The Baltic’s exit from the common energy system causes discontent in the Kremlin

When Deputy Foreign Minister Alexander Grushko commented on the statement by the operators of the Baltic countries’ energy systems — Elering, AST, and Litgrid — about their exit from the BRELL agreement, it caused a wide resonance in the Russian press. The decision, which will come into force in February next year, will significantly increase the Baltic’s energy independence, which the Russian media is trying to portray as a major economic blow to the region.

Until February, Estonia, Latvia, and Lithuania will remain in a common synchronous zone with Russia, which means Russia controls one of the key parameters of the energy system — frequency. This gives the eastern neighbour the ability to influence the operation of the energy system in the Baltics, noted ERR. The Chairman of the State Duma Committee on International Affairs, Leonid Slutsky, recently threatened Lithuania with a preemptive disconnection from BRELL.

The Kremlin’s propaganda is preparing public opinion in Russia for the exit of the Baltic countries, using three key arguments: the Baltic energy system was created by the Soviet Union; the loss of the Baltic electricity market is not of great significance to Russia; but for the Baltic countries, it threatens economic downturns and street protests.

“The Baltics will pay dearly for exiting the Soviet energy system,” declared the business newspaper Vzglyad in its article, starting with the assertion: “This political decision could lead to serious consequences — from price increases and an energy crisis to economic downturns and street protests.”

The Baltic countries owe a debt to the Soviet Union

Several Russian online publications have reprinted an article from Vzglyad explaining the history and operation principles of the BRELL system, which unites five countries. The Baltic countries receive electricity from Russia during peak hours and then return it. (BRELL is an acronym from the first letters of the Russian names for Belarus, Russia, Estonia, Latvia, and Lithuania). Vzglyad, echoing old Kremlin narratives, emphasizes that the modern infrastructure in the Baltic countries was built during the Soviet era, and a unified energy system was created to support the Baltic republics.

As the Baltic countries’ exit from the Russian synchronous zone increases their independence, Russian media portray this event with bitterness, claiming it has little significance for Russia. “It’s no coincidence that the Baltics have talked about leaving BRELL for many years but have not left the energy ring even after 2022, the start of the full-scale war in Ukraine,” said Igor Yushkov, an expert from the National Energy Security Fund. “They benefit from staying in this energy system.”

In reality, the Baltic countries have been preparing for years to disconnect from the Russian energy system and join the European one, investing a tremendous amount of time and money into this process.

Igor Yushkov claims that the Baltic countries are exiting the unified energy system due to a decision by the European Union, whose goal is to worsen relations with Russia. This is even though the disconnection from the Russian system began when the EU was striving for good relations with Russia, and the process was carried out with the support of European funding.

According to experts, Russia will be able to compensate for the loss of the Baltic market by increasing electricity sales to Kazakhstan. However, Belarus might face a problem, as its nuclear power plant was built to sell electricity to the Baltic region.

Apparently manipulating the facts, the business newspaper claims that the Baltic countries are not ready to transition to the European system. Even though 75% of the 1.2 billion euro budget is covered by the EU, the newspaper asserts that financing the project is causing serious financial difficulties.

“What will happen if technical problems arise during the transition to the European system? Who will the Baltics turn to for help to avoid being left in the dark?” asks Vzglyad, a publication closely associated with the presidential administration for the past ten years. And it immediately answers: “In case of serious problems, the Baltic countries may temporarily turn to Russia again to avoid an energy crisis.”

Prices are rising, the economy is falling.

To prove that Lithuania, Latvia, and Estonia will lose a lot from exiting the unified energy system, the business newspaper provides data: last year, Lithuania was able to produce only 46.6% of the necessary energy, and Estonia — 57.4%.

“The Baltic countries are likely counting on reducing energy consumption, which has been especially noticeable in recent years,” noted Yushkov. “If so, they can manage with their own capacities, buying electricity from Sweden and Poland during peak hours. However, the Swedes and Poles will charge a higher price for electricity than Russia.”

Deputy Foreign Minister Grushko also emphasized that now the price of electricity in the Baltic countries will be formed on the “Swedish exchange, rather than through long-term contracts with Russia at favourable prices.”

Economist Yaroslav Kabakov, referring to high inflation in recent years and rising electricity prices, argues that exiting BRELL could lead to an economic downturn.

“Political instability caused by rising prices and a possible worsening of the economic situation could spark protests among the population and businesses in the Baltic countries. In 2023, protests against rising electricity prices have already taken place in Lithuania, so such a risk is quite real,” said Kabakov.

Thus, it is evident that the exit of the Baltic countries from the unified energy system increases their energy independence, which irritates the Kremlin. Therefore, the preparation for this decision’s implementation is accompanied by arguments attempting to prove its fallacy and present it as a threat to the Baltic economies. Since the exit process has only just begun, similar discussions will appear in the Russian press over the next six months. These arguments are also aimed at Russian-speaking residents of the Baltic countries, many of whom work in the energy sector.