ANTALL JÓZSEF RESEARCH CENTRE
THREE SEAS INITIATIVE: HIGH AMBITIONS AND LIMITED CAPABILITIES
PÉTER STEPPER
2 Czuczor Street, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en
ANTALL JÓZSEF RESEARCH CENTRE
AJRC-Analyses Series of the Antall József Knowledge Centre
Publisher-in-Chief: Péter Antall Managing editor: Péter Dobrowiecki Editorial office: Antall József Knowledge Centre H-1093 Budapest, Czuczor street 2
Contact: H-1093 Budapest, Czuczor street 2 Phone: +36 20 310-87-76 E-mail: ajtk@ajtk.hu Web: ajtk.hu/en
© Péter Stepper, 2021 © Antall József Knowledge Centre, 2021 ISSN 2416-1705
2 Czuczor Street, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en
THREE SEAS INITIATIVE: HIGH AMBITIONS AND LIMITED CAPABILITIES PÉTER STEPPER
EXECUTIVE SUMMARY The establishment of Three Seas Initiative (TSI) has been suggested by Croatia and Poland in 2014, in order to develop transport, energy and digital infrastructure of the Central and East European region (CEE). The Baltic-Adriatic-Black Sea region is underdeveloped regarding infrastructure and primarily dependant on the will of Russian energy suppliers. After the US administration gave permission to export gas and crude oil, business interest to import American LNG and oil products increased significantly in Central European countries. The US government also expressed several times its worries about the increasing Chinese influence in transport infrastructure business and dependency on Russian energy resources. Hence, TSI can be considered as a domain, where US national security and business interest collide. However, we should not forget, it is a Central European project, per se. The primary goal of member-states is to harmonize their interest in a way, which neither opposes EU activities, nor harms their own sovereignty. TSI is a platform for regular presidential meetings, which can facilitate negotiations, and helps stake-holders to come together and discuss. The Bucharest Summit proved to be a huge boost for cooperation in 2018 with the announcement of financial pledges, creating a business forum and suggesting the establishment of an investment fund. A lot of priority projects have been approved during the next two years. The budget seems to have a more sustainable structure, where the private equites and external sources are constantly rising, comparing to public sources. Public money, especially the pledges from the US reflects upon the increasing geopolitical rivalry in the region. However, infrastructure projects being so large, cannot be built only on good-faith and political pledges of governments, first and foremost it needs a strong business background with a huge amount of private financial sources.
HISTORY OF TSI The start of Three Seas Initiative has been announced on the margins of the UN General Assembly meeting in New York in 2014 by Poland and Croatia and brings together 12 EU member countries. It is considered to be a platform for informal meetings of the heads of states. The main aim is to enhance cooperation in three sectors, namely transport infrastructure, energy and digital agenda. Similarly, an important priority is to strengthen the internal market of the EU, without averting further differentiation within the union. The name Three Seas Initiative has led to connotation with the interwar Intermarium project and naturally triggered some concerns about the intensions behind this initiative. The US has become an exporter of oil and gas, and the permission to sell fossil fuels abroad, resulted in a new effort to transport energy supplies and technology to Central Europe. This business requires a better pipeline distribution system, not dependant on Russia. thus,
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the focus of TSI is on north-south interconnectivity and the plan to link the liquid natural gas (LNG) terminal of Krk and of Świnoujście with territories lying across the Baltic Adriatic and Black Seas region.1 An anti-EU character of TSI was also mentioned by some observers. However, already the first TSI summit in Dubrovnik strengthened the pro-EU character of TSI, which is also demonstrated through the engagement of the wide range of countries in the initiative. Nevertheless, closer ties to the EU need to be repeatedly confirmed in order to avoid any political speculations about the future character of TSI.2 In 2018, Romania hosted the third TSI Summit which led to the adoption of 27 priority projects in three key areas transportation, energy and digital area. The participation of representatives from the European Commission, Federal Republic of Germany and the United States of America showed the increasing importance of the format. The members identified major regional problems, like demographic decline, small sized markets and energy dependency. All of these areas can be addressed by initiatives like TSI, aiming primarily at the increase of interconnectivity, competitiveness through digital transformation, and attracting investors.3 Participating countries share some similarities, but are also to significant extent different in their structural characteristics, as well as in their priorities. In fact, TSI has been a multispeed initiative since the very beginning of its existence, just to mention the fact that some of the participating countries are Eurozone-ins, other are Eurozone-outs. An informal character of the whole initiative, with only a few commonly shared priorities seems to be an adequate response to this challenge at the moment. As already mentioned above, TSI is considered to be an informal initiative of the heads of states. Presidents can certainly put additional political weight to some projects, however, their competencies are limited and their powers vary from one country to another. The implementation of bigger regional projects would therefore require the involvement of other stakeholders, including the governments.4 The member-states might see the future of TSI differently—while some of them, including the Czech Republic, Hungary and Slovakia—perceive TSI more as an informal discussion platform serving for the exchange of ideas, Poland, Croatia but also Romania assign more importance to it. Germany would like to see TSI as a European regional platform with an Atlantic profile, while the US waits for an autonomous CEE economic community, attractive enough for American business to invest into the region. On David Morris: The Three Seas Initiative: A European answer to China’s Belt and Road?, Lowy Institute. 26 October 2020. <https://www.lowyinstitute.org/the-interpreter/three-seas-initiative-european-answer-chinas-belt-and-road > Accessed: 14 December 2020.
