Rail Baltic 2006-2016 – A Brief History of Political Accomplishments

Esa Nurkka, 9.10.2016
Here is a summary of Rail Baltic’s progress in 2006-2016. A number of Statements, Declarations, Memorandums and even Agreements have been signed over the years, but Rail Baltic still exists only on paper.

Diligent Rail Baltic pioneers at their railroad construction site.

1. March 2006: Declaration of Intent, signed by the transport ministers of the five partner countries in Rail Baltic. The ministers emphasized – among other things – “the importance of defining the border-crossing points and cross border sections of the project”.

• Comment: As of today, defining the alignments in the Baltic States “are on track to be finalized in 2016.”

2. June 2010: Memorandum of Understanding, signed by the transport ministers of the five partner countries in Rail Baltic. The ministers declared that Estonia, Latvia, Lithuania and Poland would "undertake to complete all the commitments related to first phase of Rail Baltic", to clear the table for the next phase.

• Comment: The “Rail Baltica 1” section from Lithuanian/Polish border to Kaunas was partly finished only in 2016, and with the help of a fresh 191 million euros EU funding even the signaling system might be in place hopefully in 2017. However, the capacity of the refurbished track between LT/PL border and Kaunas is a far cry from the high speed double track railway, that is specified in the official Rail Baltic documents.

3. November 2011: Joint Statement, signed by the Baltic Prime Ministers. The ministers agreed “to establish a joint venture of Estonia, Latvia and Lithuania by the end of 2012 at the latest, to implement the project”.

• Comment: In real life, the Baltic Joint Venture was set up only in October 2014, and even in 2016 the JV’s operations are only about to be launched.

4. September 2013: Joint Declaration, signed by the transport ministers of the Baltic States, Poland and Finland. The transport ministers of Estonia and Latvia were fooled into signing the declaration, where they “agreed” that the Connecting Europe Facility would/should offer 85 % funding for any 1520 mm or 1435 mm railway infrastructure project between Kaunas and Vilnius.

• Comment: Originally the ministers were supposed to sign the Shareholders’ Agreement for RB Rail, but with no hope of finding common understanding, the transport ministers eventually settled for signing just a Joint Declaration. The ministers were expected to finalize the statement over the weekend of 14-15th of September 2013 in Vilnius, but there were some last minute problems.

As the other countries were reluctant to back Lithuania’s demand to add the Kaunas-Vilnius connection to the original Rail Baltic route (the one that the Baltic States as well as the European Commission had already agreed on and committed to), the Lithuanian Ministry of Transport surprisingly announced that the signing ceremony was canceled. After having read the news from the Lithuania Tribune on Monday morning, the Estonian and Latvian ministers panicked, and the option for Kaunas-Vilnius -connection was indeed added to the Declaration.

As the negotiations had turned into Baltic mud-wrestling championships, the Polish and Finnish ministers were content to signing only the very first “we have agreed to promote cooperation” liturgic chapters of the statement.

Signing this paper was a monumental mistake, which Estonia’s then Minister of Transport, Mr. Juhan Parts, admitted to the Wall Street Journal in January 2014.

5. June 2014: Joint Statement, signed by the Baltic Prime Ministers. The PMs reviewed the progress of the implementation of the regional Rail Baltic/Rail Baltica projects.

• Comment: Lithuania once again wanted to add the Vilnius clause to the Statement, while Estonia and Latvia naturally objected that. Not surprisingly, the Lithuanian PM Algirdas Butkevičius threatened to walk out of the meeting unless his version of the statement was passed. Now it was the Estonian and Latvian Prime Ministers time to be “jobud” enough to sign the declaration with vaguely (and cunningly, read carefully chapters 4 and 7) formed clauses.

Estonian and Lithuanian Prime Ministers had discussed the Vilnius issue one month earlier, and this is how Estonia’s PM Roivas commented the negotiations at that time: “I think what we agreed today that we will go further as fast as possible in the joint venture establishment. In the [shareholders’] agreement, we will find an appropriate wording [to ensure] that in the next stage [of the project] Vilnius is an essential part of Rail Baltica as well.”

The Lithuanians played hard ball in the negotiations, and Estonia’s PM Taavi Roivas’ gullible and good-natured approach was no match. Adding the Kaunas-Vilnius -section to Rail Baltic is by no means only a matter of finding the proper wording.  

