Funding Pathway Identified for Three Seas Initiative

by Paweł Markiewicz, Ph.D.

 

Inicjatywa Trójmorza, która ma na celu poprawić infrastrukturę oraz bezpieczeństwo energetyczne krajów położonych w regionie między morzami Bałtyckim, Adriatyckim i Czarnym, wkrótce będzie sfinansowana. Polski Bank Gospodarstwa Krajowego przygotowuje się do wyboru menadżera kapitału,  który skupi się nad wdrożeniem projektów Trójmorza mających na celu między innymi wzmocnienie współpracy oraz łączności krajów w tym w regionie. Przygotowanie kapitału przez Polski Bank Gospodarstwa Krajowego jest pierwszym konkretnym krokiem do realizacji około 48 projektów w zakresie energetyki, infrastruktury i technologii w regionie Trójmorza. Najważniejsze z tych planowanych przedsięwzięć są związane z sektorem energetycznym. Budowa korytarza energetycznego łączącego północne regiony Trójmorza z południowymi zapewni państwom na tym obszarze niezależność dostaw energetycznych a, co ważniejsze, zneutralizuje wpływy i monopol Kremla na europejskim rynku energetycznym.

 

The Central East European Project is Making Progress toward Realizing Key Goals

The Three Seas Initiative (3SI), the East Central European long-term venture to boost infrastructure and gain energy independence from the Kremlin, is a step closer to gaining concrete financing. Up until this point, the initiative – spearheaded by Poland and Croatia and approved by President Trump as a means of curbing Kremlin energy supply monopolization – was mostly a promising vision for Central Eastern Europe. With the appearance of financing, the 3SI can begin to move from rhetoric to realization with investments from Western European countries and the United States.

Poland’s State Development Bank (Bank Gospodarstwa Krajowego) is currently on the verge of choosing an asset manager to oversee the Three Sea’s planned $5.7 billion fund. According to Paweł Nierada, deputy CEO of the State Development Bank, the asset manager will serve as an independent body within the fund’s geographical mandate, focusing on projects supporting regional interconnectivity in Central Eastern Europe. “The fund will be free to invest broadly: in equity and other instruments, perhaps without guarantees”, Nierada commented.

The $5.7 billion which the Polish State Development Bank plans to inject in the Three Seas Initiative would make it a core partner along with other regional developmental banks. According to Nierada, a short list of candidates for the asset manager position will be compiled by mid-March. Once chosen, the new manager will be tasked with topping up the Three Seas fund with private investor funding in order to reach the financial target and managing it.

In addition to these funds, the Three Seas partners have pledged to use $2.84 billion by 2020 of European Union Investment and Structural funds for regional 3SI projects.

Besides providing political support, the United States is also aiming to help spur private investment in some of the 3SI projects. Speaking at the Three Seas Business Forum in Bucharest, US Energy Secretary Rick Perry announced the Partnership for Transatlantic Energy Cooperation (P-TEC) to help raise projects to the highest levels of political and economic agendas, making them more visible and attractive. Perry hopes that this visibility will attract substantial investment from US and multinational businesses which could work in partnership with Central East European governments to build the energy and transportation infrastructure pledged in the Three Seas Initiative.

3SI’s ultimate goal is to promote regional connectivity in the spheres of infrastructure, energy and digital projects in Central Eastern Europe; what the nations of that region see as the means of creating an emerging backbone of European resilience. During the 2018 Bucharest Summit, the 3SI countries agreed to 48 priority interconnection projects. These include: energy interconnectivity between the LNG port in Świnoujście (Poland) and Krk (Croatia), a north-south highway, the completion of a water corridor between the Elbe-Danube-Oder Rivers, and developing regional telecommunications infrastructure through fiber optics and 5G technology.

Perhaps the most important projects are ones associated with energy independence. The creation of a north-south regional energy corridor would certainly contest the current east-west one flowing from Russia. According to Ian Brzezinski and David Koranyi: “For more than half a century after the end of World War II, infrastructure interconnections on the continent focused on the development of the East-West axis. During the Cold War, pipelines that delivered Soviet oil and gas to Central and Eastern Europe also served as tools of submission and control.”

For the 3SI nations, creating the north-south energy corridor will be the definitive step toward decreasing regional reliance and influence on Kremlin energy imports and monopolization which to date have prioritized connections with Western states. The planned Nord Stream 2 natural gas pipeline, a project to which Poland and the US are both very critical of, would only be an extension of Kremlin east-west influence. According to Poland’s Ambassador to the US Piotr Wilczek, “The project [Nord Stream 2] is divisive and essentially anti-European… Russia has a history of using energy for political coercion. The question is whether Europe and the US will stand together against Russian aggression.”

The construction of a north-south energy line in the 3SI region will correct the heretofore energy imbalance by forming an alternate market and reliable corridor for Central Eastern Europe. Creating a competing energy market and modernized region in the 3SI area will also raise East Central Europe to a developed level, undoubtedly forcing Western Europe to recognize its potential and treat it as a key player and voice in the European Union rather than simply as the EU’s periphery. Perhaps this will force a fusion and integration yet to be seen in the EU. On the contrary, the economic strengthening of Central Eastern Europe could shift the balance of power on the European continent away from the traditional centers.

For the US, the chief international advocate of the 3SI, the project would also give it a good footing in Europe among allied nations, checking Kremlin and Chinese economic and geopolitical competition in an emerging global market. Taking last year’s three major liquefied natural gas (LNG) deals between Poland and the US as an example, it can be safely concluded that American-supplied LNG gas can compete with Russian-piped gas on the European markets.

The greatest threat to the 3SI will be defending it once all projects are complete. For this reason, according to Julian Wieczorkiewicz and Dominik Jankowski, the NATO alliance will be forced to: give more prominence to energy security, especially at political consultations; work with the international community to enhance energy resilience; and compelling the 3SI regional countries to work with Ukraine in creating a regional gas hub or storage sites for future gas supplies. Regular NATO visits to LNG terminals located in the Baltic Sea would be a visible sign of alliance commitment to the energy security of its partners. However, NATO also must begin conducting exercises which include energy security issues in scenarios. In this way future hybrid threats can be countered while also building civil preparedness against them. Of course, the greatest deterrent would be strengthening NATO’s eastern flank with permanent US troop bases in the region – a topic gaining more attention and discussion of late as Poland seeks to be a core of NATO and the center of US military presence in Central Eastern Europe.

 

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Pawel

Paweł Markiewicz specializes in 20th century East-Central European history. He earned his Ph.D. in modern European history at Jagiellonian University in Cracow, Poland. He comments on historical and modern events in that region.

 

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