Two interconnected summits in Vilnius

VILNIUS - For the first time, the summit of members of the Council of the Baltic Sea States, and the Baltic Development Forum, were held simultaneously in the same city, i.e. in Vilnius on June 1-2. Both summits were interconnected: the president of the European Commission, as well as heads of delegations from the Baltics, Scandinavia and Germany visited both forums. Uffe Elleman-Jensen, chairman of the Baltic Development Forum and devoted supporter of the Baltic States’ independence in 1990-1991 (this Danish liberal was foreign minister of Denmark from 1982-1993), stated that the Baltic Sea region should be the top of Europe, not only geographically but also economically. The Baltic Sea states’ leaders’ supported him by adopting the Vilnius Declaration, which states that the Baltic Sea region should become one of the most prosperous, innovative and competitive regions in the world by 2020.

The 8th Baltic Sea States Summit was attended by Lithuanian Prime Minister Andrius Kubilius, European Commission President Jose Manuel Barroso, Estonian Prime Minister Andrus Ansip, Finnish Prime Minister Matti Vanhanen, Icelandic Prime Minister Johanna Sigurdardottir, Latvian Prime Minister Valdis Dombrovskis, Norwegian Prime Minister Jens Stoltenberg, Russian First Deputy Prime Minister Viktor Zubkov, Danish Deputy Prime Minister Lene Espersen, Swedish Deputy Prime Minister Maud Olofsson, Polish Foreign Minister Radoslaw Sikorski, as well as Finland’s Christina Gestrin, chairman of the Baltic Sea Parliamentary Conference. Werner Hoyer, minister of state in the German Foreign Ministry, replaced Chancellor Angela Merkel, who cancelled her visit to Vilnius just five hours before her expected arrival due to the unexpected stepping down of Horst Koehler from his post as German president. Merkel promised to visit Lithuania later this year.

While usually state leaders avoid controversial criticism during such summits, on June 2, Russian First Deputy Prime Minister Zubkov publicly criticized the resolution by the Lithuanian parliament of June 1 recognizing the territorial integrity of Georgia, and urging the Russian troops to leave the occupied territories of that country. The rest of this double summit went smoothly.

The Baltic Sea states’ summits are held every two years, while the Baltic Development Forum is an annual event, which is nicknamed “Baltic Davos.” This was already the 12th Baltic Development Forum. The two-day forum’s official title was “European Challenges - Regional Solutions: An Agenda for Jobs, Investments and Sustainable Growth.”
This year over 500 influential businesspeople, politicians and academics arrived at Vilnius’ Litexpo center to discuss the current economic situation, the potential for improvement and prospects of cooperation. They also discussed implementation of the EU’s Baltic Sea Strategy, which was adopted by the European Commission on June 10, 2009. So far, this EU region, together with its neighboring non-EU states, is the only region of Europe having such a special EU-developed strategy. It gives some advantage over the rest of the EU in branding the region’s name and developing the region’s identity. Now, the EU is discussing a similar strategy for the Danube region.

There are no precisely determined boundaries of the Baltic Sea region. Iceland and Norway are included because they have close relations to many countries around the Baltic Sea and are eager to participate in the regional cooperation. According to Baltic Metropoles Network, uniting 11 major cities in the Baltic Sea region, the region is a market with 110 million consumers while, according to a more conservative estimation by Christian Ketels of the Harvard Business School, the region is home to 57.5 million people and, according to his estimation, the region makes up 11 percent of the EU economy.

At the forum’s opening session of June 1, Ketels was invited to warm up the audience at the Litexpo before the speech by Lithuanian President Dalia Grybauskaite. Ketels, presenting his state of the region, said that the very open and export-dependent economies of the Baltic Sea region were hit hard by the global crisis, but now they are recovering, though this recovery is still fragile. He emphasized that the region’s countries should care not only about their fiscal figures, but also about the competitiveness of their economies.

“Two years we all were in shock due to the crisis. This year, our recovery was somewhat faster than in the rest of the EU. For example, the economic sentiment in Sweden is 97 percent of the pre-crisis-level,” Ketels said.
“Even Latvia, which was hard hit, having a minority government, could go forward with appropriate reforms. The Baltics are proud of fiscal policy but it is not enough - competition comes from Asia,” Ketels said suggesting that Asia has a competitive labor force.

“There is the German approach - to keep jobs at any cost. The U.S. approach is the opposite. It is easy to fire people there. The Baltic Sea region is somewhere in the middle,” Ketels said about the jobs regulation policy pointing to the dropping FDI level in the region.

Then Elleman-Jensen, the real soul of the Baltic Development Forum, took the microphone stating that “the forum overcame all expectations with 600 participants registered,” and presented “the great European president of Lithuania.”
“The European Union has approved the Strategy for the Baltic Sea Region. It is a very important and necessary step which demonstrates the region’s huge potential. It is also a commitment to embark on a modern path of development, based on the newest technologies and innovations. It is symbolic that for the first time the Baltic Development Forum Summit coincides with the Baltic Sea States Summit, both meeting in one city. I firmly believe that this will help us to understand each other even better, and that it will reinforce our shared aspiration for making the Baltic Sea Region stronger as it emerges as the most prosperous, closely coordinated and competitive region in the European Union, where everyone feels safe and secure and where many business initiatives come together,” Grybauskaite said.
“Lithuania seeks sustainable growth. Steve Forbes in his magazine Forbes described the Baltic states as the unsung heroes of the crisis, comparing them with the bad example of Greece,” said Vilnius Mayor Vilius Navickas, greeting the forum.

