PM Kubilius, who is on his bicycling holiday in Belarus said to Ziniu radijas on 29 June that since the gas consumption in the both countries is different the initial construction of the Lithuanian and Belarusian LNG’s should proceed separately.  Lithuania is planning to build an LNG terminal with capacity for 3 billion cubic meters a year.  The Byelorussians need an LNG terminal with capacity of 8 to 10 billion cubic meters a year.  The both countries consume according amounts of gas annually.

Prime Minister Kubilius has also stated that in the near future a first shipment of the Venezuelan oil for Belarus could be handled at Lithuania’s Klaipedos Nafta (Klaipeda Oil).  He said to Ziniu radijas, ‘Talks are underway to use the Klaipedos Nafta terminal’s capacities. There is a possibility that the first such oil shipment will reach Belarus via Klaipedos Nafta in the near future. The whole technological line will be tested whether it is worthwhile.’

In May media reported that an additional works would have to be done in order to be able to handle the Venezuelan crude oil shipments for Belarus.  It was reported that while the Lithuanians were calculating the cost of such adjustment Minsk began considering to choose Tallinn over Klaipeda.

The political era of Algirdas Brazauskas has ended. By all rights it began in 1988, on June 24^th of that year in Vilnius,  Sąjūdis organized a farewell gathering for the delegates to the 19^th All-Union Conference of the Communist Party of the Soviet Union being held in Moscow. At that point, A.Brazauskas was only one of the Lithuanian Communist Party’s secretaries, yet he was the only government representative brave enough to take the podium and address the gathering of people. Four months later, after pressure from Sąjūdis, the leadership of the Lithuanian Communist Party changed – A.Brazauskas was elected First Secretary and he became the first Lithuanian leader born from “his” Lithuania.

In March 1990 A.Brazauskas was elected to the Supreme Council – Restoration Seimas, and became a signatory of the March 11^th Act of Restoration of the Republic. From that time, he served in the highest ranking national offices for at least some period – 1990-1991, First Vice Premier of the Government, 1992 – Seimas Chairman and Acting President, 1993-1998 – President, 2001-2006 – Prime Minister. In eleven of the first sixteen years of restored independence of the Republic, A.Brazauskas was one of its most influential political leaders. Few would point in error calling the period of restored independence, using old soviet naming conventions, as A.Brazauskas’ political epoch. Upon his leaving political life, the Lithuanian Republic steps into a new phase of its development.

Politicians, particularly a well known and influential politician, can leave their posts via a choice of two paths. First – leave without losing to ones opponents, being at the height of power, making up your own mind when to take that step. Second – to leave ones post under intense pressure understanding that if you don’t make the choice to step down, you will be forcibly removed. A.Brazauskas experienced going down both of these paths.

The first time A.Brazauskas gave notice of his departure from national politics, then President A.Brazauskas announced in the fall of 1997 that he would not seek election to a second term (where victory in that election was all but guaranteed for him, at least that is the current belief). He announced that it was time for a new generation to take command of the nation, unburdened by the soviet past. A.Brazauskas named his successor – former Prosecutor General Artūras Paulauskas.  The latter, even with the support of A.Brazauskas, lost the Presidential elections to Valdas Adamkus.  This, of course, somewhat tarnished the elegant exit of A.Brazauskas, which people manage to forget.

In the summer of 2001, after the collapse of the “new political” coalition, A.Brazauskas returned triumphant. In the previous year, the Social Democrat and LDDP coalition, which he led, received the most votes in the Seimas elections and he himself proclaimed he is returning to “save Lithuania”. It is true that the economy was reformed and was climbing out of the 1998-1999 crisis, although the majority of the population had yet to experience any positive results. The return of A.Brazauskas was generally regarded in a positive way in that most believed he was no fan of political infighting and that his presence would stabilize the scandal ravaged Lithuanian political environment.

In 2001 a new A.Brazauskas returned to government – one who was convinced of the righteousness of his own decision making, ignored public opinion, unafraid of scandals which would just slide off of him as easily as water from a goose’s back. A time when he felt great nostalgia for his, and his soviet, past. His term as Prime Minister began with a scandal marred trip to Moscow with business leader Bronislavas Lubys to meet with Russian energy representatives and a hunting trip with his close family friend – Manager of LUKOIL Baltia Ivan Paleicik. Next, he surprised foreign investors when he organized a speech pointing out how the soviet period was positive for Lithuania.

That by all definitions hot summer of 2001 did not cloud suspicions as to why A.Brazauskas took efforts to return to government leadership. Looking back today, the almost prescient words of philosopher Vytautas Radžvilas in Veidas: “The primary motivation that leads him back into government is that during the entire independence restoration time period, he faithfully represented that which I refer to as the soviet Lithuanian elite. These elites are fighting for their rights – to control the nations’ wealth and to maintain decision making influence. And those groups that are trying to take the last remaining tidbits of privatized national capital away are again trying to force him out.  I can’t discount the possibility that this happened against his will. He returned to finish his last task – to determine who would benefit from the privatization of Lithuania’s energy sector. And those people who assigned him this task, in considering A.Brazauskas’ possible future positions – didn’t care. He would be “eaten up” as a politician.”

In fact – the growing national economy and the post EU accession’s arrival of EU Structural funds presented a unique opportunity to the A.Brazauskas Government to finally reform social, health and higher education systems, yet nothing was done. They couldn’t even manage to introduce the promised Euro currency. That’s why the government sold off “Vilniaus Prekyba” to western concerns and Lietuvos Dujas (Lithuanian Gas) to GAZPROM and a German consortium (although they saved the go between Dujotekana which is of dubious value). Then A.Brazauskas stumbled upon Mažeikių Nafta.

