The Dynamic Nexus of Art, Economics and Energy in the Baltic States - Continuity and Innovation

New Landscape?

Energy security has become increasingly crucial for the Baltic states – Estonia, Latvia and Lithuania?– with the geopolitical fissures in the neighbourhood. The completion of the desynchronization process from the BRELL (Belarus, Russia, Estonia, Latvia, Lithuania) ring, transitioning to synchronization with continental Europe via Poland, is anticipated to be finalized by early 2025.?

The Estonian and Latvian electricity transmission system operators (TSOs),?Elering AS and Augstsprieguma tīkls (AST),?are in the process of building a new 1?GW sea cable which will be the fourth interconnector between Estonia and Latvia. Estonia already has one 1.4?GW interconnection capacity with Latvia. Two other Estonian-Latvian interconnections are also under construction in hybrid mode?for the Baltic states’ synchronisation with Continental Europe Network (CEN): the Valmiera-Tartu transmission line and the Valmiera-Tsirguliina line scheduled for completion by end of this year, 2024. The hybrid mode?of the new interconnection will not only connect the electricity systems of the two countries, but it will also facilitate the integration of new onshore and offshore renewable energy sources (RES) production and transmission capacities.

Cultural Nuances?

Bordering the eastern side of the Baltic Sea, and nestled in the East European Plain, the three Baltic states have similar geographies, yet each has its distinct culture, language and history. The region is hardly 300 metres in altitude. Dense forests cover about 50% of land mass in Latvia and Estonia, and a third (1/3)?in Lithuania.?Estonian?belongs to the Finnic branch of the Uralic language group, while Latvian and Lithuanian belong to the?Baltic branch of the Indo-European family of languages.?

The demographics show Lithuania has the most homogeneous population in the?Baltic states, a bigger population, and has had a lot of immigration to Canada, Argentina, Brazil, the US and western Europe (especially the UK) notably during the famine in the country between 1850 to 1890s. Estonia and Latvia have a third of their populations living in the capitals. Lithuania’s population is more evenly distributed between the capital and the cities of Kaunas and Klaipeda.?

Estonia and Latvia have magnificent castles and Cathedrals from Lutheran influences. Lithuania mostly has Catholicism influences.?

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Expressions

Riga in Latvia which was?a hub of Hanseatic trade is the largest of the three Baltic state capitals. It’s distinct for both its mediaeval town and art nouveau architecture. Riga offers Riga Black Balsam, one of the oldest liquor brands, made with ingenious showmanship and matured for eight whole years in oak barrels. It combines pleasant bitter notes of tart herbs with a fruity sweetness which makes it a valuable confectionery ingredient in crafting?chocolates infused with black balsam.???

Tallinn, as a major centre of the Hanseatic League, is a well-preserved mediaeval city. Toompea Castle, an old parliament built in 1922, is a landmark.?Estonia is also known for its luxury handmade chocolates.???

Most of the Estonian art in the mediaeval period (mid-1500s to the 1700s) was inspired by Swedish art depicting the concepts of mortality and battle. 19th Century Estonian art transitioned to impressionism and cubism. Estonia’s renown surreal art?started?from early 1900. Surrealism, stemming from World War I, expressed the?unconscious mind of dreamlike?ideas. Surrealist André Breton described its aim as to "resolve the previously contradictory conditions of dream and reality into a super-reality -?surreality”.?It produced works of painting, writing, theatre, filmmaking, photography, and other media.??

The post-World War II period, especially the 1940s and 1950s, saw Estonia enter the realm of social realism. In its reign, it was to depict an idealized portrayal of socialist life focused on advancing socialist ideology themes?that celebrated the achievements of the working class, industrialization, and the socialist cause.?

After that period there were tectonic shifts and developments in Estonian art as the political landscape changed to assume the avant-garde approach in art, design and architecture. Avant-garde pushes the boundaries of ideas and creativity. Estonia contemporary architecture is seen in designs such as the J?geva bus station.?

The vibrant world of Vilnius artists and writers amid the cultural treasures is showcased in museums like the?Lithuanian National Museum of Art?which was founded in 1933 and is distinguished for its rich fine arts collection with old and contemporary master paintings, sculptures, prints, drawings, applied art, folk art, and jewellery. The Pranas Gudynas Restoration Centre restores movable art treasures.?

Aleksandra Fled?inskait? Ka?ubien?, a famous environmental artist of Lithuania and the US, mainly created ceramic mosaics (illustrated below) characterized by graceful drawing and muted hues in the?1950s. The collage mosaics produce visually intricate and textured artwork, seamlessly incorporating the layered effect of collage with the intricate patterns reminiscent of mosaic. Her works strategically integrate historical foundations with the fluid dynamics of contemporary variables,?fostering adaptability in harmony with the?evolving landscapes of past and present tones, all while maintaining equilibrium.

