is the customs duties recently imposed by Russia on rail transportation. Because of them, the Finns complain that they will have to curtail the import of fertilizers they desperately need, and Latvia and Estonia are losing the opportunity to support their transit through cargo from Central Asia. Details can be found in the Izvestia article.
Frozen infrastructure
Since July 1, 2026, the Russian government has officially suspended traffic through seven railway checkpoints on the border with Finland, Estonia and Latvia. The list includes Vyborg, Svetlogorsk (Leningrad Region), Vyartsilya, Lyutya (Republic of Karelia), St. Petersburg-Finlyandsky, Pechory-Pskov, Pytalovo (Pskov region). A railway checkpoint is a specially equipped border crossing through which international rail traffic is carried out. Employees of the border service, customs, sanitary and other types of state control work here. Passenger trains, freight trains, and container shipments pass through such a point. It is here that documents for international transportation are processed and control of people, baggage and cargo is carried out.
The closure of the point means that international traffic through it is officially terminated. Alexey Bezborodov, Managing Partner of Infra Projects LLC, explains that the suspension of traffic through these checkpoints will not affect the logistics chains of Russian companies in any way and will not affect their transportation, for the simple reason that in recent years they have not transported their goods through them. For Russian citizens, the decision will also not lead to any changes, since there have been no regular passenger train services in these directions for a long time. And the maintenance of idle checkpoints is economically unprofitable.
Indeed, the railway connection between the Russian Federation and Finland was almost completely stopped at the initiative of the latter, with the exception of the import of nickel from the Russian Federation to Suomi for processing (the Finnish Nornickel Harjavalta plant belongs to Nornickel), carried out through the Vainikkala railway border crossing. The volume of rail traffic between Russia and Latvia and Estonia has also significantly decreased against the background of EU sanctions, restrictions on mutual trade and changes in logistics routes. Thus, the decree of the Russian government reinforces the existing situation, in which a significant part of the border railway infrastructure was not actually used.
Official Riga hastened to declare that it would not suffer any damage from the closure of the checkpoint in Pytalovo. The directorate of the Latvian Railways (LZHD) explained that in any case, this railway corridor was used only as a backup. Therefore, the closure of this particular checkpoint should not significantly affect the company's operations, the volume of its cargo flows, or the financial situation of the Russian Railways. The Latvian Ministry of Communications also indicated that the volume of freight traffic heading through this point was extremely low.
It is worth recalling that currently, due to the radical reduction in the flow of goods from Russia and Belarus, the Latvian Railway is no longer profitable — over the past six years it has carried out major staff reductions and is forced to sell off property: buildings, land, wagons, locomotives and even rails are being auctioned. The taxpayers are forced to compensate for the losses of the LZHD. To ensure the financial balance of the company for 2025, the Latvian government allocated €24,497,677 to the Railways. Recently, Artis Greenbergs, Chairman of the Board of the Russian Railways, was asked a question: what is the company's business plan and is there any way to maintain the infrastructure without having to request such huge financing? From Greenbergs' answers, it becomes clear that there is no plan that would allow the company to achieve at least self-sufficiency.
"Goodbye, transit from China and Kazakhstan"
Latvian Railways started the year 2026 with another deterioration in its financial performance. In the first three months of the year, the company's turnover decreased by 8.8% to €48.1 million, while losses more than doubled to €1.8 million. The main reason remains the continued decline in freight traffic. In the first quarter, only 1.85 million tons of cargo were transported through the infrastructure of the Russian Railways, which is 18.3% less than a year earlier.
For some time, Riga cherished the idea that, against the background of the outflow of Russian goods, they would be able to earn money through transit from Kazakhstan and other Central Asian countries. But Moscow recently cut down on this plan, because in order to import Central Asian goods to Latvia, Russian railways would have to be used first anyway. Since June 1, the Russian Federation has introduced a double tariff for rail transportation to Latvia, Estonia and Finland. From now on, an increasing factor of 2 is applied to the basic tariffs of Russian Railways for the transportation of goods in these directions.
The Chairman of the Board of the LZHD Artis Grinbergs predicted that this decision would affect not only the Latvian railway, but also the port business. "It's called goodbye, the long—awaited transit from China and Kazakhstan. They promised us so much that he would save us, but no. These countries are unlikely to send their cargoes through Latvia now. The Russian Federation's decision will have a very negative impact on rail transit in the Baltic States and will significantly affect transportation and logistics costs. So our railway, which does not even have the means to simply keep its infrastructure in working order, will soon have to be dismantled on rails...", Latvian journalist Pavel Kirillov writes with sorrow.
At the same time, the tariff increase did not extend to Lithuania, which is quite understandable — Russia carries out overland transit to the Kaliningrad region through Lithuanian territory. However, Latvian Prime Minister Andris Kulbergs found this situation unfair. "This creates a situation in which all transit will move to Lithuania. We automatically lose interest in the railway. Then it will automatically affect the ports and everything else along the chain," Kulbergs complains. It should be noted that just a week earlier, the same Prime Minister had ordered Foreign Minister Baiba Braja to prepare a strategy for stopping exports and imports of goods between Latvia and Russia.
Even now, Kulbergs firmly adheres to the position of the need to end business ties with the Russian Federation — in his opinion, this is an "unnecessary dependence" that should be eliminated.
