a free service
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: 258 - (27/06/02)
The Lithuanians are deciding to join the EU as soon as possible, just as NATO membership looms too. The veteran communist leader, Algirdas Brazauskas, is
right behind both developments, which shows how bipartisan politics have now become in Lithuania. His Social Democratic Party is as pro-market and reformist
in government as its conservative predecessors in office.
New party since March - The Liberal Democratic Party
The premier before Brazauskas was Rolandas Paskas, a former mayor of Vilnius. He appears to have noticed a trend in Baltic state politics for small parties
to mushroom to become contenders for power. It has happened in Latvia where the ex-central banker, Einars Repse, has founded a reform party that will fight
coming parliamentary elections.
In Latvia's case elections for the presidency, at present occupied by Valdas Adamkus, are due in December. Paskas has set up the Liberal Democratic Party as
his chosen vehicle to support him. It already has 55 branches and 1,800 members. He is campaigning on a programme of the need for a moral rebirth of the
nation (a sure theme in a Catholic country), better Social Services and an overcoming of social problems, such as poverty and injustice. He is a popular
figure, who has a distinct chance, being younger than the sexagenarian Adamkus and a long resident of his country, where Adamkus spent fifty years in the
The one plus of Adamkus having long been a resident of the US is that he has forged a special relationship with Bush. He was due to meet him in Washington on
actually 9:11 itself. The meeting was obviously cancelled, but when it took place it was an emotional moment for both men, with Bush pledging US support for
Lithuania's NATO entry.
The Lithuanians are awaiting Russian approval of a border treaty they signed with them in 1997. It is uncontroversial, there being no border disputes between
the two countries. The treaty delimiting the 700km border with Kaliningrad, the Russian enclave between Lithuania and Poland, and a 50km sea border with the
Russian mainland, has yet to be approved by the Duma, although this should be automatic later this year.
Nevertheless, there are some suspicions that ratification has been delayed, not by red tape, so much as officials wanting to give Putin a bargaining chip in
negotiations with the EU. The Russians are certainly very sensitive on the issue of the enclave. Generally, Russia has better relations with Lithuania than
the other two Baltic states. The proportionately much smaller local Russian population is being integrated under a generous citizenship law. The local
Russians find it easier to learn Lithuanian than Latvian or Estonian, a major factor in their successful assimilation.
FDI on the rise
The economy is doing better than in the 1990s, and not before time. GDP growth was 3.9% in 2000 and 5.7% in 2001; it is due to be 3.5% in 2002.
One key and welcome development is a serious surge in foreign direct investments (FDI). FDI was US$375m in 2000 and US$450m in 2001. It is due to be US$545m
in 2002. This is the sort of attention Lithuania now needs.
Lithuanian PM voices concern about Russia's plans to drill oil in Baltic Sea
Lithuanian Prime Minister Algirdas Brazauskas has expressed concern to his Russian colleague, Mikhail Kasyanov, over plans by the Russian oil giant LUKoil to
extract oil in the deposit located in the Baltic Sea close to Lithuania's Nida resort, BNS News Agency has reported, quoting the governmental press
Speaking at the meeting in Moscow on 11th June, Kasyanov gave assurances that only planning activities were under way, stressing that Russia would definitely
inform Lithuania about the concrete technologic and ecological issues of the project and present plans of actions and measures.
LUKoil announced its intentions to start extracting crude from the D6 oil deposit, near the Lithuanian-Kaliningrad maritime border, starting 2003...
Lithuania has not yet received any official information from Russia about definite preparation works for oil drilling in the Baltic Sea.
Russia has only informed the Lithuanian Foreign Ministry about the ongoing ecological analysis of the project, vowing to present more exhaustive information
about the results in the future. Lithuania has initiated a UNESCO investigation into the matter.
Lithuanian PM upbeat about oil refinery's deal with Russian energy giant
On 18th June the American company Williams [Williams International, the operator of the Lithuanian oil concern Mazeikiu Nafta, Mazeikiai Oil], the Russian
oil concern Yukos and the Lithuanian government signed agreements on Yukos's investment into Mazeikiai Oil refinery..., Lithuanian radio has reported.
The Lithuanian prime minister [Algirdas Brazauskas] is confident that upon signing the documents, things in the loss-making enterprise will turn around.
Brazauskas believes that the presence of Yukos will change the situation.
Ilona Rukiene the Radio correspondent asked Mr Brazauskas: "How do you view the agreement between Yukos and WilliamsInternational on long-term oil supplies
and the sale of shares?"
Brazauskas replied: "I view this in positive terms and - for a number of reasons. The existing situation cannot last any longer because the enterprise
actually loses 1m litas [aboutUS$0.2m] every day. We have employed every measures and I believe that the arrival of Yukos, a very powerful company, and the
purchase of the enterprise's shares by it, will change the current situation...
