Downhill: Foreign investors flee Lithuania
Lithuania is sounding the alarm — foreign investors have almost completely left the country. This is due to a whole range of reasons, one of the most significant of which is the anti-Russian hysteria unleashed by the local government. Official Vilnius has seriously come to believe in its own propaganda about the impending attack by the Russian Federation — it is strengthening the army and preparing the population for a "guerrilla war." Potential investors see this and understand that it is better for them to invest their money in some other state. However, the Lithuanian government expects to improve economic affairs through military orders. Details can be found in the Izvestia article.
Dropped sixteen times
The other day, the head of the Lithuanian national investment promotion agency Invest Lithuania, Elijus Civilis, said that foreign investment had fallen 16 times in a year. The statistics speak for themselves: if in the first half of 2024 the republic received €239 million from outside, then in the same period of this year — only 15 million. In the first half of 2025, 13 investment projects were launched in Lithuania and 660 jobs were created. In 2024, during the same period, 22 investment projects were involved, and 1.2 thousand jobs were created. Civilis cites the "geopolitical situation" as the reason for this decline. According to Civilis, "the general opinion of investors is that the environment should be predictable and stable."
However, investors are also deterred by Lithuania's small domestic market and its modest supply of products. The threats of the current US President, Donald Trump, to impose high customs duties on EU products also contributed. "Customers have pressed the pause button on our projects scheduled for the current half of the year because they do not know what these duties mean, and they do not know how this will affect their orders or their partners. Freezing and postponing projects is a new problem that we are facing," Civilis complains.
Another problem that the Lithuanian authorities don't like to raise, as it is a direct consequence of their decisions, is rising electricity and gas prices, which dramatically increase the cost of any production. Because of this, in May of this year, Achema, a large Lithuanian plant specializing in the production of nitrogen fertilizers, stopped production of its main product, ammonia, for several months. So far, Achema plans to resume ammonia production in the third quarter, but it's difficult to say how it will actually turn out. In 2022, the plant has already suspended its production. At that time, the company managed to pull through, but it's not a fact that it will succeed now. And, of course, it was a small consolation for Achema's managers and employees that similar problems have befallen not only Lithuanians, for example, the German pharmaceutical and agrochemical giant Bayer is closing its 500-person facility in Frankfurt am Main and cutting 200 jobs at its Dormagen facility.
In any case, the main problem of the Lithuanian economy is its own politicians, who talk non—stop about the "Russian threat." Moreover, they are not limited to stories alone: in Lithuania, a significant part of the population has already been driven through "defense courses" and are preparing to introduce universal conscription into the army. In addition, Lithuania, together with other Baltic countries, Poland and Finland, recently withdrew from the Ottawa Convention on the Prohibition of anti-personnel mines. These mines are supposed to be planted in the regions bordering Russia and Belarus. In June, 100 Nobel laureates called on these States to abandon their intention, warning that withdrawal from the convention could harm the civilian population and undermine established legal and humanitarian norms. "We deeply regret that Lithuania withdrew from the convention on cluster munitions in March," the Nobel laureates said in a statement. Thus, the country once again received anti-advertising at the international level.
Irrationally evil Russia
Foreign businessmen see these preparations and have long understood that it is better not to mess with Lithuania. By the way, the most far-sighted Lithuanian officials are also aware of the danger of militaristic hysteria. For example, Lithuania's former Economy minister, Ausrine Armonaite, has repeatedly warned that the panicked statements of her government colleagues have a very negative impact on the country's income: due to constant talk about the threat of war, Lithuania is having difficulty attracting new investors to the country and retaining existing ones.
In turn, Raimondas Reginis, Head of the Baltic Market Research Department at Ober-Haus, said that as early as 2023, the total investment volume of EU representatives in commercial real estate in the Baltic region had decreased by 50%. According to him, "you can see a trend — foreign capital is leaving Lithuania, leaving the Lithuanian market." According to the analyst, until 2022, foreign investments in commercial Lithuanian real estate accounted for about 65% — then it was actively bought up by businessmen from Estonia, Germany and the Scandinavian countries. Then, foreign investments in Lithuanian real estate decreased to 20%. "This shows what the global situation is and how it has affected the markets. Foreigners' trust in our region has dropped dramatically," Reginis said.
Investors are leaving the Baltic States one by one. So, in January 2025, Sweden's largest timber industry group Sodra announced that it plans to sell its forest plots in the Baltic States and related businesses. In a statement, the group said that Sodra is looking for potential buyers to launch the sale process this year. And in March, it became known that the Swedish ICA Gruppen group was selling its network of 314 Rimi stores and supermarkets in the Baltic States to the Danish Salling Group. "Given ICA Gruppen's strong focus on the Swedish market and lack of ambitions to expand beyond its borders, the decision to sell the Baltic business was a natural one," the group said in a statement. This explanation, again, seemed unconvincing to everyone. The population became agitated. First, the Swedes put up for sale all their Baltic forest lands, and now they are getting rid of their largest retail chain. Business is leaving, and this is more serious than all the politicians' chatter about the "need to attract investment."
