The relations between the Baltic States (Lithuania, Latvia and Estonia) and Russia are complicated not only nowadays but in the past as well. The geographical location of the Baltic States makes them strategically important for Russia’s national security as today as in the past. Probably all problems of these countries are laid down in the 20th century’s history.
The period was extremely difficult for Europe as well as for Russia, and the consequences are being felt in today’s realities. To solve economic and political disputes between these countries, the historical perspective should be taken into account.
Baltic States recklessly seek “Historical justice”
As it is mentioned above the Baltic States and Russia confront with each other in diverse sort of issues. Mainly and most probably it is related to the harsh and tricky situation during the World War II. It is possible to say that the source of disputes is Molotov-Ribbentrop pact signed in 1939 by Soviet Union and Germany’s foreign ministers, which was a Treaty of Non-Aggression between Germany and the Soviet Union. Both states pledged neutrality in case of a war and not to support any third part. As it is known now, there were secret protocols dividing northern and Eastern Europe between German and Soviet Union spheres of influence. Accordingly to the pact Poland would have been divided into two halves shared by Hitler and Stalin and the Baltic States would have become under Soviet Union’s dominance. This short glance of the history has not been leaving from the political life of the Baltic States since last 60 years and became permanent object in their relations with Russia.
Many believe that Soviet Union did a huge damage to the humanity under the presidency of Stalin. Of course, this view might be debated but it is obvious that the victory of Nazis would have brought much more human devastation and bigger tragedy to the whole Europe. Anyway, official political line of the Baltic States claims that after World War II, Soviet Union and now Russia as legitimate successor of Soviet Union was/is responsible for what happened  and have to apologize and reimburse the damage done during that era. As history has shown Soviet Union delegates and even modern Russia’s officials have already done so at least four times. First, Stalin’s cult and crimes were publicly denounced and condemned during the 20th Congress of Communist Party of Soviet Union by speech made by Nikita Khrushchev, the leader of Communist party and the Soviet Union. That is to say that this is the first time after Stalin’s epoch when officials of Soviet Union revealed and criticized the dictatorship of Stalin and faulty policy led by him towards some human and economic activities. Secondly, special Soviet commission under Alexander Nikolaevich Yakovlev, in December 1989, the commission concluded that the protocol had existed and revealed its findings to the Soviet Congress of People's Deputies. As a result, the first democratically elected Congress passed a declaration in December 1989 admitting the existence of the secret protocols, condemning and denouncing them. In 1992, the document itself was declassified only after the dissolution of the Soviet Union.  Third, the sovereignty and independence of the Baltic States was recognized by the first democratically elected president of Federation of Russia: B. Yeltsin. He recognized the independence of the Baltic States and invited the rest of the world to do the same. That is to say that by recognizing sovereignty of the Baltic States, Russia automatically rejected the idea of its bid to pretend to restore the influence in this region. Russia recognized all freedoms and respects towards these countries establishing diplomatic and economic relations with Lithuania, Latvia and Estonia. Fourth, during EU-Russia summit in 2008 president V. Putin was asked by an Estonian journalist “why is that so hard to recognize the fact of the occupation of the Baltic states?”. The answer of the president was as following:
"<…...>The conspiracy happened in 1939 between Russia and Germany. I believe it was a conspiracy. What can we do now? It was the reality at the time when small countries were involved in the reality of those days. <…> in 1989 the Soviet Congress of People's Deputies declared that Molotov and Ribbentrop pact did not reflect the real will of Soviet people and recognized the illigitimate action taken by them. It was condemned. What more accurate is possible to say about this? What else? How many times can we repeat that? Every year? We think that everything possible is said about that and this question is already closed". 
As it is seen both Soviet government and the government of modern Russia recognized de facto and de jure the independence and territorial sovereignty of the Baltic states which actually means that all claims to get this territories back is faulty and there is no foundation for such claims. Moreover, it is recognized that conspiracy between two states (Nazi German and Soviet Union) had no legal foundation, it was in conflict with international law and it is absolutely illegitimate. Consequently the destruction of the sovereignty of the Baltic States was condemned and sovereign power of the national states was recognized.
The policy of the Baltic States on international stage
Despite all these facts Baltic States’ governments are prone to get into open conflicts with Kremlin, criticizing Russian government and even block the EU-Russia negotiations. This took place in 2008 when Lithuanian delegation made the list of demands which must be involved in the negotiations with Russia. Of course, it was not very welcome news for Russia. The Slovenian government, which held the EU's rotating presidency, has heavily criticised Lithuania for not withdrawing its objections to initiate talks on a new partnership pact between the EU and Russia.  This action of Lithuania among old member states was accepted negatively and criticized by president of European commission J.M Barroso, who said “Lithuania lost its opportunity to shut up” . This veto did not let to move forward for all 27 members states and stuck for some time. It is worth mentioning the requirements made by Lithuanian officials. In fact there were three main concerns which should be considered as “interests of Lithuania”.
