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

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.

“Lithuanian people wanted change and now they see it on the move. Not as fast as we had wanted but still in these 365 days Lithuania took the courage to go for change towards a more transparent, fairer, safer and more civic-spirited state. This is an ambitious agenda. But if we continue working hand in hand towards a common goal, we will succeed in creating a better Lithuania,” the President says covering her first year in office.

For many people, according to the President, a better Lithuania is about lower consumer prices; therefore, the primary goal at the time of recession is to protect people against manipulation in prices, curb arbitrariness on the part of various interest groups and prevent price rise. Amendments to the Law on Pharmacy adopted in response to the President’s call had a downward effect on medicine prices. The President’s veto on amendments to the Law on Heat Sector prevented a rise in heat prices. With the dissolution of Lithuanian Electricity Organization, LEO LT, the adoption of a new methodology for calculating electricity prices and the creation of a functioning electricity market, electricity price regulation was introduced. New leadership of the Competition Council, the National Control Commission for Energy and Prices, and the National Audit Office enabled to monitor cartel agreements more closely, to contain water-supply and heat prices and to introduce a more rigorous supervision of the use of public funds and public property.

Protection of the poorest people is the primary task set by the President for social policy-makers. According to the President, a safe childhood and a secure old age are the centerpiece of a responsible social policy. The authorities responded to the President’s call to provide a mechanism for compensating pension cuts, start long-term social security reform, create a legal framework against violence, adopt legal amendments imposing higher penalties for crimes against children, make the reduction of unemployment a priority for the Government, introduce a tax-exempt cap for social payments and put into action the programme to combat social exclusion in the region of the Ignalina Nuclear Power Plant (NPP) in Visaginas.

The President says it is corruption that causes the largest damage to the state and people-to-people relations. “Corruption is like cancer metastasized in all spheres of life. We need a much more powerful cure than ever before,” the President says. The President successfully insisted on the extension of the period of limitation for crimes of corruption and tabled proposals to the Seimas to set ten times higher sanctions for smuggling, corruption and economic crimes and to legalize the seizure of illegally acquired property. The President vetoed the Law on Land Reform and proposed amendments to prevent corrupt transactions in public land in urban areas, while the presidential veto on the Law on Construction eliminated the possibility of unauthorized construction and triggered legal amendments to guarantee a transparent issue of construction permits.

To make people trust the state, their trust in justice should first be promoted, the President says. On the President’s initiative, a reform was started in law enforcement bodies with the aim to improve the transparency of the judiciary: a stricter procedure for assessing and selecting judges was introduced, the President meets with every candidate in person, and judicial supervisory authorities now impose harder sanctions for negligence on the part of judges, including dismissal from office. Also, legal amendments to tighten the control of courts were prepared, rotation of court presidents was introduced, the General Prosecutor’s Office leadership was changed, and further improvements in the procedure and control of pre-trial investigation are underway.

National security is seen as a measure of credibility of the state. The President initiated the first-ever list of national security threats and the setting of clear tasks for intelligence services. Also, a national intelligence concept was developed and approved by the Seimas. Restructuring in the State Security Department aimed at depolitization was started following the appointment of a new director, the Law on Operational Activities was amended to set out a clear procedure and responsibility for providing intelligence information, a decision was made to finalize the lustration process. At the President’s initiative, Baltic defense plans were included in the new NATO concept, which reinforced international security of the country. A new commander-in-chief of the armed forces was designated, and new Lithuanian national military defense plans are on the way.

