EU – Baltic States, Latvia, Legislation, Lithuania, Railways, Transport

Grybauskaite visited Riga last week to meet with Latvian President Andris Berzins. The Latvian president expressed support for Lithuania, which claims that the route of the European railway must include the capital city of Vilnius, Udrenas said in an interview with the Ziniu radijas.

"There was a complete agreement, understanding, that surely all the capital cities should be joined to ensure as large flows of passengers as possible through this modern railway," said Udrenas. "The Latvians understand us and believe our request to be logical, because the European Union wants to link up all the European capitals with standard-gauge railroads. I would like to remind that Riga was not included in the original version of the project," said Udrenas, explaining that, by analogy with Latvia, both Kaunas and Vilnius should be included in the Rail Baltica project in Lithuania.

Lithuanian President's Office maintains the same position as the Ministry of Transport and Communications: Vilnius must be linked to Rail Baltica, said Udrenas.

"Vilnius is the largest Lithuanian city: at least 20 percent of Lithuanian population, the highest economic activity, the highest purchasing power, therefore linking Vilnius to Rail Baltica would have more sense and feasibility," said Udrenas.

Lithuanian Prime Minister Algirdas Butkevicius also said in an interview with Lithuanian State Radio on Tuesday that the Rail Baltica section from Kaunas to Vilnius was envisaged in a memorandum that the Baltic countries had signed with Finland. Now agreement must be reached on European Union funding for this railroad section. If it is Lithuania that must pay for construction of this railroad section, or if the EU decides to cover less than 85 percent of the project's cost, such a project will be unfeasible to Lithuania, he added.

Butkevicius said he hoped that the matter would be discussed at a meeting of the Baltic prime ministers in Tallinn on February 3. The Polish prime minister has also been invited to the meeting.

Lithuanian Transport and Communications Minister Rimantas Sinkevicius said that connecting Vilnius to the Rail Baltica railroad remained the only problem to be solved. He said he hoped that such agreement could be reached during the next six months, emphasizing that Lithuania would not go back on its proposal.

"Neither Estonia nor Latvia will be able to join the European railroad network without Lithuania, this is very important to them," he said.

At the same time, Sinkevicius said the criticisms of Lithuania for delaying the project were unfounded. The new EU funding period has only just begun, and a project as important as Rail Baltica requires thorough analysis, so any possible errors could be timely averted.

Sinkevicius estimates that building the Rail Baltica branch to Vilnius could cost approximately LTL 1 billion (almost EUR 290 million), and this cost should be shared by all parties to the project. Implementation of the project should begin during the term of office of the current European Parliament and European Commission, he added.

In the meantime, Estonia believes that if Lithuania wishes to include Vilnius in the Rail Baltica project, it should do so at its own expense.

Nerijus Maciulis, chief economist at Swedbank in Lithuania, also believes that the Lithuanian government's claim that Vilnius must be included in the Rail Baltica project is economically unfounded. Expanding the railroad to Vilnius may even be damaging to regional development in Lithuania, because not all economic activity in Lithuania has to center around Vilnius, he said.

The economist also reminded that the Economist magazine had run a commentary in October 2013, which said that many railroad companies in the region were closely associated with Russia and their profits depended on freight transit flows between the Baltic ports and Russia, Central Asia and China. These railroad companies as well as Russia would rather want the east-west railroads upgraded, he said.

Lithuania is concerned that Latvia and Estonia may elevate the "Vilnius problem" to the political level. The disagreements among the Baltic countries may derail the entire project, which must commence in 2016 or else the Baltic countries may lose EU co-financing in the amount of EUR 26 billion.

Last week the matter almost caused a diplomatic scandal as Estonian Economy Minister Juhan Parts, in an interview with the "Wall Street Journal", had called Lithuanian government members "fools". Butkevicius even summoned the Estonian ambassador to Vilnius to appear at the Foreign Ministry, but Parts solved the disagreement himself by issuing an apology and explaining that his words had been misinterpreted.