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LITHUANIA


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 18,213 13,796 12,000 74
         
GNI per capita
 US $ 4,490 3,660 3,350 74
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 323 - (26/11/07)

With winter rapidly approaching, everyone in the Baltic states is concerned with energy. Lithuania is in the same boat as the other Baltic states vis-a vis energy, an over-reliance on one supplier - Russia. It is also the key state to help them to diversify, as we shall see.

Energy issues
A paper on a European Strategy for Sustainable, Competitive and Secure Energy issued by European Union Energy Commissioner Latvian Andris Piebalgs in March 2006 referred to the Baltic states as an "energy island." It was the first time the phrase was used, it caught on and has been going the rounds ever since. 

Piebalgs's label for the Baltic states refers to their being cut off from supplies of oil, gas, and electricity. With few natural resources of their own, the Baltic states are increasingly reliant upon external suppliers. More troubling for states that only managed to break free of the Soviet Union 16 years ago, the word "suppliers" can be replaced, for all intents and purposes, with the singular, "supplier": Russia. 

Piebalgs revived his catchphrase while speaking in Riga in May, saying: "I would like to see the Baltic states at the heart of [the EU's energy] transformation. This would fit well with the acute need for greater security of energy supply in these states, which have for too long been an energy island dependent upon one major supplier of gas." 

Worries about the reliability of Russian oil and gas supplies are at the heart of the energy island question. Russia's vast resources are controlled by the state in a manner that harks back to the days of the command economy, only now it's with a monopolist rather than communist flavour. 
The Baltic states watched while Gazprom turned off the taps to Ukraine in 2005 and threatened to do the same with Belarus. Evidence already points to Moscow's willingness to treat the Baltics similarly. In July 2006, delivery of crude oil to Lithuania via the ironically named Druzhba (Friendship) pipeline -- the longest in the world -- abruptly ceased and has never resumed. The Lithuanian government has yet to receive an explanation from Russian oil transport monopoly, Transneft, about the sudden cut off other than a few vague comments about "damage" that's not worth fixing. 

Kirkilas expressed his alarms in UK 
Not surprisingly, Lithuanian Prime Minister Gediminas Kirkilas was an early adopter of the energy island concept. He delivered the first major speech clearly expressing Baltic dismay at Russia's use of energy as a political tool when he addressed the Royal United Services Institute (RUSI), a British defence think tank, on 21 May 2007. 

"We are concerned about the energy monopolization in Russia, ranging from extraction and production to transport, sale, and transit," he told RUSI delegates. 

Kirkilas' fear is well-founded. Gazprom and Transneft not only have huge assets in Russia, but they also have used their soaring profits to buy big stakes in the Baltics' own energy infrastructure. For example, Gazprom owns big pieces of Latvijas Gaze, Eesti Gaas and Lietuvos Dujos, the national gas storage and distribution companies. 

"How can we speak about the single energy market if, for example, the Baltic states are still energy islands?" Kirkilas asked. "We should ask ourselves why energy is being more and more associated with politics, and not with economies." 

Since then, the Baltic states' efforts to ensure their future energy supply and energy security have started to look inadequate. Rather than addressing the problem, a series of attempted solutions have seen the Baltics drifting slowly away from each other. 

Ignalina II to the fore
At the forefront of the energy island issue is Ignalina in Lithuania. The only existing nuclear power station in the Baltic states, Ignalina is a Soviet-era reactor with a design similar to that of Chernobyl. It is scheduled to be decommissioned by 2009, and an agreement to that effect even was included as a condition of Lithuania's joining the EU in 2004. 

Given the huge costs of building a replacement (approximately 6.25 billion euros), a new project was envisaged in which all three Baltic countries would participate. A project of construction of a nuclear power plant with power capacity of 3,200 - 3,400 megawatts by all three Baltic states is being now elaborated in Lithuania. However, according to expert estimations, the new nuclear reactor could appear only in 2015. Then Lithuania invited Poland to the party, much to the surprise of Latvia and Estonia. Poland wasted no time in showing how the addition of one partner can make a project many times more complex.

Poland was a no-show at a signing ceremony designed to officially launch Ignalina II. It caused further embarrassment at another showcase event, the Vilnius Energy Conference earlier this month. Just before it began, Polish economy minister Piotr Wozniak announced that Poland would need at least one-third of Ignalina's output. Poland added further pressure by making it clear that failure to come up with the demanded wattage would result in a go-slow on construction of a "power bridge" to link Lithuania's electricity grid with Western Europe. 

Ignalina II was supposed to be operational in 2012. With so little progress made, however, even a revised switch-on date of 2015 is looking optimistic and would leave Lithuania with a six-year energy supply gap that could cripple the economy. 

