Sanctions for Thee, Rare Earths for Me

How Europe’s Baltic states – led by Estonia – are discovering the allure of “strategic importance” and asserting national interests in defiance of their own moral standards. Written By Holger Friedrich

My previous text regarding miscalculations in German and U.S. policy toward eastern Germany and Eastern Europe lacked examples – examples that could illustrate the mechanics, utility and consequences of a policy that often intends the right thing yet achieves the wrong result, precisely because it operates in a self-referential manner and fails to sufficiently scrutinize its own assumptions.

The consequences of recent election results in Germany, the escalation in energy markets, the release of strategic EU diesel reserves – coupled with agreements on additional Russian diesel supplies for the global market – are placing considerable strain on the structural integrity of certain moral frameworks. German automakers, led by BMW, are refusing to supply vehicles for the fleet of a democratically elected parliament, while Donald Trump is recommending that Ukraine get a new president. Who would have foreseen such a combination of circumstances just a year ago?

There is a particular form of moral righteousness that comes easily, above all, to those who have not yet been put to the test themselves. It is found in newsrooms, think tanks, NGOs, and – not infrequently – in the political arena. In Germany, just as in Europe.

Estonia possesses this form of moral certainty to a remarkable degree.

Tallinn has cast itself as Europe’s conscience regarding Russia. It is a national capital that reprimands, admonishes and lectures, reminding others – Budapest, then Bratislava, and now even Paris – that sanctions are not a menu from which one can pick and choose according to national taste. Sanctions, the message goes, must be applied consistently – without regard for the specific parties involved and without consideration for economic side effects.

Then reality intruded. It appeared in early October 2026 in the form of a magnesium plant in the Ural Mountains. Suddenly, it became clear that the Estonian conscience, too, has a supply chain.

Surprisingly little is said about this – whether in Washington, Brussels or Berlin. The dispute remains muted. Perhaps this is because it might disrupt the experimental setup upon which think tanks, policymakers and the media, for years, have been basing their moral assessments.

We have spoken about miscalculations long enough. Here are the data points to consider.

A Few Days of Baltic Fury

On 23 September, Estonian Foreign Minister Margus Tsahkna signed an order from New York imposing national sanctions on Alisher Usmanov and Mikhail Fridman, after both of those individuals had been removed from the European Union’s sanctions list. 

“Estonia did not consider it right to remove these two prominent Russian businessmen from the EU sanctions list and did not support that decision,” Tsahkna said, adding that Russia had not shown even the slightest willingness to end the war; therefore, there was no reason whatsoever to ease the pressure of sanctions. 

Both businessmen, according to the minister, are supporting Russia’s aggression against Ukraine and contributing to its continuation.

Just days earlier, his ministry had stated that the delisting was done “for political reasons, to secure agreement.” Estonia abstained in protest; it did not vote against the measure, so as not to block European unity.

The message to France and other EU member states that prioritize Realpolitik was unmistakable: some of us simply take this war more seriously than others.

It is precisely for this reason that this episode serves as an interesting benchmark. While the Estonian foreign minister’s words found their way into the European media – including Der Spiegel in Germany – another development went almost unnoticed.

The Rostom Factor

On 7 October, EU ambassadors meeting in the COREPER II format agreed the 22nd sanctions package against Russia. Given the ongoing war and the high number of civilian casualties, any serious initiative that could contribute to bringing it to an end would be legitimate and necessary.

However, a Russian company and a Russian individual were missing from the final draft.

Radio Free Europe journalist Rikard Jozwiak drew attention to this matter, and Estonia’s representation in Brussels subsequently confirmed the development. “Yes, we asked for one Russian company and a person associated with it to be removed,” spokesperson Kerstin Lepik told Estonian state media. The company supplies materials “of strategic importance for Europe” to the Estonia-based firm NPM Silmet.

The company in question is Russia’s Solikamsk magnesium plant, and the individual is its director, Ruslan Dimukhamedov.

