2020: A successful year for the Three Seas Initiative

Following the Tallinn Summit in Autumn 2020, Euro Créative wanted to focus on the Three Seas Initiative. An initiative which is, most certainly, little known in France, but which occupies a central place in contemporary developments in Central and Eastern Europe. This initiative has also become a key element in transatlantic relations. In this cross-interview, Ian Brzezinski reviews the main objectives and developments of this initiative and discusses with us the American perspectives on it. At the same time, Arnaud Castaignet analyses the Tallinn Summit, specifying the particular role of Estonia. Both interviewees also comment on the discrete involvement of the European Union and its main actors within this project.

We would like to remain our readers that this interview has been designed for a French audience.

Euro Créative: Mr. Brzezinski, as you know, the Three Seas Initiative remains little known in France. Could you give us a general presentation of this project (historical stages, general objectives)?

Ian Brzezinski: The Three Seas Initiative is a Central European launched and a Central European led effort to accelerate the development of cross border energy, transport and digital infrastructure in the region between the Baltic, Black and Adriatic Seas. Hence the name 3 Seas. The main objective of this initiative is to overcome the legacy of Soviet occupation during the Cold War era which inhibited the development of connective regional infrastructure that would tie together the nations of the region and the region to the rest of Europe. 

Today, if you sat on a satellite and look down on the European continent, I think you would clearly see two different parts of Europe. On the West European side you would see a spider web of cross border connectivity : highways, roadways, railroads, canals, and pipelines, all binding the countries of Western Europe together, facilitating economic engagement and growth. On the other side, in Central and Eastern Europe, you would see a far more empty landscape featuring with a limited set of East-West communication lines consisting a few highways and a pipeline or two and little to no North-South connectivity. In fact, the European Union reports that it takes two to four times longer to travel the same distance in Central Europe than it does in Western Europe. 

The countries of Central and Eastern European are determined to overcome this Soviet legacy and to leverage the power of infrastructure to drive growth and to enhance economic resilience. The Three Seas Initiative has emerged as a part of their combined effort to complete their integration into a Wider Europe, a truly single European market place. 

These twelve European Union member states  launched the Three Seas in Dubrovnik, Croatia in 2016. In doing so, they are  leveraging their own geoeconomic potential to attract and capture international investment. This is an important point as this initiative should not be seen as a Marshall Plan. CEE countries are not reaching out to Western Europe, the European Commission, or the US for assistance. They are presenting not a request for assistance but an opportunity for investment that will yield through infrastructure projects positive economic returns. Toward that end, they established the Three Seas Initiative Investment Fund which is now operational. It has raised by now almost 1.4 billion dollars in committed capital combining national investments from 9 of 12 of the Three Seas Initiative member states and 300 million US dollars – a commitment which was announced at the Tallinn Summit last October. The fund itself is managed by the Amber Infrastructure Group, a London based commercial investment firm. The Initiative is on track to reach the target of 3 to 5 billion dollars. This is really an exciting moment for this project.

« I cannot underscore enough how, this initiative is a powerful demonstration of Central Europe’s self confidence in its own potential. » 

Ian Brzezinski

The Three Seas Initiative and its fund constitute a profound demonstration of Central European self-confidence, one in which these nations are leveraging their own economic potential in order to create investment value as well as geopolitical and geoeconomic benefits to the transatlantic community. The 3SI nations are actually investing their own money into the fund, allowing a private money manager to do execute investments without any political influence but with the goal of making profit. The only constraint is that the fund can only invest in cross-border projects involving the Three Seas Initiative region. I cannot underscore enough how, this initiative is a powerful demonstration of Central Europe’s self confidence in its own potential. 

By acting as a group, the Three Seas Initiative countries are overcoming the limitations they have when they try to attract capital individually. Indeed, most of these countries are small and when acting alone have tougher time to attract significant private sector capital. But when you combine them into a team of 12 EU member state democracies, they are offering the investment community the benefits that come with a  region featuring 1.7 trillion dollars of GDP, a 110 million people, including an highly educated workforce, and a growth rate which over the 5 years previous to the arrival of Covid-19 was over 3%. 

