Covering up cross-border co-operation between Lithuania and Kaliningrad

In the meantime, the officers from the special investigative service collect documents about a cross-border project and disappear without comment. This is just one episode in a growing atmosphere of tension where a series of well-intentioned EU-Russia cross-border projects are beginning to unravel.

Cross-border attitude

Between 2007 and 2013, the EU implemented 13 Cross-border co-operation programmes in the framework of the European Neighbourhood and Partnership Instrument. The total amount allocated for these projects was 947.2 million euros. Russia participated in five of the programmes, making it the most active participant among all EU and non-EU countries involved. There is little doubt that cross-border co-operation with Russia invoked mixed feelings throughout the EU. However, most of the problems occurred on the eastern EU border which included hostile economic competition in the form of discriminating border-crossing regimes, malicious energy policies and bans on food products. This peaked in 2014 during Russia’s illegal annexation of Crimea, which led to many new security measures put in place on the eastern EU border. The Baltic states also erected new border fences, while Poland assembled a number of watchtowers overlooking Kaliningrad. After the 2016 Warsaw Summit, NATO announced the deployment of its Enhanced Forward Presence battalion. This was disclosed just a few months before the final conference of the 2007-2013 EU cross-border co-operation funding period.

The second-most expensive project during the 2007-2013 funding period was a trilateral project involving Lithuania, Poland and Russia. Warsaw was in charge, with Olzstyn, Vilnius and the Kaliningrad hosting branch offices. Kaliningrad and the neighbouring border regions of Lithuania and Poland received 62 million euros from combined EU and Russian budgets. In the final report, carried out on behalf of the European Commission, the cross-border co-operation with Russia was considered an extremely important tool in helping promote EU values within the region. However that was not the case, at least not in and around Kaliningrad. Growing international tension created new insecurities and most funding recipients soon lost any motivation to continue.

Nemunas River treatment project

As early as 2017, the then vice-mayor of the Jurbarkas District, Saulius Lapėnas, wasthe first to blow the whistle on the Russian partners in the Nemunas River treatment project. The Nemunas River separates Russia from the EU. In 2010, two municipalities on its banks, the Lithuanian District of Jurbarkas and the Kaliningrad town of Neman, agreed to invest in a wastewater collection and treatment project. During the period 2007-2013, Poland, Lithuania and Russia contributed a total of eight million euros to the project, whilst a further 4.3 million was allocated from the EU.

In August 2018, the programme’s manager, the Polish Ministry of Investment and Economic Development, requested that the project leader, the Jurbakas Municipality, return nearly one million euros due to financial discrepancies. Even though the discrepancies were found to come from the Russian side, it became Lithuania’s problem since the municipality was officially in charge of the project. In response, and closely watching the implementation of the project, the now former vice-mayor Lapėnas stirred up the mud. On his blog, Lapėnas described a story about travelling around Kaliningrad and asking “Why do Lithuanians have to suffer for what happened in Russia,” claiming that he did what he could “to make the Russians give back the money”. Just before the end of Lapėnas’ term, a reply to his question unexpectedly arrived.

On January 15th this year Anton Alikhanov, the governor of Kaliningrad, announced: “We will cover the debt. The mistake in the Neman financial report will cost Kaliningrad’s central administration almost one million euros.” At first, this seemed like the proper solution, but the governor then added: “We are doing it to prevent international stories from coming out.” Yet at the time of writing this (July 2019), half of the debt remains unpaid.

The problems can be traced back to the end of 2016 when the contractor of the EU-funded river treatment plant, Baltlitstroj, a Kaliningrad-based company, began bankruptcy procedures. Baltlitstroj constructed the water treatment plant-related infrastructure in Kaliningradwith a total value of 7.7 million euros. So far, the Neman municipality transferred 6.3 million for the project. Yet, Baltlitstroj accounts are still short almost 1.5 million euros and the Russian municipality does not show any interest in paying the rest. Anna Kudashkina, a tireless Kaliningrad-based lawyer representing Baltlitstroj, explains that “The Neman [Kaliningrad] Municipality simply lied in the report to the EU that it had settled its accounts with Baltlitstroj.” According to her, the funding administrator in Warsaw asked the project leader, Jurbarkas District Municipality in Lithuania in to refund the above mentioned one million euros immediately after it was realised.

