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31 January 2025

Estonia Proposes Tax On Ships To Fund Protection Of Baltic Sea Cables

Following recent incidents of cable damage, regional authorities discuss financing solutions amid growing concerns over maritime safety.

The Baltic Sea is becoming increasingly precarious for undersea cables, with incidents of damage to these cables prompting calls for enhanced protection measures. Recently, Estonia's Defense Minister Hanno Pevkur proposed the introduction of a special tax on vessels passing through Baltic waters to help cover the high costs associated with monitoring and repairing these cables. This proposal highlights the need for a coordinated approach to safeguard the region’s undersea infrastructure, which has become more vulnerable due to heightened shipping traffic and rising geopolitical tensions.

On January 26, 2025, the Latvian State Radio and Television Broadcasting Center reported significant damage to one of its underwater fiber-optic cables, which linked the town of Ventspils to Sweden’s Gotland island. The damage, attributed to external impacts, occurred within Sweden's exclusive economic zone, raising alarms among local authorities. According to LVRTC representative Vineta Sprugaine, data transmission services faced minimal disruption due to alternate routes, but users experienced slower speeds. After the incident, NATO dispatched additional patrol ships to the region to bolster security and investigate the circumstances surrounding the cable's damage.

This incident marks the latest in a string of similar occurrences, including the December 25, 2024 sabotage of multiple telecommunication and power cables, which Finnish authorities suspect involved vessels linked to Russia's shadow fleet. Despite claims of sabotage, U.S. and European intelligence services are investigating whether these damages result from marine accidents rather than deliberate attacks. Nevertheless, apprehension remains due to heightened activity from Russian-flagged vessels near Danish and Swedish waters. The growing frequency of such incidents has raised concerns about potential hybrid warfare targeting Baltic Sea infrastructure.

The cost of securing these valuable communication lines is high, prompting discussions on how to effectively fund protective measures. At the recent meeting convened by Latvian Prime Minister Evika Siliņa to address the January incident, she emphasized the importance of collaborating with NATO and regional partners to investigate the damage thoroughly. Siliņa indicated, “We are working together with our Swedish Allies and NATO on investigating the incident, including patrolling the area, as well as inspecting the vessels.” These efforts reflect a unified regional stance on preserving security in the Baltic.

Minister Pevkur's tax proposal compares the potential cable fee to airport landing fees, proposing it act as an insurance for damage caused by vessels to these underwater lines. With approximately 4,000 ships traversing the Baltic Sea daily, this tax could provide much-needed revenue for protective measures, including installing sensors to detect dragging anchors and constructing protective casings around undersea cables. The Baltic region is particularly vulnerable to cable damage due to its shallow waters and heavy maritime traffic, emphasizing the need for these protective actions.

Peunkur noted the necessity of reaching consensus among Baltic Sea nations on implementing such fees, as the expenses could eventually trickle down to consumers through higher taxes and utility rates. “Whether governments or cable operators bear the costs, the burden could fall on the public,” he pointed out. This remark has raised questions about how desperate these nations are for solutions to protect their infrastructure.

An example of the urgency behind these proposals came earlier this week when Swedish authorities seized a Maltese-flagged vessel suspected of damaging cables between Latvia and Sweden. This incident added to concerns about the involvement of the so-called Russian shadow fleet, which Pevkur claims operates under coordinated efforts. Russia has vehemently denied any involvement, branding allegations of its ships’ participation as “evidence-free.”

With NATO’s increased focus on Baltic Sea security, including the deployment of frigates and drones, the situation remains tense. Ongoing investigations and inspections of vessels operating near the affected areas have led to intensified cooperation among Baltic nations and NATO, reinforcing the commitment to safeguarding the region's infrastructure.

Estonia’s proposal could set the framework for how Baltic nations handle the pressing issue of cable damage, balancing security needs against economic realities. The viability of shipping taxes to fund protection initiatives hinges on broader regional agreements and the political will to implement such measures. The recent spate of incidents serves as stark reminders of the vulnerabilities these nations face, as geopolitical tensions rise and the Baltic Sea remains one of the busiest shipping routes globally.

The interconnection of countries via submarine cables is not merely about data; it’s about national security and resilience. The future of the Baltic Sea region may depend heavily on the strategies adopted now to protect these valuable lifelines from potential threats, be they accidental or deliberate. Without adequate protective measures and appropriate funding mechanisms, the risks to both communications and energy networks may continue to grow, making collaboration and innovation more urgent than ever.