First, to restore the supply of the crude oil via Druzhba (Friendship) pipeline which broke down in 2006 and Russian officials said it would take at least several years to restore it. Of course, since Russia is being considered as “aggressor” and seeking to rebuild its power in the Baltic States, it was accepted as political blackmail. At that moment Lithuanian president pointed out that "Today we know that oil will not flow through this pipeline any more", he told during a conference. Meanwhile, Russian technical watchdog Rostekhnadzor said in September that Transneft would need at least another 18 months for repairs, meaning that the pipeline could not be reopened before the end of 2009 . Even if this technical problem was politicized and it was being tried to create the image of Russia as an “unreliable partner”, the pipeline was reopened on the same time as technical experts predicted.  Second, to solve the conflicts between Georgia and Moldova: it is valuable to stress that it is difficult to unmask the real interests of the Baltic States in Caucasus and Moldova. It is more seen as trials to damage Russian security interests at the same time harming EU foreign policy. Third to encourage Russia to cooperate in criminal cases of the killings in 13th of January 1991 when Omon (Russian special intelligence service) killed the rebellions. Russia commented on it proclaiming that according to the then law Omon protected the interest of Soviet Union and acted accordingly to its constitution.
Apparently all these issues might be solved bilaterally, but the Baltic States use Europe Union as an instrument to solve their chronic problems. For example Lithuanian conservative party “Union of homeland” passed “The reimbursement for occupation damage” law in 1999 before going to step down from the ruling government. Anyway this law has been never implemented or at least it has been never trying to be implemented because Russian officials ardently respond to these attempts. After more than a decade of playing a cat with a mouse, newly appointed minister of foreign affairs of Lithuania Audronius Ažubalis retreated and said that, “at first Lithuania should do its homework and estimate what real damage has been done and then deliver the claim“.  Unofficially some representatives speak about 25 billion (almost three times more than the annual budget of the country) euro harm. Recently new numbers showed up. Latvia's Foreign Minister Maris Riekstins estimated the losses from Soviet occupation are $18.5 billion. Is money more dearer than national pride? 
But it is not clear how this number is estimated. If we follow this logic, then Russia has the right to claim for compensation for building roads, manufactures, the world biggest nuclear plant in Lithuania (in 2010 it was closed as precondition for membership in EU), harbors, Mazeikiu refinery (Lithuania), hundreds of apartments and dozens of various buildings etc. These initiatives of reimbursements of “losses” might set precedent for other countries which were involved in these historical games. If all 15 former member states of Soviet Union claimed for the compensation for “damage” done during Soviet epoch what would Russia do? There are tremendously huge problems within Russia as well and economic ones. So if Russia would try to reimburse the claims of former member states, it would take many decades of payments at the cost of own Russian citizens. Anyway there is very little chance that these initiatives will come true in the nearest future. It is worth mentioning that former Soviet Union’s states try to use different international organizations to do harm to Moscow.
Is it possible to rewrite history?
The Organization for Security and Co-operation in Europe (OSCE) at its XVII annual session approved the Vilnius Declaration including 28 resolutions, one of them entitled "Reunification of the Divided Europe", in which Joseph Stalin's regime in the USSR and the Nazi regime in Germany are recognized as equally evil. The resolution aroused a squall of protests in Russia, in the State Duma, as well as among ordinary citizens. In the Russian blogosphere, the OSCE resolution is among the top subjects of discussion. Konstantin Kosachov, chair of the State Duma's Foreign Affairs Committee, claimed that the Federal Assembly would issue an official statement, possibly even in a form of a joint declaration of two houses which is a rare occasion, adding that the reaction is going to be "harsh and operative". Oleg Morozov, First Vice Speaker of the State Duma, claimed that the comparison of Communism and Nazism is disgusting; Gennady Zyuganov, chair of the Communist Party of Russia, characterized the document as "a disgrace of Europe", indicating that equalization of the USSR with the Nazi Germany is loathsome and destructive for Europe itself.
What is so offending for the Russian audience in this document? In fact, Russians don't dispute the totalitarian character of Stalin's rule, mostly informed about the order in their country in that time from their grandparents. This fact does not need approval from European neighbors. Russians are rather outraged with the obvious hypocrisy: the document suggests that only the USSR and Germany were the evil states of the XX century, while other Europeans were "warm and fuzzy", never being involved in infringement of human rights, and in military atrocities. But if other Western powers were so impeccable, why did they concede half of Europe to Hitler, leaving Russians alone with the totalitarian adversary? Why did they hesitate for such a long time before establishing the anti-Hitler Coalition? Was it Stalin who paid for this hesitation, or millions of Russian families?
