SEIMAS OF THE REPUBLIC OF LITHUANIA

SEIMAS OF THE REPUBLIC OF LITHUANIA SEIMAS OF THE REPUBLIC OF LITHUANIA RESOLUTION ON THE PARLIAMENTARY REPORT DRAFTED BY THE COMMITTEE ON EUROPEAN AFFAIRS OF THE SEIMAS OF THE REPUBLIC OF LITHUANIA “THE EUROPEAN UNION STRATEGY FOR THE BALTIC SEA REGION AND THE ACTION PLAN FOR IMPLEMENTATION OF THE EUROPEAN UNION STRATEGY FOR THE BALTIC SEA REGION:  LITHUANIA’S STANDPOINT” 20 January 2010  No XI-665 Vilnius The Seimas of the Republic of Lithuania, having regard to the Resolution of the Seimas of the Republic of Lithuania of 19 April 2007 on the Baltic Sea Strategy; welcoming the Communication of 10 June 2009 from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions concerning the European Union Strategy for the Baltic Sea Region and the Action Plan for Implementation of the Strategy; noting the Presidency Conclusions of the European Council of 30 October 2009 endorsing the European Union Strategy for the Baltic Sea Region and calling to act speedily to ensure its full implementation, hereby r e s o l v e s: Article 1. To approve the parliamentary report drafted by the Committee on European Affairs of the Seimas of the Republic of Lithuania on the European Union Strategy for the Baltic Sea Region and the Action Plan for Implementation of the Strategy: Lithuania’s Standpoint” (attached). Article 2. To propose that the Government of the Republic of Lithuania consider and submit proposals concerning implementation of the conclusions of the parliamentary report drafted by the Seimas Committee on European Affairs. speaker of the seimas                                                            irena degutienė                                                                                                                                                                             Annex to Resolution No XI-665 of the Seimas of the Republic of Lithuania of 20 January 2010 EUROPEAN UNION STRATEGY FOR THE BALTIC SEA REGION AND THE ACTION PLAN FOR IMPLEMENTATION OF THE STRATEGY: LITHUANIA’S STANDPOINT Parliamentary report SUMMARY On 16 November 2006, the European Parliament adopted a resolution calling to come up with a Baltic Sea Strategy for the Northern Dimension. In December 2008, the European Council took a decision placing the European Commission under the obligation to draft such a document by June 2009. On 10 June 2009, the European Commission issued a Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions concerning the European Union Strategy for the Baltic Sea Region (COM(2009) 248). The drafting of the Action Plan for implementation of the Strategy (SEC (2009) 712) was concurrently commenced. On 29-30 October 2009, the European Council adopted the European Union Strategy for the Baltic Sea Region and endorsed the conclusions noting the following: ‘This Strategy constitutes an integrated framework to address common challenges, i.e. the urgent environmental challenges related to the Baltic Sea, and to contribute to the economic success of the region and to its social and territorial cohesion, as well as to the competitiveness of the EU.’ Moreover, the European Council called upon all relevant actors to act speedily and ensure full implementation of the Strategy, which could constitute an example of macro-regional strategy. Therefore, the European Commission is under the obligation to present to the Council a progress report on this Strategy by June 2011. On 19 April 2007, the Seimas of the Republic of Lithuania adopted a resolution welcoming the initiative of the European Parliament as regards the drafting of the European Union Strategy for the Baltic Sea Region; the new policy of the European Union would promote a close cooperation of eight EU Member States in the fields of environmental protection, economy, culture, education and security.  On 6 and 11 February 2009, the Seimas Committee on European Affairs resolved to form a working group of the following composition: Petras Auštrevičius, Vytenis Povilas Andriukaitis, Gediminas Kirkilas and Egidijus Vareikis, and obligated it to draft a parliamentary report on the European Union Strategy for the Baltic Sea Region reflecting the standpoint of the Seimas of the Republic of Lithuania as an institution of parliamentary supervision on this important issue. Advisers of the Office of the Committee on European Affairs of the Office of the Seimas Julius Glebovas, Evaldas Sinkevičius and Assistant Tadas Paulavičius participated in the drafting of the parliamentary report. The Baltic Sea Region is currently home to approximately 100 million people. The importance of the Baltic Sea and the impact of the region from the geopolitical perspective grew considerably as a result of the major enlargement of the European Union (the EU) in 2004, with the Baltic Sea almost becoming the EU’s ‘lake’. The majority of such challenges as ecology and environmental protection, sustainable development and security of the population are becoming a joint decision and well-coordinated action of all countries of the region rather than a concern of a single EU Member State. The Baltic Sea Region has old traditions of cross-border and regional cooperation, which consolidated and took new forms in the past decades, following the opening of national borders and elimination of the obstacles created by the Cold War. Regardless of considerable disparities in terms of economic development, the Baltic Sea Region can provide excellent examples of the development of a competitive and knowledge-based economy, hence enhanced cooperation and the taking advantage of best practices are among the guarantees of success. All eight EU Member States, namely, Denmark, Estonia, Latvia, Poland, Lithuania, Finland, Sweden and Germany, are participants of the EU Lisbon strategy, which is a cornerstone initiative ensuring the global competitiveness of EU Member State economies. It should also be noted that the EU Member States located in the Baltic Sea Region are still not fully integrated into the economic and monetary union, because as few as two out of eight EU Member States are full-fledged members of the euro zone.  In its own turn, Lithuania must take advantage of the neighbourhood opportunities provided in the area of cross-border cooperation and development of economic relations with Belarus and the Kaliningrad Oblast of the Russian Federation. Ecology, climate change and environmental sustainability are among the key problems of the Baltic Sea which the countries of the entire Baltic Sea Region come across. The EU Strategy for the Baltic Sea Region raises requirements to enhance the region’s sustainability and security. It should be acknowledged that a simple, clear and efficient cooperation that would also be well-coordinated and based on concrete actions is currently needed to address ecological and environmental challenges and should also involve other states of the region: Norway, Russia and Belarus. The parliamentary report raises the issue of eutrophication, the environmental threats posed by implementation of the Nord Stream project and stresses the aspect of energy security. A strategic position which is favourable from the transport perspective promotes intensive maritime activities in the Baltic Sea. Another important issue addressed in the report is combating crime. Cross-border crime requires close cooperation and coordinated action of border and law enforcement services. In its turn, Lithuania is particularly interested in as speedy and efficient as possible implementation of decisions in the field of energy taking into consideration regional cooperation. The Baltic Sea Region is important in terms of ensuring a smooth passage of transit cargoes from the West to the East and from the East to the West. The transport infrastructure of the Baltic Sea Region is of considerable importance for the global economy. It should be noted that due to its specific features, the common transport policy must include not only EU Member States, but also the non-EU Member States located on the eastern coast of the Baltic Sea.  