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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: 264 - (09/01/03)

Small, but strategic country
Lithuania is a small country of 3.7 million people in a land-mass smaller than many a French department, let alone a state of the US. Yet its strategic significance is immense. 
It is the most significant, by reason of its greater size and southernmost location, of the Baltic states, the republics that were a decisive catalyst of the downfall of the Soviet Union. It was with Lithuania in mind, which had already declared its independence, that Gorbachev launched his seductive, but fatal, idea of a Union Treaty, to be signed on August 20th 1991 in Moscow. All the world knows what happened instead on August 19th and the fell consequences for Gorbachev and the USSR.
Lithuania is about the only FSU neighbour of Russia by proxy as it were, having a common border with Kaliningrad, the Russian enclave between itself and Poland. This is causing problems with Lithuania's coming adhesion to the EU in May, 2004.
Lastly, Lithuania's capital, Vilnius, is the logical forward base ("the wolf's lair," as it were) of NATO's version of Drach nach ostern, the old Teutonic yen for expansion to the east. Pre-WWII it was "spook city," the main US and European intelligence listening-post monitoring the Soviet Union. It was eminently logical for Bush to head straight for Vilnius on November 23rd, having been at the Prague meeting of NATO on November 21st - 22nd, at which, the latest expansion of NATO was agreed since that of 1999. The Baltic states, Slovakia, Slovenia, Bulgaria and Romania are all due to join by 2004.
The reasons for incorporating the seven new nations are largely political. The Pentagon and Western intelligence agencies have their not unjustified apprehensions about including Slovakia, Bulgaria and Romania and above all about sharing intelligence information with them. Secret police officials of the old regimes, with contacts in the Arab world with terrorists, are still in high places in their new forms of state. Lithuania, however, is above suspicion in this regard, as are Latvia and Estonia. In Vilnius Bush and his wife knew they were with real friends, especially as President Valdas Adamkus was a US resident and citizen for fifty years before returning to his independent homeland.

The US - Baltic states axis
President Bush seemed very taken with his new idea that there exists an 'axis of evil' in the world, consisting of Iraq, Iran and North Korea. Somebody could point out to him that the Baltic states are doubly fit partners for the US to have in an 'axis of good.'
Firstly, they have played a vital role, especially Lithuania, as we have seen, in bringing down the 'empire of evil,' as Reagan designated the USSR and its Warsaw Pact domain. Secondly, and of growing relevance today, the Baltic states are the natural allies of the US within the expanding EU. The Baltic states are always likely to fall immediately in line with the US in its foreign policy initiatives, as against the 'axis of evil' states, but also in sponsoring Turkish entry into the EU. Totally loyal allies among the Europeans are appreciated in Washington, as successive British governments have been in the post war period, then the US and the Baltic states today have scope to forge an axis of their own, with Vilnius as its pivot. It is appropriate here that Vilnius is the geographical centre of Europe.

Surprise presidential victory
The second round of elections for the presidency on January 5th seemed to be a foregone conclusion. The incumbent, Valdas Adamkus, had won the first round on December 22nd comfortably. Having just taken Lithuania into NATO and presided over entry negotiations into the EU, evidently successful ones, he was widely expected to win another five-year term.
But his opponent Rolandas Paskas, a populist politician who was formerly premier and then mayor of Vilnius, won the second round on 55% to Adamkus' 45%, a clear margin. Mr Paskas conducted a flamboyant campaign, well designed to emphasise his vigour and comparative youth, at 46, next to the septuagenarian and somewhat saturnine appearance of Adamkus, who is 76, thirty years older. An accomplished stunt pilot, Paskas flew his single-seater propeller aircraft in formation with two others underneath a low bridge. Many electors were mightily impressed. They could vote for a man of action, not just another dreary politician.
Actually Adamkus, a US citizen for fifty years, was not exactly that himself. But being virtually a foreigner and on the wrong side of seventy obviously did not help.
Paskas campaigned not just on his stunts, but on a wide-ranging programme of policies concerning law and order issues and social inequality. He was also critical of the terms of accession to the EU. On his victory Paskas pledged to address the concerns of those excluded by the process of transition. "If there were no gap between the Lithuanians and the political elite, people would have voted for Valdas Adamkus. But the gap exists. Over the past five years life did not improve in many spheres," he said.
He saw the opportunity for a successful populist campaign and he seized it. But his stance is not so new after all. He stands by the need to join NATO and the EU. Some 60% back EU membership, the highest support in the Baltic states. Under the constitution the president is mainly responsible for foreign affairs and has limited power in domestic matters. Paskas can ventilate the frustrations of the disappointed and deprived without risk of being held accountable for continued misfortune.
Nevertheless, Mr Paskas' interest in domestic issues could lead him to a confrontation with the prime minister, Algirdas Brazauskas, himself a former president in communist times and subsequently. Brazauskas heads the Social Democratic Party, formerly the communists leading a majority coalition in parliament.
Whereas Adamkus was widely held to be above party politics, Paskas, for all his populist image, is actually very much the product of Lithuania's exceptionally fissiparous party political scene. He has twice served as premier, the last time giving way to Brazauskas in 2001. He resigned then as before amid in-fighting and coalition bickering. He may find it difficult to forge alliances with either former rivals or former partners and end up as aloof as was Adamkus above the political fray. Time will tell.
Brazauskas expressed his willingness to work with the new president. He knows the isolation and in domestic affairs near impotence of the presidency better than anyone. That is why he now enjoys the substance rather than the shadow of power.

