Baltic Economic Forum comes to Lithuania

  • 2000-04-13
  • By Peter J. Mladineo
VILNIUS - With little fanfare and much rhetoric, the second annual Baltic Economic Forum kicked off April 11 at the Hotel Villon, 19 kilometers north of Vilnius.

Baltic solidarity, EU accession, customs regulations, globalization, energy and high technology were the most commonly broached issues by the presenters, who included government officials and business leaders from Lithuania, Latvia and Estonia.

Prime Minister Andrius Kubilius opened the conference voicing the need for Lithuania and the Baltic states to avoid "closed" economic mentalities, which existed in these regions at the beginning of the 20th century.

"We exist at a time of economic globalization -this would be an absolute anachronism and would destine the country to be moving backward," Kubilius said.

Instead, Kubilius proposed Lithuania's entry into the EU by 2004 and for all three Baltic states to be ready for "growing competitive pressure" when accession comes.

"For us, EU membership would mean access to the huge EU market, many times exceeding the purchasing power of another, more familiar Russian market," he said.

He waxed optimistic in predicting that all three Baltic states would accede together.

"My argument is not based simply on a guess or an imaginary geopolitical factor but on the virtual economic integrity of the region," Kubilius maintained. "I think that in the nearest time the further strengthening of the economic integrity of the Baltic states is going to grow. I mean the development of joint infrastructure projects here. Cooperation in the fields of energy and transport has good prospects both in the trilateral and the wider Baltic Sea context. There are also very positive prospects for the energy sector liberalization, power bridge and gas ring projects."

Characteristically, Kubilius found time to concede that difficult financial conditions forced his government "to make unpopular financial decisions and commitments." The embattled Prime Minister rested his country's hopes on continuing privatization.

The economic ministers of Lithuania and Estonia, Valentinas Milaknis and Mihkel Parnoja also spoke. Milaknis discussed the process of energy restructuring while Parnoja heralded Estonia's success as a magnet for foreign investment.

"Economic growth of over 4 percent at an average since 1995 has to a great extent been based on the rapid growth of exports and a high level of investments," Parnoja said. "Even though the Russian financial crisis of 1998 caused a temporary set-back in Estonian economic expansion, the record level of foreign investment that year reflected the continued trust of foreign investors in the Estonian economy."

The Estonian government's new tax act, which bans corporate profit taxes, "will undoubtedly make Estonia even more advantageous for investors," Parnoja added.

The Estonian also offered his country's assistance in helping the other two Baltic states in the accession process. Estonia, which is far ahead of Latvia and Lithuania in the accession schedule, "is willing to share its experience in the negotiation process as well as in the harmonization of legislation to EU standards."

Edvins Karnitis, adviser to the Latvian Prime Minster, focused his message on high-tech issues, positive and negative.

"The real result of the symbiosis between information technologies and the development of society is the very rapid increase in the abilities of humanity, accompanied by a growing dependency on information technologies on which the activities of human beings are increasingly based. The most important results of this process are the globalization, networking and openness of all economic, political and social processes," he said.

While globalization and high technology held plenty of benefits for the Baltic states, there were also some minuses, Karnitis reported. While enabling free movement across borders and easier access to worldwide markets, globalization, he added, would also "reduce the sovereignty of our countries. It means a real shortening of the functions of the national state. Another not-so-popular issue is the deep networking of all social, economic and political growth. Everybody is connected to everybody and nobody is really independent today."

What Karnitis could have said: With the regaining of independence still fresh in all three of the Baltic states' minds, perhaps the idea of Baltic unity is still a bit premature.

But Baltic cooperation continued to be a favorite topic. Rimvydas Gradauskas, president of the Lithuanian Road Carriers Association, stressed the need for customs regulations to be relaxed to ease border crossings for truck drivers in the Baltic states to be removed.

A geography lesson was presented by Viktors Kulbergs, president of the Latvian Chamber of Commerce and Industry and president of the Latvian company Auto Riga SIA. Kulbergs presented a map displaying the Baltic countries in the context of Russia.

"The three Baltic states are a kind of bottleneck going eastward," he said. "I suppose that we are facing a period to be on the safe side of this bottleneck."

If politicians in the Baltic states made the right decisions over the next ten years, Kulbergs predicted, the size of the Baltic states' economies could grow ten times, or even more. He added that the Baltic states, population roughly 8 million, needed that size to effectively compete with the rest of Europe.

"We are not competitors, we are partners," he said. "A United Baltics is the only way to join a United Europe."

An elaboration on that was provided by Aadu Luukas, chairman of the board of the Estonian Business Association and council chairman of the Estonian firm Pakterminal Ltd.

Luukas stressed that each Baltic country, individually, was too small a market for its businesses.

"Estonia is too small for Estonian companies, Latvia is too small for Latvian companies, and Lithuania is too small for Lithuanian companies," he said.

Baltic differences, Luukas postulated, would provide enough diversity to help an eventual economic union.

"Our differences will assist to unite our economies," he said.

The only speaker to take aim at management issues - or mismanagement issues, rather -was Gunnar Okk, chairman of the management board of Eesti Energia. Management, he said, went beyond education. It was more a matter of experience, which many managers in the Baltic markets still lack.