The transport projects not linked with the East-West transport corridors under construction lack long-term viability. In implementing the Strategy for the Baltic Sea Region, a matter of importance is seeking enhanced action coordination not only among the countries’ institutions or the public sector. Stressing cooperation in the private sector is equally important, because all activities at sea and in the areas around the sea require integrated management and implementation of the principles of sustainable development. In this respect, the role of the states which have been assigned the function of action coordination is of utmost importance. The Seimas of the Republic of Lithuania believes that the initiative of the EU institutions, namely, the EU Strategy for the Baltic Sea Region, will constitute a decisive factor stipulating, in political and legal terms, the instruments of enhancing cooperation of the countries around the Baltic Sea, setting of mutual priorities and their joint and efficient implementation. This parliamentary report aims at urging the Government of the Republic of Lithuania, the country’s social and economic partners, non-governmental organisations, also other states of the region to actively implement the EU Strategy for the Baltic Sea Region and create additional political preconditions for improving the welfare and security of the Baltic Sea Region. We shall strengthen the role of Lithuania as an active state of the Baltic Sea Region by making use of the Lithuanian Presidency at the Council of the Baltic Sea States in 2009-2010 and taking an active part in the development and implementation of the EU Strategy for the Baltic Sea. We shall promote regional cooperation of the Baltic Sea States in the fields of energy, transport, environment, cultural heritage protection, tourism development and strengthening of human relations, and we shall involve the Kaliningrad Oblast of the Russian Federation and Belarus into this cooperation. Programme of the Government of the Republic of Lithuania approved by Resolution No XI-52 of the Seimas of the Republic of Lithuania of 9 December 2008 (Official Gazette, No 146-5870, 2008). INTRODUCTION The Baltic Sea was formed several tens of thousands years ago. It was known for the amber found in it (approximately 80 per cent of amber in the world is extracted in the Baltic Sea Region), which became an important object of international commerce as early as in the times of the early Roman Empire. The Baltic Sea linked the nations around it from the economic, political and cultural perspectives. It should also be acknowledged that the history of the Baltic Sea Region States, notwithstanding a relatively small territory of this region, has never experienced a single prevailing tendency providing the region with a sense of community. For instance, in the Middle Ages, the states of Northern Europe were first and foremost competing among themselves and did not have a major impact on the development of Lithuania and Poland in this region. Germany’s interests were focused on various neighbouring regions of Europe, hence the Baltic Sea Region evidently lacked Germany’s attention and possibilities of exerting impact. Russia has been present in the Baltic Sea Region for a period as short as three centuries and its presence was highly limited for a long time. The impact of the Baltic Sea on the development of the way of living of the nations around the Baltic Sea is also rather complex. Over centuries, the sea has had a tremendous importance for Danes or Swedes, while its impact on the life of Lithuanians has been considerably smaller. The Vikings, who were dominant in the western part of the Baltic Sea at the beginning of the previous millennium, do not even have comparable equivalents on its eastern coast. Religious differences of the region (between Lutheran Protestants in the north and Roman Catholics in the south) also show the heterogeneous nature of the region’s identity. The languages prevailing in the region should be given particular attention: Germanic, Scandinavian, Baltic, Ugro-Finnic and Slavic languages. Especially relevant is the fact that in this region, there are the most archaic living Indo-European languages, that is, the Lithuanian and Latvian languages. In a territorially compact area, there are a large number of completely different languages leading to other ethno-cultural differences, which provide no basis for claiming the existence of a single dominant ethnic identity of the region. However, regardless of the existing differences, the development of the Baltic Sea Region States has always been closely linked with the sea, which had and still has an impact on the development of the culture of the nations, shaping of self-awareness and national identity, the economic, social and political environment. The Baltic Sea Region was particularly exposed to consequences of the coercion of the totalitarian regimes and the Cold War. For fifty years, the region was divided by the Iron Curtain, which forcibly separated the states of the eastern and southern sides of the sea (Lithuania, Latvia, Poland and Estonia) from the democratic life in the West based on sovereignty, human rights and the rule of law. Civil resistance and aspiration for freedom encouraged the Baltic nations and Poland to seek liberation from the totalitarian oppression in the 1980s. The national liberation movements (Sąjūdis in Lithuania, Solidarność in Poland, Tautas Fronts in Latvia and Rahvarine in Estonia) were the principal centres of civic and political initiative which gradually altered the totalitarian system existing in Eastern Europe. The re-established independence of the Baltic States and democratisation of Poland permitted to take a new view of and evaluate regional cooperation through consolidation of democracy and market economy of the West. Solidarity of the states of Northern Europe and Germany, active and year-long support provided to the Baltic States in consolidating statehood, improving administrative resources and sharing the experience of political and economic reforms should be given a high praise. The comprehensive reforms of a political and economic system carried out in the 1990s provided an opportunity and a firm foundation for a full-fledged come-back of the Baltic States and Poland to the western way of living. Extraordinarily speedy and radical reforms of the states of the south-eastern coast of the Baltic Sea allowed these states to join the European Union and NATO thus reinforcing in essence the political, economic and security foundations of the entire region. It may be claimed that the Baltic Sea Region has never had more European and trans-Atlantic dimension than it has currently. The EU Strategy for the Baltic Sea Region provides a historic opportunity of directing the development of the entire region towards consolidation of democracy through ensuring economic welfare as well as sustainable and environmentally-friendly interaction with the environment. The Baltic Sea Region is currently home to approximately 100 million people: 15 million – within 10 km of the sea, 29 million – within 50 km of the sea and approximately 22 million people live in 250 thousand settlements, out of which 90 per cent are concentrated within 10 km of the sea.  