Russia is arguably the only country in the post-Soviet space where the veneration for Karlsonas has taken on greater proportions than in Lithuania. There has even been estimated that Astrid Lindgren’s Karlsson-on-the-roof is likely to be the second most common book to be found in the average Russian home next to the Bible. (When Astrid Lindgren herself was told about this by the Russian Ambassador to Sweden, Boris Pankin, she is quoted to have said: “Strange, I had no idea that the Bible was that popular”. And when Ingvar Carlsson, then Swedish Minister of State, visited Russia in the early 1990s, his Russian hosts deplored the fact that he had very little in common with “the real Karlsson”.

However, in Sweden, the homeland of Astrid Lindgren and her vast collection of beloved fairytale characters, children barely rank Karlsonas among the top-ten of Astrid Lindgren’s most appreciated figures. Similar attitudes can be observed among Western European children in general, who are more inclined to embrace the stories about Pippi Longstocking and Emil of Lönneberga.

So, does this imply that the frame of cultural preference varies significantly between Eastern European children as compared to Western European children as far as Astrid Lindgren’s stories are concerned?

No, this is not likely to be the case since the image of Karlsson-on-the-roof which has been conveyed in Lithuania and the post-Soviet space is slightly different in several perspectives compared to how he was depicted in the original Swedish versions of the popular books.

What first should be noted is the fairly haphazard translation of the book from Swedish into Russian (and latter from Russian into Lithuanian) which made the objects and the surroundings in the story appear distinctively Soviet, and thus less reminiscent of bourgeois mid-century Stockholm. Of greater importance is that that the Soviet censorship was contemplating the attitude that Karlsonas communicated – individualism, egocentrism, narcissism and anti-authoritarianism – as potentially dangerous and contradictive to the ideological tenants of official discourse. Consequently, in accordance with the stringent demands from the censors, the ensuing story about Karlsonas that was engineered deliberately saw to reduce the most conspicuous acts and elements of crudeness and delinquent behaviour.

The result, however, seems to have been an equally mischievous and innovative Karlsonas, only less wicked and more warm-hearted, who have managed to surpass the original figure’s capacity to strike a cord with generations of children. This is also the Karlsonas one encounter in the cartoons from 1968 and 1971, artfully illustrated by the famous Boris Stepantsev, which is another reason for his immense popularity in the former Soviet Union.

There are, at any case, more connections between the Baltic States and the world of Astrid Lindgren. Generations of Scandinavian children has, for example, enjoyed the pastoral and idyllic illustrations in Astrid Lindgren’s books with a sense of recognition as the surroundings are reminiscent of the typical rural landscape found in the Scandinavian countryside. However, Ilon Wikland, who contributed with the popular illustrations of many of Astrid Lindgren’s most beloved characters, had her childhood Estonia rather than the Scandinavian countryside in mind when she created images to Lindgren’s texts. Consequently, though Wikland was forced to flee Estonia for Sweden during the World War, her Estonian legacy still lives on in many of Lindgren’s books. In addition, in 2009 Wikland was dedicated her own museum in Hapsal, a small Estonian city to the south of Tallinn.

Karlsonas, then, is actually neither Swedish nor Baltic, but Ilon Wikland found the inspiration to draw him as he is normally illustrated, in books and cartoons alike, when she stumbled upon a chubby, red-haired little man at a market in Paris.

Fredrik Rydström is a distinguished academic from Sweden who graduated Vilnius University in Spring 2010. He has lived for almost two years in Lithuania where he ound true love: the kibinas. Fredrik has held several lectures about and specialized in Baltic-Nordic relations.Other articles by Fredrik Rydström

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“Tell them that there are no cars and that women can be beaten and exchanged for new ones whenever you want,” he said, echoing similar rumours about Lithuania he had heard in foreign lands.

We were discussing the fact that many people in countries as close as Sweden or Germany had no idea about Lithuania, what its capital is and what language is spoken here and so on.

In fact the knowledge of the country in the world is appalling. On a visit to Belgium a few years ago, I had dinner with two doctors and their little daughter. The girl was just learning to speak, but they had high hopes that she would also become a doctor in future: a highly educated family.

They asked me about what I was doing in Europe and where I live and what my job is. I was halfway through a story about Lithuania when they stopped me and asked “sorry what country do you live in again?”

“Lithuania? Litauen? Lituanie? Lietuva? Litva?” I tried the names of this country in every language I knew. Didn’t ring a bell.

