Baltic Reports No 15 / October 7-13

  • October 21, 2019


Estonia is one of the most competitive economies in Central and Eastern Europe – or simply emerging Europe – as this region is lately often called. Global Competitiveness Report 2019 shows that all the Baltic states are doing better compared to previous years. Estonia was in the 31st place, Lithuania in 39th and Latvia in 41st this year. The World Economic Forum has been measuring competitiveness in relation to productivity for already 40 years. This year, Singapore was the most competitive economy. Even though all the Baltic states did well, the report paints a gloomy picture of the future. Economies around the world have failed to boost productivity levels. Since the global financial crisis a decade ago, four most powerful central banks have flooded the world with ten trillion US dollars. There is no proof that it has helped. Instead, the governments and central banks are not able to stimulate economic growth enough. This is leading the world to stagnation, bigger inequalities and an economic slow-down. The Global Competitiveness report urges governments to focus on labor and education policies.

For many years the Baltic states have been trying to break away from the remains of the USSR energy networks. In the beginning of October, the European Commission announced that it will support this effort with another 4.9 million euros. This is half of the sum needed to upgrade the Lithuanian-Latvian gas pipeline connection. In 2016 Lithuania started using the Klaipėda’s Liquefied Natural Gas or in short LNG terminal, which is now fully employed for the entire Region. The capacity of the pipeline linking Lithuania and Latvia has to be increased to secure the gas supply in the wider network. The study conducted last year predicted that in a few years the gas flow in the region will increase significantly after the gas links between Finland and Estonia, and between Poland and Lithuania will be finalised. But Baltic pipelines have already reached their limits today. This week, the Lithuania’s operator Amber Grid announced that since the beginning of 2019 the transportation of LNG towards Latvia and Estonia has almost doubled.



State funding for political parties in Latvia is about nine times less than in Lithuania and Estonia. The Ministry of Justice has been pressing for changes, and this week Latvia’s Cabinet of Ministers agreed to the idea to reduce donations to the parties and instead increase their state support. The new limit of private donations for parties will be reduced from over 20 000 to 5 600 euros. At the same time, state funding will be given to political parties that get at least 2% of the votes in national elections. They will then get 4.5 euros per vote. Parties will also receive funding for success in other elections – half a euro for each vote in municipal elections and in European Parliament elections. To accomplish this goal, Latvia’s government will allocate four million euros from the state budget in the next two years. This decision has angered part of Latvia’s taxpayers, although the budget is still smaller than in the other Baltic states. Lithuania and Estonia both spend more than five million euros each year for funding political parties. At the same time, political scientists and corruption watchdogs claim that the new Latvian law will help parties become more independent and accountable.

Volodymyr Zelensky will visit Latvia for the first time as the new president of Ukraine. The presidents are expected to discuss cooperation between the countries, the relations between the European Union and Ukraine, as well as the Three Seas Initiative. There are several thousands of ethnic Ukrainians living in Latvia, and Zelensky is planning on addressing them during the visit. The relations between the two countries have been very warm. Latvia has supported Ukraine in front of the international community many times. For example, in protest of letting Russia return to Council of Europe’s Parliamentary Assembly, Latvia will be the only Council of Europe member not to participate in the plenary meetings of autumn session. At the same time Latvia has several smaller programs to support Ukraine. For example, in 2014 Latvia began an assistance program for Ukrainian soldiers who suffered from hostilities in the Donbass region. The Latvian government allocates 45 thousand euros from the state budget every year for this program. 



Lithuania has stepped up against the discrimination of its consumers by the global food producing corporations. In the beginning of October, State Consumer Rights Protection Authority sent letters to five multinational companies asking for “solid and convincing” explanations of the differences in their product composition in Lithuania and other EU countries. The products sold in Lithuania were found to consist worse quality components. The controversy started when consumers from the Eastern flank of the EU complained that the constitution of several food products was different in their home country compared to other member states. Though the products were sold in the same or similar packages. In june 2019 the EU published a report which stated that there is no consistent divide between the countries, but the issue of different composition exists. According to the Lithuanian Justice Ministry, the “questionable products” have been picked based on recommendations from the State Food and Veterinary Service that had analyzed potentially “unhealthy” ingredients, such as palm oil. The statement did not mention any specific company or product. Retailing dual-quality products without lawful reason can be treated as unfair commercial practice and is illegal.

Lithuania will have at least two new rightwing political parties in the upcoming months. This is happening as preparation for the upcoming General Elections in November 2020. The right wing philosopher Vytautas Radžvilas, famous party switcher Rimantas Dagys and the leader of ethno-radical youth movement ProPatria Vytautas Sinica are forming a political party stressing family values and ethnicity rather than civic Lithuanian identity. They expect to attract like-minded public intellectuals and also invite the Christian Democrat flank of the currently parliament Conservative Homeland Union to switch and join the new political party. The Christian flank of Homeland Union has turned against the party’s leadership since the party’s majority chose a liberal, LGBT supportive Ingrida Šimonytė as party’s Presidential candidate. The second right wing political party is to be formed by recent breakaways from the political party Order and Justice. They announced that they will be building a new group on the ruins of the old one without its leader present. Their plan is to revitalise it by joining forces with the nationalist movement “Lithuania is Here” led by the outcast nationalist Arvydas Juozaitis. In Lithuania both the left and the right wing traditional parties have failed to renew for decades. They weren’t offering any new ideas, just reaching for offices. This significantly reduced trust in them has led to new savior movements getting into the Parliament. Both new groups on the right side of the spectrum seem to be determined to build up, take the lead and shake up Lithuania’s political system.



A small Estonian TV channel Tallinn TV has been closed. The mayor Mihail Kõlvart, who closed the channel, is a Russian speaker. Nevertheless, Russian state and other media used the opportunity to spread fake news. They claimed that the closing of the channel was Estonia’s way to persecute Russian speakers, because it was a Russian-language channel. This is not quite accurate. Tallinn TV broadcasted in Estonian language with only three shows in Russian. Nevertheless, the Kremlin controlled media wrote that the closing of the local TV channel is part of a coordinated plan amongst all the Baltic authorities where they intentionally block Russian media. More specifically, a Russian language channel Izvestija even took a step further and reported that initiatives like this in the Baltic states and Ukraine violate the rights of national minorities.Tallinn TV was created in 2011 as a central party promotion channel and was constantly criticised by other Estonian parties. The costs of the channel were covered by taxpayers. Tallinn now has a new mayor, even though he is from the same – Central Party. The new mayor Kõlvart decided that the costs of Tallinn TV were too high and said that he would rather direct public money to education. Kremlin directed disinformation about the Baltic states is spread on a daily basis.

Six people have died and 26 affected because of a highly contagious and mutating listeria bacteria found in red fish. Since 2014, people were affected in five different countries: Estonia, Denmark, Finland, France and Sweden. European Food Safety Authority has tied the cases to an Estonian fish plant called M.V.Wool. Estonian Food and Veterinary Board suspects that the bacteria could have appeared years ago, but became even stronger because of cleaning products and preservatives that are used in this Estonian food processing company. The CEO of the company Mati Vetevool is constantly denying any accusations and keeps saying that company’s products are safe. Still, Estonia’s fish industry’s reputation has been hit. Many Scandinavian companies have stopped buying Estonian fish altogether in the fear of bacteria. Outbreaks of listeria infections that are spread with fish, meat or unpasteurized milk products happen all over the world. The real issue is whether the leadership of the company is willing to take responsibility and work with the authorities to eliminate bacteria. In Estonia’s case, it doesn’t look like it will be happening anytime soon.


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