NATO's Baltic Expansion Cools Fears, Empowers States Like Lithuania To Enhance Economy, Build EU's 'Silicon Valley'

VILNIUS – Near Russia, in countries that share political alignment with the Western alliance known as the North Atlantic Treaty Organization (NATO), a profound sense of camaraderie prevails.

This solidarity is best described by the age-old adage, "one for all, all for one," elaborated Aušrinė Armonaitė, the minister of economy and innovation in Lithuania, a nation committed to moving far from its Soviet past.

“Our relationship with NATO extends beyond conventional military cooperation. It’s innovation, space, cybersecurity, and so on.”

Armonaitė shared these insights during a subsequent sit-down with Benzinga, this time in Vilnius, Lithuania. The discussion began with Lithuania's role as the host of the NATO summit, a source of immense pride for the Lithuanians. She emphasized one pivotal highlight of the event was welcoming Ukraine President Volodymyr Zelenskyy and discussing the alliance's support in Ukraine's quest to overcome the harsh conflict.

Graphic: Zelenskyy next to UK Prime Minister Rishi Sunak and US President Joe Biden.

The geopolitical context in which Lithuania finds itself is critical in shaping its strategic priorities. Situated in a vulnerable location with corridors that, if blocked, could impede NATO's ability to send reinforcements by land, Lithuania faces unique challenges. However, unlike some neighbors, it does not share the same level of apprehension. This is, in part, due to NATO's expansion in the North, with Finland and Sweden joining the alliance and turning the Baltic Sea into a NATO stronghold.

Accordingly, Lithuania has been empowered to shift its focus towards enhancing its economy, which is currently outpacing some of its European counterparts. The tangible effects of this ongoing three-decade transformation are visible on the ground, looking at Vilnius’ infrastructure and well-dressed public.

“With a population of 3 million, when you go outside, people know you,” Armonaitė remarked, adding Lithuania has become a knowledge economy ahead of the curve in many areas. “We are one of the most digitalized countries in the world. For instance, nearly 100% of our governmental services are digital, and, during COVID, we were among the winners of the working from home context.”

Certainly, Lithuania's economic framework encompasses conventional sectors like logistics and materials. Nevertheless, the domains of engineering and life sciences, constituting nearly 3% of its GDP, stand out as a more substantial segment of the economy, in stark contrast to the European average of 1%. Even more remarkable is that these sectors have demonstrated double-digit growth after the pandemic.

Graphic: Vilnius' old town. By William John Gauthier. 

“With the biotechnology sector growing 87% in 2021 and 22% last year, we want to put more resources toward that growth,” Armonaitė pointed out. “COVID was not only a crisis but an opportunity, and Lithuanian biotechnology benefited.”

The country's unique sandbox approach to regulation is credited. Inga Langaite, the CEO of Unicorns Lithuania, an organization dedicated to orchestrating the country's startup growth, plays a pivotal role in this process, facilitating knowledge exchanges and discussions with policymakers.

“For instance, we recently initiated a discussion with the tax authorities on stock options,” she recounted at her offices, a few blocks from the Ministry of the Economy and Innovation. “In July, their explanation changed positively, and I’m thankful they are so open to discussion.”

Langaite emphasized the critical need to safeguard Lithuania's independence by limiting the influence of external capital through bootstrapping. She pointed to Vilnius-based Nord Security, a unicorn valued at €2.4 billion after raising funds last month, as a shining example of Lithuania's potential.

"Growth may not be as rapid as it once was after the recent slowdown in deals," Langaite observed, emphasizing that big companies are continuing to hire, and they're offering more competitive salaries. She directed attention to projects helping streamline success in startups, highlighting the case of Tech Zity, a founding member of Unicorns Lithuania. This €100 million private initiative has earned the distinction of being the largest technology hub in the EU, standing at 55,000 sq. meters. Led by Darius Žakaitis, Tech Zity represents a sustainable transformation of a Soviet-era sewing factory into a dynamic space for life and work, accommodating freelancers and large companies with hundreds of employees.

Graphic: Tech Zity. Photo provided by Tech Zity.

At the helm, driving these various initiatives to modernize education and create the talent and infrastructure for such things as Lithuania’s own Silicon Valley is a very ambitious Armonaitė, the heart of this story.

Lithuania stands on the brink of three significant elections next year, including the presidential, European, and national elections. While Armonaitė prepares to lead Laisvės partija, a social-liberal progressive party, in the national elections, she is confident the initiatives she championed will persist, notwithstanding the next officeholder. In essence, the priorities of accelerating innovation are resilient to the shifting tides of political mandates.

“We aim to continue our work,” Armonaitė concluded, noting she views her four-year-old party as a political startup. “My job as a chairperson and political leader is to scale the party, and then, perhaps, one day, we can become a unicorn and form a government of our own because now we are a smaller political coalition partner.”

“Lithuania is on a good track, so hopefully voters will also support it.”

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Photo: Benzinga