Stratfor analyst Eugene Chausovsky reflects on the Baltic states' recent announcement of a joint venture company for Rail Baltica and examines the project's regional context and implications.
© A.Stackevič nuotr.

For anyone who has traveled through Europe, whether on business or backpacking through the Continent, it is well understood that trains are often the way to go. Whether you're going from London to Paris via the Channel, or from Berlin to Prague on the high-speed express, train travel is an efficient alternative to cars or planes. Train stations are often located in the center of European cities, unlike airports, which are typically on the outskirts, and do not have the burdens of extensive security checks or gas station fill-ups. As a result, Europe has built one of the densest rail networks in the world, and more people travel by train on the Continent than anywhere else in the world.

Thus my surprise when, on a recent visit to the Baltic states, I found that rail travel between Estonia, Latvia and Lithuania is rather uncommon. Despite their small size and proximity to one another, there were no direct rail links between the capital cities of Tallinn, Riga and Vilnius. While it is possible to get from one capital to the other by rail, it requires multiple time-consuming stops; the consensus was that traveling by bus was much faster and easier. This was a curious deviation from the rest of the European Union's well-connected railways.

But the lack of trains was no coincidence. Because of their long history under the Soviet Union and, before that, the Russian Empire, the Baltic states have transport networks that are linked with their large eastern neighbor. In terms of rail networks, all public railways in the Baltic states use the Russian gauge of 1,520-millimeter (nearly 60-inch) track, as do railways in the rest of the former Soviet countries. Most of Europe, however, uses the standard gauge of 1,435 millimeters. This difference is the result of a conscious decision by the Soviets to insulate the Soviet Union from the rest of Europe for security purposes. It is also why the Baltic states' passenger and cargo railway networks are currently more integrated with Russia than they are with Europe, or with each other.

Shifting toward European integration

Once the Baltic countries gained their independence from the Soviet Union, converting their rail networks to the standard gauge and connecting with the rest of Europe became a priority, especially after they became members of the European Union in 2004. They proposed the Rail Baltica project, which envisions a continuous rail link from Tallinn to the Polish capital of Warsaw via Riga and Vilnius. (Finland's capital, Helsinki, would also be connected to the rail network via ferry service to Tallinn.) The transport ministers of Poland, Lithuania, Latvia, Estonia and Finland signed a memorandum of understanding on the intent to build Rail Baltica in 2010 and established development guidelines at the end of 2011. Differences arose over logistical and routing issues, but they were largely settled by the start of 2014.

Railway advances reveal strategic interests in the Baltics
© K. Cemnolonskio nuotr.

This work set the stage for an Oct. 28 agreement between Estonia, Latvia and Lithuania to create a joint venture company known as the RB Railway Group as a means of executing the Rail Baltica project. Under the agreement, each state will provide 650,000 euros (roughly $810,000) in startup capital for RB Railway and hold a 33.3 percent share in the company. The formation of this joint venture company was a prerequisite for the rail project to be eligible for funding from the European Union's Connecting Europe Facility, which has a budget of 26 billion euros to allocate for transport projects within the European Union for the 2014-2020 funding period. With an estimated cost of 3.7 billion euros, Rail Baltica would be the largest infrastructure project in the Baltic region, and without EU assistance, the states would be unable to finance it. The application to obtain EU funding for Rail Baltica must be finalized by 2016.

The implementation of the rail project will happen in phases. The first phase, which is underway, is the construction of a standard-gauge railway from the Poland-Lithuania border to a new intermodal terminal in the Lithuanian city of Kaunas. The first phase is set to be completed at the end of this year. The second phase would then convert the current 1,520-millimeter gauge on rails from Kaunas to Vilnius to a dual-gauge system by 2016. A dual-gauge line would then be extended to Riga and Tallinn. Construction is slated to begin on the Estonian section in 2017 or 2018, and on the Latvian section in 2020, pending the Connecting Europe Facility's approval. So although the cross-Baltic rail project is not yet finalized, the establishment of the RB Railway joint venture company was an important step for the Baltic states.

The rail project's broader implications

Since Rail Baltica is largely a north-south project, it will not necessarily have a significant impact on the east-west routes that connect the Baltic states to Russia. Indeed, the Baltics themselves have said they want to continue using the broad-gauge track for trade with Russia, as well as trade between the European Union and Asia. (For example, Latvia is the starting point of the Northern Distribution Network from Afghanistan.) As the plans for dual-gauge tracks show, Rail Baltica is more about expanding the Baltics' trade and connections with each other and the European Union than replacing their connections with Russia.

There is a security component to Rail Baltica as well. In the context of the current crisis in Ukraine and greater military posturing from Moscow in the region, the Baltic states are afraid of Russia. A better rail connection with Europe would enable NATO forces to react more quickly to crises, especially in terms of moving high volumes of armored vehicles in the event of an emergency. It would also complement the Baltic states' other efforts to reduce their reliance on Russia, such as their push for greater energy diversification and regional integration on the natural gas front.

Rail Baltica will therefore help address a number of the Baltic states' strategic concerns. In 10 years' time, rail travel between Tallinn and Warsaw may be just as easy and efficient as traveling from London to Paris and from Berlin to Prague. As railway connections improve, the Baltic states will be able to retain their connections to Russia while becoming less isolated from the rest of the Continent, bringing the Baltics further into the European fold.

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