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### Viewing cable 09STATE38591, ACTION REQUEST: DEMARCHE ON BALTIC ENERGY SECURITY

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09STATE38591 | 2009-04-17 21:09 | 2011-04-24 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Secretary of State

`

    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
    --------

    ¶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

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