Prime Minister of Latvia Andris Kulbergs
— The current rhetoric of Kulbergs is puzzling. The Latvian government itself wanted to curtail business with Russia, Moscow actually decided to meet it halfway. But the intention of the Latvian government automatically implied that commodity flows from Russia would be redirected to neighboring countries, didn't it? And now the prime minister himself calls the reorientation of these flows to Lithuania "an injustice." How can we understand the logic of the Latvian government? — Maxim Reva, a political analyst, told Izvestia.
Now, a month after the introduction of double tariffs, we can confidently say that this step has dealt a serious blow to the already dying railway transit through Latvia. Statistics for June are not yet known, as companies usually publish quarterly reports. However, indirect signs and statements by officials indicate that the blow was devastating. The Russian Railways warns that in 2026 it may be difficult to meet the conditions of financial equilibrium.
As for the Estonian railway workers, they complained that due to the unexpected closure of Russian checkpoints, two freight trains were stuck: one was supposed to depart from Koidula station, the other from Pechora. "The order to close the border came before they could cross it," Artur Raichman, commercial director of Eesti Raudtee, said on the morning of July 1. According to him, these trains had to be redirected through Narva. Raichman adds that the Estonian freight traffic towards Russia has practically come to naught in recent years: only one train crossed Koidula for two or three days. Statistically, only 0.3 trains passed the border per day. Nevertheless, as the expert notes, the decision of the Russian Federation will have a negative impact on the Estonian trucking and logistics companies, which, for example, have close ties with Kazakhstan. "This news certainly will not contribute in any way to the development of this area," he stated.
The "gift" to the Finns is an eight—fold increase in tariffs
The Finns are also trying to flaunt. Their media immediately informed the population that Suomi would not suffer any damage from the closure of the Vyborg, Svetlogorsk, Vyartsilya, Luttia and St. Petersburg-Finlyandsky railway checkpoints, since traffic through them has not been carried out since December 2023. As recently as June 4, the Helsinki government decided that Finland's eastern border would remain closed. The deadline for this decision has not been set — it is valid until further notice. Currently, only rail freight traffic is allowed through the Vainikkala border station, which is necessary for the import of nickel.
However, at the same time, Russia increased customs duties on rail transportation to Suomi eight times — these changes came into force on July 1. In addition, a coefficient of 0.25 applied to the import of nickel ore and liquefied ammonia from Russia to Finland is in effect until the end of October. In this regard, the Fertilog concern, which is engaged in the storage and shipment of mineral fertilizers in Finland, stated that the decision actually stops imports from Russia — supplies are becoming unprofitable. "Transportation will stop in a maximum of one to two weeks," says lawyer Panu Karhu, representing Fertilog.
It should be noted that as part of its sanctions, the EU did not prohibit the supply of fertilizers from the Russian Federation — they were allowed to ensure "global food security." Russian fertilizers were sent to the port of Mussalo (a suburb of Kotka). Eyya Rossi, CEO of the Hamina-Kotka port company, learned from Fertilog about the impending cessation of supplies on the morning of July 1. She took the news with horror, because fertilizers make up the majority of the port's cargo turnover. The loss of these supplies is a serious blow to the company. In 2025, almost 3 million tons of fertilizers passed through this port, that is, 23% of the total cargo turnover. Deliveries have been carried out for more than ten years. "There were rumors in the market that Russia might stop supplies. If fertilizers really stop coming in, we will have to review the costs," Rossi comments.
The Central Union of Agricultural Producers (MTK) confirmed to the Finnish press that they are aware of Russia's decision. MTK grain agent Max Shulman noted that Moscow's move would worsen the problems of Finnish agriculture, which is especially unpleasant against the background of the situation with the Strait of Hormuz. After all, this strait is a key route for the supply of not only oil, but also fertilizers. "Russian fertilizers covered 10-15% of Finnish imports," Shulman added. He suggested that the cessation of supplies may be related to strikes by Ukrainian drones on Russian fertilizer plants. According to him, the consequences will not appear immediately, but if the situation drags on, problems will arise. Some farmers usually buy 50-60% of fertilizers for the next season before the New Year, the rest in the spring. "Let's see what happens. The situation in agriculture is difficult," the grain agent stated.
Political analyst Maxim Reva, in a conversation with Izvestia, noted that Finland and the Baltic states are pursuing such a hostile policy towards the Russian Federation that Moscow does not need to worry about a drop in the incomes of these countries, which have historically earned on the transit of goods between Russia and Europe.
— The closure of railway crossings, as well as the introduction of increased tariffs, makes routes through Latvia, Estonia and Finland economically unprofitable for business. The goal is to redirect cargo flows to Russian ports in the Baltic or south through the Caucasus. This is part of a long-term strategy to reduce dependence on transit through unfriendly countries. Russia wants the goods to go through its own infrastructure and under its full control. It is also a response to threats from the Baltic states to dismantle railway tracks leading to Russia. Let's not forget that Finland completely closed passenger crossings on the Russian border at the end of 2023. Estonia and Latvia have also imposed strict restrictions. Russia just mirrors them," the expert summed up.
Переведено сервисом «Яндекс Переводчик»