Have our Western neighbors really followed the UN Human Rights Declaration since the times of the Crusade? Have all of them condemned Hitler in his cradle? "Our respected partners forget that the subject of totalitarianism is much broader, and that totalitarian regimes existed also in Spain, Portugal, and Greece, and that the European history is far more variable to reduce it to the times of World War II", reminds Mr. Kosachov. 
Other disputes arise when it comes to the Baltic States. In the last few years, a new idea of rewriting European history appeared. That is to say that the most debatable event of last century is the World War II. The Baltic States claim that the most brutal and humiliating war was initiated not by Germany but also by the Soviet Union. This brings harsh and operative responses from Moscow.  In modern politics history is attached to political realities that is to say that by putting blame on Russia as one of the initiator of World War II, western countries want to diminish Russia’s growing influence in Europe and in the world and restore its reputation which they lost after “Munich agreement” in 1938. 
It is seen how former members and the Baltic States are using international organizations as the instruments to revenge to Russia for so-called “occupation”. This adopted resolution is only a segment of the strategy. By accepting resolution of anti-Russian coalition will have at least some sort of legitimate basics for the claim of the compensation in the future.
Concluding historical perspective in the relations between the Baltic States and the Federation of Russia it is important to notice that even professional historians are not able to properly evaluate or interpret the extraordinary events of the 20th century. Any trials of rewriting history or the use of the history for political purpose will be strongly rejected by Moscow and will not bring any neither political nor economic benefits for the Baltic States or any other country in the relations with Russia.
As a result all these disputes caused by extraordinary and harsh historical circumstances reflect themselves on economic and political agenda as well. With collapse of Soviet Union, Baltic states always tried to “escape” from Russia’s sphere of influence. Finally they became a part of European Union and NATO in 2004. Notably this happened relatively in a short period of time. Probably that is because Western countries wanted to gain influence over Eastern European countries sooner than it would do Russia and diminish its dominance. As it is seen now, Baltic States started using their opportunities in western organizations in order to widen their own old wounds.
It is important to notice that the Baltic States geographically and historically are very connected to Russia. As a result economic ties developed at great extant. However, as tendencies show the Baltic States try to reduce and minimize dependence upon economic sector as well. Immediately after Soviet Union collapse, Lithuania, Latvia and Estonia aimed for integration in Western structure such as European Union and NATO. Anyway, Russia remained the most important trade partner for the Baltic States in the last decade of 20th century. During the whole independence period Estonia has imported more goods from Russia than exported there. The difference between exports and imports started to increase significantly since 1998. Later the difference decreased, but grew again in 2004.  Contrary to Estonia, Russia remained the main export market for Latvia also during 1990s. In 1996 exports to Russia comprised nearly 25% of Latvia’s total exports. The share of goods imported from Russia remained slightly smaller, staying near 20%. In 2004, the trade deficit between Latvia and Russia was 8.5 times greater than the deficit of Latvia’s total external trade. 
The volume of Lithuanian exports to Russia amounted to 3.4 billion LTL (nearly 1 billion euros). Compared to 2004, exports increased almost 44%, which indicates that Lithuanian trade with Russia grew faster than Lithuanian trade in general. Altogether, Lithuania imported goods from Russia in the sum of 11.9 billion litas (3.4 billion euros). Within a year, imports grew 51.3%. In comparison with previous years, Russia’s share in Lithuanian imports has been rising steadily, almost reaching the 1996 level in 2005 (29%). 
As it is seen Baltic States and Russia have a great trade turnover in general. Anyway the trade balance with Russia always remained negative. That is mainly because Baltic States import oil, gas and other raw materials from Russia. Negative trade balance was emphasized in the recent years mainly due to the growing oil prices. Also this fact could be explained that export to Russia is more difficult than export to Baltic States which apply EU rules because Russia implies many non-tariff barriers such as quotas, strict licensees. Also, the devaluation of rubles in the last decade caused the cheaper Russian export to Baltic states meanwhile the commodities from Baltic region became more costly in Russian market. The same must be said about present economic crisis, when Russian government gradually devaluated rubles to keep its export alive. So these reasons caused deep trade deficit for Baltic countries. Only Lithuania had higher volume of foreign trade with Russia than other Baltic neighbours (Estonian exports to Russia were 155.9 million EUR and imports from Russia 491.4 million EUR in 2003, for Latvia respective figures were 137.5 million EUR and 405.3 million EUR, for Lithuania 548.5 million EUR and 1931.6 million EUR). 