The largest number of residents in the Baltic Sea Region, if measured within 50 km of the shores of the Baltic Sea, lives in Poland (45 per cent), Russia (12 per cent) and Sweden (10 per cent), with less than 6 per cent in each of the remaining countries. The Baltic Sea Region is home to approximately 23 per cent of the entire population of the EU, however the gross domestic product (GDP) generated by the region falls below 20 per cent of the EU level. Approximately 67 per cent of the largest and fastest growing European enterprises entered in the 2007 Europe’s 500 belong to the states of the Baltic Sea Region. It is worthwhile noting that in 2007, this list contained 23 Lithuanian companies, whereas in 2006 such enterprise were as few as 4. Accession to the EU of the states located on the south-eastern coast of the Baltic Sea (Estonia, Latvia, Poland and Lithuania) has opened up new opportunities for taking advantage of the EU internal market. Over the past 15 years, these countries have created their own fast growing market economy and reached the average level of convergence with other states of the region. The geopolitical position, geographical proximity, a similar organisational model of society and historical as well cultural traditions assisted in promoting cooperation between the states of the region of benefit to absolutely all countries along the coast of the Baltic Sea. Investment of Germany and the states of Northern Europe in the countries of the south-eastern coast of the Baltic Sea have promoted the economic growth and competitiveness in these countries, has helped to update the infrastructure, acquire experience in developing the economy, public services and public administration. The private sector of Germany and the states of Northern Europe has been provided with an opportunity to take advantage of a favourable investment environment by developing business and take up a significant share of the market in the Baltic States and Poland ranging from banking, telecommunications and transport to retail trade in oil products and generic products. Over the past decade, the Baltic Sea Region has experienced a growing economic activity, the growth of economic competitiveness and employment. During the pre-crisis period, the GDP of the entire region had been growing for the past 6-7 years on average by approximately 6 per cent per annum. It should be pointed out that the potential of the countries of the Baltic Sea Region is being directed towards enhancement of competitiveness through promotion of research and development (R&D). Of considerable importance is the fact that the countries, especially those located in the north-western part, are making targeted investment in this field: Sweden (3.6 per cent of the GDP), Denmark (2.55 of the GDP) and Finland (3.47 of the GDP). Consequently, Finland, Sweden and Denmark have been listed as most competitive world economies for a number of successive years. In their own turn, during a certain period the countries of the south-eastern part (Lithuania, Latvia and Estonia) were considered as the fastest developing economies in Europe and sometimes even referred to as the ‘three Baltic Tigers’. The region is still characterised by a significant role of agriculture, which for the majority of the countries was a direct route towards industrial development and economic growth. Approximately 20 per cent of the territory of this region is used for agricultural purposes, mostly in Poland, Germany, Denmark and Sweden; 17 per cent of the territory is unused and another 8 per cent is occupied by water bodies. The majority of them are located in the Gulf of Bothnia and the Gulf of Finland. The remaining territory is populated. The agriculture and animal husbandry sector of the Baltic Sea Region is characterised by a fast introduction of innovations, successful scientific research in the processing of products, a well-developed and efficient end consumers’ supply chain. The agricultural sector plays an important role in using renewable energy resources in households and especially in the field of transport (use of biofuel in vehicles).  A mention should also be made of the fact that much attention in the region is devoted to ecological agriculture and animal husbandry. Intensive farming in the region also poses ecological challenges. Ecology and environmental protection are no longer the concern of a single EU Member State, but a joint decision and well-coordinated action of all the countries of the region. Specific measures of cooperation between the EU Member States of the region cannot be considered without stressing the need of better coordination of actions with Norway, also calling for the Russian Federation and Belarus to solve their topical and sensitive issues together with the entire region. The Baltic Sea Region must and can become not only the EU’s gateway to Central Asia and the Far East. It is necessary to further develop relations, consolidate the existing transport and energy infrastructure, which would help to bring Europe and Asia closer to each other. On the other hand, the present-day economic crisis allows the assumption that integration of the Baltic Sea Region States remains too weak, and disparities in the level of development are too large. The interdependence of economic and social relations is not sufficient and does not promote mutually beneficial cooperation between the countries of the region. Therefore, joint effort towards not only interconnection of the region’s infrastructure and energy networks with external factors, but also additional measures for promotion of cooperation between the countries of the region is required. Much attention needs to be devoted to the unresolved problems of consolidation of the region’s energy integration and common energy security, long-term effort and investment are required to alter the situation in the desired direction. Political initiative was needed to overcome the fragmentation of the EU Member States of the Baltic Sea Region and direct their effort towards attainment of common goals. It is probably not accidental that the origins of the EU Strategy for the Baltic Sea Region can be traced to a political institution, namely, the European Parliament. The Baltic Intergroup of the European Parliament undertook the first steps towards initiation of broader discussions on these topics. The active involvement of the Baltic Intergroup led to adoption by the European Parliament on 16 November 2006 of a resolution inviting to shape a Baltic Sea Strategy for the Northern Dimension. In December 2008, the European Council took a decision placing the European Commission under the obligation to draft such a document by June 2009.  