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  Lithuanian Eastern policy: achievements of 2007 (II)

Povilas Þielys
2008 09 04

Formers of the Lithuanian foreign policy expect that active country‘s policy (i.e. relationship with Ukraine, Moldova and Georgia) will provide for strengthening commercial relations with these countries and set the stage for Lithuania‘s investment in these states. According to the Lithuanian entrepreneurs, so far one of the main reasons preventing from the entrance to the Ukrainian market is corruption.  The situation in Moldova and Georgia is nearly the same.

According to the data of „Transparency International“, the fight against corruption in 2007 was relatively successful only on Georgia, whereas in Ukraine and Moldova the situation was even worse.  According to the corruption perceptions index (CPI), in 2007 the Georgian CPI has considerably improved – from 2,8 to 3,4, whereas the Ukrainian and the Moldovan has decreased significantly from 2,8 to 2,7 and from 3,2 to 2,8. For comparison – the Lithuanian CPI is 4,8.

One of the key Lithuanian Eastern policy tasks to open the market of the above countries for the Lithuanian goods.

According to the data of Statistics Lithuania, in 2007 the export to Ukraine has increased from  LTL 1,005 to LTL 1,176 billion.  Most probably this was due to active Lithuanian policy towards the East.

The export of the Lithuanian goods to Moldova and Georgia has also increased in 2007: to Moldova – from LTL 42,4 million to LTL 55,4 million, whereas to Georgia – from LTL 16,7 to LTL 38 million. However, in general the share of the Lithuanian export was least in the above two countries.  Thus, so far the Lithuanian business tries to find its place only in Ukraine.

During 2007 the amount of the direct Lithuanian investment in Ukraine has jumped from LTL 268,4 to  LTL 378 million. Taking into account the limited business opportunities for Lithuania, this could be evaluated as a good result. Moldova did not have Lithuania‘s direct investment neither in 2006, nor in 2007, whereas the investment of 10 thousand Litas in Georgia could also be equalled to zero.

Another Lithuania‘s policy objective towards the East – to increase the energy security of the country in order to ensure the alternative supply of gas and oil and to reduce the energy dependence on Russia.

In 2007, the key event in the above sphere was the international conference held in Vilnius. During the conference Lithuania joined the pipeline project Odessa-Brody-Plock-Gdansk.  The concern „Sarmatia“, established by the Ukrainian and Polish companies, was complemented not only by the Lithuanian (SC Klaipedos nafta“) but also by the Georgian and Azerbaijan companies.

Unfortunately, so far the efforts to make an agreement with Kazakhstan for supply of oil from Odessa to Gdansk fell flat (In order to make the pipeline profitable, it is not enough to supply Azerbaijan‘s oil). Besides, at the beginning of 2007 the Polish press wrote about a possible branch of the pipeline Odessa-Brody-Plock-Gdansk to Mazeikiai. Certain Lithuanian officials have also been speaking about this with hope.  However, at the end of 2007 the talks about the branch to Lithuania seized, and the officials started considering the possibility of joining the pipeline Odessa-Brody with the southern branch of the pipeline „Druzhba“ and directing the Caspian oil to Slovakia and Czech Republic.

In view of the above, the conclusion could be made that the year 2007 was neither the year of achievements, nor the year of disappointments. This year could be considered as the year of hopes.

Although the level of corruption in Ukraine did not decrease, the flow of investment from Lithuania to this country indicates that positions of our entrepreneurs in Ukraine have increased in 2007.

The formal affiliate with the concern building up the pipeline Odessa-Brodfai-Plock-Gdansk is also only a sign of hope. Maybe some day part of the Caspian oil will reach Bûtingë by this pipeline. Or maybe not.

On the other hand, the pessimists could say (by leaving the hopes aside) that the only achievement of the Lithuanian Eastern policy in 2007 is more tight relations with Ukraine, a traditional commercial partner of Lithuania.

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