The root causes of Brazauskas’ second forced withdrawal from politics can be found in the summer of 2005, with the commencement of the competitive sale of shares in Mažeikių Nafta.  At the time, when the leaders of the worlds’ largest natural gas concerns traveled to Vilnius, A.Brazauskas didn’t hide his sympathies toward Russian representatives – primarily LUKOil and GAZPROM. September brought the first significant political scandal since A.Brazauskas’ first arrival in government. He was reminded of the historical details involving the privatization of the Draugyste hotel restaurant Šešupė along with his and his wifes, Kristina Butrimiene, ties with LUKOil-Baltia manager I.Paleicik. He was also reminded of the bankruptcy of EBSW and its managements’ ties to those around A.Brazauskas. Significantly, this is the first time in 20 years that scandals started to “stick” to A.Brazauskas. His popularity dramatically declined as it appeared that the public was demanding that, on the whole, he was responsible for his Government. At the end of November 2005, A.Brazauskas found himself at the threshold of resignation. 

However, the ruling coalition managed to hold on at the time. It appeared that A.Brazauskas, and increasingly influential leader of the Darbo (Labor) Party Viktoras Uspackichas agreed on the terms of purchase for the shares in Mažeikių Nafta. The game, though, was ruined by the Russian concern Jukos, which announced that the shares of Mažeikių Nafta that it holds will only be sold to the highest bidder. The Polish concern PKN Orlen became the frontrunner, after a change in leadership it also acquired the support of the Polish national leadership. A.Brazauskas’ plan – for the government to purchase the shares held by Yukos and to sell Mažeikių Nafta to his designate, collapsed.

A.Brazauskas’ Government’s decline into agony began in April 2006 with V.Uspackich’s successful interpellation against Seimas Chairman A.Paulauskas. Understanding that he could be next, A.Brazauskas unsuccessfully tried to convince his party’s representatives to support A.Paulauskas – regardless it was too late. He did manage to resist V.Uspackich’s post interpellation grab at control of the Government, but the coalition’s disintegration could not be stopped. In May, the State Security Department and the Prosecutors Office raided the offices of the Darbo (Labor) Party and accused it of improper campaign financing activities – V.Uspackich fled to Russia.

On May 30^th, President V.Adamkus offered that A.Brazauskas should refute the public’s uncertainty in his Government and to follow the Constitutionally defined methods to form a new Government and receive a vote of confidence from the Seimas. The next morning, the Darbo (Labor) Party’s Ministers resigned from the Government and A.Brazauskas left to meet with the President where he offered the President his resignation.

Formally, no one overtly asked that A.Brazauskas resign. Had he received a vote of confidence from the Seimas, his Government would have been able to continue to work. However, A.Brazauskas didn’t have enough votes for the vote of confidence and he would have had to look for support from the Conservatives – with which A.Brazauskas could not find any points of common ground. Had A.Brazauskas tried to put aside his ambitions and in looking for support, taken the required steps to negotiate with Conservative leader Andrius Kubilius, who well remembered the previous years privatization efforts at “Draugyste”, A.Brazauskas would not have been able to maintain his nomination. For this reason he chose to resign – by his own choice, but in reality he was forced out by the events. His chosen successor as Prime Minister, Zigmantas Balčytis, as with A.Paulauskas before him, failed to receive the confidence of the Seimas.

The head of Government was taken up by Gediminas Kirkilas, a representative of the younger generation, who was nominated to the post by the independence era formed political elite which now formalized its victory over the old “Brazauskas” political elite.

The true extent and breadth of ones political personality only becomes clear once one leaves high office. A.Brazauskas’ influence in government remained significant even after he stopped participating in active politics. His words were seriously regarded not only by fellow Party members, but also by the business world, diplomats and the public at large.

Of course, over time even the most powerful leaders lose influence. This last year was particularly difficult for him as the new Government not only significantly cut the budget of his personal project  Valdovų Rūmai (Royal Palace) but also saw his chosen successor not approved for Party leadership. In looking back, the usurper of his position as Chairman of the Social Democrats, G.Kirkilas, lost his post in a shameful way – even A.Brazauskas’ now long time protégé Zigmantas Balčytis recognized the advantages behind non Soviet Party elite associated Algirdas Butkevičius.

Time will tell. But even from within the current generation, a universally recognized leader like A.Brazauskas isn’t readily apparent.

In analyzing his work, the proponents of A.Brazauskas will point out that during his leadership Lithuania established friendly relations with its neighbors, created strategic partnerships with Poland, implemented the Litas currency, became a candidate and then full member of NATO and the European Union and experienced unforeseen levels of economic growth. Opponents will recall that each forward step taken only happened with pressure from behind, no systematic reforms were created via his initiative yet he became the “shining star” and partook in the fruits of other peoples labors. Both versions will be true.

Translated by VG

“This decision is very important, however, it is not the only step in realizing the Government\’s strategy to seek full energy independence”, Prime Minister Andrius Kubilius pointed out. He noted that the construction of the terminal was directly related to the implementation of the European Union directive known as third energy package in Lithuania, announced by the Government in May.

The third package calls for the separation of gas production and supply from transmission networks. The construction of the LNG terminal would be pointless without separating gas supply and distribution since Lithuania would fail to distribute gas shipped to Klaipeda as the state does not control the gas mains.