Foreign policy, according to the President, must serve the interests of the people. The economic downturn and the financial crisis called for immediate solutions to help attract new investment, enter new markets in the neighboring countries, and ensure economic and energy security. Reaching out for these goals, the President made 26 working visits abroad. In turn, Lithuania was visited, at the President’s invitation, by the leaders of NATO, the European Parliament and the European Commission, the new President of the European Council, the presidents of Finland, Slovenia, Poland, Estonia and Latvia, and 40 high-level foreign officials. By making a special focus on cooperation with the EU institutions and among the Baltic and Nordic countries, the President succeeded in having the elimination of Lithuania’s and other Baltic States’ energy isolation placed among the EU priorities: the EU allocated 175 million euros for the construction of a power bridge to Sweden. Lithuania also managed to secure support from the European Commission for its aspiration to receive financial assistance to build a gas line connecting Lithuania and Poland and to ensure that financial allocations for the supervision of the closure of the Ignalina NPP and for the construction of power and railway links with the rest of Europe were included in the EU’s new financial perspective. The President’s efforts also contributed to the setting-up of European and Euroatlantic agencies in Lithuania: the European Institute for Gender Equality recently opened in Vilnius and NATO Energy Security Centre to be opened in the future. Furthermore, the President received official assurances from Luxembourg’s leaders about future investments in renewable energy in Lithuania. The new stage of bilateral relations with the neighboring countries, Russia and Belarus, built on a constructive dialogue started bearing fruit: investigation of the January 13 case broke the deadlock, investment opportunities were opened up in Belarus, and business climate in Russia was improved.

The President sees the driving force of a faster recovery of the country in creative, educated and inventive people. Education and culture was recognized as the key areas in the development of the state: at the President’s initiative, policy guidelines for culture were developed for the first time in the twenty years of restored independence, to guarantee access to culture for all people – not only in major towns but also in regions. Other accomplishments include the correction of mistakes made in carrying out the education reform, success in guaranteeing lower interest rates on student loans, signs of recovery of applied science, accelerated establishment of science, studies and business valleys.

To promote public confidence in the government, the President worked towards enhanced democracy and transparency in the political system. At the President’s demand, the rules for financing political parties were changed and an opportunity for independent candidates to stand at municipal elections was created. The President also advocated the direct election of mayors. The President’s dynamic and open way of cooperating with the Seimas and the Government improved the quality of the legislative process: 502 laws were signed, 8 laws vetoed, 34 legal acts initiated, 28 of which were adopted.

Over the year, the President received 11,370 letters from private individuals. The issues raised in the letters were discussed both in house and during the President’s working visits to Lithuania’s regions. Over the time in question, the President visited 6 regions: Visaginas – to discuss problems encountered by the local community of the Ignalina NPP region, Alytus – to explore possibilities for reducing unemployment and promoting job creation, the south-western district of Suvalkija – to strengthen local communities, Kazokiškės – to look into waste management issues, Kaunas – to address problems in local self-government, and Biržai – to discuss the adaptation of heritage sites for tourism.

Lithuanian Prime Minister Andrius Kubilius hopes that a close and active cooperation with Belarus might persuade it to call of its plans to build a new nuclear power station some 50 kilometres from Vilnius.

’We’re discussing some cooperation with our neighbours the Belarusians. I think that by pursuing more active cooperation we could possibly convince them that it isn’t necessarily prudent for them to build a nuclear power plant on the border with Lithuania,’ said the Prime Minister to the public radio on 8 July.

‘By acting decisively and without much hesitation implementing our plans, by talking to neighbours (…), possibly some of our neighbours plans might change.  We cannot allow some comprehension in our plans to appear,’ the Prime Minister Kubilius said to the radio. 

Lietuvos rytas noted that at the same time, Kubilius’s visit also reflects the changes in the Lithuanian foreign policy that are declared by President Dalia Grybauskaite. She uses every opportunity to emphasize that she works to ensure our country’s pragmatic interests abroad, but the president is afraid to even mention defence of democratic values in the post-Soviet sphere.

If such a visit had taken place while Algirdas Brazauskas or Gediminas Kirkilas were in the prime minister’s post, the Conservatives would have beaten up everyone brave enough to talk about improving the ties with Lukashenka’s Belarus. Now, this is the official foreign policy course of the Conservatives.

Yet, the paper writes, one has to admit that Brussels position towards Lukashenka’s regime is also much softer – the EU suspended sanctions against Minsk, including the prohibition to issue visas to Lukashenka and his closest advisers.

Of course, Minsk made some concessions as well – political prisoners were released from prison, the opposition media was allowed to breathe more freely. The nature of Lukashenka’s authoritarian regime, however, is still the same.

This was also said during Kubilius’s meeting with opposition representatives, who told him that repression in Belarus did not go away, only their form was changed.

