Three Seas Talks – Karel Sál, PhD, Institute for Politics and Society

Stefan Tompson: Hello, my name is Stefan Tompson and this is a series of podcasts about the Three seas with experts from each of the Three Seas member countries conducted for the institute of New Europe. Today my guest is Karel Sál from Czechia.

Karel, maybe we could begin with a small introduction about yourself, the think tank you work for and some of the work that you do.

Karel Sál: Hi, I’m Karel Sál, nice to be here. I’m from the Institute for Politics and Society from Prague. We are a political think tank which is close to ANO party. It’s a liberal think tank and we are researching in particular Czech public policies. Today’s topic is about Three Sees Initiative.

Czech attitude towards this Initiative is heavily influenced by the Czech domestic politics. Czech Republic has only one project on the 3SI priority project list. This is this huge project of Danube-Oder-Elbe canal, a new waterway. Very huge project, worth maybe EUR 30 bln. Former government of Andrej Babiš and ANO party was in favor of this project, but current coalition led by Civic Democracy and Petr Fiala is not that open towards this option. I think that this project is now frozen and maybe even stopped entirely, because all funds for this project have been taken away. Especially the ones for developing in the areas where this project can be build. So I think this project is now over.

Czech Republic is now looking for other opportunities [for the Three Seas priority projects list]. We are now looking into projects especially in the energy area like gas pipelines, energy interconnections with other countries like with Poland, Germany and especially with Austria. The first project that could be put on that list may be the has interconnector between Poland and Czech Republic in Silesia region called Stork II.

We are also changing our narrative [regarding the Three Seas Initiative]. The first narrative was “let’s spend others’ money for our biggest project”. Now it is more like “let’s save our economy and stop our gas dependency on Russia”. This is what we are thinking right now.

But the challenges resulting from the Russian-Ukraine war are so big, so intense and so accelerated that we are not prepared right now [for this transition]. We haven’t prepared a lot of options, so we are in the rush [to complete energy] projects, but it is not very clear which way we should go. This is the current situation Czech government finds itself in. We are desperate for solutions, quick solutions, but no good solutions can be developed quickly when it comes to long-term projects like gas pipelines, interconnections, etc.

Stefan: Just to take a step back… We need an outline of the current situation of the Czech Republic. What are the main trading partners? The main  dependencies? Could you outline that?

You started touching on all of these issues, but you’ve addressed it to an audience that might have little understanding of the region. So maybe if we could take a little step back and just give an overview. Doesn’t have to be too in-depth, just a general overview to understand who the main stakeholders are and what the main stakes at play are here.

Karel: There are three key energy areas: electricity, gas and oil. In electricity the Czech Republic is completely sustainable. In fact, we are making more energy than we consume so is a comfortable situation. Therefore electricity production is not a problem in the eyes of Czech government or the Czech population.

The biggest problem is gas dependency, since it is a dependency on Russia and [its pipelines]. At the moment Czech Republic has no other options  to obtain big amounts of gas than from Russia. That is why we are looking forward to gas interconnectors [with our neighbors].

Before the war, [gas dependency on Russia] wasn’t such a big deal. The price for building new interconnections was pretty high and it did not seem reasonable to build them, because Russian gas was widely available and cheap.

As for oil, it is not that much of a problem [right now], but we are would like to increase its delivery from Italy via TAL pipeline. We need to increase the capacity of existing connections but  for that you must build [new infrastructure] and it’s not a question of year.

So, I think that right now the biggest energy issue is gas, and how to obtain it in sufficient quantities and especially at an acceptable price.

Stefan: Sure, completely understood. If we could also take a level back, away from energy and discuss economic cooperation more broadly. The Three Seas format is obviously just for EU member states. Every single country of the Three Seas in the member of the EU. This is a very important part of what the Three Seas Initiative is –  a project within the European Union.

What is the sort of relations between Czechia and other Three Seas member states?  Where are the most important relationships? Where are the closest economic ties?

Obviously for example an important aspect is that Czechia is very connected with Germany being a major supplier of automobile parts for example, right? That’s a fairly well known fact, but where are the other economic ties and relations?

