EXCLUSIVE INTERVIEW. Lithuania May Become a Reliable Strategic Partner

The One Belt One Road initiative of the New Silk Road has been an important topic at international forums and conferences all over the world for already several years. Discussions feature various opinions that are often rather contradictory.

We invited the Diplomat Kęstutis KUDZMANAS, Ambassador-at-Large of the Energy Security Policy and Transport Strategy at the Ministry of Foreign Affairs of the Republic of Lithuania, who has also worked as the Ambassador of the Republic of Lithuania in Azerbaijan and Turkey, to share his insights on this topic.

Your Excellency, at the conference in Nanjing you have made a presentation on the topic of “Lithuania logistic sector and Klaipėda port as integral part of OBOR”. Who was the receiver of your presentation – the entire Asian market or perhaps only China?

The concept of the Chinese One Belt One Road initiative of the New Silk Road involves 65 states. This conference was attended by delegates from several dozens of countries, representing various parts of the logistics chain, Chinese and Western European ports, as well as railways, producers and governmental representatives. My goal was to introduce the advantages for transporting transit cargo through the port of Klaipėda, offered by the Lithuanian transport infrastructure to the representatives of China and other participants of the conference. The ports of Baltic states and other European countries compete in order to attract the quickly increasing flow of Chinese cargo to the ES, thus this type of conferences attract a lot of attention not only from China and Central Asia, but the EU countries as well.

What message from Lithuania did you send to China as the initiator and major implementer of the New Silk Road?

The conditions of global economy make it crucial to increase the country’s visibility, forming its attractive image and making an appropriate presentation of our achievements. We need to do this all the time, because if we relax and lose our visibility, this niche will be quickly taken by our competitors. The advantages of the Lithuanian transport and logistics sector are already well-known to our partners in China, such as Sinotrans, Camce Transport, China Merchants Group, CRCT, Chengdu CDIRS and other companies. The Port of Klaipėda, Lithuanian Railways and the Ministry of Communications of the Republic of Lithuania have also put a great effort in the matter. Lithuania has invested billions of Euro into the development of transport infrastructure, we have international airports, multi-modal terminals and the fast-growing port of Klaipėda. The advantage of the Lithuanian Railways is that we have both the wide-gauge railway access to Klaipėda and the standard European gauge through Šeštokai. We are ready and aiming to attract the container flow from China to Western Europe and Scandinavia and back to China through Klaipėda and Šeštokai. What gives Lithuania additional points of attractiveness from Chinese companies is the efficiently operating Lithuanian free economic zones. After the implementation of the Rail Baltica project, the inter-modal terminals of Vilnius and Kaunas will enable efficient distribution of the Chinese cargo flow on the North-South directions.

Lithuania also offers China FinTech services, as well as cooperation in the field of high-tech and life sciences.

What is the Chinese response?

Chinese companies are actively operating in the entire EU market and the Baltic region is no exception. After analysing the logistics and transport sectors of the Baltic States and the Baltic ports, the already-mentioned CMG company has decided to open a representative office in Lithuania. This shows that China finds Lithuania and the Baltic region attractive in the development of the Belt and Road initiative.

What, in your opinion, makes the route through Lithuania and the port of Klaipėda most appropriate for the development of One Belt One Road to Europe?

The port of Klaipėda is a modern and fastest-developing port in the Baltic region with the largest development opportunities and, together with the Lithuanian Railways, it can offer the best freight conditions in the Baltic Sea region. This is also illustrated by the stable growth of the port’s freight volumes, increasing on average by 7 per cent every year for the last 20 years. Billions of investments into the port’s infrastructure enabled Klaipėda to become the largest port in the Baltic States. China is seeking to diversify its cargo flows and increase freight forwarding by rail. Lithuanian Railways can not only offer competitive prices for cargo transportation to the port of Klaipėda, but also fast and efficient border and customs procedures. As the train crosses the border between Belarus and Lithuania (eastern EU border with the CIS), all customs procedures take place only 30 minutes and the cargo continues to the port of Klaipėda on the same wide-gauge rail line. From Klaipėda it takes only 13 hours to Sweden, 19 – to Denmark, 24 – to Finland and less than two days to the port of Hamburg.

Other countries of the Baltic Sea may have their own arguments. What cargo flow tendencies have you noticed while communicating with Chinese business and state representatives?

