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Books on Lithuania
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Update No: 312 - (20/12/06)
The new hand at the helm, Gediminas Kirkilas
The current Prime Minister of Lithuania is Gediminas Kirkilas. He is bidding to
become the new dominant figure in Lithuanian politics, taking over from Algirdas
Brazauskas, who retired in June last year, for whom he worked for a long time.
Born on 1951 in Vilnius he was appointed on July 4, 2006 after Zigmantas
Balcytis, the provisional Prime Minister, failed to gather required support from
the Seimas. Kirkilas managed to get the necessary support from the Seimas on 4
July 2006.
After he returned from mandatory military service, from 1972 to 1978 he worked
in many cultural monuments (like churches or Verkiai palace) restoring their
interiors and especially rolled gold and moulding. In 1978 - 1982 he was a
student of Political science. After graduation he joined the Communist Party of
Lithuania and took various posts there. After Algirdas Brazauskas became the
secretary of the party, Kirkilas became his press secretary.
Since independence was declared on March 11, 1990, Kirkilas was involved in the
state matters and was elected four times (in 1992, 1996, 2000, and 2004) to the
Seimas under the Social Democratic Party of Lithuania ballot. He became defence
minister of Lithuania on December 7, 2004, and still holds this position.
In 2004 he received MBA from the International Business School in Vilnius.
Poland to the fore
He is well aware the economy is the key to political success. He is lucky to be
inheriting a mightily successful economy, dubbed by The Economist 'The Baltic
Tiger.' Few would have predicted fifteen years ago that it would become even
more vibrant than Estonia. It, however, has a huge problem with corruption.
But then it is next to Kalinigrad, the Russian enclave and a den of corruption.
It is also next to Poland, with whom it has a 'special relationship.' Under the
Union of Lublin in 1569 they were even one entity for a while.
It is fitting that Poland has replaced Russia as the leading partner, something
Moscow resents, but can do little about. The Poles and Lithuanians like each
other, both are strong catholic countries; neither like the Russians for obvious
reasons.
Oil giant strikes deal for largest Polish foreign investment
The Polish oil giant, Orlen, has signed credit deals allowing for the purchase
of the Mosieiku refinery in Lithuania. The two credit deals for one billion six
million euros have been struck with eight Polish and foreign banks.
The head of the Lithuanian government Gediminas Kirkilas has said that the
transaction of Orlen - which will mean the largest such concern in the region -
would be finalised by December 15.
This is the largest Polish foreign investment abroad so far.
Gas Price Hike
Vilnius has poor relations with Moscow at the moment, which is miffed by
this sale of its prime oil refinery to the Poles, with whom the Lithuanians have
rather more of an affinity than the Russians. They responded in typical fashion
by hostile moves on energy.
It is hardly surprising that Gazprom, reflecting Moscow's ire, has summarily
announced that it would raise gas prices for Lithuania by as much as 30 percent
this year, according to Prime Minister Kirkilas.
State-controlled Gazprom will raise Lithuanian prices in 2008 to a level
consistent with that of Western European countries.
Gazprom now charges Lithuania from US$147 to US$150 per 1,000 cubic meters,
while it charges Germany US$280, Interfax reports.
Economic boom
If there is one former Soviet republic that can adapt to this situation, it
is Lithuania. It is enjoying a colossal economic boom, GDP growing by nearly 10%
per annum for several years now.
The budget situation is positive, with rising economic prosperity and tax
revenues. European Union structural funds have created a situation in which to
choose on what to invest in for the future.
"I think that conditions will not become worse for business, and that the
tax system will remain stable. However, it is important for people to know that
social spending will rise, as will pensions." Prime Minister Kirkilas told
Lithuanian radio on Oct. 10. Kirkilas said that next year will see a rise in pay
for those in the health and education sector, more money for social protection,
and compensation for heating costs.
Estonia and Latvia are both expecting budget surpluses. But with Lithuania's
situation a little tighter, the government's spending priorities are more under
fire.
Critics came out on Oct. 10 with a harsh assessment of Lithuania's 2007 budget
plans. Policymakers assign millions for salaries, cents for the raising of the
country's competitiveness and postpone reforms again, the Verslo Zinios business
daily reported.
