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December 14, 2015



Alternating current: Baltic electricity plan turns tables on Russia

VILNIUS: When Lithuania inaugurates two electrical links to the West on Monday, it will launch a process that will reduce its reliance on Russian electricity, and one day could make Russia dependent on the Baltic grids.

With Russia accustomed to wielding energy supplies as a political weapon, the possibility that its westernmost outpost of Kaliningrad could become reliant on the West to keep the lights on has Moscow seething, straining already tense ties over Ukraine.

"The first electrons have already passed" through the EU-backed power cables from Sweden and Poland, said Energy Minister Rokas Masiulis after the links were tested.

The undersea cable to Sweden will bring in cheaper Scandinavian power, while the line to Poland has the added significance of being a key piece of infrastructure that could eventually be used to integrate the three Baltic states into the European electricity grid.

Despite joining the European Union and Nato in 2004, Lithuania and fellow Baltic states Estonia and Latvia are still part of a Russian-controlled power ring -- a legacy of five decades of Soviet rule that ended in 1991.

Energy security, usually gas supplies, has long been at the root of tensions between the independent Baltic states and Moscow. More recently it has plagued the relationship of the EU as a whole after Moscow’s price disputes with transit nation Ukraine left most of the continent without supplies twice in the past decade.

Lithuania broke Gazprom’s politically-charged monopoly for gas supplies by building a liquefied natural gas terminal that opened at the beginning of this year and is now on the verge of reducing its dependence on Russian electricity.

Lithuania imports three-quarters of its electricity, currently half of it from Belarus and Russia.

The 700 megawatt Swedish cable and 500 megawatt link to Poland are enough to supply Lithuania during non-peak times, but the country will still need Russian electricity.

Moscow is not so concerned about the links as such, but the country’s eventual integration into the European grid and what that will mean for Kaliningrad, the small, heavily militarised Russian region along the Baltic coast wedged between Poland and Lithuania.

That is because electricity grids are much like a symphony -- they need a conductor to be in harmony. As long as Lithuania remains synchronised to the Russian grid, Moscow can easily supply electricity to Kaliningrad.

But the switch to synchronising with the European grid, as the Baltic states eventually envisage, will either force Moscow to build new transmission lines or converters to handle imports from the European grid.

Kaliningrad’s "geographic location means there is a challenge", said Romas Svedas, a former deputy energy minister who negotiated agreements with Moscow and now teaches at the Institute of International Relations and Political Science in Vilnius.

"Russia is already escalating this issue," he added.

Russian President Vladimir Putin brought the question up during an interview in September with the US television network CBS.

The Russian leader said the switch "means that a number of zones will emerge between several regions of the Russian Federation, where we will have no power transmission lines," according to a Kremlin transcript of the interview.

Putin said the EU would be forced to spend billions of dollars to integrate the Baltics, and Russia a similar amount on Kaliningrad.

"What for? If we really seek some kind of joint work and integration ... what is the use of all this?" said Putin, calling it another case in which the Europeans "do the opposite of what they say" in terms of integration.

The recent cut in electricity supplies in Crimea which Russia annexed last year but remains dependent upon Ukraine for most of its power has most likely made Moscow even more sensitive.

Russia could build new power stations in Kaliningrad or new transmission lines, but with low oil prices and Western sanctions over Ukraine, the economy is in recession and billions are being spent on Crimea. The last thing Moscow needs is making additional outlays.

Another option is to sync Kaliningrad with the European grid, but analysts say the Kremlin is unlikely to make this choice.

Lithuania’s energy minister downplayed the Russian concerns, insisting that it would remain a "reliable transit partner for any country".

"We will have to ensure that everything functions fully in Kaliningrad and Belarus. All technical issues will be 100 percent resolved," said Masiulis

The European Commission has said it is "supportive" of the Baltic electricity plan, but Svedas said Brussels faces a huge challenge to mollify the Russians. EU-Russian relations are already severely strained over Ukraine. Moscow has banned most European food imports in retaliation over EU sanctions imposed on Moscow for its involvement in the Ukraine crisis.