THE WARSAW INSTITUTE REVIEW

Date: 29 October 2020

The Baltic Fund – A New Idea for the Region

The establishment of the Baltic Fund is a proposal for a strategic move of the Polish state northwards – initially towards the Baltic States and then towards the Nordic countries. A new institution, modeled on the International Visegrad Fund, will allow increasing cooperation between Poland and the region in the domains of security, economy, energy and civil society. The initiator and originator of this geopolitical project is the Polish think tank – the Warsaw Institute – whilst the idea is supported by four other Baltic think tanks.

Author: Krzysztof Kamiński

The idea

Poland’s policy in the Baltic and northern regions is currently implemented mainly through joint political, economic and military initiatives. However, there are no soft power projects, which could support cooperation of the countries of the region in a organic way. Building the best possible relations with the Baltic and Nordic states serves two strategic objectives of Poland’s foreign and security policy. Firstly, this cooperation strengthens the security of Poland and the entire region in the face of the threat of Russian aggression. Secondly, it enables the creation of a group of countries acting together on various issues in international organizations, such as the European Union (EU).

The development of Poland’s regional cooperation northwards (Baltic and Nordic countries) should complement such cooperation in the south (mainly the Visegrad Group) because only then can one talk about a full implementation of the Three Seas Initiative and the strengthening of the eastern flank of NATO. For this purpose, the political, economic and military potential of Poland should be used, but also its geographical location to connect the northern part of united Europe with its central and southern parts like a bridge. Strengthening cooperation with Lithuania, Latvia and Estonia will naturally open up greater opportunities for cooperation with the Scandinavian countries. The policy implementation in the Baltic and Northern directions should go beyond the traditional framework of cooperation within the North Atlantic Treaty Organization (NATO) and the EU. What should be taken into account is that some Nordic countries do not simultaneously belong to two of the above-mentioned international organizations.

Therefore, a greater emphasis should be placed on bilateral relations and within existing regional dialogue forums and organizations. Due to its position and location, Poland can successfully combine Central European regional initiatives with new ones in the north. The effective implementation of Poland’s “northern dimension” policy will make Warsaw the central link of the regional security system and North-South economic cooperation, going beyond the EU and NATO framework to stretch from Scandinavia to the Western Balkans, the Black Sea region and the Caucasus.

Consequently, in its own interest and in the interest of the countries in the region, Poland should take the strategic initiative in the north. The first step is to build an appropriate political format on the basis of which further institutionalized cooperation could be established. It is worth noting that this process should be conducted gradually, the first phase being orbital around the Baltic States and the second one the Nordic countries. This is primarily due to the proximity of Poland and the Baltic States and the increasingly intensive cooperation of these countries in the immediate vicinity. This will enable the effective implementation of the new format of cooperation between fewer countries before being extended to other states. Hence it is reasonable to present the context of relations between the countries included in the first phase of the proposed project.

Background

Poland and the Baltic States have been cooperating on the international forum for years amid their converging interests and common threats. Geopolitically, they are all members of the European Union and NATO. The most recent initiatives in the field of geopolitical cooperation formats include the development of the Three Sea Initiative (since 2015), cooperation within the framework of the Bucharest Nine, as countries of the eastern flank of NATO (since 2014), or the recently initiated Lublin Triangle format, aimed at strengthening partnership between Poland, Lithuania and Ukraine (since 2020). Within the regional formats, Poland and the Baltic States are also part of the Council of the Baltic Sea States (CBSS), however, with the current geopolitical situation and the countries forming this initiative, this format is not an effective field for cooperation between Poland and the Baltic or Nordic States, notably with the aggressive policy of Russia, another member of the initiative.

In addition to being part of regional organizations, Poland cooperates on a bilateral basis with individual Baltic States in the areas such as economy, culture and defense. What stands out is that there is no geopolitical cooperation scheme where Poland, Lithuania, Latvia, and Estonia would directly and exclusively cooperate with themselves.. This cooperation is dominated by common membership in international organizations or in wider geopolitical formats mentioned above.

Economic cooperation between Poland and the Baltic States is constantly developing, however, it is much more modest when compared to Poland’s other neighbors. This is a result of large disparities between their economic potentials. The total share of the Baltic States in Poland’s exports is 2.6% and that of imports stands at 1.1% ( Central Statistical Office, Poland, 2019). Poland’s trade with individual countries is as follows:

  • Lithuania – export PLN 15,379.0 million (1.5%), import PLN 8,313.2 million (0.8%), balance of trade PLN +7,065.8 million;
  • Latvia – export PLN 6,121.0 million PLN (0.6%), import PLN 1,722.3 million (0.2%), balance of trade PLN +4,398.7 million;
  • Estonia – export PLN 4,857.8 million PLN (0.5%), import PLN 1,229.2 million (0.1%), balance of trade PLN +3,628.6 million.