There is a certain irony to the situation. The plant is controlled by Rosatom, the Russian nuclear corporation that Tallinn has been demanding to sanction for years.

Even the Estonian newspaper Postimees – hardly suspected of being a Kremlin mouthpiece – headlined a commentary with the sentiment that Estonia’s moral beacon had gone dark. A concern was raised, one that countries basing their foreign policy claims heavily on moral grounds would be particularly loath to hear: duplicity. To put more politely, this is a matter of double standards. To be specific: the removal of Usmanov from the sanctions list –driven in part by pressure from various countries citing their national interests – is viewed in Tallinn as morally questionable, considering the suffering population of Ukraine.

A Rosatom-controlled plant deep in the Russian Urals, on the other hand – which supplies an Estonian company with indispensable raw materials – suddenly becomes a matter of “strategic importance for Europe.”

It is precisely at this point that a political anecdote becomes a benchmark.

The Semantics of the Exception

In his defence, Estonian Prime Minister Kristen Michal argued that the facility and its director had not been on the list to begin with, so they were not removed from it. That is technically correct. A failure to include someone is not the same as removing them.

The only thing is: had Hungary or Slovakia invoked the same semantic distinction, it would presumably have been interpreted as pro-Kremlin hair-splitting.

That is precisely where our problem with the recurring application of double standards lies: not necessarily in the fact that different decisions are made, but in the fact that the moral standard applied to one’s own decision is different – and conveniently chosen – from the one applied to the other person’s decision.

It is worth looking back here at a major scholarly tradition of this region.

Königsberg and Kant are not far from the Baltic region. Even during Soviet times, a school of thought emerged in the Estonian city of Tartu that has remained remarkably relevant to this day. Its most prominent figure was Juri Lotman.

Lotman turned the small Estonian university town of Tartu into a centre for semiotics – the study of signs, meanings and cultural codes.

Lotman’s framework can also be used to describe the contemporary German landscape: since 1990, eastern and western Germans have inhabited the same political and media sphere, yet they often continue to operate within distinct cultural systems of signs.

Terms such as “turning point,” “reunification,” “transformation,” “freedom,” “state,” “Russia” or “democracy” can trigger vastly different associations, shaped by divergent historical and biographical experiences.

This becomes a communication problem the moment one side declares its own interpretation of these terms to be universal, while dismissing the other side’s perspective as an error, a sign of backwardness, or a political deviation.

A nod here to state media, as well as the newspapers FAZ, Der Spiegel and Süddeutsche Zeitung.

However, Lotman’s thinking goes further. It is precisely at the boundaries between different sign systems – as one of his key insights holds – that something new emerges. From this perspective, difference is not a defect to be eliminated through homogenization. On the contrary: it is the exchange between different spheres of experience that generates new societal perspectives. Hence, our very own eastern German newspaper, Ostdeutsche Allgemeine, with warm greetings to our colleagues in the west.

When applied to current sanctions policy, the matter becomes even more interesting.

Lotman explored the relationship between truth, falsehood, freedom and cultural boundaries, in depth. A crucial idea here is that freedom does not consist merely of the ability to do something. Culture begins where individuals and societies set limits for themselves, even though no external power compels them to do so.

To put it simply: I could lie, but I choose not to.

The Tallinn version currently seems to be more concise: I can impose sanctions, but I refrain from doing so the moment it comes at a substantial cost to me.

The Passive Voice as a Political Refuge

The language used to describe the event subsequently is also interesting.

Officials “were asked” what impact sanctions might have. Officials “signalled” that the impact would be significant. Ultimately, it “was decided” not to admit the individuals in question.

The passive voice has enjoyed a remarkable career in politics. It enables decisions to be made without decision-makers.

In this narrative, Estonia appears almost like a detached observer who was merely asked for a professional opinion by chance.

However, this portrayal is undermined by the fact that Foreign Minister Tsahkna himself said the final decision rested with him. The government apparently did not even discuss the specific case in detail.

