November 13, 2020

How Does the Three Seas Initiative Help Estonia?

Estonia must find a balance between the US and Europe.

The summit of the Three Seas Initiative and an associated business forum that were originally supposed to take place in the spring would have been landmarks in Estonia’s foreign-policy calendar this year. The event now planned will be much more modest, as befits the coronavirus era. The meeting will be held via video.

What is the Three Seas Initiative?

The Three Seas Initiative (TSI) is an idea launched in 2015 by the presidents of Croatia and Poland with support from the US with the aim of developing and creating transport, energy and digital sector connections and infrastructure along a north-south axis in Central and Eastern Europe. So far, 12 countries have joined: Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. The European Commission, Germany and the US are partners of the project.1

This is an ambitious venture, the main aim apparently taken from an old-school US textbook on diplomacy: bring together several small and medium-sized countries to expand their influence and power through cooperation. As we know, in Eastern Europe the north-south axis runs through smaller countries whose markets are too small to interest investors. However, if these countries were to take on joint projects, investment would start to make sense.

The role of US taxpayers in this is small. US Secretary of State Mike Pompeo has announced that the US government will provide seed money of up to one billion dollars.2 In US terms, this is a pittance. In addition, contributions are expected from the countries that joined the initiative, of which Poland, Romania, Estonia, Latvia and Hungary have already promised to provide their share of the budget. It is hoped a total of three to five billion euros will be collected. This money will go towards the Three Seas Initiative Investment Fund, managed by a supervisory board on a commercial basis.

All this is still an idea, but the framework is slowly taking shape: the investment fund has been established, ministers are communicating and making plans, while the purpose of the forthcoming summit is to increase the practicability of the partnership and hone its details. I have heard the project is unofficially known as the new Marshall Plan for Europe, referring to the economic aid the US provided to Europe after World War II.

There are several suggested projects that the investment fund could support, although some of them are questionable. A lot of emphasis is placed on creating energy connections on the north-south axis, so as to disconnect Eastern and Central Europe from their historical ties to Russia—for example, by constructing an LNG terminal on the island of Krk in Croatia, from where gas would be piped to Hungary and Slovakia.3 Estonia is interested in developing digital connections, e.g. creating a digital highway to enhance data sharing.

At the same time, some of the suggested projects are already underway and supported by the European Commission, such as the gas interconnector between Poland and Lithuania. Similarly, Estonia has submitted Rail Baltic and the synchronisation of the Baltic energy networks, which the European Commission has already greenlighted, as its pilot projects. Thus, the role of the TSI and the investments that flow from it is questionable.

The EU and Germany

Given the European location of the regional effort, one might ask whether the TSI is related to the EU and, if so, how. This issue is the weakest part of the initiative’s design, which shows that the US played a large part in developing the project, which explains the rather lukewarm reaction from the European partners and their low level of engagement in the early stages of the project.

Here we run into a considerable problem. The national investments by Estonia and other participating states are already closely connected to EU projects. This means that it is complicated to find new funding for and offer guarantees to new projects.

In addition, current EU projects include a growing set of principles that member states follow. For the Nordic and Baltic states, the infrastructure to be constructed must allow for the transit of military equipment within the region. Are investors prepared for the additional expense needed to follow these standards?

The EU has a major role in leading cross-border infrastructure projects and it is difficult for third parties to get in on the game. The fact that Washington did not foresee this is surprising, and perhaps indicates that the US does not understand how things are done in the EU.

Failing to involve the EU and Germany gave rise to negative feedback in the early stages; the TSI was seen as an anti-EU and anti-Germany undertaking. President Donald Trump’s personal support further exacerbated Western European criticism. Germany’s involvement is still not certain due to Poland’s opposition, and thus the country is a partner rather than an official participant, but the president of Germany will take part in the forthcoming summit.4

Leaving Germany out highlights another question yet to be discussed: does Estonia want a direct connection to Southern Europe and, if so, to what extent? For Estonia, it is crucial, for both security and economic reasons, to have a reliable connection with Germany and the rest of Western Europe that lies beyond it.

The 12 States

The list of countries that participate in the TSI challenges all kinds of mental maps that divide Europe into sections based on various characteristics. Those who have had the chance to hear Edward Lucas talking about the nature of Eastern Europe will know what I mean.5

The involvement of Austria is not sufficient to call the initiative an Eastern European venture. So it is strange that Georgette Mosbacher, the US Ambassador to Poland, referred to Soviet history in relation to the initiative.6 However, the TSI brings a fresh angle to this constant search for identity. If we look at these countries together, the combination seems odd by today’s standards. To quote one diplomat: “What do we [Estonia] have in common with Bulgaria?”

This may be an erudite question, but it has a point. The countries often do not share common interests in the EU and prefer to cooperate in regional partnerships like the Baltic states, the Visegrád Group and the Bulgaria–Romania tandem. Austria is the most unusual member of the group.

The TSI is also a digression from the general principle of Estonia’s Europe policy, based on which it has tried to stay away from various Eastern European groupings. Sometimes this cannot be avoided, but active participation in the venture raises the question whether the policy is changing.

