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Cheesed Off

A block on dairy imports is just one of Russia’s seeming reprisals against Lithuania for hosting a key EU summit. 

by Linas Jegelevicius 6 November 2013

VILNIUS | On Halloween morning, Lithuanian President Dalia Grybauskaite and other top government officials got a scare from the State Security Department, and the bogeyman was a familiar one: Russia.


A report from the security agency warned that Russian secret services, and perhaps even the Kremlin, were plotting to disseminate information aimed at discrediting Grybauskaite and other national leaders. The documents were marked classified, but that afternoon the news was all over Lithuanian media, prompting a confirmation from the president.


“I learned today that information attacks will be made against Lithuania, [the European Union’s] Eastern partners, and me personally,” Grybauskaite said. “One of the main reasons, apparently, is our successful EU Council presidency and, probably, Lithuania’s striving for energy independence.”


Products sold under the Svalija brand are processed by the Vilnius-based Pieno Zvaigzdes company, which claims to be the biggest dairy in the Baltics. Photo from the company's website.


Security officials quickly pressed for an investigation into the report’s leak, but given recent events, its general thrust could hardly have surprised anyone in the Baltic nation. Lithuania is at odds with Gazprom, the Russian government-owned gas supplier, over prices and Lithuania’s move to decouple its distribution network from the Russian company, a dispute that has now spilled into court. Lithuania also currently holds the six-month rotating helm of the EU.


Since September Lithuanian cargo trucks have been stacking up at the Russian border as customs officials subject them to lengthy checks. And on 7 October, Russia halted imports of Lithuanian dairy products, claiming its inspectors had found sanitary violations.


“It’s all bullshit,” Andrew Wilson, a senior policy fellow at the European Council on Foreign Relations, said of what Lithuanian media have dubbed the “milk war.” “Russia has never much heeded food quality. The requirements are a whole lot higher in the European Union.”


Wilson and other observers inside and outside Lithuania say what lies beneath Russia’s recent provocations is the European Union’s Eastern Partnership summit in Vilnius on 28-29 November, at which the EU is expected to sign or initial major agreements on trade and other cooperation with Ukraine, Georgia, and Moldova. Russia has been pressing former Soviet countries to join its customs union with Belarus, Kazakhstan, and, soon, Armenia, which abruptly announced two months ago that it would join the Russia-led trade group, although it still intends to take part in the Vilnius summit.


“Everyone understands that the ban on Lithuanian imports has been about the politics, not the quality of cheese or ham,” said Pranas Zeimys, a member of parliament from the center-right Homeland Union party. “As the host of a game-changing geopolitical event, Lithuania is exposed to the brunt of Russia’s fury.”


Stakes are high for both Russia and the partnership countries. For the candidates, the comprehensive EU trade pact amounts to a determination to cast their lot more with Brussels than with Moscow. For Russia, it would mean the biggest political redrawing of the post-Soviet map since Lithuania, Latvia, and Estonia joined the EU in 2004. Moscow has lobbied to draw Ukraine and Moldova into its customs union, relaying more on sticks – gas bills and trade blocks – than carrots.


“[Russia] wants to deter its former satellite countries from getting too close to the West. And it wants to punish Lithuania for its temerity in leading the EU into battle on this issue, and for leading the charge on Russia over market-abusing behavior in the gas market,” said Edward Lucas, international editor of The Economist and formerly a correspondent in the Baltics. “More trade sanctions may be in store, both export bans and restrictions on imports.”


Zeimys anticipated that Russia might next encumber Lithuanian freight-train traffic as it has done with trucks, or press Belarus to divert shipments from the Lithuanian coastal city of Klaipeda – where Belarusian imports make up a whopping one-third of the total cargo tonnage – to other Baltic seaports.


The lawmaker said he personally experienced the current state of Russian hospitality to all things Lithuanian on a recent trip with his wife to St. Petersburg. Crossing into Russia at the Latvian border, he said, “customs agents asked me to step aside and then patted me down. That wasn’t the end: they let their dogs sniff me in search of drugs. It was scary. That had never happened before.”




Disinformation campaigns like those hinted at by Lithuanian state security would represent a new front in this proxy war – one with potential political overtones in the Baltic nation, where Grybauskaite could seek re-election in May.


Lauras Bielinis, a political analyst who served as chief adviser to former President Valdas Adamkus, sees an element of political calculation in the leak of the security warnings. “I would not be surprised if the president seeks in that way to ramp up her preliminary position in the election,” he said. “Those kinds of warnings of information attacks are nothing new at all.”


