Alerts. Real-time analysis of events occurring at the intersection of economics, finance and global security concerns.

Lithuania has reported that Russian warships are actively interfering with a project underway to lay an undersea power cable, called NordBalt, that is intended to link Lithuania to Sweden’s power grid.  NordBalt (an undertaking that is co-financed by the EU) is of strategic importance, as it would reduce Lithuania’s dependence on Russian-supplied electricity.  With the coming online of Lithuania’s new floating LNG terminal in 2014, this dependency stands out as one of the key, remaining points of economic and financial leverage by Russia over the Baltic state.

Lithuania alleged that — on Thursday, April 30 — Russian warships illegally ordered a Swedish ship that was laying the NordBalt power cable to change course.  Moreover, it was disclosed that similar interventions were made by Russian naval vessels on March 29, April 10 and April 24.

The reason given for the Russian orders were that the area in which the ship was operating had been selected for military exercises.  The Lithuanian Foreign Ministry demanded that Russia cease “interfering with international shipping and legitimate economic activities,‘ summoned the Russian ambassador in protest and accused Moscow of violating the UN Convention on the Law of the Sea.

The ‘‘‘550 million NordBalt cable is being laid by ABB and aims to link Sweden’s and Lithuania’s power grids by connecting the Swedish city of Nybro with Lithuania’s port of Klaipeda.  The cable will stretch 410 kilometers, of which 350 kilometers has already been laid.  Authorities hope to bring the connection online by the end of 2015.

These military interventions by Russia are highly significant, due to the clear precedent they establish for the Russian security services and armed forces (in this case, the navy) targeting economic and financial projects being implemented by the Baltic states and Central and East European countries to gradually exit dependencies on Russian energy and the unacceptable risk exposure they create to heavy-handed Kremlin pressure tactics and intimidation.

In addition to efforts underway by Baltic, Central and Eastern European governments to diversify their sources of electric power, significant investments are also being made to do the same with regard to their supply sources of oil and natural gas.  These include the construction of new LNG terminals, the building of natural gas pipeline interconnectors among countries, the development of offshore gas and oil deposits, the formation of an EU Energy Union and other projects/initiatives.

These actions targeting NordBalt highlight the economic, financial and national security risk that exists for many — if not all — of these projects.