At this moment in time, gas supply and distribution is owned by the “Lietuvos dujos”, with Russian monopolist „Gazprom” being its main shareholder. In the Prime Minister’s opinion, a huge strategic mistake was made during the privatisation of “Lietuvos dujos” by A. Brazauskas’ Government: the main network of gas transmission was left in the hands of “Lietuvos dujos”, and the implementation of the third energy package is expected to correct this mistake. The Prime Minister stressed that nearly nothing specific had been done in the gas market to pave way for alternative gas supplies; on the contrary, the „Gazprom” monopoly was virtually left intact.

Other steps are being planned alongside with the construction of the LNG terminal and the implementation of the third energy package, ultimately leading to the opening of the Lithuanian gas market: the creation of gas exchange and construction of Klaipeda-Jurbarkas gas pipeline (thereby establishing a main gas transmission network ring in Lithuania).

The “Gazprom”has been taking full advantage of his monopolistic positions, hence the price it charged per 1000 cubic metre of natural gas for Lithuania was 100–150 U.S. dollars higher than the gas prices in Western Europe. Globally, gas prices dropped due to the growing oil shale gas consumption and the relevant decrease in liquid gas prices. The absence of alternative supply in Lithuania enables the Gazprom to keep prices high for the time being. “The third package and the terminal will translate into a higher degree of energy independence and lower gas price for Lithuanian consumers”, said the Prime Minister.

During his meeting back in March with Russian Prime Minister Vladimir Putin, Andrius Kubilius pointed out the need for modernisation of the Gazprom pricing policy, otherwise, Lithuania would be pressed for looking for gas supply alternatives.

In parallel, consideration is given to Belarus’ bid to build the LNG terminal in Lithuania. According to the Prime Minister, Lithuania understands Belarus’ determination to seek alternatives to Russian gas and it only confirms the regional character of the energy security problem. At the same time, it is noted that the terminal servicing Belarusian needs is considered separately from the terminal project for Lithuania.

Another important issue in the energy independence strategy is an independent electricity market and its redirection from Russia to the European Union (the previous governments had not done anything in this respect over the period of twenty years again). The immediate tasks of the current government in this area are the development of the Lithuanian power exchange, electricity links to Sweden and Poland, construction of NPP in Visaginas, and the ultimate accession to the European Union\’s electricity distribution system.

The Government also promotes the development of alternative energy prospects, particularly with a view to the strategic objective of using only internal renewable sources for heat generation in the long run, bio-fuels in the first place. This would not only significantly reduce dependence on imported gas, but would also bring down the price for consumers. The government will continue to consistently seek to reduce heat energy consumption through public buildings and apartment houses renovation programme.

“The Government believes that in such a way we will manage to achieve a breakthrough in Lithuania in creating an independent, secure and transparent energy system, beneficial for people and integrated with European power systems”, said the Prime Minister.

Dapkus Mr Prime Minister, the political season has ended together with the end of the Seimas spring session. What has the ruling coalition and the government managed and not managed to achieve during this political season? Which of the tasks that you assigned to the government and the ruling coalition at the beginning of the session would you like to mention?

Kubilius Indeed, even though the Seimas and the government are not the same institution, when a parliamentary sessions ends, we assess the work we have done. The government has very clearly defined the most important priorities for this year and it has been making every effort to implement them.

One of the most important priorities has been the same everywhere in the world and in Europe – to deal with the aftermath of the crisis and to ensure economic revival. I am happy that even though it was difficult to make the decisions, and even though these decisions were painful to the people, we managed to make them, and we continued cutting some expenses, including social expenses. Because we have done that we can now be more optimistic about our future and say that because we were responsible enough, our generation will not burden Lithuania with debt, which means that we feel responsibility for the future of our children.

Another thing that I would like to emphasize, and this was an important issue during this session, we have adopted the legal acts that would help us cope with unemployment. I have in mind the amendments to the Labour Code that will encourage businesses to create new jobs, which sometimes can be temporary jobs, and to employ new workers.

And the third thing I would like to mention is that we will continue looking for ways to help businesses. We see certain signs that some businesses are recovering from the economic crisis.

It is very important that there are first signs that our policy of inviting IT companies, big global companies, to open their businesses in Lithuania, has started showing results. Barclays has established its global computer-engineering centre in Lithuania. We are in the process of signing an agreement with Western Union, which will also set up a similar centre. We are about to sign an agreement with IBM. All this is very important if we consider our long-term perspective.

What other strategic economic issues could I mention? Perhaps changes in the energy market. I would like to remind you that we have been living without the nuclear power plant since 1 January. We had to quickly adjust to the new situation. An open electric power trading market was launched. We have been successfully creating a common Baltic electric power market. We are going to have changes in the gas sector. I would also like to mention the administrative reform. By reforming the system of regional governments we were seeking to bring local government decisions closer to the people. We have not yet managed to ensure that all local governments take over or seek to take over as many duties of regional governments as possible, but we will keep moving in that direction.

As you have mentioned, Lithuania has been living without the Ignalina nuclear power plant since 1 January. What are the government’s plans regarding a new nuclear power plant or regarding other ways that could be employed to ensure electric power supply?

First, I would like to note the fact that the price of electricity went up a little after we closed the Ignalina nuclear power plant, but it did not go up as much as it was forecasted in 2008. They were saying that the price of electricity could reach 0.80 Litas or even 1.00 Litas per kilowatt-hour. But this did not happen. The price of electricity went up by 15-20 per cent (to 0.42 Litas). We certainly have managed to protect Lithuania from bigger problems. And we have started getting ready for further developments.

