New wall of suspicion

Russians hunting property in Finland hit a new wall of suspicion

In a first, Finland’s defense ministry has blocked an attempt by Russian citizens to buy property in the Nordic state on national security grounds.

BY CHARLIE DUXBURY

In October, three Russian citizens arrived in the border town of Imatra and filed the paperwork to buy a rambling former old people’s home outside the small town of Kankaanpää, a five-hour drive away in Finland’s southwestern reaches. 

The applicants ticked a box saying the property would be used for “leisure or recreational purposes” and all gave the same contact email and street address: a nondescript suburban apartment block in Russia’s second city, St. Petersburg.

The story didn’t fly. 

Two months later, the Finnish defense ministry announced it had blocked the purchase, citing national security concerns to justify the move — the first time such reasoning had been used during the war on Ukraine.

The authorities’ problem with the transaction was a simple one: the building was a stone’s throw from the Niinisalo Garrison, an army training center for troops assigned to national defense and overseas operations. In May last year, the joint Finnish and NATO training exercise Arrow 22 — testing the readiness of armored brigades — was run out of the garrison. 

On a recent weekday, green military transport vehicles could be seen entering and exiting the Niinisalo base. The old people’s home had a clear view of some of the roads in and out.

In the nearby town of Kankaanpää, locals were bemused by the Russians’ attempt to buy the old people’s home. Juhani Tuori, an estate agent, said he had heard about the planned deal and thought it odd. Tuori said he had been involved in trying to sell the old people’s home before, but had no role this time. 

“I wondered why such a trade was made,” he said. “Especially given the state of the world.”

In a statement, the Finnish government said the transaction had been rejected because of the “special role” the city of Kankaanpää plays in securing Finland’s national defense. 

“According to the Ministry of Defence, it is possible that the large property in the vicinity of the Niinisalo Garrison could be used in a manner that could hinder the organization of national defense and safeguarding of territorial integrity,” the statement said.

The Russian buyers did not respond to an emailed request for comment sent to the address they provided on their application to the defense ministry. They had 30 days from the date of the decision to appeal. As of February 9, they had not done so. 

New suspicion 

The Kankaanpää case shows how suspicions about Russian activity — official and civilian — have spiked in neighboring states as the anniversary of Russia’s full-scale invasion of Ukraine looms. 

For more than two decades after the end of the Cold War, Russians enjoyed increased freedom to buy assets across much of Europe, and Finland was no exception, despite a bloody recent history that saw Finland fight two wars with the Soviet Union in the middle of the last century. 

Three Russian billionaires bought a leading Finnish ice hockey team and entered it in the Russian league. A Finnish energy company announced a joint plan with Russian state-run firm Rosatom to build a nuclear power plant in Finland. 

Across the Nordic state, Russians also snapped up holiday homes in forests, on picturesque lake shores, and on remote Baltic Sea archipelagos in what were widely seen at the time as innocent investments in an economically stable neighboring state. 

But now, with the Russian army’s aggression in Ukraine intensifying and the activities of its intelligence wing the GRU increasingly visible across Europe, Russian property purchases are being viewed with much greater skepticism.

Finland, which has a 1,340 km border with Russia, sees itself as especially vulnerable to covert Russian operations and has begun to take a much greater interest in which Russians are buying what assets: a Finn recently bought back the ice hockey team and the nuclear power plant plan was scrapped last year.

The defense ministry was granted powers in 2020 to block property sales to Russians and other citizens from outside the EU and the European Economic Area, but had never used them before the Kankaanpää case on national security grounds, a spokesman for the ministry said. The only other application rejection was because of an unpaid processing fee.

Experts say the officials are likely concerned the old people’s home could have been used as a base for special forces on covert missions, or more routinely as a place to run monitoring of comings and goings around the army base. 

“This kind of place would not necessarily be part of some Russian masterplan, but could theoretically be there in case it was needed,” said Charly Salonius-Pasternak, a researcher at the Finnish Institute for International Affairs, a think tank. 

In its ruling, the Finnish defense ministry said the Russian would-be buyers of the old people’s home had changed their story several times about what they intended to use the building for. Their explanations were “not credible,” the ministry said. 

Visited on a recent weekday, the empty old people’s home, standing unheated in sub-zero temperatures, was clearly in need of some attention. The front door was yellow with rust. The driveway was covered in thick ice. 

The old people’s home appeared to have around 100 bedrooms as well as extensive parking and other surrounding land. It could be accessed by vehicle from two sides with the edge of the Niinisalo Garrison area accessible from the property via wooded back roads as well as the main approach. 

The tightening of Finnish property policy comes at a sensitive time for the Nordic country as it proceeds with applications to join NATO alongside nearby Sweden. 

Vladimir Putin has threatened what he called a “military-technical response” to those bids, which has led to calls for heightened vigilance in both states. 

Officials in Sweden, where there has been a flurry of arrests recently of suspected Russian spies, are likely watching closely to see what lessons can be learned from the Finnish rule change, experts say.

The state-run Swedish Defense Research Agency recently produced a report taking stock of Russian investments in Sweden.

In Finland, security experts have welcomed the country’s new property rules as part of a reckoning with Russian investment in the country, which some suggest was overdue. 

“This is a problem which has long been recognized and now there are tools to at least fix some of it,” said researcher Salonius-Pasternak.