Karel: Czech Republic as you mentioned is very interconnected with Germany. It’s like we are one of the Bundeslands…

Stefan: That’s a controversial take…

Karel: Sure, but in economy it’s a fact. Our second biggest economic partner is Poland, but our relations were not good in past years. Lately our relations were heavily influenced by the Turów mine dispute. That is the dispute between Czech Republic and Poland about this brown coal mine right outside of the border of the Czech Republic. Czech locals suffered from water shortages due to mining activities. [This made] the relationship between our governments, especially between governments of Andrej Babiš and Mateusz Morawiecki, not good. That relationship could be described as cold, friendly but cold.

But last October, we had a government change. Parliamentary elections were won by central-right coalition lead by Petr Fiala. This made the cooperation with Polish side much better. The deal was made about Turów mine and now we are looking forward to more cooperation with Poland. [We still have to solve] the issue with Stork II interconnector between Czech Republic and Poland, though.

We are also cooperating closely with other Three Seas countries. Especially with Austria and Slovakia. Then again, the relationship between Czech Republic and Slovakia is special because of our common history.

Stefan: Sure, sure. Going forward… Now that we have a little bit of background… Czechia in some ways, one can say, was a little bit cautious towards the Three Seas Initiative. It’s obviously a member of the Initiative, but definitely not a very involved one. What could be done to encourage the Czech Republic to become a bigger player in this Initiative?

Karel: I think the problem is the image of this Initiative in Czech Republic. Because often in the media it’s called a Polish project. [And that makes it] a political issue. We just finished this rough mine dispute. [It makes sense that] we need to be more cooperative now, in this Polish initiative, but [this idea is not convincing] enough for Czech domestic politics. We can be good neighbors [without it]. So I think [the opposition to 3SI] is not based on some economic issues or something like that, but it’s based only on domestic political issues and fueled by political setup in Czech Republic.

And there is another, important factor – Germany.

Because Germany is not happy with the Three Seas Initiative at all. I think it is because, in some eyes especially of some leaders of German industry, this initiative can be against German best interest. Or something that can be dangerous to their interest. So there’s a big pressure from Germany on Czech Republic especially, to be much more of an opponent than the real player within the Initiative.

And remember, Czech had only one project listed in the 3SI priority project list and this project is no longer viable, [so I think that also decreases our interest.]

Stefan: That’s very interesting what you say. It’s very interesting to hear how it is perceived by the public. From your point of view, from the perspective of an expert, what role do you think Poland should actually play in the Three Seas project? I mean, bearing in mind that obviously Poland is the largest country by population, the biggest economy in the twelve countries… I’m not saying that Poland is the leader. After all, it is an alliance of the willing, it’s an initiative of the willing, cooperating members basically are all equals within the initiative, right?

But there is an economic imbalance in the sense that Warsaw and the Polish population is larger than the rest. So, from the Czech perspective, your perspective, what role would you see, would you like Poland to play? Or more importantly what role would you like Poland to not play?

Karel: It is an interesting question… Czech Republic right now plays a “controller” role in the Initiative. For example, in the Three Seas Initiative Investment Fund Czech representative is only in the supervisory board.  So now we are more into controlling, than into cooperating. I think that the position of Czech Republic in the Three Seas initiative should be of a bridge between the Old Europe and New Europe (Eastern part of the EU), similarly to the role played by Austria. I think we [could focus on managing] diplomatic and PR activities for this project and to ensure that there’s no obstacle to cooperation, that there’s no battle between Old and New EU.

[Three Seas Initiative] is about de-centralization and creating more opportunities for everybody. Due to Russia- Ukrainian war, this question is more and more important: how to make EU less dependable on Russia, and without EU Eastern members it cannot be done. [At the same time, in the Three Seas Initiative,] we should be a bit more pro-EU, more focused on the interconnections, and seek more investment from other parts of the world, reducing our dependence on EU funds.

We should attract other investors, from example the US, and even from other areas like Persian Gulf.  We should make this Initiative more global, and show that it’s a huge thing that can be really revolutionary for this part of Europe. I think this is the area in which Czech Republic could [engage within the Initiative]: making it more global, more interconnected with other part of the world.