Kaliningrad conundrum now being settled
The right of Russians to have access to and from Kaliningrad, and that of citizens of the enclave to travel freely to and fro across Lithuanian territory, have been causing headaches. Kaliningrad has become the largest crime centre outside Moscow within Russia, a transit point for stolen cars from Germany and elsewhere, for drugs, illegal immigrants and for ordinary smugglers and their wares and has been so since the collapse of the USSR. To permit total freedom of movement by the Russians across Lithuania promises mayhem and misdemeanour galore, allowing the Russian mafia to set up in the heart of Europe.
A deal has been thrashed our whereby Moscow accepts that Russians will need a special travelling document, a visa in all but name, to traverse Lithuania, which will be able to keep tabs on who is coming and going. A proposal for sealed trains to be allowed to cross Lithuanian territory between Russia and Kaliningrad has been made. The Kaliningrad issue is being tackled.

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ENERGY

Gazprom consortium to purchase Kauno Elektrine for 29m Euro


A consortium led by the Russian natural gas monopoly Gazprom has agreed to terms of purchase for Kauno Elektrine, the principal heating plant of Kaunas, the Baltic Times reported. The consortium which also includes the American firm Clement Power Venture and the Lithuanian gas importer Dujotekana, agreed to pay Kauno Energija, the local utilities authority, 116.5m litas (29m Euro) for the plant. The agreement must still be approved by the city council, which will begin to consider the proposal in the near future.
The board and shareholders of Kauno Energija, which is majority-controlled by the Kaunas city authority, must also agree to the proposal. The conditions of the agreement will require Gazprom and its partners to invest significantly in Kaunas Electric while offering electricity at a lower price for a set period of time. The purchasers will also have to spend at least 135m litas by 2005 and 400m litas by 2018 on improvements in the plant. With the purchase, Gazprom is set to take a 51 per cent stake in Kaunas Electric and will be responsible for the supply of natural gas to the plant.
Clement Power Venture, with a 25 per cent share, will execute expansion and modernisation at the site, while Dujotekana, with 24 per cent, will oversee the effective operation of the plant.
The newspaper quoted Gas Industry Association President, Raimundas Paliukas, as saying Dujotekana has signed an 11-year partnership agreement with the Russian gas monopoly. "Dujotekana and Gazprom are strategic partners, and we look forward to many more joint energy programmes," Paliukas said.
Gazprom also plans to install at least six new gas turbines, which will increase production at Kaunas Electric from 180 to 640 megawatts. This would cause production at the plant to exceed that of its Vilnius counterpart by 1.5 times. If approved, the sale of Kaunas Electric would mark the second purchase of a key Lithuanian energy producer to a Russian company in as many months.
In October, Russian oil major YUKOS took control of Mazeikiu Nafta, the largest oil refinery in the Baltic states. According to Kuikotaponyte, bidding on the plant began in May of this year, with the Gazprom consortium beating Fortum, a Finnish firm.
The rapid speed at which the agreement was made, is apparently due to the desire of Kauno Energija's leadership to conclude a deal before local elections are held later this year.
In addition, Paliukas said that Kauno Energija was anxious to clear up its outstanding debt as soon as possible. The consortium hopes to receive a full return of its investment within seven years.

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FOREIGN LOANS

Lithuania to get 300m euros from EU in first year of membership

European Union [EU] aid to each Lithuanian resident will amount to 237 litas [68 euros] in the first year of Lithuania's EU membership, Prime Minister Algirdas Brazauskas said in speaking about the results of talks on Lithuania's EU membership, Lithuanian Radio has reported.
It is planned that Lithuania will receive about 300m euros in the first year of membership. The aid will gradually increase with each subsequent year.
Lithuania is one of three EU candidate countries which have managed to secure the most-favourable financial conditions.

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INTERNATIONAL RELATIONS

Lithuania uneasy over prospect of new frontier role

The Lithuanian capital of Vilnius was for centuries the easternmost outpost of western Christendom, as its many Catholic Baroque churches still testify. In the near future, it will be playing a similar frontier role for both NATO and the European Union, the Financial Times has reported.
It is not prospect that fills Lithuanian officials with unalloyed joy. Happy as they are with the prospect of joining both clubs, they know from their own history that life in an outpost can be awkward.
Lithuania was one of the seven East European states welcomed by NATO at November's Prague summit and one of 10 countries planning to join the EU in 2004. The proposed expansion of both organisations takes their frontiers to the borders of a region that one European Commission official has called "Europe's black hole" - the three states of Belarus, Ukraine and Moldova. All are poor, backward in economic reform and vulnerable to organised crime. Alexander Lukashenka, Belarussian president, is a virtual dictator, Leonid Kuchma, Ukrainians president, heads a corrupt regime and Vladimir Voronin, Moldovan president is a Communist.
The EU has no plans to treat them as potential future members, as Romano Prodi, the president of the European Commission, made clear in a recent interview published in a Dutch newspaper.
However, Lithuania, Poland, Hungary and other Eastern European states included in the enlargement process want the EU and NATO to be more open to these eastern neighbours. As Antanas Valionis, the Lithuanian foreign minister, told a foreign policy conference in Vilnius, the country's borders were a means not only of protection but also of cooperation. And Genowefa Grabowska, chairman of the foreign affairs committee of the Polish Senate, said: "Poland is against the creation of any new curtain in Europe."
Poles, Lithuanians and others are concerned that in the desire to isolate leaders such as Mr Lukashenka and Mr Kuchma, whole countries are being punished Raimundas Lopata, director of the Institute of International Relations and Political Science in Vilnius, told the conference that a "road map" was needed for relations with states such as Belarus, Ukraine and Moldova.
The EU's road map is a policy based on treating these states as "neighbours" with which Brussels can expand cooperation, including trade and aid, without promising membership. However, financial support has been limited in comparison with that provided to the troubled states of the western Balkans.

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