Swedish 'Cold War' thriller exposes Baltic Sea nerves over Russia

By Alistair Scrutton and Simon Johnson STOCKHOLM (Reuters) - It has all the makings of a Cold War thriller -- an emergency military deployment with stealth ships and helicopters hunting for a foreign submarine in the Stockholm archipelago. Grainy photographs of a mysterious vessel. Sightings of a black-clad man wading in shallow coastal waters. Whether it was caused by paranoia or a secret naval mission, Sweden's biggest military mobilization since the Cold War over the last three days has underscored growing concerns about Russian President Vladimir Putin's intentions in the Baltic Sea region. In just over a month, an Estonian intelligence officer has been reported abducted by Russian forces, Finland has complained of Russian interference with one of its research vessels, and Sweden has lodged an official protest over a "serious violation" when Russian warplanes entered its air space. With shades of Frederick Forsyth, the maritime mystery has fired the imagination of the region. Moscow has denied it has any submarine in mechanical trouble in Sweden's waters, but nervous governments fear that the Baltic Sea could become the next flashpoint with Russia after Ukraine. "This may become a game-changer for the security in the whole Baltic Sea region," tweeted Edgars Rinkevics, foreign minister of Latvia, where officials say there has been a marked increase in Russian submarines and ships navigating close to their territorial waters. The search in the Baltic Sea, less than 30 miles (50 km) from Stockholm, began on Friday and reawakened memories of the final years of the Cold War, when Sweden repeatedly chased suspected Soviet submarines along its coast with depth charges. But there have also been many false alarms. In the 1980s, the military on several occasions thought it had detected submarines, only to find the underwater sounds had been made by minks or otters. The military say they are now looking for a submarine, a mini-submarine or even divers amid the thousands of islands near Stockholm, many of them popular holiday destinations. On Monday a no-fly zone was declared around the search area. BALTIC INSECURITY Growing tensions since the Ukraine crisis have already caused Sweden and Finland, both avowedly neutral before joining the EU in 1994, to openly discuss NATO membership. Sweden's own military questioned its ability to defend itself for more than a week against a Russian attack after NATO warplanes were scrambled last year to meet Russian bombers rehearsing a bomb run on Sweden. "This kind of incident deepens the sense of insecurity not only in Sweden but also the rest of the Baltic Sea region," said Anna Wieslander, deputy director at the Swedish Institute of International Affairs. "It is a long-term game that they have been playing," Wieslander said, adding that Russia has been gradually modernizing its forces under Putin. "Tensions have been building up before the Ukraine crisis but these incidents have now become more frequent." The Swedish daily Svenska Dagbladet, citing unidentified sources, said the latest incident had begun when encrypted radio traffic on an emergency frequency was intercepted on Friday from the Stockholm archipelago to the enclave of Kaliningrad, home to the Russian Baltic Fleet. The Netherlands has denied reports from Russia that the source could be a Dutch naval submarine. For Swedes, the affair evokes memories of 1981, when a Soviet submarine known by its Swedish designation U137 was stranded near a major naval base deep inside Swedish waters. Swedes have been reading avidly about reports of a Russian ship with underwater recovery equipment heading to Swedish waters and a tanker circling the seas near Stockholm, adding to a sense of new Cold War espionage on their doorstep. Swedish media said military intelligence was investigating a report that a man dressed in black had been spotted wading in an inlet between two islands, one of which, Korso, is used by the Swedish military and is off limits to the public. SPHERE OF INFLUENCE Russia has long seen the Baltic as part of its sphere of influence, and still smarts at the former Soviet Baltic republics of Estonia, Latvia and Lithuania entering NATO and the EU. Finland also reached accommodations with the Soviet Union for decades. Lithuania suspected a link between the submarine incident and a massive floating liquefied natural gas (LNG) terminal that is due to sail to Lithuania from Denmark this week. Named Independence, the terminal is intended to reduce the Baltic region's dependence on Russian energy. Foreign Minister Linas Linkevicius called the timing of the Swedish search a "weird coincidence". Estonia said on Monday that it was boosting surveillance around the islands of Hiiumaa and Saaremaa islands -- a potential resupply route from the West in the event of conflict with Russia to the east. One thing that has changed since the Cold War is Sweden's preparedness after years of defense cutbacks. Some observers say the navy lacks the capability to hunt and destroy submarines in its home waters after scrapping anti-submarine helicopters. If the search finds proof of foreign military activity in Swedish coastal waters, it will represent the first real test of Prime Minister Stefan Lofven's center-left minority government, less than three weeks after it took office. His government will hope to do better than one incident in the 1992s, when a Swedish corvette fired a torpedo at a suspected submarine only to narrowly miss hitting itself. "There's no ongoing submarine chase, but an intelligence operation," Lofven told a news conference in Finland on Monday. "We have the capacity for the operation." (Added reporting by Johan Ahlander and Niklas Pollard in Stockholm; Andrius Sytas in Vilnius; Aija Krutaine in Riga, David Mardiste in Tallin and Jussi Rosendhal in Helsinki; Editing by Peter Millership and Kevin Liffey)