Let's create a Baltic super-state

After 10 years of independence the three Baltic countries have made tremendous progress on the path to becoming part of the European Union. But will this really be enough to exploit the huge potential of each state once they are small parts of a Europe dominated by the three or four largest players? Probably not.

The assimilation process will be lengthy but inevitable, and the competition for funding will be keen.

Historically, Estonia, Latvia and Lithuania have suffered the same fate as many a small nation. They have never been in control of their own destiny, with the exception of Lithuania in centuries past. So perhaps the time has come to look at a new opportunity to become more self-assured and firmly in control of the future: to merge into one single Baltic state.

The idea of one Baltic state is not new. It has a successful act to follow in Switzerland, which for many centuries has been both a democracy and a federated republic. The similarities are easy to point out. Switzerland has three distinct ethnic groups with three distinct cultures speaking three distinct languages. The advantages Switzerland has always enjoyed were embodied in its far-reaching constitution, its neutrality, a banking system that attracts capital (albeit sometimes from dubious sources) and above all the ability to compromise and keep the relationship between its three ethnic groups harmonious.

The advantages the Baltic states would enjoy by becoming a federated republic would be considerable. While a new federal government and a new capital city would have to be selected, the long overdue reorganization would provide a more efficient public administration by having three regions Ð Estonia, Latvia and Lithuania Ð and a few large provinces, no more than four or five per region.

The qualified staff who would see their local public administration positions eliminated would apply for new federal positions. The capital would have to be chosen among smaller communities of 200,000 inhabitants. These communities would provide plans for government buildings, airport facilities and housing in order to win the contest.

The idea of choosing a smaller community as a capital stems from the impossibility of resolving the rivalry that already exists between the present capitals Tallinn, Riga and Vilnius. This would, of course, take considerable funding. A new constitution would have to be drafted.

The borders between the three countries would vanish, facilitating commerce. This is an advantage that would become even clearer when joining the EU. The Federal Baltic Republic would have 15 combined votes at the EU Parliament when accepted into the union. The new nation could be called Baltijaa.

There would be one currency, the balt, which would be pegged to the euro, making the transition to the euro zone easier. There would be one central bank, banking reform, a serious privatization process and favorable taxation for new businesses.

The investment flow would be promoted from countries to the east, such as Russia, Belarus and Ukraine. These countries would have an advantage in opening private companies in the Federal Baltic Republic, as a way of avoiding export restrictions to the EU, once the FBR joined the EU. In this respect the psychological distrust of Russia would all but disappear. The FBR would also continue on its path to joining NATO, an essential element of security.

The FBR would experience a very substantial growth rate over the years with low inflation. Many new technical, manufacturing and marketing job opportunities would open up. This would encourage the young and skilled to stay and live within the FBR. And the new nation might even start to experience reverse migration from Latvian, Lithuanian and Estonian groups living overseas, not unlike the situation Ireland has witnessed in recent years.

It is difficult to see any drawbacks with the formation of a Federal Baltic Republic, but it is possible that there would be some. The standard of living would not improve equally for all segments of society. The retired and the unskilled would continue to be at a disadvantage. But the majority of the population of 7.5 million would experience a substantial improvement in their standard of living, just as the 7.2 million Swiss have enjoyed all along.