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LITHUANIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 18,213 13,796 12,000 74
         
GNI per capita
 US $ 4,490 3,660 3,350 74
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km)
65,200 

Population 
3,607,899 

Principal 
ethnic groups 
Lithuanians 81.3%
Russians 8.4%
Poles 7.0%

Capital
Vilnius 

Currency 
Litas

President
Valdas Adamkus



Update No: 299 - (28/11/05)

Mazeikui Nafta affair recurs once more
There is a rather entangled imbroglio unfolding that concerns the prime minister's wife and the privatisation of Lithuania's prime energy asset, the Mazeikui Nafta oil refinery. It could bring an end to the long career of Prime Minister Algirdas Brazauskas, who was the last communist president of the country.
Before going into the details, it is worth setting the matter in an historical context. A good guide to the affair is David Aaronovitch of the Times, who recently travelled thither in a return to the land of his forefathers. 
"One final day's train journey takes me northeast to the industrial town of Bialystok and then due north, through stands of silver birches into Lithuania, the country that my father's parents left a century ago."
"Beside the tracks are small farms with a horse, a pig, six or seven geese and an elderly man and woman doing the chores. In the cities, however, everything is changing. On the north bank of the Neris River in the capital, Vilnius, there are new buildings going up everywhere. Lithuania is a success story. Economically, at any rate." 
"Politically it's another matter. I travel by bus to the second city, Kaunas, to meet Leonidas Donskis, Dean of the Political Science and Diplomacy School at the Vytautas Magnus University of Kaunas, a smiling, bright man and presenter of a non-confrontational current affairs programme. He shudders when I mention the pipeline and energy policy. "The whole country's political life," he tells me, "has revolved around this question." "
"It went something like this. A few years back there was a split between President Adamkus and his Prime Minister, Rolandas Paksas, on the issue of whether the Mazeikiu Nafta state oil refinery should be sold to the American Williams corporation. The Russians also wanted the refinery, and this contest led to Paksas standing for the presidency on a populist anti-American ticket, backed by Russian money and PR companies. Paksas narrowly won the election and Yukos got the refinery. 
" 'The Russians,' says Donskis, 'backed Paksas.' Unfortunately for them their man was subsequently accused of corruption, impeached and dismissed from office. Last year Adamkus was re-elected. Donskis remains disgusted and marks a relationship that has been visible on other parts of this journey. 'There is a fusion of the media world, politics and business and this fusion is a big problem. It is a shamelessly obvious feature of public life. 'Lithuania,' he continues, 'escaped this time. But there is no normal political life. The nouveau riche can simply rule our political system.' "
"Every time this class fails, it reinvents itself through populism. And though the economy is dynamic and foreign policy - the work of young technocrats - is respected abroad, he believes that what he calls the "degeneration" of political life will catch up with the economy eventually and drag it down. Donskis reposes his confidence in the young and in civil society more than in conventional politics which, he characterises as appealing to the worries of the old. Maybe in five to ten years, he muses, the students whose laughter we can hear coming from a nearby lecture theatre will be able to influence politics in a less corrupt, more open, more progressive direction." 

Premier strikes back
Brazauskas rebuts all charges of wrongdoing and is particularly incensed at attacks on his wife. Fed up with the opposition's relentless prodding into family business, Brazauskas launched a major counterattack on October 21st, appealing to prosecutors to investigate what he claimed was slander of his and his family's name.
The plea, however, fell on deaf ears, as Deputy Prosecutor General Gintaras Jasaitis told journalists on October 25th that prosecutors would not open a defamation of character case on request of the head of government. Jasaitis said both Lithuania's Supreme Court and the European Court of Human Rights have repeatedly ruled that criticism toward political figures can be more rigorous than criticism of private individuals.
For weeks now, the Homeland Union (Conservatives) have been hounding Brazauskas' wife, Kristina Brazauskiene, and her hotel business. They are suspicious that her relations with Ivan Paleychik, head of Lukoil Baltija, a branch of the Russian oil giant that is currently lobbying to buy Mazeikiu Nafta, may affect the Cabinet's objectivity in assessing who will take control of the country's prize industrial asset.
The Chief Official Ethics Commission ruled recently that the prime minister was not involved in a conflict of public and private interests and should not bow out of Mazeikiu Nafta privatization matters due to his wife's links with Lukoil Baltija. 
This, however, didn't stop the opposition. It collected enough signatures to form a parliamentary ad hoc commission to investigate the sale of Brazauskiene's Crown Plaza hotel. But Brazauskas said that not only would he refuse to give testimony to any ad hoc commission, but he would also withdraw from the government if his hand was forced.
In the meantime, the prime minister has asked the Prosecutor's Office to launch an investigation against Conservative leader Andrius Kubilius and MPs Jurgis Razma and Rasa Jukneviciene. 
The scandal comes at a time when the coalition government's stability is as precarious as ever. Indeed, the opposition wasn't alone in signing a petition to investigate Brazauskas' family business. MPs from the Labour Party faction, coalition partners, joined the effort. 