This couple had travelled to every continent on the planet except Antarctica, but they had no idea where Lithuania was, a European Union country already for five years at that time. They had no idea.

Another acquaintance of mine, who came to Lithuania from England also had massive troubles with the country. At first he was afraid to come here because it is in the wild wild east and he might get robbed or stabbed. Or both!

He imagined a land without electricity and without laws (okay, well that part is more or less true). Hard drugs were sold on the street and women carried AK-47s down the street. After all, this country was in the Soviet Union.

Other people I have spoken to think the country is on the Mediterranean sea somewhere near Malta.

So here is an opportunity I suppose. The Lithuanians who emigrate and those who travel could play a big role in the future of this country. The world doesn’t yet know the name of Lithuania. One day they will find out, but until then you have a blank page. Write in it whatever you want!

So, its up to you who go abroad. Perhaps you also want to go abroad and play silly games with uneducated people. Or maybe you’d like to go tell the world about the mountains of amber that everyone has in their garage. Tell them about the Seimas and how it was defended by the citizens and tell them about Lithuania’s great beaches on the Black sea.

Hold on is that a game or is that the truth?

This interview with Latvian Foreign Minister Aivis Ronis was published in “Diena” daily on July 23, 2010, provided by the Latvian Insitute.

A rare occasion in the contemporary history of Latvia: a minister has stood up for the people’s interests, saying that Swedish banks should share responsibility for what is going on in Latvia and that the issue should be addressed at the intergovernmental level. What is the idea of your proposal?

I was born and grew up in Kuldīga. As children, our history teacher told us a legend about Karl XII who had briefly taken refuge in the city to nurse his wounded leg. Although being wounded, he nevertheless kept his interest in material things and did some looting in Kuldīga. However in the end, he could not run away fast enough, and one chest with less valuable things was left behind.

Several centuries later we have good relations with Sweden. Karl Bildt’s political support in 1990s helped our peoples to overcome estrangement and all the unpleasant things that had happened during World War II, and the following years of isolation. We are in the EU together and therefore we were surprised when the Swedish Government, the Finance Minister and Prime Minister made not particularly considerate remarks about the crisis in Latvia when it broke out. The Latvian governments have invited Sweden not only to join the IMF loan scheme to Latvia, but also to jointly think and make practical efforts toward the renewal of the economies in the region. We all know now that the shower of credit deformed Latvia’s economic structure. We can’t quite say that Swedish banks had no part in this. Unfortunately, the banks did not bring along with them any other Swedish companies with long term investments. That is how it was. Now the Swedish and Latvian governments should work together in the atmosphere of solidarity on further facilitation of economic integrity, mutual division of labour, and integrity.

Second, our people, just like the Swedish people, deserve to know what mistakes were made by the regulators of financial services before 2008. As far as I have been unofficially informed, the Swedes have already carried out an internal investigation, and criticism of their regulator has been voiced also by the Swedish Parliament. Thus it is extremely important also for our people to get to know and understand what happened here and in Sweden. It would be an excellent example of cooperation, should the parliaments of two countries — the duty of which is also to supervise their regulators — establish a joint commission and have a critical look at all that. This would be in the interests of both our countries and the region as a whole.

An IMF study on credit boom in the EU makes it clear that the countries now unflatteringly called PIIGS and HELL underwent similar processes: the inflow of capital caused two booms – in the real estate market and in private consumption. This was German capital in Spain, Swedish capital in Latvia, etc. Have you any comments on that?

I have not read the document, but versions like this have appeared in our newspapers and expert opinions. In any case, it is important to take stock of errors made in public administration in order not to repeat them, even more so, to do that together with foreign partners.

It seems that in Latvia the foreign bank lobbies are so powerful that they spark off a sharp reaction to anything that contradicts them. This was also the case with the opinion of Prime Minister Valdis Dombrovskis, who said that it should be enough to cede the collateral to settle accounts with a bank. This does not seem to be good basis for further development.

It is normal that the opinions of experts and the government differ. Lobbies exist in all countries and for all industries. Still, I was mostly surprised by the assumption that through such a commission we will scare away investors. First, we are not turning against investors! Second, it seems to me that I am being intentionally misunderstood also in the sense that this would mean turning against banks. By no means! This is a call to realize and eliminate mistakes and then, for both countries, also to work closer together on the integration of their economies. We are a very important country for Sweden geopolitically, and they are no less important for us, and in the rest of the region, much depends on our cooperation.

