Geopolitics tops the list of Brexit worries for Baltic states

Geopolitics tops the list of Brexit worries for Baltic states
The Baltic states see the UK as the biggest backer of their security concerns in the EU
By bne IntelliNews June 24, 2016

Lithuania, Latvia, and Estonia all expressed regret on June 24 over the result of the UK referendum in which majority of voters said they would like the country to leave the European Union. However, while there's a seemingly endless tangle of worries impacting other EU members, the three small states are very clear that geopolitics tops the list for them.

Like many other Central & Eastern European states, the trio had warned many times before that Brexit is threat to the bloc's integrity. Fears of a weakened EU are especially acute in the Baltic neck of the woods, which considers itself on the frontline of a struggle with what they see as Russia's renewed imperial ambitions.

Of the three biggest states in the EU, the UK has been by far the most hawkish on Moscow, with France and Germany having both questioned sanctions and moves to strengthen Nato's presence in CEE. Membership in the EU and Nato are seen as the cornerstones of security for the Baltic states, which were formerly inside the Soviet Union.

As the referendum results were confirmed, Baltic leaders offered the standard refrain about respecting the democratic choice of UK citizens, and went on quickly to say the outcome is regretful and a disappointment. However, they were also clearly concerned about the geo-political effect.

Estonia stressed Britain’s commitments to the security of Estonia as allies in Nato remain unchanged. Latvia cautioned against the unpredictability of Brexit outcomes for Europe. 

“We respect the democratic choice of the Brits, but this doesn’t change the fact that their decision to leave the European Union is a disappointment," Estonian Prime Minister Taavi Roivas said in a statement. "We must draw our conclusions for the whole of Europe, from the British referendum, and work hard so that we do not lose the unity of the European Union.”

Brain drain

Latvia and Lithuania – which both have seen large number of their citizens migrate to the UK in search of jobs – accentuated the need to maintain good relationships between the EU and the UK. Reflecting the uncertainty of the fate of eastern European migrants in the UK after Brexit, both governments vowed to protect interest of their citizens in the UK.

“In the near future, negotiations must begin concerning the conditions on which the UK will withdraw from the EU and a future model of the relationship. In these negotiations, the Latvian government will make every effort to protect its national interests, the interests of Latvian nationals in the UK and the EU’s common interests,” the Latvian foreign ministry stated.

Uncertainty over the fate of Baltic emigrees to the UK - and the remittances they send back - could be a potential flashpoint with London then. On the plus side, the terrible demographic picture in the Baltic region could be relieved somewhat if young people find it harder to access one of their favoured destinations for emigration.

"The effect on the Baltics of financial market turbulence will remain small due to low debt levels," predicts Swedbank. "The trade exposure of the Baltics to the UK is not sizable, 3-5% of total goods exports," the analysts add. There is also clearly a risk to the already sluggish economic recovery in the Eurozone, which will not help the Baltic members, that are still pushing to put the financial meltdown they suffered in 2009 behind them.