As it is known now, Russia, Kazakhstan and Belarus have formed the Common Custom Union which came into force on July 1st. This growing custom wall nearby the Baltic States’ borders will affect their economies as well. For example, Lithuanian Ministry of foreign affairs has estimated that national exporters will pay 65 million litas (20 million euro) additional taxes only because of new tax system appeared in the Custom Union.  That is to say some industries of the Baltic States might be seriously damaged and probably will get no prerogatives or exceptions from Russian government.
Such policies might distance the Baltic States from trade dependence on Russia in the long term, since Baltic States will be forced to search for new markets and make their industries more efficient. On the other hand, these industries will gain big loses in short term. It might be more painful in the light of current economic crises since unemployment rate is one of the highest among the European Union member states.
In any case the Baltic States will heavily be depended on Russian natural resources including oil and gas. Countries pay the world price for these recourses even though they are located close by Russian borders. All of three Baltic States get nearly 90% of oil and 100% of gas from Russia. Moreover, the closure of the nuclear plant, built by Soviet, in Lithuania, in 2010 increased the energy dependency upon Russia. As following Lithuania is planning to build new nuclear power plant and in this way to create common energy policy of the Baltic Sea region including the Baltic states, Poland and some of Scandinavian countries. Anyway, the real future of this project seems to be vague. There was an attempt to create some companies responsible of managing and organizing this program but it was disbanded since it did not fulfill the requirements of the European law. Also countries do not agree on the distribution of the electricity among countries which causes the absence of the strategic investors since this project was extremely expensive.
As a response to such energy policy Russia has suggested to participate to building up the nuclear power plant in Kaliningrad exclave. However this proposal has not received any serious attention.
Russia tries to promote very expensive and important project called Nord Stream which will go under the Baltic bypassing the Baltic States and Poland. Even if it is much more expensive to build pipeline under the sea it is much safer geopolitically for Russia. This might be considered as a response of Russia because of unfriendly posture of Baltic States towards it.
NATO between the Baltic States and Russia
Baltic States are of geopolitical importance for Europe as well as for Russia. Probably it was one of the reasons why Baltic States were accepted to NATO in 2004. Since then Lithuania, Latvia and Estonia try to integrate into the western structure. Of course, it does not make Russia to be happy at all since NATO is considered to be a threat to Russian national interests. The last spark occurred and NATO announced its plans to do military exercises in the Baltic States. These plans were declared shortly after France selling warship Mistral to Russia.  This happened soon after Georgia-Russia military conflict as a symbol of mutual trust between Russia and France and response to Georgian aggression. Anyway, the Baltic States raised their concern about this warship that might be used against them. As a result NATO declared its plans about military exercises in the Baltic States, although NATO claimed there is no link between these two cases. 
The relations between the Baltic States and Russia are sluggish and imply negative tendencies. Since the Soviet Union collapsed, the Baltic States try to “escape” from any aspect of influence of Russia. The main goals of the Baltic States were to integrate into Western structures such as European Union and NATO and these have been accomplished successfully. The fundamental purpose of such policy was to diminish the influence of Russia and by using the international instruments to negotiate with Russia about questions concerning the Baltic States. The main connections with Russia take place within following framework. Historically, the Baltic States demand to recognize the occupation of the Baltic States and reimburse the damage caused during the Soviet period. Russia reckons that it has already admitted the fact and does not see any reason why it should do that. The Baltic States attempt to achieve its “historical justice” in any possible way. Economically the Baltic States try to channel its trade ties with Russia to other markets, although its competitive opportunities and development is not always capable for that. Even if the Baltic States are able to reduce the dependence upon Russia as a trading partner, they still heavily rely on Russian natural resources especially on gas and oil and barely can change that in the foreseeable future. The Baltic States do not present any economic importance for Russia. In terms of national security, the Baltic States use NATO to outweigh the possible Russian intervention despite the fact that neither Russia nor European partners do not claim that there are serious foundations for such intentions. Military exercises just frustrate Moscow and escalate distrust of the Baltic States. As a result Lithuania, Latvia, and Estonia operate in western organizations in order to diminish influence of Russia and use them as a tool in “speechless negotiations” with Russia. Every time when any attempt of such kind is seen, Russia gives strong and operative response. Consequently the foreign policy of Russia towards the Baltic States is obviously reactive than proactive.
13. Russian trade with Finland, Estonia, Latvia and Lithuania, Kätlin Keinast
14. Foreign trade between the Baltic states and Russia: trends, institutional settings and impact of the EU enlargement, Alari Purju, 2004