There is an opinion among the public that our civil servants have not done much to defend our interests in the EU. Has the Foreign Ministry (MFA) clearly defined Latvia’s economic interests in Europe and in the world and is this policy being consistently implemented?

The MFA has always had instructions about attracting investment, for the most part in the areas which we as a country wanted to develop, but for which Latvia lacks both capital and knowledge. In regards to economic interests on the whole, the MFA definitely cannot define those separately from the rest of the government. Therefore we would very much like to see those common interests listed and more clearly defined. The foreign service needs some kind of national commissioning – a political decision of what investments or types of cooperation and in which sectors we seek in which countries. This would definitely be the government’s competence. Our current Prime Minister has this understanding, so does also the Minister of Economics and the Investment and Development Agency of Latvia (LIAA).

I don’t suppose our civil servants and diplomats deserve criticism for the way our interests are being represented in the EU. They have protected those interests according to how they have been defined. The problem was in the quality of the definition. And we at present are working closely together with the Prime Minister, the Minister of Economics and the LIAA, as well as with businessmen and [business] associations to define Latvia’s interests and goals as precisely as possible.

You had indirectly admitted that the influx of Swedish capital has harmed Latvia’s economy. A recent leak of information about Russia’s new foreign policy strategy contains a clear indication that a considerable amount of Russian capital is expected to flow toward the tangible economic sector of Latvia. Has Latvia defined its interests in this respect and how will they be protected?

I would like to highlight: the fact that the coming of the Swedish banks was good. Another thing is that they were obviously operating in an environment that was not very well organised. And it was bad that Swedish investment did not flow into other economic sectors in tangible ways.

Investors’ interest in Latvia is a positive phenomenon as it is. The fact that currently it is stronger from Russia’s side is nothing bad. It is bad that they do not have international competitors who would be interested in our economy, resources, areas for privatisation or cooperation opportunities. I have already said that Latvia, in order to regain its competitiveness and strength, should invite other Baltic Sea countries toward consolidation of strategic resources. Starting with the definition of which those resources are. And they should be kept under the control of our own capital. This would be the best tactic toward those countries and their businesses who at present would like to obtain these strategic resources for a cheap price. In principle, Russia has had its economic interests here for a thousand years. That is nothing new, neither is it bad. It is crucial that we are able to govern our country and to regulate the incoming investment.

What could be the explanation for positive dynamics in the Latvian-Russian relations at this very moment?

It would be an overstatement to call this extremely active dynamics, but it certainly is positive. Latvia’s foreign policy rests on three pillars: security guaranteed by NATO and the link with America; membership in the EU; and relations with neighbours which do not belong to those major alliances. The impact of the economic crisis also brings change to Russia. We have heard President Medvedev appeal to the Russians themselves for modernization of their country, which is a commendable move. The EU supports and engages in this modernization. It is in our interests that Russia, in compliance with standards, international norms and the EU interests, enters the World Trade Organisation. That would also mean the removal of protectionist barriers sometimes artificially imposed on trade with Russia, and make Russia a trustworthy business partner.

And not only that. We have also common interests with Russia not only in bilateral relations but also in the international arena. We share an identical understanding that Iran should not be allowed to obtain nuclear weapons. At the same time we have a totally different understanding about Georgia’s territorial integrity. And these similarities and differences cover a wide spectrum. It is unthinkable that the EU could cooperate increasingly less with Russia, and we are part of the EU. Economics, security, stability and peace in various regions are our common interests.

The same concerns NATO. Our soldiers serving in Afghanistan now also benefit from the cooperation between Russia and the Alliance. Non-military transit that unites us with Russia in relations with NATO is a totally new phenomenon in history. And this is good, because we are allies in combating terrorism. Similarly, our joint interest and cooperation might be in the fight against smuggling if Russia fought against it on its own side of the border and we on ours. This would require cooperation and coordination.

Our archives are fully accessible for Russian researchers. We have no access to Russian archives. We know in general what happened to the deportees and other citizens who suffered from Stalinism, but the work in archives and cooperation between our countries is required for a full understanding. Reconciliation within people’s hearts is a lengthy process and needs openness.

Doesn’t the focus of the public on the heavy historical legacy also hinder the relations with Russia? Whenever Russia is mentioned, most people immediately think of 9 May, and Molotov and Ribbentrop; moreover, among the public there is a lack of a common understanding about those dates and processes.

