Weight in Europe

The Nordic countries are one of the most successful regions in the world in terms of quality of life, social environment, and work culture. However, political scientist Mindaugas Jurkynas says that in order to remain one of Europe’s – and the world’s – most prosperous regions, to be leaders in innovation, and to create conditions for further economic and social development, the Scandinavian countries must closely cooperate with each other and the Baltic states.

This direction has been on the agenda of Lithuania’s foreign policy for several decades now. In 1992, the Nordic Baltic 8 (NB8) came into existence, an informal panel for cooperation among Nordic and Baltic governments.

“Our geographic belonging to and close geopolitical relations within structures like NB8 shows that ties are quite strong. And if we think about our would-be joining the Nordic electricity market, the number of physical links with Northern Europe is only increasing,” Jurkynas predicts.

Investment growing

Lithuania openly admits that help and support from countries in the region can lend it more weight on the European and transatlantic level.

The Nordic countries have always been among the most vocal supporters of Lithuania’s transatlantic integration. “If the Nordic states were one country, it would be number one investor in Lithuania, not to mention financial support for Lithuania’s civil society, democracy, and other processes that was crucial to us as a developing, newly-independent state,” Jurkynas says.

Milda Dargužaitė, general manager at Invest Lithuania, also points out that when it comes to direct investment in Lithuania, the Scandinavian countries are unrivalled leaders.

“Scandinavians regard us as a local market, we must make use of it,” says Dargužaitė. For instance, new investment projects for 2012 are expected to come from Lithuania’s major investment partners: Germany, the Netherlands, the United States, Sweden, Norway, Denmark, and Finland.

The biggest investment into production is planned by Denmark’s Danspin (41.4m litas, 12m euros) which is to open a spinnery in Raseiniai.

“According to our calculations, investors already working in Lithuania should employ about 1 thousand more people who speak a Scandinavian language within the coming years. We think there’s a similar demand from other companies, too, so the number might be twice as big. There’s a demand for engineers, accountants, finance professionals who are fluent in one of the Scandinavian languages. We are also talking to new potential investors who would be interested in setting up service centres, mostly to work with the Scandinavian countries. These could employ up to 4 thousand people who speak Danish, Swedish, Norwegian, or Finnish,” Dargužaitė reveals future ambitions.

Bearing this in mind, four of Lithuania’s ministries signed a memorandum on measures to increase teaching of the Nordic languages.

According to fDiMarkets data, between January 2003 and May 2012, Scandinavian companies have implemented 72 direct foreign investment projects in Lithuania. This represents 20.8 percent of the total foreign direct investment and amounts to 1.28 billion euros.

These projects have created 6,173 new jobs in the country. On average, one Scandinavian investment project contributes 85 jobs to the Lithuanian labour market and is worth 17.71 million euros.

Window to the East

According to Jurkynas, the Nordic countries are reliable partners of Lithuania in the areas of defence, energy, and economy.

“These are transparent and wealthy countries. They do whatever they say they will. They do not make promises they cannot keep. The Nordic countries care much about dignity, pragmatism, consensus – something we could learn from them as well,” he says.

The Nordic countries are also famed for high political culture and a good record of their state institutions and public sectors. “They have enviably strong labour unions. They make agreements with the government that guarantee social stability. The Nordic countries serve as mediators in various conflicts and pay much attention to humanitarian project, therefore they are often dubbed the world’s moral conciousness. That’s a reputation very hard to earn,” Jurkynas thinks.

Meanwhile, many find Lithuania much in want of social responsibility, authority emanating from state institutions, devotion to work, and, finally, political stability. Do the Nordic countries see us as a solid, predictable partner? Do we come across as a reliable democratic society?

“The Nordic countries doubtlessly value us as a state that has made immense progress over the last twenty years – in terms of politics, law enforcement, human rights. The Baltic countries have internalized the principles of market economy and created favourable environment for business. Scandinavians do come to our relatively small markets, because we provide a window to much bigger eastern markets. Our business environment is significantly more favourable and stable than over there. We have dynamism while our ability to adapt to changes shows great potential,” Jurkynas says.

More space for cooperation

In his view, the Baltic countries are already equal partners to Scandinavians. Trademap data show that Lithuania’s export to the Scandinavian countries grows each successive year and already exceeds that to neighbouring Poland – last year, it totalled 7.3 billion litas (2.1 billion euros). Lithuania mostly exports furniture, timber and wooden ware, plastic, tobacco, iron and steel ware, etc.

However, economic ties are not all. “The Northern direction is particularly stressed in Lithuania, yet politicians should put their money where their mouth is, which also includes money from the state budget. I mean funding for joint Lithuanian-Scandinavian ventures and initiatives. We should think about various student and scientist exchange programmes, joint projects for experts, media professionals,” Jurkynas suggests.

Besides, he says, the Nordic countries should be viewed by Lithuania as strategic partners and not an alternative to something else.

“Let’s not forget that we have Poland at our side – some may like it, some may not, but one must admit that, bearing in mind our geopolitical situation, infrastructure, future gas links, ambitions for energy diversification and joining Western European electricity grids, Poland is the only gateway,” political scientist Jurkynas notes.

72 projects

Scandinavian companies mostly invested in financial services (17 foreign direct investment projects), consumer goods (9 projects), industrial equipment (7), textiles (4), electronic components (4), cargo transportation (4). Most of these were in production (30), business services (18), and sales (15). Most projects in Lithuania were carried out by banking companies (Den Norske Bank, Skandinaviska Enskilda Banken, Danske Bank), furniture manufacturers Svenheim and Hjellegjerde, electronic equipment maker Kitron, real estate investor Anders Wilhelmsen Group, heating equipment producer Adax, engineering consultancy firm COWI, logistics company Bjork Eklund Group (re-branded this February as Greencarrier).

Between January 2003 and May 2012, Scandinavian companies carried out 72 direct foreign investment projects in Lithuania: 31 from Sweden, 26 from Norway, 13 from Denmark, and 2 from Iceland (source: fDiMarkets).

In 2011, the greatest increase in foreign direct investment came from Sweden (3.8 billion litas), Canada (1.2 billion), the Netherlands (373.3 million), and Finland (331.2 million). The decrease was reported in FDI from Estonia (-2.2 billion litas), Denmark (-648.9 million), and Luxembourg (-498.8 million).

Nordbaltic

The Nordic and Baltic countries have a combined population of 32 million, producing an annual GDP of 1.5 trillion US dollars. The region is fifth-biggest European economy or 10-12th in the world.

The region is number eight in the world by export and number six by aggregate investment. The Nordic and Baltic states have a rather good record according to various international criteria (like the Human Development Index), putting them among the most advanced nations in the world.

NB8

The Nordic Baltic 8 is an informal cooperation panel among Nordic and Baltic governments established in 1992. NB8 homepage can be accessed at http://nb8.mfa.lt

Each year, one country presides over the agenda of NB8. The country is responsible for calling and hosting intergovernmental meetings. Lithuania is coordinating NB8 this year, planning to host several dozens various events and meetings.

Over the first half of 2012, Lithuania has already hosted over a dozen of expert meetings to discuss foreign policy, defence, energy, electronic security, justice, finance, gender equality, development. NB8 and UK prime ministers met in Stockholm to discuss important social policy issues; NB8 countries expand cooperation to other areas as well, like nuclear safety.

A meeting of Nordic and Baltic foreign ministers is scheduled for 3-4 September in Vilnius. The ministers will discuss Nordic-Baltic cooperation, EU Eastern Neighbourhood, and developments in the Middle East.