Stefan: Tell me Karel… When you look at the greatest change in the last years it has obviously been Russian aggression on Ukraine. The Three Seas region is predominantly made of countries that are the Eastern flank of NATO. This is also the EU’s Eastern border and we’re neighbors of Ukraine. Multiple Three Seas states have a land border with our Ukrainian neighbors and allies.

How has the Russian invasion of Ukraine shifted the perception [of Poland and the Three Seas Initiative within the Czech Republic]? As you’ve pointed out, the conflict over Turów, this is something that I’ve seen a lot of in Polish media, really has been an issue, that has literally been a thorn in Polish side, you know. It kind of really impacted our relations.

From the Czech perspective, how the events of the last few months, the Russian invasion in particular, have impacted your relationship with Poland and with the rest of the region?

Karel: This war had a huge impact, especially on Polish-Czech interconnection and relations. Our neighborly fight about the Turów is now gone, because Czech Republic stepped down and now is looking forward to better cooperation. Fiala’s government is more pro-Polish than pro-Hungarian, as was the former government of Andrej Babiš. So the relations are better, but we are now in the critical situation due to challenges posed by energy security and energy supplies. This is [a serious threat], because when you haven’t enough of gas and oil, it is very easy to revert to nationalism and focus on solutions that benefit you in the first place. And that poses challenges for foreign relations. So I can say that we should try to be more cooperative in this field, because situation right now is hard, but it can always be harder. Now it might be too early to determine how strong relations between our two nations are. Do you understand me? This be very tricky to understand.

Our relations are now good, better than in the past, but the real challenges are still ahead and we must look for solutions now. And that solution is not energy nationalism or solutions that work only for us. Czech solutions should work for other states too.

I think that we haven’t yet reach the breaking point, but that can be in a few months, because the war is intensifying and more and more affecting energy industry. We will see [if our good relations can stand the test of time]. We can say that “unity” is the best solution, but when cold and need knock on your door, you will see who your true friends are.

Stefan: As you say, this is unfortunately just the beginning of potential [challenges]… Especially with winter coming and the weaponization of energy by Russian being a very serious threat to all of us. Especially to those countries that have had a fair amount of dependency on Russian gas. One of the interesting shifts has also been, as you mentioned, the fall of the Babiš government and the replacement with the Fiala government. Prime minister Fiala, prime minister Morawiecki from Poland and prime Minister Janša from Slovenia were the first leaders to go to Kiev and visit President Zelensky. So that was a kind of an interesting shift, especially after that Turów conflict, to have the Czech prime Minister travel with Polish prime Minister, and the Slovenian prime Minister, of course.

The other shift is quite the major one… Within the Three Seas format there is another one, the Visegrad Four (V4). And within that format we have Hungary. What are some shifts in relationship that have occurred within the last few months, years, in the Czech-Hungarian relationship?

Karel: I can say it’s much colder than before, but it’s not because of some problems between Hungarian and Czech state, but because of personal friendship between the between the prime ministers. Former prime minister Babiš was a great friend of [Hungarian prime minister] Orban and his administration. Those times are now over. Petr Fiala, who is a leader of the ODS, and a very conservative, right wing, not liberal politician, is more Polish oriented. He is in favor of other conservative governments. For example, Petr Fiala was only one of the few European prime ministers who welcomed the win of new Italian, right-wing, female prime minister. I think this is the reason why the relationship between Hungary and Czech Republic are not that friendly right now. But it’s not a very big shift in V4, because there are two “couples” in V4: there is Polish-Hungarian couple, and Czech-Slovak couple. These two couples [favor their] own relations over others and these couples stay basically the same. So I think [the Czech-Hungarian relations] are not as good as before, but nothing truly changed. [The negative narrative] is mostly rhetorical or a media thing.

Stefan: Sure. And finally… You mentioned one of the projects, one of the Three Seas priority projects, that involves the Czech Republic. What are some other projects that could potentially be exciting for the Czech Republic from the infrastructure/digitization point of view? Is there anything else that the Czechs would potentially like to add to the Three Seas Initiative?