During this political season we announced an international tender for a strategic investor. I believe we will have such an investor by the end of this year. And then together with our neighbours Latvians, Estonians, and Poles we will move on to concrete preparation for the construction. We are in contact with our neighbour Belarus. I think that through such cooperation we will perhaps manage to persuade the Belarusians that it is not very wise of them to build a nuclear power plant near the Lithuanian border. But these issues will be discussed in the future.

You have mentioned that nuclear power plants in Belarus and Kaliningrad may be built. What will happen with our own construction project if so many nuclear power plants are planned to be built in our neighbourhood?

I think that if we coordinate our plans with our neighbours, if we implement them, if we do not get distracted, and if we adhere to our plan, perhaps some of our neighbours will change their minds. But to achieve that we should ensure that our plans are not misunderstood. And I think that there is more and more understanding as far as our plans are concerned.

I am pleased that, not so long ago, perhaps at the beginning of May, there was a meeting of the four energy ministers or economy ministers responsible for energy issues in Brussels. The meeting was organized at our initiative and the initiative of EU Energy Commissioner Guenther Oettinger. This was a meeting of the Lithuanian, Latvian, Estonian, and Polish ministers, and Oettinger also participated in the meeting. They signed a very important document, a declaration on the regional importance of the Visaginas nuclear power plant. The document includes the EU’s involvement in the implementation of this project.

The government has decided to merge the electric power networks and to establish a new electric power group. Does it have anything to do with the strategic investor? Besides the construction plans, what are you going to do to restructure the electric power sector?

The restructuring plans are also based on the European Commission’s directives on the separation of the electric power transmission, distribution, and production networks. However, at the same time, the state will remain the owner of all these companies. We will seek to manage all the assets that belong to the state in a proper and effective way. I would like to draw your attention to the wider context here.

We are about to prepare the first public report, which we will publish next week. The report is being prepared in accordance with international standards. It will show how the state is coping with the management of its assets, and the value of these assets is really high – about 18 billion litas. This constitutes about 25 per cent of all the assets existing in our country. For the first time we will announce the results of the management of these assets. The results will be calculated in accordance with international standards.

I have to admit that the results do not look very good. If, for example, such assets were managed by Sweden, the state budget would have received additional 1.5 billion Litas. This is how much profit we could generate from the management of the state-owned assets. This includes the energy and transport sectors, railways, the national mail service, the state-owned woods, and the state-owned buildings where various bureaucratic organizations have their offices.

This leads us to an obvious conclusion that we should reform the management of our assets so that it is done in accordance with internationally accepted principles. There are three key principles. First one is transparency: Reports on the state’s management of the assets should be made public quarterly and the main report should be made public yearly. This will allow the public, our electorate, and international markets to evaluate our success.

This will allow us to show clearly and in accordance with international standards how we are managing our assets. We have not been doing that for 20 years. Nobody has tried to do that; there was just talk about our assets in general terms. Some were saying that we were managing them well, others that we were doing not so well. Now, however, we have clearly shown what the real situation is. The second principle is that we should formulate our goals in a very clear way; we should define what is it that the state is seeking by managing its assets. As we can see from the experience of other countries, one clear goal should be the increase of value of such assets. And the third one, a very clear principle, is to depoliticize the management of state-owned companies.

We are going to base our work on the aforementioned principles. There will be very important reorganizations and changes that should bring benefits to all people of Lithuania.

We should do the same in the energy sector. The assets controlled by the energy companies should be used to implement important energy goals, including the construction of the new nuclear power plant. The same goes for the construction of the electric power bridges, and we have made progress in both projects, with Sweden and Poland. As you can see, we have a lot of important work to do here. As for the gas sector, we are methodically seeking to correct the really big strategic mistakes that had been made in the past when the entire Lithuanian gas sector was privatized and when the distribution and transfer pipelines were not separated. And now we are prepared to implement the EU directives without any exceptions and reservations and to separate these two functions.

Without a doubt, the owners of the Lithuanian gas sector, be it Gazprom or somebody else, are not happy and will never be happy with the changes. But we are seeking to carry out this reorganization because this is the only way to ensure that Lithuanian gas users – individual users and businesses – could finally get the possibility of an alternative gas supply. This is why our next step, which we are going to make, is the construction of a liquefied gas terminal.

As for the gas sector, the separation of the functions and the implementation of the EU directive may lead us to the deterioration of relations with Gazprom. What would be the consequences? How would the owners of Gazprom and Lithuanian Gas react to these initiatives? For a long, time they have been successfully opposing the plans, such as the construction of the liquefied gas terminal.

I do not know what attitude Gazprom has towards the package of measures approved by the EU. If it does not like these measures, it could discuss this with the European Commission. We see the implementation of this directive as a huge strategic benefit to Lithuania, because it is absolutely obvious that our gas sector will not be interested in any alternative pipelines, links with Poland, or the construction of the liquefied gas terminal as long as it is controlled by Gazprom. This is a natural reaction if you are a monopolist, and this is what is today…

It is not important whether this monopolist is Gazprom or some Western company. It would be insane to ask them to allow others to enter the market. We should make it very clear that perhaps we overlooked something, or, if we want to be more precise, perhaps we made a mistake when we allowed one monopolist to privatize the entire Lithuanian gas sector. Seven or eight years have passed since the privatization, and despite all the declarations that alternatives would be created, nothing is happening. This is because, and I will repeat my words again, a monopolist would never agree to such things. And we should understand that very clearly.

Coming back to the liquefied gas terminal, what are the plans, with whom the government is going to build it, and which investors is the go averment going to invite?