On 19 April 2007, the Seimas of the Republic of Lithuania adopted a resolution welcoming the initiative of the European Parliament to develop the EU Strategy for the Baltic Sea Region; this new policy of the European Union would encourage eight EU Member States to more closely cooperate in the areas of environmental protection, economy, culture, education and security involving in this cooperation also the regions of the Russian Federation, namely, the Kaliningrad Oblast and the St. Petersburg Region. The resolution notes that all required actions and decisions must be taken at the national, regional and international levels in order to implement this strategy; the Baltic Sea states should provide for sufficient funding of programmes and actions in the Baltic Sea. The Seimas of the Republic of Lithuania urged national parliaments of the Baltic Sea states to actively join and participate in the shaping of the parliamentary policy of development and implementation of the Baltic Sea Region Strategy. Much attention must be devoted to dealing with the emergency situation in respect of the ecological condition of the Baltic Sea with a view to preventing new ecological disasters, hence all the states carrying out activities in the Baltic Sea are invited to abide by high environmental protection standards, the principles of justice and joint responsibility. Having regard to provisions of the mentioned resolution of the Seimas as well as the preparatory work and initiatives of the Government of the Republic of Lithuania, the Seimas Committee on European Affairs resolved on 6 and 11 February 2009 to form a working group charged with drafting of the parliamentary report on the EU Strategy for the Baltic Sea Region reflecting the standpoint of the Seimas of the Republic of Lithuania as an institution of parliamentary scrutiny on this matter of high importance. While drafting the parliamentary report, the working group organised round table discussions with the public, social and economic partners as well as state institutions. The discussions were held on the following topics: competitiveness, environmental protection, security, transport and the policy of protection of consumer rights. This report aims at urging the Government of the Republic of Lithuania, the country’s social and economic partners and non-governmental organisations to be active in implementing the EU Strategy for the Baltic Sea Region, create additional political preconditions for promoting the welfare and security of the Baltic Sea Region.  The Seimas of the Republic of Lithuania believes that the key priorities of the EU Strategy for the Baltic Sea Region should be as follows: 1) assuring of the quality of life of the population of the Baltic Sea Region and the economic attractiveness of the entire region by enhancing the competitive advantage of the economies; creation of a foundation and conditions for a long-term economic and environment-friendly growth of the new generation in the Baltic Sea Region, which will provide yet another stimulus for the economic growth in the entire EU; 2) promotion of the EU’s visibility and efficiency in the Baltic Sea Region and its attractiveness in neighbouring regions; 3) a new approach and coordinated action of all the states of the region in the areas of environmental protection and climate change; 4) close interaction of the policies and initiatives being implemented by the EU in the region and improved management, consolidation of relations with Europe's neighbours – the states of Central Asia. The Seimas of the Republic of Lithuania hopes that the initiative of the EU institutions, that is, the EU Strategy for the Baltic Sea Region, will constitute a decisive factor stipulating, in the areas of politics and legal affairs, the instruments of enhancing cooperation of the countries around the Baltic Sea, setting of common priorities and their joint and efficient implementation. Regional cooperation around the Baltic Sea The Baltic Sea Region has already developed long-standing traditions of trans-national and regional cooperation. A brief mention should be made of the main institutions and initiatives of regional cooperation. · The Baltic Assembly and the Baltic Council of Ministers – the expanding cooperation between Lithuania, Latvia and Estonia led to establishment, in Tallinn in 1993, of a permanent organisation of international cooperation, namely, the Baltic Council, acting through the Baltic Assembly and the Baltic Council of Ministers. The aim of the Baltic Assembly is to promote inter-parliamentary cooperation. This is a consulting and coordinating international organisation established to discuss and develop joint projects and common interests at the political level. The main political achievements of this organisation: speedy withdrawal of the military units of the Soviet Union from the Baltic States; efficient coordination of accession to the EU and NATO; development of the common economic, educational and information technologies space of the Baltic States; cooperation in the field of culture; harmonisation of legislation, etc. Establishment of the Baltic Council of Ministers provided the cooperation between Estonia, Latvia and Lithuania with a solid institutional foundation. · The Council of the Baltic Sea States – the Council was established in 1992 in Copenhagen as a non-formal regional political forum having the principal aim of promoting integration processes and establishing closer relations in the region. The activities cover all areas of inter-state cooperation in the Baltic Sea Region, excluding military defence. The Council of the Baltic Sea States consists of eleven states – Denmark, Estonia, Iceland, Latvia, Poland, Lithuania, Norway, Russia, Finland, Sweden, Germany – and the European Commission.  Belarus, Italy, Spain, the USA, the United Kingdom, Netherlands, France, Romania, Slovakia and Ukraine have been granted the observer status. · The NB8 – the group consists of eight Scandinavian and Baltic states – Denmark, Iceland, Norway, Finland, Sweden and Estonia, Latvia and Lithuania, which have cooperated on a regular basis since 1992 in various fields and at the political level. Participants of the meetings of the countries’ representatives discuss topical issues of international politics, various practical cooperation issues. A mention should also be made of the NB6, which unites only the EU Member States: the Baltic States and the countries of Northern Europe – intergovernmental cooperation in the field of EU policy manifested through adjustment of positions and search for joint solutions. · The Nordic Council of Ministers and the Nordic Council – two organisations responsible for official cooperation between the Nordic countries. These councils include five countries – Denmark, Iceland, Norway, Finland, Sweden – and three autonomous regions – the Aland Islands and the Faroe Islands as well as Greenland. The Nordic Council, established in 1952, is the forum for inter-parliamentary cooperation whose aim is to support and develop cooperation of the countries in the areas of legislation, culture, public transport, environmental protection, social policy and economy. The Nordic Council of Ministers, established in 1971, is the forum for inter-governmental cooperation ensuring an improved cooperation between the Nordic countries and promotion of the northern identity. This cooperation has recently expanded and currently covers the issues of foreign policy and security. The membership of the Baltic States of the Nordic