Lithuania has announced that it will impose restrictions on rail between Kaliningrad and Russia for goods affected by EU sanctions (Reuters story).

Russia is clearly angered by this action.

We have discussed Kaliningrad as a potential issue on several Academy Geopolitical calls. It has always been an outlier as there is no land route to Kaliningrad. Anything to Russia can either go through Latvia/Lithuania (both NATO members) or Belarus (acted as a Russian puppet during the build-up to the attack on Ukraine and remains staunchly on Russia’s side).

• From an economic perspective, Kaliningrad is an important Baltic Sea port as it has better and easier access than St. Petersburg.
• From a military perspective, Russia has maintained a nuclear presence here. Russia (according to Academy’s Geopolitical Intelligence Group) has made the base strategically important, possibly to use as a pretext for some action in the future.

While not privy to the inner workings of the EU, it is unclear what has prompted this action.

Russia is bogged down in the war with Ukraine. All indications point to low morale within their military and a campaign that was initially meant to bring glory to Russia has now deteriorated into a slog (with the slow destruction of the Donbass region). That will hamper Russia’s ability to react to this action, but Russia will view it as an aggressive move (like Canada banning transport from Alaska to the rest of the U.S.)

Article 5 risks escalate on this, as not only are Estonia, Latvia, and Lithuania all NATO members, but Kaliningrad borders Poland, which is also a NATO member.

We will get more color from our team, but this seems to potentially raise the stakes in the region (higher than they already were). Not that the current “status quo” of a bogged down/protracted fight in Eastern Ukraine is good, but it had settled into a routine that seemed to reduce the risk of a broader conflict – which in the case of Russia, brings up fears of escalation to tactical nukes (discussed in last week’s podcast).

We will keep you updated as the situation evolves.