6. October 2014: Shareholders’ Agreement for RB Rail AS, signed by the Baltic transport ministers.

• Comment: The SHA was eventually signed and the JV was established. In due time RB Rail managed to open a bank account to receive the EC funding and also to appoint (despite furious opposition from Lithuania) Mrs. Baiba Rubesa as the full time CEO for the JV. Unfortunately the Shareholders' Agreement was only a measly compromise, and many of the major problems remained unsolved.

7. December 2014: Joint Statement, signed by the Baltic Prime Ministers. The Ministers recognized that “the quick and constructive negotiations to reach concluding the Rail Baltic/Rail Baltica Intergovernmental Agreement is in the fundamental/mutual interests of the Baltic States, as the Agreement is a pre-requisite to successful implementation of this development”.

• Comment: As the Shareholders' agreement was not enough, an Intergovernmental Agreement was needed. The Ministers agreed to extend the deadline for submitting the draft of the Intergovernmental Agreement by the end of January 2015 at the very latest. It took almost two years until the IGA was eventually signed in October 2016. 

8. June 2015: Joint Declaration, signed by the transport ministers of the Baltic States, Poland and Finland, together with Commissioner Violeta Bulc.

• Comment: Poland and Finland got back into the Rail Baltic train, which is nice. A nurkkaresearch analysis of the Joint declaration can be read here.

9. June 2016: Joint Declaration, signed by the transport ministers of the Baltic States, Poland and Finland, together with the European Coordinator Catherine Trautmann.

• Comment: This is a slightly updated version of the June 2015 Joint Declaration. The positive angle in this paper is the signatories’ urge to “strive for an acceleration of the timetable, and start the construction work already in 2018”. A nominal adjustment of the originally über-lax schedule is not much, but at least the spirit is right!

However, Poland remains a problem. The signatories rejoice that the feasibility study for the improvement of the Białystok -PL-LT section is “on-going”, but later they admit that Poland has committed to completing the detailed feasibility study only by 2020.

10. October 2016: The Intergovernmental Agreement was finally signed in October 2016. Lietuvos Gelezinkeliai's CEO Stasys Dailydka was eventually forced to sign on the dotted line on the eve of October the 7th.

• Comment: The Lithuanian Railways did not want to sign the agreement, because they are now not allowed to participate the Rail Baltic tenders. The Lithuanians have delayed this process since 2013, always explaining that they are just "protecting their national interest". At this very moment it seems that Lietuvos Gelezinkelia and their Ministry of Transport have shot themselves in the foot.

Source: leta.lv

Conclusion
Rail Baltic is a 5 Billion euros project. After 10 years of hard work, the Baltic states are still arguing whether they should talk about Rail Baltic or Rail Baltica. For the sake of political correctness, Baiba Rubesa is forced to talk constantly about "Rail Baltic/Rail Baltica" project. Managing a multinational project sure ain't easy.



Confused? If not, you will be, before the first Rail Baltic train leaves the station.

Rail Baltic Train - Finally Leaving the Station?

Esa Nurkka, 10.7.2015
 
The Transport ministers from Finland, Poland, the Baltic States and Commissioner Violeta Bulc signed a Joint Declaration on Rail Baltic on 22nd June in Riga. Although there are some vague compromises and even discrepancies in the declaration, it was enough to guarantee the half a billion euro financing, which will eventually kick off project Rail Baltic. The Connecting Europe Facility Committee made the formal decision to allocate financing for RB Rail in its meeting today.

A full transcription of the 22.6.2015 Joint Declaration with nurkkaresearch comments and analysis can be downloaded here.

The necessity of Rail Baltic
As stated in the Joint Declaration of 22nd June, Rail Baltic is “one of the most strategic missing links to the trans-European transport network”. Europe needs Rail Baltic, and the European Commission wants Rail Baltic.

The isochrone maps below (snipped from emptypipes.org, courtesy of Peter Kerpedjiev) show expected travel times by train from certain cities. It is clear that especially Finland, Estonia and Latvia are smoothly connected to Moscow by rail, while connections to south are practically non-existent. Countries up in the north would benefit greatly from Rail Baltic, while in Lithuania and especially in Poland the improvement would be less dramatic. 

It is not surprising that of the Rail Baltic partner countries, Lithuania and Poland are the ones that suffer from a severe lack of Rail Baltic motivation. In the Joint Declaration of 22nd June there are several paragraphs dedicated to challenges related to Lithuania, while Estonia is mentioned only as a name in the list of Rail Baltic partner countries. Although all the partner countries will benefit from Rail Baltic, the further up north we go, the bigger the motivation.

