Podcast: Latvia’s EU priorities

This podcast [music] is brought to you by the IEA, sharing ideas, shaping policy. >> Good morning. My name is Ora Quinn. I'm here as the interim director general of the institute and I'm the former secretary general of the department of enterprise trade and employment. I'm delighted to join you this morning and I'm particularly delighted to welcome our honored guest. Uh we're joined today by Minister uh Braza, Minister of Foreign Affairs of Latvia. Minister Brazia, I will introduce you in a few minutes. But before I start, maybe just to give a few uh rules of the road for us all. Um the minister will speak to us for about 20 minutes and then we will have a Q&A. Uh please note it's on the record. Uh both the presentations and the Q&A is on the record. We also have our audience online. You are most welcome. Uh and if you have questions, um please use the Q&A function on the the Zoom to for to join into the discussion later. Um if I can now introduce our honored guest, Minister Brasha. She serves as Minister of Foreign Affairs of the Republic of Latvia. Uh and she's been there from 2020 to 23. And prior to that she held the post of assistant secretary general of NATO for public diplomacy. She's overseen various communication activities across NATO and indeed uh the military bodies and commands. I mentioned to you you uh just there uh minister we had deputy secretary general Radi Shakarinska here yesterday. So I think your focus um on security is obviously one that's of great concern and of great interest to our audiences uh here and online. Um from 2016 to 2020 she was the ambassador extraordinaire and plen potentiary of the Republic of Latvia to the United Kingdom of Great Britain and Northern Ireland. So again minister I'm quite sure you're familiar with Ireland in from your your previous discussions as well. um and she has also represented Latvia in the organization for the prohibition of chemical weapons. The minister is going to speak to us uh first and then we will have a Q&A uh with from me first and then obviously from yourselves as well. Minister, you are most welcome. Thank you. Good morning everyone here and online. It's really wonderful to be back in Dublin. Um it's my second visit as a minister and the first during the Irish EU presidency and um uh later today we all EU ministers but also there will be a number of guests will start our informal EU ministerial meeting. so-called Gimnik meeting which will continue tomorrow and um as I think we all can agree it's a high time again uh the summer break was not really a summer break at least for us in Latvia but it's a high time to put our minds and heads together and uh to act to maintain for the EU both peace and security that we have enjoyed since the establishment of the EU view which has not come by itself where indeed NATO has played an important role but also uh for the competitiveness for the future of the EU as an economic power with a global impact where we have all I think like our companies and citizens we have quite many questions how can we advance that and then indeed our citizens expect us also during this uh hard time for security and defense of Europe. Our citizens expect us to continue to provide the welfare states, the the health protection, the education that uh we all want. So how to make those decisions at a political level that ensure both investment in defense and making sure that deterrence and defense works while also making sure that the populations and citizens indeed enjoy the high level of of social guarantees and everything else that we in the EU are are famous for. And that's why many countries, so many countries want to exceed to the EU democracy, peace, security, welfare uh and the global competitiveness. That's what the EU is about. And so I think uh there is uh this time in particular with the technology advancements with uh other actors in other parts of the world where we see the highest economic growth, trade and everything else. Uh um we in the EU should should be I believe more decisive in in doing what we need to do. Um it's also to a great pleasure to be here in the Irish Institute of International Affairs where I did speak one time before but where I also have been as as an official in the foreign ministry with our former president Lita when she was visiting Ireland as in the audience and um uh Ireland has chosen a fitting moto for its presidency and I already apologize for my pronunciation ninat. Go. We did it. Which is strength through unity, which is indeed also something that is a motto for our foreign ministry building in a in a in a Latin uh saying that great things can happen through unity. And um so we very strongly support the Irish presidency priorities which is security, competitiveness and European values. And that is exactly what we need in Europe today. Strength to protect us, economic capacity to prosper and confidence to stand by our principles. And in Latvia uh all all of this is true and in the same time we do see a change. We have been in the EU uh since 2014. We were lucky to join uh one month after we joined NATO and support for the membership has remained very high. Um, and today when we look at the Euro barometer numbers, 67% of Latians believe Latvia benefits from EU membership and 89% agree that EU member states should be more united in the face of global challenges. So basically almost everyone, but only 55% of Latans says that they tend to trust the EU, whatever trust in the EU means. And that's you know of course something else uh to explore but what it means for us that there's a lot of work in front of not only Latafia but of all of us to advance the EU that uh we want to see and um as for a national level uh our priorities in the foreign policy for the country itself for this government for previous government I believe also the national elections on 3rd of October will remain to be three big pillars which is security and defense economy and welfare. So growing economy and welfare and taking care of our people and that means society at large not only uh protection of individuals and the human rights and European values but also actually working with the society as we know it and societies nowadays are different because again as I mentioned technological