Aftershocks from the Grybauskaite vs. Putin match

VILNIUS - On Feb. 10, Lithuanian President Dalia Grybauskaite met with Russian Prime Minister Vladimir Putin. The meeting was initiated by Putin. Grybauskaite is a former master of karate while Putin is a master of judo. This fact gave cartoonists and commentators material for jokes. It was the first meeting of Lithuanian and Russian leaders at such a high level since 2001, when President Valdas Adamkus visited then President Putin in Moscow.

Grybauskaite and Putin participated in the Baltic Sea Action Summit, convened on the initiative of the president of Finland, in Helsinki. Even the biggest critics of Grybauskaite in Lithuania praised her tough stance towards Putin. Grybauskaite emphasized that Lithuania is a European Union country and it should be treated the same as the rest of EU countries. She criticized the fact that Lithuania pays a higher price for Russian gas than other EU countries. She expressed doubts about the necessity of intermediary companies which sell Russian gas. All moves towards closer relations should be made on an equal and mutual basis, she emphasized. At least visually, the beginning of the talks, which were shown on TV, reminded one of a dialogue between a female teacher and an ashamed pupil. Grybauskaite rejected Putin’s proposal to build, together with the Russians, a nuclear power plant in Russia’s Kaliningrad enclave. She said that Lithuania will build its own nuclear plant in Ignalina.

While Putin easily convinced Latvian President Valdis Zatlers to come to Moscow to view this year’s Russian military parade on May 9, this theme was not even discussed during Putin’s meeting with Grybauskaite. Lithuanian presidents traditionally are not going to celebrate the end of WWII in Moscow, because the end of WWII brought no freedom to Lithuania. Such a visit to Moscow would be possible only in the case of the Russian president’s visit to Lithuania on March 11 to celebrate the 20th anniversary of restoration of Lithuania’s independence. After the meeting Grybauskaite said that Putin told her about Russian companies’ negotiations over the purchase of the Lithuanian oil refinery in the northern Lithuanian town of Mazeikiai.

That oil refinery is considered by Lithuanian politicians to have a strategic importance to Lithuania. The Polish-owned company, Orlen Lietuva, is a petroleum refining company operating the only petroleum refinery in the Baltic states, as well as a crude oil and petroleum product network and the Butinge sea terminal. The company also manages the chain of gasoline filling-stations Ventus and Orlen Lietuva through its subsidiary Ventus - Nafta. Production and sales of petroleum products are the key areas of activity for the company. The oil refinery processes approximately 10 million tons of crude oil a year. The impact of Orlen Lietuva on the Lithuanian economy is considerable. It is the largest taxpayer in the state. The company has the highest revenue in Lithuania. Orlen Lietuva is one of Lithuania’s largest exporters. The company is the largest supplier of petrol and diesel fuel in Lithuania, Latvia and Estonia. The company’s products are also exported to Western Europe, USA, Ukraine, and other countries. The Polish oil concern Polski Koncern Naftowy Orlen S.A., the leader of the oil refining sector in Central Europe, is the only shareholder of Orlen Lietuva.

According to Grybauskaite’s information, which was leaked to the media, Putin also promised that Russia will renew supplying Lithuania’s only oil refinery, via the Druzhba (“friendship” in Russian) pipeline. The supplies were stopped because of “technical” reasons (as Russia explained it) after the Lithuanian government decided to sell the Mazeikiai refinery to the Poles, not to the Russians, in 2006.

On Feb. 12, Krystian Pater, director general of Orlen Lietuva, visited Lithuanian Parliament Speaker Irena Degutiene in the Lithuanian parliament. After their meeting, they held a press conference. Pater categorically denied speculation about Orlen Lietuva’s ongoing negotiations with the Russians over purchase of the company.
“There are no negotiations over some sale of Orlen Lietuva to Russian companies. I don’t want to comment on politicians’ talks. I speak only about facts. There are no such facts,” Pater said.