Karel: I think the biggest issue, from the Czech perspective, is the lack of infrastructure between Czechia and Austria. And it’s very, very needed, because currently we have no highway between us and Austria. After 30 years after fall of communism, we haven’t got a highway connection between Prague and Linz, and between Brno and Vienna. It’s such a pity, such a mess. We should spend our money especially on those connections first.

Second problem, which is highly hyped in media, are limited train connections between Czech Republic, Germany and Austria. Trains from Berlin to Vienna are going through Germany and Austria. Not through Czech Republic, but much longer way through the Germany and Austria, because it’s quicker. This is such a shame, and such a big political issue. I think Czech Republic should [get more involved in the Three Seas format] for those big transportation projects in particular. Our own projects need to be more about regional connectivity, because as you can see 30 years wasn’t enough to build such viable connection with our neighbors. I think this is the biggest issue in Czech Republic right now.

Stefan: As a counterpoint a lot has been achieved in 30 years.

Karel: Yeah, but not as much as in Poland. Poland build hundreds of kilometers of new highways and we are jealous of that, we are really jealous.

Stefan: I mean come on, just in terms of numbers, the post-communist transformation has been [a success]… Every single inhabitant, maybe not every single one, but on average every single inhabitant of Central-Eastern Europe has done better after the fall of communism than beforehand.

And something that I have discussed and led with the other people that I spoke with from the region was that our generation, I mean we’re clearly a similar age, our generation is going to be better off than the generation of our parents and our grandparents. Whereas in Western Europe people our age, millennials, are going to be worse off than their parents and considerably worse off than their grandparents.

So there is this sense of optimism and hope and of us going somewhere. And of the region having the sense of purpose. We are catching up to the West. And that should fill us with a lot of hope.

And yes, obviously, we can complain that not enough was done in the past 30 years. But if the past 30 years are any metric to go by the next 30 years, if they are even half as good as the last 30, you will have many highways in the Czech Republic.

Karel: That’s true. We are looking at a promising future. Lots of things can be done and better be done in the Czech Republic. Everything depends on our domestic policy and how our cooperative our governments can be, instead of nationalistic. And that’s all. We should be looking for other opportunities for cooperation, because there are more opportunities [in our part of Europe] than in the West, western parts of the EU.

Stefan: Absolutely. Of course, as you point to that… I think that the Three Seas Initiative Investment Fund certainly can be a vehicle to raise money from many other places including the Arabian peninsula, the United States of America, but perhaps even other places like Singapore, South-East Asia… There is money in a lot of places. And the region still, on average, provides better return on investment than many other places of the world. Despite the two tragedies, the economic slowdown caused by Covid-19 and the geopolitical crisis caused by the invasion of Ukraine by Russia, we still remain a good place for players to invest and put their money. So, I definitely think that there is a lot of potential for greatness.

Thinking about my conversation with you, I noticed that one of the things that characterizes us, that links up all Central and Eastern Europeans, is we are quite pessimistic by nature. Instead of thinking to yourself “Hey, we’ve done a lot in the past 30 years”, you go “We haven’t built enough highways”. You know that sense of self-criticism that is something that’s very Central and Eastern European, right?

Karel: That’s a way of life, the way we live… You expect the worse so you can be pleasantly surprised.

Stefan: Management of expectations.

Karel: Everything that was said here is dependable on the outcome of the Russian-Ukrainian conflict. Nobody in the West will invest in our [infrastructural] projects, if the war will continue right outside our border. So in our interest, interest of all member states is quick win for Ukraine in Russian-Ukrainian war and stabilization of the situation in Russia. That’s the biggest issue right now. We will see how this can be done and how we can be a part of the Ukrainian victory.

Stefan: Thank you for highlighting that, because as you say, all of the rest of the discussion, at the end of the day is fairly meaningless unless we have victory of Ukraine. And hopefully some form of restructuring, complete and utter restructuring of Russia, because the region remains at a massive risk if we have a rogue empire that is willing to breach all international laws and just come in and essentially occupy, annex, destroy, murder, kill, plunder.

Karel, thank you so much for your time I really appreciate it.

Also thank you for a very amusing discussion. You have been a very entertaining person to speak with, so thank you for that. And yeah, all the best with the future work.

Karel: My pleasure, it was very, very good thank you. Thank you for your invitation to this project.