The definition of a small state still needs to be fully resolved, as there are many disagreements in this area. Firstly, there is no consensus on the definition of the particular quantitative factors, that is land area, population size, gross domestic product (GDP), and military expenditure (Demir, 2008, p. 141) that could be associated with a small state. Complex quantitative formulas are created to consider multiple variables, including other aspects such as perceptual or psychological (Willis, 2021, p. 21). However, it is noted that different contexts favour different variables (Thorhallsson and Wivel, 2006, p. 659). Furthermore, challenges arise if states belong to a “microstate” or “middle power,” as their measurable parameters are similar (Baldacchino and Wivelm, 2020, p. 13). Secondly, the number of small states is changing as their indicative factors evolve. Thirdly, only recently have small states been recognised by some mainstream IR theories as not marginal actors (Willis, 2021, p. 22).

Small states face challenges similar to those faced by other states in the international arena; however, their reactive options are more predictive and narrow once “national interests of the bigger powers are at stake” (Urbelis, 2015, p. 65). Contemporary threat, such as direct invasion, cyber-attacks, hybrid warfare, natural disasters, propaganda, terrorism, and refugee crises, put pressure on small states to seek viable options to compensate for their weaknesses in the number of inhabitants, market size, smaller economy and territory, and military capabilities (Thorhallsson, 2019, p. 382). Small states can mobilise fewer troops, invest less in novel military technologies, and cannot sustain longer military campaigns (Thorhallsson and Steinsson, 2017, p. 58). However, small states can minimise risks by “adopting particular domestic or external measures,” such as good economic and administrative management (Thorhallsson, 2019, p. 383), capable and active representativeness (Weiss, 2019, p. 195), providing HN support for foreign troops (Dvorak and Pernica, 2021, p. 170), and gaining expertise in a particular niche sector.

Small states have certain flexibility if the issue is less relevant to more powerful states (Urbelis, 2015, p. 76); they could receive assistance from great powers if inaction is seen as dangerous or they need support. Once a small state is a member of an international institution, this allows it to have a more prominent voice when compared to its size, and additionally, creates more opportunities for bargaining (Baldacchino and Wivel, 2020, p. 12). However, this requires more diplomatic and administrative resources (Thorhallsson and Steinsson, 2017, p. 60) and may lead to a situation that contradicts domestic policies (Weiss, 2019, p. 199).

The small states are seen differently depending on dominant IR theories that have developed over time, for instance the first wave (1959–1979) can be related to the primary tenets of classical realism, the second wave (1979–1992) can be aligned with the theory of neorealism, and the third wave (1992–present) can be aligned with the constructivist school of thought (Willis, 2021, p. 20). The study considers all IR theoretical paradigms in modest detail, focusing on alliance and alliance shelter theories that presumably better explain the nexus.

Through the lens of classical realism, small states are assessed as lacking power and, therefore, having no significant impact on the international system (Willis, 2021, p. 21). However, small states could seek non-material gains, such as a “loyal ally” reputation (Pedersen, 2020, p. 43), have less room for manoeuvre on an integrational agenda (Handel, 2016, p. 31), and can become satellites of a greater state (Galal, 2020, p. 41).

In the neorealist view, small states could still bargain on essential issues whilst using their relative power (Willis, 2021, p. 19), which lies in natural resources, geographical location, and the international structures they are part of (Urbelis, 2015, p. 79).

Constructivists explore prestige as a central driver for small state motivation acting within international structures. Small states receive territorial protection and closer “relationships with the alliance hegemon” in NATO (Pedersen, 2020, p. 44) and remain positive towards the European Union (EU) (Thorhallsson and Wivel, 2006, p. 658).

According to liberal theory, small states are more interested in developing international institutions due to their apparent vulnerability and behaviour, shaped by factors like the country’s economic sectors and political influence (Thorhallsson and Wivel, 2006, p. 657).

In neoliberal theory, small states can use their “soft power to appeal to common values” while acting in NATO, where the most potent members cannot unilaterally impose their will (Urbelis, 2015, p. 83).

Shelter theory explains the situation where small states need specific shelter (political, economic, and societal) provided by larger states or international organisations (Thorhallsson, 2019, p. 390). All options inevitably give up some sovereignty in exchange for enhanced prospects for survival and prosperity (Thorhallsson and Steinsson, 2017, p. 86).

States can enter into alliances to supplement each other’s capabilities, thus reducing the impact of a potential opponent’s actions (Bailes et al., 2016, p. 17). States could enter an alliance not only for security but also for reasons of influence. The primary motivation for small states to join alliances is the recognition that they must act together to remain visible in the international arena (Urbelis, 2015, p. 85). It is believed that small states tend to align with the weaker of two sides to oppose emerging threats. As a result, being on the weaker side, states feel more appreciated (Bailes et al., 2016, p. 16). An alliance can reduce defence burdens by pooling and sharing scarce resources and can avoid duplication in the drive to develop mutually beneficial capabilities (Thorhallsson and Steinsson, 2017, p. 119).

