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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: 260 - (29/08/02)

The Lithuanians are assuming a pivotal role in the negotiations for the Baltic states to join the EU and NATO. They are after all the largest of the Baltic states and have a special relationship with Poland, the key country in leading the way into the EU for Central Europe as a whole.
In late July the leaders of the Baltic states had a meeting with the presidents of Austria and Portugal on the sidelines of the Salzburg Festival. President Valdas Adamkas called for equal treatment of small nations in the EU. The Balts are being asked to comply with the 85,000 pages of regulations in the Acquis Communautaire and yet accept lower than normal quotas and subsidies under the Common Agricultural Policy.
The enormous problems of internal security was "one of the greatest challenges for the EU," said Portuguese President Jorge Sampaio. "The problems must be faced, but Europe must not be sealed off to the outside. I don't believe in fortresses."
These issues are especially pertinent for Lithuania, given its common border with Kaliningrad, the Russian enclave between itself and Poland. The Lithuanians have allowed free access to and from the enclave for Russians. But this is open to abuse by mafia elements of which neither Russia nor Kaliningrad is short.

Brazausakas goes on and on
The veteran of Lithuanian politics, a president in communist times and again after an interval in the 1990s, is Premier Algirdas Brazauskas. He is seen as a dependable figure, who knows the ropes of dealing with the Russians.
He had a good relationship with Yeltsin, who, indeed, supported Lithuanian independence, first of its communist party and then of the nation. He is forging a good relationship with Putin. As ex-communist functionaries, now both pro-Western, they have a lot in common.
The Lithuanians are more relaxed about the relationship with Russia than the other Baltic states, relations indelibly associated with communism. The Russians account for only 11% of the population there, unlike 34% in Latvia and over 20% in Estonia, a fact explained by the absence of a common border with Russia except for Kaliningrad, for long a closed military base.
This is why Lithuania alone among the Baltic states has an ex-communist prominent in its political life. Brazauskas is as pro-EU and NATO entry as any Lithuanian politician.

OECD membership
Brazauskas has decided to ask the OECD, the Organisation for Economic Co-operation and Development, to allow Lithuania to join. This is in tune with the EU and NATO sights of his government. 
The OECD in Paris coordinates cooperation among Western nations and Japan. Membership would indicate that Lithuania had aspirations to join their ranks. But it has far from done so yet, being a poor country still.

EU prospects
This is perhaps why the people as a whole are lukewarm about the EU, only 54% being in favour in a recent opinion poll. The Lithuanians, like the Poles, have reservations about the whole idea. Small farmers are likely to suffer initially, as are those in handicrafts and related industries.
The Lithuanians are likely to take the line of the Poles, whose general leadership is accepted by all among the new candidates for entry. It is likely of course that Lithuania will join and soon, by 2004-5. But there may be hiccoughs on the way.

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ENERGY

Gazprom, Dukotekana submit bid in Lietuvos dujos tender

Russian natural gas monopoly, Gazprom, and Dukotekana, the biggest importer of gas to Lithuania, on July 16th submitted a bid to take part in the tender for a 34 per cent stake in Lithuanian gas company, Lietuvos dujos. BNS News Agency quoted Dujotekana head, Raimundas Paliukas, as saying that he and the Gazprom deputy chief executive for sales, Vladimir Obukhov, submitted the bid to Lithuania's State Property Fund.
The deadline for applications to take part in the first round of the tender was July 16th. The tender is open to companies acting in a consortium, but the main member of the consortium must acquire at least 25 per cent of Lietuvos dujos shares. The potential investor will have to supply gas to Lithuania for at least ten years, meeting 70 per cent of the country's gas needs, and provide an acceptable plan for setting gas prices. A supply agreement must be signed with Lietuvos dujos before the deal is finalised.
The sale is to be completed by the end of this year. After the sale of the 34 per cent stake the Lithuanian government will be left with 24.36 per cent of Lietuvos dujos shares. The property fund was expected to announce the names of the companies that had submitted bids on July 16th.
The German consortium of Rhur and E.On Energie earlier bought a 34 per cent stake in Lietuvos dujos for 116m litas. It is investing another 70m litas in the gas company by buying a new share issue.
Dujotekana, which is more than half owned by Gazprom (the remainder is owned by the Industrial Finance Corporation of Western Lithuania), last December signed an 11-year contract with the Russian company to supply gas to Lithuania. Dujotekana plans to import 1.2bn cubic metres (bcm) of gas to Lithuania this year. The country's annual needs total 2.6bn cubic metres.
Lietuvos dujos has charter capital of 340.9m litas, of which the Lithuanian government had controlled 9.2.36 per cent. The company closed 2001 with a net profit of 13.0m litas, and posted a pre-tax profit of 31.8m litas for the first quarter of 2002.

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FOREIGN LOANS

Lithuania to improve schools with help from World Bank

The World Bank will grant a loan of 101m litas (29m euros) to finance the restructuring and renewal of Lithuania's educational institutions. A contract on 29m-euro credit was signed in Vilnius on 29th July by Lithuanian Finance Minister, Dalia Grybauskaite, and Michael F. Carter, World Bank director for the Baltic states and Poland, BNS News Agency has reported.
According to the Ministry of Finance, the sum of 49.22m euros will be allocated to a programme of restructuring and renewal at Lithuanian educational institutions, with 29m euros granted by the World Bank, 11.76m euros coming from the Lithuanian state budget and 8.46m euros from the municipalities' budget.
The funds will be used to develop and renew lower secondary schools, improve learning conditions and the environment to generate favourable teachers' work, education management and social conditions. Also, systems will be implemented to enable schools to save on energy costs...
Since 1992, the World Bank has granted Lithuania a total of US$490.8m in loans within the framework of 19 projects.

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TELECOMMUNICATIONS

Comliet gearing up to expand in telecom market

Comliet, a subsidiary of the fixed-line telephone operator Lietuvos Telekomas, plans to further penetrate the telecoms markets of neighbouring countries, Verslo Zinios has reported. However, the business daily quoted Comliet Managing Director, Eimantas Satas, as saying the company would only invest in countries with viable business opportunities citing Belarus, Poland and Russia's Kaliningrad region as potential countries currently being eyed for investment.
Comliet and Merko Ehitus, one of the largest construction companies in the Baltic region, has already acquired a controlling 100 per cent share holding in the Estonian telecoms company, Telegrupp.
Under the terms of the deal, Comliet is to hold 55 per cent of the shares while Merko Ehitus will own a 45 per cent stake, according to a statement issued by Lietuvos Telekomas following the conclusion of the deal.
Furthermore, Comliet has recently signed an agreement to acquire a majority stake in the Latvian company, Datu Tikli SIA, in a deal that allows the Lithuanian company to expand its operations in Latvia. "Acquisition of Telegrupp shares will enable us to offer our services to Estonian customers too," said Tapio Paarma, CEO of Lietuvos Telekomas and chairman of Comliet's management board.

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