Merkel in Lithuania for talks on energy and trade (1st Lead)

Sep 6, 2010, 15:13 GMT

Vilnius - The Baltic states of Lithuania and Latvia played host Monday to German Chancellor Angela Merkel.

Merkel's first stop was in the Lithuanian capital, Vilnius, where she held talks with President Dalia Grybauskaite.

Speaking after the meeting, Grybauskaite paid tribute to Germany's 'understanding' and contribution to the Baltic Sea region.

'I also welcome the fact that German and other cargo destined for the international mission in Afghanistan finds its way through Klaipeda port,' Grybauskaite said, referring to a 2,000-kilometre supply chain that takes goods from the Lithuanian port to Germany's NATO contingent in Afghanistan.

Trade and energy are expected to be high on the agendas of all Merkel's meetings during her two-day Baltic tour and were covered in her conversation with Grybauskaite.

'We talked about the current energy situation in Lithuania - and the situation is not very good as the Baltic states are still isolated and not connected to EU energy markets,' Merkel told journalists.

At the weekend Merkel said that, despite their relatively small size, the Baltic states were 'important partners' who could help formulate the EU's Eastern Partnership programme designed to promote cooperation with states bordering the EU.

Later on Monday Merkel will meet Lithuanian Prime Minister Andrius Kubilius before flying to Latvia in the evening ahead of meetings with the Latvian president and prime minister on Tuesday.

Merkel will also meet representatives of German businesses operating in the Baltic states, which have played an important role in helping to stabilize recession-hit economies.

While investors from some countries fled the region when a lengthy boom turned into a massive bust in 2008, many German firms have won admiration locally for staying put.

Last year the Lithuanian economy shrank by 15 per cent while Latvia underwent the European Union's biggest recession as its economy shrank 18 per cent.