Grybauskaite has flown largely above the political fray since her election in 2009, but lately she has been the target of criticism from Loreta Grauziniene, chairwoman of parliament, who is considered a likely challenger. In recent weeks Grauziniene has taken Grybauskaite to task for not participating in a recent meeting of EU-affairs committees from the parliaments across the union, and for other, unspecified lapses in carrying out presidential duties.


Last month Grauziniene became leader of the Labor Party, a junior member of Lithuania’s governing coalition. She took over the post from the party’s founder, multimillionaire businessman Viktor Uspaskich, under whose leadership Labor became embroiled in a scandal over allegedly fraudulent bookkeeping that has seen it lose public support and exposed Uspaskich to possible criminal charges.


Speaking last month to Lithuanian news site Lrytas, Vilnius University political scientist Kestutis Girnius called Grauziniene a “loyal supporter” of Uspaskich, a native of Russia who is widely rumored to have close business ties to Gazprom. In an RIA Novosti article last year titled “Viktor Uspaskich: Our Man in Lithuania,” Russian political analyst Vadim Dubnov wrote that up to 80 percent of Gazprom deliveries to Lithuania went through an Uspaskich company.


“Russia obviously tries to impact the [political] process in Lithuania, and the [Labor] party and its leader are among the better options,” said a former Lithuanian state security official, who spoke on condition of anonymity.


Whatever Russia’s political intentions, the tangible impact of its machinations is economic. Russia is Lithuania’s single biggest trading partner, accounting for 18.9 percent of the smaller nation’s exports in 2012 – up by more than 30 percent from 2011, according to the Lithuanian statistics office. Just over 19 percent of Lithuanian food exports go to Russia – at least until last month, when Russia’s consumer watchdog agency asserted that Lithuanian cheese and yogurt did not meet sanitary and quality standards and halted imports. 


The moves are not unprecedented. Four years ago, amid the economic crunch, Russia subjected Lithuanian trucks to long and scrupulous border checks, part of a larger effort to promote domestic hauling companies and push out foreign carriers. Tomas Janeliunas, another Vilnius University political scientist, said Lithuanian exporters should not be surprised by the events of recent weeks – nor terribly worried.


“Russia is a dangerous market, obviously, and every investment there has to be deemed risky,” he said. “The dairy companies’ losses won’t dent the national economy considerably, as dairy exports make up some 3 percent of Lithuanian-Russian trade.” Given the history of disruptions, Janeliunas added, “entrepreneurs should be learning lessons.”


Lithuania has gained an unlikely ally in the milk war: Kaliningrad, the Russian exclave on the Baltic state’s southwestern seacoast. Kaliningrad and Lithuania have close economic ties, and some in the exclave have protested Russia’s tactics – most notably by replacing their avatars on social networks with pictures of Lithuanian dairy products.


“The people are obviously displeased with the policies of the Kremlin, which is waging a trade war with Lithuania while forgetting that the Kaliningrad region is suffering a lot from this blockade,” said Oksana Maitakova, a journalist in the exclave.


Kaliningrad plays another role in the escalating battles between Russia and Lithuania: Gazprom is mulling building a liquefied natural gas terminal there, with which the energy giant could supply Kaliningrad without using Lithuania’s pipelines. The proposal was announced shortly before Lithuania filed a case with the Stockholm Arbitration Tribunal accusing Gazprom of overcharging. Lithuania pays some of the highest gas prices among EU countries.

Lithuania’s current deal with Gazprom runs out in 2015. Bielinis, the analyst and former presidential adviser, said the fuel issue has additional urgency given that Chevron recently pulled out of plans to develop shale-gas resources in Lithuania and construction has not yet started on a planned liquefied natural gas terminal in Klaipeda.


Political scientist Girnius predicted to TOL that amid the tensions over Lithuania’s leading role in tightening EU ties with other ex-Soviet republics, its Gazprom talks “will likely get mired” and be put off for later.


But Wilson of the European Council on Foreign Relations does not expect the trade and diplomatic furor to have an impact on the gas negotiations.


“With Lithuania’s case against Gazprom in arbitration in Stockholm, Russia won’t want to worsen the situation,” he said. “Gazprom well knows that it will lose this case, since it has already lost a couple of such cases in Europe,” involving Poland and Germany.


As for waging a milk war against a country “known in Russia since Soviet times for its agricultural production,” Wilson called it “just a symbolic flexing of muscle.”

Linas Jegelevicius is a freelance journalist in Klaipeda, Lithuania.

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