The relations of Russia with the North European countries have a special place in European politics. The atmosphere of these relations has evolved over many centuries, when countries traded and fought with each other, concluded dynastic alliances, explored the Northern sea and shared cultural and scientific achievements with each other. These relations were deep and multifaceted. Their bloom came in the days of the Hanseatic League, among whose participants were many Russian cities ― Novgorod, Pskov, Tikhvin, Belozersk, Tot’ma, Torzhok, Tver, Velikyi Ustyug, Revel and others. However, not only trade relations determined the nature of mutual relations between Russia and the North European countries, as marriage of state also played an important role. A significant mark in Russian history was left by Empress Maria Feodorovna, born Danish Princess Marie Sophie Frederikke Dagmara, who became the wife of Emperor Alexander III and mother of the last Russian Emperor Nikolay II.

Perhaps the most serious test of the relationship took place during the Great Northern War, when Peter the Great “cut the window” into Europe in spite of Sweden and strengthened the military position of Russia on the Baltic Sea. European capitals were not happy about the strengthening of Russia on the Baltic Sea, but after a while Stockholm and Copenhagen admitted the increasing influence of Russia on world politics. A century after Poltava Victory at the beginning of the XIX century, Russia made an enormous contribution to the development of the Finnish state, including it in its membership and granting the broadest autonomy to the Grand Duchy of Finland. Finally, in the XX century, the Soviet Union made a major contribution to the liberation of Europe from fascism; Soviet troops took part in the liberation of North Norway from Nazi troops.

The present stage of this relationship was marked by the “cold war”, when during the confrontation between West and East the policy of restraint and neutrality was used by social democratic governments of Sweden and Finland, what helped to create at that difficult time a climate of trust between the countries, belonging to different military-political blocs. Despite the fact that the level of mutual trust at that time was not always very high, it was fully offset by restraint in military and strategic issues, as well as the desire to preserve regional stability.

As you know, three of five North European countries (Norway, Denmark and Iceland) were fully integrated into the North Atlantic alliance, the first two even worked out plans in case of an armed conflict with the Soviet Union, while Sweden and Finland remained neutral. At the same time Finland had a special place in the relations with the West and the Soviet Union. Its sovereignty was partially limited by a treaty with the Soviet Union in 1948, in which both countries made a commitment “not to conclude any alliance and not to participate in the coalition directed against another High Contracting Parties”[1].

The disappearance of the USSR and the victory of Western democracy inspired many people to revise previous models of interaction. In the 1990s, the Finnish model was rejected by the supporters of the Euroatlantic choice and new generation of politicians of the North European countries, representing the right-wing conservatists. At the same time due to a misunderstanding were forgotten unique achievements of this model of relationship. Meanwhile, the historical significance of the model “Finlandization” lay in the fact that with the help of it Finland, on one hand, significantly reduced the risk of being involved in a confrontation between East and West, and on the other hand ― it was able to take full advantage of the economic benefits of its geographical location and the Soviet-Finnish border. The model of “Finlandization” opened access to capacious Soviet market for the high-quality Finnish goods and helped our northern neighbour to avoid confrontation with Moscow, didn’t allow to draw The Country of Thousands of Lakes in dubious military and political maneuvers that could have escalated into an armed conflict.

Whatever it was, already at a new historical stage in the 1990s and the first half of the 2000s, the basis of these relations contained the idea of maintaining a sub-regional stability, improving the climate of trust and sustainable development. Thus the development meant not only an increase in turnover, but also the creation of democratic institutions, which would bring together the political systems of Russia and the North European countries. The indicator of progress in this direction was the emergence of subregional organizations (CBSS, BEAC), as well as the attempt to create a common space of development, expressed in the concept of “Northern Dimension”.

This stage of relations between Russia and the North European countries lead to serious contradictions, which had the ideological character. Russia agreed to adopt Western liberal democratic model for the creation and development of the Russian government institutions and local governments, but strongly disagreed with the fact that the Western liberal ideology would completely replace its national identity, abolish religious standards and force Russia to sacrifice its national interests in the nearest countries. For example, the North European countries really did not understand Russia’s reaction to the infringement of the rights of Russians in the Baltic States, believing that the imperial period of Russian history should have stayed in the past.

From its side, Russia did not understand a lot in the politics and actions of the North European countries. It was difficult to realise, for example, the reason for increased military budgets of Sweden and Finland against the significant reduction of the Russian military capacity after the collapse of the USSR and the subsequent reductions in the 1990s. It was hard to understand, why the withdrawal of the Soviet troops from the Baltic countries was not accompanied with a normalization of relations with Moscow, but instead led to a serious deterioration of relations in almost all important areas ― political, economic and humanitarian. Russia sincerely hoped that the North European countries, which took care of young democracies in the Baltic States, would be able to convince them of the need to ensure the equal rights of Russian-speaking population, especially since similar rights were provided to all national minorities living in the North European countries. Russia did not understand the need of the entry of the Baltic States into NATO, as well as the upsell of the thesis about the “Russian threat” by the leadership of the republics.

Over the past 10-15 years Russia’s relations with the countries of North Europe continued to develop on its special path, alternating the periods of recovery and recession. Significant milestone of this relationship became the restart of the program “Northern Dimension” in 2006. As a result, Russia was proclaimed the main target of this initiative, as originally proposed by the author of the idea of “Northern Dimension” – Finland. The program received a new framework document, identified new joint projects. ND had at its disposal two new partnerships ― in the field of transport and logistics (2008), as well as in the field of culture (2011).

However, two years later relations were spoiled by the events in the Caucasus, where Russia came to the defense of the interests of Abkhazia and South Ossetia, and the Scandinavian countries supported Georgia’s position. Then Swedish Foreign Minister Carl Bildt compared Russia’s actions to protect its citizens with the actions of Hitler’s annexation of the Sudetenland. After 8 years, he also condemned Russia’s annexation of the Crimea, comparing the policies of the President of Russia with the seizure of Kuwait by Saddam Hussein[2]. The fact that these statements were not a spontaneous and short-term splash of emotions, was confirmed by the events of 2008, when Poland and Sweden became the ideological inspirers of “Eastern Partnership”, the purpose of which was the gradual integration of the former Soviet Union in Western institutions. Anti-Russian orientation of the initiative was read between the lines.

In fact, the crisis in the Caucasus in 2008 and the promotion of the “Eastern Partnership” exacerbated the competition between Russia and the EU for the political dominance in the former Soviet Union, and a very active role in the EU’s eastern policy was played by two countries ― Poland and Sweden. From the point of view of Western countries, it looked as a competition between a neo-imperial project, which was supported by Russia as the center of Orthodox Slavic civilization and Western liberal project, aimed at establishing the economic, ideological and informational control over the European CIS countries, as well as the states of Transcaucasus. In this case, the coexistence of “Northern Dimension” and “Eastern Partnership” did not mean a fundamental difference of opinions between Finland and Sweden.

Preserving a common approach and a common strategy towards Russia, Stockholm and Helsinki disagree on tactics: if the project “Northern Dimension” is supported by Finland and is aimed at the gradual democratization of Russia and rapprochement with the West, the project “Eastern Partnership”, which is backed by Sweden, in fact recognizes that Russia is unlikely to be part of the Western world in the foreseeable future, and aims to establish control over the newly independent states established on the ruins of the Soviet Union.

Political upheaval and civil war in the Ukraine in this sense are not the starting point of the crisis in relations between Russia and the North European countries, but is a new stage of ideological confrontation, which was indicated in the middle of the 2000s. The aforementioned Swedish politician does not hide it as well. According to Carl Bildt, Russia in the 1990s demonstrated commitment to Western values, but with the coming of Vladimir Putin to power Moscow faced tough opposition to the Western policy. Former Minister of Foreign Affairs of Sweden believes that the contradiction between Russia and the West is of a fundamental ideological character: “The new anti-Western and antidecadent line of Putin is built on deeply conservative orthodox ideas»[3].

It must be noted that the offensive Western policy towards Russia, combined with tough rhetoric of certain Western politicians have almost fully revived the political atmosphere of the “cold war”, and the media of the West has begun to carefully sculpt an “enemy image” from Russia. How long will the new “cold war” be, and how long will be the economic sanctions against Russia? This raises the third question: what is the position of countries on this issue? In particular, what do leaders and leading politicians of the North European countries think about it?

Many years of mutually beneficial cooperation have taught many to conclude that the North of Europe is quite a well-off region and Russia’s relations with the countries of the region seem to be promising and mutually beneficial. And, in fact, there were no open conflicts in the North of Europe with the participation of Russia, except for those systematic violations of the rights of Russians living in the Baltic states, and they mostly boil down to two main problems: failure of Latvia and Estonia to grant citizenship to all residents, who were born there and lived at the time of the declaration of independence of these countries, as well as the denial of the right of these people, and especially ― their children ― to receive education in their native language. In 2010, Russian initiative was to settle the dispute between Russia and Norway regarding the section of the Barents Sea between two countries. Thus, all potential conflicts in the region have been minimized.

However, it did not prevent the Norwegian oil company Statoil from withdrawing from the joint project of developing the Arctic shelf with Russia; Norway declared that its sanctions and EU sanctions against Russia wouls be cancelled only when Russia changed its policy in Ukraine. Explaining the position of the state, Norwegian Foreign Minister Børge Brende recalled that the sanctions against Moscow were introduced after the annexation of the Crimea, as well as other “violations of the international law in the eastern regions of Ukraine[4].

It should be noted that Norway not being a member of the EU, was free on the question of participation in the sanctions, as well as on the issue of the degree of its rigidity and duration. For example, Turkey, which, together with Norway being a member of the North Atlantic Alliance, decided not to join the sanctions at all, because it saw it as a threat to its national interests in the Black Sea region.

The fact that Norway did not simply join the sanctions, but chose their toughest variant, signifies either a serious crisis in bilateral relations, or that the foreign policy of Norway on the question of sanctions is completely subordinated to politics of Washington or Brussels. This situation has opened another unpleasant situation for Russia’s foreign policy: the signing of a bilateral agreement between Moscow and Oslo on the delimitation of the disputed waters of the Barents Sea in 2010 and reciprocal steps by President Medvedev had absolutely no effect on improving the climate of bilateral relations. Nevertheless, even in Norway one can hear louder voices of opposition to the current position of the country with regard to Russia. Thus, ex-Minister of Foreign Affairs Jonas Gahr Støre recalled “the millennial experience of a peaceful neighborhood” with Russia.[5].

Thus, the events of the Ukrainian crisis has shown that the most irreconcilable and active critics of Russia’s actions are the North European countries, namely Sweden, Norway and Denmark. Acuity of their position is not inferior to the positions of the United States and Canada, and on the degree of hardness it’s stronger that one of France and Germany. On the contrary, Finland and Iceland at the outset showed much more balanced position, based on considerations of economic pragmatism dominated the political arguments.

Finland’s position from the beginning tended to a compromise, and Prime Minister Alexander Stubb has repeatedly spoken out against imposal, extension and tightening of the sanctions, as the importance of Russia for the Finnish economy is too huge[6]. It can be explained by the fact that among all North European countries, Finland faces the greatest losses from the sanctions regime, as well as the impact from Moscow responses, which imposed a total ban on exports of beef, pork, vegetables and fruit, meat, poultry, fish, cheese, milk and dairy products to Russia.

Denmark and the Danish Board of Agriculture and the Economy also warned on the serious impact of Russian counter-sanctions on its economy. According to the National Institute of Statistics of Denmark, exports to Russia in 2013 amounted to 2.14 billion USD, of which 891 million USD accounted for agricultural exports. At the same time, the share of Russia in the exports of Denmark does not exceed 1.9%, which allows the country’s leaders to insist on the continuation of anti-Russian sanctions. This, in particular, was declared by Prime Minister Helle Thorning-Schmidt[7].

According to the polls carried out in March 2014 by Taloustutkimus, the majority of Finnish society (60%) is foreign to anti-Russian sentiment, and Russia is not perceived as a threat. Finnish President Sauli Niinistë agrees with the opinion of the Finnish society: “We are neighbours. Unlike other neighbours of Russia, we are not members of NATO. Our relations with Russia are based on bilateral contacts”[8]. The position of Finland is not opportunistic, but consistent and is based on the mood of the majority of Finnish society, which has been recently shown by the events, when the Finnish leadership voted against the supply of arms of Kiev authorities^[9].

Against the balanced and moderate position of Finland Sweden is continuing to demonstrate hardness against Moscow. Swedish Foreign Minister Margot Wallström said that Russia poses a serious threat to the security of Europe, however, along with the pressure on Russia one should continue political dialogue as well[10]. The announcement of Ambassador of Sweden in Russia Veronika Bard Bringus was in similar mode, when she did not exclude the possibility of exit of Swedish companies from the Russian market[11]. The main argument of the Ambassador was the situation with the Swedish concern Oriflame, which was accused by Russian tax authorities of deliberately understating the company’s revenues for the reduction of tax payments to the Russian budget. After losing the lawsuit in the Russian arbitration court, the company announced its intention to appeal to the international investment arbitration.

It should be noted that the current crisis in Russian-Swedish relations is not accidential. Stockholm has long been regarded Russia as a threat to its security, and therefore critically perceives any Russian actions of political or economic nature, aimed at strengthening the security of Russia in the Baltic Sea, whether it’s laying of the pipeline “Nord Stream” or the development of the military infrastructure of the Baltiysk and Kronstadt.

The story of unsuccessful search for “Russian submarine” in Swedish territorial waters in October 2014 recalled a similar story from “cold war”, when in 1981, a Soviet damaged submarine was discovered close to the Swedish naval base at Karlskrona. Stockholm reacted to Russia’s actions to ensure security of Abkhazia and South Osetia with obvious disapproval, accusing Moscow of violating the territorial integrity of Georgia. A similar position was taken by the Swedish Ministry of Foreign Affairs in Crimean issue.

Playing the “Russian card” and the spread of the thesis of the “Russian threat” was the brand style for a number of leading Baltic politicians. The toughest position on the Russian question among the Baltic States has traditionally been shown by President of Lithuania Dalia Grybauskaite. In her opinion, three Baltic countries faced “Russian threat” and they should be ready to respond to it during three days at least, until they get assistance from NATO members[12]. However, a different position was shown by Latvian President Andris Berzins, who does not support the imposal of sanctions and calls for their soonest cancellation. His views are shared by Foreign Minister of Latvia Edgar Rinkevich and Ventspils Mayor Aivars Lembergs.

Some political consequences of the deterioration of relations of North European and Baltic countries with Russia within the framework of the Ukrainian crisis followed shortly. In particular, it was reflected with newly resumed talks on accession of Sweden and Finland into NATO, the North European countries and the Baltic States published their plans to deepen cooperation in defense and security. So, the ongoing projects within the North European defense cooperation (Nordic Defence Cooperation ― NORDEFCO) were joined by the Baltic States ― Latvia, Lithuania and Estonia[13].

Minister of Foreign Affairs of Sweden, Margot Wallström was the initiator and inspirer of the plan; she declared that military cooperation between the North European countries and the Baltic countries would decrease defense expenses and improve cooperation on border security. Russia replied immediately by performing tactical flight exercises in the Barents Sea, which were attended by the crews of fighter-interceptor MiG-31 and tactical bomber Sukhoi Su-24M of Central Military District[14].

Thus, Russia’s relations with the countries of Northern Europe are developing in an unfavorable scenario; however, there is still some potential for a gradual improvement in case of easing policy by the majority of the North European countries in respect of Russia. In this situation, the most pressing question is what position will prevail: the policy of deepening confrontation or a pragmatic and balanced policy aimed at overcoming the sanctions crisis. It seems no one can state the way of further development of relations between Russia and the North European countries, as Brussels and Washington both have a strong impact on the foreign policy of the North European countries. We can only hope for traditional Scandinavian sanity, willingness of all parties to move towards each other and take into account the legitimate interests of Russia.