However, the budget deficit in Lithuania should remain at an acceptable level,
well below the maximum three percent of GDP set out in the Maastricht
convention. Lithuanian finance minister Zigmantas Balcytis, while admitting that
budget expenditures will exceed revenues by almost 1.5 billion litas (434
million euros), stated that the fiscal deficit of the country should decrease by
300,000 million litas and should not exceed one percent of GDP in 2007.
This makes joining the Euro zone in 2010, the official target date, a perfectly
feasible project.
Corruption is key
The downside is aggravated corruption. The Kaliningrad connection is not the
only reason for extensive corruption by a long chalk.
Lithuania, like Poland, is a Catholic country unlike the two other Baltic
states, Estonia and Latvia. While Roman Catholicism is a splendid religion, it
is compatible with a high degree of corruption. One can confess and be pardoned
so long as one makes a due donation to the church.
If the admonition to mend one's ways is ignored, one has to confess again. But
what after all would happen to the confessional and the priests if every
believer became a saint overnight? They would be out of a job and the church out
of new coffers.
The issue of his premiership
Kirkilas is making this issue the defining one of his premiership, a bold
thing to do, given that it is endemic in the culture of the country.
Nevertheless, he pledges to resign if corruption continues Kirkilas has voiced
his pledge against corruption, promising to step down as head-of-government if
the problem is not eradicated in the coming year. During an interview with Ziniu
Radijas radio on Nov. 9, a journalist asked Kirkilas whether he would resign if
Lithuania's ranking in the global anti-corruption index, which is currently 46th
among 163 countries, did not improve in 2007.
"Of course I will," responded the prime minister, who recently
celebrated his first 100 days in power. "I believe it is a matter of honour."
The annual corruption perception list was released in early November by the
non-governmental corruption watchdog, Transparency International. Lithuania was
ranked 46th, together with the Czech Republic and Kuwait.
The anti-corruption index ranks countries according to their degree of
corruption, as seen by business people and professional analysts. The scorecard
ranges from zero, meaning high corruption, to 10, which reflects a transparent
and non-corrupt environment.
In 2006, Lithuania scored 4.8 for the second year in a row. In 2003 and 2004,
the Baltic state scored 4.7 and 4.6, respectively.
Top-ranked in this year's list are Finland, Iceland and New Zealand with 9.6
points, while Haiti was revealed as the world's most corrupt country with 1.8
points. Estonia, with 6.7 points, ranked well above Lithuania in 24th place
while Latvia (4.7 points) shared 49th place with Slovakia but was mentioned
among those countries "with a significant improvement in perceived levels
of corruption."
Unfortunately, the same cannot be said for Lithuania, according to Rytis
Juozapavicius, director of Lithuania's Transparency International bureau.
"This year's index reflects the anti-corruption policy fiasco in Lithuania:
we have not seen any serious anti-corruption reforms since 2004, when Lithuania
joined the European Union and NATO," Juozapavicius said after the 2006
Corruption Perception Index was released.
Responding to Kirkilas' radio announcement, Juozapavicius told The Baltic Times
that the PM had demonstrated superb public relations skills. "We ask for
political will and he demonstrates this. By doing so, Kirkilas will definitely
earn public sympathy. Whether these sympathies disappear if he fails to follow
up on his commitment has yet to be seen," Juozapavicius said.
Yet there is a good chance that Kirkilas won't even be put to the test, he
added. "What is special about the global corruption perception index is
that it is influenced not only by local businessmen and bodies, but also by some
international institutions, whose decision is often influenced by the media. If
fewer corruption scandals are revealed in the media, the index may
improve," Juozapavicius pointed out.
At the same time, the Transparency International director stressed that Kirkilas,
if he really wants to bust corruption, should concentrate on the local
corruption index. "If the prime minister wanted to sign against corruption
in blood, he should make a pledge over Lithuania's corruption map, which looks
very bad, especially when we're speaking about bribery," Juozapavicius
noted. "Only one indicator out of six improved on Lithuania's 2005
corruption map, while bribery by traffic police, vehicle registration employees
and in hospitals increased."
"If Kirkilas promised to change this particular situation, that would be
real commitment," he added.
Vilnius backs Poland's veto on Russia-EU talks on new treaty
Lithuania backs Poland's stand on blocking the start of EU-Russia talks on
concluding a new basic partnership treaty, Premier Kirkilas said on November
21st in an interview with national radio. "Poland is Lithuania's strategic
partner, and it would be strange if Vilnius rejected Warsaw in supporting its
veto. The more so, since Lithuania is also interested in this," the premier
noted.