For foreign direct investments – which is about a trillion dollars a year circulating around the globe and looking for safe places to make a long-term positive investment – Central Europe is a very attractive place for such investments. Hence, by combining their efforts, these countries are presenting themselves in a way that is more attractive to private capital. The Three Seas Initiative Investment Fund can be seen as their financial lighthouse. The Three Seas Initiative, its fund and its specific projects present profitable investment opportunity. These projects will provide not only positive returns, but also generate economic growth for the 3SI member states. By contributing to the prosperity of Central and Eastern Europe, the Initiative is adding to prosperity of Europe and the Transatlantic Community.

Euro Creative: We are in 2021, several years after the launch of the Three Seas Initiative and a few months after the annual summit in Tallinn. In your opinion, was this summit a success?

Ian Brzezinski: Absolutely, Tallinn Summit was a tremendous success. 2020 is the year when the Three Seas Initiative moved from rhetoric and planning to concrete action. It is the year when the Three Seas Initiative became operational, and the Summit in Tallinn fully emphasized that historical moment. 

In Tallinn, we had the confirmation that nine of the twelve countries from this initiative are not only talking about Three Seas Initiative but also investing their own funds into the Investment Fund. This is highly important as this is a concrete demonstration of tangible regional commitment. 

Another important development at the Tallinn summit, the announcement that the United States will invest $300M into the 3SI Investment Fund.  This announcement operationalized the commitment US Secretary of State Mike Pompeo made at the Munich Security Conference back in February 2020 when he said that the US was prepared to invest up to 1 billion dollars into the Three Seas Initiative. 

« 2020 is the year when the Three Seas Initiative moved from rhetoric and planning to concrete action. »

Ian Brzezinski

Additionally, the Tallinn Summit underscored German and the European Commission support for the Three Seas Summit. President Frank-Walter Steinmeier committed to attend the summit but was sidelined by Covid-19.  He was represented by Senior Deputy Minister for Foreign Affairs. The European Commission was represented its Executive Vice-President Magrethe Vestager who endorsed not only the initiative’s infrastructure goals but also the initiative’s objective to attract private capital.

Euro Créative: Mr. Castaignet, you live and work in Tallinn. Is it the same assessment from the Estonian side?

Arnaud Castaignet: Yes indeed, here in Estonia, the Tallinn Summit is considered as a success as well. The positive perception of this summit is mainly due to two reasons. Firstly, in terms of organization. It was a very difficult summit to organize, almost entirely digital. There were official meetings of course and therefore physical meetings, but the digital part was really very important. Hence, it is a real success to have managed to organize an event like this. Even though Estonia has experience of organizing international summits, events of this magnitude do not take place there every day. That’s why there was a real will to make it happen despite the difficult sanitary conditions.

Secondly, it was a success for Estonia because it managed to highlight its key concept of ‘Smart Connectivity’. The goal was to ensure that this concept could become one of the priorities for the future of the 3SI. Until now, this initiative has been much more focused on transport and energy issues. The digital component is gradually coming back, driven in part by Estonia. In Tallinn, ‘Smart Connectivity’ has been as important as transport and energy issues.

In concrete terms, the issue of Smart Connectivity is mainly related to the Estonian experience with digital identity, digitization and is based on the use of industrial data as opposed to consumer data. We can see that the issue of industrial data is becoming the key issue for economic development in the digital field for the future. When we talk about the Internet, connected objects, 5G, we see that industrial data is more important than consumer data in the end. This ‘Smart Connectivity’ will therefore enable physical infrastructures to be linked to industrial data to promote exchanges but also the emergence of new economic players.

That being said, when we look at the 77 projects deemed a priority by the Member States and when we look in more detail at the projects proposed by Estonia, we don’t find any projects concerning the digital sector for the moment. We remain in the field of transport with, in particular, Rail Baltica – the rail connection project of the three Baltic States. There is also Via Baltica, which is a road connection project from Tallinn to Poland.

Euro Créative: Knowing this this Estonian dynamism, how to understand its role within the Three Seas Initiative? And more broadly what is the place of Estonia in Central and Eastern Europe and more largely in the West?