The fast-growing flows of Chinese cargo are attractive to the Baltics, the Balkans and Western Europe. Chinese partners traditionally value long-term cooperation perspectives, considering the majority of factors: the country’s perspectives for economic development, political stability and the status quo of the bilateral relations. That is why the role of the Lithuanian government and specific ministries is crucial in the development of economic relations with China. Lithuania and China share friendly ties and that, with no doubt, is a positive factor in the dynamics of our economic relations.

In The New Silk Road. China Meets Europe in the Baltic Sea Region, published by World Scientific in 2017, the article of the authors from the Lithuanian Vytautas Magnus University features statistics of the goods’ flows in the Northern and Baltic states from and to China, which don’t look very much impressive. What are the latest tendencies to invigorate that movement?

In truth, so far the majority of cargo from China reaches Europe by sea. However, keeping in mind that railway transport is three times faster and, compared with the air transport, four times cheaper, this logistics sector is quickly growing. The demand for rail cargo transportation between China and the EU is quickly increasing. In 2016 the number of trains from China to the EU was 1 700, while the number of expected freight trains from China was already 2 500. Meanwhile, after 2020 the cargo flow by land from China is expected to constitute 5 000 trains every year. Although currently the majority of trains cross the EU border along Brest in Belarus, significantly increasing cargo flows may need additional routes. We aim to direct these additional cargo flows through the port of Klaipėda and Šeštokai. So far we notice a strong imbalance of cargo flows with three trains from China against only one train from the EU to China. However, this imbalance should be reduced in the future. China is increasing economic growth by promoting internal consumption, Shanghai is even hosting an exhibition for import promotion and Lithuanian companies are also planning to be there.

The competition for cargo is also fuelled by the Belarusian and Chinese joint Great Stone Industrial Park, developed in Belarus, which will soon start production and intensive exports to Europe and other regions of the world. Where will these new cargo routes lie, joining the lines of the One Belt One Road? What will it depend on: infrastructure, country’s stability and reliability, or the efforts of smart logistics experts and lobbyists?

The project of the Great Stone Industrial Park has been developing for already several years and the future will show the volumes of the generated cargo. The neighbouring Belarusians are well aware of the possibilities and advantages of both the Lithuanian Railways, which is developing the joint project of the Viking container train with Belarus, as well as our carriers and logistic companies. We are ready to ensure the transportation of both cargo for the Great Stone industrial park and the ready-made production to Europe or China. Every year representatives of Lithuanian business and government participate at the Belarusian Transport Week and the international exhibition in Minsk, as well as the separate Lithuanian-Belarusian Transport Forum. In recent years a large share of the discussions at these events revolve namely around the industrial park, being developed near Minsk, and the initiatives of increasing the cargo flow through Lithuania. Both Belarusian and Chinese companies developing the Great Stone Industrial Park agree that the safest, fastest and cheapest route for their cargo is through the port of Klaipėda.

How is the Lithuanian logistics business and the port of Klaipėda, sitting on the way of the One Belt One Road initiative, participate in the China+16 project of the central and Eastern Europe?

The main discussion during the 16+1 Cooperation meeting, which took place in Budapest in November 2017, revolved around the Chinese Belt and Road initiative of the New Silk Road. The meeting was attended by the Lithuanian Prime Minister Saulius Skvernelis, who discussed the cooperation opportunities in the field of transport during a bilateral meeting with the Chinese Prime Minister Li Keqiang. During the 16+1 Cooperation meeting in Budapest Lithuania and China signed a memorandum between the Government of the Republic of Lithuania and the Government of the People’s Republic of China regarding cooperation according to the initiative of the Silk Road economic belt and the 21st c. Maritime Silk Road. By signing this memorandum, Lithuania is hoping for a successful transit of Chinese goods and services through the Lithuanian territory and the port of Klaipėda.

As I have already mentioned, with our well-developed transport infrastructure and excellent service sector, Lithuania can successfully join the Chinese and EU markets, as well as become a strategic partner of the One Belt One Road initiative. Lithuania is a reliable partner, offering an opportunity to use the entire transport and logistics infrastructure, which may benefit China in searching for new and expanding current business niches in Scandinavia, Western Europe and the neighbouring Eastern European states.

Thank you for your thoughts.

Interviewed by Zita Tallat-Kelpšaitė



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