TheMarketForIdeas

In pre-war Poland, Marshal Józef Piłsudski developed a grand strategy titled Prometheanism, which meant to weaken the Russian Empire and its successor state, the Soviet Union, by encouraging national independence movements. The movement eventually incorporated a related initiative, that of the Intermarium, a system of alliances, which some had hoped would become a future Federation, linking the Baltic Sea to the Black Sea, as a united front against the advance of the Soviet juggernaut. It failed, but the concept held lingering appeal and was resurrected time and time again as a geopolitical solution to perennial Eastern European insecurity in relation to Russia in its various incarnations.

2015 saw the birth of another Promethean/Intermarium concept, dubbed the Three Seas Initiative (3SI or Trimarium). The inaugural Summit was held in Dubrovnik in 2016, then Warsaw and Bucharest. The 3SI stretches between the Baltic Sea, Black Sea and Adriatic Sea and incorporates Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. All of the countries are EU members and they represent 29% of the European Union’s territory (1,210,000 km²), 25% of the European Union's inhabitants (112 million), and 19% of EU GDP (in PPP). In June 2022, Ukraine became a partner-participant in the 3SI and a de-facto member, adding more geographical coherence to the North-South Axis envisioned by participants. Unlike the Promethean and Intermarium school of thought, the 3SI is in no official form aimed at Russia, or having a military component, however there is a significant undercurrent of “we hang together or we hang separately” running through official and policy discussions, emerging at its strongest in discussions on cybersecurity, energy security and the general security of critical infrastructures. Given the omnipresence of hybrid warfare in modern inter-state confrontation, and that the states in the region identify Russia as the main source of such threats, it is inevitable, especially with the inclusion of Ukraine, that the 3SI will lean more heavily on security as a policy and as an argument for its strategic investment.

I had previously described this initiative and Romanian attitudes towards it for The Market for Ideas in 2018 and concluded that it is necessary, but not sufficient, as the initiative faces significant challenges and “Romania must establish and develop new partnerships on the European chessboard (V4+, other trilateral initiatives) to increase the potency of regional cooperation and to strive for Bucharest 2018 to be not just a photo opportunity, but also a validation of the formula with concrete results”. This applies to Riga, as well. I had the opportunity to attend the Riga Summit and Business Forum on 20-21 June 2022 and my conclusions stand, despite the progress registered and the impetus which the war in Ukraine is giving to most participants. 

Goals of the 3SI

The main goals of the 3SI are to develop economic relations between the member states in the tri-sea area, particularly through investment in energy, transport and cyber infrastructures. These projects are predominantly lined up on a North-South axis, which pre-3SI analyses have shown is missing from the area, limiting the potential for economic cooperation in the region. Rather, the area’s infrastructure has, for decades, been oriented West to East, marking the region as either a bridge between Western and Eastern Eurasian economic poles, or as a periphery of the power holding sway at any moment in time over it. A North-South infrastructure axis facilitates tighter economic couplings within the region, with more diversified economic relations, centered on particular strategic needs, like connecting the Baltics by land to the rest of the EU or linking cross-border supply and productions chains, as well as innovation hubs, now and in the future.

Unlike the 16+1 Initiative between China and its Central and Eastern European partners, which more or less covers (or used to cover, before the Lithuanian exit) the same geographical space, the 3SI did not receive an overtly anxious or hostile reception in Brussels and in major Western European capitals. The strongest supporter was, however, the United States, which was an early investor in Three Seas Investment Fund. The members of the 3SI have, on average, a very strong Atlanticist orientation as a result of the strategic partnership with the US on defense issue and their reliance on NATO. Consequently, early project proposals for the 3SI in transport also stressed the role of North-South transport infrastructure in improving military mobility for the “tripwire forces” that NATO had in the region and for the likelihood of placing more substantial military assets in the future. In the past, the US had balked at this, not only to avoid higher costs of deployment outside already amortized facilities in Western and Central Europe (which are co-paid by beneficiaries such as Germany) or to avoid greater antagonization of Russia, but also because substantial pre-positioned forces in the region would be more difficult to move elsewhere. Germany is the country that serves as a turntable for NATO forces in the CEE region, allowing the fastest deployments through existing infrastructure. The war in Ukraine and the greater perception of insecurity in the region may have pre-empted the prior concerns, but a better connected CEE region on the North-South Axis will be required for sustainable long-term deployment of mobile forces. Some projects are proposed with this as an explicit outcome, such as the proposed Gdansk-Constanța railway. 

Current outcomes

The official 3SI website lists important statistics on the priority interconnection projects of the 3SI. Most project are in transport, followed by energy and digital. The number of priority projects has almost doubled compared to 2018, but only 5 have been brought to fruition and 27 have actual tracked progress. The projects are worth an estimated 168.4 billion euros, but only 62% of the projected required funding for them has been secured, which points towards a wider issue with the initiative.

The list of projects highlights a wide range of issues with economic and security impact that have been approached under the 3SI, such as 5G infrastructure, pipeline interconnectors and railway optimization.

Looking towards other analyses on the 3SI, such as those by the Kosciuzsko Institute, we find that even the digital projects align with broader concerns about security in the region, as evidenced by much faster growing imports of cybersecurity products, as well as the economic aspects of innovation and R&D for the new digital and economic paradigms. A Digital 3 Seas Initiative was created so that all projects under the three pillars of the 3SI would make cybersecurity a priority component for implementation.

