The Baltic Course
Trade Comes First | The GOTHENBURG summit: EU Enlargement Under Attack

Trade Comes First

By DISA HASTAD, Dagens Nyheter

As the 'Year of the Baltic States' is drawing to an end, Sweden's minister of Foreign Trade, Leif Pagrotsky, tells The Baltic Course about his strong belief in trade: Trade is a fore-runner: it brings ferry lines, tourism, contacts on the official and personal level, plus all kinds of development.

Leif Pagrotsky.

Sweden decided to devote the year 2001 to the Baltic states. In this we took a two-step decision: we decided to concentrate instead of spreading our engagements. The decision to choose the Baltic countries was an easy one. We feel very much for your countries, which are our immediate neighbors. We share a common project: the European Union. We wanted to mobilize all forces to promote this, on all levels, says Leif Pagrotsky in an interview to The Baltic Course.

We usually call our countries by their names Latvia, Lithuania and Estonia. Why does Sweden call them by the collective name of the Baltic States? And what is the meaning of the expression "The Baltic Ring"?
I see it as a geographical term. We are often called Scandinavian or Nordic countries, which is a collective term too. We are aware of the fact that the three countries that we call the Baltic republics are very different, but we also see some common factors: countries who, free from the Soviet yoke, are now building a market economy and are candidates to the European Union. Sweden's interest in the three countries is of the same intensity. We see the countries as close to us and rather similar in size.
I don't use the term the Baltic Ring. But it would mean all the countries around the Baltic sea.
In political cooperation of the Baltic Council we have Norway - which is not a Baltic state - also as a member. Ukraine is an associated member. To me the presence of Norway in the cooperation is self-evident, as is that of Kareilia.

 Why did Sweden choose to give assistance in the fields of education, border security and the rule of law and not any others?
We chose these fields because there was interest from our partners in the region and also because we are not good at everything. We have to know our limits.

 Can we take it that the interest in the Baltic countries will serve as a starting point for Swedish trade into Russia and the CIS?
Not directly in everyday terms. But I think it could develop in that way when European Union membership is a reality. Your countries have a unique advantage in knowing Russia, having contacts, and with people speaking the language. The Baltic countries could be a link between the EU and the CIS.

What is more interesting for Sweden in cooperation with the Baltic states: the economical, political or social aspect?
It all hangs together. Our interest is to consolidate democracies that are stable, have a market economy and a rising standard of living. All this is best for creating a world without tensions. A good environment is also of vital importance to everybody in the region.

Results of most Swedish companies having started out their business in Russia and the Baltic States have turned out better than expected - such is the conclusion of a poll run by the Swedish Chamber of Commerce. 90% of the large and 50% of the small companies responding to the poll announced that their profit in Russia, Latvia, Estonia and Lithuania exceeded expected numbers. Swedish companies experienced their largest success in Estonia. Experts of the chamber concluded that reports on criminal activities endangering businessmen in Russia and the Baltic States, also hindering their businesses, is greatly exaggerated. In fact, these problems are caused by imperfections in legislation, high customs duties and a lack of information about credits that obstacle business expansion in these countries. The experts at the Swedish Chamber of Commerce posed questions on business success to 1,000 Swedish companies operating in Russia and the Baltic States fully or partly owning 1,300 firms in these countries. Representatives of 228 companies responded. (AK&M)

How do you view the investment climate in Latvia, Lithuania and Estonia?
It is getting better. But we still hear complaints from business people about red-tape and corruption. I hope these impediments will go away as the work to harmonize your laws according to EU and the WTO goes on. I am also pleased to note that Latvia has decided to abide by the decision that an international arbitration authority will take in the case of the Swedish ship in the harbor if Riga - this will serve as a confidence building measure.
If the Baltic countries persist in their will to turn their backs to Russia I think you are denying yourself great possibilities in the future.

What does Sweden think about corruption in the Baltic states?
I have no firsthand knowledge but follow the reports. Our investors tell me there are problems. But I am optimistic and think these are temporary problems, characteristics of a transitional society which has not yet fully established the rule of law.

How much does the Swedish state participate towards the investments of our region?
The Swedish state as such does not invest, or very little. We support environmental projects and the exchange of knowledge. We also give credit guarantees for environmental projects.

Should one view the expansion of Swedish banks into Latvia, Lithuania and Estonia, where they practically control the region, as a long-term investment or a way to earn money quickly?
I think it proves the ambition to grow in our region on a long-term basis. I don't believe they are there for quick and easy money only. The rule is: the earlier you get in, the better. This is the tactics for banks all over the world.

