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lithuania

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  LITHUANIA

REPUBLICAN REFERENCE

Area (sq.km)
65,200 

Population 
3,610,535 

Principal 
ethnic groups 
Lithuanians 81.3%
Russians 8.4%
Poles 7.0%

Capital
Vilnius 

Currency 
Litas

President
Valdas Adamkus

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Background:
Independent between the two World Wars, Lithuania was annexed by the USSR in 1940. On 11 March 1990, Lithuania became the first of the Soviet republics to declare its independence, but this proclamation was not generally recognized until September of 1991 (following the abortive coup in Moscow). The last Russian troops withdrew in 1993. Lithuania subsequently has restructured its economy for eventual integration into Western European institutions. 

Update No: 263 - (26/11/02)

The Lithuanian government is now awaiting developments to the west, notably on how successfully Poland negotiates EU entry for itself and others in the final stages. The Lithuanians are more similar to the Poles than the other Balts. They are both Catholic with large smallholder agrarian sectors. They were conjoined by the Union of Lublin in 1569, but then dismembered by Russia (and in Poland's case Prussia and Austria as well) at the end of the eighteenth century.

Bush comes to town
Their special relationship to Poland makes them the natural leader of the Balts, to whom they are also intimately related by history. It is to Vilnius that President Bush came on November 23rd to meet his three Baltic counterparts. As it so happens he is on particularly good terms with Valdas Adamkus, president of Lithuania, who had been due to meet him on 9:11 when their visit was cancelled for obvious reasons. When Adamkus, an American citizen, met Bush later, it was an especially emotional moment for both men.
Actually Americans love the Balts over all other ex-communists, or rather let us say, given the many diasporas from them in the US, they are everyone's favourite number two. They are the plucky little underdogs that brought down the USSR, none more so than Lithuania, which on March 13th 1990 declared its independence, leading to bloody confrontation in January 1991 and outright independence in August 1991. One sign of this is that the president's wife, Laura, who rarely accompanies her husband abroad, will be on the trip.
The main point of the trip was of course to welcome the three who have been accepted to join NATO. The issue was raised at the NATO meeting in Prague earlier in November - all 19 member states agreeing. It is not only the Americans who love the Balts, but President Bush very clearly told them that the US 'umbrella' of protection was now over them.

Presidential election looms 
The Vilnius meeting falls one day after the onset of a presidential campaign. It is likely to give a great boost to the chances of the incumbent. With one citizen of America greeting another one for fifty years, agreeing on Lithuania joining NATO, what better electoral spin could you have? It should be a shoo-in for Adamkus.

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ENERGY

Government asks Russia's Gazprom to improve bid in sell-off tender

The Lithuanian government chose not to halt talks on October 23rd with Russian natural gas monopoly, Gazprom, and will ask the Russian company to improve its offer, New Europe reported recently. Gazprom is the only bidder for a 34% stake in gas utility Lietuvos Dujos.
The decision to continue the privatisation tender does not imply that the government was ready to accept the terms of a preliminary offer which Gazprom submitted on September 26th, Lithuanian Prime Minister, Algirdas Brazauskas, told a meeting of his cabinet. "It must be understood that the real negotiations are only now beginning," Brazauskas said.
Lithuanian officials have said they were unhappy with some of the conditions that Gazprom was demanding. They have declined to comment on media reports that Gazprom was offering to pay just 80m litas (US$22.86m) for the shares, significantly less than Ruhrgas and E.ON Energie agreed in May to pay for an equal stake in the utility. The German group paid 116m litas for their 34% Dujos stake, placed another 34m litas in an escrow account which the Lithuanian government could draw after meeting certain conditions and pledged to invest 70m litas in a new issue of Dujos shares.
Lithuania has repeatedly warned Gazprom, its only source of natural gas at present, that it would not give in to pressure and might put the sell-off on ice. Privatisation officials said a November 20th deadline for Gazprom to submit its final bid for the stake would likely be extended. The Lithuanian government presently owns 58% of Lietuvos Dujos, which had an audited net profit for full-year 2001 of 13m litas after losing 0.1m litas in 2000. 

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FOREIGN LOANS

Bank of Lithuania to repay IMF loan early

The Bank of Lithuania on October 18th resolved to repay a loan of 41.83 SDR (193.83m litas) to the International Monetary Fund ahead of schedule in January 2003.
There are sufficient official gold and foreign currency reserves to repay the debt, Interfax News Agency quoted the bank as saying. The repayment deadline for the last debt before the IMF falls in 2007.
In accordance with an extended financing programme in 1994-1997 the IMF allocated loans of 134.55m SDR to Lithuania. These loans were equally distributed between the Finance Ministry and the Bank of Lithuania. The bank started to repay its debts in 1999.

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FORESTRY

Ochoco Lumber makes grade in Lithuania 


The decision for John Rowell back in 1995 to pack up his belongings in Oregon and head for Lithuania to seek new opportunities was an easy one. Rowell had been running his own saw mill for 16 years in the Pacific Northwest before environmentalists drove him out of business, leaving him and his 25 employees without a job, Tony Pappa reported in the Baltic Times.
For Rowell, newly-independent Lithuania held promise as an alternative base for production, yet at the start things did not go very well. Eventually, however, the Malheur Lumber Company, a neighbouring Oregon mill and a wholly owned subsidiary of Ochoco Lumber, approached Rowell for help. Rowell was initially brought on board as a technical director to get Ochoco's production facilities in Kupiskis, in Western Lithuania, up and running. 
"Our initial problem was that we had no lumber, no market and no production," he recalled. "We got the production side running, then we set out to procure the lumber. But then we had to figure out where to sell the wood. It was like reinventing the wheel."
The wheel is now fully functional. The Kupiskis mill boasts a production capacity of 31 million board feet (72,000 cubic metres) per year. Compared to Ochoco's capacity of 45 million board feet back in Oregon, the Kupiskis success story becomes evident. Rowell became general manager in 1998, bringing along additional challenges with the new appointment.
He is frank about the company's accomplishments. From the get-go he was impressed with the plant's workers. According to Rowell, it was because of them that he took the general manager's position: He wanted to see if together they could turn the Kupiskis operation around. 
"We needed to build a plant not only with the equipment, but with the people. We started with people who never worked in the wood industry before. It sounds like it could have been a bad scenario, but it wasn't because they had no bad habits," said Rowell. "Now they are as good as any work force anywhere and our products compete with the rest of the world," he said. 
There are currently 148 employees working at the mill. Rowell prefers to keep this figure fairly stable and is reluctant to either hire in peak times, or lay off in leaner ones. Depending on the availability of lumber, he tries to run two to three shifts per day. Ochoco mainly procures green lumber from Lithuania, Russia, Belarus and Ukraine.
Initially, the finished product was a hard sell, explained Rowell. "There was this immediate stigma that because the wood is from the Baltics we should knock some money off the price. We had to prove some things to our customers. We do produce a good product. We're not just anybody. And wood from here is as good as wood anywhere," he said.
Statistics show that Ochoco has done a fine job convincing. Ninety per cent of the company's exports are bound for America, with the rest heading to Europe and Japan. 

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