The European Union has punished Lithuania, but so far very gently
Last Monday, the European Commission decided to fine Lithuania for 27,82 million euros. Thus ended the long-standing litigation of the Baltic border countries due to the dismantling of the railroad tracks on the Lithuanian part of the road between the city of Mazeikiai and the Latvian Rengi. Experts, however, do not consider the appointed fine as the final of this stories. The European Commission's fine now gives grounds to Latvian enterprises affected by the actions of Lithuanian railway workers to file claims for compensation for the damage suffered.
Ten years without travel
It all started in the already distant 2008 year. Under the pretext of repairing the Lietuvos geležinkeliai road (“Lithuanian Railways”), nearly twenty kilometers of railroad tracks were dismantled in the border area between Lithuania and Latvia. The road here together with an oil refinery in the city of Mazeikiai was built during the Soviet years. Oil refineries were delivered to the neighboring Latvia and Estonia from the refinery, and exported through their ports.
Actually, this story began with Mazeikiai. The plant in the post-Soviet period was controlled by subsidiaries of the Russian oil company Yukos. After its bankruptcy, Rosneft and LUKOIL joined the fight for oil refineries. Lithuanian authorities preferred Polish companies PKN Orlen to Russian companies. To her, in 2006, for a modest $ 1,492 billion, they sold a plant capable of processing annually up to 12 million tons of oil.
The Poles did not fully appreciate the Lithuanian gesture and, under the pretext of reducing transport costs, announced plans to redirect their cargoes from Lithuanian sea ports to Latvia. Lietuvos geležinkeliai responded quickly and dismantled nearly twenty kilometers of railroad tracks. Neighbors explained - repair.
The credulous Latvians took the Lithuanian version at face value and waited patiently for the repair to end. After three years of waiting in Riga, at last, they realized that the Lithuanians simply fooled them, closing the road to the Latvian ports not only for oil products from Mažeikiai, but also for related cargo, including transit Belarus.
The first to start is PKN Orlen. In 2011, a Polish company accused Lietuvos geležinkeliai of unfair competition (Lithuanian railway workers, taking this opportunity, raised the tariffs for Poles by as much as 30%) and complained to her about the European Commission. Began a long trial.
In Lithuania, we felt the weakness of our position and began to offer compromises. Lithuanian Prime Minister Saulius Skvernyalis promised the Poles to reduce transportation tariffs. Instead, they should abandon the requirement to restore the Mazeikiai-Rengue railway section.
The proposed compromise brought the Latvians to life. In Riga, they realized that the Lithuanians deliberately dismantled the road, and Vilnius was not going to repair or rehabilitate anything. Thus, railway history received a new interstate dimension. This led the European Commission in 2013 to begin a substantive examination of the unfair competition case. On the horizon of Lithuania, a fine in the amount of 43 million euros.
The first results of the proceedings were outlined only this spring. The antitrust investigation led by European Commissioner for Competition Margrethe Vestager concluded that Lietuvos geležinkeliai was guilty. "It is unacceptable and unprecedented that the company dismantled the state railway for the sake of protecting itself from competitors," Vestager made a statement to the media.
The blame of the Lithuanian Railways was tentatively estimated at 35 million euros - 10 percent of the company's annual turnover. Another 20 million euros had to be invested in the restoration of the dismantled section of the railway. However, even this punishment was considered by the experts insignificant compared with the income that Lithuania received for ten years of “competitive advantage”, when cargo instead of the Latvian and Estonian ports went to Lithuanian Klaipeda and Ventspils.
The final decision, as we see, has become even more favorable for Lithuania. Observers considered it a merit of the Lithuanian President Dalia Grybauskaite. Its political weight in the European Union is somewhat higher than that of its neighbors. In addition, Grybauskaite did everything to distance herself from the actions of the railway company.
Moreover, the Lithuanian president instructed his government to “make decisions regarding significant changes in the state-owned enterprise Lietuvos geležinkeliai. The meaning of these transformations, on the one hand, was to strengthen government control over the faulty company. On the other hand, in the revitalization of work on the Rail Baltica project - the construction of a high-speed railway from Tallinn to the border between Lithuania and Poland. They say the European Commission appreciated the efforts of the Lithuanian president.
External conditions dictate the rules of behavior
There is, meanwhile, another point of view. The European Commission simply did not dare to seriously punish Lithuania. First of all, due to the weakness of the Lithuanian economy, in which gaps are closed by the EU structure with its subsidies and grants. Suffice it to say that this year, from just three EU funds (the EU Regional Development Fund, the Cohesion Fund and the European Social Fund), almost a billion euros will come to Lithuania.
For the country's budget in 8,5 billion euros, the amount is very decent. But even EU assistance does not solve current Lithuanian problems. In 2017, the deficit hole in the Lithuanian budget grew to 558 million euros. The country is sorely lacking money. Sometimes it is quite comical.
In August, the publication Lietuvos žinios shared sadness that since the beginning of the year, the Lithuanian Center for the Study of Genocide and Resistance of Residents of the Country has been unable to find a specialist able to calculate "the amount of damage caused to the country by the Soviet occupation." The reason is that there are no people willing to do this work for the average salary in the country. Offer other conditions at the Center has no financial capacity.
The theme of “compensation for damage from the Soviet occupation” was not revived in the minds of the Lithuanian authorities. Twenty years ago, the Lithuanian interdepartmental government commission already called the approximate amount of this “damage” - 20 billion dollars. By the time the withdrawal of the government commission coincided with the adoption of the decommissioning program built by the Soviet Union Ignalina NPP.
The station provided Lithuania with cheap electricity and the opportunity to earn money on exports of enriched uranium and excess electricity. But the European Commission insisted that the nuclear power plant be closed due to its “environmental hazard”. They say that, against the background of this event, Lithuania was recommended not to raise the issue of “Soviet damages” for the time being. The formal reason was found in the “incorrectness of calculations” of the commission, which did not take into account the “full burden of the occupation”.
Today, old claims are trying to give a new life. Experts cite two reasons. Firstly, over the years of prosperity in the family of European nations, the Lithuanian economy sank so that the depopulation of the population began in the country due to the outflow of the able-bodied population to work in Old Europe.
In addition, in connection with Brexit, European officials have already warned the Baltic border countries that after 2020, the funding of their countries will be sharply reduced. We'll have to live almost at your own expense. In Vilnius, this was not for all the postwar time. Previously, the Soviet Union was invested in Lithuania. Now they live on European money, and on the resources of enterprises inherited from the USSR by the current government. And this is not a figure of speech.
Nikolai Mezhevich, President of the Russian Association of Baltic Studies, has calculated that almost a third of the budget revenues of Lithuania are provided by two unique enterprises - the Port of Klaipeda and the Mazeikiai Oil Refinery. Both inherited from the USSR. Moreover, Mazeikyai refinery was the last refinery built during the Soviet era. It is distinguished by deep processing of oil, the best technology for that time, imported equipment.
Klaipeda port stood out among other modern oil terminal, a large sea railway ferry and berths, the total length of which is almost 25 kilometers. Today, Klaipeda and Ventspils are transported not so much Lithuanian cargo, as transit - mainly Belarusian (about 10 million tons). President Alexander Lukashenko once boasted that at the expense of Belarus, up to 30% of the Lithuanian budget is being formed.
The example of Belarusian goods shows the dependence of Lithuania on external conditions. Experts believe that this dependence will only increase. So, Vilnius will still have to work with its elbows, pushing its neighbors in a tough, not always correct competition. In all it turns out, the current quarrel between the Baltic neighbors is by no means the last ...
Ten years without travel
It all started in the already distant 2008 year. Under the pretext of repairing the Lietuvos geležinkeliai road (“Lithuanian Railways”), nearly twenty kilometers of railroad tracks were dismantled in the border area between Lithuania and Latvia. The road here together with an oil refinery in the city of Mazeikiai was built during the Soviet years. Oil refineries were delivered to the neighboring Latvia and Estonia from the refinery, and exported through their ports.
Actually, this story began with Mazeikiai. The plant in the post-Soviet period was controlled by subsidiaries of the Russian oil company Yukos. After its bankruptcy, Rosneft and LUKOIL joined the fight for oil refineries. Lithuanian authorities preferred Polish companies PKN Orlen to Russian companies. To her, in 2006, for a modest $ 1,492 billion, they sold a plant capable of processing annually up to 12 million tons of oil.
The Poles did not fully appreciate the Lithuanian gesture and, under the pretext of reducing transport costs, announced plans to redirect their cargoes from Lithuanian sea ports to Latvia. Lietuvos geležinkeliai responded quickly and dismantled nearly twenty kilometers of railroad tracks. Neighbors explained - repair.
The credulous Latvians took the Lithuanian version at face value and waited patiently for the repair to end. After three years of waiting in Riga, at last, they realized that the Lithuanians simply fooled them, closing the road to the Latvian ports not only for oil products from Mažeikiai, but also for related cargo, including transit Belarus.
The first to start is PKN Orlen. In 2011, a Polish company accused Lietuvos geležinkeliai of unfair competition (Lithuanian railway workers, taking this opportunity, raised the tariffs for Poles by as much as 30%) and complained to her about the European Commission. Began a long trial.
In Lithuania, we felt the weakness of our position and began to offer compromises. Lithuanian Prime Minister Saulius Skvernyalis promised the Poles to reduce transportation tariffs. Instead, they should abandon the requirement to restore the Mazeikiai-Rengue railway section.
The proposed compromise brought the Latvians to life. In Riga, they realized that the Lithuanians deliberately dismantled the road, and Vilnius was not going to repair or rehabilitate anything. Thus, railway history received a new interstate dimension. This led the European Commission in 2013 to begin a substantive examination of the unfair competition case. On the horizon of Lithuania, a fine in the amount of 43 million euros.