Alliance shelter theory focuses on ethnicity, demographics, regime type/ideology, and economic and threat patterns. This contrasts with the shelter theory, as it captures the complexities of small state alliance foreign policy behaviour (Bailes et al., 2016, p. 22). As small states have domestic factors that shape different parameters of the shelter relationship, mutually beneficial cooperation could be based on other factors besides the power calculation. Shelter alliance could affect small states’ social and political developments; the small state relationship is “neither based solely on subordination or annexation nor on equality or autonomy” (Vaicekauskaitė, 2017, p. 10).

Free-riding theory explains when the smaller allies exploit the major powers without paying their fair share (Plümper and Neumayer, 2015, p. 258). However, small states tend to stop free-riding once they perceive an increased threat, their economic situation is improving, or they are pressured by the hegemon (Dvorak and Pernica, 2021, p. 170).

Balancing is directed towards the threat, and offensive or defensive bandwagoning could occur. Offensive bandwagoning aims to share in the spoils. In contrast, defensive bandwagoning aims to influence the winner to refrain from attacking (Bailes et al., 2016, p. 20). Bandwagoning is seen as a way for small states to survive by accepting the will of a powerful aggressor, rather than opposing it (Thorhallsson and Steinsson, 2017, p. 138).

Small states prefer hedging because it is less provocative, counterproductive, and risky regarding political and economic gains (Vaicekauskaitė, 2017, p. 12). Hedging strategies include indirect balancing, dominance denial, economic pragmatism, binding engagement, and limited bandwagoning, which are employed to achieve specific aims (Cheng-Chwee, 2008, p. 162).

A policy of neutrality could ensure small states’ sovereignty (Vaicekauskaitė, 2017, p. 15), although a state’s survival depends on its “ability to demonstrate that it is truly neutral and a non-threat to larger states” (Thorhallsson and Steinsson, 2017, p. 123).

Each theory indicates tendencies and potential regularities (Table 1) that could be associated with a particular state’s behaviour.

Small states’ choices are influenced by multiple external and internal factors, including the location of the great power, the tension between great powers, the relationship history, intergovernmental institutions, regional collaboration, economic factors, good governance, and political stability (Thorhallsson and Wivel, 2006, p. 659). In broad terms, there are two wide patterns of foreign-policy behaviour for small states. They can either keep their autonomy and stay neutral, or use cooperative schemes such as bandwagoning with major powers, forming alliances against dominant powers, seeking shelter, or using hedging strategies.

Following the events in Ukraine in 2014 and 2022, multiple NATO decisions were made to increase security in 3B, which are geographically exposed.

The 3B recognised the fragility of their sovereignty and the importance of national defences. As a result, fundamental changes were made to enhance preparedness for state defence, including increased defence budgets (Table 3).

Estonia was the only state from 3B that spent around 2% of GDP on defence prior to the Russian aggression whereas Latvia and Lithuania were not in line with NATO’s recommendation on defence spending. However, in the face of potential threats, both countries managed to increase spending in a comparatively short period.

A substantial defence budget was spent on acquiring new armaments (Table 4) and facilitating internal reorganisations.

In 3B, various modernisation programmes were launched “focusing on rebuilding the combat and crisis readiness of the land forces, strengthening intelligence and surveillance capabilities, air and missile defences.” Particular focus was given to increasing combat capabilities whilst providing HN support for the USA and NATO initiatives (Friede, 2022, p. 530).

While the 3B reacted efficiently, the focus differed across the region. Lithuania could be seen as “a new defence policy leader amongst the 3B,” as it has the most significant defence budget and acquires the most equipment (Dvorak and Pernica, 2021, p. 171). Estonia focused on “territorial defence, compulsory military service, a large reserve army” and on the cyber domain where a “separate cyber defence command” was established. Latvia focused more on out-of-area international missions and operations (Nikers and Tabuns, 2022, p. 50).

Parallel to military forces, paramilitary voluntary defence organisations gained renewed importance in the 3B. For example, the Latvian National Guard was provided with the necessary funds and established new force elements to cover more expansive areas, increased readiness mechanisms, modernised training areas and infrastructure, and procured extra equipment (Friede, 2022, p. 532).

Regarding the conscription base, Lithuania reintroduced conscription in 2015 and gradually expanded whereas Estonia chose to continue with a conscript-based system and increased the number of new conscripts. Latvia decided on voluntary conscription in 2023 (Lithuanian Radio and Television [LRT], 2022).

Strengthening air defences was considered a priority for 3B; therefore, 3B acquired different short-range air defence systems. Lithuania acquired a medium-range surface-to-air missile system (Cieślak, 2021, p. 18).

