Three Seas Initiative investment fund gets US boost

The United States has agreed to pledge up to one billion euros to the Three Seas Initiative (3SI), Keith Krach, the US administration’s Undersecretary for Economic Growth, Energy and the Environment, announced at the Three Seas Virtual Summit in Tallinn on October 19.

Speaking at the summit, Mr Krach said that the US would match 30 per cent of the combined contribution of all 12 3SI participating nations, to a maximum of one billion euros. In other words, if the 12 nations stumped up around 3.4 billion euros, including money amassed via private sector investment, the US would put in one billion euros in return.

“The more each country invests, the more we invest,” said Mr Krach.

Beata Daszyńska-Muzyczka, president of Polish State Development Bank and also chair of the 3SI Investment Fund supervisory board, used the summit to announce her organisation’s decision to grant an additional investment of 250 million euros to the fund.

This time last year only Poland and Romania, from the 12 participating 3SI states, had put money in the investment fund. That number grew to nine at the latest summit, as Estonia, Latvia, Hungary, Bulgaria, Lithuania, Slovenia and Croatia joined Poland and Romania. The fund now currently stands at 913 million euros.

The main target spheres of the fund are transport, energy and digital infrastructure, and the 3SI aims to alleviate what is by some estimates a shortfall in investment of over one trillion euros in comparison with the 12 countries’ western EU neighbors.

Mr Krach also placed the 3SI approach, as a democratically-led initiative among like-minded countries, in stark contrast with China, which he said had been doing little short of holding countries to ransom in its debt-trap approach to investing overseas.

The fund is being managed by London-based investors Amber Infrastructure.

Amber, whose CEO Gavin Tait also took part in the summit, has been manager of fund since March 2020, and has itself put up 10 million euros.

“That the fund is managed by Amber Infrastructure, a private company, means that in a transparent manner the decisions supported by political objectives will be made independently by fund managers,” said the President of Estonia Kersti Kaljulaid, the host of the summit.

She added that while the main objectives of the fund will be determined by the presidents of the 3SI countries, actual project decisions will be made by fund managers.

Also unveiled at the summit was Estonia’s Smart Connectivity Vision Paper, which hopes to revolutionise smart connections across the region and beyond through autonomous vehicles, and high speed, efficient road, rail and river links.

“If we want to really fast-forward into a better future we need to invest in smart ways,” said Ms Kaljulaid. “If we manage to make our transport and energy grids smart enough, this will hopefully serve as a role model for Europe in how to use technology to ensure a more connected future.”

“We think that we have a competitive advantage over the rest of the EU, because we have fewer legacy systems to hold us back. The Three Seas region can emerge as a leader in data and digital connections, not just for Europe, but for the whole world. Let’s get started on our smart connectivity today,” the Estonian president added.

Concrete examples of Three Seas facilities which will plug into the smart connectivity vision include LNG terminals on the coasts of Lithuania and Poland, Rail Baltic, the proposed pan-Baltic States high-speed rail link, and even river transport, with canals planned to link the Danube, Oder and Elbe rivers and with it provide a continuous link between the Black Sea and the North Sea.

Mark Menezes, the US deputy secretary, used the summit to point out how important energy infrastructure is for the region, especially when it comes to lessening the dependence some countries have on Russian natural gas.

In particular, the issue of the Nord Stream 2 pipeline connecting Germany and Russia, has proven immensely controversial, and both the US and Poland have been in staunch opposition to completing the pipeline.

“The Trump administration has been providing opportunities to develop [energy infrastructure] that is not dependent on Russia’s natural gas,” said Mr Menezes. “We’ve seen what happens when countries become dependent on Russia for their natural gas. Russia simply uses this as a way to exert control over these countries.”

One issue often raised in relation to the Three Seas Initiative is whether or not it is congruent with wider European Union objectives, and if it perhaps represents a split along a West-East line. European Commission Vice-President Margrethe Vestager confirmed during the panel that this is not the case.

“It’s truly cross-border, it has the same values that the entire Union promotes – cohesion and convergence, and infrastructure is key to those two objectives,” she said.

The next summit will be held in Bulgaria in 2021, and the country’s president Rumen Radev briefly outlined the objectives and focus areas that Bulgaria plans to bring to the table during the next year.

“We should look beyond pipes and asphalt. If we want this initiative to prevail we must also focus on scientific and educational connectivity. That’s why I will challenge my colleagues to think how to better invest in our young people in our scientific potential,” said Mr Radev.

Ms Kaljulaid meanwhile invited more private sector investors to seriously consider investing in the region.

“Please use this smart opportunity to invest smart money into smart economic development. We, the leaders of the Three Seas nations, promise to keep red tape at bay and also to make sure that the cross-border operation of the projects will function smoothly,” she said.

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