Investment Bank is one of the signs of convergence of the Nordic countries with the Baltic States towards each other, a practical instrument and also a significant political signal and a good example of the forms of a search for closer regional cooperation. · The Barents Euro-Arctic Council consists of Denmark, Iceland, Norway, Russia, Finland, Sweden and the European Commission. The organisation was established in 1993 with a view to developing regional cooperation between the northmost regions of Norway, Finland, Sweden and North Western Russia. The original aim was to promote economic and social cooperation and thus contribute to sustainable development in the North. · The members of the Arctic Council are Denmark (including the Faroe Islands and Greenland), Iceland, the USA, Canada, Norway, Russia, Finland and Sweden. The organisation was founded in 1996 in Ottawa and is the top-level intergovernmental forum for development and promotion of cooperation, coordination between the states of the Arctic region involving the communities of local residents. The objectives of such cooperation are sustainable development and environmental protection in the basin of the Arctic Ocean. · The Northern Dimension is the European Union initiative approved in 1999 and promoting cross-border cooperation between the Nordic countries, the Baltic States and Russia. The main areas of cooperation are as follows: 1) economy, business and infrastructure; 2) human resources, education, culture, scientific research and health; 3) environmental protection, nuclear safety and natural resources; 4) cross-border cooperation and regional development; 5) justice and home affairs. · The European Neighbourhood Policy pursues the aim of sharing experience and benefits gained as a result of the EU enlargement in 2004, also bringing of the EU neighbouring states together for enhanced mutual integration. The guidelines for the European Neighbourhood Policy were published in 2003. The European Neighbourhood Policy covers the Mediterranean countries in Africa and Asia, the states of the Commonwealth of Independent States (excluding Russia and Kazakhstan), the Caucasus and Eastern Europe. • The Eastern Partnership – the European Union initiative inaugurated in 2009 and having the purpose of creating close relations with Eastern neighbours of the European Union – Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. This stands for enhancement of political relations, development of economic integration, conclusion of free trade agreements, facilitation of travel and the possibility of introducing a visa-free travel regime, cooperation in the areas of energy security and other fields. This initiative will be based on four policy platforms: democracy, good governance and stability; economic integration and convergence with EU policies; energy security and contacts between people. Taking into consideration a broad network of regional cooperation bodies, the experience of institutional cooperation and the impact of the previously introduced EU initiatives, the EU Strategy for the Baltic Sea Region should avoid the risk of activity duplication and not reflect the current internal institutional limitations. The Seimas of the Republic of Lithuania believes that the real added value of the Strategy for the Baltic Sea Region may emerge through a closer and more efficient cooperation of the EU Member States inside the EU. The benefits of EU membership and the possibility of joining effort in addressing challenges and seeking security and stability in the entire EU provide a historic opportunity. Moreover, the Strategy for the Baltic Sea Region may make a future contribution to a closer cooperation between the EU and the EU’s neighbours in the Asian continent. PART I ECONOMIC INTEGRATION AND COMPETITIVENESS The Baltic Sea Region States are distinguished by high human development index scores. Such data are provided in annual reports of the United Nations Development Programme. These reports are drawn up on the basis of the indicators of life expectancy at birth, literacy and the standard of living. Comparison of the Human Development Index (HDI) among the Baltic Sea Region States (the United Nations Development Programme) State Global ranking (annual reports of the United Nations Development Programme include approximately 180 countries) 2002 2003 2004 2006 2007 Denmark 17 14 15 13 16 Estonia 36 38 40 42 40 Latvia 50 48 45 44 48 Lithuania 41 39 41 43 46 Poland 37 36 37 39 41 Finland 13 13 11 12 12 Sweden 2 6 5 7 7 Germany 19 20 21 23 22 The Baltic Sea Region Member States are characterised by sharp disparities with respect to the level of economic development, which could be primarily explained by the phenomenon of the Iron Curtain and a rather late, though highly successful, commencement of development of the market economy. According to data of the Statistical Office of the European Communities (Eurostat), the share of the gross domestic product according to the purchasing power parity ranged in 2007 from EUR 31.3 thousand (Sweden) to EUR 13.3 thousand (Poland). Significant disparities in the living conditions and earnings in the countries which are territorially close to each other stimulate emigration and brain drain causing a short- and medium-term detrimental effect. Such considerable disparities in the standard of living repeatedly reiterate the long-term need for regional cohesion and also indicate the possibilities of further economic growth through making the best use of the advantages of the entire region and individual countries. Medium-size national markets (excluding Germany) must improve their competitiveness by means of innovative technologies, also by enhancing productivity.  It should be noted that the Baltic Sea Region can be distinguished by both high and average competitive rankings of the Member States (see the table below). It is pointed out frequently that this region devotes considerable attention to promotion and enhancement of economic competitiveness by means of research and development, also to innovative solutions both in the private and the public sectors. Competitiveness of the countries of the Baltic Sea Region (the World Economic Forum) (global ranking) Country 2007-2008 2009-2010 Denmark 3 5 Sweden 4 4 Finland 6 6 Germany 7 7 Estonia 32 35 Lithuania 44 53 Poland 53 46 Latvia 54 68 All the states of the region are distinguished by a high level of economic openness and considerable dependence on foreign trade. According to the data of 2007, the share of goods export in GDP ranges from 53 per cent (Estonia) up to 32.4 per cent (Denmark). Dependence on foreign markets in the field of import of goods is even greater – from 70.1 per cent (Estonia) up to 31.7 per cent (Finland). The share of export of services in GDP varies from 21.0 per cent (Estonia) up to 6.5 per cent (Germany), the share of import – from 17.4 per cent (Denmark) up to 5.8 per cent (Poland) (see the table below).  