FOREIGN ECONOMIC RELATIONS
Adamkus: Greek investors welcome, trade must grow
Lithuanian President, Valdas Adamkus, issued an open invitation to Greek businessmen not to hesitate to invest in his country and contribute to the expansion
of bilateral trade. Adamkus, who was on a formal visit to Greece, made the statement addressing the Greek-Lithuanian Forum organised in Thessaloniki by the
Commerce and Industry Chamber, New Europe reported recently.
He stated that Lithuania offers opportunities in many sectors and has managed to improve its economy, organise its democratic institutions and win its
recognition by the World Bank which recently has upgraded its credit ability. He also made a special reference to the imminent accession of his country into
the EU by the year 2004.
Thessaloniki's Commerce and Industry Chamber President, Dimitris Bakatselos, referred to the potential for the further development of bilateral trade.
Lithuanian exports to Greece were US$10.7m in 2000 compared to US$1.6m in 1999, while the Greek exports to Lithuania reached US$8.3m in 2000 compared to US$6m
in 1999. However, Bakatselos said those figures underestimate bilateral trade relations as a big part of the trade transactions is being done through third
countries like Germany, Denmark and Poland.
Also, based on figures provided by the Lithuanian Ministry of Finance, at least 24 Greek businesses have invested in the former Soviet republic.
Bakatselos stressed that there is great cooperation potential in the sectors of energy, construction, manufacturing, services, transportation and tourism.
Vagnorius calls for speedy accession to WTO
Lithuanian Prime Minister, Gediminas Vagnorius, said his country might finally complete its negotiations to get into the World Trade Organisation (WTO) by the
end of the year. At present, Latvia is the only one of the three Baltic nations to have entered the WTO. Vagnorius visited Washington recently to help
accelerate the accession process.
RFE/RL quoted Vagnorius as saying a major, but unrecognised problem, has been the incompatibility of requirements for joining the European Union and for
joining the WTO. "I'm afraid I'll have to explain a few things concerning our accession into the WTO. The thing is, we are thinking about our accession to
the WTO and we are also thinking about our accession to the European Union. Unfortunately, the requirements that are sometimes set by the EU are not always
in line with the requirements of the WTO," Vagnorius said.
Vagnorius said agriculture is no longer the major stumbling block to Lithuania's accession and that Lithuania is willing to make significant concessions in
moving into the global trade regime.
"I'm afraid I have to say that the agricultural area is not the essential area, really, because we have already concluded a package of proposals and I hope
this package is going to give an optimistic end to the finalisation and conclusion of all the necessary agreements. We have suggested that we would like to
have the transitional period during which we are ready to eliminate our export subsidies as well as reduce our customs duties and agricultural domestic
support," he said.
"And I would like to stress in this respect that domestic support as well as export subsidies are not that large amounts when you come to think of it. The
amounts are really symbolic. Agricultural subsidies are only US$15m, so this is not only an economical problem," he added.
Vagnorius said his country was hit hard by the Russian financial crisis, which lowered government revenues in the first two months of this year by more than
US$264m. Trade volume between Lithuania and Russia has dropped significantly in the past year, he said, and some Lithuanian companies lost a great deal of
money as well.
However, Vagnorius said the situation was improving, this winter the national revenues were lower - the short fall is about 10%. But still I would like to
note that we have been able, despite all the difficulties and losses, to withstand the impact of the financial crisis in Russia. And to maintain the
stability of the Lithuanian financial system," the news agency quoted him as saying.
Vagnorius noted that while the government still has the ability to further cut its outlays, the budget is balanced and revenues, compared to last winter
overall, are growing.
Comliet to purchase majority stake in Estonia's
Comliet, a subsidiary of Lithuania's monopoly fixed-line operator, Lietuvos Telekomas, and Estonia's Merko Ehitus, one of the largest construction companies
in the Baltics, has signed a binding letter of intent with the Estonia's Telegrupp to acquire its shares. The document stipulates that Comliet and Merko
Ehitus are to acquire all of Telegrupp' shares, with Comliet holding a majority stake.
BNS News Agency quoted Lietuvos Telekomas as saying in a statement that the three companies are planning to sign a share purchase agreement by the end of the
June. Comliet Managing Director, Eimantas Satas, said Telegrupp is among the leaders on the Estonian market in construction and maintenance of low-voltage
networks, which is to remain Telegrupps core business.
It is understood that Telegrupp will later launch services provided by Comliet, such as installation of power supply systems, premises management systems,
construction and maintenance of telecoms networks.
Comliet, which set up a representative office in Riga in February, acquired 75% of shares in Latvia's Datu Tikli SIA in early May.
INVESTMENT BACKGROUND REPORTS
Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available
in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of
clients or by access to one of our existing specialised reports.
For further information email:
Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly
newnation reports and the complete worldaudit democracy check for the low price of US$12. The print-out would be a good companion to take with you. Having
read it, you might even decide not to go!
To order please click here:
Investment background report