The morning of the second day of the Baltic Development Forum started with airport-style security procedures at the entrance due to the arrival of Barroso, as well as Baltic, Scandinavian and German heads of delegations from the Baltic Sea States Summit.

“I’m a believer in the potential of this region. You give a huge contribution to Europe. Yesterday, during a nice dinner with the Lithuanian prime minister, we came to the conclusion that it is easier sometimes to do reforms during a crisis. […] Problems do not stop at EU borders - we should communicate with Russia, Norway and Iceland. I see a real opportunity in this region. Here we have Germany, the strongest economy in the world, Russia, the biggest country in the world, the dynamic countries of Poland and the Baltic states and Scandinavia,” Barroso said.

Danish Deputy Prime Minister Espersen emphasized that the Baltic Sea region is the most important region for export-orientated economies surrounding this busiest sea of Europe. “Some 55 percent of all Danish export goes to the Baltic Sea region,” she said. In comparison, Lithuania’s trade with the Baltic Sea region comprises 63.5 percent of all Lithuanian trade. Furthermore, nine states of the Council of the Baltic Sea States members are on the list of 10 major foreign investors in Lithuania. At this year’s Baltic Development Forum, Lithuania, in numerous leaflets and brochures scattered in the Litexpo center, advertised itself with the slogan “The largest country in the 15th century - the greatest opportunity in the 21st century.”

Lithuanian Prime Minister Kubilius, with his speech at the forum, intended to provoke some friendly laughter from the audience and he succeeded quite well. “Whenever you come to Lithuania, you will get as good weather as it is today [it was a sunny day]. It is our responsibility. We are tough people,” Kubilius said pointing out to the tough, according to his own words, fiscal policy of Lithuania fighting the budget deficit.

“My salary went down by 38 percent. My wife is still in agreement with me. In 2014, we’ll introduce the euro. We’ll win the European basketball championship before this - our government made a decision regarding it. We’ll also win the Eurovision Song Contest - I would like to congratulate Germany, which won it this year, but next time it will be ours. Apart from all this, in 2013 we’ll hold the presidency of the European Union,” Kubilius said. Lithuania’s presidency over the EU Council is scheduled in the second half of 2013. Kubilius added, “We have ambitions to become better than Estonians,” congratulating Estonia with the introduction of the euro. He also expressed his satisfaction that such companies as Barclays and Western Union have invested in Lithuania by opening their world-wide operating centers in Vilnius.
Kubilius finished on a high note, stating that “the Baltic Development Forum will become the European Forum by 2020 and Uffe [Elleman-Jensen] will be the head of it.”

Norwegian Prime Minister Stoltenberg emphasized the necessity of “counter-cyclical politics.” “To stimulate the economy at the bad times and to save in good times,” he said. Stoltenberg also emphasized that “Russian membership in the World Trade Organization would be beneficial for this region.”
Swedish Deputy Prime Minister Olofsson urged the development of the region’s transport system. “It is stupid that we need to change trains seven times between Gothenburg and Brussels,” she said.
Estonian Prime Minister Ansip urged the region to go digital. “We should concentrate on the policies where we already have an advantage. I mean the digital market. Why is it that Swedish businessmen cannot open a company in Latvia via the Internet? We are not good in football, but we are good in cross country skiing and ICT,” Ansip said about the Estonian advantages.

Finnish Prime Minister Vanhanen, speaking at the discussion in the Forum, urged an increase in the region’s capacity to deal with oil spills in the Baltic Sea, taking a lesson from the disaster in the Gulf of Mexico. At the Baltic Sea States Summit, Vanhanen also called for sanctions against those countries of the eurozone which fail to implement decent fiscal policy. Such sanctions could include the stoppage of the co-financing from the EU funds and suspension of the country’s voting rights in the EU.

Latvian Prime Minister Dombrovskis spoke about the necessity of further integration in the region. “The more integrated the Baltic states are, the more integrated they will be with the Nordic countries. There is a need to remove the barriers in the Baltic region. It still took Brussels to dismantle borders between the Baltic states - they could not do it on their own. The further barriers should be removed,” Dombrovskis said.

The EU-funded cross-border cooperation programs could be one of the tools to overcome those barriers. The Latvia–Lithuania Cross-Border Cooperation Program’s main objective is to promote sustainable and equal socio-economic development in border regions to make it competitive for economic and business development and attractive for living and visiting. The program can get 60 million euros from EU funds. Asked by The Baltic Times at the Baltic Development Forum about such opportunity for barriers’ removal, Raivis Bremsmits, head of the Development Monitoring Division at the State Strategic Planning Department of the Latvian Ministry of Regional Development and Local Government, answered, “We need good projects which would be sustainable. It should not be just money spent on travel and seminars.” Anyway, he agreed that EU money influx is better than no influx at all. Such summits are a perfect opportunity for people from businesses and politics of the region to meet their colleagues from neighboring countries to discuss implementation of new projects.

According to Gediminas Kirkilas, a former prime minister of Lithuania, the most important talks at such forums are taking place during lunch. He said that during one such previous summit lunch, he got the support of Nordic leaders for the establishment of the European Institute for Gender Equality in Vilnius: it was a great Lithuanian political and economic achievement, because it is the first Baltics-based EU agency and it also brings EU money into Lithuania.