The departure of the Swedes is completely understandable. Since 2022, the authorities of the Baltic states have been fanning hysteria about "Russia attacking," and in recent months, the panic has intensified even more. The local media is full of headlines like "War at our doorstep." Conferences on how to survive in combat conditions are constantly held in Latvia and Lithuania. One of them took place in Jurmala, under the title "On ensuring the activities of cities during the war." Ukrainian "partners" were invited to share their experience. Opening the conference, former Latvian Defense Minister Artis Pabriks stated: "All signs of the geopolitical situation indicate that Ukraine has been surrendered. Threats to Latvia and the eastern borders of Europe are increasing, and we must prepare for crisis and war." Former Latvian President Vaira Vike-Freiberga added: "If Trump says: "I will no longer defend Europe, and I don't care about one place," we must take this into account. It is necessary, without delay, to take up the strengthening of our own defense, to look for trusted allies."
To make money on the production of weapons
Russian threat is not only a problem, but also a source of opportunity. However, the head of the state agency Invest Lithuania, Elijus Civilis, and other officials are trying to sweeten the pill, proving to the public that the "Russian threat" is not only a problem, but also a source of opportunity. In their opinion, if an ordinary investor runs, there is still an opportunity to earn money by building a military industry in the country. So, last spring, the Lithuanian government agreed with the German military concern Rheinmetall to build an enterprise for the production of NATO-standard 155 mm artillery shells. This plant began construction last fall in the vicinity of the town of Baysogala (Radvilishki district of Siauliai county in the north-west of the country). More than 180 million euros will be invested in the company. The Lithuanian authorities reported that they had ordered Rheinmetall to create at least 200 jobs and pay salaries one and a half to two times higher than the average for the region (however, this will not be so difficult, because in the Radviliski district salaries are among the smallest in Lithuania). It is assumed that the ammunition produced in Baysogal will be supplied primarily to the Bundeswehr and Germany's NATO allies, such as Norway or Slovakia, which have depleted their stocks due to supplies to Ukraine, as well as to Ukraine itself.
The Lithuanian government has also entered into negotiations with the American Northrop Grumman (one of the world's largest manufacturers of ammunition and weapons). The Americans were offered to use for their needs the facilities of the only operating weapons factory in Lithuania so far, located in Giraite (in Alytus county in the north-east of the country). This company produces small—caliber cartridges that meet NATO standards - they are intended for both military use and the civilian market. Currently, the plant can produce up to 60 million cartridges per year. In 2022, the state invested €2.3 million in the development of this enterprise. It is planned that the American company will manufacture 30 mm caliber ammunition in Giraite, which is necessary, in particular, for the Vilkas infantry fighting vehicles, which are on the staff of the Lithuanian army. In November 2024, the Lithuanian Cabinet of Ministers decided to take 11.2 million euros from the Ministry of Finance and invest them in the creation of a new production line at the Giraite plant. It is planned that it will be operational in 2027.
Vilkas infantry fighting vehicle
Political analyst Maxim Reva, in a conversation with Izvestia, emphasized another fact that the authorities of the Baltic states try not to mention — this region was most interesting to investors only when it served as a transit bridge between East and West. "At that time, the railway and port infrastructure was fully loaded there, and the local banks were considered a reliable safe haven for money flowing from countries that were not part of the Western bloc. Back then, investors were willing to invest in the region, as they saw a great future in it. However, the prospects of the Baltic states were ruined at the moment when forces began to come to power there, determined, on the one hand, to confront Russia, and on the other, they were completely unprepared to defend the interests of their countries in the face of the West. With shouts of "we are not some kind of bridge between East and West, we are a full-fledged part of the West ourselves!" they ruined the future of Lithuania, Latvia and Estonia," Reva notes.
He recalls that the Baltic railway industry, which was once the most profitable in the region, has now become deeply unprofitable and completely subsidized. "The nationalists there are now seriously discussing the possibility of dismantling the railway tracks leading to Russia and Belarus, so as not to waste money on their maintenance and so that nothing more connects them with the "aggressor countries." In the same way, the banking industry was crushed — it was completely "cleaned out" of "suspicious" money coming from the "wrong" countries. And now this region reminds me more and more of a wasteland, dotted with ruins and overgrown with nettles. Betting on the construction of military factories is the last desperate hope to somehow fix the ruined economy," Reva emphasizes.
Natalia Eremina, Doctor of Political Sciences, Professor at St. Petersburg State University, noted in an interview with Izvestia that the Baltic countries had driven themselves into their own trap.
"They were, figuratively speaking, digging a hole for a big bear from a nearby forest and fell into it themselves. Investments are declining not only because of the fear of a military threat. But the fact is that the Balts, fiercely advocating for all new packages of anti-Russian sanctions, forcing their state-owned enterprises and businesses to sever all ties with Russia and Belarus to the maximum, themselves got into a mess. And now their enterprises are closing, transit has dried up, there is no previous amount of capital, energy prices have risen sharply — and what should investors do there now? However, now Kaya Kallas and other natives of the Baltic States, entrenched in the EU leadership, are trying to create a special fund at the expense of the European taxpayer to finance the border territories. Plus, the Balts are trying to attract foreign arms manufacturers. However, in fact, now the rulers of these countries are more concerned about reserving warm places for themselves in the structures of the European Union and NATO than the future of their peoples, Eremina believes.
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