Viewing cable 07VILNIUS306

07VILNIUS3062007-05-02 14:44:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
DE RUEHVL #0306/01 1221444
P 021444Z MAY 07
C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000306 
E.O. 12958: DECL: 05/01/2017 
     ¶B. VILNIUS 239 
Classified By: Political/Economic Section Chief Rebecca Dunham for reas 
ons 1.4 (b) and (d). 
 ¶1. (C) Summary:  The GOL may ask the EU to approve extending 
the life of Ignalina Nuclear Power Plant's (INPP) second 
unit, which is scheduled to be shut down no later than 
December 31, 2009 in accordance with Lithuania's EU accession 
treaty.  (Note: Unit One was shut down in 2004.)  The GOL and 
members of the Seimas (parliament) differ on how to approach 
the EU on this sensitive issue in the wake of European 
Commission President Barroso's March 29 warning to the Seimas 
that an extension is not feasible.  The GOL plans to present 
the EU with studies evaluating the negative economic impact 
of the scheduled shutdown.  Parliamentarians prefer a more 
political approach that emphasizes the need for Lithuania to 
avoid over-dependence on Russian energy.  End summary. 
The EU's preemptive "no" to extension . . . 
¶2. (U) Jose Manuel Barroso, president of the European 
Commission, addressed a March 29 session of the Seimas 
commemorating the 50th anniversary of the Treaty of Rome. 
Responding to an MP's question about the possibility of 
extending the operation of Ignalina's second reactor, Barroso 
was firmly negative.  Barroso stated that he sees no 
possibilities for Lithuania to extend Ignalina's operation 
past 2009, and reminded the Seimas that Lithuania pledged to 
shut down and decommission the nuclear plant as part of its 
EU accession treaty.  He said that attempts to change the 
terms of the treaty to extend Ignalina would require 
Lithuania to get the agreement of every EU member state, 
which he evaluated as impossible.  Barroso urged Lithuania to 
abide by the terms laid out in the accession treaty and told 
the lawmakers that the sanctity of EU treaties is part of 
what allows the EU to function. 
¶3. (U) Prime Minister Kirkilas also spoke out in early April 
against the parliament's draft legislation to extend the life 
of INPP Unit Two and warned that if it continued functioning, 
Lithuania would face EU sanctions.  Kirkilas opined that it 
would not be possible to get the assent of all other EU 
member states, particularly Germany and Austria, required to 
change the EU accession treaty.  Kirkilas also warned that if 
Ignalina is not shut down on schedule, Lithuania would have 
to repay the EU funds allocated for the plant's 
decommissioning and would subsequently have to pay these 
costs out of its own pocket.  Kirkilas allowed that if the 
parliament votes to approach the EU on extending Ignalina's 
operation, the GOL would start consultations, but said that 
he doubted that consultations would bring any new answers. 
President Adamkus also warned in early April that extending 
the life of Ignalina's second reactor past 2009 would violate 
Lithuania's international obligations and could have 
"unpredictable consequences," including harming Lithuania's 
reputation as a reliable partner. 
But Eurocrats unlikely to stop Lithuania from trying 
--------------------------------------------- ------- 
¶4. (C) Despite the Prime Minister's public condemnation of 
parliament's plans, both the Seimas and GOL support appealing 
to the EU to allow Lithuania to extend the life of Ignalina's 
second reactor until 2015, when a new nuclear power plant is 
scheduled to come online.  Prime Ministerial energy advisor 
Saulius Specius told us March 28 that the extension is not as 
dead an issue as the EU wants to think it is.  He said that 
the GOL believes that it has the legal right to apply for an 
extension based on Article 37 in Protocol 4 of its EU 
Accession Treaty. 
¶5. (U) Article 37 states:  "If, until the end of a period of 
up to three years after accession, difficulties arise which 
are serious and liable to persist in any sector of the 
economy or which could bring about serious deterioration in 
the economic situation of a given area, a new Member State 
may apply for authorization to take protective measures in 
order to rectify the situation and adjust the sector 
concerned to the economy of the common market...The measures 
authorized . . . may involve derogations from the rules of 
the EC Treaty and from this Act to such an extent and for 
such periods as are strictly necessary in order to attain the 
objectives. . ..  Priority shall be given to such measures as 
will least disturb the functioning of the common market." 