Degutiene said that Pater asked the Lithuanian government to sell the Lithuanian state-owned oil terminal Klaipedos Nafta. On the same day, Grybauskaite categorically rejected such possibility. Klaipedos Nafta is considered to be strategic for Lithuania’s security. There is no guarantee that the Russians will not buy Orlen Lietuva. The Lithuanian state should preserve at least Klaipedos Nafta in its ownership, according to the dominating official position of Vilnius.
On Feb. 12, newly appointed Lithuanian Foreign Minister Audronius Azubalis also commented on Putin’s suggestion over purchase of the oil refinery in Mazeikiai. Azubalis, during his first press conference in the Lithuanian Foreign Ministry, was asked if it is possible that Putin was telling a lie about ongoing negotiations over the purchase of Orlen Lietuva.
“Lie, not lie… Maybe, it was a probe,” Azubalis said. He expressed his conviction that Orlen Lietuva would not make some deal with the Russians in secret.

“The Poles are our strategic partner and I’m sure that they would inform us in advance about such negotiations,” Azubalis said.
According to the daily Lietuvos Rytas, on Feb. 12, Putin’s spokesman denied information that Russian companies are negotiating over the purchase of Orlen Lietuva.
However, on Feb. 12, Social Democrat MPs Justinas Karosas and Vytenis Andriukaitis expressed their suspicion over possible negotiations of the Polish-owned company with the Russians.

“A person of such rank as Russian prime minister does not follow some gossip,” Karosas said. Andriukaitis speculated that the best solution for the Mazeikiai refinery would be co-ownership by the Lithuanian state and some EU and Russian companies. He also said that the U.S. company Williams International was also denying its negotiations over selling the refinery in Mazeikiai to the Russian company Yukos.

In October 1999, the Lithuanian government and Williams International signed an agreement, under which Williams International became a 33-percent owner and operator of the Mazeikiai oil company (then called Mazeikiu Nafta). In July 2002, the Lithuanian government, Williams International and Yukos signed investment agreements under which Yukos acquired a 26.85-percent stake in Mazeikiu Nafta. In September 2002, Yukos acquired from Williams International an additional 26.85 percent stake. After Putin started his attack on Mikhail Khodorkovsky, Russian dissident businessman and Yukos owner, and liquidation of Yukos itself, all shares of Mazeikiu Nafta were purchased by the Lithuanian government and later sold to Orlen.

On Feb. 12, during a press conference by the Lithuanian government, Lithuanian Prime Minister Andrius Kubilius said that he is sure that Orlen would inform the Lithuanian government in case of negotiations with the Russians over the company’s sale.
February 12 was a Russia-related day in Lithuania. Kubilius announced that in two years, Lithuania will build a liquid gas terminal in the territory of Klaipedos Nafta which will give Lithuania a gas supply route via the sea. It would be an alternative to Russian gas supplies via pipelines from Russia. “It will be an alternative, or partial alternative,” Kubilius said, emphasizing that Lithuania would be the best place in the Baltics to build such a terminal. The European Commission has advised the Baltics to have such a terminal which would be useful for all three Baltic states.

Azubalis, during his press conference, also spoke about French plans to sell a Mistral class amphibious ship, which is able to carry tanks and helicopters, to Russia. The Mistral ship is designed for attacking military operations.
“At the moment, this is only media information. It does not add the feeling of tranquility,” Azubalis said. He promised to raise this issue in his talks with Pierre Lellouche, France’s minister of state for European affairs, who will visit Lithuania soon. At the moment, Lithuanian Defense Minister Rasa Jukneviciene is questioning her French counterparts about that rather distasteful deal. NATO considers Russia a partner, while Russia officially considers NATO as a security threat. Estonia and Georgia expressed their concern about the possible Mistral ship deal. Georgia is an EU partner in the Eastern Partnership program.

The European Council’s Common Position of Dec. 8, 2008, defining common EU member states’ rules governing control of exports of military technology and equipment reads as follows: “Member States shall take into account the risk of use of the military technology or equipment concerned against their forces or those of Member States, and those of friendly and allied countries.” The document was signed by French Foreign Minister Bernard Kouchner since France was holding the EU presidency in the second half of 2008.