The list of bibliography:

1.         Dogovor o druzhbe, sotrudnichestve i vzaimnoy pomoshi mezhdu Sojuzom Sovetskikh Socialisticheskikh Respublik i Finljandskoy Respublikoy. URL: http://www.heninen.net/sopimus/1948_e.htm

2.         V Danii opasajutsja posledstviy rossijskikh sankciy URL: http://russian.rt.com/article/44314

3.         Karl Bil’dt. Putin povel sebja kak Saddam URL: http://www.bbc.co.uk/russian/multimedia/2014/07/140708_v_bildt_hard_talk_int

4.         Litva pugaet Pribaltiku «rossiyskoy ugrozoj». URL: http://www.stoletie.ru/lenta/litva_pugajet_pribaltiku_rossijskoj_ugrozoj_423.htm

5.         MID Norvegii: tol’ko izmenenie politiki RF v otnoshenyi Ukrainy privedet k snjatiu sankciy. URL: http://versii.com/news/320114/

6.         Nad Barencevym morem proleteli 40 istrebiteley URL: http://www.stoletie.ru/lenta/nad_barencevym_morem_proleteli_40_istrebitelej_555.htm

7.         Norvegiya dolzhna prodolzhat’ politiku dobrososedstva s RF. URL: http://www.norge.ru/news/2015/02/14/26538.html

8.         Nosovich, Aleksandr. Baltijskiy kontrast: Finljandiya otkazalas’ otvorachivat’sa ot Rossyi. URL: http://www.rubaltic.ru/article/politika-i-obshchestvo/baltiyskiy-kontrast-finlyandiya-otkazalas-otvorachivatsya-ot-rossii/

9.         Posol Shvecyi: v RF sozdajutsja prepjatstviya dlja raboty shvedskihk companiy URL: http://1prime.ru/state_regulation/20150306/804132680.html

10.       Pravoslavie ― glavnaya ugroza dlya Zapadnoy civilizacii: mnenya. URL: http://www.iarex.ru/interviews/47573.html

11.       Prem’er Finljandiyi: Ukraine ne nuzhna voennay pomoshh’ URL: http://vz.ru/news/2015/2/4/727740.html

12.       Strany Severnoy Evropy I Baltiki dogovorilis’ ukrepit’ voennye svjazi. URL: http://vzgliad.ru/news/2014/11/30/717796.html

13.       Shadrina, Tat’jana. Finljandijaotkazalas’ otsankcij k Rossii URL: http://www.rg.ru/2014/08/14/finlyandiya-site.html.

14.       Wallström, Margot. Rysslandettallvarligt hot mot Europasfred. // SvenskaDagbladet, 6 mars. URL: http://www.svd.se/opinion/brannpunkt/ryssland-ett-allvarligt-hot-mot-europas-fred_4388101.svd

[1] Договор о дружбе, сотрудничестве и взаимной помощи между Союзом Советских Социалистических Республик и Финляндской Республикой / Agreement of Friendship, Cooperation, and Mutual Assistance with the Soviet Union. URL: http://www.heninen.net/sopimus/1948_e.htm

[2] http://www.bbc.co.uk/russian/multimedia/2014/07/140708_v_bildt_hard_talk_int

[3] Православие – главная угроза для Западной цивилизации: мнения. / Orthodoxy is main threat to Western civilization . opinions / URL: http://www.iarex.ru/interviews/47573.html

[4]МИД Норвегии: только изменение политики РФ в отношении Украины приведет к снятию санкций. URL: http://versii.com/news/320114/ / MFA Norway: only changes of Russia’s policy in respect of Ukraine will lead to cancellation of sanctions

[5] Норвегия должна продолжать политику добрососедства с РФ. URL^: http://www.norge.ru/news/2015/02/14/26538.html. / Norway must continue policy of neighbourliness with Russia.

[6]http://www.rg.ru/2014/08/14/finlyandiya-site.html

[7]http://russian.rt.com/article/44314

[8] Носович, Александр. Балтийский контраст: Финляндия отказалась отворачиваться от России. URL: http://www.rubaltic.ru/article/politika-i-obshchestvo/baltiyskiy-kontrast-finlyandiya-otkazalas-otvorachivatsya-ot-rossii/ / Nosovich Alexander. Baltic contrast: Finland refused to turn back from Russia

[9]Премьер Финляндии: Украине не нужна военная помощь URL: http://vz.ru/news/2015/2/4/727740.html / PM of Finland: Ukraine does not need military aid

[10]Wallström, Margot. Rysslandettallvarligt hot mot Europasfred. // SvenskaDagbladet, 6 mars URL:http://www.svd.se/opinion/brannpunkt/ryssland-ett-allvarligt-hot-mot-europas-fred_4388101.svd

[11]Посол Швеции: в РФ создаются препятствия для работы шведских компаний URL:http://1prime.ru/state_regulation/20150306/804132680.html / Ambassador of Sweden: Russia imposes difficulties for activity of Swedish companies

[12] Литва пугает Прибалтику «российской угрозой». URL: http://www.stoletie.ru/lenta/litva_pugajet_pribaltiku_rossijskoj_ugrozoj_423.htm / Lithuania threatens Baltics by “Russian threat”

[13]Страны Северной Европы и Балтики договорились укрепить военные связи. URL:http://vzgliad.ru/news/2014/11/30/717796.html / The North European countries and Baltics agreed on strengthening military cooperation

[14]URL:http://www.stoletie.ru/lenta/nad_barencevym_morem_proleteli_40_istrebitelej_555.htm

Lithuanian Prime Minister Algirdas Butkevicius (sixteenth head of government in 21 years of national independence) has been for long overshadowed by such bright Social-Democratic leaders as Brazauskas, Kirkilas, and Jursenas. Observers believe the convincing victory of Social-Democrats under Butkevicius leadership to the Saeima last autumn was predetermined by the election program of the party rather than by the charisma of its leader.

The Social-Democrats listed energy reform, the fight against unemployment and mass emigration, and elimination of the gap between the rich and the poor as their home policy priorities. The first decision of the new government fulfilled its election promise and raised the minimum wage to 1000 lits (close to 300 euro). It pledged to better consult society on all key issues and promote public consensus.

Butkevicius numerously said that when the taskforce discussing energy sector reform (with a new nuclear power plant or without it) provides conclusions they will be definitely submitted for public discussion. There will no longer be non-transparent decisions characteristic of the Conservative government.

In a brief time as the prime minister Butkevicius approved himself as an experienced and prudent politician. So far he succeeded to reconcile contradictions in the ruling coalition and softly but resolutely resist the attempts of President Dalia Grybauskaite to push her decisions through.

Lithuanian voters were attracted by election promises of the current government which offered a “reset” in relations with Russia. The prime minister numerously said Lithuania will promote mutual trust and build up cooperation based on future rather than the past. Opposition claims that new authorities turn their back on the West and betray their main strategic partner, the United States, by looking at the East were rebuked by Butkevicius who said the country should not turn its back either on Russia or the USA. We asked the head of government how Lithuania plans to build up relations with neighbors.

Mr. Butkevicius, The government program envisages and you also numerously stressed the necessity to “reset” relations with Russia. What should politicians do to thaw bilateral relations with neighbor s?

First of all, I have to say it bluntly that I am a supporter of constructive dialogue. I hope for the same position of the Russian side. I stand for enhanced mutually beneficial cooperation with Russia, specifically in economic relations. Trade turnover between our countries is big at present, but it should continue to grow. Favorable business conditions and the initiative of entrepreneurs from both sides are necessary for that.

The comprehensive agreements between the European Union and Russia which are being designed at present have to give a new impetus to bilateral cooperation. Political, economic, and cultural relations between the two countries shall be based on mutual respect and understanding.

Lithuanian relations with Poland and Latvia have not been smooth of late. You have already paid official visits to the countries. Have you agreed with the Latvians on energy issues (construction of a nuclear power plant and a liquefied gas terminal) and with the Poles on problems r elated to national minorities?

Relations between Lithuania and neighboring Latvia and Poland are very close and productive. There are numerous big and strategic projects in trade and investments which confirm it. We are united by the commitments in the framework of the European Union and NATO and we jointly fulfill them. We are members of one family. Naturally, there may be different opinions on various issues, but we always listen to the arguments of the other party. I was convinced in it again during my first

foreign trips to Riga, Tallinn, and Warsaw. Together with the prime ministers of Estonia and Latvia we reiterated our resolute intention to develop cooperation of the Baltic troika and more intensively promote the Baltic trademark which has already been recognized in the world.

We are united by common interests in the energy sphere, including energy independence and efficiency and the common internal market in the EU context. Latvia and Estonia continue to declare their interest in the construction of the Vysaginas nuclear power plant. They are currently waiting for Lithuania to complete the feasibility study of the project.

Polish Prime Minister Donald Tusk said relations between Lithuania and Poland are good. Poland would be glad to maintain such relations with other countries, but they should be the best with Lithuania. We shall join effort to achieve them. The position was confirmed by Polish President Bronislaw Komorowski who visited Vilnius on February 16 to celebrate the day of Lithuanian Independence together with us. Our concrete projects have shaped out already: the agreement has been signed to build LitPolLink energy bridge and we shall jointly apply to the European Commission for financing the gas bridge between Lithuania and Poland. Both countries will unite efforts in the implementation of the Eastern Partnership program of the European Union.

As for national minorities, the problems should be resolved by each country at home. They are resolvable. We have nothing to conceal from close neighbors and we shall not reject fruitful experience and advice.

Will there be a similar meeting with Russian Prime Minister Dmitry Medvedev in the near future? Which steps are being made to implement your idea of closer cooperation at the diplomatic level?

I accepted the invitation of Russian Prime Minister Dmitry Medvedev to participate in the conference of heads of government of the Baltic Sea countries which is to be held in St. Petersburg this spring (in the framework of the Russian presidency in the CBSS – ed.). It will be my first meeting with the chairman of the Russian government. No doubt one meeting and one talk are not enough. We have to expand opportunities for consistent and fruitful cooperation.

R e p r e s e n t a – tives of the rightwing forces, mostly Conservatives, blame authorities for readiness “to cede to Moscow” in exchange for cheap gas. What would you say?

In a democratic society there is usually a healthy tension between the government and the opposition and discussions are underway on all issues. It is important not to lose the guideline of national interests. I would like also to stress that my government will work for solutions that are beneficial for all residents of Lithuania, but not at the expense of energy or national security. Our priorities include the drive towards increased energy independence through implementation of the provisions of the Third Energy Package of the EU (which contains proposals to liberalize the energy market, calls to unbundle vertically integrated energy companies, and regulates ownership and use of gas pipelines by handing over transportation networks to independent operators – ed.), construction of a liquefied gas terminal, increased energy efficiency due to active renovation of multi-apartment houses, as well as development of renewable energy. We shall also look for solutions that allow to decrease gas prices and consequently heating tariffs for ordinary consumers.

Don’t you fear bitter criticism from the rightists if the government works for rapprochement with Russia?

Russia is our neighbor which maintains with Lithuania not only close energy ties and historic experience, but also has a common European agenda. No party and no group of people enjoy a monopoly in relations with Russia or any other country. Lithuania is a democratic country and a member of the European Union. Decisions are adopted publicly and transparently and take into account public interest and long-tem national development prospects. I do not doubt there is a place for Russia in the strategy: friendly, economically strong, and democratic state.

Radicals accuse new authorities of “betraying national interests”. What would you say about it?

I have not heard such accusations and have nothing to comment.

According to official statements, the current main task of Lithuania is to win energy independence from Gazprom. Is it possible in the current situation and what did you mean by expressing hope that Gazprom would behave “like a gentleman”?

The national energy independence means, inter alia, the right to choose energy suppliers. There is no such possibility in the gas sector at present but it will emerge after the implementation of Third Energy Package which stipulates liberalization of the market. Gazprom will have to take into account the laws of the European Union and Lithuania and restructure the Lietuvos dujos gas distribution company which it partially owns. I hope Gazprom will behave “like a gentleman” and will carry out the necessary changes in cooperation with the government of Lithuania. Practical work to ensure energy independence is already underway. In 2014 the construction of a liquefied gas terminal in Klaipeda will be completed. It will allow gas supplies from any country of the world. It will definitely influence the pricing policy of traditional gas suppliers in favor of Lithuanian consumers.

Does Gazprom advance any demands which are unacceptable for Lithuania?

Constructive talks are currently underway however the Lithuanian position at the negotiations is clear enough: the implementation of the Third Energy Package and decreased prices for ordinary consumers.The citizens of the country opposed the construction of a new NPP at a consultative referendum. You used to be also against the agreement signed with Hitachi. Did you change your mind?

The new government will avoid unbalanced and hasty decisions on the Vysaginas nuclear power plant. It is clear today the plant can go on only as a regional project and we shall take all effort to make it regional in reality. I have instructed to create a taskforce to discuss the issue which is to submit its proposals in late spring.

The agreement with Hitachi was signed in complete secrecy. Will you stand up to the commitment and inform the public which way Lithuania should go in the sphere of energy?

As soon as the abovementioned taskforce provides proposals the Saeima and the public will be immediately informed.

The Lithuanian shale gas prospecting and production project causes many public claims as well. It turned out the agreement with the American Chevron has already been signed. What can you say about it?

Shale gas prospecting and production is one of the guidelines for energy security in the region. The contract with the company envisages only prospecting. The public will be informed about the progress and results of prospecting for shale gas.

Despite reserved official relations between Lithuania and Belarus, Lithuania and Russia businessmen and ordinary people actively cooperate. How can we simplify people-to-people contacts? What is the progress in visa-free regime in border areas?

As for the visa-free regime, Lithuania has invested a lot into upgraded infrastructure of Lithuanian-Russian and Lithuanian- Belarussian checkpoints and border zone. We informed Belarus about our readiness to implement the agreement reached by the governments of the Republic of Lithuania and the Republic of Belarus on border-crossing trips by residents of border areas of Lithuania and Belarus. We are waiting for a confirmation from Minsk that it is also ready to implement the agreement.

Some people in Lithuania are dissatisfied with the fact that Russian actors come to perform in the country, Russian movies are shown on TV and in cinema halls.

They view it as expansionist policy of the neighboring country. What do you think about it?

I believe no borders exist for the arts and the tours of Russian performers in Lithuania can be only welcomed. Genuine art always finds its listeners and viewers without any advice from authorities. I would like to hope that Lithuanian actors will also find their admirers on the immense space of Russia.

Algirdas Butkevicius was born in 1958 in the village of Paezeriai in Padviliskis district. He graduated as engineer-economist from the Vilnius Engineering and Construction Institute, studied in the Lithuanian Governance Academy and underwent traineeship in the United States. He joined the Social-Democratic Party in 1992 and was elected its chair in 2009. From 2004 to 2008 he was finance minister and then transport and communications minister in the Social-Democratic government of Algirdas Brazauskas and then Gediminas Kirkilas.

In the 2012 parliamentary election the Social-Democrats headed by Butkevicius received most of the votes. They created a coalition with the Labor Party, the Order and Justice, and the Electoral Action of Poles in Lithuania to form the constitutional majority in parliament and a coalition government. In November the Saeima approved Butkevicius as the Lithuanian prime minister. Lithuanian residents hope the new government will improve the economic situation in the country, as well as good-neighborly relations with Russia. Public opinion polls show Butkevicius is ahead of Lithuanian President Dalia Grybauskaite in popularity ratings.

Thank you for the interview .