Further unimpeded development of the free internal market of goods and services and elimination of existing barriers is in the common interest of the states of the entire Baltic Sea Region. Share of goods and services in foreign trade in 2007 (in percentage of the GDP) Goods Services Country Export Import Export Import Denmark 32.4 32.7 19.8 17.4 Germany 40.7 32.4 6.5 7.8 Estonia 53.0 70.1 21.0 14.4 Latvia 30.1 54.1 13.5 10.0 Lithuania 44.6 59.1 10.7 8.6 Poland 34.1 37.8 6.8 5.8 Finland 36.5 31.7 8.4 8.5 Sweden 37.4 33.3 13.7 10.5 The attained high standards in the area of education, long-standing traditions of university and professional training warrant the key economic advantage and competitiveness of the region in the field of employee qualification. Highly qualified workforce and its efficient use enable to expect the potential of a long-term economic growth in the region and attraction of foreign investment in the area of high technologies. Admittedly, the current economic crisis has affected and, during the medium-term period, will affect the countries of the Baltic Sea Region, their attractiveness for investment and the business environment. In 2009, the Baltic States suffered the largest economic recession among all other EU Member States. Decreased economic activity, increased fiscal deficit and higher unemployment best describe the present-day situation in the Baltic States. Other states of the Baltic Region have also been significantly affected by the global economic crisis, which has put a considerable pressure on public finances and worsened the overall macroeconomic situation of the countries. The Strategy for the Baltic Sea Region initiated by the European Union does not offer fast and simple solutions. The instruments of this strategy are a long-term process which can and should provide new opportunities, create preconditions for restructuring of branches of the economy, and ensure the meeting of increased economic and social needs of the public. Economic integration and competitiveness can be currently ensured by promoting entrepreneurship, innovation and external trade. On the other hand, competitive advantage in the Baltic Sea Region States is possible when the goods manufactured and the services rendered are more ecological, efficient, resistant and convenient for the end user. All eight EU Member States are implementing the Lisbon Strategy, which is the framework initiative ensuring future competitiveness of economies on a global scale. Implementation of the Lisbon Strategy Structural Reforms in the context of the European Economic Recovery Plan – Annual country assessments permits to develop awareness of the main directions and needs of reforms in the Member States. The European Commission proposes that absolutely all states of the region agree on devoting close attention to implementation of the energy and climate change package. Excerpts from the 2009 update of the broad guidelines for the economic policies of the Member State s and the Community and on the implementation of Member States’ employment policies are presented below: · Denmark. The growth potential depends crucially on strengthening labour supply and productivity, and on increasing returns from investment in human capital, research and innovation. Demographic ageing has started to affect labour supply, accentuating the need for reforms stimulating participation and hours worked. A further challenge consists of enhancing competition to lower the relatively high consumer price level in Denmark. · Estonia. Structural reforms are urgently needed to support the required reallocation of resources towards external demand-driven sectors.  Continued investment in R & D, innovation and education is needed to offset the loss of cost-competitiveness in labour intensive sectors and ensure medium to long-term growth. The deteriorating labour market will require a stronger focus on active labour market policies and lifelong learning in order to respond to evolving labour market needs. A further important aspect of restoring competitiveness is to ensure that wage developments are more closely aligned with productivity developments. Labour market rigidities need to be further reduced. In order to improve macroeconomic stability, a determined fiscal policy, a well-enforced competition policy and improved energy efficiency are necessary. · Latvia. The immediate economic policy challenge for Latvia is to secure macroeconomic and financial stability as there is a risk of a pronounced and prolonged downturn. In the medium-term, productivity enhancing investment in R & D, innovation and education has to facilitate a shift from domestic-demand-driven sectors towards tradeables. Structural reforms are urgently needed to further labour market flexibility and support transition, primarily through more efficient activation and training. Public wage policy should give the right signal for wage moderation in the private sector, helping to contain inflation, and to maintain the cost-competitiveness of exports. A timely and determined implementation of the Structural Fund programmes will have a positive effect: strengthen the supply potential of the economy, support employment and safeguard access to finance for businesses. It is essential to maintain administrative capacity to implement the programmes. · Poland. Economic performance is held back by a number of interconnected structural problems, a low level of labour productivity and low utilisation of the workforce. Combining efforts to complete the reform of the social security systems with an increase in the number of older workers could simultaneously strengthen the labour supply and improve the long-term sustainability of public finance. Growth and employment would benefit from further improving the business environment, developing infrastructure and improving the quality of human capital. · Lithuania. The high economic growth and emigration have tightened the labour market and fuelled increases in labour costs, thus negatively affecting Lithuania’s competitiveness. The current economic slowdown will however lead to rising unemployment and active labour market policy therefore becomes of vital importance. However, the most urgent challenge remains reducing the sizeable macroeconomic imbalances. In order to contain inflation and halt the deterioration in competitiveness, wage developments need to be more closely aligned to productivity, the business environment should also be improved and administrative capacity should be strengthened. Moreover, productivity growth needs strengthening by improving skills and raising innovation performance, including through the attraction of foreign direct investment. · Finland. Finland’s export-oriented economy has performed very strongly over the last few years. However, economic growth and competitiveness are held back by labour shortages that will increase in the medium term because of a rapidly ageing population. Given the already high employment level, the main challenges will be to further enhance participation rates and reduce structural unemployment stemming from regional, sectoral and skills mismatches. The adoption and implementation of the new innovation strategy could also contribute to securing long-term sustainable growth. Given that the Finnish economy is very energy intensive, its growth and productivity potential would benefit from improvements in energy efficiency. · Sweden. While the Swedish economy is robust and economic reform is being taken forward, further progress could be made in enhancing competition and raising employment rates among particular groups. Enhanced competition could raise productivity, growth and narrow the price gap between Sweden and the rest of the EU. Increased labour market participation from long-term unemployed, people returning from sick-leave, the young and people