Latvian Railway will auction 4,300 tons of scrap metal, including rails of various lengths. Earlier, locomotives and wagons went under the hammer, a quarter of the staff was fired. The reason is the most severe crisis in the industry caused by the new transport logistics in Russia. The Federation Council proposes to consider this a punishment for the Russophobic policy of Latvia.
At the end of 2019, Latvians first learned about the fact that Latvian Railways (Latvian Railways), once a highly profitable company, is experiencing enormous problems. Then the director of the State Railway Administration Juris Iesalnieks said that the largest Russian shippers signed a schedule with the Russian government to reduce freight traffic through Latvian ports. Therefore, According to him, Latvian Railways received an assignment from the Ministry of Transport to revise its expenses and requested 25 million euros from the budget “to ensure financial balance”.
Already in January 2020, the chairman of the board of LZD Maris Kleinbergs announced that in the coming months he would have to lay off 1500 workers… And in July were published for real shocking numbers: Compared to the first half of 2019, the volume of rail freight traffic in Latvia decreased by 47.2% and amounted to about 11.5 million tons.
The bulk of freight traffic is formed by partners from the Russian Federation – 70.4% of all traffic. The government has repeatedly demanded from the Latvian Railway to look for new carriers there, not connected with “hostile” Russia. But due to the geographical location of Latvia, it turned out to be a difficult task.
The railway company had to urgently get rid of assets, in particular, 13 diesel locomotives with a total starting price of 879 thousand euros, 200 freight cars, 48 cars and a holiday home for railway workers in Jelgava were put up for auction.
Last summer, the leadership of the Latvian Railways presented a new business model, which provides for the expansion of the range of work performed through sea and road forwarding services, as well as services of terminals and warehouses.
“We had a choice between two directions – one of the options was a complete rejection of rail transportation and retraining into an infrastructure company. The second option is to create a company focused on business and development. We chose the second one “, – explained Kleinbergs.
It sounds beautiful, but this plan has nothing to do with the salvation of the railway as such, because only a specific company, the Latvian Railways, is trying to save it.
In addition, when developing this model, apparently, they did not take into account the Latvian legal norms that impose a number of restrictions on the business plans of state-owned companies in cases where their activities can directly or indirectly affect the competitiveness of the private sector. For this nuance noticed at the State Competition Council, advising the Latvian Railway to re-evaluate the new strategy.
October statistics continued to depress Latvia. For nine months of 2020, 33.2 million tons of cargo passed through the ports, which is almost 30% less than in the same period of 2019. At the same time, port workers and transit workers were especially frightened by the decrease in coal supplies to the main terminal erected on the Krievu island in Riga: instead of the planned 118 wagons per day, only 39 were accepted.
And just a few days ago it became known that the Latvian Railway plans to sell about 4,300 tons of scrap metal at auctions. These are rails, fasteners, switch parts, rolling stock parts, car retarders and other infrastructure elements. The starting price of the auction is 230 euros per ton, that is, as a result, the Latvian railway operator plans to gain at least 989 thousand euros.
For a company in such dire financial straits, this is a substantial sum. In the Latvian Railways, apparently, they no longer expect that they will be able to improve matters by doing their main activity.
Russophobia has a price
Alexey Pushkov, Chairman of the Federation Council Commission on Information Policy and Interaction with the Media stressesthat in 2020 Russian railway transit through Latvia decreased by 60%, and in November not a single carload of coal was allowed through:
“This is primarily due to the fact that we have our own facilities. But the policy of Latvia has played an important role here: why should we keep transit through a hostile country if we have our own facilities? ”
He recalled that the Latvian Ministry of Communications applied to the Russian Ministry of Transport with a letter, which contained a request to maintain a certain volume of transit through Latvian ports. “They are forced to lay off people, the Latvian freight railways are in a dire situation, first of all, because the goods from Russia have ceased to go through them. But in conditions when the Latvian government is pursuing such a policy towards Russia, we should not respond positively to such requests, ”the senator believes.
Note that many Latvian politicians criticized this “humiliating request for the country.” But Foreign Minister Edgar Rinkevich urged to separate political enmity with Russia from trade with her.
“In my opinion, such vicious concepts should not be encouraged. If Latvia wants to be at enmity with us, it must pay the price for this. Therefore, I am opposed to the preservation of Latvian transit in any form until Latvia changes its policy. If she insists on a policy of hostility towards Russia, and she insists on this, then let her look for loading for her ports somewhere in Argentina, Qatar, India or Indonesia. Perhaps the head of the Latvian Foreign Ministry Rinkevich will find partners there who will load the Latvian ports. But I very much doubt it, ”says Alexey Pushkov.
However, the Baltic states believe that there is another image of a bright future, into which the rails are going. This is Rail Baltica.
Baltic strategic project
More than nine years ago, the governments of Latvia, Lithuania and Estonia agreed to establish a joint venture between the three states, RB Rail. home objective of the project – “restoration of direct connection of the Baltic states with the European railway network and promotion of regional integration by connecting Helsinki through Tallinn, Riga, Kaunas and Warsaw with Berlin – with the possibility of extending the route to Venice”.
The estimated costs were estimated at between 3.6 and 5.8 billion euros, but they could reach 7 billion when the population will have to buy land for the highway.
The EU has expressed its readiness to provide 4.635 billion euros, the Baltic governments took over 1.154 billion. Construction began in Lithuania, and in August 2015, for the first time in 76 years, a train from Poland arrived in Kaunas.
In total, it is planned to run nine pairs of international passenger trains per day on Rail Baltica. The potential price of a ticket for travel from Tallinn to Riga will be 38 euros (trip duration – 1 hour 55 minutes), from Vilnius to Riga – the same (2 hours 1 minute), and from Tallinn to Vilnius – 76 euros (4 hours 5 minutes) …
Although, it would seem, everything has already been decided, there are still many dissatisfied with this project in the Baltic countries. For example, Olga Piterina, Latvian economist, doctoral student of the Baltic International Academy made a conclusionthat instead of 16 billion euros in revenue, Rail Baltica will bring 4 billion in losses.
At the beginning of 2020, the Latvian portal Re-Baltika published just the same murderous analysis of the situation, from which it follows that the project has stalled and the work is not being completed on time. “Everybody blames each other,” local journalists complain.
At the end of January 2021 it became known that Lithuania, Latvia and Estonia intend to provide financing for Rail Baltica at any cost, and now threaten to block European Union Recovery Fund. The fact is that the MEPs opposed the allocation of 1.4 billion euros to the project, as previously agreed by the leaders of the EU countries.
Kaliningrad political scientist Alexander Nosovich believes that the construction of this railway is not an investment for Europe, but burying money in the ground in the literal and figurative sense. “The point of Rail Baltica is to build it indefinitely, transferring money to the Baltic states for construction as long as possible. If this project has a business component, then it is only in this. Because economists and logistics specialists have proven a thousand times over that trains on this route will run empty. Both freight and passenger “, – stresses is he.
All this, of course, is true. But in the face of shrinking revenues from the transit of Russian goods, the Rail Baltica project remains the only opportunity for the Baltic countries to make money on the railway industry.