Books on Lithuania
Update No: 305 - (30/05/06)
Vilnius in the eye of the storm
Not for the first time Lithuania is the venue for massively important events in
world politics. It was the first Soviet republic to declare its independence way
back in March 1990, triggering off the collapse of the Soviet Union. Now Dick
Cheney, Vice-President of the US, has made Vilnius the place to launch another
broadside against Moscow.
Speaking to Eastern European leaders in the Lithuanian capital in early May,
Cheney made the essential point about Putin's government: that "opponents
of reform are seeking to reverse the gains of the last decade." "In
many areas of civil society, from religion and the news media to advocacy groups
and political parties," Cheney said, "the government has unfairly and
improperly restricted the rights of her people." Cheney also accused Russia
of using its energy resources to push around its neighbours.
Cheney's comments were a vast improvement on President Bush's claims five years
ago of spiritual affinity with a Putin who was already showing his authoritarian
streak. "I looked the man in the eye," Bush said in 2001. "I was
able to get a sense of his soul, a man deeply committed to his country,"
the latter part of which few would contest.
Comparing the Bush of 2001 with the Cheney of 2006 calls into question the
president's talent for reading souls, and makes you wonder: Who lost Russia?
Lithuania will not meet the EU's strict convergence criteria for joining the
European single currency, the European commission is expected to say.
The Baltic states are always trying to distance themselves from Russia and get
closer to the West for obvious reasons. Lithuania, for instance, wants to join
the euro in 2007.
But the commission rejected the bid on the grounds that Vilnius has not done
enough to bring down inflation. The commission discussed euro entry bids from
Lithuania and Slovenia on May 16 - just two years after they joined the EU. The
commission's economics department recommended delaying euro entry until prices
are brought under control.
Lithuania's inflation has been well above EU target levels for more than a year,
and the commission believes there is little chance of it coming down in the
short term. Forecasts for 2006, released by the commission, set Lithuania's
inflation at 3.5 per cent, well ahead of the 2.7 per cent target.
Countries wishing to join the single currency need to keep inflation within 1.5
percentage points of the average of the EU's three lowest inflation rates.
The new member states in central and eastern Europe have some of the most
impressive growth rates in the EU, but have struggled to control the price
inflation sparked by the economic boom.
But any move by the commission to block euro entry could lead to accusations of
double standards, not least because several current members of the eurozone - in
particular Greece - have persistently failed to meet the same convergence
Slovenia's euro entry has succeeded its more likely to succeed - its inflation
forecast of 2.4 per cent is well within the 2.7 per cent ceiling - making it the
first of the new member states to join the euro club.
The following is self-explanatory:-
Lithuania's president hits back at Russia's policy on energy
Financial Times interview, Valdas Adamkus, May 4th
President Valdas Adamkus of Lithuania has called for a common
European Union front in response to Russia's willingness to use its energy
supplies to secure political influence over its neighbours.
Speaking to the Financial Times on the eve of an international pro-democracy
conference in Vilnius, Adamkus condemned Germany for backing Russia's
controversial planned Baltic Sea gas pipeline, which will circumvent transit
countries including the Baltic states, Ukraine and Poland.
He said: "I believe I can understand the Russian position but I can't
understand Germany's position. As a member of the EU, they acted without even
extending the courtesy of advising the Baltic states (about their plans)."
Adamkus's comments echoed those of Poland's defence minister, Radek Sikorsky,
who earlier compared the Baltic pipeline deal with the Molotov-Ribbentrop pact -
the secret German-Soviet agreement dividing up eastern Europe signed just before
the second world war.
Although the 79-year-old Lithuanian president distanced himself from Sikorski's
rhetoric, he left no doubt that Warsaw's concerns are shared by Vilnius, as they
are by the EU's other new member states in central Europe. "I don't want to
use the word blackmail," said Adamkus in referring to Moscow's efforts to
extend its influence through energy policy, but he mad clear he was very
concerned about Russia's economic and political pressure.
Adamkus hosted a summit attended by Dick Cheney, the US vice-president, and more
than 20 European political leaders, including nine presidents of east European
states. The conspicuous absentee was Russia's Putin, who was invited but - to
nobody's surprise in Vilnius - declined to accept. His absence gave Russia's
critics a chance to voice their complaints unhindered.
Adamkus, a former US government official who returned to his native Lithuania in
the 1990s, said the conference highlighted the region's shared democratic values
and emphasise the fact that this ideology extended much further than was often
supposed - as far as the south Caucasus.
Adamkus said there were differences in interpreting democratic values between
Russia and the west but he avoided any direct comment on what is widely seen in
the west as Russia's growing authoritarianism.
He urged EU leaders to support Lithuania's bid to join the euro next year,
saying the application should not be blocked because the country's inflation
rate missed the entry criteria by a "fraction of a percentage point."
Vilnius is lobbying to be admitted alongside Slovenia on January 1st. But the
European Commission and the European Central Bank have vowed to interpret the
admission rules strictly, including the inflation criteria. Under the latest
(March) data, Lithuania's rate stands at 2.7 per cent, just above the required
2.63 per cent.