Although the Lithuanian Railways don't want to admit it, Rail Baltic's north-south transportation would substantially diversify the future risks related to transportation of east-west cargo. Lietuvos geležinkeliai, Latvijas dzelzceļš and Eesti Raudtee all make big business transporting Russian cargo via their Baltic Sea ports, but they can not count on that business ad infinitum. Russia is constantly investing to its ports at the bottom of the Gulf of Finland, and eventually that means bad news for the Baltic transito business.

Do we really need the whole Rail Baltic?
Commissioner Violeta Bulc stated in politico.eu interview in January 2015, that one must not forget the Big Picture: “I am a systemic thinker: if a small part is to be successful, the bigger system also has to be successful.” This is very true with Rail Baltic.

Currently it looks like the northern part of Rail Baltic in Estonia and in Latvia is proceeding nicely, while there are lots of uncertainties related to the Lithuanian and Polish sections. What if we get a top notch Rail Baltic connection in Estonia and Latvia, with an inferior or non-existent north-south  railway in Lithuania or Poland?

Let’s compare Rail Baltic with another cross border connection. The Øresund Link connects Sweden and Denmark with a combination of an 8 km bridge, 4 km of Pebber Island surface passage and a 4 km tunnel. What if the bridge and the Pebber Island had a double track high speed railway (as they do have in real life), but the tunnel section would only have a one track railway with 50 % lower speed limit?

You don’t need Excel to tell that such a curtailed Øresund Link would not work. The same goes with Rail Baltic. Constructing just a part of the Tallinn-Warsaw connection would cripple the connection and totally destroy its viability.

Conclusion
The Rail Baltic train is indeed moving now, and there is no stopping it. It’s just that we do not know when the project will be finished and what will be the cost. The worst case scenario is that the Estonian and Latvian sections will be finished by 2025, while Lithuania and Poland do their best to reallocate the Rail Baltic financing to other purposes.

Hopefully Commissioner Bulc with her black belt in taekwondo and expertise in fire walking can bring some balance to the Rail Baltic negotiation table. The Lithuanian Ministry of Transport with their ruthless negotiation tactics have set the tone in Rail Baltic "cooperation" in recent times, and the other partners have time and again been forced to comply with Mr. Sinkevičius' policies.

Anonymous sources within the European Commission have admitted that there was some extremely harsh criticism against Lithuania during the negotiations in late June. However, the final Joint Declaration as well as Ms. Trautmann’s impressive personal plea for Lithuania were eventually softened and polished.

The same goes also with this comment. The original text was longer and contained more colorful language, but to avoid diplomat crisis, I decided to publish only a censored version.

Rail Baltic - Aika astua Eurooppaan

Esa Nurkka, 20.5.2015

Kirjoitin Uudenmaan liiton toimeksiannosta selvityksen Rail Baltic -projektin taustasta ja nykytilasta. Raportti julkaistiin Newsbrokers Oy:n Hiljainen reportaasi^TM formatissa, ja sen voi ladata Uudenmaan liiton nettisivulta.

Ultra Running and Science: How Do They Blend?

Esa Nurkka, 23.4.2015

University of Zurich's Institute for Primary Care and Gesundheitszentrum St. Gallen have published “Pacing strategy in male elite and age group 100 km ultra-marathoners” report, which analyzes Biel 100 km race pacing strategies over time period 2000-2009. Despite the promising title, the content of the research is a letdown. The report is based on data from the race website, and it seems that, before moving into statistical analysis and conclusions, a bit more background research would have been in order.

In this review I have chosen some questionable issues from the report (direct quotes from the report are in italic red color) and comment on them.

Pacing strategy in male elite and age group 100 km ultra-marathoners (Knechtle-Rosemann-Zingg-Stiefel-Rüst, 2015)
The aim of the study was to investigate running speed over segments in male elite and age group 100 km ultra-marathoners competing in the 100 km Lauf Biel in Switzerland in 2000-2009. The dataset for the study was obtained from the official race website in January 2015, and running speeds for athletes were calculated from split time information from the three Time Stations along the route.

The method sounds appropriate, but unfortunately it seems like something went wrong.