Which other branches, outside the financial sector, do you see as most interesting for Swedish investors?
It is not the role of the Swedish government to point the way to the market actors. I hope there will be high activity in general.

Swedish capital earlier gave strong support to the wood processing industry in the Baltics. But here you have voices who say that this activity, which builds on cheap labor and raw materials, may turn out not to be such a blessing for the Baltic countries themselves. Your comments?
This is a thing for private investors to consider. In general I want to say that you have to start somewhere. Wood processing needs a lot of capital. This leads to an industry with better possibilities. For the Baltic states I think a modern industry is better than one that is not up to date. I have inaugurated a sawmill in Latvia.
Some of the machinery was new, some old (about ten years). This sawmill has seen good development.

What is the position of the Swedish government on the question of the EMU?
The Social Democratic Party has said it favors the European Monetary Union in principle and will join at a time when it is good for Sweden. [Mr. Pagrotsky has been known for an opposing view - i.e. not joining the EMU now, as it is too late - but nevertheless will be loyal to the government. DH)

What is the view of Sweden to Baltic membership in the EU and /or NATO?
We hope the Baltic countries will be members of the EU as soon as possible and are happy that the Nice summit gave results. On NATO we have no opinion, as Sweden is not a member. Every country has to decide for itself.

What has surprised you most in the Baltic countries?
The high level of education and the early introduction of IT.

Your best memory from the Baltic States?
My visit to the Baltic Business School [The Riga School of Economics], which has in a very short time become one of the best business schools in Europe. It produces the business leaders of the future for the whole region.


The GOTHENBURG summit: EU Enlargement Under Attack

By Inna  Rogatchi, Rogatchi Productions & Communications

The Gothenburg Summit, taking place in June in Sweden this year, appeared truly as a surprise summit for the EU. In approach to the summit, there was a slightly unsure and tense waiting time amongst political circles. But the main agenda question for EU enlargement nowadays is WHEN, not WHO.

There were three main parties at the Gothenburg Summit: candidates for EU enlargement, with the club of three Baltic states, eagerly awaiting a decision, and with good reason; Scandinavian countries and Finland, who support the Baltic bid for EU membership; and southern European countries, in particular, Spain and Portugal, who are not all too openly, but clearly enough, opposing the move for enlargement, afraid of loosing their privileges as still being the poorer countries within the EU, especially in the agriculture sector. The rest of the EU members have until now been either neutral as are the Benelux states, or trying to balance between EU-enlargement optimists and pessimists. Germany and Austria are more inclined to support the Baltic states and their Northern colleagues, while France and Italy are inclining to sympathize with the southern cause. The United Kingdom is keeping an almost perfect neutrality, but it also has historical sympathies with the Baltic states in any case.
Two other issues at the Gothenburg Summit were measures for providing sustainable development, first of all by harmonizing the increase of GDP and economic structures of EU members; and choosing a location for the EU Food Authority, a new and crucially important EU Agency. Finland is trying very hard to lobby its capital, Helsinki, for locating the Food Agency but it still has to wait until the decision is made finally.
Naturally, the entire agenda of the Summit was affected, to say the least, by the vandalistic festivities of the anti-globalists just outside the windows. Nobody inside the walls of the Congress Center, could even think in normally, let alone speak or decide in peace and efficiency on something as important as the future of the EU. Under the circumstances, EU members did what they could, and it was neither a full, nor satisfactory decision for the enlargement candidates. Too many separate issues - such as the free movement of labor, currency regulations, social security, etc. - are yet to be settled before the first row of happy new EU members are named. All of this must be cleared within a year's time, by fall 2002. As the Finnish Minister for Foreign Trade, Kimmo Sasi, put it, "Finland fully agrees to the decision on finalizing negotiations for part of the first few members by the end of 2002". Then the final decision will be made on which countries will join the first round of enlargement, becoming EU members by 2005 or 2006. There is general belief, especially among Finnish and Swedish international policy makers, along with their Danish colleagues that "there will be at least one Baltic country in the first wave of new EU members".
As for Baltic states, it's rather important now to elaborate their own tactics for the final run - will they pursue the issue all together, as a region, or it will it be separate lines of negotiations, discussions, contacts, and lobbying. The answer to this could be crucial for all of them together, and for each country, as well.

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