advancements, information space that immediately in in milliseconds uh spread whatever news true or fake. The pressure on the politicians to make decisions immediately, pressure on the defense forces to be able react one way or the other uh immediately. So this more decentralized type of society where the various societal groups whether they are NOS's whether they are other groups play a more prominent role actually is something that forms the tissue of society and getting them all on board for the priorities. I think uh is is crucially important for all of us. So on security defense uh the first the first priority indeed we invest and we have made that decision uh not only after Russia's start of the aggression in 2014 against Ukraine but also after full-scale aggression in 22 we made the decision by law to invest 5% of GDP in hard defense capabilities which means it's funding for the armed forces. It's funding for uh making sure that at the national level we have those capabilities, deterrence and defense that is needed. On top of that uh we do invest significant uh amounts and and resources in internal security uh also on border force and customs. we are external border of the EU, NATO uh to make sure that also on the internal security uh we are properly uh sort of prioritized. Uh we also believe that the EU as a collective should assume a greater role in security and strengthen our capabilities and increase defense investment by all states. And why? Because there are no front lines of Russia's aggression against Ukraine. We've seen Russia threatening cyerspace wherever it is. We have seen Russia conducting hostile operations uh teaching the uh large AI models with disinformation uh systemically investing in that. Uh so all that will will continue for us. It's also protection as I said of the external border of the EU NATO. Uh the pressure of illegal migration instrumentalized illegal migration from Bellarus is significant. Uh running groups of migrants pushing them against the border checking how they can cross whether cutting fences climbing over digging under. We have seen that from Poland to Lithuania to Latia and elsewhere. So this is where uh very clearly these threat landscapes uh span the conventional wars that we are seeing in Ukraine and uh uh drone threats that we have seen anywhere in Europe in Leig airport, the armed drone that was uh landing uh next to the to the airplanes. um the attacks using mass uh instruments weapons of mass destruction like in scripple case or litenko case there's no limit to challenges uh that can be pres presented to us so no answer but strengthening the defense and security uh for each one of the countries but also for EU as such on um secure communications. I think that is also which involves a lot of uh opportunities for EU universities for EU researchers. Whether we talk about quantum science, whether we talk of quantum crypting, computers, that is that capability that we have in the EUT from our our very strong academic uh uh background. So, uniting that also to invest to make our countries more secure is something that we see as important. So we have involved our academic institutions to work on this um essential understanding of how dual use technology can improve security and defense of the country and um I think that is one answer where investment in defense and security actually pays back. We have seen really uh sort of large improvements in ability of our companies to produce dual tech and export licenses work with uh especially Nordic Baltic partners and universities uh on on these specific issues. Um so it's uh it's something that we see that actually brings back the uh also economic benefits. So investment in security defense brings back benefits for the economy uh as we see it. Then on um uh the collaboration um as I did mention for us the collaboration with the C Baltic Sea countries so the Nordic and Baltic states uh Germany, Poland is something that uh has very much improved since uh uh Sweden and Finland joined NATO because now we are at least in one organization where we are all together and unfortunately ely Iceland's referendum on restarting the uh EU uh possib accession talks possibility was negative. We respect that. But indeed we would have liked to see a different outcome and have that ability also to possibly uh discuss with Iceland the possibility of them uh advancing work within the EU. And uh so that's why for us it's really a good sort of format to have NATO where we all in a secure space can meet and that region again for security defense for support to Ukraine for for innovation is one of the fastest fastest growing and most innovative regions not only in Europe but also be beyond. So for Ireland uh we have noticed interest from Ireland also to work closely with Nordic Baltic countries. So we have those consultation formats within the EU which doesn't include Iceland and Norway obviously but includes Ireland includes Netherlands and and others. So this is also where sort of flexible geography depending on the issues can be of of uh use. But for us, the Nordic Baltic states, the Baltic Sea partners is is the first sort of close family with whom we discuss uh issues issues of importance and then bring them into the EU NATO and and international global fora for example as member of the UN security council where we are for the first time. Then uh uh all this of course is reflected in the negotiations on the EU multi-annual financial framework [clears throat] and um it's a new type of budget proposal from the commission uh the [clears throat] way it's constructed the way it's prioritized how uh to uh then uh get to the end result that we all want to see. Uh there's still a road to go. There's still um We are proceeding. We are pro in a good process. But I think the effort will need to be see and the main difficulty as we see for us is that yes farmers uh of course as for all of us are an important community. Uh Latvia is only 74% from the cap uh subsidy level. Uh Ireland is at 84 I believe. Um so the rest those who receive 100% subsidies there are those who are above 100%. We compete in the same market we compete in the same global field where others receive 20% more subsidies than we do. So our farmers feel this is deeply unfair. So at a national