 A quote from the report:
“Split times at three time stations (TS) TS1 “Oberramsern” (38 km), TS2 “Kirchberg” (56.1 km), and TS3 “Bibern” (76.7 km) were taken identically during the 2000–2009 period by using an electronic chip system… Since 1999, split and overall race times have been recorded by Datasport in the same manner.” [source: Pacing strategy…, page 2]

My comment:
Could it be that although the data has been recorded “identically using an electronic chip system” and “in the same manner”, the location of the chip mats has not been identical over the years?

 A quote from the report:
“There seems to be a trend towards even pacing after 2005, with more negative splits at the final segment before 2005." [source: Pacing strategy…, page 6]

My comment:
1. This is not a trend. As you can see in Figure 3, this is a sudden and inexplicable change in the data.
2. This did not happen “after 2005”, the change happened after 2003.
3. This kind of sudden change cannot be explained by “changes in training theory or trends” or "some ‘running guru’ advertising towards ‘putting some time in the bank’" or “dawn and a flat course”. Both the data from 2000-2003 (with an unprecedented amount of negative splits) AND the sudden change in 2004 are utterly implausible. This should have set alarm bells ringing.

It would have been easy to ask one of the Biel 100 km veterans, whether there had been a major change in 2004. The names of all the finishers can be found at 100km.ch web site, so that would have been easy to do.

I have never been to Switzerland, so in order to find out the truth, I had to spend half an hour digging the internet. The waybackmachine found older versions of 100km.ch website, and the outcome was not surprising.

TS3 has been in Bibern (76,7 km) only since the change of the route in 2004, while in 2000-2003 TS3 was in Gossliwil (82 km). The distance from TS3 to the finish line has been 23,3 km since 2004, but before that it was a mere 18 km sprint.

 A quote from the report:
“…using repeated measures one-way analysis of variance with Greenhouse-Geisser correction and Sidak’s multiple comparison tests… the effect of change in altitude on running speed was estimated using means of the Akaike information criterion… using one-way analysis of variance with Dunnett’s multiple comparison post hoc tests… calculated Cohen’s d using means and standard deviations…“ [source: Pacing strategy…, page 3]

My comment:
It is very easy to see that basic source data is seriously flawed, so running extensive statistical tests on this material is a waste of time. Actually, it is rather surprising that the flawed dataset somehow “survived” all these tests. 

The final verdict

The split time data used as the base of this report are seriously flawed. The data from 2000-2003 and 2004-2009 are not commensurate. Trying to identify trends from such data probably leads to flawed conclusions.


Disclaimer: I am not properly qualified to comment on scientific research, as I have no medical education and my expertise in sophisticated statistical methods is next to nothing. I am a pure amateur in these areas. Despite my academic limitations, I have done some (extremely simple and un-academic) research on pacing strategies in Spartathlon 2008 and Oxroad 100 miles 2013.

Rail Baltic - Looking For A Nonchalant Financier With Deep Pockets

Esa Nurkka, 24.3.2015
The Baltic States managed to submit the Rail Baltic finance application to the European Commission on the 26th of February 2015, but the process was not an easy one. Although the EU financing for this project has been earmarked for years, a positive financing decision can not be taken for granted. The Commission is expected to come out with their response on funding application - either positive or negative - in July or August.

MEP Zigmantas Balčytis of Lithuania is one of the most vocal Rail Baltic activists in Brussels, and his parliamentary question from the 22nd of January 2015 presents a concise summary of Lithuanian approach towards Rail Baltic. Mr. Balčytis' parliamentary question E-000924 [with my blue color debunking comments in square brackets amongst the text] is here:

Subject: Responsibility of the Baltic States' joint venture ‘RB Rail’ for distributing EU funds to implement the ‘Rail Baltica’ project  
Question for written answer to the Commission, presented on the 22nd of January 2015 by MEP Zigmantas Balčytis (S&D)

On 28 October 2014 the Baltic States set up a joint venture called RB Rail to handle implementation of the Rail Baltica trans-European rail network project. Early this year the joint venture has to apply to the Commission for funding for the construction work, but there is disagreement among the Member States implementing the project on the question of the most suitable recipient. Some are seeking to ensure that the designated recipient will be the RB Rail joint venture, whereas others maintain that the recipients should be each of the Member States participating in the project.

