When Russia recently (counter-)attacked Georgia, William S. Lind notes, this raised the issue of defending the Baltics:
The worst option, which Georgia took, is to create a toy army. A handful of modern jet fighters, a battalion or two of tanks, a frigate for the navy, all add up to nothing. Against a Great Power, a toy army goes down to defeat in days if not hours. More, even a few modern jet fighters or tanks cost so much there is no money left for a real defense. Unless the Baltic states want to fight each other, they should leave military toys to children.
Second, the Baltics could try to ally with other near-by Powers strong enough to balance Russia. But this option exists only in theory. Germany could fill the role but has lost all Great Power ambitions, while Sweden has been out the game for two centuries. There could be benefit for all concerned in a union of the Baltic states and Finland under the Swedish crown, all retaining complete domestic autonomy but united for defense and foreign policy, but it is probably only historians who can see the potential.
A third option is to ally with distant Great Powers in order to balance the threat from a local Great Power. That is what the Baltic States have done through their membership in NATO. Unfortunately, while central European states have attempted this over and over again for centuries, it never works. It may involve Western Powers in war with Russia, or in the past with Germany, but it does nothing to protect the country in question. Poland is a recent example: Britain and France went to war with Germany in 1939 over Poland, but Poland remained an occupied country for 50 years.
NATO membership also increases the pressure to build a toy army, or to specialize in “niche” capabilities like water purification that serve NATO but not home defense. Both are roads to military irrelevance.
There is a model that would work for the Baltic states and other small countries: the Iraqi model. Instead of creating a toy army, they should plan an Iraq-style insurgency against any occupier. This requires a universal militia like Switzerland’s, where every male citizen knows how to shoot and how to build and emplace IEDs and where weapons and explosives are cached all over the country. In the Baltics, this would be a rural rather than an urban defense: Russia could take the cities but not the countryside. The “Forest Brothers” kept up just such a resistance to the Soviet presence well into the 1950s.
An Iraqi-model defense would not make it impossible for Russia to conquer the Baltic states. It could only make such a venture expensive for Russia, hopefully too expensive.
For long-term security, the Baltic states must approach the problem not just at the military but at the grand strategic level. What that means is that, like all small countries bordering Great Powers, they must accommodate the Great Power’s interests. The model here is Finland during the Cold War. Finland maintained complete sovereignty in her domestic affairs, but she was careful to accommodate the Soviet Union in her foreign and defense policies. She was a good neighbor to Russia, as the Baltic states should strive to be good neighbors to Russia now. Their goal should be to create a situation where it is more in Russia’s interests for the Baltics to remain independent than to reincorporate them into the Russian empire.