Yet, Lietuvos rytas notes, even the formal softening of the regime allows the West to justify the decision to abandon the policy of isolating Minsk.

Not a lot of effort is needed – for example, Prime Minister Kubilius was allowed to talk to opposition leaders, and he was able to say he did not forget democratic values, even though the real goal of the visit was a dialogue with Lukashenka.

On the other hand, it is also clear that the policy of isolating Minsk did not produce fruit.

Using cheap Russian raw materials, Lukashenka managed to keep his regime stable, and the Belarusian opposition is so insignificant and divided, that it is unlikely to be a real alternative to the current regime.

Moscow’s desire to keep Minsk on a leash forces Lukashenka to look towards the West and forces Western countries to be more forgiving towards Lukashenka’s regime.

It is symbolic that Kubilius travelled to Minsk when the natural gas war between Russia and Belarus was not completely over yet.

Moscow demanded immediate payment of a 200 million USD  debt for natural gas, which had formed because Minsk had been paying less than the contract provided. Moscow also reduced natural gas supply even by two thirds.

The fight was between Moscow and Minsk, but there was a real chance for Lithuania, which receives natural gas only via Belarus, to become a victim of this war, because in response to Russia’s decision to reduce the natural gas flow to Belarus, Lukashenka order to significantly reduce the Russian natural gas transit to EU countries.

Poland also receives natural gas via Belarus, but the Poles also have an alternative supply route via Ukraine. Lithuania would have been a hostage of the natural gas war between Moscow and Minsk.

The natural gas war between Russia and Ukraine that took place in the winter of 2008 produced huge losses in Central Europe, even though Brussels and the most influential EU countries rushed to alleviate the situation.

The paper thinks that larger damage was avoided, but the conflict between Minsk and Moscow once again reminded us how important it is for Lithuania to ensure alternative energy supply sources as soon as possible and for the EU – with actions, not words, to ensure energy security of the Baltic states, which are called an energy island.

In this sense, Vilnius and Minsk have many common interests. Lukashenka, who recently has been increasingly fighting with Moscow and who has been looking for a counterbalance to Moscow in the West, today may be more interested in good relations with Lithuania than our country is.

It looks like by starting another natural gas war, Moscow merely wanted to discipline Lukashenka, because he has not agreed to sign the customs union agreement with Russia and Kazakhstan, has not recognized the “independence” of separatist Abkhazia and South Ossetia, and has sheltered Kurmanbek Bakiyev, the ousted Kyrgyz president.

It is also no secret that personal relations between Lukashenka and Russian Prime Minister Vladimir Putin remain tense, and it is probably justifiable that Lukashenka views the words of Russian President Dmitry Medvedev that Moscow expects to be paid for natural gas in dollars, not in pancakes offered by Minsk, as an insult to Belarus.

Therefore, even if not all, then at least some proposals put before Lithuania by Lukashenka (cooperating in the construction of a liquefied natural gas terminal, selling electricity, importing Venezuelan oil to Belarus via Klaipeda port) can also be viewed seriously.

Of course, it would be naïve to trust Lukashenka. Minsk, which receives natural gas from Russia at the lowest prices in Europe and this way manages to patch up its budget, is too dependent on Moscow.

Lithuania must take advantage of the new opportunities; it is necessary to take care of today’s economic interests in Belarus, but to do this by forgetting human rights and other democratic values would be a short-sighted policy, Lietuvos rytas concludes its editorial on 30 June.

Lithuania wants to build a plant, but is still mired in the shutdown of its former facility in Ignalina. The country, and the region, need a new source of electricity, but uncertainty over the participations of other states, such as Estonia, in the project have slowed down the process.

Estonia is working on new under sea connections to Finland for electricity, though it is currently self sufficient on oil shale reserves which it burns for electricity and heat.

The Finnish parliament took two votes on the nuclear power plant construction permits as protesters were removed from the hall.

The bill to start the construction of the power plants was passed with 121 votes for and 71 against in the 200-seat Finnish parliament.

The country already has four nuclear reactors and another should be complete by 2013. The new reactors that were voted on in this vote will likely be complete by 2020.