Despite its lower economic potential, Poland, together with the Baltic States, is implementing a number of economic projects in order to build up regional and EU integration. The projects of strategic economic cooperation include: Via Baltica (road connection between Poland, Lithuania, Latvia and Estonia), Rail Baltica (high-speed railroad line connecting Helsinki with Berlin), LitPol Link (onshore electricity interconnection between Poland and Lithuania), HARMONY Link (subsea electricity interconnection between Poland and Lithuania) as well as GIPL (cross-border natural gas pipeline between Poland and Lithuania). These projects aim at strengthening economic cooperation by improving transport and energy connections.

The defense cooperation between Poland and the Baltic States materializes mainly within the two’s NATO membership as well as through bilateral and multilateral initiatives. Poland, Lithuania, Latvia and Estonia believe that what poses the greatest military threat to the region are Russia’s aggressive actions, especially after the invasion of Georgia in 2008 and the armed conflict with Ukraine, lasting from 2014. Poland and the Baltic States, along with their allies, have taken a number of initiatives to deepen military ties in recent years. Such measures include: Baltic Air Policing – defense of the Lithuanian, Latvian and Estonian airspace (since 2004), LITPOLUKRBRIG – multinational Lithuanian–Polish–Ukrainian Brigade of 4,500 soldiers (it reached full operational readiness in 2016), Enhanced Forward Presence (EFP) – four battalion-sized battle groups stationed in Poland, Estonia, Lithuania and Latvia, each consisting of 1,000-1,500 troops (since 2017 being deployed on a persistent rotational basis every six months). Another important project strengthening regional security is the increased US military presence in Poland, which is supported by the Baltic States. It is worth noting that Poland, Lithuania, Latvia and Estonia meet the NATO’s goal of spending 2% of their GDP on defense each year.

At the heart of regional cooperation lie also social and cultural issues, including matters of national minorities. This is especially true for relations between Poland and Lithuania that have improved significantly over the last few years. In the light of deepening economic, military and political cooperation, it is possible to resolve many disputed social issues.

Referring to regional cooperation, it is worth noting the excellent relations between Lithuania, Latvia and Estonia. The three states, referred to as the Baltic States, do not form an official union, but are actively involved in parliamentary and intergovernmental cooperation. These countries cooperate closely, especially in areas such as foreign and security policy, defense, energy as well as transportation. That way, one of the region’s smallest states can consistently and effectively pursue their common interests in the international arena along with implementing ambitious economic projects. Moreover, the Baltic States cooperate closely with the Nordic countries, as demonstrated by their participation in the Nordic-Baltic Eight (NB8) initiative.

A significant factor in relations between Poland and the Baltic States are also affairs with Belarus, especially in the aftermath of the August 2020 presidential election. The democratic states of the region support the pro-democratic reforms and the right of Belarusian society to self-determination. Belarusian turmoil is undoubtedly one of the greatest challenges in the foreign and security policy of Poland and the Baltic States. A new regional and political format could serve as a platform to coordinate activities in the neighborhood policy while its institutionalized form could result in proactive actions for the sake of Belarusian civil society.

All the aforementioned issues indicate that today the Baltic region requires an institutionalized framework for cooperation. Effective deepening of relations between Poland and the Baltic States cannot take place only on political, military or economic levels. It should also encompass civil society, expertise and soft power tools. At present, Poland does not have tools for direct cooperation with the Baltic States at this level. The proposed project of the Baltic Fund will certainly support the efforts of Poland and the Baltic States to enhance regional integration in addition to pursuing mutual interests or fighting against common threats.

The solution

In response to the aforesaid needs as well as in the context of the cooperation between Poland and the Baltic States to date, in 2019 the Polish think tank – the Warsaw Institute, began working on a concept for a new international institution – the Baltic Fund. The idea of creating such an institution primarily relies upon the untapped potential for cooperation between Poland and the Baltic States. At issue was also the positive experience of the International Visegrad Fund, a complementary body for the efficient political format of the Visegrad Group.

In 2019, four think tanks joined forces with the Warsaw Institute to establish a new institution, giving it an international character. The following organizations became partners of the Baltic Fund project: International Centre for Defence and Security (Estonia), Baltic Security Foundation (Latvia), Eastern Europe Studies Centre (Lithuania) and Memel Institute (Lithuania). Thanks to the partners and their invaluable contribution to the work on the concept, especially in the context of the Baltic States internal conditions, it was possible to draft a common document. During the conference NATO Eastern Flank Security. Baltic States and Poland on November 28, 2019 in Warsaw, representatives of five think tanks signed a declaration on increasing the efforts of expert organizations to promote the idea of establishing the Baltic Fund. Thus, the Baltic Fund project and its concept became a joint proposal of five institutions. In February 2020 the signatories of the declaration put forward the official concept of the Baltic Fund to the authorities of Estonia, Latvia, Lithuania and Poland: presidents, prime ministers and foreign ministers.

