The NATO PA Science and Technology Committee has discussed the impact of the war in Ukraine on Lithuania’s economy

Press release, 28 May 2022

 

The Seimas has hosted a meeting of the Science and Technology Committee of the NATO Parliamentary Assembly (NATO PA). The rapporteurs gave overviews on the implementation of Lithuanian innovation projects, the strengthening of the Science and Technology (S&T) Resilience in the Alliance, Ukraine’s achievements in digital transformation, the role of technologies in combating climate change, the future of military activities, and other matters.

 

 

In her report, Jovita Neliupšienė, Vice-Minister of Economy and Innovation of Lithuania, talked about the impact of the war on Lithuania’s economy and the implementation of innovation projects. She welcomed the development of laser technology, start-ups, EdTech and biotechnology in Lithuania.

 

When referring to the current economic situation, the Vice-Minister noted that Lithuania was experiencing high inflation amid souring prices of energy resources and food products. According to her, the European Commission forecasts that the consequences of the war in Ukraine will be most acute in the Central and Eastern European countries that are geographically closest to Ukraine.

 

‘Our region suffers from enormous inflation that seems external to us because it is conditioned mostly by resource costs, exports, and energy prices in other countries,’ said Ms Neliupšienė. She added that Eastern European countries very actively traded with Russia, Belarus and Ukraine, and thus faced a sharp fall in exports. Furthermore, according to the Vice-Minister, the prices of materials and components are rising, supply chains are affected, and these challenges were already visible during the COVID-19 pandemic before the start of the war against Ukraine.

 

Photos by V. Chorna, Office of the Seimas

 

When talking about the deteriorating investment environment and confidence, Ms Neliupšienė said that investors currently saw our region quite differently and kept asking when the war would start in Lithuania and spread to Latvia and Poland. According to the Vice-Minister, investors have to receive thorough explanations that Lithuania is a member of NATO and the EU and that our region is safer than before our accession to these organisations. ‘The trust of our social partners is of crucial importance to us,’ said Ms Neliupšienė.

 

She reminded that Lithuania had stopped imports of Russian gas in April and electricity imports in May. The Vice-Minister expressed her appreciation of Lithuania’s LNG Terminal, which was constructed following the decision taken back in 2014. According to her, the need to have the own terminal was prompted by both economic and geopolitical reasons. She reminded that Lithuania had to cope with over 50 interruptions of gas supplies by Russia from 1989 to 2013 and paid a 30 % higher price as compared to other countries. ‘We are convinced that the LNG Terminal will help us to stabilise gas prices and reduce inflation at least partially,’ said Ms Neliupšienė.

 

‘Our economy is still growing, but we need a new workforce,’ stated the Vice-Minister. According to her, Lithuania had more than 54 thousand war refugees registered last week. This is a large number compared to the population of the country. She assured that a lot of refugees were offered jobs and social services, as well as provided with housing by a number of supportive Lithuanian families.

 

How can we deal with the effects of the war? In answer to that question, the Vice-Minister argued that the first thing to do was to stop financing the war, that is, first and foremost, to stop purchasing energy resources from Russia. As regards exports and imports, diversification seems to be an important solution. She said that consumption could be reduced. However, when it comes to investment, the focus shifts to NATO’s stronger forces and presence in our countries and to mobilisation of EU capacities.

 

Ms Neliupšienė stated that innovation and smart specialisation were a priority for our country. ‘We are increasing economic presence in all countries, including Taiwan,’ she said. She added that Germany was Lithuania’s main export and import partner and main investor. Ms Neliupšienė also noted her belief that the future of Lithuania was food technology.

 

The Vice-Minister also stated that, according to experts, it was important not only to measure the impact on trade, GDP and other statistical indicators, but also to assess the level and situation of the economy, that is, its health. This is an indication of the degree of success in stabilising the economy in times of crisis.

 

Rimas Rudaitis, Adviser, Press Office, Information and Communication Department, tel. +370 5 239 6132, e-mail: [email protected]