Arctic Industry Hit by Sanctions: "Responsibility For the Transition Cannot Rest Solely With The Businesses"

The new report The shadow of sanctions shows the consequences Russia's war against Ukraine and the subsequent sanctions have had for businesses in Sør-Varanger and Eastern Finnmark, the North Norwegian region bordering Russia. 

Conditions for businesses in the region changed very rapidly in 2022 following Russia's full-scale invasion of Ukraine, adding to other challenges such as the pandemic and reduced quotas for important fish species. 

"The report finally provides documentation of how the sanctions have affected the region, and how severely and geographically unevenly they have done so," Kristina Amalie Hamre, managing director of the Kirkenes Business Association, tells High North News.

Kirkens is located in Sør-Varanger municipality, approximately 20 kilometers from the border to Russia. 

"Traffic through the border crossing at Storskog has been reduced to one fifth of the level before the pandemic and the tightening of sanctions, while Russian cross-border trade has fallen from around NOK 60 million to NOK 10 million," Hamre points out.

Local impact

Hamre and the Kirkenes Business Association are clear in their support for Norway's necessary response to Russia's full-scale invasion of Ukraine. At the same time, the association believes that the state must acknowledge that the consequences of security and foreign policy decisions are geographically unevenly distributed.

"When businesses at the outer border of Norway, NATO and Schengen lose established markets and revenues, the national response must be proportionate to the burden," the business association writes in a press release. 

The report in question was prepared by Orinor AS on behalf of the Kirkenes Business Association and highlights, among other things, the following findings, which show the scale of the challenges facing local businesses:

• Russian retail trade in Sør-Varanger is estimated to have declined from around NOK 60 million before the pandemic to approximately NOK 10 million in 2024.

• Kirkenes Port's revenue from Russian fishing vessels has been reduced by approximately 90 per cent. Using 2021 as a normal year, the annual loss of revenue is estimated at around NOK 3.22 million.

• The number of calls by Russian fishing vessels at Kirkenes Port fell from 419 in 2019 to 205 in 2025. The port has budgeted for only 20 calls in 2026.

• Turnover in affected parts of the retail sector, marine industries and service industry in Sør-Varanger fell by a total of around NOK 160 million from 2023 to 2024. The figure describes developments in these industries and is not an isolated measure of losses caused by sanctions.

"At the same time, we see that local businesses have demonstrated considerable capacity for adaptation. Employment remains high, but the transition comes at a cost, borne in particular by port, trade and service companies in the border area," Hamre tells HNN.

"Cannot turn this around alone"

What feedback have you received from businesses in Kirkenes about the situation? 

"The businesses describe the loss of customers, revenue and former value chains. Maritime businesses have been particularly hard hit: the Port of Kirkenes' revenue from Russian fishing vessels has fallen by around 90 per cent. Henriksen Shipping Service lost its most important customer segment and ceased operations," Hamre says. 

"At the same time, companies such as Kimek and Barel show that the business community is capable of finding new markets and adapting. However, restructuring comes at a cost, and it cannot be left to individual companies to turn this around alone," she emphasises. 

Hamre points out that trade and cooperation with Russia before the full-scale invasion of Ukraine were not something that individual actors in Kirkenes had devised on their own, stressing that this was a deliberate policy on the part of the Norwegian authorities.

"Must take action"

"Norway has chosen a necessary sanctions policy, but the cost is not borne equally. Businesses in Sør-Varanger have lost customers, markets and revenue almost overnight. National authorities must therefore also take responsibility for the transition," emphasises Hamre of the business association. 

What do you believe are the most important things that needs to be done now? 

"National authorities must recognise that the responsibility for the transition undertaken by the Sør-Varanger and Eastern Finnmark community cannot rest with businesses alone. Companies have demonstrated considerable capacity for adaptation, but the loss of customers and markets has come at a cost," she says.

Hamre and the Kirkenes Business Association believe that the state must support the region with measures proportionate to the documented burden.

The association particularly points to the need for better framework conditions for investment, transition and settlement, and highlights four government decisions that the business community considers necessary:

• Eastern Finnmark must have better connectivity to the rest of Norway: ensure a predictable afternoon and evening flight service between Kirkenes and Oslo that enables day trips.

• Transition: establish a targeted programme for businesses affected by sanctions and the maritime and port-related industries.

• The Sydvaranger mine: clarify state participation and risk relief that can unlock private capital and contribute to the establishment of new mining operations.

• Power and grid: ensure progress on the 420 kV connection eastwards and a binding plan for the necessary grid capacity onwards to Sør-Varanger.

"We believe these are four concrete measures that can be followed up quickly, and they are the four most necessary measures to strengthen investment, jobs and settlement in what the state describes as one of Norway’s most important areas."

A need for measures

NHO Arktis, the regional branch of the Confederation of Norwegian Enterprises, also recently commented on the new report from the Kirkenes Business Association. Regional Director Geir Håvard Hanssen of NHO Arktis is clear about the need for measures. 

"This is the first major compilation of figures showing the consequences the sanctions have had for businesses in Eastern Finnmark. The analysis quantifies what the business community has long warned about and provides an important knowledge base for the discussion on the way forward for the region," Hanssen says in a press release. 

"When Eastern Finnmark has experienced a turnover decline of NOK 1.4 billion and parts of the business community in Sør-Varanger have lost key markets virtually overnight, this underscores the need for measures that can contribute to growth, investment and new jobs in the region," he adds. 

Hanssen is clear that Eastern Finnmark has received significant attention from the Norwegian government and Parliament, but that measures to strengthen the framework conditions for businesses have nevertheless been lacking. 

"If we are to secure more investment, more jobs and strengthen local communities in the region, action must follow words," he says.

NHO Arktis highlights, among other things, the need for a dedicated fast-track process for cases that can contribute to activity, investment and jobs in Eastern Finnmark.

"We must take measures that have an impact quickly, while also launching larger, long-term initiatives that strengthen the region over time. We must resolve the structural challenges, while at the same time implementing measures that can create activity here and now. There is an urgent need to get started," he concludes.