In line with the proposed concept, the Baltic Fund is supposed to support all valuable initiatives in the field of security, economy, energy and civil society in what will strengthen the sense of regional community and intensify expert cooperation. The new institution is modeled on the experiences and mechanisms of the International Visegrad Fund, while its assumptions take into account the specificity of the region and the key challenges it faces.

Thanks to the Baltic Fund, the social capital in the form of knowledge alongside structural and interpersonal links will grow whilst the image and importance of the Baltic region will improve in Europe and worldwide. This plays a fundamental role in strengthening the sense of regional community and increasing security in the Baltic Sea area. The Baltic Fund initiative may be of significant importance in the current geopolitical situation in the region. The Baltic Fund, through its soft power activities, may be a real tool for supporting the efforts of Poland and the Baltic States in the field of political, economic and military cooperation.

Four main themes were distinguished within the concept as the most important areas of cooperation between Poland and the Baltic States: security, energy, economy and civil society. Within the framework of the projects, the Baltic Fund will support networking in the region, research activities, expert and analytical events as well as civil initiatives. The target groups include: research and analytical centers, think tanks, local government branches, scientific and academic centers, students and doctoral students (with a special emphasis on students of security-related disciplines), secondary schools, NGOs, watchdogs and other foundations or associations. The Baltic Fund will support the projects of the enlisted organizations through various mechanisms. The first one will be the permanent Baltic Security Studies program, or an annual program consisting of four multi-day sessions in at least three Baltic Fund countries. Its mission is to create a network of experts, analysts, ministry officials, etc., and to broaden their knowledge whilst ensuring direct contact between representatives of government and civic institutions in member countries. The second mechanism will comprise grants, which will be used to finance projects or replace own contribution in large international projects (small grants up to EUR 6,000, large grants up to EUR 50,000). The third mechanism will consist of dedicated grants with one of the expected results being to release a publication in the form of an analysis, article or research bulletin, along with its translation into English. The fourth mechanism, addressed directly to the citizens of the Baltic Fund member states, will include scholarships financing the stay in another member state within the framework of a scientific trip or an internship in a government unit or a non-government organization (one grant holder will be entitled to EUR 600 per month for the total duration of one quarter of a year).

Within the framework of the presented concept of the Baltic Fund, four countries – Poland, Lithuania, Latvia and Estonia – will participate in the first stage of the project. The initial budget of the institution will be EUR 1 million, of which EUR 0.5 million will come from Poland and the remaining amount paid by Lithuania, Latvia and Estonia. In the second stage, each subsequent state will have to provide a contribution equal to EUR 0.5 million. Furthermore, the concept assumes the implementation of projects with partners from third countries. This includes projects carried out with donor countries (e.g. the United States, Canada, Japan, South Korea) as well as providing support through programs dedicated for organizations in Belarus, Ukraine or Georgia. The list of cooperating countries is open and its shape will result from the political decision of member states.

The concept of the Baltic Fund assumes the establishment of a new international institution, with a diplomatic status, based in one of the member states’ cities. Its official language will be English. In order to operate efficiently, it will be necessary to appoint local coordinators in the member states (associated with the Ministry of Foreign Affairs of a given country). The proposed model of management and supervision of the new institution assumes the appointment of the Council of Ambassadors of the Baltic Fund (the highest decision-making body of the Fund, consisting of the Ambassadors of the member states in the country where the headquarters will be located) and the Executive Director of the Baltic Fund (responsible for the operational activities of the Fund), selected on the basis of the recommendations of the member states for a period of two or three years. It is recommended that all decision-making processes on day-to-day and strategic issues be based on unanimity.

Summary

During several months of collaboration of experts from five think tanks and four countries, a concept of a new international institution was developed. The Baltic Fund is an answer to the challenges of the region and takes into account its specificity. This project is an example that ambitious international initiatives can be proposed in a bottom-up way by the expert community and non-governmental organizations. The project has been backed by a number of institutions and public figures. Currently the concept of the Baltic Fund is being debated in the decision-making circles in Poland and the Baltic States.

We encourage you to join the group of people who publicly support the establishment of the Baltic Fund and to contact us directly through the website: balticfund.org.

All texts published by the Warsaw Institute Foundation may be disseminated on the condition that their origin is credited. Images may not be used without permission.

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