¶6. (C) Specius said that the GOL wants to make the extension 
VILNIUS 00000306  002 OF 002 
a technical issue rather than a political issue.  GOL legal 
experts believe that the legal language in the EU Accession 
treaty allows Lithuania to apply to continue operating INPP 
if the alternative would seriously damage the economy.  To 
that end, said Specius, the government is calculating 
Lithuania's energy needs during the expected "energy gap:" 
the period between closing INPP Unit Two and bringing a new 
nuclear plant on line.  Specius said that the GOL is fully 
aware they will have to convince a skeptical audience in the 
EU, but believes that technical evidence of an impending 
crisis will be enough -- both legally and politically -- to 
change hearts and minds in Brussels.  He also said that if 
the GOL's analysis shows that Lithuania would not be harmed 
by closing Unit Two, then "we won't ask" to extend its life. 
He was uncertain about when the GOL would complete its study. 
Parliament paving a different route to the same goal 
--------------------------------------------- ------- 
¶7. (C) Meanwhile, the parliament has opted for a noisier, 
more populist approach.  On April 3, parliament held a 
session to discuss the consequences of closing INPP Unit Two 
in 2009 as part of an effort to rally members of parliament 
to vote in favor of requesting the extension.  Several 
scientific luminaries presented arguments for extending 
INPP's life.  They argued that INPP's extensive safety 
upgrades now rendered the EU's original concerns about the 
facility anachronistic.  (Note:  This assessment stands in 
stark contrast to the assessment we were given by a Lawrence 
Livermore National Lab nuclear physicist who sat on the 
international steering committee that oversaw the security 
and safety upgrades of INPP.  In his opinion, though INPP is 
now probably as safe as it can be, its "fundamentally crappy 
design" means that it can never meet western safety 
standards.)  Some also cited the economic damage clause of 
Protocol 4 of the EU Accession Treaty, highlighting the 
potential harmful consequences to Lithuania from increased 
energy prices.  Several also cautioned against relying even 
more on an increasingly unpredictable Russia for electricity. 
¶8. (U) Minister of Economy Vytas Navickas acknowledged at the 
Seimas session that Lithuania will probably see a 39 percent 
increase in the price of electricity after Unit Two's 
shutdown.  He cautioned, however, that if Lithuania reneged 
on its pledge to close it, the GOL might have to return the 
EUR 80 million in EU funds it has already received for INPP's 
¶9. (U) Parliament continues to debate the issue.  Opposed by 
many in the governing coalition, but heavily favored by the 
opposition, parliamentary leaders have repeatedly managed to 
prevent this draft legislation from coming to the floor for a 
final vote. 
¶10. (C) There is no imminent energy shortage in Lithuania. 
Rhetoric from politicians about a looming "energy gap" 
reflects fears that Lithuania will become more dependent on 
Russian energy after Ignalina shuts down, as well as 
disquiet over the loss of revenue from exporting excess 
electricity.  Planned projects that could provide 
alternatives to Russian electricity imports, like links to 
the western European energy grids via Poland and/or Sweden 
(ref A), will not be available until 2011 at the earliest.  A 
new nuclear power plant (ref B) won't be ready before 2015, 
and probably not until later. 
¶11. (C) But Lithuania can already produce enough energy to 
cover its needs by increasing output from traditional (and 
soon-to-be-upgraded) gas-fired plants or it can import 
electricity from Russia.  Both options involve increasing 
reliance on Russian energy sources; gas-fired plants such as 
Elektrenai will require substantial increases in natural gas 
imports from Russia.  Projections of the increased cost of 
post-Ignalina electricity from the Minister of Economy, 
National Energy Strategy, and the Lithuanian Energy Institute 
range from 40 to 100 percent higher.  It is nearly impossible 
to make accurate estimates in part because the price of 
Russian natural gas in the 2010-11 timeframe is nearly 
unknowable.  Regardless of the financial costs, the prospect 
of long-term reliance on Russia for yet another source of 
energy appears galling (and perhaps even dangerous) to the 
many Lithuanians who believe that Russia already uses energy 
exports as a political tool to achieve the Kremlin's goals.