This creates an awkward dilemma: either the head of government did not know the details of what his foreign minister was requesting in Brussels, or he did know and chose to distance himself publicly.

Neither scenario bolsters confidence in a state that claims not only to help shape European policy on Russia but also to provide moral leadership.

Strategic Responsibility, With a Strategic Delay

Yet Tallinn’s economic logic is entirely understandable.

What’s more, as a German taxpayer, I would like to see German policymakers weigh economic realities against political goals with similar sobriety more often.

NPM Silmet in the Estonian town of Sillamäe is one of the few European processors of critical raw materials. Its products are used in applications such as wind turbines, electric cars, electronics and the aerospace industry. Riina Aav, a professor at Tallinn University of Technology, points out that switching raw material sources is not as simple as merely changing suppliers. Different raw materials may require different chemical processes, and production facilities must be adapted. This entails costs – but, above all, it takes time.

Moreover, if Europe sanctions a Russian supplier, the material does not necessarily disappear from the global market. It can be resold via China and ultimately end up back in Europe with a new label and a higher price tag.

In that scenario, Europe would have weakened its own industrial capacity, only to subsequently import the same or comparable raw materials at a higher cost.

This is a lesson that could have been considered earlier and more thoroughly in the context of the PCK refinery in Schwedt or the Central German Chemical Triangle.

From an economic perspective, therefore, Estonia’s approach is by no means irrational. On the contrary: it is sensible. The problem lies elsewhere.

Hungary, Slovakia, Belgium, France and other EU states have been defending their respective interests using essentially these same arguments for years. Yet these are precisely the arguments that Estonia and other Baltic states have repeatedly dismissed as inadequate, shortsighted or morally questionable.

Now, Tallinn itself is discovering Realpolitik.

55 Years in the Supply Chain – and Still a Surprise

One detail makes this discovery particularly noteworthy.

Silmet’s Russian supply chain is not a surprising consequence of the war. According to the company, it dates back more than 55 years.

Russia launched its full-scale invasion of Ukraine in February 2022. Since then, Estonia has had four and a half years to analyse the strategic dependency of its flagship company regarding critical raw materials and to develop alternatives.

That is four and a half years during which top Estonian politicians simultaneously found ample opportunity to lecture other European countries on their own energy and raw material dependencies.

Added to this is a remarkable historical connection.

Until 2011, when it was acquired by the U.S. company Molycorp, a majority stake in AS Silmet was held by the Estonian company AS Silmet Grupp. Its owner was Tiit Vähi – Prime Minister of Estonia in 1992 and again from 1995 to 1997.

There is no concrete evidence of any current involvement by Vähi in NPM Silmet. However, according to Estonian registry records, he remains linked to AS Silmet Grupp and chairs its supervisory board. He is also connected to the Port of Sillamäe through AS Sillamäe Sadam and the terminal operator, AS SilSteve.

Furthermore, NPM Silmet is explicitly listed as a partner in the published operating regulations of the port railway.

This is not intended to imply that the economic interests of these individuals or companies influenced Tallinn’s request to Brussels; substantiating such a claim would require concrete evidence.

Nevertheless, the geographical concentration of what has suddenly acquired “strategic importance” remains remarkable: a former prime minister, an industrial complex, a port and a railway – all clustered in a small town in Estonia’s Ida-Viru County.

At roughly the same time, the “Silmet 2.0” project was accorded strategic status at the European level regarding critical raw materials.

In this context, Foreign Minister Tsahkna said – in essence – that Europe must not allow an industry critical to its security to remain dependent on supplies from an aggressor state. That is a remarkable perspective, given that his government had, almost simultaneously, ensured that this very dependency could initially persist.

Personal Connections

This impression is reinforced when one considers the personal connections between Tallinn and Brussels.

In 2023, Estonia’s then-Prime Minister Kaja Kallas came under political pressure after it was revealed that a transport company in which her husband held a financial stake had continued business dealings with Russia following the start of the Russian invasion.