We want to move fast forward, the time for discussions is over. If we look at the situation in the world market, international markets, it is absolutely obvious that we are painfully losing because we do not have any alternative to the monopolistic gas supply. In a situation like ours, the monopolist can set his own price that is about $100 higher than Gazprom’s price in the European market. Or the price for 1,000 cubic meters is $150 higher than the price of liquefied gas sold on the world market.

Big changes have taken place in the world when the Americans discovered the technology of extracting shale gas. The United States has got the possibility of having its own gas resources thanks to that. This is why there is a huge oversupply of gas right now in the market. The price of gas extracted in various Middle Eastern countries, such as Qatar and other countries, has fallen drastically, which means that we do not have much time to consider and discuss things.

But are these countries interested in investing in Lithuania, in coming to Lithuania with their capital?

Without a doubt, they are willing to do that. We see a possibility of negotiating with the countries that produce liquefied gas, be it Qatar or some other country; that is an object of discussion. But it is clear that if the state is building such a terminal, it should maintain its leading role in the project.

When will negotiations with an investor and the actual construction be launched?

I certainly would like the process to be as speedy as possible. I think that we should agree on certain organizational issues this summer and after that we will move forward.

But there were plans for you and your delegation to visit one of such countries, and the visit did not take place.

It has been postponed a little, but that is not a problem. We want to have a very clear vision of our actions and our plans. And I hope we will have a plan in the near future. According to our calculations, Lithuania may need about 1.5-2 billion cubic meters of liquefied gas per year. This will give us a very important alternative, because Lithuania uses about 3 billion cubic meters of gas per year. I would like to mention here another new initiative. As you know, during my recent visit to Belarus I had meetings with the Belarusian prime minister and president, the Belarusian representatives expressed their very clearly-formulated strategic interest and asked Lithuania for a certain help or cooperation so that Belarus could also have alternative gas supplies…

… Because they are tired of the constant pressure…

… Yes, they are tired of that; they also went through the so-called gas war. I had an impression that their interest was not melodramatic; it was a very real interest. Without a doubt, their needs are much bigger; they would like to have a liquefied gas terminal for the capacity of up to 8-10 billion cubic meters of liquefied gas, which would clearly change the nature of such a terminal. This is another reason why we need to make swift decisions.

Does this mean that there is a possibility of Belarus participating in the project in one way or another; is it really interested in that?

Belarus is interested, we just need to quickly consider all the possibilities, whether we start with a small terminal, the one we have already planned and which would suit our needs, and then think about how to expand it, or whether we should consider some other options. But I think that the fact the Belarus is looking for alternative sources of gas supply is a very important new tendency.

There have already been attempts to build a terminal in Vilnius, but interest groups had ruined the plans with the help of the legal system. Do you think this time the project will succeed?

All I can say is that our strategic priority is to transform our energy sector into an independent, autonomous, and integrated into the EU energy system. This does not mean that we will stop buying gas from the countries like Russia if the price seems competitive to us. But our strategic priority is an autonomous and independent energy system, and it should be integrated into the EU network.

Over the year and a half that we have been in power, we have demonstrated very clearly that in the areas where we see our most important strategic goals, we manage to achieve the results we need. We manage to implement our decisions even when our coalition is not stable, when it engages in discussions, or when it is chaotic, despite all the discussions and other political peculiarities we manage to achieve our goals. Therefore I do not see any reason why we should doubt whether we will be able to make decisions on such an important strategic issue.

How will this influence the price? Now we are paying a very high price for gas…

As I have already mentioned, the current price of 1,000 cubic meters of liquefied gas on the international market is about $150 less than the price we are paying Gazprom, the monopolist that provides gas to Lithuania. I have discussed this with Russian Prime Minister Vladimir Putin. I told him that Gazprom’s representatives should themselves realize that they have to analyse their price policy and they have to make it more flexible. Otherwise the price will only motivate us to seek alternative supplies. Actually, we find alternative supplies important and necessary to us in any case.

What has the Russian prime minister said about the prices of gas and Gazprom’s activities in Lithuania in general? As far as I remember, there had been cases of politicking and meddling in our domestic policy.

We dedicated a lot of time, perhaps half an hour, to the discussion of the tendencies in the global gas market. Perhaps the Russian prime minister thought that we did not know and did not see what was going on, so he was trying to explain to me that the Americans had discovered shale gas. I told him that we knew that and that the Poles could do the same. In other words, we exchanged the information we had. I think that the times when Gazprom could be a monopolist and could dictate its conditions in Europe will soon be over. When during the meeting with the Russian prime minister I said that we were planning to build a liquefied gas terminal, he repeated three or four times that Russia was not against such plans.

Mr Kubilius, what can you say about the rumour that after the electricity distribution networks are merged, they will be privatized?

This interpretation is again not exactly correct… We are speaking about the management of all state assets; which is about 17 billion Litas, including the electricity networks. After we deal with the initial arrangements, that is after there is the initial transparency and order, and after we announce all the data, and after we organize the management process, then we will allow private capital to contribute partially to the state companies, but this part will be very small, we will certainly not give away the entire state portfolio. And we are going to do that not the way we used to do such things in the past when privatizing objects, but we will distribute part of the shares in the market, at the same time we will strengthen capital markets and create new financial instruments. In any case, when the partially private capital enters the management of such assets, it brings positive changes. Private capital always seeks to reduce all expenses and stop all types of squandering. If this is done, state-owned assets could generate profit.

You have mentioned that there has been progress made in the construction of the electricity bridge to Sweden. What have we achieved?