Arnaud Castaignet: There is no doubt that digital technology has become an integral part of Estonia’s international and European policy over the last few years. The country is perceived as a digital stronghold – in both public and private sectors – and is seeking to share its expertise with other countries. Especially those in the region. The digital sector in Estonia is extremely important as about 6% of Estonian workers are employed in this field. Estonia has four companies valued at more than one billion euros. For a country of one million three hundred thousand inhabitants, that is very important!

« An essential element of the Estonian system is the trust that exists between citizens and their administration. It is this element that Estonia is seeking to emphasize in cooperation with other states and international organizations in the digital field. »

Arnaud Castaignet

There are a few important dates to remember in this regard that illustrate the pioneering role of Estonia when it comes to digitization. In 1994 the development of Estonian e-government began. In 1996, the authorities launched the Tiger Leap initiative, which enabled every school to be connected to the Internet. It is thanks to this kind of initiative that 90% of Estonians know today how to use a computer and the Internet and that the country has become a model in terms of digital technology. In 1997, the first online banks began to emerge. In 2000, the e-tax system began. If only 15% of the population used these e-taxes at the beginning, today we are at more than 90%. In 2001, the X-Road digital infrastructure enabled the development of real-time data accessibility. In 2002, it was the turn of the digital identity card and in particular the use of the digital signature. In 2005, the e-Voting system was launched. Estonia, which at the time had to rebuild a functional administration, decided to develop its new public services directly through the use of digital technology.

An essential element of the Estonian system is the trust that exists between citizens and their administration. It is this element that Estonia is seeking to emphasize in cooperation with other states and international organizations in the digital field. For example, Estonia is helping Ukraine, through public and private initiatives, to digitize its own administration. And from the outset, one of the priorities was to maintain this element of transparency and trust between the administration and the citizens. Another example, Estonia has signed an agreement with the WHO to implement digital vaccination certificates, again in the framework of transparency.

However, it would be impossible to talk about Estonia without mentioning cybersecurity. Let’s remember that in 2007, Estonia was one of the first countries in the world to suffer large-scale cyber-attacks. However, no personal data was compromised or stolen, as these were only attacks aimed at blocking e-government sites. However, this event really served as a signal for the country to develop advanced knowledge in this area and become a model.

Indeed, the country has begun to add other security elements to its digital administration – for example, through the development of block chains – guaranteeing data integrity, especially in the medical field. Every year, Estonia organizes full-scale exercises to test NATO’s cyber-facility capabilities. The country hosts the NATO Cooperative Cyber Defense Center of Excellence. The country therefore has real experience in this field. That said, some states are also strengthening their expertise in this area. This is the case of Lithuania, which now has excellent cybersecurity capabilities. Thus, Estonia is unquestionably a driving force in this field, but it is not the only one; there is a lot of expertise in the region.

Euro Creative: Mr. Brzezinski, after having mentioned the role of the host country of the last summit, let’s come back to you in order to talk about the role and the specific objectives of a strong 3SI’s partner: the United States.

Ian Brzezinski: First of all, I would like to emphasize that again the Three Seas Initiative is a Central European launched, led and invested initiative. In this regard, the United States has played a supporting role. US support for the Three Seas Initiative is rooted in its interest in a Europe that is economically more prosperous, vibrant and resilient. More than that, the US wants to support those allies who are most robust in their commitments to the transatlantic community. And many of these allies are to be found in Central Europe. 

« The Three Seas Initiative is an initiative which is all about completing Europe, fulfilling the vision of a Europe that is united, undivided, free, prosperous and secure. »

Ian Brzezinski

The Three Seas Initiative is an initiative which is all about completing Europe, fulfilling the vision of a Europe that is united, undivided, free, prosperous and secure. There is no doubt that such a Europe would be a better partner for the US in addressing current and future challenges and opportunities found in the North Atlantic area and around the world. These are among the main reasons why the United States has supported has been supporting the initiative these past six years. 

Euro Creative: We know that this initiative has been a key element of the Trump Presidency regarding US foreign policy in Europe. Do you think this involvement will continue under Biden’s presidency? Or should we expect some changes?