level that will be indeed one of the main difficulties in in agreeing to certain positions. Having said that uh cohesion like Ireland benefited uh from the cohesion policy after its entrance into the EU and uh became a net pair uh at the beginning of '90s. We look forward to the same cohesion policy has been a success for Latia and we would like to see it continue and uh the history of the EU and history of Ireland shows that's possible. So uh this is where also security, defense and cohesion policy because Latia is a big country for European uh sort of scale. We are twice as big as Belgium but we are 1.8 million people. So we have to take care of a significant territory but also it's the eastern borders that we have to take care of obviously. So uh it's a sort of challenging uh situation for us. So European solidarity and also prioritizing these issues in MFF is is indeed the priority while maintaining that excellence. So the second heading which is around the uh excellence criteria is still there for us and our you know forestry uh fantastic companies pharmacy ecosystems the as I said the scientific institutions the the defense industry still will compete for those excellent foundations but being a relatively small economy compared to Germany or or France or others will present challenges if the inclusiveness criteria is not there if we cannot uh compete together with them because by scale our projects will be smaller. So we have to be part of that um excellence uh pillar also. Then on um on the Euroatlantic security and the threats that we all face from Russia from which I started uh that relates to a number of issues um is not just security and defense per se and the safe instrument and support to Ukraine per se. It's also changing our own European defense industry. So the trigger was indeed Russia's war in Ukraine, but it was long sought for. The traditional way how defense industry operates does not provide for the response that our armed forces need. And this is where I think uh we will lose out to the US, to South Korea, Turkey and others unless our industries are able to really very fast and quickly change the way they expect contracts to be given. And it's possible. We see it. We see it in other parts uh of the world. And um we actually all need that and then again as I said it benefits science it benefits uh the rest of economy and other parts on um on um other part of dealing with Russia's threats is indeed denying Russia money, technology and international support for the war. Uh almost half of Russia's federal budget goes to the war effort. almost half. So there are lots of hidden costs and that's why I can say it's almost uh because nothing is very transparent but that's the regional assessment that we see. So as less money Russia has in its budget as less ability to finance soldiers salaries uh finance tank production finance missile production and so on so forth. uh which means Russia's biggest exports have to be continuously continuously limited today. Unfortunately, Russia's LNG from the Arctic is bought up by European countries. So those are billions going into the Russia's budget, financing the war, killing Ukrainians, threatening our own security and defense. So finding alternatives and systemically systemically getting rid of the Russian energy experts. The same on other natural resources. It's possible. Baltic states in 22 politically decided not to import a gram of Russian gas. It took a few months. Yes, it became more expensive, but it also really prompted the renewables, the solar energy, the wind energy growth. It was and it serves as well now. So half almost half is hydro and the rest the dependence on the on the diesel on the gas and so on so forth has decreased. So currently LG's that we have 80% is from the US the rest is Norway and a few elements of others. It can be different but it's not going to be Russian. The um same with the interconnectors we still we were not importing energy uh electricity from Russia even though the electricity connection was still there. So we disconnected and it was a 16-year project which we finished last year and the real prompt was a war. It cost money to build those connectors with the Nordic states with Poland across the Baltic Sea but we did it and um again in the latest storm that we saw it actually served us well. we were able to manage with those interconnectors on um on the sanctions uh which is then the second part uh in denying Russia money, technology and and international support. Uh today we need to move from the large sanctions packages into dynamic acceptance of sanctions. Whenever we have uh something that is that we are seeing that Russia is using like now we are seeing ballistic missiles produced in Russia where the uh ecosystem relies on supplies from outside Russia from quite a number of countries where an international payments crypto platform is used for payments that has to be sanctioned. It's known what are those companies where they are and and what are they using. we don't need to wait for another big package 22nd or 23rd where all types of things are put together and then they also are slowed down because very different issues come at play. So this is where um I think also for the EU itself to have that sharpened instrument of restrictive measures that works despite Russia trying to present an illusion that it doesn't is is a key. So for now uh ballistic missiles are doing the most damage in Russia in in Ukraine jet powered drones. So that is a clear object. One is as I said energy and other natural resources. Second is these ecosystems. Then uh international support. Russia will try to legitimize its war through various efforts not only through as I said training the large AI models and creating you know thousands of artificial uh persons uh even websites of think tanks supposedly researchers and so on so forth with which they try to feed into AI models but also by trying to squeeze in and be elected in internationalizations management boards by trying to return to international competitions, international art fairs. That is a policy. There's a whole branch of Russia's government and services working to to ensure that. So again being uh recognizing that as an issue and being conscious that this is happening uh on our side