The first results of the proceedings were outlined only this spring. The antitrust investigation led by European Commissioner for Competition Margrethe Vestager concluded that Lietuvos geležinkeliai was guilty. "It is unacceptable and unprecedented that the company dismantled the state railway for the sake of protecting itself from competitors," Vestager made a statement to the media.
The blame of the Lithuanian Railways was tentatively estimated at 35 million euros - 10 percent of the company's annual turnover. Another 20 million euros had to be invested in the restoration of the dismantled section of the railway. However, even this punishment was considered by the experts insignificant compared with the income that Lithuania received for ten years of “competitive advantage”, when cargo instead of the Latvian and Estonian ports went to Lithuanian Klaipeda and Ventspils.
The final decision, as we see, has become even more favorable for Lithuania. Observers considered it a merit of the Lithuanian President Dalia Grybauskaite. Its political weight in the European Union is somewhat higher than that of its neighbors. In addition, Grybauskaite did everything to distance herself from the actions of the railway company.
Moreover, the Lithuanian president instructed his government to “make decisions regarding significant changes in the state-owned enterprise Lietuvos geležinkeliai. The meaning of these transformations, on the one hand, was to strengthen government control over the faulty company. On the other hand, in the revitalization of work on the Rail Baltica project - the construction of a high-speed railway from Tallinn to the border between Lithuania and Poland. They say the European Commission appreciated the efforts of the Lithuanian president.
External conditions dictate the rules of behavior
There is, meanwhile, another point of view. The European Commission simply did not dare to seriously punish Lithuania. First of all, due to the weakness of the Lithuanian economy, in which gaps are closed by the EU structure with its subsidies and grants. Suffice it to say that this year, from just three EU funds (the EU Regional Development Fund, the Cohesion Fund and the European Social Fund), almost a billion euros will come to Lithuania.
For the country's budget in 8,5 billion euros, the amount is very decent. But even EU assistance does not solve current Lithuanian problems. In 2017, the deficit hole in the Lithuanian budget grew to 558 million euros. The country is sorely lacking money. Sometimes it is quite comical.
In August, the publication Lietuvos žinios shared sadness that since the beginning of the year, the Lithuanian Center for the Study of Genocide and Resistance of Residents of the Country has been unable to find a specialist able to calculate "the amount of damage caused to the country by the Soviet occupation." The reason is that there are no people willing to do this work for the average salary in the country. Offer other conditions at the Center has no financial capacity.
The theme of “compensation for damage from the Soviet occupation” was not revived in the minds of the Lithuanian authorities. Twenty years ago, the Lithuanian interdepartmental government commission already called the approximate amount of this “damage” - 20 billion dollars. By the time the withdrawal of the government commission coincided with the adoption of the decommissioning program built by the Soviet Union Ignalina NPP.
The station provided Lithuania with cheap electricity and the opportunity to earn money on exports of enriched uranium and excess electricity. But the European Commission insisted that the nuclear power plant be closed due to its “environmental hazard”. They say that, against the background of this event, Lithuania was recommended not to raise the issue of “Soviet damages” for the time being. The formal reason was found in the “incorrectness of calculations” of the commission, which did not take into account the “full burden of the occupation”.
Today, old claims are trying to give a new life. Experts cite two reasons. Firstly, over the years of prosperity in the family of European nations, the Lithuanian economy sank so that the depopulation of the population began in the country due to the outflow of the able-bodied population to work in Old Europe.
In addition, in connection with Brexit, European officials have already warned the Baltic border countries that after 2020, the funding of their countries will be sharply reduced. We'll have to live almost at your own expense. In Vilnius, this was not for all the postwar time. Previously, the Soviet Union was invested in Lithuania. Now they live on European money, and on the resources of enterprises inherited from the USSR by the current government. And this is not a figure of speech.
Nikolai Mezhevich, President of the Russian Association of Baltic Studies, has calculated that almost a third of the budget revenues of Lithuania are provided by two unique enterprises - the Port of Klaipeda and the Mazeikiai Oil Refinery. Both inherited from the USSR. Moreover, Mazeikyai refinery was the last refinery built during the Soviet era. It is distinguished by deep processing of oil, the best technology for that time, imported equipment.
Klaipeda port stood out among other modern oil terminal, a large sea railway ferry and berths, the total length of which is almost 25 kilometers. Today, Klaipeda and Ventspils are transported not so much Lithuanian cargo, as transit - mainly Belarusian (about 10 million tons). President Alexander Lukashenko once boasted that at the expense of Belarus, up to 30% of the Lithuanian budget is being formed.
The example of Belarusian goods shows the dependence of Lithuania on external conditions. Experts believe that this dependence will only increase. So, Vilnius will still have to work with its elbows, pushing its neighbors in a tough, not always correct competition. In all it turns out, the current quarrel between the Baltic neighbors is by no means the last ...
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