Galina Afanasyeva,

for Amber Bridge

Although so far elections in Latvia were based exclusively on ethnic principle – Latvians voted for Latvian parties and Russians – for Russian, the Harmony Center does not consider itself an ethnic party. It offers its own political formula as it believes multilingualism and multiculturalism are Latvia’s advantages rather than drawbacks. It is difficult to advocate the formula in conditions of dominating national ideology and nationally-minded voters, however the number of supporters is on the rise.

At self-government election on June 1 the Harmony Center won a landslide victory in Riga – nearly two thirds of residents entrusted Ushakov and his team to govern the city for another four years. For the first time in Latvia’s modern history a political party won an absolute majority. It was also for the first time that the vote in the capital of Latvia was not based on the ethnic principle. At least a third of Harmony Center supporters are Latvians. It was a genuine victory which was preceded by strong campaigning. Now all of us and mostly Harmony Center leader Nils Ushakov have to prove that the choice was correct and make those who did not vote for us change their mind, said Urbanovičs. It is typical of Janis. Even such a major victory he perceives only as an opportunity to improve and grow.

History as weapon

Mr. Urbanovičs, you have been in politics for 20 years. How do you assess what has been done in the years?

On the official level the main achievements of Latvia is the joining of the EU and NATO or the return to the European family, so to say. But these are successes for the outside “market” while inside the country there is little to boast of because we failed to achieve the main thing – create the foundation for national development. No country like no building can be erected without a reliable foundation. The foundation comprises citizens of the country while we deliberately split society into citizens and non-citizens after regaining independence in 1991. Hundreds of thousands of people and there are 300 thousand non-citizens in Latvia were bluntly told: we reject you, you have no rights here, and in order to vote or become a lawyer you have to naturalize, i.e. take citizenship exams to confirm loyalty. It was an insult for people who were born in Latvia and lived here for many years. Legal deliberations saying the Latvian Republic and commonness of its citizens were restored in 1991 were no consolation to anyone.

Over 20 years have passed but the split is still there. We keep living in society which is split into citizens and non-citizens, Latvians and Russians. The split is the root of all problems. We do not have normal political competition as Latvian and Russian parties are competing instead of conservative, liberal, and social political forces. Most heated political debate focuses not on economic, but historic and national issues. We discuss where people were born, which language they speak, and on which side of World War Two front they fought.

Why are Latvian politicians so obsessed with history?

It is a paradox but many parties in Latvia build their political programs on the dream about the past. Unity, National Alliance, Union of Greens and Farmers are cultivating the dream of restoring the First Latvian Republic which existed in 1918-1940. But you cannot turn the time back. And there is no paradise which they promised after accession to the European Union. Moreover, the recent crisis considerably complicated the life of ordinary Latvians. According to official data, over 300 thousand people emigrated to earn their living abroad. It is an astronomical figure for Latvia. What do the ruling parties have to do in such a situation? It is politically risky to speak about the real situation and they switch to the past as history can offer various arguments if you look thoroughly .

But sober-minded people have to understand it is impossible to go back to the past no matter how wonderful it was . . .

Yes, it is true for sober-minded politicians. But one of the main problems is biased and provincial mentality. It helps plough the historic and national field. We are constantly trying to convince ourselves that we suffer because nobody understands how unique we are and that no common recipes for treating public and state diseases are good for us. It is gross provincialism! But it definitely helps maintain a conflicting atmosphere in society. For example, the Saeima has recently divided citizens of the country into “correct” and “incorrect”.

What is the “correctness” criteria?

It is the country where a Latvian resident wants to get a second citizenship. Earlier the possession of two passports was strictly banned and even punished by stripping the Latvian citizenship. Now the law is liberal but with a limit as dual citizenship is allowed only with members of the European Union, European Free Trade Association, NATO countries, as well as Australia, New Zealand, Brazil and countries with which Latvia concluded agreements on dual citizenship. The Russian Federation and other CIS member-countries, as well as Israel are not on the list.

The Harmony Center believes the approach is discriminatory. It turns out that a citizen of Latvia residing in the United States or Brazil enjoys more rights than Latvian citizens living in Russia or Israel. The amendments to the law do not allow thousands of Latvian citizens and their descendants to maintain ties with the native land. They are actually pushed out of the country for good. We requested Latvian President Andris Bērziņš not to sign the amendments into law, but he did not adhere to our call.

Trapped by myths

Harmony Center is the winner of the latest parliamentary election and the biggest faction in Saeima. But it is still in opposition. One of the conditions advanced to Harmony Center for joining the ruling coalition is the recognition of Soviet occupation. Isn’t it strange?

It is strange, of course! Latvia calls itself a democratic country but has only one official interpretation of history. It is banned not only to deny but also doubt it. The answer to the question “Do you recognize occupation?” is a kind of a password in Latvia. If you agree with what the asking person means by occupation then you get a foot in the door. If you reject occupation or at least doubt it (because you know more about the period than the asking person) you immediately become an alien and further communication with you is impossible. . .

It is a genuine totalitarian approach when they proclaim the only truth which needs no proof. Truth cannot be afraid of facts and evidence because it is truth that always passes the test for truthfulness.

The Harmony Center was offended by the demand to recognize occupation as a precondition for joining the government. Why should a politician elected by a big number of Russian voters in Latvia take a history exam with another politician elected by Latvian voters? Voters of the Harmony Center are no worse than voters of currently ruling national parties of Latvia! Deputies from Harmony Center are not going to take exams. We have to report only to our voters.

The problem in Latvia is that nobody is ready to seriously discuss recent history and 1940 developments. The country is trapped by myths which are reproduced e very year.

What is your opinion? What happened in Latvia in 1940 — occupation, annexation or incorporation?

For me the issue of incorporation, annexation or occupation is secondary. It is a dispute over definitions rooted exclusively in history mythologize. International law does not use “occupation” definition regarding Latvia. It is used only by Latvian experts to preserve and expand the myth they created.

You suggested to impose a moratorium on discussion of historic issues.

The Harmony Center is ready to discuss historic issues at any level but the problem is that no discussion is possible. Politicians who rule Latvia for the past twenty years are used to the language of ultimatums rather than dialogue. If the ruling parties are not ready to change the record it might be better to put it aside. Let us first provide decent pensions to the elderly and allowances to children and give medicines to hospitals and patients and jobs to able-bodied people. Then we can argue about half a century old developments.

They will object by saying it is possible to build up the present only on correct historic foundation…

The foundation is necessary but, unfortunately, in Latvia reference to history does not mean the construction of a correct foundation for the country. By constantly raising the occupation theme the Latvian political elite gives a signal that there are aliens, good and bad guys. Occupation thus stops to be historic fact as it is raised to the level of religion.

I am very much concerned by the ongoing calls to revise World War Two results and hold the second Nuremberg trial this time of Communism and that Russia has to compensate Latvia for “occupation” damage. They even created a special commission to calculate the damage and it regularly meets to count something. A Latvian Internet site offered to vote for pulling down the monument to Liberators in Riga close to which hundreds of thousands of residents mark the Victory Day every year.

This year on the eve of May 9 the ruling coalition decided to make a special “present” to Latvian war veterans – it banned the use at festive events of Nazi and Soviet symbols. It was the initiative of Unity, National Alliance, and Reform Party to equate swastika with the red flag, star, hammer and sickle. There is the second meaning behind it – to equate Nazi Germany and the USSR. This year the ban was not approved but the ruling parties will definitely push it through by next Ma y 9.

It is all very frustrating and serious when they judge the past and plan to demolish monuments. It is no fight with the past but shooting at future. Neo-Nazism is raising head in Europe and the revision of World War Two results is becoming a modern political trend.

I believe Europe and Russia need a new peace conference similar to the one held in Helsinki to discuss a lot of accumulated vital issues. Russian President Vladimir Putin and European Parliament President Martin Schultz can initiate it as both men have Passionist mentality and figuratively speaking can build an amber bridge between Russia and Europe. Latvia would only benefit from Its construction.

Accounting harms

They call the performance of current Prime Minister Valdis Dombrovskis a success story as budget deficit was reduced to the necessary level and the country is ready to introduce euro. How do you assess his work?

First of all I would dare say that I am convinced the country should better have a budget deficit than a deficit of the population. Three hundred thousand Latvians who left the country are the true assessment of the performance of Dombrovskis’ government rather than polite words he hears from Brussels offices. I am sure the government has to report not only to the International Monetary Fund but to all residents of the country. You will agree that not all residents of Latvia are planning to emigrate to London or Dubai. The government has mostly to think about them and their interests rather than about praise from the IMF .

Does the prime minister think about Latvians?

Domsbrovskis is a very good accountant who skillfully deals with figures. However accounting is no economy. Economy means development. The Harmony Center calls to stop constantly cutting all budget expenditure but to develop the country instead. The prime minister has recently said the Harmony Center headed by Riga Mayor Nils Ushakov is dragging Riga into a financial abyss. In reality it is vice versa. The Harmony Center controls the economic and social situation in the Latvian capital and prevents Riga and the whole of Latvia from falling into a pit. Riga today is the float of future development in the country. The new victory of Nils Ushakov at elections in Riga I shows city residents are well aware of that. Gradual development of the capital city in the past four years gave a guarantee that not everything in Latvia is consolidated, stolen and reduced.

Positively thinking we should admit that current economic crisis helped Latvia get rid of a very bad illusion and belief that someone would come to rescue it. Neither the EU nor the United States will come. Egoists work in every country and we also have to learn to be egoists. We have to argue rather than obediently fulfill instructions from above. We have to think how we should develop ourselves in order to secure Latvian prosperity.

Russian syndrome

Common sense prompts that Latvia should develop good economic relations not only with EU countries but also with Russia and CIS members. Nobody denies it at the official level but western vector clearly dominates real politics. What do you believe is the reason?

Let’s look at the map for the beginning. It is clear that Russia and CIS countries are our closest neighbors. They know Latvia and Latvian products well. Mounted activities on the avenue would give an impulse to economic development and create new jobs. But the problem is that the political elite constantly adds not a spoon but a whole bucket of tar into relations with Russia. Now we honor SS legion and then we speak about the danger of not only Russian investments but also of cultural organizations of compatriots as they comprise the “soft power” of Russia.

Now and then the issue of closing all Russian kindergartens is raised and calls are voiced to switch education in budget-financed schools only to Latvian language. In a word, the emotional background of Russian-Latvian relationship leaves much to be desired. It is a shame that Latvia turned its back on Russia for many years while neighboring countries – Lithuania, Estonia, Finland, and Poland successfully competed for Russian investments. We should have long admitted to ourselves that we want to operate on the eastern market. We have one major advantage for accessing Russian and CIS markets against Lithuanians, Estonians, Poles, Germans, Chinese – we have a much higher share of Russian-speaking population. But there is an obligatory condition: all people in Latvia – Latvians, Russians, Belarussians, Ukrainians, Jews, Poles and all other nationalities should agree a formula of joint existence and begin constructing a big common home. I always say the Latvian book of happiness can begin only with the following phrase: “and finally they agreed.” Only after that we shall be able to join global competition.

As long as Latvian leaders fight for the ballots of Latvian voters without paying attention to Russians and even declaring them enemies and as long as Russian politicians struggle for Russian voters there will be no breakthrough in the country. Remember the words of Professor Preobrazhensky in Mikhail Bulgakov’s Heart of a Dog: “Havoc is in heads”. I would add in the heads of politicians. Believe me, when the havoc is over the country will immediately improve.

Smile!

Dou you believe interethnic relations in Latvia are improving or deteriorating?

For the given moment they are mostly mothballed. Each community leads its own life. The Latvians keep repeating the mantra about occupation and hard destiny of the Latvian people, the Russians complain of being blamed for all historic deeds of the USSR and treated as second-tier people.

It is most dramatic that both are right in their own way as everyone believes only his own truth and does not even want to hear another truth. Any withdrawal from habitual and convenient perceptions and notions painfully hits at self-conscience. We like to live in the closed zone of personal psychological and political comfort and ignore everything happening around in the country and the world. It is the diagnosis of our disease and the first remedy is the understanding that we are ill. But we are stubborn patients and shall never agree that we are ill. It is a hard job for us to try and understand a neighbor of different nationality. We are all very lazy. Therefore, the ideas of reconciliation, harmony, forgiveness are unpopular. It is more important for us to hit the opponent as hard as possible.

At the same time huge money is spent to integrate society, but nothing is changing.

Integration is joint work. But we turned it into a process of converting unfaithful to genuine faith. Figuratively speaking, Latvian politicians are telling Russians in Latvia: “Dear Russians, you were unlucky to be born in wrong families but we shall correct it. We shall help you become Latvians!” The Saeima has recently adopted amendments to the citizenship law which list only Latvians and Livs as Latvian nation leaving all other nationalities aside.

But Russians in Latvia do not want to become Latvians. They want to remain Russians, speak Russian, read Russian newspapers, watch Russian TV, and they want their children study in Russian. The Russians also want to be treated as full-fledged citizens rather than schoolchildren who have to be taught how to grow up as genuine citizens. Instructions from above will not create a common life formula in Latvia. We already had such an experience not long ago.

During heated debate we often forget the main thing – you should not wish other people what you do not wish yourself. We forget that pronounced words often materialize: if you call someone a friend he will become a friend, if you call him enemy he will be an enemy . . .

There is an old animated cartoon about a small raccoon who was afraid of a big beast that lived in a pond. The raccoon made horrifying faces but the beast in the pond also grinned. And then the raccoon was advised to smile to the monster and the beast smiled in response… It is a cartoon for kids but with great philosophy – anger and negative emotions do not resolve but complicate problems which can be settled only through a positive approach. For genuine politicians it should be a commonplace truth in their profession.

Ina Оshkaya,

for Amber Bridge

The Russian-Estonian border still lacks proper legal demarcation. That the two countries are headed for a likely solution became obvious in April as a delegation of Estonian parliament (Riigikogu) visited Russia. The intensive program schedule was compensated by a friendly spring atmosphere at Moscow meetings.

The upper chamber of Russian parliament hosted a joint meeting of the Federation Council committee on international affairs and foreign affairs commission of Riigikogu. “The meeting continues the work to resume and revive permanent consultations between us which testifies to the importance of parliamentary ties between neighboring countries”, said committee chairman Mikhail Margelov who represents Pskov region that borders on Estonia. His Estonian counterpart Marko Mihkelson agreed and was pleased to say that such meetings have become traditional and allow parliamentarians to frankly discuss all vital issues.

Margelov specified that consultations have been held for over ten years and interlocutors know well how to discuss relationship “regardless of the acuteness”. Only last year three meetings were held on various platforms in Estonia and Pskov. “Now we know the more practical the discussed issues are the better it is for general relations between peoples,” he told Amber Bridge. The senator admitted that numerous unresolved issues have accumulated related to various agreements that have not yet become documents. Border treaties are the main ones.

The Russian-Estonian state border line was established in 2005 after nearly eleven years of negotiations. Treaties on land and water borders were signed. However during ratification Estonian parliament introduced in the preamble a reference to 1920 Tartu peace treaty in a context which preserved the possibility of territorial claims to Russia. In response Moscow recalled its signature and the border issue remained legally unresolved. Consultations resumed in 2012.

Margelov refused to elaborate on textual details. “Diplomats discuss them. We should not interfere. It is important that lawmakers are ready to do their job.”

The main thesis of the talks in April was that life demands to finally resolve the issue. Cooperation is to build up on the basis. The four “M”, like journalists dub Margelov and Mihkelson by the first letters in the names and surnames, assured that both sides are interested in constructive and good-neighborly relations. Therefore, the dialogue has resumed on three levels – foreign ministry, parliaments, and prime ministers.

