Neutral No More: Europe’s Last Neutral States Face a Reckoning

Lachie Macfarlan | Europe and Eurasia Fellow

Image sourced from the White House via Wikimedia Commons.

Russia’s invasion of Ukraine has forced Europe’s neutral states to confront the limits of a posture long treated as immutable. Finland and Sweden, after decades of military non-alignment, concluded within months that neutrality no longer deterred Russian coercion. Finland formally joined NATO in April 2023 and Sweden followed in March 2024. Their shift has intensified scrutiny of Europe’s remaining neutrals, particularly Switzerland and Austria, whose interpretations of neutrality increasingly reflect political convenience, structural dependence and reluctance to confront strategic vulnerability.

Finland and Sweden: neutrality reaches its limits

Finland’s post-war ‘balance’ with Russia had already begun to fray as Russian aircraft violated Finnish airspace in 2022. GPS interference and cyber operations, also attributed to Russia, escalated alongside growing concern within the Finnish Defence Forces. Public opinion shifted dramatically , with support for NATO membership climbing to 76 per cent by May 2022. Once Russia demonstrated it was prepared to disregard Finnish sovereignty, neutrality ceased to offer either stability or deterrence.

Sweden’s security assessment reached a similar conclusion. After Russia’s invasion of Ukraine, Sweden rapidly re-allocated troops and armoured vehicles to the strategically fraught, yet significant island of Gotland in the Baltic Sea, and invested USD$160 million to strengthen the island’s military infrastructure, recognising that the Baltic had entered its most unstable period since the Cold War. Sweden’s long-standing policy of military non-alignment no longer provided meaningful security without a credible collective defence framework. The Nordic experience shows that neutrality survives only when major powers accept it. When they do not, neutrality becomes exposure.

Switzerland: symbolic neutrality despite material contradictions

Switzerland’s neutrality remains central to its national identity, yet the war in Ukraine has highlighted the contradictions between its political rhetoric and financial practice. Switzerland aligned with EU sanctions in 2022 and has since frozen over USD$8 billion in Russian-linked assets. However, independent estimates suggest that total Russian wealth held across Swiss financial institutions may reach CHF150–200 billion (USD$188-251 billion). This disparity underscores how sanctions enforcement coexists with long-standing financial opacity that neutral policy leaves largely untouched.

Switzerland’s refusal to permit the re-export of Swiss-made ammunition to Ukraine illustrates another contradiction. Germany, Spain and Denmark have all sought re-export permission, but Switzerland argues that approving transfers would breach its War Materiel Act and its neutrality obligations. Critics counter that Switzerland’s strictness on re-exports contrasts with the flexibility shown toward Russian capital not subject to sanctions. Neutrality has therefore arguably become a convenient mechanism for limiting domestic political cost rather than a legally defined method to uphold substantive impartiality.

Switzerland has effectively adopted a form of selective neutrality: restrictive in areas that might impose military or diplomatic commitments, permissive where economic interests are at stake. For Switzerland, neutrality arguably functions as less of a principled foreign policy stance than a convenient excuse to hedge around difficult decisions.

Austria: neutrality as structural vulnerability

Austria illustrates the most profound tension between formal neutrality and practical dependence. Enshrined in the 1955 Constitutional Law, neutrality remains politically sacrosanct. Yet Austria’s energy, political and security landscape has been shaped by decades of deep Russian involvement.

Until 2022, around 80 per cent of Austria’s natural gas was imported from Russia. Even after the invasion, Russian gas continues to account for roughly 70 per cent of Austria's gas imports (July 2024). This dependence stands in stark contrast to the EU average, where Russian gas now makes up only 8 per cent of imports, and has constrained Vienna’s appetite for more ambitious European energy diversification efforts.

Russian influence extended into political networks as well. Former Chancellor Wolfgang Schüssel and former Foreign Minister Karin Kneissl have both variously held board positions in Russian energy companies. Kneissl’s appointment to Rosneft in 2021 drew particular criticism given her earlier decision to host Vladimir Putin at her 2018 wedding. Such relationships reflect a political culture that long treated neutrality as justification for maintaining close ties with Moscow.

Austria’s intelligence services have also suffered from the constraints created by a political environment which respects neutrality above all else. In 2018, raids on Austria’s BVT intelligence agency led several NATO states to restrict intelligence sharing the country due to fears of compromised internal security. Defence reviews found major capability deficits, including outdated air-defence systems and insufficient cyber protection Neutrality is frequently invoked to avoid deeper integration into EU defence initiatives, reinforcing a cycle in which underinvestment persists under the guise of sovereign independence.

Neutrality as complicity

Switzerland and Austria illustrate how neutrality often entrenches complicity rather than impartiality. Financial opacity, energy dependence and under-resourced security institutions can all be maintained under the shelter of neutrality, even when they indirectly support the interests of an aggressor state. A state cannot meaningfully claim neutrality while facilitating large flows of Russian capital, relying on Russian energy or depending on neighbouring states for intelligence and defence.

Neutrality has shifted from principle to posture. It allows governments to minimise risk by avoiding alignment, yet avoidance itself shapes strategic outcomes, often to the detriment of European stability. But Europe’s neutral states must decide whether neutrality can be adapted to contemporary security realities. That requires transparency, investment and a willingness to reduce structural vulnerabilities.

Without such reforms, neutrality risks becoming a passive form of alignment through omission. Otherwise, neutrality will remain what it increasingly represents today: a refuge for the lowest common denominator, offering neither credible independence nor meaningful security.

Lachie Macfarlan is a final-year student at the Australian National University, where he studies a Bachelor of Laws (Honours) specialising in International & Comparative Law, and a Bachelor of International Security Studies. He recently returned from a year in Vienna – spending six months on academic exchange studying international law at University of Vienna, and six months working on multilateral policy full-time at Australia’s Permanent Mission to the United Nations (Vienna).

Through this fellowship, Lachie hopes to provide accessible commentary on intra-European dynamics and Europe’s evolving role in the international system, aiming to connect European developments and experiences with Australian foreign policy debates.

Our 2025 Europe and Eurasia Fellow is sponsored by the Centre for Deliberative Democracy (CDD) at the University of Canberra. For more information, visit their website here.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Young Australians in International Affairs. AI tools were used by the author for grammar checks, but all content is original, and no plagiarism has been used in the preparation of this article.