However, the Kaliningrad region’s prosecutor proposed his own version of events. In a response to Baltlitstroj last October, the senior investigator of the prosecutor’s office wrote: “The EU did not transfer the whole sum, and it is still indebted to the Neman Municipality for around 1.3 million euros.” Kudashkina explains that the prosecutor and now the Neman municipality are trying to tie the debt to fluctuating currency rates, which she suggests not to take seriously: “I am trying to prove that the Neman Municipality intentionally avoided making payments for five years. It established another separate company, The Neman Centre for Capital Construction (NCCC), and illegally transferred the wastewater plant construction to it. And the NCCC spent the money on something else.”

By the end of 2016, Kaliningrad’s court of arbitration ruled that the NCCC does not have any funds to pay the debt and that the municipality is not legally responsible. In January this year, shortly after the Kaliningrad governor’s announcement that he would pay the Neman debt, Lithuania’s special investigation service also took notice. Whilst they were discretely researching their first document samples relating to one infamous failure, the Russian courts announced rulings in two similar cases. At least three Kaliningrad municipalities, Svetlogorsk, Sovetsk and Neman, are refusing to pay Baltlitstroj for the 2007-2013 programme-funded construction. These include the Nemunas treatment infrastructure in Neman, a physical education centre called Druzhba (Russian for Friendship) in Sovetsk, and the Yantar theatre hall in Svetlogorsk. The total debt is around seven million euros. The key to the story is simple: Baltlitstroj, once the largest contractor in Kaliningrad, is owned by a construction business conglomerate called Panevezio Statybos Trestas – a Lithuanian company.

Kudashkina does not believe the company will receive any of the money. Even the one million that Kaliningrad’s governor promised to pay is to be transferred back to the funding administrator in Warsaw, not to Baltlitstroj, because the project funds were misused. The special investigative services in Lithuania have conducted pre-trial investigations of this misuse for more than six months.

Casualties of cultural diplomacy

Andzelika Shpiljova often takes long walks along the Russian side of the Nemunas River, which separates Russia from the EU. During these walks, she prepares an application for the European Court of Human Rights about her dismissal as director of the Sovetsk Museum of History. The Russian border town of Sovetsk appropriated around three million euros from the 2007-2013 cross-border co-operation programme. In 2018 the town authorities tried to close down the programme’s beneficiary – the town’s only museum.

“We saved the museum, we won the fight, but every fight claims its victims. I was the one here,” Shpiljova tells me. She is accused of organising exhibitions with representatives of a hostile state, namely Lithuania. The court in Russia did not accept her complaint.

Officially, the museum closed due to a lack of funding, but this clearly does not correspond with Shpiljova’s side of the story, and its success with European-supported projects. A museum employee, who did not want to give her name, listed the results of the co-operation to me: the town opened a new tourist information centre, there was a renovated park, some key tourist routes were transformed, and even a monument to Louise of Mecklenburg-Strelitz, the former Queen of Prussia, was erected.

Back on the other side of the Nemunas, one fate has already been sealed. In October 2018, Gintaras Skamaročius, the chairman of the Nemunas Euroregion (the cross-border region connecting Russia, Poland, Belarus and Lithuania), was declared persona non-grata in Russia. Skamaročius is also the head the Donelaitis Society – a Lithuanian cultural association which lobbies to safeguard the heritage of Kristijonas Donelaitis, an 18th-century Lithuanian writer; some of it being in the territory of Kaliningrad.

An 18th-century church where the writer worked and lived received 500,000 euros for renovation from the 2014-2020 cross-border programme. However, Skamaročius, the initiator of the renovation, has been banned from entering Russia for five years. Moreover, the ban cites article 27.1 of the Russian law on border crossing, describing it as a threat to state security. Skamaročius used to regularly visit Kaliningrad, but doing his job has now become nearly impossible. Holding his tense lips tight, he explains to me: “On the border I refused to collaborate with an unidentified officer, who I believe was an agent of the Russian Federal Security Service.”