I have defined three priorities for myself, for those few months of my time in office in the MFA: attracting resources from abroad to our economy, removing obstacles on the path to attracting those resources, and third, the dignity of our state and community. In Riga, for some reason or other, Ribbentrop and Molotov still confront each other through monuments and on websites. They are long since dead, one of them, thank God, was also executed. The regimes and countries they represented have perished, which has only been to our benefit. They divided our country and society, and even today unfortunately their goals and propaganda seem to resurface now and again. Let us finally bury them both! It is Meierovics’ beliefs that should be alive here! We have our national days of commemoration. On other days people have the rights and freedoms guaranteed by the Constitution to do whatever they like and commemorate whomever they like, within the limits of the law.

You are working with the creation of new NATO strategies. How will our national interests be incorporated? In relation to the renewed relations between America and Russia, publically the view has emerged that the U.S. support for the Baltics is no longer at its previous level.

I worked in Madeline Albright’s group, which wrote the proposals for the NATO Member States and the General Secretary. Currently, the General Secretary, hopefully, based on that, is writing his draft concept, which will be up for discussion in September, so that the new strategic concept can be accepted at the NATO summit in November. At least in Albright’s group, the views of the Baltic countries were very much so taken into account – not less so than the views of other Member States. Before this, I, and many others, felt that the diversity of interests between the Member States would be much larger than it turned out to be in reality. The NATO cornerstone remains the principle of Article 5: One for all, all for one, and that is important to all. Not only did no one object to that, but indeed everyone stressed its importance.

The second message: NATO must engage in more political consultations with the EU. Third, new threats must be taken into account – cyber security, energy security, the fight for resources, climate change, the not-so-new terrorist threat, etc. That is in everyone’s interest, and it is clear that forces must be combined for the challenge ahead. While priorities may be laid out slightly differently, the interests of the Member States are the same.

Also because of that, I don’t agree with those that say Americans have lost interest in us here. This year, we have already had two joint military exercises, the United States has continued its presence and involvement in the region, and is a very good, reliable partner in Latvia’s security concerns. They say the same thing about us, and that has been shown with our soldiers’ involvement in NATO missions. We also invite the U.S. to not lose interest in the regions that we believe are important to us: the South Caucasus, Moldova’s territorial integrity, cooperation with Ukraine, etc.

In that regard, also concerning U.S. and Russian relations, it is in Latvia’s interest that those would be good relations, because we gain security from that. If these are friendly relations, and the U.S. has a bigger influence in Moscow, Russia’s neighbours will only benefit from that. Similarly, we can benefit if there is more practical cooperation between the U.S. and Russia, particularly in combating terrorism and in exchanging intelligence. Afghanistan is just as painful a problem to Russia as it is to NATO.

We also must mention France’s return to NATO and the importance of Germany’s increased role in the Alliance, from which we have benefited. Particularly important to our interests is Germany’s greater economic engagement in our region. The presence of Germany’s capital here is negligible in comparison to what it could be.

Not always does the general public see military cooperation as something positive. For instance, building in the dunes during a recent military exercise.

The training assignment was to attempt a landing operation on an undeveloped shore, which is important in a crisis situation if ports are not accessible. Still, Latvia may need allied assistance, military or humanitarian, it does not matter. Building the road you mentioned was an element of the exercise. The exercise proved that the Allies are able to set up their operation headquarters in the middle of the forest in three hours’ time. That is truly impressive. And this awareness makes us feel more secure.

At present, there is an ongoing dynamic activity in ND8 project about the so called Northern Dimension in order to raise the cooperation between the countries in our region to a new level. Why now, and what is the idea of the project?

The initiative was launched during the previous minister’s time. I am glad that our former Foreign Minister Valdis Birkavs together with former Danish Minister of Defence Søren Gade agreed to work on a study about what changes should be made to the Baltic-Nordic cooperation. The background for the initiative is Latvia’s current presidency within the framework of the Baltic states’ cooperation and the Danish presidency among the Nordic countries [Nordic Council of Ministers]. Both Foreign Ministries understood they have to take advantage of the situation. Currently we have a great many cooperation formats within various organisations and the purpose of the study was to assess whether all that could be rationalised, simplified and perhaps replenished with advanced ideas of what we should do together.

In August the other seven foreign ministers will visit Latvia and we will review the draft produced by Valdis Birkavs and the former Danish Minister of Defence, and will decide on further action. It is good that the draft is being written by experts not actively involved in politics, and there are already various ideas about future cooperation among our eight countries. Together we are one of the strongest regions in the EU. We were once even leaders as to economic growth. Together we are a considerable power and entity, and as we talked about the case of Sweden, the most important thing is that we have a great potential. It is vital for this potential to be supported by political will.

