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  Economic expansion of Poland to Lithuania (1)

Česlovas Iđkauskas, political analyst
2008 06 11

The subject of this article was prompted by the analysis of economic relations between Poland and Lithuania, provided in the Russian website „Regnum“ under a very provocative title:  „The Polish business usurps the Lithuanian economy“.  The Polish export and investment to Lithuania increases, but this is a usual cooperation between the two neighboring states.

Since the very old times Lithuania has been one of the major trade partners of Poland. The Lithuanian import from Poland is constantly increasing. In 2005 it comprised one tenth of the total import and only Russia and Germany are ahead of Poland in the above area.

During the recent ten years the Polish export to Lithuania has increased twenty times, and import from Lithuania increased more than twice. The positive balance of trade between Poland and Lithuania has grown rapidly. In 2002 it comprised 740 million US$ and was the highest of all the Lithuanian trade partners. Although in 2006 Poland was only 14th according to investment in Lithuania, by the end of the same year the Polish company „PKN Orlen“ bought the concern Mazeikiai Oil and the investment has immediately jumped up to 2,5 billion US$.

Most probably the above made the authors conclude that the Polish simply „bought up“ the economy of our country.

The above article indicates that Polish expansion to the Lithuanian energy sector is increasing.  In February 2008 „PKN Orlean“ told about its plans to acquire the shares of the state undertaking „Klaipedos nafta“ (Klaipeda's Oil).  70% of these shares are controlled by the Lithuanian Government. If Seimas does not agree with this transaction, this Polish company is going to start controlling Liepaja and Ventspils terminals in Latvia. By 2020 „PKN Orlean“ is planning to establish a network of about 200 fuel stations occupying about 20% of the energy market of these countries.

As we know, Poland was invited to join the construction and operations of the planned reactor of the Ignalina Nuclear Power Plant.  According to the EU membership treaty of 2004, Ignalina Nuclear Power Plant shall be closed by the end of 2009; whereas the construction of the power station of the new reactor is under discussions.  Its power should reach 3200 megawatts. It should start the operations by 2015. This means that Lithuania would have to import more expensive energy from Russia in the next five-six years.

In order to accumulate funds for the construction of a power–station, in 2006 Lithuania, as well as other countries, applied to Poland, and in November of the above year Warsaw agreed to take part in the construction of the new power-station. In December a four-party agreement was signed, according to which Poland,Latvia and Estonia would equally receive 22% of energy power, and 34% would remain for Lithuania. However, later Poland required to increase its part to 1200 MW. Vilnius as if agreed with this condition, however the discussion on the final decision is still under way.

Since Russia wants to construct a nuclear power plant in the Kaliningrad Region, Warsaw also wants to secure against a possible lack of energy. At the end of 2006 it started discussing the construction of the nuclear power-station up to 2021. However, it seems that the Ministry of Economy of Poland has focused on the project of a new reactor of the Ignalina Power Plant.

The perspective of the energy cooperation between the countries is not yet clear also because of the construction of the energy bridge via the Polish territory towards the West (Alytus-Elk section) due to the analogous project with Sweden. Projects of the new line for the supply of gas to Lithuania from Poland are also under establishment, but they are also in the stage of discussions.

Therefore talks about the expansion of the Polish business to Lithuania and, moreover, about any „economic occupation“ are premature and unjustified.

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