Strengthening preparedness in the Nordic-Baltic region

Article is written by Marina Unnérus, NIB Senior Economist

Societies, infrastructure and economies are deeply integrated in NIB’s member region. Considering recent crises and the damage caused by the pandemic and Russia’s invasion of Ukraine, proactive preparedness is essential for conflict prevention, as well as delivering necessary actions in case of major harmful events.

To meet the emerging need for strengthening security and societal resilience in the region, NIB’s Board of Directors decided in June 2024 to revise the Bank’s exclusion list to allow financing for security and defence for dual-use equipment and projects—those with both military and civilian applications—as well as facilities, services, technology and other defence equipment excluding weapons and ammunition.  

The overall purpose of an NIB involvement in strengthening necessary security and defence readiness is to ensure that NIB’s member states can prevent, withstand or respond effectively to any major threats or crises. NIB can facilitate access to finance for business, projects and infrastructure protecting Nordic-Baltic citizens, as well as minimising the economic and social impacts of disruption with the purpose of maintaining stability and operational capacity.

Geopolitical realities

Security is a public good and the foundation of our civil society. Preparedness raises risk awareness, protects assets and ensures continuity, translating into economic benefits. The interdependence between regional competitiveness and security is evident. Our member states will greatly benefit from increased resilience to crises, mitigated consequences and from a potentially quicker recovery. Strengthening Europe’s civil and military preparedness and readiness: Report (2024) by Special Adviser Niinistö, former President of the Republic of Finland, also underlines the need for an ambitious new approach to our preparedness and readiness.

Investors favour countries and entities with robust preparedness strategies as they represent lower-risk opportunities. Safeguarding the ability to access critical societal functions, infrastructure, goods, and technologies minimises downtime during disruptions and ensures sustained productivity. Improving defence capabilities may also at least deter potential actors from targeting our member states.

The seriousness of the situation is illustrated by the historic move by Finland and Sweden to join NATO. This shift marks a departure from their long-standing neutrality, driven by the necessity to safeguard freedom, the rule of law, democratic values and regional stability. Strengthening regional collaboration—within the Nordics, Baltics, NATO and the EU—is central to bolstering defence readiness.

Critical infrastructure protection and cybersecurity

Strong civilian infrastructure and emergency response systems are crucial components of a holistic security and resilience strategy. Regardless of the type of risks and crises at hand, a robust society has the capacity to resist and manage environmental disasters and human-caused crises.

Scaled-up efforts in infrastructure investments, particularly in critical sectors like transport, energy supplies and communications, are vital to withstand potential threats. Investment in advanced technologies, including artificial intelligence, quantum computing and biotechnology, are also necessary to contribute solutions to other crises such as pandemics, food security challenges and climate adaptation.

As technological advances grow, so do the risks of cybercrime and attacks on critical infrastructure. These risks extend across essential systems, from electricity and water supply to financial networks and space-based communications and communication interconnectors. The Nordics and Baltics will benefit from further strengthening their tech ecosystems to prevent disruptions and boost resilience to pre-empt potential attacks and disruptions.

Balancing the investment needs and broader priorities

The region faces the challenge of balancing an investment gap related to security and resilience with other pressing needs. While enhancing defence capabilities, it is equally important to continue to address the vulnerabilities caused by the climate crisis, and threats to biodiversity and the environment. The climate crisis compounds existing security risks. Delayed progress on global climate targets and insufficient adaptation measures leaves communities increasingly vulnerable to climate impacts. Competing crises stretch public and private resources, and future priorities may overshadow other concerns. It is equally important that the private sector incorporate lessons from past crises into strategies and mechanisms to handle external events such as cyberattacks, geopolitical conflict and disruptions in supply chains in order to remain operational.

The Nordic and Baltic nations, positioned strategically in Europe, must navigate complex challenges with adaptive strategies. Strengthened defence capabilities, enhanced infrastructure and innovative technology investments will be pivotal in ensuring security, stability and resilience. The integration of security into policy and practice will define its ability to overcome the challenges of an unpredictable future.