The Three Seas Initiative vs. 17+1

The geopolitical importance of the TSI has grown since it was launched. While the project’s geopolitical angle initially proceeded from the aim of weakening Eastern and Central Europe’s ties to Russia, in the past few years the project seems to be increasingly “against China”.

The 17+1 initiative—the multilateral cooperation network headed by China—is the crown jewel of Beijing’s foreign policy,.7 US global power is about bringing countries together and facilitating their cooperation, and 17+1 is an example of China trying to create a similar capability.

The two formats have similar memberships, but 17+1 includes Albania, Bosnia and Herzegovina, Greece, North Macedonia, Montenegro and Serbia. The other 12 overlap and thus it is difficult to argue that the two initiatives are not in competition. It is too early to claim that this is a battlefield in the global struggle between China and the US, but it would still be wise to keep an eye out for it.

Although the future of both formats is undecided, the decision by the Trump administration to support the TSI is reason enough to talk about it today. It was the Obama administration’s baby and it is logical to presume that Joe Biden would support it, but one cannot be sure that things will remain the same if he is elected president.

The future of 17+1 is even more uncertain. While Washington may be safe in the knowledge that the countries involved want to cooperate with it, this is not true for China. Attitudes in Europe towards China have become rather negative in the past two years. Moreover, 17+1 lacks substance and its members are beginning to voice their concerns loudly. Besides a few fancy photo ops with Chinese leaders, the format has no results to show and has no future.

Estonian foreign minister Urmas Reinsalu has said that Estonia should leave 17+1.8 Vilnius is also dissatisfied, while the Latvians tend to express their opinions more cautiously. There are several choices available: leaving individually or as part of a group, or remaining a member but investing only a minimal amount of resources. Whatever the decision, it will have a negative effect on relations with China.

The TSI and Estonian Foreign Policy

Those who follow Estonian foreign policy will have noticed how the TSI gives rise to opposing opinions.

It has the political support of president Kersti Kaljulaid and is backed by the government at Stenbock House. Foreign minister Reinsalu is a stalwart proponent. But the initiative is frowned upon by diplomats, foreign-policy observers and analysts.

Moreover, it has highlighted the fault lines between supporters of Europe and of the US. One does not rule out the other, but there are conflicts when stakeholders must decide whether Estonian foreign policy needs to prioritise relations with the US or with Europe.9

Balance is the key here and Estonia’s biggest concern is that European and US interests might contradict each other. For Estonia, both Europe and the US are extremely important, mainly from the point of view of security but also in economic terms. This is why president Trump’s policy of setting Europe against the US is the most significant foreign-policy development from this continent’s perspective in the last four years. As a result, we must cultivate both relationships in parallel, and Estonia cannot allow the differences between Europe and the US to be highlighted to its disadvantage or decide that today is the best day for making existential decisions.

The TSI’s most important added value for Estonian foreign policy is in providing Tallinn with a direct connection to the White House and Foggy Bottom [home of the US State Department—Ed.]. Estonia has something to talk about with Washington and, amidst the pandemonium in which each country is fighting for US attention, this amounts to political capital that should not be underestimated. That is why political support for the initiative in Tallinn is solid.

From Washington’s point of view this means that, if the White House lost interest in the TSI, it is highly likely that Estonia and several other countries would contribute considerably less to the format. It is clear the European partners have their self-interest in mind and there is no use denying it.

The initiative highlights the weak point in Estonian-US relations: they are too focused on security. But it can serve the purpose of diversifying the relationship in the hope of strengthening the economic axis in addition to security and military cooperation over time. The tighter the ties between Estonia and the US, the stronger and more sustainable the bilateral and multilateral partnership will be.

From a regional perspective Estonia stands out as a leader and, if the format is successful, it will be a diplomatic victory for the country. There is a reservation, however. President Kersti Kaljulaid has a big role in leading the initiative. Just as with the US elections, we must consider the possibility that, if a new Estonian president is elected, Estonia’s role in the TSI and its leadership may change.

Conclusion

A single critic can criticise more than ten movers and shakers can achieve, and this also applies to the Three Seas Initiative. Several aspects of the venture invite scrutiny, from the nature of the projects to the limited overlap of participants’ interests.

At the same time, Estonia and the entire region tend to suffer from a lack of ideas and strategic partnerships. We will see whether and, if so, how the TSIdevelops, but I think the idea and its level of ambition are commendable.

It should be simply decided how much to invest and what field would suffer as a result. If this is European solidarity, I would be concerned. Where does the perfect balance lie, and are the stakeholders even trying to find it?

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1 vm.ee/et/kolme-mere-algatus-3si

2 news.err.ee/1035828/us-to-put-up-to-1-billion-towa…

3 fas.org/sgp/crs/row/IF11547.pdf

4 ies.lublin.pl/pub/2020-01/RIESW_2019-3-03.pdf

5 www.youtube.com/watch?v=BcTOSxcv2_o

6 www.politico.eu/article/three-seas-central-to-cent…

7 www.ifri.org/en/publications/notes-de-lifri/asie-v…

8 www.err.ee/1127429/reinsalu-vihjas-eesti-voimaliku…

9 Matti Maasikas, “Ankur või kompass – Euroopa Liit kriisiolukorras”, Riigikogu Toimetised 41/2020, p. 24, rito.riigikogu.ee/wordpress/wp-content/uploads/202….