Identifier
Created
Classification
Origin
09STATE38591
2009-04-17 21:34:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Secretary of State
Cable title:  

ACTION REQUEST: DEMARCHE ON BALTIC ENERGY SECURITY

Tags:  PREL PGOV ECON ENRG LG LH PL RS SW FI 
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VZCZCXRO3184
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHPOD RUEHROV RUEHSR
DE RUEHC #8591/01 1072153
ZNR UUUUU ZZH
P 172134Z APR 09
FM SECSTATE WASHDC
TO RUEHHE/AMEMBASSY HELSINKI PRIORITY 1669
RUEHRA/AMEMBASSY RIGA PRIORITY 1284
RUEHSM/AMEMBASSY STOCKHOLM PRIORITY 7129
RUEHTL/AMEMBASSY TALLINN PRIORITY 7114
RUEHVL/AMEMBASSY VILNIUS PRIORITY 2007
RUEHWR/AMEMBASSY WARSAW PRIORITY 3632
INFO EU INTEREST COLLECTIVE PRIORITY
EU MEMBER STATES COLLECTIVE PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
UNCLAS SECTION 01 OF 03 STATE 038591 

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV ECON ENRG LG LH PL RS SW FI
SUBJECT: ACTION REQUEST: DEMARCHE ON BALTIC ENERGY SECURITY

REF: A. A) 08 STATE 106338

B. B) USEU 311

C. C) RIGA 164

SUMMARY
--------

UNCLAS SECTION 01 OF 03 STATE 038591

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV ECON ENRG LG LH PL RS SW FI
SUBJECT: ACTION REQUEST: DEMARCHE ON BALTIC ENERGY SECURITY

REF: A. A) 08 STATE 106338

B. B) USEU 311

C. C) RIGA 164

SUMMARY
--------------


1. (SBU) The Prime Ministers and Energy Ministers of
Estonia, Latvia and Lithuania will meet in Vilnius on April
26-27 to discuss energy security; Poland, Sweden and
Finland will be represented at lower levels, as will CEOs
of several Baltic energy companies. The United States
supports and has consistently advocated for regional
efforts among the Baltic countries to improve their energy
security. Addressee posts -- including Embassies
Stockholm, Helsinki and Warsaw -- should draw on the points
in paragraph 6 to emphasize prior to the April 26-27 summit
strong U.S. support for regional cooperation to enhance
Baltic energy security, and the importance of moving beyond
discussion and on to the actual implementation of
cooperative energy projects.

BACKGROUND
--------------


2. (SBU) Isolated from EU electrical markets and dependent
on imported gas from Russia, the Baltic States can be
characterized as "energy islands." Baltic dependence on
Russian electricity will increase when the Ignalina nuclear
power plant is decommissioned at the end of 2009 and
Estonia's oil shale industry is subjected to costly
EU-imposed environmental upgrades by 2016. Given
historically tense political relationships with Russia, the
Baltic States view energy dependence as a threat both to
sovereignty and European integration.


3. (SBU) The Baltic States and Poland have sought to
diversify their energy sources and increase connectivity of
electrical grids with each other, their Nordic neighbors,
and other EU Member States. While some progress has been
made, domestic interests in each of the countries has
complicated cooperation and undermined regional energy
security. For example, delays in reaching an accord with
Lithuania on a replacement nuclear power plant are driving
Poland and Estonia to examine their own nuclear
alternatives, and the inability of Latvia and Lithuania to
agree on a terminus for a power connection to Sweden has

delayed this much-needed connection. The relatively low
cost of the electricity the Baltic states receive from the
Northwest Russia grid has contributed to the inertia,
notwithstanding long-term concerns about over-dependence on
Russian energy.


4. (SBU) Given the small size of the three Baltic markets,
close cooperation among them will be key to the success of
any strategy to enhance energy security. The EU also could
ameliorate the situation by providing the financial and
technical support needed for Baltic energy integration and
the development of additional energy sources. Although the
U.S. role is a subsidiary one, we believe that in the
run-up to the summit, it is important that the U.S.
reiterate our strong support for close cooperation among
the Baltics and our conviction that now is the time to
finalize agreements and move on to project implementation.