Last year, we achieved crucial political agreements. We had to persuade our neighbours Latvians. Without any doubt, we had to work very consistently to do that. We also had to do a lot of work to persuade the Swedes that we were really ready to build not just some line between a Lithuanian and a Swedish business, but a real infrastructure line that the entire Baltic electric power market will be able to use. The Baltic electric power market will be connected to the Scandinavian electric power market.

In the past, the owners of our energy companies, including the owners of LEO LT, did not manage to persuade the Swedes. Perhaps they had some other plans. We have managed to reach an agreement and to ensure that this project is partially financed by the EU. Now we are doing the concrete practical work. According to the Swedish standards, and according to all international standards, such work cannot be done in one day. We have been urging our neighbours Swedes to accelerate the work, because according to the initial plan of the Swedish energy sector, such a line could start working in 2016.

You have mentioned that the price of electricity after the Ignalina nuclear power plant was closed did not go up as much as it was expected. You have said that this was because of the open electric power market? However, others are saying that we could have made agreements with Russian monopolies and receive electricity for an even lower price.

We think that the situation with the prices was exactly what it was because we created a possibility for the market to function, and the market is operating in accordance with the established Scandinavian model, we applied the same rules. And this is why we managed to avoid the rapid growth of prices that was predicted in all the reports that were used to try to convince [the EU] that the closure of the Ignalina nuclear power plant would be catastrophic for Lithuania. The previous government made an official statement that the price would double after the Ignalina nuclear power plant is decommissioned.

Does this mean that an agreement with RAO (Russian electricity company) was not needed?

It was not needed, that is for sure. And, in my opinion, the fact that the Scandinavian model is working is one of the key reasons why we have a competitive electricity price.

’Of course, we’d like to see the project proceeding more actively. However, things have been moving faster since the current government took office. The Visaginas Nuclear Power Plant is an important project for the whole region. Estonia is interested in taking part in it,’ the Estonian Prime Minster said to Veidas

US Thermo Fisher Scientific confirmed that it has completed the acquisition of 100 per cent of shares of the Lithuanian company Fermentas International.  The US giant has bought the Lithuanian company for USD 260 mln and is expecting to finalise the deal in the autumn of 2010.

Thermo Fisher Scientific has announced that the company is planning to expand its operations in Lithuania.  ‘We are glad to have completed Fermentas acquisition procedures. We are planning to continue infrastructure expansion. With sales rising, we don’t rule out increasing resources,’ Norman David Eansor, the president of life science research at Thermo Fisher Scientific said to reporters on 20 July.

Lithuanian Prime Minster Andrius Kubilius expressed his satisfaction about the deal. ’It is symbolic that the largest private deal in Lithuania has been achieved in the field of science. Science earns good money. It proves once more that the direction chosen by the government is right. The government is investing heavily into research, high-tech clusters, and development of valleys. We are sparing no efforts in inviting large foreign companies to invest in Lithuania,’ Kubilius said to Public radio on 20 July.

The golden age of Lithuanian foreign policy – when we were enjoying the attention of world leaders and when we knew exactly which goals to pursue – is over, IQ, the Economist writes.  However, even now Lithuania has to face many foreign policy challenges. Perhaps there are even more challenges now than there were in the past: Big players are seeking new agreements, and therefore the risk that the interests of small countries may be forgotten is growing.

IQ, the Economist thinks that some foreign policy steps President Dalia Grybauskaite has taken during her first year in office are seen as controversial. For example, she invited Belarusian President Alexander Lukashenka to Lithuania after a long break in visits, and did not go together with other Central and Eastern European leaders to meet with US President Barack Obama in Prague. Moreover, Grybauskaite seems to have forgotten to invite Georgian President Mikhail Saakashvili to Lithuania. All this shows that Grybauskaite has decided to change the foreign policy that was implemented by former President Valdas Adamkus. However, political scientists have not had an occasion to summarize “Grybauskaite’s new doctrine” yet. The old foreign policy has ended, and it seems that the new one has not been formed. Is Lithuania aware of the international policy changes and does it duly notice the possible dangers that may arise because of the possible secret agreements among the big players, asks IQ, the Economist?

Darius Semaska, the president’s foreign policy adviser, believes that the current tasks of Lithuanian foreign policy do not necessarily need to be grand and ambitious. The declarations that we have to be the centre of the region have obviously brought no results. We need to strengthen our ability to take care of Lithuania’s interest in the EU and NATO, and we need to do that without any superficial ambitions,” the presidential adviser says.

Semaska: We Should Always Be on Alert

The president delivered her state of the nation address at the beginning of June. Many politicians and political scientists noted that the president dedicated only several sentences to foreign policy, and that all she said was an abstract summary of our traditional foreign policy goals. What is the meaning of the three priorities the president has mentioned: active integration into the EU, implementation of the Euro-Atlantic agenda by strengthening Lithuania’s security, and constructive relations with the neighbours?

Semaska – We have been saying for a long time now that there should not be a “second-class” membership in the EU and that Lithuania should be able to take advantage of all the rights EU members enjoy. If there are any restrictions in the EU, we should remove them. This is what the president had in mind when she spoke about our further full-fledged integration into the EU. One of the most topical issues, no matter how banal it may sound, is the liquidation of Lithuania’s energy isolation. It is important to us to liquidate this isolation by building electrical power links. We should have done many things already. We have not done some of them because of our fault, some because our neighbours were not very interested. So, as far as energy issues are concerned, Lithuania has not fully integrated into the EU yet. However, some decisions we have made inside the country, for example opening the electricity market, have finally set the electrical power link projects into motion. This makes it possible for us to think about creating a similar market for gas in our region.

