Ahead of the meeting of the EU finance ministers in Brussels and as the EU keeps working to make sure the loan to Ukraine is approved and the country can receive the first disbursement of the much needed money as early as in the second quarter of this year, Ukrinform sat down with Lithuania’s finance minister Kristupas Vaitiekunas, a staunch supporter of Ukraine, son of the former foreign minister Petras Vaitiekunas, who also served as Lithuania’s ambassador to Ukraine when Russia launched its aggression in 2014.
The minister spoke about the prospect of Ukraine’s financing, challenges on the integration path, investment, sanctions against Russia, support for Ukraine’s reconstruction and recovery, importance of energy independence from Russia, and more.
FAILING TO FINANCE UKRAINE ON TIME IS NOT AN OPTION
- Lithuania is one of the main defenders of Ukraine’s interests within the EU. Even against the backdrop of the corruption scandal surrounding Energoatom in November, you were one of the first to emphasize that this should not in any way affect humanitarian, military, and financial support for our country. I quote: “Ukraine is our only choice”… Has your position not changed since then?
- Nothing has changed, of course. Despite any scandals, we have to support Ukraine in all the possible means. It doesn't change much with scandals. Of course, we have to understand that this fight against corruption is first of all needed for Ukraine. And only after that, it's needed by Lithuania, Brussels, or the European Union. So, it's good for you to beat corruption, it’s all for your country, it’s you who need that. And of course, it will also be in our best interests, too, if your corruption is taken down.
- Coming back to the decision of the leaders, made in December, about financial support to Ukraine for 2026-2027. What difficulties may come up when developing specific payment mechanisms?
- At the current moment, it's most important to come up with a mechanism, which would not overburden the country which is at war. So, it must be easy, effective, and transparent to use. It's probably one of the most important things left to do with that. And, of course, this money has to reach Ukraine on time, until April, because in April, additional funds will be needed to keep the country running, to keep the military running, to keep that bureaucracy running, to keep the infrastructure working. So, this money has to reach you on time and then used effectively and transparently.
LITHUANIA STANDS FOR UKRAINE’S FULL MEMBERSHIP OF EU
- Do you think the EU co-legislators will be fast enough in approving legislation to make sure Ukraine gets first payments in April?
- I think they will do their job because there is simply no other option. If money runs out, how will the country at war operate? It cannot stop functioning. Because if it stops functioning, it will lose. So it's not an option.
- Just recently, we saw reports that the European Commission is discussing the possibility of changing the rules for the enlargement and this would involve the introduction of the two-step integration for Ukraine. What is your attitude to this idea, and what are the possible pros and cons of that?
- Lithuania stands for the idea of Ukraine’s full integration into the EU before 2030, or even sooner. It has to be fully integrated, a real member of EU. But of course, if there is some kind of way to make it step by step, and if it only helps to accelerate the process and gives some intermediary milestones that Ukraine can stick to, and if it makes Ukrainians feel better and accelerates the integration, then of course we will support it.
We don't think that Ukraine should be left on that first intermediary step and never be able to make the second step for full membership. So this is the risk, and, if we avoid that risk, we will support this intermediary step. But still, the ultimate goal is Ukraine’s full membership of the EU.
BY JOINING EU, UKRAINE WILL CONTRIBUTE TO EUROPEAN COMPETITIVENESS
- The model currently being discussed, among other things, provides for Ukraine to gradually gain access to certain segments of the EU single market, agricultural subsidies and development funds. Our integration into European agricultural markets, as is known, raises certain reservations from even some of Ukraine’s biggest friends in the European Union. Does Lithuania also see threats to its market and producers from the Ukrainian agri-industrial complex?
- It's only from an economical standpoint, of course, that you can see the threat because Ukraine has very competitive agricultural products and competitive prices. So this would create more competition for local farmers and manufacturers, but it's only one perspective.
Still, there is a perspective of users. And from that perspective, bigger competition means lower prices and better quality. So, I think that along with threats there are also opportunities, and it depends from which perspective you see the issue. Even if some manufacturers are exposed to risk, all users are gaining some advantages. So, it's a double-edged issue.
- So you speak more like a people’s minister who doesn’t just side with manufacturers…
- I see it very objectively. Yeah, and there are advantages and disadvantages, as everywhere. In the end, if Ukraine joins the EU, it will bring more dynamic to some economy sectors.
- By the way, in your opinion, are the protective measures provided for in the new trade agreements between Ukraine and the EU sufficient after the abolition of the Autonomous Trade Measures last June, or does the situation require stricter regulation, as our country’s closest neighbors, in particular Poland, insist on?
- They will be applied only to the transitional period, and actually, Lithuania is still in this transitional period on agriculture. There are direct payments from EU to Lithuanian farmers, and we still get a below the European average for that. When we started our membership, direct payments were at 25 percent of EU level.
It’s difficult for me to say if protective measures are sufficient or not. Of course, Poland is an important country and its voice will be heard across Europe. But if you want to make Europe competitive, sometimes you have not to run away from competition. Competitiveness of Europe now is one of the top priorities of EU. Maybe the concept doesn't talk about agriculture in particular, but it’s about all economic sectors.
UKRAINE IS A GREAT PLACE TO INVEST
- Speaking of our bilateral relations, the state of bilateral trade between Lithuania and Ukraine. Are the trends satisfactory and what do you see as a reserve for development?
- On bilateral trade, I'm not very aware of the latest statistics but regarding the investment, I saw the levels are quite high, even for the war period. We have a quarter of a billion U.S dollars worth of Lithuanian companies’ investment in Ukraine annually. And it was even higher during the peace times. And I think this collaboration between the two countries in economics has even greater potential of course.
Now, it's a big thing is rebuilding what has been destroyed. But if the war ended and peace would be reached in some way, I think the investors would be very attracted to Ukraine. It's a big and very well known market for Lithuanian investors. We have had these mutual relations for a very long time. And we have good examples of businesses already operating in Ukraine, including supermarkets and some other companies. They would attract other companies from Lithuania to invest in Ukraine. And the potential is a lot higher than that was before the war at $350 million. If the war stopped, it could go a lot higher than that.
- So, the first precondition for the increase of investment is the end of hostilities…
- The war is a fundamental thing when we talk about Ukraine. But there are some other things we mentioned earlier, like corruption. Also, what’s important is the size of the Ukrainian market. Ukraine is a big country rich in resources, including agriculture. And the population has this hard-working mentality which is a little bit different from the older Western countries. I think it's a great place to invest, and investments are reaching Ukraine even now during the war.
But if the war stops, Ukraine has a very bright prospect for the future, especially if it joins the EU – under a one-step scheme, if it becomes a full member at once, or if some other scheme will be applied, involving intermediary steps. But again, these steps should be meant to accelerate integration, not to keep Ukraine in that intermediate position.
- Can you elaborate on particular field of Ukraine’s economy where Lithuania is most interested in terms of investment when we speak of Ukraine’s recovery?
- Lithuania is very strongly present in helping your energy sector. For example, it ranks first in the number of energy generators provided to Ukraine and is also among the top ones in the supply of transformers, and other things.
In the current situation, when the strikes continue, the main part of investments should go into rebuilding. If the war stops, you will attract not only the investment in rebuilding but also the investment that aims to developing businesses. I can also mention that some Lithuanian state-owned companies are also investing in Ukraine, like our railways, cargo companies, and others.
- What examples of Lithuanian investment in Ukraine are indicative of the country’s strong presence?
I would mention Novus supermarket chain, railway operators LTG Cargo and BGS Rail Holdings, some investment companies and energy businesses… Lithuania have long had a quite strong industrial sector. Nowadays, it's slowed down a little bit due to the geopolitical situation where industry is facing difficulties in whole Western Europe. But still, it is quite strong, and I know that industrial companies are investing in Ukraine quite substantially.
LITHUANIA HAS ACHIEVED INDEPENDENCE FROM RUSSIAN ENERGY
- While Lithuania is helping Ukraine maintain its energy sector, what is your overall view of Lithuania's role in ensuring energy independence of the Baltic region from Russia?
- Lithuania’s fight of become energy independent has been going on for quite some time because we'd been very dependent on Russia in energy sector when the Soviet Union collapsed. We had the connections and same standards, and we've been striving to break these connections.
It was a long fight but finally, we are independent from Russia. We have our LNG terminal, which allows us to get gas from any countries that can export liquified gas. So, this was probably one of the first major steps toward energy independence. That terminal, built over 10 years ago, operates very actively. We also invested a lot in renewables – solar and wind generation, particularly. We even have a goal of producing 100 percent of electricity to cover all Lithuania’s demand by 2030 and become a net exporter.
Before the Soviet collapse, Lithuania was a net exporter of electricity when we had a big nuclear power plant, which was finally shut down in 2009. So from 2009, we suddenly became importers and now we’re investing in renewables and slightly building up the capacity to become exporter again.
And, of course, we have disconnected from Russian electricity network. So, a lot has been made. Some of the reforms were difficult and expensive to make. Previously, there was the situation where we could get cheaper electricity from Russia and we didn’t invest because of this. But we know it’s not sustainable to be dependent on Russia.
- Is there public debate in place in Lithuania toward ensuring better protection of the country's energy infrastructure against possible attacks? Russia is already employing a lot of it's hybrid war instruments against Europe. Perhaps there's some investment already flowing into enhancing protection?
- The investment is ongoing, and the debate is ongoing. The discussions are going on, we are already building capabilities to defend our infrastructure.
- Are some Ukrainian lessons being learned in this regard?
- I hope so.
SANCTIONS MUST CRIPPLE RUSSIA’S ECONOMY
- What is Lithuania’s position on increasing sanctions pressure on Russia and also Belarus? What should be included in the next EU sanction package?
- Of course, we will support further sanctions on Russia and Belarus, and it has to aim the sectors that haven't been targeted yet. These sanctions would be great if we aligned the sanctions regime between the EU, UK, United States, and other countries in order not to leave these loopholes where they can evade sanctions. So, yes, we will advocate for including the sectors that are still excluded from the sanctions, including elements of the energy sector, maybe Rosatom, the shadow fleet, and finance.
Sanctions should include more banks and crypto businesses. These sanctions are meant and should cripple the economy of Russia, so it could weaken their ability to continue the war.
- Speaking of the shadow fleet, will you be advocating also for a full ban on maritime services for this fleet?
- I have yet to confirm this, but of course we will advocate for anything that helps to cripple Russian economy.
- Can you elaborate a little bit on the agenda of your upcoming visit to Ukraine? Because I've been told that you're going to visit our country?
- Yes, but it's being planned at the moment, so it's a bit early to say. But, but I'm looking forward to doing this visit.
- And what are the expectations of the meeting of EU finance ministers on Tuesday in terms of what is related to Ukraine?
- Tomorrow at the meeting, and today at the Eurogroup meeting, no political decisions will be made. It's more about touching down on the state of play on supporting Ukraine.
Ievgen Matiushenko, Brussels
Photo by Ievgen Matiushenko