Risk prevention

On February 1st this year, on the 24th floor of a Vilnius high-rise office building called “Europe”, preparations for a new stage of cross-border co-operation with Russia are running at full speed. Aistė Žukauskė, head of the Lithuania-Russia co-operation programme division of this secretariat, receives visitors in a transparent glass room. After the Russian annexation of Crimea, the European Commission cast doubt on the future of cross-border co-operation programmes. By the end of 2016, however, it was decided that the project should continue.

During the 2007-2013 period there were major disagreements among the Lithuanian, Polish and Russian counterparts, and some projects had to be reassessed as many as four times. In 2012, after a meeting initiated by the European Commission and the gathering of all national authorities, a clear and binding decision that the projects selected by the evaluation committee and previously hotly disputed were approved for contracting and implementation. In the end the planned second call for proposals never took place because it was already too late.

The new European Neighbourhood Instrument (ENI) document suggests a reduction in the number of trilateral border programmes and an adjustment in their implementation in order to prevent further risks. This is why the Lithuania-Russia programme has been separated from the trilateral Warsaw-led one. A new joint technical secretariat was also established in Vilnius (in the “Europe” building).

Today, as part of the secretariat under the Lithuanian interior ministry, Žukauskė is responsible for allocating 27 million euros to joint Russian-Lithuanian projects. Excited about the next round of applications, she says she cannot say anything about the 2007-2014 programme and blatantly admits: “I have no one to learn from, because we are all new. None of us has experience with the previous funding period.”

“Preserving institutional memory is equally important as a continuation of the co-operation,” writes a European Commission spokesperson in a long-awaited email to me. The EU representatives obviously could not have predicted how the new modalities of the Lithuania-Russia programme will develop. At the same time, the ENI documents also state that the main risk for cross-border co-operation is Russia’s role in Ukraine, which could lead to new sanctions. According to the documents, new sanctions could affect the programme’s success. Indeed, Lithuania’s Baltlitstroj representatives agree that bankrupting them is Russia’s revenge for EU sanctions. They are thinking of dismantling reusable parts of the water treatment plant, and see the deconstruction of the recreational and sport centres that they have built as the only way out. However, none of the institutions – in the EU or Russia – seem to care.

Alla Ivanova, head of Kaliningrad’s ministry of interregional co-operation, is evidently familiar with the whole picture. Yet, she consistently presents the Neman debt as a one-off mistake. Replying to my question, and without giving a direct answer, she writes: “One problem may not affect the overall co-operation” and suggests solving the debt issue at the re-launched Lithuanian-Russian interregional co-operation board. Since the board has not met since 2012, and the tension between the two states continues to grow, she has no doubt that the board will not be meeting anytime soon.

Marius Laurinavičius, a senior expert at the Vilnius Policy Analysis Institute, believes that Vladimir Putin’s regime should not be seen as a partner for Europe and claims that co-operation is possible only with those who do not support the Kremlin or its policies. Laurinavičius notes that “If Brussels doesn’t understand that we should take the choice of partners into our hands, we should transfer the responsibility for cross-border co-operation to European institutions. People there have more power, so they should be mitigating corruption and combating fraud. Let them deal with it.”

Saulius Lapėnas, the former vice-mayor of Jurbarkas, is now free of his representative duties and is open to making his own interpretation. He elaborates: “Not one of the sides, neither the programme administrator in Poland, nor Lithuania nor Kaliningrad want to investigate the abuse of EU funds. They want to cover it up because the negative publicity would stop any new projects.”

In the meantime, ordinary residents on both sides of the border are paralysed by the security threats. They cannot agree on the history, about everyday life, and now about unpaid bills. On the top of the failed project and superficial visions, officials are trying to build new ones. This is how the EU and Russia invest in their cross-border animosity.

Gil Skorwid is a freelance journalist based in Kaunas, Lithuania. He covers international relations, media policies, social movements, and educational and cultural developments in the Baltic region. In 2017, he was awarded the Philippe-Chaffanjon Prize for the best multimedia report in France.

Cross border, Kaliningrad, Lithuania, Poland