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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: 261 - (26/09/02)

Presidential race
The Lithuanian president, Valdas Adamkus, has announced his intention to stand for a second term in presidential elections in December. A silver-haired septuagenarian, he was for fifty years a US resident and citizen. He sat out the communist era and so is completely free of any complicity with the Soviet authorities.
That is not true of his premier, Algirdas Brazauskas, who was a first secretary of the communist party of Lithuania and president of the country in the 1980s. He has since been president and may now want to stand again. The chairman of parliament, Arturas Paulaskas, is also considered a possible candidate. They are due to announce whether they are standing shortly.
If they do then they would be frontrunners also with Adamkus. Adamkus is running on 23% of support in recent opinion polls and Brazauskas, the ultimate pragmatist on 18%. Adamkus is a conservative, whereas Brazauskas is a social democrat. But these political positions have less meaning today. The way forward is pragmatism in all its forms, with a pro-European twist. The only real difference of opinion is on tactics.
The presidency is something of an honorary post so that if the premier is going to stand then this would indicate a reluctance to carry on governing and desire for a ceremonial retirement. Having had the trappings of power before as president in the mid-1990s, he may deem them a suitable accompaniment to bowing out of government.

Economy looks up
The largest of the Baltic states, with a 3.6m population, Lithuania has been the tardiest to reform. Nevertheless, it is now doing so and quite successfully. The economy is now 70-79% in private hands.
Foreign firms are coming in with an accumulated stock of their investment at US$1.5bn, a little less than Latvia, which has the bulk of the Baltic conduit trade with Russia. Nevertheless, Russian firms are beginning to come in. Yukos, Russia's second largest oil company, has bought shares in Lithuania's largest oil refinery, Mazeikiai. It bought them from US firm, Williams International.
The standard of living is low of course and in the early to mid-1990s fell severely. But recovery is now on the way, with GDP growth at a reasonable 3% or so per annum.
The bipartisan nature of Lithuanian politics is nowhere more evident than in economic policy, which consists of getting into the EU and NATO. Poland is leading the way for Lithuania here and is striving to improve entry terms, especially on agricultural subsidies and quotas, both too low for still agrarian economies in Poland and Lithuania, once one country after the Union of Lublin of 1589. They then both fell into the clutches of Tsarist Russia. That common experience has bonded them together. The Poles, the natural leaders of central Europe, will look after the Lithuanians. 

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ENERGY

Global consortium wins tender to privatise Kaunas station

The Russian-US-Lithuanian consortium headed by Russia's Gazprom gas holding won the tender for privatising the Kaunas Hydroelectric Power Station in Lithuania. This decision was made by the Kaunas administration on August 29th. The consortium offered 116.5m litas (US$33.1m) for the power station.
Additionally, it is to invest 400m litas in it. The other potential buyer was Finland's Fortum Power and Heat Oy, which had offered 115m litas for the station and 56m litas in investments. As the power station is an affiliate of the Kauno Energija company, the decision on the privatisation should be adopted by Kauno Energija shareholders' meeting on September 30th.
The consortium headed by Gazprom, is going to start negotiations with the European Bank for Reconstruction and Development on the investments in the power station, ELTA News Agency reported. These negotiations are to be completed by the end of October.
Kaunas Hydroelectric Power Station produces 90% of the heat consumed by the city of Kaunas. The balance cost of the of power station is 118m litas. Kauno Energija was intending to sell it for at least 108m litas, eventually reducing its debts, which amounted to 250m litas. Gazprom is also discussing the possibility of participation in projects for constructing gas storage facilities in Lithuania.

Lithuanian government enables US-Russian oil deal

The Lithuanian government decided not to buy the shares of the local oil company Mazeikiu Nafta (Mazeikiai Oil) from the US-based Williams International, BNS News Agency has reported.
The government's decision paves the way for Russia's oil giant Yukos to acquire Williams's stake of 26.85 per cent in Mazeikiu Nafta and take over the concern's operational control. Moreover, Yukos will take over a US$75m loan that was granted by Williams to Mazeikiu Nafta with an annual interest rate of 10 per cent.
The government is likely to make a decision on the takeover of the loan and state guarantee shortly.
As one of the majority shareholders of Mazeikiu Nafta (40.66 per cent), the government had the right to acquire 60 per cent of Williams's stake (16.17 per cent).
Lithuanian Economics Minister Petras Cesna said, however, that the decision to use this right would not make economic sense and would not add to the value of the state-owned stake in Mazeikiu Nafta.
The Economics Ministry calculated that an additional US$96m (about 336m litas) would have to be allocated from the state budget if the government decided to buy Williams's stake and take over a corresponding part of the US$75m loan. The concern's modernization would require another US$100m (around 350m litas), which would considerably increase the state's financial risk exposure.
After Yukos acquires 26.85 per cent of Mazeikiu Nafta's shares from Williams, its shareholding in the Lithuanian company will rise to 53.7 per cent.
The government believes that the deal between Williams and Yukos may be closed by late September.

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EU ACCESSION

Lithuania, EU discuss financing Ignalina closure

Lithuanian negotiators on the country's future membership of the EU held a regular round of technical consultations in Brussels, dealing with terms for financing the shutting down of the Ignalina nuclear power plant. They considered different categories of cots for closing the plant, Interfax News agency quoted the European committee of the Lithuanian government as saying.
In June this year, Lithuania and the EU came to an agreement that the Ignalina plant will be closed by 2009 if the EU provides adequate financial assistance on this procedure and the overcoming of economic, power supply and social problems. According to estimates by the Lithuanian Economics Ministry, the costs for the closure of the plant will amount to some 2.4bn Euros by 2020.

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