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The role of small nations in international politics should not be underestimated. Commitment to the principles of cooperation, transparency and broader institutional regulation is typically the strong point of the small. Lithuania is no exception in this regard. We can make a difference if more transparency and more international regulation are needed, for instance, in global energy markets. On the surface, global energy and Lithuania seem too distant topics to be discussed together. However, everything has become so intertwined in today’s complex world that Lithuania also participates, no matter what, in global energy development. Just a short glimpse on the ongoing EU-Russian dialogue reveals the important role of Lithuania in this process.

On the other hand, as we increasingly compete at the level of ideas and innovations, the size of the state is no longer important. Sometimes the small countries must be more innovative to cope with the same challenges as the large ones but at a lower cost. Thus, bright ideas need not necessarily come only from world-class universities. Yet, to promote and implement them it is necessary to concentrate intellectual efforts and to better coordinate research and development activities under overarching goals. This is a challenge to the big and the small and perhaps we should no longer limit ourselves to such conventional notions as “nation state” or “European” and “transatlantic” community, but rather speak of Western civilization.
According to the old Prussian saying, “diplomacy without arms is like music without instruments”. Perhaps, modern Prussians would rephrase it as follows: “Diplomacy without energy is like music without instruments”. Energy has indeed become an inseparable part of European and transatlantic politics. On the one hand, the continued growth of developing markets has substantially increased global demand for energy resources. In Lithuania alone, the economy has been growing by 7.5% on average during the last six years. We all need more oil, gas and new production capacities. On the other hand, the new tunes in the Russia-Ukraine gas dispute last year sent a serious signal. The European Union highly depends on imported energy resources. Nearly 54% of gas and 76% of oil consumed in the EU are imported from third countries. In 2030 imported energy will reach more than 80% for gas and more than 90% for oil. Thus, the question of where Europe will buy energy resources is already here today and will become even more important in the future.
Today Russia’s share in European energy imports is substantial and constantly growing. Whether we should welcome or fear this fact is still unclear, as Russia’s prospects of becoming a full-fledged free market democracy remains uncertain. We believe that Russia will continue on the path of reforms, thus increasing the role of free enterprise in its economy,
including its energy sector. But regardless of whether these hopes will come true or not, it is already obvious that the EU-Russia cooperation will have a huge strategic impact on the European and global developments. Lithuania, as member of the EU and a neighbour of Russia, can play an important role in developing this cooperation.

Challenge 1 – Building a Common European Energy Policy

Our interests in the EU are twofold. First, we need a more integrated energy policy of the EU. Second, we have to create more effective instruments, including the Common Foreign and Security Policy (CFSP), to promote our energy interests more efficiently. The United States can contribute in both cases; we just need to be a little bit more open and self-confident to engage the Americans in this exercise. Lithuania welcomes the debate on energy security within NATO. This topic should be kept on NATO’s agenda. Perhaps NATO may not be the primary actor in addressing energy security problems, but the linkage between the flow of vital resources and national security is too obvious to ignore and NATO could certainly add value in assisting national and international efforts in this field.
Building a Common Energy Policy is one of the major topics on the EU agenda. A growing deficit in European energy resources and skyrocketing energy prices stimulate intense thinking in three directions. The first is diversification of supplies by source and geographic origin. Today European generation capacities heavily depend on fossil fuels, like oil and gas. To change this balance is one of the key challenges. Some EU member states have adopted ambitious strategies which should end their dependence on oil by 2020. Others revert to their once suspended files on nuclear energy. In Lithuania, too, discussions thrive on what sort of energy our country will use after the foreseen closure of the Ignalina Nuclear Power Plant in 2009. Not so long ago, an agreement was reached with the other two Baltic States, Latvia and Estonia, to build a new modern nuclear reactor in Ignalina. The ranks of the EU countries interested in this project have expanded since, including Poland and Sweden.
The diversification debate still too much depends on conventional thinking and is overwhelmed by geographic details. The “new” energy projects circulating in the EU are largely focused on pipelines and other infrastructure. This discussion is of course very important. We must have access to the Caspian Basin and the other energy-rich regions to
diversify our supplies. This is especially true for such countries as Lithuania, which imports almost 100% of its energy sources from a single supplier. Without an alternative, we all become extremely vulnerable.
But on the other hand, new pipelines will solve only part of the problems. The greater challenge is to restructure our energy markets so that we no longer depend on fossil fuel monopolies. We need a breakthrough in energy generation, transmission and accumulation methods. Europe is taking only its first steps in this direction. Energy is all around us. We
only have to learn how to bring it under control and apply it more universally. It is still too early to tell in which fields of research new forms of energy will be discovered (maybe in biology, in chemistry or in mathematics). This brings us back to the topic of Research and Development policies in the European context. These will not deliver a breakthrough unless they are fundamentally reformed. Research and Development policies have to be liberated from national jurisdiction and narrow “national” interests. This is a challenge for the Western community as a whole. New forms of energy generation, transmission and storage may remain under lock in patent institutions for years, if companies or national governments, who sponsored the research, do not want to share their knowledge. Financial profits must always be weighed against the added value in terms of global peace and development.
The process of pooling the competences of all European states, large and small, in Research and Development is already under way. We also see a growing discussion in the other two sections of the EU’s so-called “reflection on energy” – energy efficiency and the development of a Single European Energy Market. Lithuania seeks active participation in both. For us, energy efficiency is a sore subject. Compared to our GDP, Lithuania uses two times more
energy than the EU average and three times more than, for instance, Denmark. The Soviet legacy is only part of the reason for this. We also need a closer look at how and where we consume energy. Buildings and energy systems have to be renovated; people should be encouraged, through taxes and education, to save energy. Membership of the EU has opened access to EU funds which can help the government in this respect.
The EU as such originated in the European Coal and Steal Community and in EURATOM. One of the primary tasks of these communities in the early 1950s was to regulate energy relations in Europe. They later developed and transformed into the Single European Market which now ensures free movement of people, goods, services and capital across the European continent. In modern times, coal has been replaced by oil and gas which raise new forms of dispute between member states as well as in their relations with third countries. But the key challenge remains the same. Europe has to restructure its energy market so that European nations cooperate rather than compete with each other in pursuing their vital energy needs. Liberalization and integration of the energy markets is a promising step.
For Lithuania, integration has a much deeper sense than for many other EU members. Together with Latvia and Estonia, we live on an energy island which is isolated from the European networks. Our grids are connected only with each other and the former Soviet republics. This situation severely curtails our possibilities of participating in the European energy market. We need bridges to reach the European mainland. Two important projects have been developed to connect the Baltic States to the rest of the EU. One is a power bridge between Estonia and Finland which has already been completed and connects our countries to the Nordic energy grid. The other bridge should connect Lithuania and the other Baltic States to Poland and Central Europe. Our recent contacts with the new Polish government have raised new hopes that the Lithuanian-Polish Power Bridge project will gather momentum in the near future.
The latest proposal by Ukraine’s Prime Minister Yanukovich to extend the planned Odessa-Brody-Plock oil pipeline to Lithuania opens up new opportunities to our integration into the European pipeline system. The project bears a strategic importance to the whole of the EU as it provides an alternative access to the Caspian oil fields. We expect that this project will receive full support from the European Union and the other interested parties. Unfortunately, these integration efforts were largely ignored by the Russian-German deal to build a gas pipeline under the Baltic Sea waters. Nord Stream’s construction raises a lot of controversies, including the possible environmental impact of the project. The construction work will free sediments from the seabed. Possible risks include destruction of wartime explosives that may still lie at the ground. It is too risky to start construction of the gas pipeline under the Baltic Sea waters without first having done an environmental impact assessment of the project.
The lack of infrastructure is not the only reason limiting Lithuania’s access to alternative energy fields. We also suffer from the lack of will in some transit countries to ensure free and safe transit. In some cases, pipelines are even used as political instruments. The solution to this problem lies, perhaps, not so much in ”enhanced” or “privileged” dialogues with transit countries but in their transformation into free market democracies, where politics and commerce are strictly separated. Europe and the broader transatlantic community need a clear and focused policy, based on democratic values and free market principles, to achieve this goal.