Art nouveau architecture present in Lithuania combines aesthetic artistic detail with cutting-edge innovations.

Fiscal and Monetary Policies?

Reflecting the move from social realism art, Lithuania declared independence from the Soviet in 1990, and both Estonia and Latvia in 1991. Estonia began moving away from Russian influence and curating its financial model in favour of an open market.??

Liberal economies in the Baltic states have attracted funding due to their stability, which has bolstered investor confidence. Foreign investment, particularly from Nordic countries like Sweden, has played a significant role in propelling the Baltics forward in terms of development.?

The?Lithuanian currency, the litas, was pegged to the US dollar in?1994, and in 2002 it moved to a euro peg. The Latvian lats had been pegged to IMF’s Special Drawing Rights (SDRs), assets whose value is based on a basket of the world's five leading currencies – the US dollar, euro, yuan, yen and the UK pound.?Initially, the Estonian kroon was pegged to the Deutsche Mark.?

After the 2007-2008 financial crisis, the Baltic states adopted the Baltic Adjustment Strategy for Fiscal Adjustment, Labor Market Adjustment, Maintaining Financial Stability and Repairing Corporate and Household Balance Sheets. Latvia, especially, emerged from the crisis without the economic bedrock damaged – fixed exchange rates, flat tax system and relatively good?public accounts. ?

In the 2010 recovery, Latvia cut public spending by 25%.?Latvia negotiated a support package with the IMF, European Commission, and other countries worth about € 7.5 billion, though by 2011, it had not drawn the entire approved amount, indicating prudent fiscal management and economic recovery.?

According to ‘Budget Deficit and Public Debt in the Baltic States in 2010-2015' by Stanis?aw Pil?ys and Robert Aliukonis,?in 2011, public debt in Latvia was 42.7% as a ratio of debt to GDP, 37.2% in Lithuania, and 6.1% in Estonia. In a few years, Latvia got rid of subsidies, privatized the bulk of public companies, and established a competitive tax model under a proportionate system / flat tax system.

In the recovery from the 2008-2009 financial crisis, Estonia and Lithuania, too, implemented significant austerity measures pushing the boundaries of creativity to navigate the fiscal impact of the economic challenges.

Renewable Energy and Technology?

The Baltic Synchronization Project, funded through the Connecting Europe Facility (CEF) since 2018,?has a total funding?amount of € 1.3 billion. The project will?advance the development of renewable energy resources (RES) and liquified natural gas as a transition fuel in the entire Baltic Sea region.?

Alexela and Infortar are constructing a?Liquefied Natural Gas (LNG) terminal?project in Paldiski with capacity for?a Floating Storage Regasification Unit (FSRU). Balticconnector, a bi-directional natural gas pipeline between?Ing?,?Finland?and?Paldiski,?Estonia?run by?Gasgrid Finland?and?Elering links the Estonian and Finnish?gas grids providing Finland with access to the?In?ukalns underground gas storage?facility in?Latvia.? ?

These projects increase energy security and contribute to the climate goals of countries in the Baltic Sea region. ?

The Estonian Government’s ambitious objective is to generate energy for consumption by 2030 from 100% renewable sources such as wind power which had a capacity of 320MW in 2020. According to the International Trade Administration, Estonia is one of the most energy independent countries in the EU because of domestic oil shale, accounting for 56 percent of energy in 2020.?Estonia,?in collaboration with neighbouring countries, is exploiting offshore wind?power on the Baltic Sea.?

The Hydrogen Valley initiative in Estonia is poised to expedite the energy transition. Latvia and Estonia are collaborating to explore the potential of green hydrogen in the transport sector, aiming to develop a comprehensive hydrogen ecosystem with a value chain.?

The Baltic states have specialized in service industries: Estonia in IT and renewable energy, Latvia in finance with attractive tax rates, and Lithuania in tourism.?Estonia has more than two thousand (2,000) islands and it is tech savvy. Estonia’s nationwide coverage of IoT smart metering network went online in 2017. It is efficient as distributed generation is integrated. Bidirectional energy meters optimize self-consumption, track load profile and control energy flows lowering loss from non-dispatchable generation. Technologies such as long-duration energy storage (LDES)?will curb intermittent power supply from wind and solar?to the grid. Predictive analysis anticipates electricity demand and helps mitigate damage during harsh weather conditions. Decentralized ledger technologies will enhance transparency and accountability among stakeholders.?

The Rail Baltica, an ecological greenfield rail transport infrastructure project, seeks to integrate the Baltic states into the European rail network creating an economic corridor from Warsaw to Helsinki in line with the European Green Deal objectives.?

The Baltic states exhibit a remarkable ability to adapt and take on new forms on-demand,?while simultaneously retaining their unique essence over the years.