Our membership in NATO is also a process that has not been completed yet. We need to continue looking for a proper balance between our armed forces whose task is domestic defence and the possibility of developing our participation in foreign missions. Of course, another thing that is very important is to ensure that we do not end up as a “second-class” member whose security is less important in the context of the changing global situation and the possible plans of the big players to draft new agreements.

It is a positive thing that we have avoided the unnecessary statements on the relations with our neighbours, which would have angered our neighbours and created unnecessary tension. The president did not get involved in any verbal fight; she has demonstrated that we respect our neighbours and that we speak about the problems with our neighbours, as opposed to doing that through the media.

One of the tasks that Grybauskaite has managed to implement was to restore contacts with the highest-raking Russian officials. However, we have not received any signals from Russia that it has changed its attitude towards Lithuania. Did Russia ignore our attempts to revive relations?

I do not think our efforts have been ignored. We continue maintaining our contacts, which means a lot if we take into consideration that there had been no contacts between our top officials whatsoever for some time. Now we need to get down to work and prepare concrete proposals and agreements with Russia. We are working on a substantial set of agreements on cooperation in criminal cases, various cross-border projects, construction of the Panemune Bridge, and so forth. We are hoping that at least several agreements will be signed this fall, when the president is going to pay a visit to Russia. The meeting could become a historical event in our relations.

Why is Belarus so important to us? There was a lot of conflicting opinions on Grybauskaite’s decision to invite Lukashenka to Vilnius. Is the EU’s attitude towards Belarus – to what extent we should isolate it and to what extend we should help it – is changing?

It is obvious that the EU sanctions against Belarus – its demands that Belarus does all things at once – have not brought any results. This is why there have been discussions in EU institutions for several years now that we should try to behave with Belarus in a different way – to create a dialogue step by step. Now everybody agrees that if we do it this way, we can expect at least minimal progress.

Before her meeting with Lukashenka, the president discussed and coordinated her position with several heads of EU countries and with Javier Solana, then the EU high representative for foreign and security policy. It was obvious that she could not avoid discussing issues important to the EU when discussing bilateral relations. Therefore, the Lithuanian president played a role of an EU representative in this meeting.

As for the outcome of this open policy, one of the most important ones is that Belarus has amended its Election Law. I think this is an important step. Of course, formal changes are not enough as far as democratization is concerned.

The US President Barack Obama administration has obviously turned away its attention from Europe and is flirting with Russia. But can Lithuania expect more attention from Western Europe? After all, Berlin and Paris are also more interested in relations with Russia than in Lithuania’s security and energy problems.

When European Commission President Jose Manuel Barroso met with Grybauskaite during the Baltic Sea States’ Summit, he summed up the discussions on the electrical power links in the Baltic region by saying: “You can count on me.” Europe has started to better understand our interests, but we need to continue our work in that direction. If we understand and demonstrate that we understand why and how relations with Russia are important to the big EU countries, it will help us direct their attention towards our needs and problems. We were a thorn in the EU’s side because of our attitude towards Russia. The Lithuanian president is now trying to transform our role by creating an image of a constructive partner.

How can Lithuania avoid potential isolation when neither the United States nor the big EU countries care about that? Even Poland, our closest neighbour, is seeking more pragmatic relations with Russia.

Well, the wording that the United States has turned its back on Lithuania is too strong. We are currently engaged in a very intensive cooperation at the highest diplomatic level, especially with the US State and Defence Departments.

On the other hand, the volatile situation is a challenge to us. Perhaps the situation when important international problems are far away from us can even bring us new possibilities. After all, there was a discussion in the past that Lithuania perhaps should become a “golden province” that would not participate in the games of the big countries. I do not think that we should become a “golden province.” The president is really doing her best to ensure that Lithuania is getting proper attention.

Of course, our current situation is different from the one we had when we were seeking membership in NATO and when we joined the group of potential NATO members. At that time we felt very clearly the shift in the US attitude and the exceptional attention to our country. Now we have achieved our goal, Lithuania is a NATO member. Of course, it is important to be on alert even now so that we do not become a toy or an object whose interests could be forgotten or played with.

Cases of nationalism and conflicts with the Poles are on the rise in Lithuania. Criticism of Lithuania in Poland is also growing. Does it mean that our strategic partnership has exhausted itself and that we may have to face a “strategic conflict,” something we had during the interwar period?

It is very sad that both sides have not managed to avoid cheap escalation of emotions. Our society and our media sometimes are asking what we have received from Poland to make any concessions to the Poles. I think that the spelling of their surnames is certainly not a concession to the Poles. We should see it as a liquidation of discrimination against our citizens, so that they do not have to distort their surnames. Speaking of Poland’s support to Lithuania, we should not devalue it. I remember that when we were seeking to join NATO, Poland was very supporting. Poland had more ties with the Americans and it was genuinely interested in our membership in NATO. The Poles have never used the NATO membership card to blackmail us. The example of Croatia – which finds it difficult to negotiate with the EU because Slovenia has various objections – shows how important it is to have the support of one’s closest neighbours.

Lithuanian society is not very interested in foreign policy. We are provincials who are engaged in our own domestic issues and who are not willing to get out of our shells. Is this normal or should we develop the people’s understanding of what is going on in the world and how these processes affect Lithuania?

I think that a small nation can survive only if it is open and willing to accept global changes. We, as a nation, can become stronger if we become more open. But, I would like to note, that, comparing to other countries, a statistical Lithuanian knows about Europe quite a lot. And we should promote this interest, first and foremost through education programmes. The efforts of the state institutions to superficially generate the interest of the Lithuanians in foreign issues and to increase their active involvement sometimes turn into something grotesque. This is why it is not reasonable to seek to interest society in foreign policy issues at any price. This should be done systematically through the education system.

