The project that marks a blemish in Finland’s dealings with Russia

The Finnish men’s ice hockey team won the world championships on home soil in dramatic fashion on Sunday, sparking riotous celebrations among the normally reserved Finns. It caps an impressive time for the Nordic nation, which submitted its application to Nato earlier in the same month after a suitably thorough and well-prepared process and dealt with Russia cutting off its gas and electricity supplies with nary a worry.

But May also brought the ignominious end of an industrial project in Finland dubbed “a gargantuan mistake” by Charly Salonius-Pasternak, leading researcher at the Finnish Institute of International Affairs.

The Fennovoima nuclear plant, to be built with Russian technology and large amounts of Russian money, was abandoned with little fanfare in the aftermath of Moscow’s full-scale war in Ukraine. It remains an unusual stain on Finland’s reputation for being perhaps the best European country at dealing with Russia, with which it shares a 1,340km border.

“It’s a perfect symbol of that hubris of: ‘We will deal with it so well that all of these risks we’ve been made aware of won’t matter, we’re so good at it’,” says Salonius-Pasternak.

The project dates back to 2007 when big Finnish industrial customers of energy and power companies teamed up to build a new nuclear power plant alongside German utility Eon. The signs looked good; another reactor — Olkiluoto 3 — was already under construction by a Franco-German consortium.

But by 2011, the outlook had soured dramatically: the Fukushima nuclear disaster led to Eon pulling out while Olkiluoto 3 became mired in delays and legal disputes. (The start of full electricity production is now set for September, 12 years behind schedule.)

Fennovoima plumped for Rosatom, the Russian state nuclear company, to build the reactor, in part because it was one of the few companies to carry on after the 1986 Chernobyl disaster. But controversy was stoked in 2014 when days after Russia annexed Crimea, Rosatom also became a large shareholder in the Finnish project with a 34 per cent stake.

The Finnish government’s decision to approve the plans later that year — after Russian-backed separatists started a war in the Donbas region of eastern Ukraine — was deeply controversial. The head of the Green party, then a member of a five-party coalition, told the Financial Times it was “Finlandisation”, a highly loaded term referring to how Finland used to adapt its policies to suit the Soviet Union. But still Finland pushed ahead.

Another chance to kill the project came a year later when parliament’s demand that 60 per cent of Fennovoima be owned by domestic groups — in practice, EU ones — led to a farcical process in which an unknown Croatian company became a big shareholder, before Finland’s largest utility Fortum was forced into backing the project.

Fast forward to 2022 and a project long living on borrowed time has finally been put out of its misery.

It still leaves awkward questions for Finnish decision-makers. Salonius-Pasternak once said that Finns had two parts of their brain that they were able to keep separate — one that viewed Russia as a security risk, and one that viewed it as a commercial opportunity.

But that did not go to plan with Fennovoima. The demand from some industrial users for dependable, long-term power trumped any kind of basic national security considerations. Using a Russian-backed project to reduce dependency on electricity from Russia was always a twisted logic at best, and Moscow’s growing aggressiveness only highlighted the problems. “It was a mistake from the start really, but many felt we could contain the risks with regards to Russia,” said one official involved in the process.

The fallout may even have influenced today’s Finnish government in its tough stance to rid the country, and the EU, of Russian energy. Olkiluoto 3, finally coming on line this year, is arriving at just the right time to ensure a move away from Russian energy is undramatic.

For Finland, the full-scale war against Ukraine, another non-Nato neighbour of Russia, meant, in the words of its president, that the mask had come off “and only the cold face of war is visible”. Commercial ties between the two countries have almost stopped.

Long after the ice hockey hangovers have faded, Fennovoima is likely to stand as a tribute to a different time, when Finland could afford to make mistakes over its neighbour to the east.

richard.milne@ft.com