Lithuanian leader faults EU over new gas pipeline 
Energy issues are paramount in international politics too. President Adamkus said on October 26th that the European Union's foreign policy was being set by individual member states that were more concerned with pursuing their own national interests than establishing a common, long-term strategy for dealing with crucial issues, such as energy security and Russia. Adamkus, who presides over a small country of 3.7 million people that won its independence from the former Soviet Union in 1991, made membership of the EU and NATO the cornerstone of Lithuania's foreign and security policy, reported Judy Dempsey in The International Herald Tribune of October 27th.
Adamkus, whose country and seven other former Communist countries joined the EU in May 2004, said Brussels had made no effort to engage or inform countries that would be directly affected by a new gas pipeline Russia is building under the Baltic Sea with financial and technical support from Germany. "This is an example of how things are in the EU," Adamkus said during a two-day official visit to Germany where he met with Chancellor Gerhard Schröder, who has politically supported the North European Gas Pipeline. Once complete, the pipeline will allow the Russian state-owned energy company Gazprom to transport gas directly from Russia to Europe, bypassing the Baltic States and Poland. 
"We felt the pipeline was a vital element concerning our future," Adamkus said at a meeting of the German Marshall Fund of the United States in Berlin. "I told Schröder what I thought. But he said it was a done deal." Schröder, who during his seven-year term as chancellor developed a close relationship with President Vladimir Putin of Russia, dismissed Adamkus's criticisms. In a statement issued by his office, Schröder said, "Germany has a sovereign right to take steps to make sure it has reliable and sustainable energy resources." 
The pipeline, which will give Gazprom the chance to diversify its transmission routes to Western Europe, will stretch from Vyborg, near Saint Petersburg in Russia, to Greifswald, in Germany, where it will then spur off to Scandinavia and Britain. 
Gazprom said recently that the plan was to build two parallel gas pipelines, each about 1,200 kilometres, or 750 miles, long. Completion is scheduled by 2010, although work has yet to begin. Total annual capacity would be 55 billion cubic meters, or 1.9 trillion cubic feet. The costs would range between US$6 billion and US$8 billion. 
Estonia, Latvia and Lithuania as well as Poland are concerned that they could be left potentially vulnerable with regard to secure energy supplies since they depend on Russia for their gas imports. They would also be denied transit fees they earn from Russian gas that passes through their countries to Western Europe. 
Even though Lithuania tried to muster some support among EU countries, Adamkus said the EU raised no questions over the deal. "Being a member of the same EU," he said, "at least we could have been informed and invited to sit at the same table and discuss the advantages and disadvantages. We are, after all, speaking for the EU now. Our state border is the eastern borders of the EU." 
Antanas Valionis, Lithuania's foreign minister, said, "The pipeline affects our interests and the energy security interests of the EU." He said Russia was determined to press ahead with the pipeline "in order to have the possibility to use pressure on us, if needed." 
Neither Lithuania nor Poland, however, seem to believe Gazprom would cut off gas supplies to them since that would seriously damage Gazprom's credibility as a reliable exporter of gas to the EU, where it supplies a fifth of Europe's total gas needs. This is surprising as at this time, Gazprom appear to be threatening Moldova with cutting off supplies of the behest of the Russian foreign ministry.
Valionis said Russia resented the role played by Poland and Lithuania in the EU, where they have been increasingly outspoken over the need for Brussels to adopt a much longer-term strategic policy toward Ukraine and Belarus. Poland and Lithuania also played an active role in mediating Ukraine's Orange Revolution last December, much to Russia's annoyance. 
"The point is that Russia does not like our active Eastern policy," said Valionis. 
Lithuanian diplomats said that they knew it would be almost impossible to reverse the decision over the pipeline, which was decided in April by Gazprom and German companies and which was signed in September when Putin visited Schröder in Berlin. Chancellor-designate Angela Merkel and her Christian Democratic Party have said the deal is closed.

