Raivo Vare: Russia's closure of border railway crossings may have economic reasons
Estonian economic analyst Raivo Vare suggests that Russia's decision to close railway border crossings with Estonia, Latvia and Finland may be driven not only by politics but also by financial troubles at Russian Railways and a desire to redirect cargo to Russian ports.
The Russian government's decision to temporarily suspend rail traffic through several border crossings with Estonia, Latvia and Finland may have both political and economic motivations, according to Estonian economic analyst Raivo Vare.
In an interview with ERR news on July 1, Vare said the Moscow decision can be explained by several factors: financial difficulties of Russian Railways (RZhD), a desire to redistribute cargo flows in favor of Russian ports, and an intention to increase influence over Central Asian countries.
According to Vare, one of the main reasons is the severe financial situation of Russian Railways. "They have cut their investment program, reduced costs rather 'crudely' across the entire network, and carried out mass layoffs," the analyst noted.
He pointed out that old M62 diesel locomotives, which consume large amounts of diesel fuel, are used on the border sections, and maintaining international crossings requires additional costs for locomotive changes, maintenance, and border and customs services. Vare estimates that abandoning these routes allows for significant cost savings.
Another reason, Vare believes, is the aim to redirect some freight to Russian seaports. He said the closed railway crossings mainly carried goods that are not subject to sanctions. After the restrictions, businesses will likely have to use Russian ports, increasing their utilization.
The expert also noted that after these closures, almost all rail routes along Russia's western border will become unavailable. The exception is the route via Lithuania, which is linked to transit to the Kaliningrad region.
Vare sees the Moscow decision as a signal to Central Asian countries that actively used these routes for trade with Europe. He believes Russia is showing it can limit the use of alternative logistics routes at any time, potentially increasing transport costs for exporters and importers in the region.
At the same time, the analyst thinks such actions could accelerate the development of alternative transport corridors, in particular the Trans-Caspian route via Azerbaijan.
Vare separately criticized the timing of the restrictions. "Usually some time is given because part of the cargo is already in transit, and its emergency rerouting by rail is very expensive. But when did Russia care much about that before?" he said.
As reported earlier, Russian Prime Minister Mikhail Mishustin's order was signed on June 30 and took effect on July 1. The restrictions cover the railway checkpoints Pechory-Pskov on the border with Estonia, Pytalovo on the border with Latvia, and several points on the Russian-Finnish border.