In terms of transition, I expect the Biden administration to support the Three Seas Initiative. If you look at Biden’s campaign, even without focusing specifically on the Three Seas Initiative, it is clear that Biden and his team understand and appreciate the geoeconomic and geostrategic values promised by this initiative.

However, ultimately, the US support for the Three Seas Initiative will be driven by the commitment of Central and Eastern European countries to this initiative. If the initiative sustains its momentum, if the investments continue to increase in the Fund and if its member states continue to coordinate – not only at the declarative level but also in terms of execution of concrete infrastructure projects – I am confident that the Biden administration will invest in the Three Seas Initiative both diplomatically and financially. 

Euro Creative: Some critical voices, both at European and international levels, believe that the Three Seas Initiative is a purely geopolitical project. What is your opinion on this?

There are opponents to the Three Seas Initiative, and these opponents are those who would like to see a weaker Europe, a divided Europe. They have tried to portray the 3SI as a divisive force intended to pull Western and Central Europe apart. But the fact is that this initiative is all about integrating CEE countries with the rest of Europe, to create a single European single market space. These past decades, there has been historic progress in terms of integration due to the extension to EU and NATO membership to nation of Central and Eastern Europe, but when you look at the hardware of integration, there is still a lot of work to be done. And this is what the Three Seas Initiative is addressing. It is all about pulling Europe together, creating a truly single economic space, leveraging the power of infrastructure to not only benefit the Three Seas Initiative region but Europe as a whole as this kind of connectivity will enable all of them to do business better together. 

Infrastructure is a powerful driver of growth and is at the heart of this initiative. The International Monetary Fund has stated that this is exactly this type of undertaking that Europe needs to drag itself out of the economic morass created by Covid-19. Hence, the Three Seas Initiative should be supported as a key element of a European economic recovery strategy. In this role, the Three Seas would further enable Europe to leverage private capital to stimulate and facilitate an acceleration of infrastructural development. 

Euro Créative: What about the future of the initiative? Do you think that some non-EU Eastern European countries could join it?

One distinctive and very attractive feature of the initiative is that its members are all EU member states. These 12 member states are offering something that of real value to private investors. This not only the Three Seas’ sizable population, robust GDP, and strong economic growth record. It is also the stability, the rule of law and stable regulatory environment that comes with EU membership. This is an excellent environment in which to make economic investments. 

With that said, it is important for the Three Seas Initiative to look beyond its current members and to be guided by vision of how to fully complete Europe by furthering and completing the integration of Ukraine, Moldova and other states in the Western Balkans into a single European market space. This theme was an important focus of the Tallinn Summit. This is an objective the Three Seas Initiative will have to address in the coming years.

Euro Créative: Mr. Castaignet, we know that Brussels, Paris and Berlin were initially somewhat annoyed by the implementation of the Three Seas Initiative. This was seen as a development excluding Western Europe. Things have changed a bit since then. What is the precise role of the EU in this initiative today? Does the 3SI fit in with major European priorities – in terms of digitization, transport or the Green Deal?

Arnaud Castaignet: The EU is indeed not at the origin of the the Three Seas Initiative which was initiated by President of Croatia Kolinda Grabar-Kitarović and President of Poland Andrzej Duda. Their initial observations explain alone why the European Union was not at the origin of the initiative. Mr. Brzezinski mentioned that the the 3SI was created in response to a lack of infrastructure in the region, a lack of north-south integration, but also to exploit a potential that had been underestimated until then. Indeed, over the last five years, the growth rate in Central Europe was almost double the average of other EU countries, while GDP per capita is still half the European average.

Hence, from these three observations, one can understand why it was not the European Union that could launch such an initiative. That being said, since 2018, the EU, or at least the European Commission, has been participating in the 3SI summit, initially with President Jean-Claude Juncker and then this year with Vice-President Margrethe Vestager. It must be said that there is international interest in the region. First of all that of China, which realized that there could be opportunities linked to its own ambition stemming from the Belt and Road Initiative of the New Silk Roads project. And, of course, the United States, which now participates in every summit.

