Photographer: YORGOS KARAHALIS/Bloomberg

Baltic Railway Used by Graham Greene Nears $5 Billion Return

  • New tracks to link Estonia, Lithuania and Latvia with Poland
  • Three nations’ premiers signed pact in Tallinn with EU’s Tusk

A railroad traversed by Graham Greene as he conceived one of his best-selling novels is edging closer to a 5 billion-euro ($5.4 billion) revival, decades after war and Soviet central planners crippled it.

Map showing countries the railroad will connect.

Source: Bloomberg

The prime ministers of Latvia, Lithuania and Estonia signed an agreement Tuesday to build Rail Baltica, a high-speed connection between the three countries and Poland. Donald Tusk, president of the European Union, which is supplying as much as 85 percent of the financing, attended the signing in Tallinn. The Estonian capital helped inspire Greene to write “Our Man in Havana” as he hopped on a train to Berlin in 1934.

The project would be the biggest Baltic infrastructure investment since the region broke free from communist rule a quarter-century ago. It would also further cement the European status of the three countries, which are already EU, NATO and euro-area members. First proposed in the mid-1990s, the plan has been held up by deep recessions and squabbling over the route. Pitfalls remain, particularly over the EU’s budget once the U.K. leaves.

“The Baltics was originally the window on the West for Russia, but it’s increasingly becoming a connection for all of Eurasia,” said James Oates, chief executive officer of Tallinn-based investment adviser Cicero Capital. “The biggest issue at the moment really is the political will to actually make it happen.”

The project envisages 700 kilometers (440 miles) of tracks stitching together the three nations’ capitals and the Lithuanian city of Kaunas before heading on to the Polish border. The rail network will revert to European gauge from the Russian standard used at present in the Baltic region. The Soviets had previously geared the railroad toward connections with Moscow rather than central Europe.

Trains traveling as fast as 240 kilometers an hour should slash the journey time from Tallinn to Berlin to 10-12 hours from 60 hours at present and 27 hours before World War II. Lines should start work by 2026, reaching Warsaw by 2030, and eventually carrying 2 million passengers and 12.9 million tons of cargo a year, including electronics and clothes.

Economic Benefit

Freight traffic on the line would benefit Baltic nations’ ports and potentially become part of Europe’s trade with Asia, according to the project’s website. That would provide an economic boost after trade suffered from Russia’s ban on EU food imports and other geopolitical tensions.

But Tuesday’s signing won’t guarantee Rail Baltica’s completion. Estonian Prime Minister Juri Ratas last week left a back door open to quit the agreement, saying his cabinet must review a final feasibility study in April before sending the deal to parliament for ratification. Lawmakers in Lithuania and Latvia must also give final approval. EU funding levels are also in question.

“One thing indeed remains open at this point -- what EU financing will be in the next period,” Estonian Prime Minister Juri Ratas told lawmakers Jan. 25 in Tallinn. About 800 million euros of financing has already been agreed with the European Commission, mainly for planning works, while Lithuania has built some stretches of track near the Polish border.

“We can definitely view this meeting as historic,” Latvian Prime Minister Maris Kucinskis told Tuesday reporters in Tallinn. “This will be a new symbol for all three countries’ independence.”

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE