The Three Seas Initiative: The way forward

Last month, the third Summit of the Three Seas Initiative (3SI) came to a successful close in Bucharest. The gathering, hosted by Romanian President Klaus Iohannis, brought together leaders from Europe and the United States to present regional government-approved projects and concrete progress in the integration of 3SI’s framework, which aims to improve interconnectivity in transportation, digitalization, and energy.

The goal of the initiative is to create greater cohesion within the Union through regional development and economic interconnectivity and growth. The main objective of the Initiative, one of Central Europe’s flagship projects, is to develop infrastructure in Central and Eastern Europe with an emphasis on the north-south axis, to strengthen the region economically.

The 3SI platform, which involves twelve European Union (EU) members, was launched in 2015 by Croatian President Kolinda Grabar-Kitarovic as a joint project in cooperation with Polish President Andzej Duda, since Poland has a long-standing geopolitical interest in strengthening the region. Since then, the Initiative has strived to further its mission by working in the region and engaging important stakeholders. For instance, the initiative hosted President Trump at its summit in Warsaw last year and brought together important strategic partners this year in Romania, namely the US, EU, and Europe’s greatest economic power, Germany. By bringing together political representatives of these countries, the message that 3SI is a promising European regional tool with transatlantic support reached a wide audience. Next year, Slovenia will host the summit, and they will likely endeavor to point out the way the initiative complements projects supported by EU institutions.

Thus far, the initiative has made great strides, including overcoming initial skepticism from the EU, as evidenced by European Commission President Jean-Claude Juncker attending the 2018 Summit in Bucharest, along with German Foreign Minister Heiko Maas.

Along with Commission buy in, Germany seems to have taken an approach of engagement, or at least interest, toward the initiative. German Foreign Minister Heiko Maas explained Germany’s position by stating that “Germany wants to be a bridgebuilder and moderator in the spirit of European unity.”

Central and Eastern Europe is an important region when it comes to the strategies of great powers, including EU and NATO members. US Secretary of Energy Rick Perry even argued in his closing remarks this year that  the EU and the United States’ support of 3SI countries is guaranteed, “as they all are built upon a foundation of shared values that promote a joint commitment to mutual defense, economic prosperity, and civil liberty.” Secretary Perry also emphasized the importance of regional energy interconnections and of the United States remaining a trustworthy partner of the Central and Eastern European region in energy matters. The United States understands that the construction of new pipelines along the north-south axis are significant for improving energy security, increasing diversification, and reducing potential leveraging from Russia.

One of the key takeaways of the gathering was the launch of a new US initiative called the Partnership for Transatlantic Energy Cooperation (P-TEC), which creates a catalyzing sphere for critical infrastructure investments, with contributions from the European Commission and 3SI countries. P-TEC also aims to include American funding, in order to bridge financial gaps and kick off priority energy projects.

The greatest accomplishment in Bucharest, however, was the signing of the agreement on the forty-eight priority interconnection projects championed by Bogdan Aurescu, the foreign policy adviser of the Romanian Presidency. Although, it must be noted that moving from rhetoric to realization on these projects requires stable funding. The European Commission has a significant role in economic development across Europe, especially concerning investments in connectivity and infrastructure. Currently, 3SI countries are set to use €2.5 billion in European Investment and Structural Funds, by 2020, for infrastructure improvements.  Another major success this year was six participant countries (Croatia, the Czech Republic, Latvia, Poland, Romania, and Slovakia) signing a multinational letter of intent to establish the Three Seas Investment Fund (TSF) to generate resources for project financing, a development largely championed by Poland. The fund will begin operations in 2019, with €5 billion to generate investments worth €100 billion.

While the TSF will not be able to address all the development needs of the region, its creation is an important first step in fostering a supportive ecosystem of financial tools for strategic infrastructure and priority projects. It will be imperative for Poland to widen the participation of 3SI member states in the TSF, attract the interest of private investors, and combine EU cohesion funds with non-EU financing. It will also be necessary to determine who will run the fund over the course of its planned thirty-year existence .

The aforementioned developments took place at the first ever 3SI Business Forum, which enabled discussion of shortlisted flagship projects and broader business and investment opportunities. Economic stakeholders, including officials from financial institutions and companies, and political leaders from all the participating states, as well as from the Western Balkans and the EU Eastern Partnership (Moldova, Georgia, and Ukraine) attended. Additionally, participating states signed a joint statement establishing a network of Chambers of Commerce intended to support the Forum and business communities in the region.

While laudable, 3SI’s visible progress begs further questions, namely: how does the initiative move forward?

Next year, the goal will be moving from planning to implementing projects, which requires credible financing. Reaching that goal will require member states to focus on achievable goals and cooperate with external participants, including Washington, Brussels, and Berlin. However, the ultimate success of 3SI will depend on the mutual support of both member states’ governments and the private sector.

The initiative cannot go wrong in the long run if all participants think and act rationally, focusing on addressing their mutual interests. Central and Eastern European countries are aware of the need for EU support and they can feel confident in that support, given the EU’s demonstrated interest in the improvement of security and stability in the region. US engagement also strengthens the transatlantic community with its commitment to both NATO and European energy projects. With this foundation, the initiative will have momentum to work toward achieving greater integration for Europe. Given the challenges Europe faces, the cooperation will be much-needed.

Fanni Virág is an atlanticist fellow with the Future Europe Initiative at the Atlantic Council.

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Image: Romanian President Klaus Iohannis speaks at the Three Seas Initiative Summit in Bucharest on September 17, 2018.