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Update No: 253

The Prime Minister of Lithuania is a veteran of its politics, former head of the communist party, former premier, former president, Algirdas Brazauskas. He is popular precisely because he is thought to be an old hand at the game. Another such is the President, Valdas Adamkus, who is over 70 and was for long an American citizen.
The two have one thing in common, an intense patriotism and desire to see a better future for Lithuania. 
One thing that has long bedevilled its politics is reliance upon Soviet - era nuclear power in the shape of the Ignalin Power Station. Brazauskas has decided that it should be closed, a decision to be confirmed in February. International donors have already earmarked more than €200m for its closure and a memorandum has been signed with the European Commission allocating €50m for its suspension.
The energy situation in Lithuania is complex and is likely to revolve around what happens to the Mazeikin oil refinery. It continues to post losses despite being sold to the US company, Wiliams International in late 1999. The company has been unable to secure a long-term supply of crude oil from Russia's main oil concerns. But it now looks as if YUKOS will become the saviour, having agreed to cooperate with Williams. YUKOS will guarantee 4.8m tonnes of oil per year to Mazeikin over the next ten years. LUKoil president, Vagit Alekperov, has also expressed an interest in the refinery, an excellent one for export purposes since it is virtually ice-free during the winter unlike Russia's ports further north. Both Russian companies are committed to becoming shareholders.
The real saviour of the laggard Lithuanian economy would be foreign investment across the board, not just in energy. Figures for direct foreign investment (FDI) show a rise for 2001, which the government hopes will be confirmed in 2002. The main investors to date are from Denmark (18.1%), Sweden (15.7%), Estonia (10.2%), Germany (9.2%) and the US (9.1%).
New laws have been enacted on bankruptcy and restructuring, which should make life easier for foreign business. But a great deal still need to be done to clear away red tape.
GDP growth in 2001 was 4.5%, lagging behind Estonia on 5.3% and Latvia on 7.9%, according to the EU. But the EBRD estimates growth at 4% in 2001 and the IMF at 3.6%, which shows that the figures should not be deemed sacrosanct.
The EU rates inflation at 1.4% in 2001, rising to 2.8% in 2002. The one big problem is unemployment, remaining at over 12% of the work force, a natural problem for a transition economy.

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AVIATION

Lithuanian Airlines carries more passengers in 2001 despite last quarter slump

The national air carrier, Lietuvos Avialinijos (Lithuanian Airlines, LAL), carried 313,500 passengers, on both scheduled and chartered flights, in 2001, up by 6.28 per cent from 294,900 in 2000, BNS News Agency has reported.
Last year, LAL boosted the number of flights by 2.45 per cent and the load factor of flights from 54.53 per cent to 55.08 per cent, the company's press release stated.
The 11th September terrorist attacks in the United States affected LAL's fourth-quarter passenger flows. In the first nine months of 2001, LAL increased the number of passengers by 10.44 per cent, the number of flights by 3.75 per cent and its load factor stood at 57.11 per cent in year-on-year terms.
In the fourth quarter, however, the passenger flow slumped by 7.42 per cent and the number of flights fell by 1.64 per cent.
Last year, LAL started the rearrangement of its aircraft fleet and reorganisation of its structure. LAL sold its two last JAK-42 aircraft and would be operating one Boeing 737-300, two Boeing 737-200, one SAAB-340 and two SAAB-2 aircraft this year.
Downsizing the staff is a part of the reorganisation process. It is estimated that LAL will have a staff of 700 employees this year...

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FOREIGN INVESTMENT

Direct foreign investments up

Direct foreign investments in the Lithuanian economy went up 11.5% in the first nine months of last year from 9.338bn litas on January 1st to 10.413bn litas on October 1st, Lithuanian statistical department data showed. In per capita terms it made 2,983 litas. BNS News Agency quoted the department as saying at the beginning of October the bulk investments - 1.882bn or 18.1% of the total - came from Denmark, 1,632bn (15.7%) from Sweden, 1.058bn (10.2%) from Estonia, 963m (9.2%) from Germany and 943m (9.1%) from the United States.

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TELECOMMUNICATIONS

Sonera's Omnitel says number of mobile users doubles

Omnitel, which is owned by Telia AB and Sonera Corp, said that the number of mobile phone users in Lithuania doubled in 2001 to about one million people, reports New Europe. 
"According to our estimates mobile penetration in Lithuania is about 27%, so the total number of mobile users in the country should be close to one million," Omnitel president, Antanas Zabulis, said. At the beginning of 2001, around 490,000 of Lithuania's 3.5m people used mobile phones, the company said.

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TRANSPORT

Lithuania and Kaliningrad will cooperate in transport area

The Republic of Lithuania and the Kaliningrad Region of the Russian Federation intend to improve cooperation in transport and to modernise facilities at their border crossings.
Mikhail Tsikel, the first deputy governor of the Kaliningrad Region and the head of the delegation of officials from the neighbouring Russian Kaliningrad Region visiting Vilnius and the Lithuanian deputy foreign minister, Evaldas Ignatavicius, discussed these and other issues during meetings recently in the Lithuanian capital.
Head of the Lithuanian Foreign Ministry's Information Department, Petras Zapolskas, told BNS News Agency that a wide range of issues in cooperation between Kaliningrad and Lithuania were discussed.
He reported that officials had agreed to expand cooperation between Lithuania's main Baltic Sea port Klaipeda and the Kaliningrad Region's main port in the capital city with the same name, Kaliningrad.
They also agreed on projects for modernising the transportation infrastructure...

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