Recently, the European Commission traveled throughout the Baltic Countries, which include Lithuania, Latvia, and Estonia, to promote the European Union’s plan for Rail Baltica. This project plans to connect the three capitals of the Baltic countries with a high speed train and cut the travel time to about four hours. Despite the promotion by the EU, there are still many headwinds that this project faces.

The Baltic countries regained their independence from the Soviet Union more than 20 years ago, but most railways in these countries run east towards Russia and away from the rest of Europe. The Baltic countries have their electricity grids synchronized with Russia and are highly dependent on Russian gas. Getting Rail Baltica implemented would be a large step for the Baltic countries, stepping away from Russia and moving towards the EU. This railway could also have a large impact on trade relationships in Europe. The EU’s transport commissioner, Siim Kallas, wants to improve the infrastructure in the Baltic region in order to create a network of railways, waterways, and seaports connecting it with the rest of Europe.

Rail Baltica has been a project which has been talked about since 1994. The European economic crisis has had a huge impact on the Baltic country and has left them short of cash for infrastructure projects. The project will most likely not start until 2014, when the EU transport budget increases. Also, there was a plan to create an integrated gas network in the Baltics to reduce energy dependence on Russia, but individual facilities are already being started. Many people who are opposed to the project don’t believe that there will be enough interest in the train. Currently people tend to fly or drive, but with a much faster route via train, this trend could change.

Building a high speed train throughout the Baltic countries could have a significant impact on the EU’s relationship with Russia. Recently, Russia has started trade wars with neighboring countries which engage the European Union. For example, Lithuania had its dairy products banned by Russia. As Russia continues to create tension with the Baltic countries, the possibility for the creation of Rail Baltica becomes stronger.

For more information on these Baltic countries visit globalEDGE’s country insight pages!

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