Pessimism on Rail Baltica, NATO Summit expectations
A slight WTF? on Russian grain transit through Latvia
I was at the 10th anniversary LAMPA (Lamp) discussion festival in the Latvian country town of Cēsis on July 5 -6 , where it has been held at the park near the ruins of Cēsis Castle from the beginning. As usual, the gathering, this year said to have reached 25 000 people passing by hundreds of discussion and presentation sessions at dozens of temporary stages and tents, brought together most of the country’s political and cultural elite. As always, it was an opportunity to see and be seen by both public figures and acquaintances unseen since the last LAMPA a year ago. It was also a chance to gather material for this week’s delayed Substack post.
Latvian politicians (l.to r) Edmunds Jurēvičs (New Unity), Aleksejs Rošlikovs (For Stability!) and Ainārs Šlesers (Latvia First) with others on a panel at the LAMPA discussion festival in Cēsis, Latvia. Photo: Juris Kaža
Pessimism about getting the best management scheme for Rail Baltica
Latvia’s Minister of Transport Kaspars Briškens sees little chance that the multi-billion euro and multinational Rail Baltica project, which faces major cost overruns, will achieve the strong central management needed for the whole project to successfully complete it.
“I don't know whether the Baltic states at this point in full agreement on that. I certainly would support that. In future infrastructure management, I still believe that we need to have as many centralized functions as possible because this ultimately leads to, uh, higher quality,” Briškens said speaking at a panel discussion at an annual debate and discussion festival in the Latvian country town of Cēsis.
“10 years ago when the international joint venture (to implement Rail Baltica) was established, the intention was that this joint venture will be doing the full scope, including planning designing, construction, of all of the railway systems and finally , starting also to commercialize and start operations,” the Latvian transport minister said of the project to link all three Baltic countries of Estonia, Latvia and Lithuania with a modern European standard high-speed rail link
“Unfortunately, over time, this implementation structure was diffused. National implementing entities were established. There was a significant amount of
segregation on the one hand and fragmentation on the other hand. And of course that has led long term to significant corporate governance issues,” Briškens said.
He noted that since 2019, the top management of the joint venture had changed several times, leading to turmoil in governance of the project.
The Latvian transport minister’s concerns and doubts about the Rail Baltica project, technically under his ministry are in line with a joint audit of Rail Baltica by the state auditors that found very large cost overruns from the original planned budget of the project.
“The completion of the project requires additional funds of EUR 2.7 billion in Estonia, EUR 7.6 billion in Latvia and EUR 8.7 billion in Lithuania,” the report published in the middle of June said.
On the sidelines of the panel discussion, Briškens said he and others in the government were looking for alternative ways, in addition to European Union (EU) funds to finance at least part of the large cost overrun.
“We are looking at private public partnership solutions for particular elements. For example, connecting the Riga International Airport station and, the (Riga) Central Station. We are looking at also diverting other EU funds that are available for Latvia, such as the recovery resilience package or cohesion funds,” he said.
At the same time, Briškens said that such a step could cause political turbulence if the government tried to reallocate earmarked EU fund. The three-party center-left coalition under Prime Minister Evika Siliņa recently lost its majority when a lawmaker allied with the social democratic Progressives quit their parliamentary faction.
Politicians speaking informally on the sidelines of the LAMPA political, social and cultural discussion festival said that the Rail Baltica could be a major factor in causing a government reshuffle or even the fall of the center-left coalition.
Foreign Ministers: Baltics have more muscle, louder voice in Europe
The Baltic countries of Estonia, Latvia and Lithuania, once considered small countries on the margins of Europe with exaggerated fear of Russia, after the Russian invasion of Ukraine have gained a much greater voice and weight in formulating European policy toward Moscow, the Foreign Ministers of Estonia and Latvia said Saturday.
Estonian Foreign Minister Margus Tshakna and Latvian Foreign Minister Baiba Braže spoke at LAMPA.
“When we regained our independence, I think that we all believde that it may be the end of history times, then maybe we can live finally in peace together with Russia, and and all the other nations as well. But I think that it took like a couple of years when we understood that actually nothing will change, “Tsahkna said.
“We were not just smart, and not just experienced, but we just read what (Russian President) Putin said publicly. And I was always worried about why different analysts and different think tankers and very smart people, they always were thinking during the last, I don't know, 15 years, what is actually behind the Putin's words? What is the secret plan of Putin? What is there? But actually, to be honest, you can find it already …on webpages everywhere, more than 10 years about Putin's plan. It was a restoration of Soviet Union empire, using force if it's needed,” the Estonian Foreign Minister said.