with a migrant background could also raise growth and further improve the sustainability of public finances. · Germany. Improving productivity growth and addressing high unemployment among the low-skilled, especially in the East should help sustain the strong German economic performance in the future. In this respect the improvements in R & D and innovation are helpful. However, an improved functioning of services markets, in particular professional services and the energy sector and rail services, and improvements in the business environment would further increase the growth potential of the German economy. The information presented above proves the statements that the Baltic Sea Region has excellent examples of development of a competitive and knowledge-based economy, hence closer cooperation and making use of best practices are among the guarantees of success. However, the majority of the Member States need to continue their effort in this area, hence setting of clear priorities and abiding by them are inevitable. The Baltic Sea Region Member States are still not fully integrated into the economic and monetary union, because as few as two out of eight Member States are full-fledged members of the euro zone. The Baltic Sea Region may be claimed to be currently facing a certain euro deficit. Further integration of the states of the region into the EU’s currency union is impeded by the current economic crisis, especially the countries’ growing fiscal deficit and remaining macroeconomic imbalances. The EU internal market is among the main stimuli of EU integration. Nevertheless, the EU internal market itself is not equally liberalised and open to all sectors. There is room for enhanced integration of certain regions within the European Union, hence based on the initiative of the European Commission, the Baltic Sea Region should search for the possibilities and ways of enhancing integration by taking advantage of: · Openness of the public sector to competition. This initiative should not be seen as encroachment on the national identity or ethnic and cultural self-awareness of the countries of the region, it must be a continuous interest and area of competence of each European Union Member State. Nevertheless, certain public sector activities may be opened up to competition not only at the national, but also at the regional level, namely, waste management, renewable energy sources and their use. · Liberalisation of the cross-border provision of services. This concerns proper implementation of provisions of the Directive on services in the internal market throughout the European Union. · A common innovation strategy, which will cover the potential of the entire Baltic Sea Region in the area of high technologies, will promote cooperation (exchanges among scientists and researchers, development of clusters and spinoffs) as well as dropping of certain legal instruments and deregulation. · Exploitation of research through patents, which would be implemented through cooperation between national patent authorities in the Baltic Sea Region with a view to harmonising procedures, application and recognition of inventions. This initiative may also be important in creating preconditions for specialisation of such institutions and sharing the decision-making burden. Lithuania’s standpoint In recent years, the membership of the European Union has positively influenced various areas of life, starting with economy and social development, and has made an impact on the overall living standard.  Harmonization of the rules of the free movement of people, goods, services and capital has decisively influenced economic growth and development of the new EU Member States.  In the last ten years, Lithuania's economy has been rapidly developing, which has created new possibilities for economic competitiveness and human welfare.  Yet the current economic crisis has adjusted the short-term objectives of public policy in the economic sphere. Lithuania’s economy remains open but highly dependent on foreign trade. In 2007, exports and imports of goods amounted to, respectively, 44.6 per cent and 59.1 per cent of the gross domestic product. The main partners of Lithuania in foreign trade are the Baltic Sea Region countries and neighbours – Latvia, Russia, Germany, and Poland.  The market of Lithuania is well-known to the investors of this region, because 61 per cent of foreign investments are from the Baltic Sea Region countries.  The backbone of Lithuania’s economy is small and medium-sized enterprises.   Basically they prevail in all sectors. Regulation of activities of these enterprises as well as the tax system in force continue looking for further possibilities of improvement, therefore, it is important to further implement the provisions of the “Small Business Act” for Europe (2009).  In this field the best experience and achievements of the region may be used on a broader scale, seeking to facilitate the regulation of establishment and activities of small and medium-sized enterprises.  Another equally important aspect is a possibility to enter the market.  The provisions of the Directive on services in the internal market must be transposed into national law by the end of 2009. It is likely that the efficient and targeted implementation of the provisions of this EU Directive will contribute to wider and simplified possibilities for service providers to participate in economic activities.   This in turn would contribute to economic growth, the increase in competitiveness and employment. The principal objective of Lithuania is to improve business financing conditions and energy saving opportunities, to use EU funds more efficiently, and to promote exports and investments.  It must be admitted that at present the measures by which fiscal stability is sought are especially painful to the financial position of the State and the family household.  Successful integration in the internal market of the European Union previously encouraged to seek an active membership in the economic and monetary union. It must be admitted that an actual schedule of joining this Union has been noticeably corrected by the economic crisis.  It is currently assumed that the euro may be adopted when it will be adequately prepared for this, but the realistic date is 2012-2013. The recent years of economic crisis should not be the reason to abandon the planned structural reforms; on the contrary – it is a possibility to accelerate them.  Lithuania has already revised its legal base and started implementing the reform of higher education.  This is a permanent and long-term process; so far it is too early to see its positive results.  Revision of the education reform seeks to: ·  create preconditions necessary for an essential step forward in the quality of research and higher education; ·  ensure availability, acceptability and adequacy of higher education; ·  achieve that the system of research and higher education become an accelerator of the prosperity of the State; ·  efficiently use the funds allocated by the State. When implementing the reform of higher education Lithuania must continue expanding regional relationships in the field of research and higher education, thus creating a more favourable and common area of higher education in the Baltic Sea Region.    