The Lithuanian Minister of Finance: green transition is the only way to become independent of Russia’s fossil fuels and increase Europe’s resilience to future shocks

Press release, 28 May 2022

The Seimas continues to host the Spring Session of the NATO Parliamentary Assembly (NATO PA). Having taken the floor at the meeting of the Economics and Security Committee, Gintarė Skaistė, Lithuanian Minister of Finance, reviewed the consequences of Russia’s war for the Lithuanian and global economies and described the measures that Lithuania had taken to reduce its energy dependence on Russia.

Photo by Džoja Gunda Barysaitė, Office of the Seimas

According to Ms Skaistė, this year the global economy, which is still coping with the consequences of the pandemic, has suffered another blow as a sad result of the war in Ukraine. The war unleashed by Russia against Ukraine undoubtedly has seriously harmed the European and global economies because the rising energy and food prices undermine international trade as well as investor and consumer confidence. International financial institutions must be prepared to support and protect the most vulnerable and fragile countries against serious disturbances and to combat the negative effects of Russia’s military aggression against Ukraine, including the refugee crisis. This is particularly relevant now when the increasing pressure on the global food market is turning into a wider food crisis, which will have the greatest impact on developing and emerging economies.

When referring to Lithuania, the Minister of Finance acknowledged that the imposed sanctions had affected both Russia’s and Lithuania’s economies. Lithuania’s economy will nevertheless grow, but much less than expected, and everything will depend on the duration of the war. ‘We thought that our economy would grow by 3.7 %. However, now we believe that growth will be slower than forecast earlier, but will still remain positive at around 1.6 % this year. Our basic scenario is constructed on the assumption that we will avoid a downturn. Greater uncertainty and inflation pressures will hold back consumption and business investment. The geopolitical crisis will also have a negative impact on our exports, which should fall given our economic involvement with Russia, Belarus and Ukraine,’ said Ms Skaistė.

According to her, Russia is aggressive in its behaviour and is trying to wield its power on neighbouring states by means of military and non-military invasion. Therefore, long-term sanctions are also necessary to avoid new wars.

Europe’s energy independence has a role to play in this connection, and Lithuania has already taken very decisive decisions in this area, as stated by the Minister of Finance.

‘It is very important to make proper decisions in time. We have had some experience with Russia. Gazprom used to set 30 % higher gas prices for Lithuania than for other countries because we were not sufficiently friendly with Russia. Therefore, in 2010 we finally decided to purchase a liquefied gas terminal that enabled us to abandon Russian gas. We have had similar experience with electricity grids. Therefore, we have built interconnections with other countries in the region and are now independent of Russia’s electricity grids or natural gas. We have made these decisions for ourselves and can help other countries to do so,’ said Ms Skaistė when reminding that last Sunday, 22 May 2022, Lithuania decided to completely abandon Russian oil, natural gas and electricity.

According to her, it is important that Lithuania, as the EU Member State, participates in green transition, reduces energy consumption and uses renewable energy resources. ‘Our estimate is that by 2030 we will be producing 90 % of electricity from renewable energy sources,’ said the Minister of Finance.

Ms Skaistė believes that green transition is the only way to become independent of Russia’s fossil fuels and to increase resilience to future shocks. Therefore, Europe must continue to have more ambitions around green transition and ensure the availability of adequate resources for this purpose.

The Spring Session of the NATO Parliamentary Assembly in Vilnius takes place in the buildings of the Seimas on 27–30 May 2022.

Saulė Eglė Trembo, Chief Specialist, Press Office, Information and Communication Department, tel. +370 5 239 6203, e-mail: [email protected]