Lithuanian cabinet is to express its political will on 21 July to build a liquefied natural gas terminal in the Lithuanian seaport of  Klaipeda. 

Lithuanian Prime Minister Andrius Kubilius said to reporters on 19 July, ‘Today we discussed this matter as such and will on Wednesday make a decision expressing the political will of the government to build the liquefied natural gas terminal and take specific actions so as to implement the decision with the instruments available, including the company Klaipeda Oil’.

The Prime Minster claimed that the company that would construct the facility will be established soon.  Kubilius also added that the possible participation of a private investor will be decided then.  ‘I would not rule out the involvement of private capital. Perhaps we could look for partners who are known globally as the producers of liquefied natural gas,’ Kubilius said to the reporters.

LNK TV news announced that it could take up to two years to build a terminal.  Lithuania is considering building the terminal that would cover its yearly consumption with the annual import capacity of about 3 billion cubic meters.  Currently all of the gas consumed in Lithuania comes from Russia.

Lithuania’s government also announced that it will attempt to establish a trade in natural gas through the exchange.  Lithuania’s power exchange Baltpool, which began its operation on 1 January of 2010, has reported that it plans to expand its operations and trade in gas in addition to electricity.  Kubilius said to the reporters, ’We will seek to launch the implementation of gas trade through the exchange in Lithuania, just as it is now with electricity.’

In Tbilisi, Clinton announced the United States supported Georgia’s territorial integrity, urged the Kremlin to withdraw its troops from South Ossetia and Abkhazia, and said the deployment of the Russian armed forces in these Georgian regions was “occupation.” In this case words can be equated with actions. Not many in the world are brave enough to call the situation in Georgia the way that Clinton did. At the same time, Clinton urged Tbilisi and Moscow to look for ways to solve the conflict peacefully.

Mite continues saying that finding them will not be easy, but Georgian President Mikheil Saakashvili hopes that better relations between Russia and the United States can perhaps alleviate Georgia’s situation as well. We recall that for a few years now Russia has occupied South Ossetia and Abkhazia and Russian tanks are stationed a few dozen kilometres from Tbilisi. In addition to Russia, the statehood of these creations was recognized by Venezuela and Nicaragua. After Barack Obama came to power, the United States’ attention and support for Georgia was almost zero, but it looks like the recent trip by Clinton has changed the situation.

The US secretary of state also visited Azerbaijan, Poland and Ukraine, in an attempt to demonstrate that America’s attention to these countries has not been reduced and that their interests are not sacrificed for the sake of improved relations with the Kremlin.

During her visit in Kiev, Mite writes, Clinton emphasized that NATO remains open to Ukraine’s membership. Currently, such a statement has a mere political significance, because the people who came to power after the presidential election adhere to the position of not joining any military structures and adhere to the policy of neutrality.

For the sake of truth, one has to admit that the majority of Ukrainian people have never supported the country’s membership in the alliance. However, the public’s opinions change with time, and perhaps the membership issue will become important for Ukraine sometime in the future. Whatever the case may be, Clinton hinted to Russia that the United States did not recognize any zones of influence, on which the current Russian foreign policy is based.

During the visit in Azerbaijan, Clinton called for a solution to the Nagorny Karabakh problem and promised America’s support on this issue. She also calmed the leaders of Azerbaijan, which is rich in natural resources, by saying the United States was not indifferent to the fate of Azerbaijan.

During her visit in Cracow, Clinton signed two important agreements. One of them was the agreement on deploying components of the antimissile defence system in Poland. The other one was on US assistance in searching for and in utilizing shale natural gas. The United States is the world leader in the shale natural gas technology. Due to the shale natural gas extraction, the United States has recently become the world’s number one producer of natural gas. Surveys show that Poland possibly has enough shale natural gas to increase the overall natural gas extraction in the EU by almost 50 per cent. If the estimates are correct, the influence of Russia’s Gazprom in Europe will greatly diminish. At the same time, the chances of applying energy pressure on EU countries, including Lithuania, will diminish as well.

If nothing else, Mite concludes in his article, Clinton’s visit was important, because for the first time Barack Obama’s administration clearly demonstrated that countries of Eastern Europe and former Soviet republics remain important to the United States. She somewhat dispelled the fears that for the sake of improved relations with Russia the United States was prepared to sacrifice its allies and countries that are friendly towards the United States. However, it is hard to say how successful will be the attempt at the same time to improve relations with Russia and to make sure the Kremlin withdraws its troops from Georgia, for example.

The Lithuanian President and the Estonian Prime Minister discussed the relations between Lithuania and Estonia, bilateral economic cooperation, emphasized the need for coordinated economic decisions and the aim to achieve energy independence of the Baltic States, Presidents palace said in a press release.

“Energy independence of the Baltic states is one of the priorities of the entire European Union. In order to achieve it, the implementation of energy security projects in the region must be speeded up, giving them particular attention and financial assistance of the European Union,” the Lithuanian President said.

According to the President, in order to eliminate the energy isolation of the Baltic States, it is necessary to promote energy diversification, reduce energy dependence on a single supplier and expand the integration of the Baltic Sea region market as well as ensure the development of power bridges between Lithuania, Latvia and Estonia.

President Dalia Grybauskaitė and the Estonian Prime Minister discussed priority regional projects which would require financial assistance from the new EU budgetary perspective to be launched in 2014. Such projects would promote the development of power lines, high technologies, science and competitiveness in the Baltic States.