The latter camp fears that if it were designated the recipient, the joint venture, and not the Member States themselves, would determine which projects should be financed and which ones should not. [Rail Baltic is a multi-national project. In order to guarantee a coordinated implementation of the whole project, RB Rail (i.e. the joint venture) is in charge of scope management. Furthermore, all the participating countries should have a common understanding on the desired outcome of the project.] There is another risk which might arise, namely that two Member States in agreement, disregarding the interests of the rest, could, having secured the majority of votes in the joint venture, take decisions to finance and implement projects useful to them alone. [One of RB Rail’s essential tasks is to make sure that no country can favor its own projects to the disadvantage of other countries or the project’s entity. Any signs of questionable activities would constitute a prominent threat to the whole project.]

Such situations could hamper the implementation of this major European project, which could be delayed or even halted if Member States failed to agree or could not come to a joint decision. A case of this kind, in which no decision could be reached jointly, occurred in connection with the building of the common LNG terminal in the Baltic region. [Hamper, delay, halt? If such fears are realistic, the Connecting Europe Facility will have to judge the project weak, and deny any financing for it. One would have hoped that the Baltic states had learned something from the LNG terminal dispute.]

Does not the Commission believe that any decision of the kind described would run counter to the EU’s common interest and could impede effective development of the single EU railway area? Does it not believe that each Member State, taking into account that the project is a matter of common interest, should itself decide which projects it will implement on its territory using the funds allocated to it for that purpose? [The answer to question “Should each Member State decide itself which projects to implement on its own territory?” is a plain and simple no. In a multi-national project, like Rail Baltic, the funds must be allocated by the multi-national project organization, in this case RB Rail.]

Answer E-000925/2015 given on 3 March 2015 by European Commissioner for Transport, Ms. Violeta Bulc can be read here. 

The Risk
Estonian MEP Urmas Paet placed a parliamentary question on the state of project Rail Baltic on the 23rd of February 2015. Mr. Paet inquires whether the Commission believes that the project is still on schedule, and what are the greatest risks associated with the implementation of the project. Ms. Bulc has not yet given her answer to these questions.

Even without Ms. Bulc's answer we can state, that the major risk for project Rail Baltic seems to be the inferior credibility of the project organization. Just reading through the list of risks and hazards mentioned in MEP Balčytis' parliamentary question raises serious doubts, whether financing such a project, with seemingly no hope for over-the-border coordination and cooperation, would be worth the risk. It is rather surprising that such fear, uncertainty and doubt mongering comments about Rail Baltic come from a MEP representing a Baltic country, and not from a supporter of another project that would be competing for the same money.

The feasibility of Rail Baltic lays on the assumption that the whole project will be implemented. Successfully constructing two thirds of the proposed Rail Baltic would be as great an accomplishment as successfully digging two thirds of a railway tunnel. Lots of cost with very little benefits. 

The Baltic Trendsetters Club has awarded the Rail Baltic companies in Estonia, Latvia and Lithuania a certificate for “setting up the RB Rail joint venture of the Tallinn-Kaunas European standard rail gauge railroad”. The winners of this award have showed exceptional boldness, persistence and creativity. Too bad that the “missing link” between Kaunas and the Lithuanian-Polish border is missing.

Source of the picture: Transport Ministry of Lithuania.

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If you are interested in a more elaborate analysis on Rail Baltic issues, please feel free to contact me by e-mail or via newsbrokers.fi.

The Derailed Rail Baltic

Esa Nurkka, 24.2.2015

Estonia, Latvia and Lithuania signed RB Rail's shareholders´ agreement on the 28th of October 2014 in Riga. The Baltic joint company was needed to coordinate the Rail Baltic II project and to submit a joint finance application to European Commission. Unfortunately "one common finance application" proved to be too ambitious a target. While Estonia and Latvia had no problem with committing to it, the Lithuanians once again opted to stick to their very own agenda.


RB Rail’s Recent History

• 21.6.2014: The Baltic Prime Ministers´ Joint statement “stressed the importance to prepare and submit the joint Rail Baltic/Rail Baltica CEF application for the first CEF call for the project proposals to be opened in from September 2014 through February 2015”.
  
• 23.8.2014: The Baltic countries were supposed to launch the RB Rail joint company in Riga as a part of Baltic Way 25th anniversary celebration, but due to different views on shareholder agreement’s wording, the signing ceremony was cancelled.
  
• 28.10.2014: After onerous negotiations, RB Rail was eventually established in Riga. To get the signatures on the dotted line, some compromises were needed: 

o Estonia and Latvia did not want to carry any risk on the financing of Kaunas – Vilnius connection, and they got “each party co-finances the railway construction only within its territory” clause in the agreement.

o Lithuania wanted to get the “provision for Vilnius connection” in the contract, as well as the statement that “owner of the rail infrastructure in Latvia, Lithuania and Estonia is the country in which the infrastructure is located”.