In my opinion, however, the goal of Nordic and Baltic cooperation should not be to turn us into Scandinavians. We needn’t wake up every morning with an inferiority complex because of not being, for instance, Swedish. Riga and our history gives Latvians a unique identity and potential.

“It is an historical moment for Europe and Iceland. I strongly believe that Iceland’s EU membership would bring important contribution to European security, economic cooperation and cultural diversity,” the letter of the head of Lithuanian diplomacy reads.

The Minister stressed that Iceland had always been a close partner of the EU, integrated into the European Economic Area and member of the Schengen Agreement.

Minister A.Ažubalis also encouraged Iceland to take advantage of Lithuania’s experience during EU accession process.

The EU opens talks with Iceland on 27 July. Iceland and the EU will hold negotiations in 35 chapters. Experts estimate, that the negotiations could last for 18-24 months.

The EU foreign ministers also discussed the EU’s actions following the publication of the advisory opinion by the International Court of Justice on the declaration of Kosovo’s independence. On 22 July, the Court ruled that the declaration of Kosovo’s independence was not a violation of international law.

Minister A.Ažubalis welcomed the publication of the advisory opinion of the Court and highlighted that in the Western Balkans key attention had to be dedicated to regional cooperation, stability and closer relations with the EU. According to the Minister, the EU had to send a strong signal to Kosovo and Serbia, inviting these countries to open a dialogue with each other.

According to the head of Lithuania’s diplomacy, facts and arguments based on the international law showed that Kosovo was a unique case and, therefore, it was not a precedent for solving conflicts in other regions of the world.

Before the Foreign Affairs Council and the General Affairs Council in Brussels, the foreign ministers from the Baltic States and Nordic EU countries had a separate meeting to discuss the situation in Central Asia. Minister A.Ažubalis presented to his counterparts the results of his meetings with ministers of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

“We are going to visit these countries in spring 2011, during Lithuania’s chairmanship of the Organization for Security and Co-operation in Europe,” Minister A.Ažubalis said.

The Minister stressed that Central Asia faced numerous challenges, such as water and energy resources management.

The crisis in Kyrgyzstan was also discussed. Lithuania’s Minister of Foreign Affairs said that he valued the decision of the OSCE Permanent Council to send a Police Advisory Group to this country. According to Minister A.Ažubalis, Lithuania’s OSCE chairmanship will pay considerable attention to this region.

On 25 July, the eve of the EU foreign ministers’ meeting, the political directors from the Ministries of Foreign Affairs of the Baltic and Benelux states (Belgium, Luxembourg and the Netherlands) held an informal meeting, during which the EU’s relations with strategic partners, the European Neighbourhood Policy and activities of the European External Action Service were discussed, and an agreement was reached to hold the Baltic and Benelux foreign ministers’ meeting this autumn.

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.

According to well informed military sources Russia has decided to position Iskander missiles in the western border, in the military region around Saint Petersburg, which is about 140 kilometers from Estonia and this, as expectable, came with great concerns of those ones feeling Russia as a concrete threat for Estonia.

The decision was announced by the commander of the Russia’s ground forces, Alexander Postnikov, who said that Russian military forces are discussing about the possibility of deploying even more missiles elsewhere.

The Russian move found also an immediate reaction from the Estonian Foreign Ministry in Islandi valjak as it is considered to be alarming and negative for the cooperation between Russia, Estonia and all the international community the country is part of as EU and NATO.

The Iskander is a tactical missile that can be targeted by aircraft, by satellite or even by a soldier in few seconds making it dangerous exactly because of the difficulty of preventing its moves.

Iskander missiles can even be retargeted during the flight and, the fact that it can work within a 400 kilometers range means that – potentially, at least –  also Lithuania, Latvia and Finland could be affected by the Russian military decision.

NATO has been holding BRTE in the Baltic States since 2008. Five training events held so far were tailored to drill capabilities of the Baltic States taking part in the Baltic Air-policing mission. BRTEs are organised to enhance interoperability of the Baltic military capabilities, to highlight NATO’s commitments to the Baltic Region, and to demonstrate visibility of the Alliance in the region.

This is the second BRTE meant to train forward air controllers. In military operations Forward Air Controller performs crucial duty of calling in air support to infantry and provides control from the ground for combat aircraft during assault on positions of hostile forces.