Recently signs have emerged that Lithuania may be thinking about asking the EU for an extension of Ignalina's lifespan. Energy Commissioner Piebalgs has slapped down such suggestions as "vain discussions," but what Lithuania is clearly angling for is an increase in its EU compensation package. 
The power bridge ultimatum must have been particularly galling for Lithuanian President Valdas Adamkus, who has been campaigning for links to both Poland and Sweden for years. "I urge the European Union to show real and more active support for this and other regional energy projects aimed at solving the problem of the so-called energy islands," Adamkus said, employing Piebalgs's catchphrase at the launch of the Vilnius Energy Conference. "New bridges are needed to connect these islands in order to create an effective and viable European energy network." 

At the Vilnius conference, which Adamkus had worked so hard to establish, he promised that an agreement on the power bridge would be signed "within days." A month later, nothing had been signed. 

Nord Stream 
Another element of the Baltic energy debate is Nord Stream, a Russo-German project to construct a 1,200-kilometer gas pipeline along the Baltic seabed. It is much more expensive to build a pipeline underwater than it is on land. The Baltics were not consulted about its pending construction. The obvious conclusion is that Nord Stream is a Baltic bypass, enabling Russia to cut off supplies to the Baltics without affecting its bigger customers in the West. 

Nord Stream also makes the EU's talk of a common energy policy look questionable. From a Baltic perspective, it enhances the energy supply of some EU states at the expense of others, placing national interest above collective interest. 

When Finland expressed environmental concerns about the route of the pipeline, Nord Stream was forced to make a belated approach to Estonia for permission to survey the seabed in the small country's exclusive economic zone. Estonian politicians derived some satisfaction from giving Russia a taste of its own medicine and refused. 

The real irony now is that the Baltics' haphazard attempts to avoid being split by Moscow's divide-and-rule strategy may end up having precisely that effect. Estonia is disillusioned with the dithering over Ignalina and is looking north. Lithuania and Poland have too much prestige -- and EU funds -- invested in their joint projects to let them collapse completely, so they will probably complete them, albeit behind schedule and over budget. 

EU proposals to develop an over-arching energy policy may offer some hope, but would require the EU to follow through on a threat to make Russia open up its own energy market or face expulsion from European markets. Such a course of action would require a degree of European unity that has never been seen before. But unless Baltic unity can show some signs of life soon, European unity could be the last means left to link the energy islands.

Lithuanian prime minister: Language of ultimatums is inadmissible for me 
The Lithuanian Prime Minister called "inadmissible" the language of ultimatums, which is probably used to put pressure upon Lietuvos Energija Company in establishing a national investment company.

The prime minister made the statement today November 19. Kirkilas has already ordered that the Lithuanian Economy Ministry to take under control of Lietuvos Energija's activities.

Earlier, it was announced that a national investor is being established in the country (they call it "a three-headed serpent" in Lithuania, because the planned company will comprise state-run Lietuvos Energija, Rytu skirstomieji tinklai and private VST (Vakaru skirstomieji tinklai)). The national investor is being established to build a new nuclear power plant in Lithuania.

In recent weeks, Lithuanian media and certain politicians citing Lithuanian security services released plans to hamper establishment of the national investor. The rumours are connected in Lithuania with an attempt of unnamed forces from abroad to derail construction of the NPP and the aspiration to make national major capital waging a war for influence in the new energy project with active lobbying of their own interests. 

Minister resigns after tragic accident by drunken officer
Like other Nordic countries, Lithuania has its problem with drunken drivers, even police officers at that. Interior Minister Raimondas Sukys handed in his resignation to Prime Minister Gediminas Kirkilas on 12 November.

Kirkilas' spokeswoman Nemira Pumprickaite confirmed to BNS that Sukys made the move in the wake of a car crash that claimed the lives of three children.

On November 7, a car being driven by a police officer ploughed into a group of children returning home from school. Two ten-year-old boys were pronounced dead at the scene of the crash and third died of his injuries in hospital.

Though he was not directly involved in the tragic incident, Interior Minister Sukys is ultimately responsible for the conduct of the police. The minister himself demanded the resignation of the police's Commissioner General Vytautas Grigaravicius, and said that if Grigaravicius refused to go, he would himself stand down.

In a meeting with PM Kirkilas on November 10, Sukys said that the tragic event in Skuodas revealed that serious problems within the police force have been accumulating over a seven-year period and illustrated that the force is in crisis - both in terms of management and morale.

For his part, Grigaravicius told BNS that he even though he assumes responsibility for the tragedy, he will leave his post only if a "political decision" is made. At the time of the incident he was attending a function in Morocco, but after a meeting with President Valdas Adamkus on November 12, he did announce his resignation. 

Kirkilas divided the responsibility equally between the district's police department, the police Commissioner General, the minister and himself.

"How many more victims will the war on the roads claim before politicians, state officials, see and start to address the traffic issues?" asked President Valdas Adamkus, speaking via a spokesperson.
Sukys was forthright in his appraisal of the situation. "There can be no excuses. The chief of the Police Department must bear personal responsibility for this horrible incident - all the more as it is not the first time that instead of curbing traffic violators, police officers become culprits."
The officer responsible for the crash is reported to have fled the scene. He was escorted to the police station the next day by his older brother - also a police officer.

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