RIGA, Latvia They’ve been raiding each other, plundering, making friends and trading for more than 1,000 years, off and on, and now the post-Soviet era has brought a new period of flourishing business ties between the Baltic countries and their neighbors in Scandinavia.
Sweden and the other Nordic countries are the dominant investors both in the region and in key sectors including telecommunications, banking, forestry, retailing, light industry and the media.
The Scandinavians’ multibillion-dollar stake in the Baltics is unlikely to grow as fast as it did in the latter half of the 1990s, when hundreds of millions of dollars were poured into modernizing national telecommunications networks, or tens of millions of dollars were invested in new sawmills.
But the next few years may see Finland’s Metsaliitto go ahead with a E600 million, or $720 million, pulp mill in Latvia, and Sweden’s TeliaSonera will likely make additional large deals to top up its holdings in the telecommunications sector.
Trade works both ways, with the beginnings of movement westward by some Baltic companies, but the main trend is investment in the Baltics by modern-day Vikings from Scandinavia, wielding cash instead of battle-axes.
In 2003, Sweden was the single largest foreign direct investor in Estonia, with 39.2 percent of cumulative foreign direct investment, and in Latvia, with 14 percent. Denmark tops the list for Lithuania, with 17.4 percent, closely followed by Sweden, with 15.5 percent.
Sweden’s TeliaSonera owns major stakes in the fixed and mobile telecommunications networks in Estonia, Latvia and Lithuania and calls the Baltic region part of its home market. It is rumored to be ready to bid more than $300 million to get the remaining state share of Latvia’s Lattelekom – once a long-running arbitration dispute with the Latvian government is settled.
A rival, Tele2, also Swedish, is TeliaSonera’s major competitor in Estonia and has been the No. 2 mobile services operator in Latvia, with fixed network services set to start this year.
In banking, Swedish Skandinaviska Enskilda Banken, or SEB, and Swedbank own major shares of the banking systems of all three Baltic countries. Swedish-Finnish Nordea is also present on a smaller scale. SEB holds three different banks, while Swedbank uses the Hansabank brand across the region.
Nordic subsidiaries are the leaders in the region’s thriving forestry and forest products sector – wood products are Latvia’s single largest export – and are substantial players in the textile and apparel industries. Snickers brand work clothes and pricey Swedish Oscar Jacobson suits are sewn in Latvia.
The Nordic presence in manufacturing is also rising. The Finnish electronics manufacturer Elcoteq employs more than 2,000 workers in Tallinn, the Estonian capital, while the Swedish-owned specialized industrial spring maker Lesjofors has moved some operations from Denmark to Liepaja in Latvia. The contract manufacturer Hansa Electronics, owned by a Latvian engineer and several Swedish investors, is building, among other things, wireless Internet equipment used by Mikrotiks, another Latvian company, to set up Internet access and telecommunications in Baghdad and the Kurdish city of Suleymaniya.
At present, 60 percent of Lithuania’s furniture exports are bought by Sweden’s IKEA, said Dalius Simenas, foreign editor of the Lithuanian business daily Verslo Zinios. The newspaper, like its Latvian and Estonian counterparts, is owned by Sweden’s Bonnier Business Press.
Hundreds of thousands of Balts watch terrestrial, satellite and cable television from Sweden’s Modern Times Group under the TV3 and Viasat brands.
Norway’s Varner Gruppen brought modern retailing to the Baltics with the first Dressman clothing stores in Latvia in the mid-1990s. The company switched to developing and operating shopping malls when it joined up with Linstow, the Norwegian property company, in the late 1990s. The Norwegian Rimi brand became synonymous with “supermarket” in Latvian usage – people still speak of shopping “at the Rimi” – although Swedish-Dutch ICA/$ Ahold now owns the brand.
Some Baltic companies are moving West. The Latvian software company Dati started a subsidiary in Sweden last spring and has begun receiving its first contracts. Estonian IT companies are also putting feelers into the Swedish market, helped by the large Estonian 魩gr頣ommunity in Sweden.
At least in Estonia, signs of a new regional identity are evolving. J?tam, an Estonian-American business consultant, says both Estonians and Finns are speaking of “Talsinki,” a metropolis linked by 20-minute helicopter hops and frequent ferry service across the 80 kilometers of the Gulf of Finland – 50 miles – that separates Tallinn and Helsinki. Estonians and Finns have the closest linguistic ties; they can understand each other and, like Swedes and Norwegians, can converse, with each party speaking his or her own language.
This closeness is not surprising. Vikings and Baltic raiders were staging incursions into each other’s territory as early as the 10th century. The city of Tallinn takes its name from Taanilinna, or “Danish castle,” for a fortification built by Danish conquerors. In the 17th century, Sweden ruled Livonia (comprising Estonia and part of Latvia) and made it “the granary of Sweden.” It is said that Latvian peasants crossed the frozen Baltic Sea on sleds to market their crops in Stockholm.
Now, with Estonia, Latvia and Lithuania about to join the European Union, there are some fears in Scandinavia that Baltic “hordes” may return as farm and factory workers, or even Web site developers, seeking to tap into Scandianvian health, welfare and unemployment benefits.
This may be why Sweden, one of the most unequivocal advocates of Baltic accession to the EU, is considering restrictions on the free migration of labor after May 1. The thousand-year path trodden between the Nordic and Baltic peoples will then end at a gate that is only partly ajar.