Russian President Vladimir Putin on Thursday warned the West against escalating the war in Ukraine, saying Russia could use “all weapons” in its arsenal, including nuclear weapons, if its Baltic exclave of Kaliningrad comes under attack.Speaking at the Valdai Discussion Club in Moscow, Putin said Russia had no plans to attack any European country but would respond if it faced what he described as Western aggression. He specifically pointed to Kaliningrad, a Russian territory located between Nato members Poland and Lithuania.“If it comes to direct attack against the Russian Federation, in this case on Kaliningrad and possibly some other territories, of course the issue of using all weapons in our country’s arsenal will inevitably and unavoidably emerge on the agenda. This is unavoidable,” Putin said.“The drills in the Baltic Sea, following one another … Then the attempts to arrest our ships and vessels. All this is an escalation. And then we began to hear statements regarding the Kaliningrad region,” Putin said.Putin says Ukraine strikes hitting Russian economyPutin also acknowledged that Ukrainian drone strikes on Russian oil refineries were hurting the country’s economy, saying they had cost Russia about 1% of its GDP, CNN reported.Ukraine has stepped up long-range drone attacks on Russian territory, particularly targeting oil infrastructure. Ukrainian President Volodymyr Zelensky has described the strikes as “long-range sanctions” intended to cut Russia’s revenues and military capacity and push Moscow towards negotiations.Putin said Ukrainian attacks had also damaged more than 100 Russian ships in the Black Sea.Why is Kaliningrad strategically important?Kaliningrad is a strategically important Russian territory surrounded by Nato members Poland and Lithuania. It is a heavily militarised Russian exclave, meaning it is separated from Russia’s main territory. Located between Poland and Lithuania on the Baltic Sea, the region has a population of about 1 million and covers an area slightly larger than the US state of Connecticut, Reuters reports.The exclave gives Russia a key military position in the Baltic region, hosting air defence, missile and naval capabilities that can project power into parts of northern and central Europe.But its location also makes it vulnerable. Surrounded by Nato territory on its landward sides and separated from mainland Russia, maintaining supply lines or reinforcing the region could become difficult during a conflict.Tensions around Kaliningrad have grown since Russia’s full-scale invasion of Ukraine in 2022, as Nato strengthened its eastern flank.