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2 Tomas Strazay: Regional cooperation formats in CEE and their Relation to the V4. In: Stepper Péter (ed.) Central Europe and the Visegrad Cooperation: Historical and Policy Perspectives. Antall József Knowledge Centre, Budapest, 2018. 3 Oana Cristina Popovici: Romania External Relations briefing: Romania was the host of the Three Seas Initiative Summit in September, China-CEE Institute. 12 October 2018. <https://china-cee.eu/2018/10/12/ romania-external-relations-briefing-romania-was-the-host-of-the-three-seas-initiative-summit-in-september/ > Accessed: 14 December 2020. 4 Tomas Strazay: Regional cooperation formats in CEE and their Relation to the V4. In: Stepper Péter (ed.) Central Europe and the Visegrad Cooperation: Historical and Policy Perspectives. Antall József Knowledge Centre, Budapest, 2018.
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the margins of the Bucharest Summit, a Business Forum has been also organized, which enjoyed over 600 participants. Six of the twelve members also signed a letter of intent to establish an Investment Fund in the near future.5 Besides Poland and Romania, Baltic countries also put a special emphasize on developing TSI further, because they see it not just an economic, but also a geopolitical project, which can boost their security by strengthening the transatlantic alliance. Energy security of Poland are self-evident, their primary goal is to reduce dependency on Russian sources. Tallinn offered to organize the next TSI Summit, thus, after 2019 Summit in Ljubljana, the members had a mostly virtual meeting hosted by Estonia on 19 October 2020. Lithuania also declared the intention of deepening the engagement with this multilateral cooperation platform during the 2019 summit in Ljubljana, where also the then EU President Jean-Claude Juncker, the president of Germany Frank-Walter Steinmeier and the US Energy Secretary Rick Perry took part. President Gitanas Nausėda who took part in Tallinn followed in the footsteps of his predecessor, reiterating the importance of the geopolitical aspects.6 Poland and Romania pushed forward the idea of an investment fund, and together they pledged 500 million euros for the budget of the TSI Investment Fund at the TSI Virtual Summit. Nine of the participating countries also offer 20-20 million euros to show their commitment to the idea of the investment fund, hence the fund currently stands at 913 million euros. These positive steps from Central Europe convinced the United States to support the idea on a greater extent. Keith Krach, Undersecretary for Economic Growth, Energy and the Environment announced a US pledge reaching up to one billion dollars (850 million euros), if the contribution from the 12 nation achieves 3.4 billion euros eventually. “The more each country invests, the more we invest,” said Mr Krach.7 The fund is being managed by London-based investors Amber Infrastructure. It’s CEO, Gavin Tait also took part in the summit, has been manager of the fund since March 2020, which also delivered 10 million euros for the sake of budget.
COMPLEMENTARITY OR COMPETITION? At the end of 2020 we can evaluate the past five years of the cooperation to draw some conclusions. During its history, there were five presidential summits, organized in the framework of TSI, with the participation of twelve member-states, two visitor countries, and a pledge of 1 billion euros to start an investment fund for implementing
5 Oana Cristina Popovici: Romania External Relations briefing: Romania was the host of the Three Seas Initiative Summit in September, China-CEE Institute. 12 October 2018. <https://china-cee.eu/2018/10/12/ romania-external-relations-briefing-romania-was-the-host-of-the-three-seas-initiative-summit-in-september/ > Accessed: 14 December 2020. 6 Linas Eriksonas: Lithuania external relations briefing: Lithuania explores the deepening cooperation through the Three Sea Initiative, China-CEE Institute. 16 November 2020. <https://china-cee.eu/2020/11/16/lithuaniaexternal-relations-briefing-lithuania-explores-the-deepening-cooperation-through-the-three-sea-initiative/ > Accessed: 14 december 2020.
Nikola Đorđević: Three Seas Initiative Investment Fund gets US boost, Emerging Europe. 20 October 2020. <https://emerging-europe.com/news/three-seas-initiative-investment-fund-gets-us-boost/ > Accessed: 14 December 2020. 7
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