Closure of another sort 
US Ambassador Stephen Mull said that NATO was considering ways to improve airspace security after the recent incursion of a Russian fighter jet into Lithuanian territory. "On all of our minds in the aftermath of the incursion of the Russian fighter jet and crash in Lithuania, is the question of NATO's more immediate security guarantees," he told students at Siauliai University at end-October. 
"Some suggest the incident shows that NATO's security guarantee is hollow. But anyone who would believe that is badly mistaken. No air policing arrangement can prevent such incursions into NATO air space; just as it was impossible to prevent the crash of a Soviet fighter jet in Norway at the height of the cold war in 1978," Mull said. 
He stressed that the alliance took the incident "very seriously" and is looking into ways to improve the air policing system. 
A US Air Force contingent took over the rotating air policing duty from the Germans at end-October. The three-month mission will have been handled by some 100 service troops, which is nearly twice as many as any of the allied contingents that have served in the mission so far, the Baltic News Service reported.

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ENERGY

Baltic presidents want to join Russian gas pipeline

The presidents of Estonia, Latvia and Lithuania agreed in a summit recently to work together to be included in a proposed Russian-German gas pipeline under the Baltic Sea that under current plans would bypass the three countries, Deutsche Presse-agentur (dpa) reported.
The proposed pipeline has drawn criticism from Poland, and was one issue during talks between Lithuanian President, Valdas Adamkus, and German Chancellor, Gerhard Schroder, during a recent visit to Germany.
Adamkus met with his Latvian and Estonian counterparts, Vaira Vike-Freiberga and Arnold Ruutel, to discuss regional cooperation at an annual rotating summit of the Baltic states near the Estonian capital Tallinn.
The Baltic presidents cited the environmental dangers the proposed gas pipeline would pose if laid under the Baltic Sea, and vowed to cooperate on the issue in addition to others concerning regional infrastructure. "It is obviously necessary for all of us to coordinate actions and properly represent regional interests in the EU. To this end, it is important that cooperation be expanded at all levels," Adamkus said at the summit. Cooperation is also planned to implement a regional rail network, dubbed Rail Baltica, and a highway system, named Via Baltica.

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FOREIGN RELATIONS

Lithuania, Poland, Russia sign border deal 

Officials of Lithuania, Poland and Russia signed in the Lithuanian capital recently an intergovernmental agreement on the establishment of the junction point of the three countries' state borders. Foreign Ministry's Ambassador at Large, Alexei Obukhov, signed the document on behalf of Russia, Itar-TASS News Agency reported.
The point of junction of the state borders established by the sides is named "Vistitis" on the map and is located three kilometres from the lake with the same name on the Polish state border line.
Obukhov said at the signing ceremony, "This intergovernmental agreement is an important practical step legally formalising the delimitation of borders and a simultaneous beginning of the state border demarcation between Russia and Lithuania." 

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INFORMATION TECHNOLOGY

3G Network launches in Lithuania 

Under the brand name Neltes tinklas a 3G TDD network has been launched in Lithuania. The first network in the Baltic States based on the 3G UMTS TDD standard supports full mobility and data transfer speeds of up to 3 Mbps, New Europe reported. 
The company plans to sign agreements for wholesale data transfer services with its first customers in the near future. Network deployments have already started in Vilnius and will continue in the major cities of the country. "We are very happy to be the first to introduce a next generation wireless broadband network in the Baltic States. With the new technology, we will offer high speed, simple to use services that will change how people in Lithuania use the Internet," said Darijus Klusas, CEO of UAB Neltes tinklas. "I am happy that we will have a next generation wireless broadband access network in Lithuania. This will make it possible for service providers to offer their clients high data rates and easy to use Internet services. This new network will facilitate the development of data transfer services, and such services could be very useful to our company's clients," said Liudvikas Andriulis, director of UAB "Eurocom," which is interested in the potential of a next generation wireless broadband network. During the INFOBALT 2005 trade fair, Ian Henderson, business development director from US-based IPWireless, the company that offers the standards-based broadband wireless technology, will introduce UMTS TDD to specialists and potential customers.

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