According to Kirkilas, "Russia discontinued oil deliveries along the
Druzhba pipeline to Mazejkiaj. Therefore, we should act jointly with Poland so
as to convince Moscow to make a compromise. This item should find a place in a
new EU-Russia treaty."
The prime minister emphasized that Lithuania "is interested in signing a
new basic partnership treaty between the EU and Russia and is ready to act as a
mediator in the Moscow-Warsaw dispute." However, Lithuania and Poland
"cannot sacrifice their interests. Therefore, Russia should also adjust its
position," he noted.
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ENERGY
Lithuanian PM, PKN chief agree details of MN deal
The Lithuanian government and Poland's PKN Orlen have agreed all the details of
preparations to complete a purchase and sale deal for Lithuanian oil concern
Mazeikiu Nafta, Interfax News Agency reported.
"We agreed the last details and organisational issues for the completion of
the deal on December 15th," Lithuanian Prime Minister, Gediminas Kirkilas,
said after meeting with PKN Orlen President, Igor Calupec, on December 4th.
Kirkilas said that the Lithuanian government and Polish Prime Minister, Jaroslaw
Kaczynski, would be invited to the ceremony to mark the completion of the deal.
The Lithuanian government wants to sell 30.66 per cent of Mazeikiu Nafta to PKN
Orlen for US$851.8 million, it was reported. Having acquired 53.7 per cent of
the company from YUKOS International for US$1.492 billion, the Polish company
will own 84.4 per cent of Mazeikiu Nafta. On November 7th, the European
Commission gave its approval for the Polish company to acquire up to 100 per
cent of the Lithuanian concern. The Lithuanian authorities said earlier that the
deal for PKN Orlen to acquire Mazeikiu Nafta would be completed by the end of
December.
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FOREIGN RELATIONS
Adamkus confirms support for Ukraine's European aspirations
Lithuania will continue to support the democratic transformations in Ukraine and
its European and Euro-Atlantic aspirations, Lithuanian President, Valdas Adamkus,
confirmed recently, Interfax News Agency reported.
"I would like to state very clearly that Lithuania will continue to support
the democratic way and reforms in Ukraine as well as the goals pursued by
Ukraine, namely a European way and integration in Euro-Atlantic
institutions," Adamkus said at a joint press conference with Ukrainian
President, Viktor Yushchenko, following talks on November 14th. "I hope we
will continue to walk together," Adamkus said. The Lithuanian president
called his current state visit to Ukraine "historic." "Despite
some changes in relations between Lithuania and Ukraine, we are consolidated by
having a joint strategic perspective," Adamkus said. Adamkus further noted
that his state visit "has laid a new foundation for bilateral
relations" between the two countries; i.e., cooperation at the presidential
level in the format of a meeting of the presidential council.
Ministers discuss Russian-Lithuanian bilateral relations
"Moscow is counting on the activation of Russian-Lithuanian trade and
economic, customs and border cooperation," Russian Foreign Minister, Sergei
Lavrov, said recently, New Europe reported.
"I hope that your sojourn in Moscow will make it possible to nail down the
success and take a step forward in solving certain issues in the trade and
economic, humanitarian, infrastructure and customs and border areas,"
Lavrov said at a meeting with his Lithuanian counterpart, Petras Vaitiekunas,
who came to Moscow to take part in a meeting of the Russian-Lithuanian
intergovernmental commission on November 14th. The meeting was expected to focus
on a number of issues in Russian-European relations and the work in the
Russia-NATO Council. On his part, the Lithuanian minister Vaitiekunas said he
came to Moscow to discuss general and specific issues of bilateral interaction.
"Every pragmatic issue is a step forward in our relations," the
Lithuanian minister said.
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RETAIL
Lithuanian retail sales increase 14.5%
Retail sales in Lithuania in the first ten months of 2006 grew by 14.5 per cent
year-on-year to 21.6 billion litas (6.27 billion Euro, excluding VAT), according
to the country's statistics department, website kamcity.com reported on December
4th.
Retail sales in October surged by 18 per cent year-on-year in comparative
prices, and rose 6.3 per cent when compared with September. Food retailers saw
aggregate 10-month turnover rise by 6.1 per cent year-on-year, while non-food
retailers, excluding motor sales, posted an 8.5 per cent rise in sales. The
aggregate turnover of restaurants, bars and other catering establishments rose
by 3.6 per cent year-on-year for the period.
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