Margelov recalled the wellknown Marxist postulate saying that “politics are concentrated expression of economy” and recalled that Russia occupies the first place in Estonian exports. The flow of Russian tourists is growing and cross-border cooperation is expanding. His Estonian counterpart agreed: “Good-neighborly relations with Russia are very important important to us. Many projects which we discussed in July in southern Estonia and Pskov region are being implemented. They prompted us to again discuss the border treaty.” Asked about a possible “reset” in the sphere the lawmakers were unanimous in saying the political and economic situation has changed. Mihkelson expressed hope the problem may be resolved this time in the interests of both parties. Parliament has issued a clear mandate to the government regarding negotiations. For Tallinn the legal regulation of the border and the principle of legal succession are important.

Speaking about changing relationship Margelov cited an important fact: when Federation Council members were in southern Estonia in July they for the first time visited Estonian military base – Kuperjanov Battalion, and then Estonian colleagues visited the 76th airborne division in Pskov. After a meeting in Estonian Otepe they also visited Barclay de Tolli Mausoleum in JЫgeveste. The level of trust at negotiations is high enough for parliamentarians “not to argue what we can cede or not, but tell each pragmatic, and aimed at future.” Moscow and Tallinn have to dismantle artificial mistrust to each other. Reciprocal visits by politicians to military units on both sides of the border promote it. It is a political signal. Russia and Estonia are and will remain neighbors forever. We have to help each other live together in united Europe specifically when the global financial system and economy are facing serious challenges.”

After the signing of border agreements it will be necessary to make an inventory of joint projects. The talk is about the abolition of double taxation and renovation of border infrastructure in the area of Narva-Ivangorod. In summer lawmakers inspected operations of border checkpoints and got acquainted in detail with Koidula checkpoint. Margelov believes upgraded railway communications are a vital issue. Why is there no shuttle train between Pskov and Tartu? For many residents of Pskov and Novgorod regions it would become a convenient and cheap route to EU border space. Margelov also recalled the initiative of the colleagues to create in Pskov region a partner of Estonian research project Julemiste City or a smart business city .

Jointly with Singapore a big business incubator is being built in Pskov region. It is a technopark with a free economic zone which can be of interest for neighbors. Estonian seaports are unique and can be successfully used by Russia. For example, handling of some types of chemical products is still impossible at Russian terminals. Therefore, the port of Sillamae operates like a docking unit for Russian companies.

Cooperation could progress better on all guidelines had the issue of border treaties been finally dropped, Margelov said. Their signing would give an impulse to active development of mutually beneficial relations and enhanced trust. The senator said he is optimistic that discussions now focus on technical details as political issues have been resolved to a major extent.

The head of the Estonian delegation quoted Prime Minister Andrus Ansip as saying that the signing of border treaties will positively influence economy. After the conference of heads of government of the Baltic Sea region held in St. Petersburg on April 5-6 and a meeting on its sidelines with Russian Prime Minister Dmitry Medvedev Ansip said in an interview: “We have an operating border but we would like to settle relations in the issue. When border agreements come into force. . . Russia will invest into simplified border crossing.” As a result the “agreement will render positive longterm influence on the economy.” The prime minister also said that Tallinn and Moscow “have come very close to the signing of a border document however there is no final solution yet.” Ansip expressed hope the sides will find it.

A vital issue for both countries is the introduction of a visa-free regime. There are no major contradictions between parliamentarians on it. Estonia sees no political obstacles for signing an agreement with Russia on visa-free travel. Marko Mihkelson said: “We have been discussing the idea with our colleagues in Brussels for long. Not only we but also the EU is interested in visa-free regime.” The introduction of the regime will considerably increase the flow of Russian tourists and business activity .

Despite positive dynamic in negotiations it is impossible to claim that “everything around is blue and green.” Dmitry Medvedev admitted that for the given moment the bilateral relationship “unfortunately, is not on the highest level by many parameters.” ” If we abandon the schemes which are often ideological, we can give a good impulse to economic cooperation and people-to-people contacts.” This is the main recipe for normalization of relations.

The delegation of the foreign affairs commission of Riigikogu also met Federation Council Deputy Chairman Alexander Torshin who represents the Republic of Mary El in the upper house. He called on Estonian lawmakers to visit not only Moscow but also Russian regions and shared his positive impressions of a recent tourist trip with his wife to Estonia. In response Marko Mihkelson said it would be good if womenspeakers of both chambers meet – Valentina Matviyenko and Ene Ergma – to discuss parliamentary cooperation of both countries.

After the talks in the Federation Council the guests noticed a piano of Estonia brand in the lounge. Riigikogu lawmakers checked its sound and remained satisfied.

The next item of the program was lunch with Vladimir Titov, Russian deputy (now first deputy) minister of foreign affairs. The meeting took place in the Reception House of the Russian foreign ministry in Spiridonovka Street. According to Mihkelson, they discussed border negotiations. The talks exposed no obstacles to further work on the text of the agreement. However the time of the third meeting of delegations from both countries was not agreed. An agreement on avoiding double taxation was also discussed, as well as agreements on higher education and interaction in case of emergencies.

The Riigikogu delegation also met Chairman of the State Duma committee on international affairs Alexei Pushkov and President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin.

The finishing stroke of the Moscow visit by Riigikogu delegation was a meeting with lecturers and students of MGIMO. Together with lawmakers the institute was visited by Ambassador Extraordinary and Plenipotentiary of the Republic of Estonia to the Russian Federation Juri Luik. Guests were welcomed by MGIMO Director for international cooperation and public relations Andrei Silantyev and Director of MGIMO Institute of International Research Alexander Orlov .

Summing up the results of the Moscow visit Marko Mihkelson said State Duma lawmakers plan to visit Tallinn (by the end of the year) while colleagues from Federation Council will meet on the river, i.e. in Narva and Ivangorod to discuss border infrastructure.

Alexander Orlov told the guests about MGIMO which is one of the biggest scientific and educational centers in Russia. He said there is major interest in MGIMO in Estonia. He expressed hope relations will mount in future to cap a shortage of creative contacts between scientists and experts of Russia and Estonia. Professor Lev Voronkov called on Estonian guests to pay major attention to students present in the hall. Many of them will work in the Russian embassy in Tallinn in the near future and will do everything possible to enhance our relationship. Speaking about cross-border cooperation lawmaker from Ida-Vyrumaa Yevgeny Osinovsky said the absence of a border agreement does not create obstacles for cooperation and it develops fruitfully. However he recalled bureaucratic problems existing in the current fiscal year of the European Union which impede the allocation of EU funds to organizations dealing with infr astructure problems.

Osinovsky also spoke about renovation of fortresses in Narva-Ivangorod and expressed hope that after completion it would be possible to build a new bridge across the Narva River which is very necessary today. He also recalled important precedent in 2012 when auditors of the Russian Audit Chamber and Estonian State Control prepared a joint report with recommen dations of controlling agencies for environmental protection of Chudskoe Lake and reasonable use of trans-border water reserves, as well as movement of goods and vehicles through border and customs checkpoints of Russia and Estonia. The lawmaker stressed that cross-border cooperation in Narva-Ivangorod has specific humanitarian significance as for many years the region was the only space where people did not perceive the presence of the border. A visa-free regime is therefore specifically vital for the region.

Senior MGIMO research fellow and Executive Director of the Baltic Civilization Institute Alexander Chechevishnikov asked Estonian guests to specify the major aspect of negotiations. “Estonian political circles are currently discussing the possibility to “package” border agreements and the solution of a number of infrastructure problems in cross-border cooperation. Can such “packaging” jeopardize progress in border agreements? You also met Vladimir Titov yesterday. Can you add something to the information posted on the Russian foreign ministry website?

Marko Mihkelson thanked for the question which “allows to clearly state that you are wrong. Naturally, the fact of discussing various issues can be interpreted as their interdependence. Our position aims at resolving various issues without interlinking them.” He stressed that border agreements are drafted in strict compliance with the approach and recalled that yet in 2004 Estonia ratified the agreement on avoiding double taxation which still awaits Russian ratification. The drafting of other agreements is on a high level – on diplomatic property, cross-border cooperation, etc. An agreement on pensions has been concluded. They were all drafted separately. As for the meeting with Vladimir Titov, it was constructive. “We spoke not only about border. We discussed a wide range of problems as Mr. Titov is in charge in the foreign ministry of cooperation with European states. Ninety minutes of the meeting passed quickly. It w as very interesting.”

Lawmaker Vladimir Velman noted a radical improvement in tonality of communications during the visit to the Russian capital. He recalled that last time Estonian lawmakers met colleagues from the State Duma nine years ago. Much has changed since then. Today many Pskov residents go on holidays to Tartu and other Estonian regions. Contacts are not only limited by Pskov, they develop also with Novgorod region. Velman noted also positive work of foreign affairs ministries of both countries in promoting conditions for economic and cultural development of Setu people living in border territories. Thus, the resolution of the border issue will crown multi-faceted cooperation taking place on the Russian-Estonian border.

In answer to the question from Lev Voronkov about the initiative of Thorvald Stoltenberg who proposed in 2009 to five northern countries a program to strengthen military and foreign policy potential Ambassador Juri Luik said there were numerous proposals regarding the security policy of regional countries. Stoltenberg proposed to create a common peacekeeping force for northern European countries. However the reality showed that to carry out even soft operations it is necessary to have at least one major country which would provide logistics, hardware, and arrange evacuation. “So far we have not identified a peacekeeping operation in which only weak countries would participate.” Luik recalled there were problems in airspace defense. Practice showed it is impossible to resolve them without major countries only by North European countries. The ambassador said a positive aspect of defense cooperation were joint military purchases , e.g. radar purchases by Finland and Estonia. He stressed that numerous interesting ideas are voiced but not all of them can be implemented in the region.

MGIMO director’s aide Vladislav Vorotnikov complained that for nine years since he entered the institute there was no possibility to meet Estonian parliamentarians in the building of the institute. Now time has come. Vorotnikov spoke about public and academic diplomacy and asked whether it was possible to launch a Russian-Estonian commission of historians like it happened with other Baltic countries. The question was answered by Marko Mihkelson, an historian by education. He said historians should have free access to archive sources. The Estonian embassy in Moscow has intensified presentations of historic publications including joint ones of late which is more productive than other formats.

Juri Luik, in his turn, said Estonian historians often complain about problems in accessing Russian archives and expressed hope MGIMO would help resolve them. In this connection it would be appropriate to recall the opinion of distinguished Estonian historian and Professor Magnus Ilmjarv expressed in an interview with the Amber Bridge (2011 #4, page 37). He said Russian archives are open while Estonian historians often lack money for work in Russia. Work in archives is an art and is productive only when researcher understands which documents can keep a trace of various developments and how to find them in archives.

Several questions were asked by students. Chairwoman of Estonian Student Club of MGIMO Sonya Afanasyeva asked lawmakers to comment the intention of Chairman of the State Duma committee on international relations Alexsey Pushkov to file a request to the Strasbourg Court regarding the activities of the language commission of Estonia. Yevgeny Osinovsky said the issues related to the Russian language were discussed a day before at a meeting in Duma and assured that Estonia has always been inclined to cooperate with international organizations and comply with its international commitments. However he admitted that language issues in Estonia are very emotional for well-known historic reasons. Another student from Estonia, Georgy Makhmurov, asked about prospects of construction of a high-speed railway from Moscow to Tallinn. Marko Mihkelson said the agenda currently includes simplifying customs procedures on railway transport according to those enforced on Moscow-Helsinki and St. Petersburg-Helsinki trains.

In one of the interviews Marko Mihkelson said both countries are engaged in constructive dialogue although there are still many problems. Time is necessary for major changes. It is in the interests of Estonia to have integrated society and common home. It is necessary to take steps which make us competitive on the international labor market. Estonians currently speak also Russian, Finnish, and English.

In Estonia like in many Baltic countries there are calls to stop living with old hard feelings. Historian Mihkelson agreed we should not always and everywhere speak about the past as it sets up “an emotional trap”. We have to remember the past but look into the future. Estonia wants to maintain very good-neighborly relations with Russia which are beneficial for both countries.

Lyudmila Yermakova,

ITAR-TASS,

for Amber Bridge

using the site materials imi-mgimo.ru

Unforgotten past

Finland built ships yet for the USSR – in the 1960s the shipyards of Suomi produced 1200 vessels for the big neighbor and many of them are still navigating. For example, six nuclear ice-breakers built by the Finns are still operating. The Taimyr and the Vaigach were built by Finnish shipyards, as well as diesel icebreakers Yermak, Krasin, and others. Therefore, a new ship ordered by Russia in Finland is rather a tradition than news.

“Thirty years ago the Soviet Union accounted for a quarter of Finnish exports and ships comprised a major part of it,” said Ilpo Kokkila who heads the Central union of business life in Finland.

Today shipbuilding partnership is profitable both for Russia and Finland as joint experience and know-how help guarantee high quality of production for own needs and bid for joint fulfillment of international orders. Most experts are convinced that Russian and Finnish shipbuilders can properly cope with the task.

The Finnish Maritime Industry Association estimates the country controls one percent of the global shipbuilding market which is a good result for a small country with a population of five million people. The Finnish share in the global production of cruise ships and ferries is close to 20% and in design and production of ice-breakers and ice-rated vessels – nearly 60%. Today the maritime cluster in Finland employs a total of 21 thousand people who work in over 60 companies. The annual turnover of the industry is close to 60 billion euro. Russia is considered a major strategic partner and shipbuilding for the Arctic as the most promising guideline.

“The potential of Russian-Finnish interaction in the Arctic region is immense and is not currently used in full,” said Russian trade representative in Finland Valery Shlyamin. The national Arctic strategies adopted by both countries open prospects for expanded transportation possibilities in the region and development of its natural wealth which mostly comprises energy carriers. Forecasts estimate close to a quarter of global undiscovered hydrocarbon reserves are accumulated there. The development of the Russian Arctic shelf by 2030 will demand new technical means and servicing infrastructure for production and transportation of close to 110 million tons of oil and 160 billion cubic meters of gas. Experts estimate close to 150 vessels – 30 platforms and terminals, close to 50 specialized transportation ships and 70 servicing vessels – will be necessary by 2030. The big demand cannot be satisfied only by Russian shipbuilding capacity. Besides, Arctic development demands modernization of the ice-breaker fleet while oil and gas industry needs gas tankers for liquefied natural and hydrocarbon gas, container carriers and oil tankers, as well as universal multipurpose vessels. “On such a background Russia and Finland have all possibilities to efficiently develop mutually advantageous cooperation both in shipbuilding and in the creation of a joint maritime cluster,” the Russian trade representative said.

The future of the cluster was discussed by the Russian-Finnish Intergovernmental Commission for trade and economic cooperation and the Russian-Finnish Partnership in Modernization of National Economies business forum on its sidelines.

The forum of businessmen, experts and politicians named shipbuilding and biotechnologies as the most promising avenues of bilateral innovative cooperation. New developments are expected soon, f i r s t and foremost, staged emergence of the mentioned Russian- Finnish maritime cluster of recognized international scope. Its prospects were discussed by participants in the round-table Challenges in Maritime Industry in Russian-Finnish relations – Arctic Cooperation held on the sidelines of the business forum in Turku attended by nearly 90 representatives of the industry, including up to 30 Russians delegated by ship and machine-building companies and R&D organizations.

Modernization and the search for new forms and points of growth come to the foreground instyle Russian-Finnish business partner ship.

Round-table participants agreed the task of the Russian-Finnish maritime cluster in the geographic boundaries from St. Petersburg to Helsinki and Vyborg was to “create trans-border technological chains and networks of suppliers and efficiently use international labor division.” It is also important to mount the Russian participation in joint projects implemented for Russia and supplies of Russian materials and pre-fabricates, equipment and devices for the Finnish maritime industry .