According to Boyarkin, the Baltic Nuclear Power Plant, the construction of which has started in the Kaliningrad Oblast, could supply the entire region with cheap electric power, and Lithuania could profit from the transit of Russian electricity to other countries.

If our country were not interested in such a proposal, Russia could export the excess electricity produced in Kaliningrad to Western Europe. It is considered for that purpose to construct an electric power cable to Germany next to the Nord Stream natural gas pipeline under the Baltic Sea.

Killing two birds with one stone

The nuclear power plant in Kaliningrad is already being constructed. Why was it necessary to build the new power plant in the Russian region where the demand for electricity is relatively small?

The demand for electricity in the Kaliningrad Oblast is indeed significant. In the past we used to import electricity from the Ignalina Nuclear Power Plant. Today, approximately 40 per cent of the electricity the region receives from a power plant in Smolensk via Belarus and Lithuania. Such a way of transmission is difficult in technological terms and is unreliable. Second, Kaliningrad is a rapidly-developing region.

There are many large construction projects; residential houses, commercial buildings are constructed and roads are built. Many investors, however, are forced to limit their capabilities, because there is not enough electric power. It is a real problem that hinders the development of Kaliningrad. Today in Russia we are building eight new nuclear power plants and are utilizing 10 power plants – 32 blocks in total. In the regions were the nuclear power plants are built, production is developed.

We are convinced that the first reactor of the Kaliningra! d nuclear power plant will fully satisfy the region’s demand for electricity. We intend to export the electricity produced by the second reactor.

I would like to note that currently three electric transmission links are active between Lithuania and Kaliningrad, which make it possible to transfer to Lithuania the amount of electricity produced by one reactor of the power plant. Lithuania could use part of this electricity and could supply the rest via transit to Latvia and Estonia or to Poland through a planned power link.

Power line under the Baltic Sea

Our country’s leaders, however, have repeatedly stated they are not considering the option of buying electricity from the Baltic Nuclear Power Plant, which is being built.

After the closure of the Ignalina Nuclear Power Plant, Lithuania buys a lot of electric power. Any reasonable man buys where it is cheaper. We are convinced that our electricity will be cheaper than in that of other suppliers.

We also have alternative options of selling electric power – we can build a transmission cable to Germany under the Baltic Sea – Germany is very interested in cheap electricity. The Nord Stream natural gas pipeline will reach Germany at a spot where in the past a large electric power plant used to stand and which now is closed. The necessary infrastructure is still there. If next to the Nord Stream we constructed the electric power cable, due to the existing infrastructure these works would be cheaper.

We, however, think that it would be fairer to agree with Lithuania over the transit via the territory of your country and to build another line from Kaliningrad to Poland. We already proposed this to Poland.

The Lithuanian project has gotten stuck

Lithuania intends to build its own nuclear power plant. What do you think about this project?

I wish you the best. Unfortunately, I see that this project has been advancing very slowly for two years, even though the site of the new nuclear plant is suitable, infrastructure exists, and you have professional and experienced specialists.

In the best case scenario, from the time of selecting a project for building the nuclear plant until the beginning of the project’s implementation you will spend two to three years. Nuclear energy projects are strictly regulated. Therefore, it takes a long time to build a nuclear power plant. Even if you selected a project on 1 July, you would be able to start the construction only in 2012 and the construction would last at least five years. Therefore, according to the most optimistic scenario you will be able to launch your nuclear power plant in 2017.

We intend to build our nuclear power plant together with foreign investors. Are Russian companies interested in this project?

The Rosenergoatom Corporation builds nuclear power plants and manages them only in Russia. Atomstroyeksport, a specialized Russian company, however, builds nuclear power plants abroad.

As far as I know, a year ago Atomstroyeksport made a proposal to Lithuania that it was ready to participate in the construction of the power plant, to present technological solutions, and to consider the issues related to the project’s financing. We have not received a positive reply from Lithuania, but we are open and are ready to build the nuclear power plant and to participate in the financing of the project.

In building the Baltic Nuclear Power Plant in Kaliningrad, we invite European companies to join the project. We are prepared to sell 49 per cent of the power plant’s shares. We made proposals to energy companies of Lithuania, Latvia, Estonia and Poland.

