Latvia may link North­ern Eu­rope with China via rail­way

The Baltic Times - - BALTIC NEWS -

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.”

Po­lit­i­cal Con­sid­er­a­tions

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.

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