we shouldn't let it happen because that is a way for Russia to show oh we are just a normal actor on the international stage country like any other no you are an aggress aggressor state who violated the basic principle of the UN charter there has been no wars like that after the second world war so this is um something that uh we prioritize uh significantly and Ireland has been great. It's been great working with your colleagues in that respect. So Russia was not elected to UNESCO executive board or to OPCW uh boards. Russia has not been elected to international court of justice uh IMO international maritime organization boards and so on so forth. The next topic that Russia is trying to do is undermining international legal system by bringing frivolous by bringing frivolous court cases like now IA ruled on MH17 finding that Russia did violate ICA rules and should be uh uh compensating uh for what it did. So Russia is bringing that to the international court of justice believe it or not wasting everyone's time. So this is what they keep doing under under false pretexts. So again awareness, understanding, preparing our legal systems for those type of cases should be there. Then on uh on uh san sanction sufficiency and I really praise the EU sanction envoy David do Sullivan a distinguished Irish diplomat uh who is who is doing excellent work with whom we work closely to both understand how Russia evades sanction but also how to counter it and uh indeed we are unanimous among uh EU countries that sanctions work. uh the war economy is showing that it is unsustainable and unproductive and a couple of couple of numbers I think numbers and speeches overall are boring but uh in this case maybe it's useful so forecast for Russia's GDP this year is 0.4% 4% of growth while inflation is double digit and interest rate is 14%. And sometimes it goes up even higher. So private companies cannot finance credit. They cannot be successful. So the the budget deficit has swelled by 73 billion in the first six months of this year. And the projection was for the whole year 48 billion. So double in the first half a year. So we can look at other numbers but this is what it is. So uh cutting salaries, cutting social welfare pens payments, uh not increasing pensions, there's a whole set, you know, print trying to print money. uh that's not going to help uh de facto whether it has affected the butcher and Kremlin intention to wage war not yet. Russia is still waging the war and we don't see any indication that they are going to stop. Currently for the sixth day they've been bombing Ukraine both during the day and night. We haven't seen that even during the Nazi war. So this is something that maybe is not making headlines here but it's happening in Ukraine. So people uh in Ukraine are exhausted but Russia is not going to break their will to be free. They want to be free, successful, independent country just like Ireland, Latvia or any other and they have the right to do so. and Russia will not be able to impose its authoritarian model on free people and at the end that is what European values are about. Now a few words on the economy and um I think um that the intentions what we all have are right. I mean druggie report was right. uh all the things that the commission president underline is saying are right but somehow we are slow. We are slow. We are not even able to adopt these simplification packages that we had committed by the commission to present to the member states and parliament. So our companies are indeed complaining, I'm sure yours too, that they're burdened by regulation, that their ability to export is limited because of the cost, higher cost that is imposed. Um I think the uh the answer is in three strands. promoting competitiveness, easy to say, but also protecting against risks and diversifying. And this is where um especially on diversification, we have been quite successful with Merkosaur agreement with uh Indonesia, Australia, um basic sort of uh deal with India that we need still to sort of uh detail how it will work. Samoa and so on so forth. There's a whole set of uh free trade uh advanced agreements that will increase our ability to export and that will be in the markets where China have squeezed out European companies but also American companies. When we look at Asia for example uh the numbers uh uh the change in trade uh and market uh exposure is significant in the last 10 years. Um then we praise Ireland for placing competitiveness in the single market in the center of the presidency. So we do believe that we have excellent minds that we have academic and scientific excellence that we have everything that we need also to be successful in uh uh productive uh economy and exports. Um in the same time uh as I already uh suggested we are losing out to China in quite a significant way. Not only dependencies, supply chains and uh uh rare metals we all know that uh but also the reality that China's trade practices and industrial model has left on our ability to compete in the world markets. uh no we don't subsidize companies no uh we don't engage in practices that China do uh but we still have to compete in the same way um and this I think is a big challenge both at the national level but also for the EU for the EU as such. Um so getting the simplification faster uh done especially I urge the European Parliament in that respect to to act um the energy costs uh from one hand uh limitations to the single market in in various way deeper capital market uh digital connections um we all know what to do. So it's about doing it and uh the MFF the next MFF should be an enabler for that not by keeping the old practices in place by actually uh really uh uh making sure that it happens. Um I think this is where I will stop now. We will have uh uh a Q&A session uh also on the reform of the external action service. the ideas that are there, you know, for European external action service being more or European external interests being more presented and represented uh on the EU enlargement. Um we can all discuss that during the Q&A session, transatlantic relationship and so on so forth. So I thank you now for your attention and um let's continue uh in the Q&A. This podcast [music] is brought to you by the IEA. Sharing ideas, shaping policy.