Naturally, activities within the maritime cluster are not simply industrial cooperation as they also envisage cooperation of R&D and design bureaus in designing maritime hardware and new conceptual shipbuilding guidelines, etc.

Joint ventures which will emerge in the framework of the Russian-Finnish cluster will specialize in production of engines, electro-technical and onboard equipment, as well as systems for civilian ships and maritime hardware for the use in Baltic and Arctic Seas. New environment-friendly technologies have to be developed, such as the use of dual-fuel propulsion plants. Innovative cooperation will target the design of new materials for operation in Arctic conditions. Russia and Finland will jointly build shelfoperating vessels, oil and gas drilling and production platforms, multifunctional specialized icebreakers for fishing and research in extreme conditions, etc.

The idea to modernize the existing shipbuilding infrastructure and create new one will be entrusted to the Russian-Finnish technopark to be created on the Kotlin Island near St. Petersburg on the basis of the Kronstadt maritime works. Both countries declared it a priority.

The Bering and Chirikov are back to the Pacific

All principles of future partnership have been already implemented in the joint project of icebreaker construction for Sakhalin fields.

The Arctech Helsinki Shipyard created in December 2010 is considered by experts as a base for the emerging Arctic Center of shipbuilding companies which targets customers who need to modernize their Arctic fleet. That determined the basic guidelines of Russian- Finnish cooperation: construction of high-tech vessels – icebreakers, logistic ships, and other specialized ice-rated vessels.

Such is the new series of Russian-Finish icebreakers. Its identity is beak design with asymmetric hull and several propulsion plants which provide efficient forward and backward run and side motion. The diesel-electric icebreaker has a capacity of 13MW and can crush ice of up to 1,7 meter thick and navigate for 20 days at temperatures up to minus 35 degrees Centigrade. The two-year project costs 75 million euro. The icebreakers help supply production platforms and protect them from ice. “It is likely a unique vessel among existing ones and the best in its class,” said Sovcomflot CEO Sergei Frank.

The lead ship of the series named after legendary seafarer Vitus Bering is already operating in the Pacific Ocean. It will be backed by the Alexei Chirikov, the second icebreaker in the series named after great Russian seafarer and explorer of the northern part of the Pacific and companion of Bering in Kamchatka expeditions. Like three centuries ago the seafarers are again sailing the same seas and serving Russia.

The Arctech Helsinki Shipyard hopes the two icebreakers built in cooperation with Vyborg Shipyard will be followed by the third and fourth. However customer Sovcomflot said modern shipbuilding means competition and Russia can build the vessels at its own shipyards. Tender winner has to offer the best. “Competition today depends not only on money, but also on know-how ,” said Sergei Frank.

Joint ventures will specialize in production of engines, electrotechnical and onboard equipment for civilian ships and maritime hardware for the use in Baltic and Arctic Seas.

The significance attributed to shipbuilding in both countries is confirmed by the presence of heads of state at name-giving ceremonies in St. Petersburg and Helsinki. The Vitus Bering got its name in the presence of Russian President Vladimir Putin, while the Alexei Chirikov – in the presence of Finnish President Sauli Niinistö.

“It means a lot for our company,” said Arctech Helsinki Shipyard Director General Esko Mustamäki. “Good contracts demand good work and current ones open a new era of Arctic shipbuilding. I am convinced that in five years Sovcomflot will become the biggest operator in Arctic waters while Arctech will supply vessels for its Arctic fleet,” said the shipyard CEO full of optimism.

Keep afloat

Finnish economic experts say the Arctech Helsinki Shipyard founded by Russian USC and STX Finland (a unit of STX Europe within Korean STX Business Group) is the most successful business component of the Finnish coowners. STX Finland runs two other shipyards in the country: Turku Shipyard in Turku and Rauma Shipyard in Rauma. The enterprises of STX Finland employ a total of 2500 people. In January 2013 Finland admitted that its shipbuilding industry was in a deep crisis which intensified after STX Finland shipyard in Turku lost a major contract for the construction of a deluxe cruise liner for American Royal Caribbean Cruises. The multibillion-dollar contract went to STX Europe in France which was a blow to Finnish shipbuilding as the order could have provided 23 thousand jobs, according to experts. The Finnish government refused to issue guarantees to the shipyard worth 50 million euro and said it had no right to risk the money of taxpayers and support a loss-making company. The shipyard had to work itself to win the order.

Lack of contracts begins to tell on the Russian-Finnish shipyard in Helsinki which in February began negotiations about temporary personnel cuts. As a result 15 people had to go on an unpaid forced leave.

Esko Mustamäki said the shipyard “did not receive sufficient orders to ensure full load on the personnel.” In such a situation partnership with Russian shipbuilders offers both a way to survival and a path to growth.

The opinion widely spread after Korean and the Finnish media announced in the spring of 2013 that STX can sell its subsidiaries abroad, including in Finland, to raise money for the parent company and preserve priority production guidelines. The news was completely unexpected for Finnish shipbuilders. Experts say it is hardly possible to find a buyer of the shipy ards in Finland.

“There is an unstable situation at the shipyards which can result in a change of owner,” said Finnish Prime Minister Jyrki Katainen adding the sale of the enterprises to a private owner can offer “a chance for Finnish economy”.

Finnish experts and media cautiously but persistently suggest that a buyer can be found on the other side of the border – in Russia. “In the coming decade the role of Arctic shipbuilding will considerably grow and Russia is a major actor on the market. Consequently, it needs hundreds of new vessels and additional capacities for their construction,” said Professor Jorma Tajna, a leading Finnish maritime expert. Like many people in Finland he concluded that “Russia may be interested in buying the Finnish shipyard.” Time will show whether Finnish experts are right.

Fall is not alwa ys fail ure

Trends in bilateral economic relations can be traced by the very name of the annual information analytical bulletin of the Russian trade mission in Helsinki – Finland – a Russian Partner. In 2012 the bulletin came out under the motto Finland – Russian Economic Partner while in 2013 the country was called Russian partner in modernization of national economy .

Modernization and the search for new forms and points of growth come to the foreground in Russian-Finnish business partnership. Old methods of trade and economic ties which until recently ensured stable positive result are losing their previous force. New time sets new tasks while trade statistics urge to accelerate their solution to the maximum.

Professor Jorma Tajna: “Russia may be interested in buying the Finnish shipyard.”

“Our economic relationship faces a major challenge as trade turnover fell 10 percent,” said Valery Shlyamin. “The problem is not only the world market situation and decreased activity in the euro zone. Traditional trade forms in which commodities – oil and petroleum products, gas, timber, etc – comprise 88 percent are outdated.” The trade representative believes Russia and Finland have to find new spheres of cooperation, first and foremost, technological. “It is wrong to stake on increased commodity exports in kind. Trade turnover figures may change but it is important that technological cooperation changes.” Regional cooperation is also important, he believes. “Our relations are multi-faceted and flexible enough and it is necessary for public-private and municipal partnerships to profit from them,” Shlyamin said.

In 2012 trade turnover between Russia and Finland comprised 17 billion dollars, twelve of which were Russian exports to Finland and five – Finnish exports to Russia. Despite the mentioned 10-percent fall Russia remains a major trade partner of Finland and accounts for 14% in its trade turnover. The share of Finland in Russian turnover is 2.1 percent.

The Russian co-chair of the Intergovernmental Commission and Deputy Prime Minister Dmitry Kozak suggested at a meeting in Turku that “Russia and Finland can succeed in restoring the trade turnover in a year or two.” “Russia and Finland work to create a favorable investment climate and the agreement signed today will promote simplified border procedures. The growing number of border crossings which currently comprise 12 million a year will give an impulse to trade turnover growth,” he said and recalled that “not everything depends on us, the world economy is unstable so far and it would be wrong to give exact forecasts.”

The Finnish co-chair of the Intergovernmental Commission and Minister for European Affairs and Foreign Trade Alexander Stubb believes such processes, as Russian membership in the WTO and further integration in the economic system of Europe will play a positive role in restoring trade indicators. “They enhance the trends existing between Russia and Finland,” he said.

At present there are close to 600 Finnish companies operating in Russia.

Polls held by the Russian-Finnish Chamber of Industry and Commerce show that every third Finnish businessman operating in Russia plans new investments into the Russian economy. Business activity is on the rise on the other side of the border: according to Finnish research company Asiakastiedot, every sixth company which opened in South Karelia and Kymenlaakso provinces in 2011-2012 was registered by Russian owners. The Russian business already owns nearly six percent of private companies operating in the region in the sp here of tr ansport.

However both countries mostly stake on innovations. Shipbuilding, as a sphere of innovations and their implementation, will preserve in the coming years its status of one of the most promising guidelines in Russian- Finnish cooperation. It means points of joint economic growth will increase which is so important in conditions of continuing global financial instability.

Yulia Andreeva, ITAR-TASS,

Helsinki – for Amber Bridge

When will Russia deploy its troops on the border with Baltic countries?

There is no necessity in it as we regard a military conflict with NATO as extremely unlikely in at least 15- 20 years. Today there is a different configuration of threats. They mostly come from the south. It is because the United States and NATO failed to accomplish the tasks which they set before the invasion in Afghanistan. Modern security forces of Afghanistan are incapable. The government is actually controlling only Kabul. Various warlords charge NATO forces for save passage of convoys. This extortion developed into a business – we shall shoot if you do not pay.

Today the presence of NATO in Afghanistan is beneficial for all, including Russia, because the threat does not expand beyond its borders. We believe that after the Americans and NATO forces withdraw the government of Hamid Karzai will be toppled and the Taliban will again seize Kabul. A question will arise where they will advance from there? We forecast that Islamic extremism will expand to former Soviet republics in Central Asia. That will trigger large-scale destabilization in a number of countries. Without counteraction the threat may become real also for Russia. Therefore, the Central military district is being strengthened as it is in charge of repelling threats from Afghanistan.

Still many Baltic politicians claim that Russia poses a major threat to them. Is it smoke without fire?

The image of an outside enemy consolidates a nation and makes it easier for politicians to brainwash the public. It is prestigious to engage in politics: there is good money, a possibility to travel the world at state expense, appear on TV, and when possible dive hand into state coffers. Therefore politicians want to engage in politics all their life. The image of an outside enemy helps manipulate the moods of the voters and achieve the desired result in elections.

However the Latvian defense minister several times expressed concern over Russian-Belarussian military exercises close to our borders. Do you mean there was no reason for it?

There is the Latvian embassy and military attache who has to inform his defense ministry about the aims and tasks of the Russian military planning. If the minister is concerned it means the work of the Latvian military attache in Russia is bad. It means he cannot communicate proper information that will dispel the concern of the minister. On the other hand, I understand that it is important for the defense minister to always express concern about threats in order to secure an acceptable budget in Latvian conditions. Another explanation is a recurrence of past mentality and the absence of a broad perception of the world. We describe claims that Latvia can become a victim of aggression from Russia as political paranoia.

But many Latvian residents are still scared by their history… How do you believe it is possible to agree dividends from an enemy image with mutually beneficial and good-neighborly relations?

As for history, I can also say that we can advance claims to Latvia for activities of Latvian secret police. As you know, the organization created by Felix Dzerzhinsky had a disproportionately high share of senior Latvian officials who also participated in mass non-judicial executions of Russian officers on the territory of Soviet Russia. Should we issue a historic invoice for Latvia to pay? Russia does not do that because it is absolutely counterproductive. Who will benefit from it? It will only cause anger and deterioration of relations.

We describe claims that Latvia can become a victim of aggression from Russia as political paranoia.

I cited the example to show that it is possible to get any skeleton from the closet if necessary. We are interested in good relationship with Latvia. Our foreign policy aims at resolving security problems not through an arms race, but by political agreements which guarantee us from military force majeure on the western avenue.

The main thing which I want to say is that it is necessary to get rid of the occupation in the minds. The heads of many politicians are occupied by the Russian military threat. Honestly speaking, we laugh at the paranoid fears. We do not understand the logic. If you analyze the composition of the military grouping in the west of Russia you will see that it is purely defensive. It is not an invasion army. Secondly, I believe we have to help politicians establish contacts with non-governmental experts. Together with my colleagues I am planning to set up a non-governmental structure shortly – the institute of national security problems which will analyze military-political activities in all regions of the world. We are open for contacts with Latvian experts to jointly assess the threats. We call on politicians to change something in our existing bilateral relationship. I repeat – Russia is very interested in good-neighborly relations and Latvia can enjoy major economic benefits from partnership with Russia. Favorable political conditions shall be created for that.

The technical might of the armed forces has increased. But did the strength of guarantees against the might increase the same way? The question is actually about the possibility of a nuclear war.

I believe the threat of a nuclear war is minimal today because the nuclear powers are aware of. . .

Are they?

Definitely, they are. I can say that legal (I am not speaking about India, Pakistan, Israel) members of the nuclear club – Russia, France, the UK, China, and the United States – are very responsible in planning the use of nuclear weapons. The fear of guaranteed mutual extermination in case of an exchange of massive nuclear strikes makes their use in modern warfare practically impossible. Today nuclear weapons are a political weapon, a peacekeeper. Nuclear weapons are a political surety and a non-aggression guarantee. But I have to recall that Russian military doctrine says: if Russia becomes a victim of large-scale aggression with the use of conventional armed forces which threaten the very existence of Russia as a state it will have the right to a preventive nuclear strike against the aggressor. Thus, we are sending a message: if you launch a conventional war against us we can retaliate in a different way.

But you recently wrote yourself that existing and potential military threats will considerably increase by 2030.

They will increase mostly because of global uncertainty.

How would you rate modern threats in general? By the level of danger.

I believe Islamic terrorism is the main threat for Russia. Another equal threat is internal instability mostly in North Caucasus. The problem there is not military, there is a self-reproducing terrorist environment which is dangerous.

It is necessary to get rid of the occupation in the minds. The heads of many politicians are occupied by the Russian military threat.

Then there is uncontrolled proliferation of mass destruction weapons and missile technologies. In the third place there is considerable supremacy of NATO military capabilities over us. The fourth potential threat is China from the point of view of military planning which it can carry out in future, not now. Today China’s interests are in Southeast Asia. There is also uncertain situation in a number of regions in the world. Small conflicts can provoke a big war. Cyber wars are another threat. There are examples of cyber threats related to an impact of one country on another. The United States and Israel launched a virus which switched Iranian centrifuges into an off-design regime and they actually broke down. The same weapon can be used against a nuclear power plant and trigger a large-scale environmental catastrophe. Consultations are necessary among civilized countries to drop the threat.

I nevertheless believe that as long as there are states wars will remain a means to resolve irreconcilable contradictions between the states. There are new wars in store, wars for resources and new colonial wars. Actually France launched a military operation in Mali to secure free access to African uranium on which French nuclear power-engineering relies. It is an example of a new colonial war. I believe it will become a reality more and more as all economies need resources today. Look how China actively enters Africa and Southeast Asia. It goes where it is allowed to come and the Americans naturally do not like it.

We have also to bear in mind that an army can win a war against a regular army of another country, but it cannot act as regulator of policing and anti-insurgency functions. The Americans routed the government forces of Saddam Hussein and won a military victory in Iraq. But they failed to regulate the situation in Iraq. It is still a pot of various terrorist groups. In this respect nonmilitary conflict settlement forms are becoming important.

What does the notion of “international terrorism” mean?

It is a myth and a bluff used by the Americans to free their hands for military operations. In reality the United States failed to achieve a single aim either in Afghanistan or in Lebanon or with Al-Qaeda.

What is the European Union in military context?