• 5.12.2014: The Prime Ministers of the three Baltic states met in Maardu, Estonia, in a Baltic Council meeting. Once again, to get the joint statement signed, compromises were needed:

o Estonia and Latvia managed to get the phrase “a fast conventional double track 1435 mm gauge electrified railway line with the maximum design speed of 240 km/h on the Route from Tallinn through Pärnu-Riga-Panevezys-Kaunas to Lithuania-Polish border” in the statement, and Lithuania’s Prime Minister, Ms. Laimdota Straujuma did indeed sign the paper. Lithuanian transport minister Sinkevicius would have probably refused to sign such a commitment, but luckily this meeting was on a prime-ministerial level.

o Lithuanian prime minister would not have signed the paper without the Vilnius clause, and thus “as proposed by AECOM study with a connection of Vilnius-Kaunas as part of the Route” was added to the statement.

• 19.2.2015: According to the Lithuanian Ministry of Transport and Communication’s press release, ”The joint venture of the three Baltic States, established last autumn, will coordinate the implementation of the project from Kaunas via Vilnius to Riga and Tallinn”. This raises two questions:

o Does “from Kaunas via Vilnius to Riga and Tallinn” really mean that to get from Kaunas to Riga, you need to visit Vilnius?

o Does “implementation of the project from Kaunas via Vilnius to Riga and Tallinn” mean that Lithuania does not intend to build a high speed dual track connection between the Polish border and Kaunas?

Money matters

RB Rail is going to apply for 461 million euros from the first round of financing. Estonia is looking for 191 million euros, Latvia 240 million euros and Lithuania 30 million. This financing is for preliminary studies, cost-benefit analysis and designing the route.

Besides the 30 million euros applied through the Baltic joint venture, Lithuania is applying separately for 160 million euros to be used for “acquisition of land for public purposes” as well as “construction and partial electrification of a rail section between Rokai and Palemonas”. It is easy to see why this 160 million application is not a part of the RB Rail application. Rokai – Palemonas -section is a part of the old rail Baltic I project, which has nothing to do with the high speed double track Rail Baltic II project or RB Rail.

Lithuania has also other reasons for a separate financing application. According to minister Sinkevicius, the bulk of Rail Baltic works in Lithuania will probably be carried out through the Lithuanian railway monopoly Lietuvos Geležinkeliai (never mind the EU procurement rules…), and the VAT on that work should therefore be collected by Lithuania, and not Latvia.



Rail Baltic: The Mother of All Bottle Necks?

Rail Baltic is one of the European Commission’s TEN-T Priority Projects, and its aim is to close the gaps between Member States' transport networks and remove bottlenecks that hamper the smooth functioning of the internal market. The current Rail Baltic 2 project and RB Rail are based on AECOM’s feasibility study.

AECOM's study suggests that a 728 kilometer double track 1435 mm 240 km/h railway would be constructed from Tallinn all the way down to the Lithuanian/Polish border. At the moment it seems that the Estonian and Latvian parts of Rail Baltic might be well on track, while the Lithuanians have shown very little interest in constructing the high speed Rail Baltic railway line connecting Latvia and Poland via Kaunas.

Minister of Transport and Communications of the Republic of Lithuania Rimantas Sinkevičius is going to meet Violeta Bulc, European Commissioner for Mobility and Transport in Brussels on 24th of February 2015, ie. today. It will be interesting to see how Ms. Bulc reacts to Lithuania’s initiative. If the chances of getting a proper Rail Baltic connection across Lithuania look slim, how could the European Commission award financing even for Estonia and Latvia? Rail Baltica's Estonian project manager Miiko Peris stated yesterday, that a common application has a better chance of being funded by the European Commission.

Rail Baltic with no connection to Europe would be purely and utterly infeasible.

UPDATE: Lithuanian Ministry of Transport announced in the evening that the meeting between Mr Sinkevičius and Ms Bulc was "constructive and efficient". They agreed that "the TEN-T Core network has to be developed mainly by establishing the cross-border missing links, and, therefore, the project “Rail Baltica” is one of the key components of it". Wow.

The most interesting piece of news can be found at the end of the press release: Lithuania will apply for a total of EUR 365 million of co-funding under the CEF cohesion envelope. We do not know what this actually means, but here is an educated guess: Lithuania will still apply independently for 165 million to finance Rail Baltic I project, and Lithuania's original 30 million euros stake in the RB Rail's pan-Baltic application has been raised to 200 million euros.