Lithuania will send eight servicemen to the training event in Adaži Military Area. One day long theoretical introduction part will be followed by two days of practical training on the basis of a range of real-life scenarios. BRTE will involve cutting-edge equipment of NATO countries. Such training events provide opportunity for troops of the allied forces to improve skills before deployment the multinational mission in Afghanistan.

Air support during BRTE VI is planned to be rendered by Polish F-16 “Fighting Falcon” based in Krzesiny Airbase, US fighters F16 “Fighting Falcon” from Aviano Airbase (Italy), and two light assault training jets of the Lithuanian Air Force L39 “Albatros”. On the way to Adaži Military Area fighters will conduct air refuelling from US KC-135 Stratotanker that will launch from Mendenhall Airbase in the United Kingdom. Forward air controllers will coordinate actions jointly with NATO airspace command and control units in Lithuania and Latvia and thus ensure control of combat aircrafts. The entire training event will be coordinated by the Combined Air Operations Centre in Uedem, Germany.

Lithuanian Armed Forces began developing tactical air assault capabilities in 2006, in 2007 the first representative of Lithuania graduated from the Forward Air Controller Course at the Danish Royal Air Force Combat Support School. Denmark rendered assistance is training the first Tactical Air Assault Team of the Lithuanian Armed Forces which was deployed to ISAF operation in Helmand province of Afghanistan with a Danish Battle Group in 2008.

“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.

It is impossible not to see that during the recent 10-15 years NATO has changed significantly. In principle, management of international crises has become one of the key NATO‘s function, instead of assuring collective security to the EU Member States. The Baltic States are concerned about that, as well as about NATO‘s ability to make solutions related to collective defense (if, for instance, one of the Baltic states becomes a victim of the military aggression).

The Alliance took the fears of the Baltic States into account: this year NATO anticipates to prepare defense plans for the Baltic States and to organize the first military exercise in their territory.  However, alongside the debates regarding a new strategic concept of NATO, Lithuania, Latvia and Estonia raise the issue concerning the concept of „armed aggression“ stipulated in Article 5 of the Washington Treaty.  The Baltic States are worried that „armed aggression“ might not include the cyber attacks, information war, blockade of supply of energy resources and similar dangers.

Ratification of the Lisbon Treaty enhanced the trust in the EU’s ability to struggle against the external threats in the future, although it did not anticipate the establishment of Europe‘s army. The Treaty introduced the obligation of collective defense committing Member States to provide support („by all available measures“) to a state which has become victim of aggression. One of the new issues in the Lisbon Treaty might be “permanent structural cooperation“ stipulating a possibility for a group of EU Member States to strengthen cooperation in the sphere of the Common Security and Defense Policy (CSDP). Maybe then EU actions will become more effective in the above sphere. Pursuant to the new clause on „strengthened cooperation“, the EU Council could commit certain countries to take the initiative and protect basic EU values on behalf of the EU.

The ambition „to be where decisions are made“  makes Baltic States to give more attention to CSDP. Maybe it is worth while changing the venue of decision-making from the NATO Council to the newly established European External Action Service (EEAS), moreover that the Lisbon Treaty stipulates more powers to the EC regarding CSDP. Several years ago the Baltic States suspected that France and Germany sought to create a „club“ in the sphere of security and defense for making key solutions without “slowly moving” EU Member States. The Lisbon Treaty legalized formation of the above groupings, but at the same time created conditions for regulation of the process. Therefore, today quite a lot depends on our diplomats‘ ability to negotiate more favorable conditions for joining „strengthened cooperation”, and to specify the commitments of collective defense.

Surely, some EU Member States might pursue the development of a “two-speed” CSDP. Therefore, by supporting the idea of „One Voice Europe“, the Baltic States are not less concerned about what this „one voice“ would say.  The Baltic States will not be able to influence this voice until they are not able to coordinate their actions and expand cooperation with other small EU Member States. In search for partners in Northern Europe, we must not forget the Vyshegrad Group (V4); its experience and interests are similar to ours and V4 seeks to overcome similar fears. Thus, if Baltic States and the Vyshegrad Group countries are able to find a compromise on key CSDP issues, their initiatives and support to specific projects could have major impact on the development of the entire CSDP. However, it is not enough to have a will; it is necessary to take specific actions for coordination and implementation of the common strategy of small Baltic, Northern and Vyshegrad states.

By Dr. Arūnas Molis 2010 06 07