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Rail Baltica: the next step for an interconnected Europe

The project of the century, the biggest shared investment in the Baltics so far, and the most important north-south rail link in Europe. All these headlines refer to one railway infrastructure project that cannot be underestimated. A new chapter in European infrastructure and trade is being built before our eyes: this is Rail Baltica.

We would never think today to what extent the Soviet Union was once separated from the western half of Europe. The post-Soviet countries had to deal with problems after their democratic transitions, such as having a different rail gauge than the rest of the continent. With a 1435 mm standard gauge in the West and 1520 mm in the Soviet Union, the changeover made rail transport slower and more expensive. European integration has been crucial for the Baltic countries since they restored their independence, and it has become even more critical since the Russian invasion of Ukraine. Therefore, Estonian, Latvian, and Lithuanian rail systems’ integration into the European network has not only economic but also symbolic and political dimensions.

Réka Pisla | Hype&Hyper

The idea of connecting the Baltic states with the rest of Europe by rail dates back to the 1990s. Actually, it is not entirely true, as the Baltics also had 1435 mm gauge before the Second World War. The first plan came to light in 1994, when the three Baltic countries jointly published a draft for Rail Baltica. The project received more publicity when the Trans-European Transport Network (TEN-T) included it on its priority list in 2004. The Rail Baltica is currently the twenty-seventh of TEN-T’s 30 Priority Projects.

The project should be seen in the context of the North Sea-Baltic corridor, an ambitious infrastructure development plan linking the Benelux countries with the Baltics by road, water, and rail. Contrary to its name, Rail Baltica does not only cover Estonia, Latvia, and Lithuania, but it would connect the region to Finland in the north and Poland in the south. The planned stations are Helsinki, Tallinn, Pärnu, Riga, Panevežys, Kaunas, Vilnius, and Warsaw, among others. The total length of the project is 870 km, of which 213 km will be in Estonia, 265 km in Latvia, and 392 km in Lithuania. The section linking Tallinn and Helsinki will be operated by existing ferries, but there are also plans to build an undersea rail tunnel between the two cities, which will further reduce journey times.

Réka Pisla | Hype&Hyper

In addition to adapting the track gauge to the European standard, the modernized railway will be capable of speeds of 249 km/h when carrying passengers and 120 km/h for freight trains. Trains up to 1050 meters long can run on the new double-track railway, and the maximum axle load will be 25 tonnes. The investment was initiated by the relevant ministries of the three Baltic countries: Estonia’s Ministry of Economic Affairs and Communications, Latvia’s Ministry of Transport, and Lithuania’s Ministry of Transport and Communications. The three countries will have equal shares in RB Rail AS, the established joint venture which will manage the operational tasks of Rail Baltica.

The project’s total estimated cost is €5.8 billion, but up to 85% of it will be covered by the Connecting Europe Facility (CEF), an EU fund established for infrastructure investments. The expected return is much higher, with socio-economic benefits alone estimated at €16.2 billion. In addition, the project will create hundreds of jobs, and the economic recovery of regions that will be easier to reach due to the improved network would also make at least a 2 billion euros return.

The corridor linking Scandinavia with the continent’s heart is expected to bring European interconnectivity to a higher level, which could help mitigate the supply chain crisis that became apparent during the COVID-19 pandemic. The goods can be more easily transported through the Baltics, and the region will be able to have a bigger slice of the global economic pie thanks to its better integration with the European and the world market.

Nowadays, sustainability cannot be neglected in any investment project. Rail transport is the least polluting form of transport because, unlike cars and planes, it primarily does not rely on fossil fuels. The scale of the investment is cost-efficient, and the project has relatively low emissions. As Rail Baltica will be an electric railway, noise pollution will also be reduced. With a length of 870 kilometers, Rail Baltica is Europe’s largest electrification project.

Réka Pisla | Hype&Hyper

The Russo-Ukrainian war has isolated Russia from the European continent in the past few months, which could jeopardize the construction of Rail Baltica. It was known well before February 2022 that the project is against Russia’s interests: it is disadvantageous for Moscow if the Baltic states change their gauge and develop their railway network in a north-south direction instead of the current east-west axis. It was an axiom before the war that it would be very difficult to make the investment profitable without Russian cargo, as it accounts for the lion’s share of the Baltic trade. When the Baltic countries started to plan the new railway, they could count on only a limited freight from Scandinavia.

If the Russo-Ukrainian war turns out to be a prolonged conflict, Rail Baltica will face lower volumes from Russia, Belarus, and China, which could further reduce the profitability of the investment. The railway project is currently planned to be fully completed by 2030, but the war could hamper the work as the Baltic countries are neighbors of Russia, which could make the project lose priority. Moreover, due to the war, there may also be difficulties in obtaining the necessary raw materials for construction works. The completion of Rail Baltica is not only the Baltic states’ interest; the whole European continent can profit from it. The project would help the integration of North Eastern Europe by sending a clear message of distancing the region from Russia and demonstrating its commitment to the West. It would also boost the region’s economy, stimulating further markets in the interconnected European system. But the question is how much Rail Baltica would hurt Russia’s interests, and what can Moscow do to isolate the railway system of the Baltic states from the rest of the continent?

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