Latvia may link Northern Europe with China via railway
regional leader for Northern Europe in terms of cargo. According to Mr. Kols, “Despite fierce competition and the challenging geopolitical situation, cargo turnover in Latvian ports in 2016 reached 63.1 million tons representing almost 20 per cent of all the cargo volume handled in the Baltic Sea Region. In terms of our reach across Eurasia, we also see a significant increased growth in containerized cargo volumes with our container train Baltika Transit, which connects Latvia and other ports of the Baltic States with Kazakhstan and Central Asia. The number of containers transported by railways from Latvia during the last year increased by 108 per cent and the number of containers sent to Latvia increased by 93 per cent.”
On the subject of bilateral cooperation, Latvia seeks to establish trilateral cooperation mechanisms to connect the Chinese-belarussian Great Stone Industrial Park with Latvian ports. Yet, there is a notable differentiation between the Latvian and Belarussian approach, with Latvia playing less of a manufacturing role and more of a logistics and supply chain role, by transporting goods to and from the Baltic Sea. Latvia’s ice-free ports and centennial heritage of railyards, provide a direct connection east to Russia and south to Afghanistan, an obvious geographic and strategic advantage. Mr. Kols emphasized his optimism for Latvia’s role with China, “This strong performance in transport and logistics affirms that Latvia is the clear leader in transport and logistics amongst the three Baltic States, and that we are ideally placed to become China’s transport and logistics centre in Northern Europe.”
As the economic case for increased coordination between Latvia and China becomes stronger, so too does the political relationship. The number of diplomatic meetings between Latvian and Chinese officials has picked up significantly over the past year. As of May 2016, Latvia has served as the coordinating country of the 16+1 countries, a framework that coordinates initiatives between China and 16 Central and Eastern European Countries (CEEC). In November 2016, Latvia hosted the first 16+1 Transport Ministers meeting and fifth 16+1 Prime Minister’s Summit. This provided Latvia with a rare opportunity to host the Chinese Premier, Li Keqiang. In January 2017, the Chinese government extended invitations to three Latvian ministries—transport, Economy, and Culture—to attend China’s Belt and Road Forum in Beijing later this year.
Now, the only question is whether there will be a political will to invest in improved East-west freight rail infrastructure during a time in which economic sanctions and military build-up predominates the news. Due to these political considerations, the most likely result related to any new East-west rail infrastructure investment is inaction.
Fear of politically-motivated non-performance of railway infrastructure can, indeed, have a paralysing effect on investment decisions. But, it can also have a stabilizing effect in the region. It is also worth remembering that the Treaty of Paris following WWII was the direct result of efforts to promote trade between hostile neighbours through the establishment of the European Coal and Steel Community. In a similar way, promoting Eu-russia-china trade through railway infrastructure spending could yield both economic and political benefits.
If the political considerations can be resolved and freight rail connections to China—through Moscow— are improved, there is a sound economic argument to be made that Latvia could emerge as a shipping and logistics hub that connects China with the Baltic Sea region, Northern Europe, and more broadly the entire EU. Moreover, the coordination of such a large-scale infrastructure program between three of the world’s four most powerful militaries in the world—the EU, Russia, and China—could normalise relations amongst this Eurasian bloc and prompt something even greater than economic development: peace.