TALKING POINTS
--------------


5. (SBU) The Department requests Posts to draw on the
background and points provided to communicate to host
country officials U.S. views on Baltic energy security,
prior to the April 26-27 summit, at the highest appropriate
level. Our overall objective is to reiterate strong USG
support for close energy cooperation among the Baltic
states and to encourage them to translate their extensive
discussions into agreement and prompt implementation. More
specifically, we want to: (1) advocate the development of
timelines to ensure that steady progress is made on the
implementation of energy projects; (2) encourage the Baltic
states, and other interested players such as Sweden and

STATE 00038591 002 OF 003


Finland, to work closely with the EU to fully integrate the
Baltic states into the EU electrical grid; (3) promote a
prompt agreement among the Baltic states and Poland on the
construction of a nuclear power plant to replace Ignalina;
and (4) encourage Latvia and Lithuania to quickly reach
agreement on the location of the Swedlink terminus so that
construction can commence.


6. (SBU) BEGIN POINTS:

-- We applaud the initiative of the Prime Ministers of the
Baltic States to form a Working Group to intensify energy
cooperation with each other, and with key partners such as
Poland, Sweden and Finland.

-- Like you, we see energy security as a major challenge
facing the Baltic republics and many other European states
in the years ahead, one that has profound economic and
national security implications. We believe that close
cooperation among the three Baltic states is the likeliest
path to greater energy security.

-- We encourage the establishment of a clear timeline for
final decisions and the implementation of projects under
consideration. A timeline will help key players to measure
progress and coordinate further implementation.

-- We believe the EU can play a leading role in providing
the financial and technical support needed to consummate
the projects under consideration and we strongly support
the work of the EU's High Level Group on Baltic energy. We
encourage all three Baltic republics to engage proactively
with the EU to help shape EU energy policy and its
prioritization of projects to increase the number of Baltic
interconnections and grid redundancy.

-- With the impending closure of Ignalina, it is
particularly important that outstanding issues surrounding
the construction of a replacement nuclear plant at
Visaginas be promptly resolved. While a regional reactor
would have many advantages, we also understand Estonia's
interest in pursuing the option of its own grid-appropriate
nuclear reactor. We are prepared to move forward as soon
as practicable to organize the long-delayed TDA-sponsored
Orientation Visit to familiarize the partners with U.S.
nuclear technologies and financing options.

-- Other forms of cooperation among the Baltic states --
such as a regional LNG terminal -- would also reduce
dependence on Russian gas.

-- For Vilnius and Riga: We encourage you to come to a
final decision on the Swedlink project. We do not have a
view as to where the Baltic terminus for Swedlink should be
located. Regardless of where the terminus is located, the
entire Baltic region stands to gain from its completion.

-- For Tallinn, Riga and Vilnius: Given the small size of
the three Baltic energy markets, greater market openness
will help ensure that the benefits of the energy projects
under consideration are fully realized. We encourage you
to take concrete steps to open your energy markets to each
other.

-- For Tallinn: We applaud the efforts Estonia has made to
address both its own energy security needs and the pressing
environmental problems created by your current singular
dependence on oil shale. U.S. technologies, in nuclear and
other alternate energy sectors, fit well with this
strategy. They provide cutting edge solutions that meet
both energy supply needs and Estonia's goal to reduce
carbon emissions. We look forward to working with you to
promote U.S.-Estonia commercial cooperation. We note that
you are working with our Department of Energy on an Oil
Shale Technology MOU. We anticipate this cooperation will
yield new ways to reduce dependence on oil shale while
cutting CO2 emissions from residual oil shale electricity
production.

-- For Stockholm and Helsinki: We believe that with your
sophisticated energy infrastructures, geographic proximity
to the Baltic states, and considerable experience in the
EU, your governments have an indispensable role to play in
the process of ensuring EU engagement and in spurring the

STATE 00038591 003 OF 003


Baltic states to agreement and implementation. We believe
you can also play a positive role in encouraging the Baltic
states to achieve greater openness in their energy markets,
which will reduce their dependence on any single source of
energy. Please let us know when you perceive
opportunities for us to contribute to the objective of
enhancing the energy security of the Baltic states.


7. (U) Please report responses by April 24, slugging
responses for EUR/NB - Alan Meltzer and EUR/ERA - Erin
McConaha.
CLINTON