The Seimas of the Republic of Lithuania invites the Government of the Republic of Lithuania to take further actions encouraging the exchange of students and teachers, to support the preparation of coordinated study programmes, to promote university and higher education cooperation.    The current state of the economy and the competitiveness indicators in Lithuania show that in the short run we will compete mostly with those countries which go through the “efficiency improving” stage, i.e. the aim will be to increase productivity and efficiency of services and manufacturing. Although at this stage the factors of cooperation between innovations and business (manufacturing) are not the most important, the capability to shift towards the knowledge and innovation economy more rapidly than other countries with similar economies may become an essential condition for increasing Lithuania's competitiveness. During this period it is therefore very important to answer the question how of to develop and enhance the country's competitive potential and to provide an advantage through the promotion of research, innovation or experimental development. The Seimas of the Republic of Lithuania considers that, in order to achieve these objectives, it is necessary, first of all, to recover the scientific potential, secondly, to provide sufficient financial stability. The development of the scientific potential is related to the enhancement of activities of research establishments. When legal preconditions are created, it will be possible to observe the emergence of spin-off enterprises under higher education institutions of Lithuania. On 21 March 2007 the Government of the Republic of Lithuania adopted Resolution No 321 on the Approval of the Concept of Integrated Science, Studies and Business Centres (Valleys). An integrated science, studies and business centre (Valley) is the concentrated potential of research, higher education and business open to science, which possesses the common or related infrastructure and purposefully contributes to the creation of knowledge society and knowledge economy. Lithuania plans to develop the following five projects of the valleys: ·  Vilnius Technology Valley Saulėtekis The vision – one of the largest and most efficient clusters of studies, science and modern business of Eastern Europe in the field of applied physical sciences and technologies. The nucleus – the centre of physical and technology sciences – is a new, modern infrastructure of studies, science and technologies concentrated within the territories of the universities and ensuring an open access to research equipment for all researchers and business entities. The following are research areas suggested for the development (breakthrough areas):  1) laser and optical technology, 2) materials science and nanotechnology, 3) semiconductor physics, electronics and organic electronics, 4) civil engineering. · Vilnius Valley Santara The vision – a cluster, with the highest capacity in Lithuania, known in the world and successfully integrated into the national economy, of studies of life and natural sciences, biotechnologies, information and communication technologies, as well as related research, business and medical practice. The nuclei: BIOMOL (biotechnology, biopharmacy, molecular medicine and polymeric materials) and INFO (modelling, information and communications technologies). The following are research areas suggested for the development (breakthrough areas):  1) biotechnology, biopharmacy, molecular medicine and polymeric materials; 2) modelling, information and communications technologies. · Integrated Science, Studies and Business Centre – Kaunas Valley Santaka. The vision – to concentrate the intellectual, administrative and financial capacity and to create an applied research and innovation park – the largest in Lithuania. The nucleus – the infrastructure intended for carrying out public and private research, establishing high-tech and research companies; specialists with appropriate education; creation of services having high added value and receptive to knowledge; development of scientific research activities and cooperation with industrial enterprises; support to the development of new enterprises; assistance to industrial enterprises through the exchange of technological and business skills on the issues of intellectual property, patents and quality control. The following are research areas suggested for the development (breakthrough areas):  1) sustainable chemistry and pharmacy; 2) mechatronics and related electrical technologies, biomedical engineering; 3) future energy; 4) information and communications technologies. ·  Integrated Science, Studies and Business Centre – Kaunas Valley Nemunas. The vision – an effectively functioning integrated science, study and business centre for agriculture, forestry and food business carrying scientific research and experimental development activities of international level which are necessary to increase the competitiveness of the Lithuanian economy and for sustainable development. The nucleus – by developing the existing base to create a sectoral integrated science, study and business centre in accordance with the best foreign examples of university research centres. The following are research areas suggested for the development (breakthrough areas): 1) agrobiotechnology, bioenergy and forestry; 2) food technology, safety and healthiness. • Integrated Science, Studies and Business Centre Valley for the Development of the Maritime Sector of Lithuania. The vision – to create a nucleus of marine knowledge economy concentrating  territorially scattered marine science and studies institutions and their branches, to optimize, on the basis of a common infrastructure, the interaction between these institutions and to allow for closer interaction of marine science, studies and business. The idea is that this Centre would strengthen not only the links of maritime business and marine science, but it would also implement Lithuania's interests and obligations under the European Union's Integrated Maritime Policy in the environmental, marine innovations and other areas. The following are research areas suggested for the development (breakthrough areas):  1) marine environment; natural resources and aquaculture, environmental protection and coastal management, recreational resources and tourism; 2) maritime technologies:  maritime transport and ports, maritime constructions and technologies, maritime mechatronic systems. The Seimas of the Republic of Lithuania hopes that the actual implementation of the Integrated Science, Studies and Business Centre (Valley) for the Development of the Maritime Sector of Lithuania will start in December of 2009.  LTL 1 878 billion are planned to be used in 2007-2013 for funding all the Valleys. The concept of the development of the national Valleys must contribute to the development of regional ties, establishing useful ties with other institutions of the Baltic Sea Region. The Seimas of the Republic of Lithuania considers that the emergence of regional, integrated, efficient science, studies and business clusters may be one of the priority goals of the Strategy for the Baltic Sea Region. In order to achieve these objectives financial resources serve as a great encouragement. When approving the national budget of Lithuania, the Seimas of the Republic of Lithuania paid particular attention to the harmonization of certain funding programmes with the Lisbon Strat …