« Thus, the 3SI objectives are now aligned with the Commission’s objectives and priorities. »

Arnaud Castaignet

To answer the second part of the question, as mentioned before, the initial observation of the launch of the Three Seas Initiative started from the deficit in transportation and energy infrastructure. When you look at the 77 projects that have been selected as a priority by the countries of the region, you can see they concern transport, energy of course, but also digital. It is these types of projects that will enable the countries of the region to meet their objectives in terms of digitization – an important priority of the new European Commission – but also in terms of environmental and energy transitions. Thus, the 3SI objectives are now aligned with the Commission’s objectives and priorities. One can indeed hope for a real leap forward for these countries to catch up with other European Union countries in the areas mentioned above.

Euro Créative: Mr. Brzezinski, as an American, what is your personal opinion about the level of involvement from Western Europe in this initiative? More specifically, what do you think of the attitudes in Berlin, Brussels and Paris?

I think there are still some misperceptions regarding the Three Seas Initiative in Berlin and Paris. As a consequence, those governments and related financial communities have been somewhat hesitant to deal with this initiative. These European capitals should support and invest in the Three Seas Initiative. 

The good news is that the German government is becoming more and more forward leaning when it comes to the Three Seas. Several years ago, it was almost opposed. Germany has since attended 3SI’s summits at the head of state level. The next step for them will be actually to invest in the Three Seas Initiative Investment Fund. That would be a powerful accelerator for the development of the initiative because it would complement the US investment. 

« Similarly, I would love to see France invest in the Three Seas Initiative Investment Fund. France has the economic capacities to do it and such investment would be beneficial both to its treasury and its vision for an economically more prosperous and globally competitive Europe. »

Ian Brzezinski

In addition, it would be great to have the European Commission to go beyond rhetorical support to actually encourage its companion International Financial Institutions to invest in the Three Seas Initiative Investment Fund. Such investments are almost more significant for the fact that they happen rather than how much is invested as they constitute a powerful and positive signal to financial markets, one that  enhances the awareness and credibility to the Three Seas Initiative. The would help generate confidence that this initiative is a safe and sound place for capital investment. 

Similarly, I would love to see France invest in the Three Seas Initiative Investment Fund. France has the economic capacities to do it and such investment would be beneficial both to its treasury and its vision for an economically more prosperous and globally competitive Europe.

Euro Créative: Mr. Castaignet, as a French, how do you perceive this lack of interest from our country?

Arnaud Castaignet: For the moment, France is absent from the Three Seas Initiative. No high-ranking officials participated in the 2020 summit, as in the previous ones. Indeed, Germany is now an official partner of this initiative, but we should not forget that this country is the first trading partner of most of the states in the region. So it is easy to understand why there is such interest in this initiative for our neighbour.

On the French side, trade relations are much less important. Speaking of the country where I live, cooperation between France and Estonia is currently more focused on defence – Estonia participates in Operation Barkhane. Nevertheless, for several years now, there has been a mutual desire to develop cooperation in the digital field, either through exchanges between start-ups or by strengthening cooperation in specific areas such as cybersecurity or digital administration – particularly around the issue of digital identity. This enhanced cooperation has been proved by the regular visits of French officials in recent years, such as Mounir Mahjoubi (former Secretary of State for the Digital Economy), Édouard Philippe (former Prime Minister) and President Emmanuel Macron. At the end of 2020, a Franco-Estonian declaration was signed on this subject, it remains to be seen whether this will lead to concrete progress or whether it will remain at the level of declarations of intent. The precedent of 2017 regarding the cooperation agreement in the field of digital administration did not lead to great results.

We are therefore in a bilateral relationship in which Estonia perceives France as a major European country that can provide economic and political opportunities and where France identifies specific features (in this case e-governance) from which it could draw inspiration. This is a potentially win-win relationship, but one that does not succeed in bringing about concrete, large-scale projects. A situation which can be found elsewhere in the region when it comes to French-CEE countries relations.

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Euro Créative team would like to warmly thank Ian Brzezinski and Arnaud Castaignet for their time and availability.

This interview was conducted by Téva Saint-Antonin and Romain Le Quiniou.