In Riga, geopolitics took center stage and pointed comments were launched by even the national leaders regarding the security dimension of the 3SI’s ostensibly economic priorities. 

What the 3SI gets wrong

The main issue with the 3SI, as meritorious as it is in geopolitical terms, is its structural make-up. Its participants are entirely (with the exception of Austria) drawn from middle income states or states recently graduated to high income. Its one attempt at expansion brings in a low-middle income state whose fixed capital stock is actively being bombarded. As such, the 3SI lacks significant internal capital to fund these projects, and has found itself going “hat in hand” to partners with better resources. EU funding. National funding only accounts for 24% of the current planned expenditure, which is itself just 62% of what is needed. No wonder that the Americans are constantly asked to invest in the 3SI, but their commitments have been consistently lackluster, barely breaking the billion-dollar barrier, which is not a great deal when discussing infrastructure since, for example, a 17 km stretch of mountain highway on the larger highway project between Sibiu and Pitești in Romania will cost a billion euro on its own. The 2022 Riga Summit saw an announcement for a new round of American funding for projects, though details are scarce and the current figure is 300 million dollar. While the Americans under President Donald Trump were the initial boosters of the project, its early summits and business events also saw significant Chinese attendance, with ministerial level participation, since their 16+1 (later 17+1, now 16+1 again) initiative overlaps quite well with the 3SI and its infrastructure orientation. Their participation was salutary specifically because of the need for funding for projects, but the lackluster performance of the 16+1 and the evolution of the Sino-American relation and the attendant pressures placed on the CEE region to downgrade its cooperation priority with China have meant that the 3SI is not in a position to fuel projects with Chinese cash. This is especially true now since, by definition, all of its projects are strategic and will come under closer scrutiny from key partners for geostrategic impact., both formally through new EU and national legislation, and informally, through pressures such as the summer of 2020 US shuttle diplomacy in the EU on 5G issues regarding Chinese entities.

Neither is the US in place to provide much funding. The American state does not work that way and cannot match China in resource mobilization for strategic projects of an economic nature internally and abroad. It is an irony that the US only allocated significant funding when military concerns are on display, such as the 40 billion dollars for Ukraine or, in an economic sense, the 2,000 km of highway the US built through Afghanistan to also facilitate military mobility. Certainly, this presents an opportunity if we can get the US to occupy the 3SI states but, for now, we are stuck with limited funding through specific programs and actions, such as targeted grants like the ones for the feasibility studies on small modular reactors (SMRs) in Romania (worth 14 million dollars in total). The US has found it hard so far to even fund its own moonshots to match China’s in 5G, AI and other fields, while US companies frequently have a mind of their own and are not amenable to being directed to engage in projects with uncertain payoffs for political reasons in the CEE region. Not to mention that these companies themselves are often strapped for investment cash and lack the direct support that China gives its national champions abroad, which not only offsets R&D or expansion efforts but also often includes a funding component for strategic projects (like the 77-billion-dollar line of credit Huawei has with the China Development Bank for investment in digital infrastructure in Belt and Road Initiative countries).

The EU has picked and will pick up most of the slack, but this relegated the 3SI for the foreseeable future to a less formalized state, where countries decide projects and then shop around for EU funding calls to make them happen. 

But why were the Germans there

This is partly why Germany was invited as an observer and President Steinmeier was given (literally) the center seat in the Riga Summit’s public discussions line-up. It assuages German fears about uppity Easterners that have, for a long time, injected their national anxieties into the discussions on the German vison for cooperation with Russia, for decarbonization in Europe and for counting foreign aid as part of the contribution towards collective defense through a unified foreign, development and defense policy, as Wolfgang Ischinger previously proposed during the Munich Security Conference. Being proven wrong does not change the situation, quite the contrary! Germany also has the political and economic wherewithal to make or break the 3SI, with its central trading and investment partner role for all of the countries involved, so it pays to have it at the table, especially to also assuage European anxieties regarding American intentions. There are still significant divergencies in perspectives between the EU and the US, which were on display also during the 2021 EU-US Summit and the quite productive efforts inaugurated there. The main linchpin is EU data and technological sovereignty in the face of the US technological giants, but there are other points of contention which have temporarily been swept under the rug with the war in Ukraine. For all of the boasting by the Biden Administration on going back to a multilateral foreign policy, a degree of unilateralist mettle remains, and Brussels and other European capitals look towards the 3SI as a possible American attempt at bloc-building in the EU’s backyard, just as they viewed, but with greater intensity, the Chinese efforts in the same region. 

Concluding thoughts

Aside from the superb organization by the hosts, there is not much to say about the Riga Summit. The open door for Ukraine was not exactly unexpected, but it still represents a historic advance and something that will change up the dynamic of the 3SI in the future. Funding remains a perennial issue and one for which neither the 3SI countries, nor their partners, have a definitive and satisfying answer beyond handwaving it away through the EU or through private investors. The focus on interconnectivity in energy, transport and digital infrastructure is worthy and a clear winner, but investors in infrastructure are not guaranteed historically to reap the benefits of the positive externalities of their projects and will need some serious enticement. The fluid geopolitical situation in the context of the war in Ukraine precludes any sort of definitive prediction – with the next summit planned for Bucharest in June 2023, we will see whether the long list of 3SI projects will get longer along with the completed column and whether a Europe facing down the barrel of recession will fund many of those projects, when their strategic orientation is towards less reliance on the West. 

Photo source: rawpixel.com.

[“The Seafarers” (1923), by Paul Klee.]