No violation of sanctions was found to have occurred.

From a legal standpoint, this is decisive. Politically, however, it does not answer every question.

For anyone who publicly calls on other states and companies to sever their economic ties with Russia sets a standard – including for themselves.

In late 2024, Kallas became the European Union’s High Representative for Foreign Affairs and Security Policy, effectively the EU’s top diplomat. Her foreign policy team now helps shape the very European sanctions policy from which her home country is seeking an exemption for a commercially significant Russian supply relationship.

This does not constitute proof of undue influence, let alone evidence of a personal connection.

Yet, it creates a politically intriguing benchmark: just how universal are moral principles when their application suddenly affects one’s own interests?

The Moral Pedestal and the Looming Quagmire

Estonian officials are understandably annoyed that their country, of all places, has now become the focus of this debate. Their argument is that other EU states constantly have names removed from draft sanctions lists, whereas Estonia has so far requested hardly any exceptions. That may well be true. Yet it misses the point.

For many of those states never anchored their policies in the same claim to moral absolutism. They did not impose national sanctions only to subsequently publicly criticize other EU members for their willingness to compromise.

Anyone who places themselves on a moral pedestal changes the standard by which they are judged. That is not an injustice; it is the logical consequence of the stance they have adopted.

German policymakers, in particular, should observe this experience closely. Moral grandstanding can create political blind spots. And when interests, dependencies and power dynamics are obscured by moral categories for too long, reality eventually makes a surprise appearance when the bill comes due.

The history of Western interventions offers ample examples of this – from Tripoli and Kabul to Saigon. Western societies can be sustained for long periods by political and media narratives. But when those narratives lose touch with actual conditions, moral certainty is often followed by bitter disillusionment – accompanied by dramatic images on the evening news.

France and the Interesting Counter-Example

That is precisely why it is worth looking at France.

In La Rochelle, Solvay operates a direct European competitor to the Estonian facility. It is home to one of the most significant facilities for separating rare-earth elements outside of China. The plant has been in operation since 1948; in April 2025, a new production line for neodymium and praseodymium was opened – two elements essential for permanent magnets used in electric cars, wind turbines and other high-tech applications.

France would certainly have had an economic interest in weakening a European competitor whose production relies on Russian raw materials. Paris did not do so. That is precisely what makes the case interesting. The crucial takeaway is not that Estonia acted cynically.

The more interesting insight stems from the opposite assumption: Estonia acted rationally. It defended its national interests.

When sanctions affect French interests, Hungarian pipelines or Slovak refineries, they quickly appear – from Tallinn’s perspective – to conflict with the moral imperative. Yet when they affect a strategic plant in Estonia’s Ida-Viru region, that same issue transforms into a balancing act involving “strategic importance,” “non-inclusion” and potential “re-evaluation.” This is exactly how states behave.

And that is precisely why we should finally stop framing European conflicts of interest as clashes between the morally righteous and the morally questionable.

Every EU country defends its national interests. France does it. Poland does it. Hungary does it. Estonia does it. Germany, perhaps, does it too little. The energy-intensive industrial base of eastern Germany – with its long-standing ties to Central and Eastern Europe – vividly illustrates the price paid when economic structures are subordinated to an abstract moral framework rather than being recognized as strategic interests. We sacrificed the eastern German industrial base in the name of “doing the right thing.”

Estonia’s mistake, therefore, is not that it protected its industry. The error lies in having spent years morally condemning others for the very same balancing of interests that Tallinn is now undertaking itself. That is the true data point.

And if, in the future, Tallinn once again extends an accusatory finger towards Paris, Bratislava, Budapest or even Berlin to remind them of adherence to European principles, a lengthy rebuttal may no longer be necessary.

A single word might suffice: Solikamsk.

The name of a factory in the distant Perm region – a factory that generates revenue for Russia, supplies raw materials to Estonia, and suddenly makes Europe’s moral certainties appear remarkably complicated.

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