Nothing, except for declarations. No viable armed forces have been created in the European Union. The economic situation in the EU does not promote them. Europe prefers to fight somewhere if the United States bears the main burden.

Why should Europe put the carriage before the horse? The main threats for the EU today are economy and migration control. Look what is happening. Shariah patrols are in the streets of London. Mujahedin in Switzerland call from minarets. In certain conditions that can result in internal destabilization and unrest like in Paris. The accumulation of a critical mass which does not accept European values but has a residence permit is very dangerous. Terrorist cells can emerge. It is clear that wars are impossible between European countries. On the contrary, there is integration. Balkan wars were US aggression against sovereign Yugoslavia which ended in its disintegration. At present the threat of a conflict in Europe is next to nothing. Therefore, geopolitics move to the front stage.

Who are Russian allies today?

As Alexander III said, Russian strategic allies are its army and navy. There is a coalition of interests but it is still inefficient. In the military sphere the closest relations are maintained with Belarus. But I repeat that Belarussian army will not fight for the Russian army. We can support each other but the Russian army can rely only on itself. There is nothing like the Warsaw Treaty today. Russia is strategically alone. It has to repel existing threats by military but mostly political means. It is the task of the Russian diplomacy to decrease the risks of military conflicts. We cannot afford an arms race and we do not want confrontation as they all hit our economy. I repeat there is no Russian threat for Baltic countries. We are interested in good-neighborly and peaceful relations. We absolutely do not need any tension on our western borders.

What is the current breakdown in world arms trade?

The United States is in the lead and Russia is second. But our performance improves every year. Last year we sold arms worth 15 billion dollars although we lost some important markets.

Can the arms flows indicate where conflicts are coming?

No, they are not related. A growing number of countries want to have an army as a guarantee. The main arms race is developing today in Southeast Asia or broadly speaking in Asia and the Pacific Rim. China began to convert its economic might into military strength and project its force on oceanic theater of warfare. China said it will build aircraft- carrying fleet. It means it has an expansion plan. Other countries are concerned with it and begin to re-arm themselves, from Australia to Singapore. It is a very conflict-fraught region. Firstly, there are disputed islands and, secondly, there is shelf where hydrocarbon production is possible.

You were born in Riga. Is Latvia an alien country for you today?

Riga is my native place and Latvia is my motherland. As they joked in a TV show I am a third-generation occupant. My grandfather was an officer in the Baltic military district and graduated from the Alksnis military school. I am also an officer. It so happened that I wasn’t here for the last fifteen years. I came now and am very glad. There are good recollections and warm feelings. I love Latvia.

Viktor Avotins,

for Amber Bridge

Shale gas revolution has joined pop culture of late. Even when you switch on an iron you hear something new about shale gas revolution. The words “shale rock” are well known to Russian experts. MGIMO has been recently visited by Estonian lawmakers who asked not to confuse available shale rock in Estonia with shale gas revolution. You have been dealing with the issue for long. What is it all about?

Shale gas has been developed in the world for decades but in small volumes as it is, firstly, expensive and, secondly, technologically difficult. The government of the United States traditionally subsidizes the production of shale and other non-traditional gas. I do not want to burden the reader with numerous figures but will anyway cite one table which explains a lot about the shale gas revolution which was artificially and intentionally inflated. The table was produced on the basis of calculations by well-known Wood Mackenzie consultancy and published in March 2010 by Petroleum Economist.

The table shows the share of non-traditional types of gas grew before 2009 not due to real physical volumes but as a result of depleted production of traditional gas. In reality the difference in total volumes of US gas between 2000 and 2009 comprised 3.2 bln cubic feet a day. Although the share of shale gas considerably increased it was still 2.5 times lower than tight gas (most deposits were developed by old vertical drilling technology) and nearly three times less than conventional gas. Such a modest result hardly merits “shale gas revolution” title. Even if Wood Machenzie forecast for 2020 comes true the total growth of domestic gas production in the United States can hardly be viewed as radical. The surplus will comprise only 7.5 bln cubic feet a day.

To comprehend the developments it is necessary to remember that 92% of natural resources in the United States are mined by small and medium independent companies which account for 82% of gas production. The second major aspect is that everything under your own land is yours. The technological condition for the shale gas revolution was the unification of two well-known technologies – horizontal drilling and fracking (high-pressure hydraulic formation fracturing). Shale is different from stone and sand as after fracking that discharges gas the cracks fold back and “heal”. To prevent it they add chemicals to the injected water. That is the reason while local population and authorities oppose the technology in most states. However there are territories where residents are indifferent to the environmental consequences and mostly want jobs.

In Texas, in a place called Barnett someone decided to combine horizontal drilling with fracking. It seems the Barnett field continues to provide a lion share of US shale gas. The situation was favorable as from 2005 prices of energy carriers grew and became record-high in 2008 when a barrel of oil cost 147 dollars. (I always warned at the time the price was unbalanced and a result of gambling at NYMEX – New York Commodity Exchange). However it was like hypnosis for many people. Even Vladimir Putin said when oil price began to rise after the crisis that so far we have failed to reach 147 dollars per barrel. But it was an absolutely artificial and abnormally high price. A fever similar to gold and oil rush in the XIX century began. Companies and individual businessmen bought out land plots and drilled for shale gas. A number of major fields were discovered – Eagle Ford, Haynesville, Utica, Woodford, Marcellus, and others. The last one includes the States of Pennsylvania, New York, and New Jersey, which are densely populated and well-developed regions. When TV showed a land plot whose owner allowed to produce gas on it people were horrified by seeing dark brown water around. Another TV broadcast hit the whole world: a burning match ignited water in a tap. There is still one more important aspect for the comprehension of the general situation. In all the years when the shale issue was in the focus of public attention there were only two-three serious publications about it, as far as I remember.

In mid-March 2010 the Oil and Gas Journal published an article of Houston-based expert and President of Merlin Associates consultancy Chuck Yost whose biography offers a successful synthesis of theory and practice. He agreed there are prospects for shale gas in the United States but expressed skepticism regarding excessively optimistic present-day forecasts. Yost said shale gas industry was in “infant age” at present and there are many uncertainties to be clarified and problems to be resolved. One of the problems is rapid depletion of wells. The article offered an index schedule of average productivity of a typical well which showed the yield rises only in the first year of operation after which it radically falls and continues to slowly decrease during the second, third, and fourth years of operation down to a low level of some 12-13 points from maximum 100. As for competition between shale gas and imported LNG, Yost analyzed three options of gas demand and price movements and convincingly showed that in any option LNG will continue to come to the United States (the amount is the question) and will exert considerable competitive pressure on shale gas and thus decrease its production. We should not expect that LNG will stop coming to the US market because of fear of competition with shale and other non-traditional gas, he concluded.

A similar opinion of LNG prospects in the United States was voiced by another expert – Nikos Tsafos who published an article in the British Petroleum Economist in May 2010. He monitored the staged movement of LNG in 2007-2009 and concluded that the United States was “the last resort” for LNG as exporters can always come to the market if they fail to profitably sell the gas in other countries. He noted that even before the shale gas boom LNG did not strike root in the USA after regular supplies began from Trinidad and Tobago in 1999 but stressed that in 2008-2009 two-three re-gasification terminals did not stop operations and in 2009 LNG staged a comeback to the United States.

The shale fever only slightly resembles the oil fever which lit up the star of Rockefeller when oil was discovered in Pennsylvania and hundreds and thousands of people rushed there. They drilled the earth literally stamping on each other feet. To save money they bought a very small plot of land which could accommodate a primitive drilling rig and its wooden supports often stood on neighboring plots. They nearly ruined the oil industry. It was Rockefeller who saved it by creating the first vertically-integrated company in the world. He deserves a monument for that. The main difference of the current fever is that shale gas wells rapidly deplete. A normal gas well operates for 16-20 years while you have to keep constantly drilling for new shale gas.

Maybe the technology is imperfect?

The Americans learned how to partially offset the problem. Today horizontal drilling is accompanied by drilling in several directions through only one surface well. In Russia they also drill the same way at Vankor field in the north of Krasnoyarsk territory. Shell invented the flexible bore when it helped Brunei cope with the problem of depleting fields in which oil remained only in the so-called pockets.

Rapid depletion of fields is not the only problem of the business. It triggers others and makes shale gas production a loss-making business which is subsidized. Thousands of people took bank loans to buy or lease land and acquire equipment. The heat continued up to 2009. In 2008 oil prices were still very high. (In contrast to Europe the United States does not tightly link oil and gas prices, but the exchange feels the dynamic). Then prices began to fall for one, two, three years. The “thermal price” of the gas was 3.5 dollars per MMBtu. Falling prices were accompanied by depletion of numerous shale gas fields and new drilling costs. Many people who believed in shale gas revolution went broke but 10-12 medium independent companies emerged and succeeded to survive. The most distinguished of them is Chesapeake Energy which pioneered in purchasing land for shale gas drilling and now has huge debts and fourteen billion dollars in the red.

In the summer of 2012 MGIMO published a collection of articles under your supervision called Russia and the Asia Pacific Gas Cooperation Prospects. I had an impression after reading it that shale gas revolution in the United States was a result of a sophisticated state policy aimed at creating maximum favorable conditions for private enterprise in shale gas production. The policy aimed at decreasing US reliance on imports. In general the flow of publications about shale gas revolution does not highlight the role of governments.

There is also another misunderstanding. The news makes public opinion believe that shale gas revolution helped the United States stop buying liquefied natural gas and the biggest importer quit the world market. The withdrawal naturally affected prices and the market structure, as well as strategic prospects of its main players. But the main thing is that the United States increased its independence from foreign supplies and came close to the cherished dream when Arab countries will no longer be necessary and it would be able to deal with them in the way it treated other states and territories.

Let’s recall the situation of late 2008. Barack Obama was preparing to occupy the Oval Room. The public paid all attention to election results and upcoming appointments. The NYMEX and the US oil and gas industry were waiting to clarify the course of the new administration as the previous one was closely related to the mining sector. Obama and supporting elites signaled a course for change and the oil business suffered major losses as a result. However there was an exception for shale gas as benefits were preserved. Why? Economic globalization played a low-down trick with US industry which suffered from global outsourcing. It became profitable to move production to China, India, and Southeast Asia. Profits from production were partially reinvested and partially kept offshore. On this background production of traditional gas sharply decreased in the United States, fields depleted and no new licenses were issued according to the principles adopted yet by the Roosevelt administration in the end of World War Two which triggered the emergence of “seven sisters” that shared the world among them and established the price of a barrel of oil.

Obama decided that widely advertised shale gas can compensate for the decreased production of traditional gas and prevent major price hikes for energy carriers which could deal the final blow to thousands of American enterprises. If we count all gas, including traditional, sand, and shale, there has been no quantity revolution at all. I believe the revolution boiled down to an efficient impulse to keep the US industry more or less viable and prevent further deindustrialization.

People who overslept the changes now speak about shale gas revolution which is rarely recalled today in the United States. But we continue to issue gloomy forecasts by inertia.

What did the real or imaginary revolution mean for energy security and independence of the United States?

Today shale oil is more popular in the United States as it was found at certain shale gas fields. It is praised to high heaven now. They promise to outshine Saudi Arabia soon. The wave emerged in 2010. One very stubborn independent investor in North Dakota continued to unsuccessfully drill one plot after another. He first drilled for shale gas. He then got disappointed in his gas dream but found the oil one. And he was lucky. The second stage of the fever began in the United States. Chesapeake Energy was again in the lead. But it is noteworthy that it no longer buys but sells land. The Upstream weekly said on March 1 that Chesapeake announced the sale of 427 thousand acres at the popular Bakken field located in Montana, Wyoming, and North Dakota states.

It is true that shale gas is produced and sold for cheap in the USA. It is good for industry, economy in general, and the government. But those who invested in it will not get expected profit.

Daniel Yergin, current president of Cambridge Energy Research Association (IHS CERA) predicted in Foreign Affairs in 2003 that in several years America will be the biggest import market for LNG. The article was co-authored by Michael Stoppard. Sergei Karaganov immediately reprinted it in his Russia in Global Politics magazine. But it was a bluff. America did not become the major LNG buyer. As for Yergin, he switched to the propaganda of shale gas. He visited Moscow once and I asked him: In 2009 you addressed the International Gas Congress in Buenos Aires and promised to satisfy not only America with cheap shale gas but also teach the whole world how to produce it. Aren’t you afraid the forecast will face the same plight as the one about LNG?

Under the influence of such experts President Obama said before the Copenhagen conference on climate change (December 2009) the United States will teach China to produce shale gas and signed with Hu Jintao an agreement which promised US assistance to China in mastering the necessary technologies.

Naturally, it was aimed against Gazprom, in particular. For example, Obama’s aide Joseph Aldy said the following about the role of shale gas in US policy. He told the Center for Strategic and International Studies (CSIS) that shale gas provides a possibility to ruin cartels and help many countries produce gas.

Why did I recall the story with the old forecast by Yergin? America is a country where business listens very attentively to such forecasts. As soon as prospects of large-scale LNG imports were announced investors immediately rushed to build terminals and re-gasifying facilities. They built twelve of them and there were twenty projects in the line. At present four are operating at reduced capacity while others have been mothballed or construction suspended.

Under the influence of forecasts about shale gas exports from the USA investors again lined up to build export terminals. However they did not have time to erect something significant. Europe, to which Russia belongs, is not critical in assessing the fluctuations in US business. Kommersant newspaper reports about the projects as if they had already been implemented and serious people begin to believe in it. One of them is Board Chairman Rainer Seele of Wintershall, which is a major partner of Gazprom. He supported the construction of both Nord Stream pipelines and now supports South Stream construction. Through Gazprom Wintershall enjoyed a possibility to develop Achim fields while Gazprom got a share in midstream sector of Wintershall. That is what he said in an interview with Kommersant on April 30: the US demand for imported gas is practically equal to zero.

Look at figures! Don’t be afraid of looking deeper. Every June British Petroleum publishes an excellent statistical report on all energy sectors – oil, gas, coal, and nuclear. It clearly shows the situation on the US gas market. But they forget a small detail: there is Canada close to the United States which continues to export to the US 88 billion cubic meters of gas. It is more than Seele’s native Germany imports!

It is truly strange for a German. But some Americans do not view Canada as another country…

That is what Americans think. But when Bush administration requested Ottawa to supply huge water volumes for fracking the Canadians responded: Any volume but of bottled water.

I will repeat that British Petroleum provides the best statistics. It is one of the best things it is doing. They show that US LNG imports which decreased to the minimum of 0.57 billion cubic meters began to grow in 2010 and reached 10 bln in 2011.

Does it mean the major buyer which is the United States did not quit the world gas market?

No, it didn’t. I will again cite Nikos Tsafos who categorically predicted in the same article that no matter how upstream developments progress the United States will remain an LNG buyer. I am looking forward to July when the next annual BP bulletin comes out with 2012 import volumes. The upward trend in evident anyway.

If there was no shale gas revolution but only an attempt in the United States, if the country returns to the global market as a buyer, what does it mean for the European Union as consumer?

In November 2010 the annual US-Russian Energy Dialogue was held in Washington. I delivered a report there and praised the achievements of the United States in at least partially replenishing the outgoing gas production capacities and thus saving the real sector from recession. But I also cited data confirming there was no alleged gas flow from the USA to the European Union. It is only natural as the Obama administration is in no hurry to encourage LNG exports from the United States as they will inevitably raise domestic prices on the US market. It is not accidental that up to now (May 2013) federal authorities have approved only one out of twenty submitted bids for Sabine Pass terminal in Louisiana (Cheniere Company). In case the regulator approves the project the first shale gas batch will be exported in late 2015 – early 2016 (less than 5 mln tons a year). Moreover, there is “coal renaissance” in some European countries today which squeezes out more expensive gas. There are also other LNG consumers in the world – Japan, South Korea, and Taiwan. In future there are China and India. There are also suppliers, first and foremost, Qatar which since 2002 has developed into the biggest LNG supplier in the world. Two years ago its exports amounted to 90 billion cubic meters. However they include also pipeline gas supplied by Qatar to Arab neighbors with existing discounts. It comprises over 19 billion cubic meters.