Rail Baltic - To Vilnius or not to Vilnius, That is the Question

Esa Nurkka, 11.11.2014

Baltic countries eventually managed to sign the shareholders’ agreement for RB Rail on 28th of October in Riga, and media coverage on Rail Baltic has been rather positive ever since. And why not, establishing the Baltic Joint Company looks like a major breakthrough in the negotiations. 
 
Even the geopolitical climate supports the positive interpretation of Rail Baltic’s progress. Russia’s political, economic and military activities are a constant worry for the three Baltic states, who have been card carrying members of EU and NATO since 2004.

Although the Rail Baltic task force has worked hard, their achievements so far have been rather humble. To get the Rail Baltic train on the move, they need to pick up the speed radically! It does not help that the sluggish progress of project Rail Baltic has never been a real concern for the Transport ministries in Latvia and Lithuania.

Who needs Rail Baltic the most?
Estonia stands to gain the most from Rail Baltic. Unlike Latvia and Lithuania, Estonian Railways have practically no east-west business with Russia, and Rail Baltic would offer new business opportunities for both the state owned Eesti Raudtee and the private entrepreneurs operating in the Estonian logistics business.

Latvia used to be the nerve-center for Baltic railways in the Soviet era, and the Latvian Railways still regards the freight trains shuttling between the harbors of the Baltic Sea and Russia as the only viable business. Although the Latvians do not object Rail Baltic, they are doing an excellent job hiding their possible enthusiasm towards it.

The Lithuanian Railways’ primary interest is the east-west axis. In the west there are Port of Klaipeda and the Russian enclave of Kaliningrad, and in the east Belarus, Russia, Kazakhstan and China. Although the Lithuanian Railways claim to support Rail Baltic, their support could be described as questionable but volatile.

Conclusion: Estonia wants Rail Baltic, and Latvia does not object it. Vilnius does not actively want or need Rail Baltic (at least north of Kaunas), and their support comes with a price. Lithuanians are eager to capitalize their valuable position as the “strategic gatekeeper” to the European 1435 mm rail network. 

RB Rail: Who’s got the upper hand?
RB Rail’s shareholder agreement was signed on the 28th of October. The photograph taken after the signing ceremony shows, who had the upper hand in October’s negotiations.

Palo, Matiss and Sinkevicius: Who's got the upper hand? (photo LETA/diena.lv)

Lithuanians have proved time and time again that they have not skipped the "getting what you want in a negotiation" class. Once again they persuaded the Estonian and Latvian ministers to sign a shareholders’ agreement including the “Vilnius provision”. Kudos to Mr. Sinkevicius team on that.

However, it is hard to understand the Lithuanians fetish to argue about the Vilnius connection with the other Baltic states. The fate of Lithuania's internal Kaunas-Vilnius connections’ financing lies completely on the hands of the European Council, never mind how much or how little Estonia and Latvia support it. Hopefully the Lithuanian mastery of negotiation tactics will be next time used in Brussels, to the benefit of Rail Baltic and Baltic states.

Latvian Minister of Transport Mr. Matiss was optimistic after the signing ceremony: “I am convinced that the signing of the Contract will ensure the implementation of Rail Baltica II.”  But to be honest, starting a statement with “I am convinced” does not sound too convincing.

Another shade of the Latvian attitude towards Rail Baltic can be heard in the comments of Latvian Rail Baltic manager Dins Merirands, who did not want to rule out a partial failure of the project. Mr. Merirands pointed out that in a tripartite project like Rail Baltic there is always a risk that the “will” to finish the project may not be always shared by all the participants. But then again, Mr. Merirands reasoned that everyone should work hard in the Rail Baltic project, in order to get at least something done. “Even the separate elements of this infrastructure could be used for the benefit and the purpose of what they were built for.” (Mr. Merirands comments are at 23 minutes of this video recording, taped at the Globālās transporta kustības vīzija 2050 conference in Riga on the 14th of September 2014).

Estonian Minister of transport Urve Palo was more or less forced to sign the shareholder’s agreement, as that was the only way to move forward with the project. After the signing ceremony Ms. Palo did not comment on the past problems of the project, and opted to concentrate on the future instead. She stated that the most urgent tasks for RB Rail are to prepare the financing application ASAP, contact the European Commission, prepare the business plan and evaluate the benefits of the project.