Challenge 2 – Promoting Principled and Mutually Beneficial Relations with Russia

Russia is a historical, and now a geographical, neighbour of Lithuania. Throughout centuries our relations have seen ups and downs which now form the foundation of our relationship. We seek to share our experience of cooperation with Russia with our European and transatlantic partners, using not only our membership of the EU and NATO for this purpose, but also concrete examples of bilateral and multilateral cooperation. Lithuania’s role in maintaining the transit between Russia and Kaliningrad is just a case in point.
Russia without doubt is a European nation. It is our shared interest that Russia smoothly integrates into the European community which is firmly committed to the elimination of conflicts on the European continent. However, the growing tensions on Russia’s European borders raise the question as to where Russia under its current leadership is actually heading.
Perhaps, the Russian people and the Russian administration should be more clearly separated in our policies towards Russia. We should make our point to the Russian society that Europe and democracy is not a threat to them. Europe wants to embrace the Russian people and is open to further cooperation. Our will has been demonstrated on many occasions, including the issue of transit to Kaliningrad. We should continue this policy by facilitating people-to-people
contacts, business cooperation and academic exchange.
Meanwhile, we should not shy away from asking the Russian administration what they have done to embrace Europe. When will she ratify the European Energy Charter and its Transit Protocol? When will she withdraw, as promised, her troops from Moldova and Georgia and conclude border treaties with Russia’s neighbours? Not to ask these questions would in fact mean to write Russia off as a European nation. From this perspective, Lithuania is one of the most sincere friends of Russia.

Challenge 3 – Strengthening the Transatlantic Community

Europe can make its voice better heard if it raises difficult questions in cooperation with America. During the enlargement process, European and transatlantic policies were going firmly hand in hand. This success repeated itself in Ukraine during the “Orange Revolution”. We believe that our cooperation which evolved in our relations vis-à-vis Belarus will also continue and produce concrete results. Russia should be no exception to this. Only the scope of the challenge, given the diversity of our interests, will be much bigger.
However, the question is left open whether the transatlantic community is well suited to meet new challenges. NATO is providing Lithuania with collective instruments of dialogue and action. The EU is also America’s key ally in coping with such security challenges as Iran’s nuclear ambitions. Lithuania, too, maintains a very active partnership with the U.S., which is helping us both to address the most persisting security issues in the region and beyond.
But beneath this surface, the momentum of cooperation is slowing down. Every minute which is spent in the U.S. consular office waiting for an American visa can be better spent at developing U.S.-Lithuanian relations, but is not. Every dollar spent on acquiring an American visa can be spent otherwise – for example, investing in security and stability in our neighbourhood. It is not surprising that under such circumstances people so easily buy theories which are not true - like the one telling that Americans come from Mars and Europeans from Venus. We should tear down these barriers as quickly as possible. It is time to start thinking, in practice, of ourselves as one community and one civilization.