Still, more defence synchronisation activities need to be implemented amongst the 3B, including developing maritime and air defences, joint procurements, maintenance of military equipment (Nikers and Tabuns, 2022, p. 52), acquisition, and external support. Nevertheless, there are positive signs of practical cooperation in cyber security and other areas (Horchakova, 2022, p. 97).

eFPs contribute to “deepening political and economic relations between HNs and FNs” (Stoicescu and Järvenpää, 2019, p. 16). Therefore, three essential elements in the study are analysed: engagement in international operations, activities in bilateral military cooperation, and economic interrelations.

Estonia supports security initiatives of other NATO/EU member states and participates in the French-led Operation Barkhane and the Takuba Task Force in the Sahel region. Furthermore, Estonia joined the European Intervention Initiative (EII) (Hurt and Jermalavičius, 2021, p. 12). Estonian forces are deployed on the US-led operation “Inherent Resolve” and NATO mission in Iraq, the UN Interim Force in Lebanon (UNIFIL), UN Truce Supervision Organization (UNTSO), EU Training Mission in Mali (EUTM), UN Multidimensional Integrated Stabilization Mission in Mali (MINUSMA), and European Union Naval Force Mediterranean Operation IRINI (EUNAVFOR MED IRINI) (Estonian Defence Forces [MIL], 2023).

Latvia participates in six military operations with 141 soldiers: the NATO Mission and “Inherent Resolve” in Iraq, the NATO Mission in Kosovo (KFOR), EUNAVFOR MED IRINI, EUTM, and MINUSMA (Ministry of Defence, Republic of Latvia [MOD], 2023).

Lithuania has more than 300 troops deployed on ten international operations: the NATO Mission and “Inherent Resolve” in Iraq, the US-led operation in the Straits of Hormuz, KFOR, EUTM, MINUSMA, EUNAVFOR MED IRINI, and EU’s military operations in Atalanta. The most significant change in deployment geography was the plan to join the French-led Takuba mission in Mali and the EU’s training mission in Mozambique (Lietuvos Respublikos Seimas [LRS], 2021).

The 3B are involved in international operations, regardless of emerging threats to their sovereignty. Lithuania remains the most significant contributor from 3B regarding personnel deployed overseas. 3B nations deploy troops to the same operations, although with some differences. Firstly, the 3B remains involved in NATO’s operation in Iraq, but Lithuania and Latvia additionally send troops to KFOR. Secondly, 3B sent troops to the US-led “Inherent Resolve” in Iraq, and Lithuania deployed troops to support another US initiative—the ongoing operation in the Straits of Hormuz. Thirdly, in support of the UN, the 3B contribute to MINUSMA whereas Estonia is deploying its troops also to the UNIFIL and UNTSO initiatives. Fourthly, the 3B participate actively in EU operations, such as the EUTM Mali and EUNAVFOR MED IRINI. In addition, Lithuania participates in the Atalanta and Mozambique missions. Fifthly, Estonia and Lithuania are involved in Operation Barkhane. Lastly, Lithuania was involved in a military training operation in Ukraine.

There is no supporting evidence that the 3B support their eFP FN whilst deploying additional troops to the international operations, as most international operations where FNs and HNs participate fall under a NATO, UN, or EU framework. Locally and mission-wise, countries can choose where to deploy their troops (e.g. Estonian soldiers were serving within the UK-led Kabul Security Force; Ministry of Defence, Republic of Estonia [MFA], 2020), which is a tactical choice with a tangible political dividend.

Once FNs bring their military assets into HNs to deter Russian aggression and demonstrate NATO’s resolve, international and national investors are likely to regard the economic situation within the 3B as more secure. Foreign direct investment (FDI) and trade balance could indicate economic interrelations among states and perceived security in the 3B. For that reason, two sets of data are provided, where the first portrays FDI by FNs and participant countries in eFPs (Table 5), and the second looks into the trade balance between the respective HN and FN (Table 6).

Investments into HN economies from the United Kingdom and Germany increased in correlation with the timings of the first deployment of eFP troops in early 2017. The UK’s FDI increased four times whereas German’s FDI into Lithuania increased more than five times. With Canada, the contribution remained at the same level—€13 million, as the focus for Canada is only within the military domain. When considering other contributing states, Denmark, Poland, France, and Norway are all visible with their increasing FDI figures. However, FDI from the Netherlands and Luxemburg must be carefully interpreted, as these countries have a more conducive tax regime and multiple investment treaties that ensure investor protection.

Like most other small states in the world, all 3B nations have a deficit trade balance, including in bilateral trade balance with FNs. FDI and trade balance indicate an increasing economic interrelation between the United Kingdom and Estonia, and Germany and Lithuania. Once the eFP units were deployed in the area, the FDI figures increased sharply (especially in Estonia and Lithuania), indicating long-term investors’ commitment, decreased concern for security, and the expressed political will for future cooperation.