Adamkus expressed hopes that Vilnius would soon settle the future of the
Mazeikiu oil refinery - the largest industrial enterprise in the Baltics - in
which Yukos, the stricken Russian oil group, has a 53.7 per cent stake worth an
estimated US$1bn (790m Euro, £550m).
Yukos, which runs the refinery in partnership with the Lithuanian government,
which owns 41 per cent, has been in talks with Vilnius about selling its stake
back to the state. Lithuania would then resell a majority interest to another
large oil group, such as Kazakstan's KazMunaiGaz.
However, the Russian authorities, which are pursuing debt claims against Yukos,
in April won a US court injunction banning asset sales. Lithuanian officials are
concerned that Moscow plans to secure a big stake in Mazeikiu for a Russian
state-controlled group such as Rosneft. Adamkus said: "Lithuanians are
still sensitive that their economic dependence on Russia should not turn into
Kazakstan, Russia continue talks on oil supplies to MN
Kazakstan has yet to reach agreement with Russia on deliveries of oil to the
Mazeikiu Nafta (MN) oil refinery in Lithuania, Kairat Kaipiev, president of the
Kazak Energy Ministry's main dispatcher department of the oil and gas industry,
said, Interfax News Agency reported.
"An agreement has yet to be reached. I can say that for sure," he
said. KazMunaiGaz nevertheless remains interested in purchasing a stake in MN,
he said. Sisengali Utegaliyev, deputy general director of production at
KazMunaiGaz Exploration and Production, a subsidiary of KazMunaiGaz, said he was
confident that the issue of Kazak oil being delivered to MN through Russia would
be resolved. "I think an agreement will be reached in any case," he
said. He said the issue of the eventual sale of the stake in MN had not been
resolved due to the difficult negotiations between the Lithuanian government and
"Things are being sorted out there internally. For now, they need to decide
something amongst themselves," he said. In choosing a potential buyer for
the stake in MN, it was important for Lithuania that the company "had the
resources and the capability for stable oil supplies," he said. "And
we have these resources," he said. It was reported earlier that KazMunaiGaz
was considering two possibilities for delivering gas to the company's oil
refinery. The first option would be a SWAP-operation with Mazeikiu Nafta, in
which the Kazak company would provide oil it produces at the Caspian Sea in
return for oil MN produces in the North Sea for its further transit to
Lithuania. The second variant envisions the purchase of oil at the Primorsk
terminal that has been delivered through the Baltic pipeline system, which could
either be Russian or Kazak oil. This oil could then be brought to Lithuania by
tankers, he said. The Lithuanian government plans to sell the YUKOS stake in
Mazeikiu Nafta along with about 20 per cent of shares in the company, owned by
the government. The government hopes to receive about one billion litai for the
shares. The 53.7 per cent stake in Mazeikiu Nafta is controlled by the YUKOS
subsidiary YUKOS Finance-YUKOS International UK. The Lithuanian government
controls 40.66 percent of the shares and the remaining shares are held by
minority shareholders. Mazeikiu Nafta includes the Mazeikiai Oil Refinery, the
Butinge terminal and Lithuania's oil pipelines.
Poland's top refiner PKN Orlen bids for Mazeikiu
Poland's largest oil refiner PKN Orlen has submitted a bid for 40.66 per cent of
Lithuania's Mazeikiu Nafta refinery, according to a company statement issued on
April 13th. "Moreover, should the GOL (government of Lithuania) purchase
the 379,918,411 shares (53.7022 per cent stake) which are currently owned by
YUKOS International United Kingdom B.V., PKN Orlen offered to purchase those
shares from the GOL for the same price as the price currently offered for the
40.6621-per cent stake," according to the statement, New Europe reported.
Unconfirmed reports say PKN Orlen has offered some US$1.5 billion for the
Mazeikiu refinery. In a bid to assure Lithuanian authorities it could provide
the Mazeikiu plant with a steady flow of crude oil, PKN Orlen stressed it had
"developed a detailed action plan aimed at ensuring continuous supply of
crude to Mazeikiu Nafta." In the offer, PKN Orlen also vowed to invest
about US$ one billion in the plant. It also promised to introduce projects
related to the production of clean fuels and the improvement of ecological
standards, the construction of a pipeline to Lithuania's Baltic port of Klaipeda
and the expansion of the refinery's crude processing capacity to 11 million
tonnes per year. In a recent article, Lithuania's Lietuvos Rytas daily slammed
the Lithuanian government for dragging its heels on the sale of the Mazeikiu
plant. Russia's giant YUKOS group owns a majority 53.7 per cent stake in
Mazeikiu Nafta, while the remaining 44.66 per cent belongs to the Lithuanian
state, which wants to buy up the YUKOS share and sell it off to another
investor. Poland's PKN Orlen is the largest fuel refiner and distributor based
in Central Europe. The company took over the Czech Republic's Unipetrol Holding
fuels company last year and controls some 485 gas stations in neighbouring