They scared us by claiming Europe will be flooded with excessive gas. Statistics do not confirm it so far. On the contrary, consumption is falling in some EU countries because of the crisis. Naturally, Norway revived as it always gets a green light in the European Union in contrast to Gazprom. It is noteworthy that nobody demands Norway to decrease gas prices.

There is evidently a prudent man in Gazprom who likely said: let’s justify our inaction at Shtokman and other offshore fields by reported surplus of gas in the world and that shale gas suppressed everything. These will be objective reasons for our inaction.

Naturally, Gazprom overslept the market, but not American, as Russian newspapers claim, but Asian and the Pacific Rim. The lion share of Qatari LNG goes to Japan, South Korea, and other Asian countries although Russia is closer to them. LNG transportation costs comprise 40 percent minimum. It takes two-three days to sail from Sakhalin to Japan or may be even 36 hours depending on the island while transportation from Qatar takes two weeks. The Japanese are interested in LNG exports from Russia and their companies operate in Sakhalin-1 and Sakhalin-2 projects. They insisted at talks with the Russian government to make Gazprom build the third line at Sakhalin-2. It is cheap and close. We have to remember that neither we nor Shell built everything on Sakhalin. Shell was in command as an operator. The Japanese built everything. Now after the Fukushima tragedy their interest increased. One more gas pipeline will go to Vladivostok where it is planned to complete the construction of an LNG plant in 2019 for exports to Japan. An agreement between Gazprom and with several Japanese companies has already been reached.

Let’s go back to Europe. What do you have after shale gas development? Moon landscape. France rejected any shale gas development projects. Nuclear power plants account for 40 percent in its energy mix. Germany decided to get rid of NPP but it also banned fracking. The whole of Old Europe is a garden where people care about each meter of land. Why should they subject it to shale gas tests?

They say there should be a lot of shale gas in Poland…

Yes, there is much ado about shale gas in Poland. ConocoPhillips and other forty companies arrived to prospect for it. They promised energy independence to the Polish government and said Polish gas would oust Russian gas from the EU market. In 2011 the US department of energy estimated Poland can have 5.3 trillion cubic meters of shale gas which are enough for 300 years of consumption. Today there is no shale gas in commercial energy mix of Poland but they delayed for a year the signing of a new transit agreement with Gazprom. In the meantime Exxon Mobil withdrew from Poland in 2012. ConocoPhillips is thinking so far. In May 2013 three companies refused to develop shale gas in Poland – Marathon Oil, Talisman Energy, and Polish state-run Lotos! They said there are no commercial gas reserves. However the Polish leadership keeps insisting it will not affect its decisiveness to find and develop shale gas.

Well, Poland is a big country. It is no Denmark or Austria. But I pity Poland.

Do you mean it is worth producing shale gas in a country which you do not pity?

Yes, in general. The Americans do not pity Texas as it is big and scarcely-populated and people would not protest a lot.

Does it mean there are no shale gas prospects for Baltic countries? They do not let migrants in, will they allow such environmental devastation?

No. Besides, they struggled a lot to make Gazprom lay its pipelines through their territories. They recruited Poland as an ally and demanded a new pipeline to go along the Ukrainian one.

It is exactly the pipeline which Gazprom is offering to Poland at present, but Tusk is rejecting it for unclear reason. They claim it would be a politicized pipeline and they would not support a project that bypasses Ukraine. Do they really mean that oil and gas can be unrelated to politics? Does the fantastic Nabucco project have anything besides politics?

It is a very instructive story. Russia and neighbors should learn lessons from it. Which lessons?

Today we are talking with the European Union as if we are on different sides of barricades. It is abnormal. It is better to discuss existing problems at a round table and take common interests into account. Energy security problem is double-edged and risks shall be shared by both parties – suppliers and consumers. It is the main thing. They should not politicize the issue or resolve it unilaterally.

Nodari Simonia  is the leading expert in global energy research.

From 1990 he is corresponding member of the Soviet Academy of Sciences and from 1997a Russian Academician. In 2000-2006 he directed the Institute of Global Economy and International Relations at the Academy. In 2001-2006 he was special representative of the Russian president for relations with leaders of African countries in the G8 framework. He participated in G8 summits in Kananaskis (2002), Evian (2003), Sea Island (2004), Gleneagles (2005). He is currently professor of the desk of international problems in fuel and energy complex of the International Institute of Energy Policy and Diplomacy at MGIMO University at the Russian foreign ministry.

Speaks English, Indonesian, and Chinese languages.

In 2012 MGIMO published a volume of selected works by Academician Nodari Simonia.

This article is a brief story of a provision of the Statement of the Conference of heads of government of the Baltic Sea region on the protection of the Baltic Sea held in St. Petersburg on April 5-6, 2013. It reads: “Participants specifically noted the Pilot Financial Initiative of the CBSS… as a new mechanism of promoting activities to protect the environment of the region”.

Annual presidency rotation in the Council of the Baltic Sea States (CBSS) offers a challenge and a test for the ability of member-states to coordinate implementation of proposed cooperation priorities in “your own” term of presidency in the organization. The universal troika mechanism comprising previous, current and future chairs of the Council allows, as a rule, to coordinate new regional projects and ensure succession in their implementation. The story of the CBSS Pilot Financial Initiative offers a vivid example of efficiency of the mechanism.

In June 2011 when Norwegian presidency was coming to an end, the 16th ministerial session of the Council adopted the Oslo Declaration. One of the agreed decisions related to the Russian-German initiative to exchange experience in Public-Private Partnership (PPP) to promote investment into the future of the region and study ways to encourage regional partnership in innovations and modernization within the CBSS framework. During subsequent German presidency in the Council (July 2011 – June 2012) the Russian foreign ministry initiated practical efforts to engage major banking institutions in cooperation along the guidelines. The result was not long in coming. On May 31, 2012 on the sidelines of the 9th meeting of the heads of government of Baltic Sea states in Stralsund (Germany), a memorandum of understanding was signed in the presence of Russian delegation chief – First Deputy Prime Minister Igor Shuvalov – between CBSS Secretariat, the German banking group KfW (state development bank), and State Corporation Bank of Development and Foreign Economic Activity (Vnesheconombank). The document was signed by Director General of CBSS Secretariat Jan Lundin, Vnesheconombank Deputy Chairman Mikhail Kopeikin, and KfW Director General Stephan Opitz.

The launched Pilot Financial Initiative (PFI) was a prelude to creating an open platform to attract partners and funds into projects aimed at sustainable economic development and cooperation in the geographic area of the CBSS, transfer of scientific and technical knowledge, increased efficiency of CBSS investment, and implementation of sub-regional programs. The initiative is open for other financial institutions operating in the Baltic Sea region.

Under the CBSS aegis in 2012-2014, Vnesheconombank and KfW expressed readiness to begin financing projects and open a credit line up to 100 million euro a year for PFI area – St. Petersburg, Kaliningrad, Pskov, Leningrad, and Novgorod regions.

Trilateral cooperation includes:

– easy-term loans to small and medium businesses in the sphere of innovations and modernization. The PFI mostly targets sustainable development of Russian northwestern regions, and

– financing of Public-Private Partnership projects as a most efficient instrument to modernize economy and intensify cooperation in the Baltic Sea region. It is focused on municipal infrastructure, climate and environment, energy efficiency, and complex development of territories.

The financing mechanism works as follows: KfW Bank provides long-term incentive loans for VEB projects which, in its turn, finances projects either directly or through its network of subsidiaries (MSP Bank, Svyaz-Bank, Globex Bank, Federal Project Financing Center, and others) or though a corresponding network of partner banks in Russia or other CBSS member-countries under the on-lending principle.

The PFI working body is the Coordinating Committee comprising six members, two from each party. Its main function is to estimate and approve project proposals offered by KfW and/ or VEB, control and assess PFI implementation, and submit reports to the CBSS Committee of Senior Officials. The founding meeting of the committee took place in the office of the Russian foreign ministry in St. Petersburg on June 7, 2012. Head of the KfW office in Russia Daniil Algulyan was elected its chairman.

The first agreement in the PFI framework was signed in Moscow on November 16, 2012. It envisages a five-year credit facility of 110 million US dollars to finance projects in St. Petersburg, Kaliningrad, Leningrad, Novgorod, and Pskov regions. According to the terms, VEB provides finances to partner banks which in turn lend them to Russian enterprises.

The second agreement was signed at the CBSS Secretariat in Stockholm on December 12, 2012. According to the loan agreement worth up to 65 million US dollars, funds will be provided in ruble equivalent at a fixed rate. They will be used by VEB to finance the project of economically and ecologically feasible treatment of mixed household waste in St. Petersburg implemented by Avtopark #1 Spetstrans Company. The agreement is valid for seven years.

The implementation of the project will dramatically decrease the amount of solid waste at dumps, extend the service life of the dumps and improve the general environmental situation in the region. Five waste-treatment enterprises will recycle up to 70-75% of paper, corrugated cardboard, offset paper, plastic bottles and solid-plastic boxes, polyethylene film, ferrous metal scrap, aluminum cans, heat-producing elements for cement industry, and biologically degradable waste. Up to 15-20 percent of recycled garbage will become environmentally safe as it will contain no biologically degradable waste. The aggregate recycling capacity will reach 900,000 tons of solid waste a year. Thus, the project will decrease greenhouse emissions in the region and eliminate harmful impact of garbage dumps on the environment.

There is enormous demand in Leningrad region for such services and waste-treatment plants are expected to have a full load. The project is being implemented with the support of the long-term regional goal-oriented investment program for treatment of solid household and industrial waste in St. Petersburg in 2012-2022. It is also backed by the government of St. Petersburg as the enterprises will be built on municipal land under a long-term (49 years) lease contract.

On November 22, 2012 Kaliningrad hosted, within the PFI framework and under the auspices of the Russian CBSS presidency, the International Conference on Support to Small and Medium Businesses in the Baltic Sea Region: Financing, Public-Private Partnership, and Innovations. The event aimed at attracting the attention of small and medium businesses, financial institutions and agencies to the problem of long-term financing and support to small and medium businesses in the sphere of innovations and modernization in the Baltic Sea region. The conference was attended by representatives of development banks and financial institutions of the Baltic Sea region, small and medium businesses, the Embassy of Germany in Russia, the government of Kaliningrad region, organizations which support small and medium businesses, and scientific and expert communities.

At present, the CBSS Secretariat is working to engage in the PFI such influential regional financial institutions, as the Nordic Environment Finance Corporation (NEFCO) and the Nordic Investment Bank (NIB), as well as development banks from other countries of the Baltic Sea region.

It is logical therefore that the PFI implementation experience was a major issue in the economic section of the address by Russian Foreign Minister Sergei Lavrov about priorities of the Russian CBSS presidency delivered at the third ministerial meeting of the Northern Dimension in Brussels on February 18, 2013. The algorithm of the PFI project as an instrument of close and mutually beneficial cooperation of well – tested business partners and the non-governmental organization can and should lose its unique status as soon as possible. The Baltic Sea region should again confirm its pioneer status in introducing new models of social and economic interaction for the benefit of its peoples. The recipe of Public- Private Partnership is available.

Heads of governments at the Baltic Sea Forum in St Petersburg on April 5-6 praised the PFI in acknowledgement of well-chosen areas of work, as well as the readiness to offer projects under implementation for the fulfillment of new tasks.

Despite the seeming triviality, the problem enormous economic and social significance. In the modern world, approaches to its solution demonstrate maturity of the state and business and their ability to create a comfortable environment for the life of the citizens.

Therefore, the problems of the “green growth”, reduced discharge volumes and rational recycling of waste also for the production of energy have fully entered the global agenda. We shall definitely discuss the issues at the G20 which Russia currently chairs.

Russia accumulates some 3.5 billion tons of waste every year. Close to a quarter, but much less in reality, is recycled. The rest is burned down or dumped at special sites. Regrettably, much waste is dumped at illegal sites whose number is constantly growing.

The volume of accumulated waste in Russia currently comprises around 90 billion tons.

The experience of many countries shows that utilization and recycling of waste is a complicated but promising type of business activity. We have to create conditions for investors and small and medium businesses to come and operate in the sphere.

Quoted from President Vladimir Putin’s speech at a meeting on April 10, 2013 devoted to incentives in household and industrial waste treatment.

Nikolai Lakhonin,

for Amber Bridge

The Amber Bridge has already covered various PFI stages. Its third issue in 2012 contained an interview with Russian Foreign Minister Sergei Lavrov headlined Synergy of Efforts – a Practical Task while issue 4 in 2012 published an article by Director General of the CBSS Secretariat Jan Lundin headlined Who We Would Like To Be With. We believe it is logical to continue covering the implementation of the successful project.

What is Norden Association?

The association was founded in 1996 and united four friendship societies which previously were a part of the Union of Soviet Friendship Societies. At that time in all northern countries except for Finland friendship societies with the Soviet Union ceased to exist. A new format of public diplomacy was necessary which would enrich previous experience with new interaction methods which emerged in mid-90s at the turn of the centuries.

From 2001 Norden, as an inter-regional public association, is the national coordinator of the annual forum of non-governmental organizations of the Baltic Sea region. Since that time our activities cover not only northern countries and northwest of Russia but also members of the Council of the Baltic Sea States.

In Russia we cooperate with regional nonprofit organizations from Murmansk to Kaliningrad. We provide information and logistic support to them. I am not talking about big and well-established organizations but rather small and inexperienced civil societies for which such support is vital. They ask us to find partners for them and share reasonable experience in project implementation. It is sometimes only half-way to get money for a project as you have to also properly report to the grantor and then keep the launched project in your hands.

You say “we” and “us”. Where and how many are you?

We have partnership organizations in every region. They represent the interests of the association and its projects in the Russian northwest. Such organizations exist in Petrozavodsk, Arkhangelsk, Murmansk, Kaliningrad, Pskov, Novgorod, and Vyborg. I want to stress that we are not a Petersburg organization, but an interregional one. We operate as a normal public organization and we have seven permanent staff. Besides, we annually engage 20-30 experts to implement projects as we cannot be equally competent in all spheres of activities.

Today there is a vital issue of financial checks which Russian competent bodies carry out in non-profit and non-governmental organizations. Did they check you as you also spend money from for eign sources?

The information about foreign financing surprises me because it reports only the very fact and the amount. But nobody says what the amount comprises. Most financing of non-government organizations in the Russian northwest comes from joint funds. We have to remember that Russia and the European Union have a joint North Dimension program which includes four partnerships. In particular, we formally received financing from Brussels for our biggest project of cultural heritage of the Viking epoch. The Russian Federation invested 122 million euro into a common fund – the European neighborhood and partnership instrument. All the projects are approved by the Steering Committee, i.e. by a supervising council of experts which also unites representatives of Russian authorities. The Nordic Council of Ministers is a separate source of financing. It interacts with the government of the Russian Federation since 1995 and supports numerous projects which are of significance also for Russian regional authorities.

In this context I would like to draw your attention to the radical difference of regional cooperation of public organizations from any other one. There is no protection of interests of a party. We are united by territory, we breathe one and the same air, drink the same water and suffer from the same diseases. We live along 1200-kilometer long land border in the area of the Baltic Sea and naturally everything of our concern is of concern for our neighbors. There are no political interests except for the interest of any country in having a calm social climate along its borders.