It is an excellent idea to contact European Commission, and ask whether all the planned adjustments to project plan are acceptable for the financier. If RB Rail’s finance application is made according to the specifics that have been presented in the ministerial declarations and joint statements, the EC will need to consider issues like “Does it matter who owns the infrastructure, once it has been constructed using EU financing?” and “Is it all right if the 1435 mm 240 km/h railway from Tallinn leads to Vilnius, instead of Poland?”. 

The European Commission and the Vilnius Issue

Lithuania has been advocating the 1435 mm Kaunas-Vilnius connection since summer 2013, and there is nothing wrong with that. It’s just that managing the plain north-south Rail Baltic 2 from Tallinn to the Polish border is a demending task, and addition of Kaunas-Vilnius connection to the already complex and multi-dimensional project could turn it into a Mission impossible.

AECOM’s extensive Feasibility study from 2011 found project Rail Baltic to be feasible and eligible for EU funding, but the feasibility was based on assumption of a double track 240 km/h railway from Tallinn all the way down to the Polish border. Currently the “bottom 100 km” from Kaunas to the Polish border is a slow speed single track connection, with only a fraction of the capacity that would be required to digest the cargo and passenger flows between Kaunas to Europe.

Claiming that the Tallinn-Riga-Kaunas-Vilnius version of Rail Baltic fits the “Connecting Europe” agenda is a tough act. If there was a “Connecting Vilnius Facility”, that would be a natural source of funding for this twisted version of Rail Baltic.    

However credible or incredible the Lithuanians’ arguments for a new Kaunas-Vilnius track are, the state of the current 1520 mm connection between Kaunas and Vilnius should also be considered. It is the highest quality railway in Lithuania at the moment, and it would serve as an ideal connection for Kaunas area’s intermodal terminals and future Rail Baltic connections to north and south. This is how Lithuanian Railways illustrates the dramatic improvement in the 1520 mm connection between Kaunas and Vilnius, achieved with the help of EU funding:

Conclusion: To Vilnius or not to Vilnius?

The Vilnius issue has delayed Rail Baltic, and it looks like the problem might possibly have been solved now. However, moments of optimism have often been followed by a return to harsh reality. Here's a recap of the situation:

• Lithuania wants to add Kaunas-Vilnius connection to the Rail Baltic 2 project to maximize its stake of EU financing.
• Estonia and Latvia have not opposed the idea of constructing a 1435 mm railway from Kaunas to Vilnius per se, but their logical view has been that there is no reason to complicate the already daunting project Rail Baltic. Kaunas-Vilnius is purely Lithuania's domestic issue, and they should discuss it directly with Brussels.
• Eventually a compromise was reached, and RB Rail's shareholders' agreement was signed in October. Lithuania was happy because the "Vilnius provision" was included in the agreement after onerous negotiations, while Estonia and Latvia were probably pleased with the “each country will co-finance the railway construction only within its own territory” clause added to the agreement.

A high ranking official from the Lithuanian Ministry of Transport confirmed me last week, that “regardless of the EC financing decisions for the Kaunas-Vilnius railway, there is no risk for the construction of Kaunas-Latvia section”. If we take that comment at face value, the construction of Rail Baltic's Kaunas-Latvia section will not be affected, even if the European Commission would completely turn down the application for Kaunas-Vilnius financing. That would be major progress, since only last June the Lithuanian Minister of Transport, Mr. Rimantas Sinkevicus linked together the financing decision of Kaunas-Vilnius and the construction of Kaunas-Latvia sections.

The European Commission has been following this Baltic mud wrestling act mostly on the sidelines. Considering that we are talking about a 4+ Billion euros project, the EC might consider taking a bit more vocal role. Giving clear guidelines of what can and what can not be included in the Rail Baltic 2 finance application would help. Creating a sense of urgency and instigating the fear of missing the 3 Billion euros financing to other TEN-T Priority Projects would help keep the Rail Baltic folks in Tallinn, Riga and Vilnius well motivated and focused. Money is the ultimate motivator.

“The Rail Baltic Task Force continue working on the establishment of the Rail Baltic Joint Venture as mandated by the ministers” (Source: Ministry of Transport and Communications of the Republic of Latvia)

Disclaimer

This article is based mostly on information available on public internet sites. If you are interested in more in-depth analysis on Rail Baltic issues, do not hesitate to contact me by e-mail, esa.nurkka@gmail.com.