Interested in selling at a cheaper price

What do you think about the independent electric energy market, which exists for a few months in Lithuania?

EU directives provide for creation of uniform, transparent rules for selling electric power. We think it is a very fair initiative.

The Kaliningrad Oblast will be interested in joining such a market. Without a doubt, we will adhere to all set conditions and will propose electricity under conditions that will be similar to those proposed by others.

Today average electric power price in Europe ranges between 40 and 60 Euros for 1 MW. The price of our electricity is two or three times lower.

We welcome Lithuania’s ties with Europe, but we think that we are competitive as well. We are interested in selling electricity at lower prices and in making money in this market.

During a round table discussion RegionalNuclear Energy Projects, which was held in Vilnius on 16 June Lithuania’s Prime Minister Andrius Kubilius said to the Baltic News Service that Lithuania is considering building its own nuclear electricity plant and has no plans to buy the Kaliningrad nuclear plant’s electricity if a such a plant will be built.  The only  concern for Lithuania regarding the possible N-Plant in Kaliningrad could be that of the environmentalimpact of the plant.

Later the Prime Minister Kubilius told reporters that there is no need to build the Kaliningrad plant, since the Russian enclave already has enough electricity.  Kubilius said to reporters, “I cannot give an answer to why a nuclear power plant should be erected in the Kaliningrad region, what kind of economic logic is there?  As far as I understand the Kaliningrad region is already fully covered by its energy generation capacities, which have already been installed or their installation is nearing the completion.” 

At the same discussion Maxim Kozlov, the head of the Baltic (Kaliningrad) Nuclear Power Plant project at Inter RAO UES offered Lithuania to reinforce the electrical power links between Lithuania and Kaliningrad, from Sovetsk to Klaipeda and Jurbarkas.  Mr Kozlov also proposed construction of an electrical power link between Poland and Kaliningrad.  “We are absolutely open and technically prepared, with figures, balances and estimates in our hands, to start serious technical discussions with our colleagues in Lithuania and Poland, as well as in other countries,” said Mr Kozlov during the discussion.

Lithuania plans to open the new nuclear plant in Visaginas in 2018-2020, the Kaliningrad region plans to switch on the first nuclear plant reactor in 2016, and the second in 2018.

The discussion in the meeting centred around the future of nuclear energy, related environmental issues, energy security in the Baltic Sea region, energy situation in Lithuania after the closure of the Ignalina Nuclear Power Plant, plans to construct a new nuclear power plant in Visaginas, and other nuclear energy projects in the region such as power plants in the Kaliningrad Region and Belarus.

„It is in the interest of us all to make sure that nuclear energy projects in the Baltic Sea region – the Kaliningrad enclave, and the power plants underway in Belarus are implemented in accordance with generally accepted international nuclear safety and environmental standards set out in the Espoo Convention. Even the slightest deviation from these standards would compromise nuclear energy in the region,” President Dalia Grybauskaitė underlined in the meeting.

The President deplored the fact that sites for these power plants were selected without having clear-cut criteria, without conducting an environmental impact assessment and without consulting the neighbouring countries more extensively.

President Dalia Grybauskaitė noted that Lithuania gave special attention to environmental protection and nuclear safety measures in designing its new nuclear power plant in Visaginas. In 2009, the Lithuanian Ministry of Environment conducted an environmental impact assessment for the Visaginas power plant, in accordance with the procedures required under the Espoo Convention and by way of consultations with the neighbouring countries of Belarus, Poland and Latvia as well as with other stakeholder countries. The Lithuanian civic society was also involved in open and transparent consultations.

The Espoo Convention signed in 1991 in Finland requires performing environmental impact assessments and holding international consultations on an early planning stage of projects that are liable to cause cross-border environmental damage.

„I am confident that the new nuclear power plant in Lithuania will enhance energy security in the region and contribute to addressing challenges caused by climate change,” President Dalia Grybauskaitė said.

The International Atomic Energy Agency was established in 1957 as an international organisation for scientific and technical cooperation to foster the use of nuclear energy for peaceful purposes. Lithuania joined the IAEA in 1993.