Braže added that “I think our (increased) credibility is there, not just because of Russia or being right about Russia, but because also, as Margus said, we act on the basis of values, principles and rules, that there is something we want to achieve.”
The Latvian Foreign Minister, an experienced diplomat who took office only recently said that values of international law and cooperation were “the way we have conducted our foreign policy. And that also how we behave in the EU, we build coalitions to try to achieve something positive. Obviously, on Russia, unfortunately, we have much more history and much more knowledge than we ever had wanted.”
Both foreign ministers noted that Cēsis was the site of a joint battle by Estonian and Latvian forces during Latvia’s War for Independence in 1919 which defeated an army aligned with pro-German interests fighting to keep Latvia and Estonia in the German sphere of influence.
LAMPA indirectly has its roots in the annual Swedish Almedalen festival on the island of Gotland, which grew to a gathering of various political and social organizations that started after Swedish Prime Minister Olof Palme got up on a flatbed lorry in the summer of1968 to address supporters of his Social Democratic Party.
Kallas, future EU foreign policy chief, on what to expect from the NATO Summit
Estonia’ s Prime Minister Kaja Kallas, soon-to-be High Representative of the European Commission (EC) for Foreign Affairs and Security Policy, said Monday that the NATO Summit in Washington must make decisions that help ensure victory for Ukraine and pave its way to joining NATO.
In a statement released by her office, Kallas is quoted saying : “Ukraine needs long-term military aid from NATO in order to win. At the summit, we hope to approve a strong support package of the allies for Ukraine. During the summit, we must also confirm in words and deeds that Ukraine’s path to NATO is irreversible.”
Other priorities at the NATO Summit for Kallas and the Estonian delegation are increasing defence spending and keeping the Russian threat at the centre of NATO's priorities in addition to aiding Ukraine, the statement said.
The Estonian government statement also cites Minister of Defense Hanno Pevkur as saying that Russia has increased its military capabilities and therefore NATO must consider raising the military spending threshold for allies to 2.5 to 3% of gross domestic product (GDP) from the current benchmark of 2 % of GDP.
“The upcoming summit should send a message of prioritising the development of critical capabilities. This means that countries should focus on acquiring ammunition and creating critical capabilities like long range fires and air defence in an expedited manner in the next five years,” the statement quotes Pevkur.
Long-range fires include conventional artillery and missile systems such as the US-made High Mobility Artillery Rocket System (HIMARS) that has proven itself on the battlefield in Ukraine.
Despite having indicated that she will resign as Prime Minister soon after the July 9-11 NATO summit, Kallas will have a full schedule of meetings while in the US capital. On Tuesday, Kallas and the Pevkur will attend the celebration of the 75th anniversary of NATO, hosted by the US president Joe Biden and the Secretary General of NATO Jens Stoltenberg. In addition, Kallas is scheduled to have several bilateral meetings during the Summit.
Estonia’s ruling Reform Party recently named the country’s current Minister of Climate Kristen Michal to replace Kallas.
Kallas is seen as a “hardliner” on Russia along with other Baltic politicians and was reportedly placed on a wanted list by Moscow for alleged political crimes against Russia in February.
Estonia along with neighbors Latvia and Lithuania have contributed hundreds of millions of euro in military equipment and ammunition to Ukraine and rank as the highest contributors as a percentage of GDP.
Is Latvia a Russian grain pipeline bringing revenue to Moscow?
In the first six months of 2024, Russian grain products went through Latvia in transit at higher volumes than in the first six months of 2023, the Latvian news agency LETA reported July 9.
As of March 8 this year, it is prohibited to import fruit, vegetables, cereals, and animal feed products into Latvia from Russia and Belarus. Importation into Latvia within the meaning of the Law on Agriculture and Rural Development shall be understood as a release for free circulation of agricultural and feed products with a recipient in another member state as the consignee, and a value-added tax of 0% is applied to these products.
214,800 tonnes of cereal products were imported into Latvia from Russia in the first half of this year, which is 2.7% more than in the first half of 2023 when 209,129 tonnes were imported, according to the State Revenue Service (VID). VID operates the Latvian Customs Service.
In the first half of this year, the value of grain imported into Latvia from Russia amounted to EUR 35.59 million, which is 29.9% less than in the first half of 2023.
One wonders how much this trade contributes to Russia’s war effort against Ukraine and whether any of the grain is stolen by Russia from Ukraine and passed off as “Russian” grain.