What are you mostly proud of in the past seventeen years?

In the life of any person and in activities of any organization there are many sides – much more than only black and white. We are specifically proud that we still exist. There are few non-profit organizations which emerged in the ’90s and are still alive, operating and expanding. We are proud of our team and partnership network which operates in eleven regions of the country .

In the context of current eleventh forum I cannot but remember the second forum held in 2002 here in St. Petersburg. Had we failed to hold it the forum of non-governmental organizations of the Baltic Sea region would never become an annual event. The first forum was held in 2001 in Lubeck during the German presidency in the CBSS upon the initiative of the German foreign ministry. The organizers viewed it as a single event. The second forum held in Petersburg in 2002 was due to the goodwill of the city administration and the Russian foreign ministry. Today many people know the Norden Association and our abilities. At that time it was a major risk to stake on us. I will never forget the huge eyes of Hans-Jurgen Heimsoeth who a year before headed the committee of senior officials from Germany and held the forum in Lubeck. He arrived as a guest and told me: “Darya, I was backed by the German foreign ministry. Tell me how you managed to cope with the task?” We organized both forums thanks to non-governmental organizations. Naturally, the foreign ministry provided political and moral support but our financial resources are very limited.

If we go back to the previous question I have to mention another proud achievement – it is due to our merited accountant that in all the years of existence we were only once fined for three rubles. You have to remember that we pay money to western experts and that we are an employer .

Now it is a bewilderment question. If your association has existed for seventeen years now why don’t you pay attention to your Internet website? Long-living organizations produce respectable sites in the final run.

It is a very laborious process. Even if you try to blog and communicate in Facebook and Twitter it will take much time and big human resource. We tried to do it, but it is very costly. We are currently entrusted with the implementation of a major European project called Common Historic Past for Common Future which will launch an open-sky archaeological museum of the Viking epoch in Batetsky district of Novgorod region. In this project major museums of the Viking epoch – Gotlands Museum (Sweden) and the museum in the town of Vejle (Denmark), as well as leading Russian archaeologists and historians cooperate with us.

Thank you for the interview. I wish you luck in you interesting but restless mission!

Dmitry Sokolov,

for Amber Bridge

Interview with Sergei Petrovich:

For a number of years Russia has been raising the issue of reforming the CBSS towards greater succession and better cohesion of activities of member-states. The changes are evident. Already under the German presidency the Pilot Financial Initiative was launched and the implementation of SEBA project began. During the Russian presidency the Project Support Facility was launched. How did the Russian presidency encourage further reform of the CBSS?

The reform of the CBSS began in 2008 at a meeting of the heads of government in Riga. It adopted a declaration on new guidelines of CBSS activities and approved five long-term priorities. The process continued in 2010 in Vilnius at a meeting of the heads of government which adopted a declaration on the vision of the Baltic Sea region up to 2020. One of the approved priorities was the necessity to target the Council of the Baltic Sea States towards project implementation. It is no secret that since the emergence of the institution in 1992 it was mostly a discussion club. It was a very good discussion platform which emerged in the period of geopolitical transformations. The creation of the CBSS aimed at promoting interaction between all member-states on the basis of common interests. By mid-2000s the Council has fulfilled its mission of a networking forum.

The only common project in the CBSS portfolio at the moment was EuroFaculty which from 1993 was implemented first in Latvia, Lithuania, and Estonia and from 2000 to 2007 in Kaliningrad on the basis of the Kant Baltic Federal University. Now it is being implemented in Pskov State University. During the Russian presidency we launched the second stage of the project in Pskov for three years. Now the EuroFaculty will educate not only bachelors but also masters, i.e., provide complete higher education. It is the only successful project which matured inside the CBSS at an early stage of its activities and implemented at the CBSS expense. All member-countries financed the project although contributions were voluntary and there was no mechanism of obligatory financing.

During the current Russian presidency succession is the key principle. A year is a brief period for a country to implement its priorities in full. Therefore, we work in a close contact with previous German presidency and upcoming Finnish presidency. The achievements include the mentioned Project Support Facility launched on March 1. So far the amount is modest – one million euro for three years from 2013 to 2015. However it is important that for the first time in its history the CBSS received its own fund and contributions will be obligatory for each member-country. The fund will co-finance projects in the Baltic Sea region on conditions that each project is initiated by at least three countries…

It is mostly symbolic money with which the Secretariat underlines its attitude to the project, isn’t it?

Yes, of course. One of the financing guidelines is the Initiative of Modernization of the South-Eastern Baltic Area (SEBA) which was launched during the German presidency and which we continued. On June 7-8 Kaliningrad will host a large-scale conference on SEBA which will sum up the results of the first implementation stage which is the selection of projects. One of them is the creation of Vyshtenetskoe Lake recreation zone with a major nature-protection component on the border of the Russian Kaliningrad region with Poland and Lithuania. Prospects of including the Kaliningrad region into the water tourism network of the Baltic Sea are being discussed. The Baltic Artek project is successfully developing in Kaliningrad region. Another potential candidate for co-financing is the project to create a network Baltic Institute on the basis of the Kant Federal University in Kaliningrad which is to join efforts of law faculties of leading universities in the Baltic Sea region. Students from all countries of the Baltic Sea are expected to study there. The concept is currently being designed and summer courses are likely to be organized at the first stage. I do not rule out that at later stages the Baltic Institute format will become more sophisticated.

How does regional integration in the CBSS framework correlate with the EU Baltic Strategy according to the Russian opinion?

The EU Strategy for the Baltic Sea Region was adopted in 2009 and renewed in 2012. We have numerously told out CBSS partners which are EU members that Russia as a non-EU country can be neither the object nor subject of the mentioned strategy. We consider it to be an internal EU document and Russia can by no means participate in its implementation. Moreover, we numerously told our colleagues it would be incorrect to use the provisions of the document, which may be good in certain aspects, in the whole region as the Baltic Sea is no inland sea of the European Union. There is also Russia without which no major project in the Baltic Sea region can be implemented and our EU partners agree with it. As for approaches, we have our own strategy for the development of the Northwestern Federal District in the period up to 2020. In late 2012 an implementation plan was adopted as the document has a framework character.

At the same time we never said the strategies are contradicting, they mostly complement each other. A corresponding dialogue has been underway with the European Union for three years already. There were three meetings in EU-Russia format which discussed potential joint projects in the Baltic Sea region. At present there is a list of 18 projects in which Russia and the EU see points of coincidence. Some of them are at the stage of implementation, some are being discussed, some are likely to be deleted from the project list as unfeasible.

As for the CBSS role in relations between Russia and the European Union in the Baltic Sea region, together with EU members in the CBSS we have reached an understanding to have platforms for equal dialogue. As I have stressed, we do not consider the EU strategy as a universal document for the development of the Baltic Sea region like our EU colleagues do not consider our strategy for the development of the Northwestern Federal District as an applicable document for them. At present we have a full understanding about the platforms. One of them is the Council of the Baltic Sea States which represents both EU members and non-EU countries. Besides CBSS, there is the Helcom (Baltic Marine Environment Protection Commission), the Northern Dimension program, as well as the so-called industry dialogues (transport, power-engineering, law enforcement, etc). In all the formats Russia and the European Union are equal parties to the dialogue.

Which place does the Nordic Council of Ministers occupy in the configuration?

It is an important institution for the north of the Baltic Sea region. Since 2009 there has been a mechanism of regular meetings between four intergovernmental regional councils – CBSS, Barents/Euro-Arctic Council, the Arctic Council, and the Nordic Council of Ministers. It has been long said that their activities often overlap, that they discuss one and the same issues, and participants are often the same. Therefore, it is necessary to coordinate their activities to provide synergy of efforts. The Russian side initiated interaction of the four councils. We suggested to hold the first meeting in 2009 in St. Petersburg. The second meeting was held in Oslo in 2012. The third will take place under the Finnish CBSS presidency in a Finnish city.

What would you like to wish to the next CBSS presidency?

We support succession in the activities of the Council of the Baltic Sea States. For several years the council has the troika mechanism comprising previous, current, and future chairs. We work to closely coordinate efforts with our partners and the next troika meeting will take place in Moscow in the second half of June at the end of the Russian presidency when we shall pass the relay baton to Finland. We hope the new priorities will be declared in late May at a regular meeting of CBSS Committee of Senior Officials and at a meeting of regional directors held on the sidelines. Finnish colleagues assured us they will abide by succession in activities. Estonian partners, whose presidency will come in 2014, said the same. The succession tradition gives hope that available CBSS plans, the main of which is the U-turn towards project activities aimed at end result, will be continued during Finnish presidency.

Which are identity interlacing trends (European, EU, Baltic, Norden) in the region on the background of current developments in the European Union which resulted in listing Poland as a northern country? How strong is the Baltic identity today?

It is a difficult question. Although globalization processes continue and many CBSS member-countries are EU members as well (at the time of CBSS creation only Germany and Denmark were EU members) Baltic identity does exist. The Baltic Sea brings people closer rather than distances them. The successful experience of CBSS which marked 20 years of existence last year is a proof of it. The institution is popular and deals with cooperation on the intergovernmental level in practically the whole range of intergovernmental interaction except for military-political issues: sustainable social and economic development, energy, transport, nuclear and radiation safety, fight against organized crime and trafficking, cultural cooperation, youth policy, information security, successful cooperation of border services, customs and tax agencies, rescue and civil defense services, prosecution agencies. The wide range confirms that the Baltic Sea united peoples and countries. But I believe Baltic identity is only evolving. People already feel their affiliation to certain Baltic family. The region is relatively well-off against both the European and global background. However living standards still differ much although the differences are no longer so crying as they were in the ’90s. Our region is a region of peace and economic development. Therefore, the Baltic interaction model can be borrowed as an example by other regions of Europe.

Interview with Jan Lundin:

We are summing up preliminary results of the Russian presidency at the XI Forum of non-governmental organizations of the Baltic Sea region. Which share of your work NGOs comprise?

I believe a third of what we are doing is related to NGO. If we speak about human dimension, the two main guidelines of activities are the fight against trafficking and protection of children. The first is the task of numerous governmental agencies with which we cooperate, but there are also non-governmental organizations which care for trafficking victims. They want to launch a dialogue with state institutions, while we, the CBSS Secretariat, offer a platform for dialogue. We have a taskforce dealing with the protection of children. Its head Lars Lööf maintains broad contacts with non-governmental organizations of the region. Another major field for interaction between state institutions and NGOs are sustainable development and environment. We also offer a platform for the dialogue.

At present Russia has mounted efforts to increase the financial transparency of NGO activities. It is clear that legislation regulating NGO activities differs in various countries. The guest from Latvia said at the forum there are democratic and anti-democratic NGOs. It makes it necessary to define the basic characteristics of an NGO.

It is a difficult question. We support a flexible approach. If there are organizations ready to cooperate with us in the protection of children and environment and against human trafficking, we are glad to include them in our work. The CBSS Secretariat does not look for a hidden agenda of such organizations. It is not our business. Naturally, it is important to deal with a serious organization and we would investigate the results of its performance. However the source of financing the organization does not matter much for us. The fruitfulness of its activities is the main thing.

As for the CBSS political level, it also pays much attention to cooperation with NGOs. The recent CBSS summit proclaimed the Petersburg Initiative which mostly targets the work of the non-governmental sector. For example, Finland has an outstanding institution called Baltic Sea Action Group which works to protect the environment in the Baltic Sea region. The adoption of the Petersburg Initiative also means our enhanced interaction with BSAG. We plan to help the organization expand the geographic area of activities as today it cooperates mostly with Finnish actors. Another major environmental actor is the St. Petersburg Vodocanal. We perceive it also as a non-governmental and non-profit organization.

We expect proposals from non-governmental organizations on the implementation of the Petersburg Initiative to improve the environment in the Baltic Sea region. The effort demands developed Public-Private Partnership. The Petersburg Initiative is likely to produce new PPP forms. We expect a draft concept of the initiative by early October however it is clear already now that it will be a non-governmental organization.

Where will money come from?

There is no money yet, the idea should come first. I hope the concept will also answer this question. However the main task is to engage the non-governmental sector in active work to protect the Baltic Sea environment. BSAG launched the work, but mostly in Finland. With the help of such organizations as Vodocanal, Helcom, CBSS the work will spread to the whole region. We are waiting for concrete proposals.

BSAG has an interesting experience of engaging new actors in environmental protection. For example, they use the technology of commitments. Potential actors are offered to speak out on what they can do on the avenue in five years, for example. They have a special Commitment page on their website. Anyone can make a commitment.

It is an interesting social-psychological technology…

And it can produce interesting result. Some banks have already made voluntary commitments. But they are mostly Finnish actors. I hope geography will expand when the implementation of the Petersburg Initiative begins.

Now about SEBA initiative which is being implemented already. Is there any unexpected result? And which plans failed to be achieved?

SEBA unexpectedly promoted the emergence of the Pilot Financial Initiative to support PPP. It was due to the intention to cooperate with the Russian northwest. The first PFI conference was held in Kaliningrad. I believe it will find investment. The first investment was made in St. Petersburg into a waste recycling enterprise.

I believe without SEBA the CBSS will have no Project Support Facility today. It is a very good instrument specifically for the non-governmental sector.

SEBA conference on June 7-8 in Kaliningrad will discuss a whole set of projects for future activities. I am personally interested in the project to create the Vyshtinets-Krasnolesye natural park on the border junction between Poland, Lithuania, and Russia. On June 8 participants in the conference are scheduled to visit the park to see everything with their own eyes. Long-term work to develop tourism in the area is beginning. We succeeded to draw the attention of the Swedish Institute which will help develop entrepreneurship and tourism there.

What has failed? Some projects are being implemented slower than expected. An example is offered by the Baltic Law Institute where there is no progress but only hope for it as the project enjoys support of the Russian presidency and the Kant University in Kaliningrad.

Which place does the Russian CBSS presidency occupy among other recent presidencies?

During its presidency Russia considerably contributed to the development of regional cooperation. The contribution was not less than that of preceding German presidency. Both major states demonstrated their serious attitude to the CBSS.

Each presidency has its own specific. During the Russian presidency numerous important events took place: two ministerial meetings – of transport (December 5) and foreign ministers (June 5-6); the Baltic Sea environmental summit; since March 1 the CBSS runs its own project support fund: since last year the Pilot Financial Initiative has been implemented which is equally German and Russian. It all testifies to active Russian efforts in the CBSS framework.

Addressing a plenary session at the forum you said the absence of money is no reasonable excuse for the absence of cooperation. Are there first beneficiaries of the Project Support Facility?

No, so far. However I have the first bid for the creation of a CBSS summer university. For two-three weeks the best students from member-countries can discuss one important issue and attend lectures of the best professors from various countries. Good governance may become the first topic. Another issue would be discussed next time. It will be a mobile university. We shall begin in Kaliningrad. It is also a result of SEBA.

What do you expect from Finnish presidency? How can it differ from previous ones? What would you like to wish?

Finland is a modern country which likely enjoys the best education system in the world. In education and innovations Finland can make a major contribution to regional cooperation. It is premature to speak about concrete priorities. They are all in the hands of Helsinki. But I am a big optimist concerning everyday and technical aspects of the Finnish presidency. Finland has a very efficient administration and numerously demonstrated it during EU presidencies. As a Swede I am always pleased to work with Finland. It is easy for us to work together. Naturally, due to my knowledge of Russian I succeed to properly work with the Russians. It will be no worse with Finland, to say the least. There may be fewer events compared to the Russian presidency which is only natural as Finland is smaller and does not have powerful administrative resources like Russia and Germany have. I am sure that regardless of a smaller scope Finland will ensure high-quality presidency.