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: 276 - (01/01/04)
Scandal deepens; impeachment now the issue
The Lithuanian Republic is in the throes of a political scandal, deemed the Lithuanian Watergate. It concerns the President, Rolandas Paksas. Things looked bad enough for him in November last. They now look much worse in the light of events in December.
Following a damaging report by the security forces, the press mounted a campaign in the autumn that his office has had extensive links with organized crime, notably Russian ones. Four of the counselors in his office had to resign.
Now he is under strong pressure to resign himself. Indeed, impeachment proceedings are already under way in parliament. A parliamentary commission prepared a report for December 1st, which confirmed various devastating allegations, at least sufficiently to justify him stepping down. If he does not, the impeachment process will gather momentum.
The investigating committee reported that the 47-year-old president was responsible for leaks of sensitive information and that he had allowed Almax, a public relations firm suspected of links to Russian intelligence, to influence his decisions. An inappropriate source allegedly helped to finance his presidential campaign. The charges concern events that stretch back to when he was a highly popular mayor of Vilnius, the capital, prior to his becoming prime minister, let alone president.
The affair threatens to tarnish the reputation of Lithuania itself in the EU, just when Lithuania is about to enter the union. Premier Algirdas Brazauskas, who earlier backed the president, has now called for him to go. He has now indicated that legal procedures have to be respected and should continue in order to clear the matter up once and for all. The strong hint is that Paksas should do the decent thing and resign, with the prospect of being re-instated if he successfully clears his name.
Broader problem of crime
The current political scandal is highlighting the fact that Brussels and the West generally are deeply perturbed at the prospect of bringing into the European fold the Baltic states, because of the entrenched positions of organized crime in them with strong connections to the Russian mafia. These are likely to be 'mediated' by the local Russians in their midst. Lithuania actually has fewer Russians as a proportion of its population than the other Baltic States, some 11% compared to Latvia's 34% and Estonia's 20%. But this is still 400,000 or so in this the largest of these states, with a population of 3.8 million. And Lithuania is geographically the southernmost of them, indeed is actually the geographical centre of Europe.
Lithuania has long been seen as an ideal base for smuggling and counterfeiting rings between Russia, Belarus and Scandinavia. Lithuanian gangs specialize in: cigarette and amphetamine-smuggling; counterfeiting; burglaries; money-laundering; illegal immigration for prostitution; extortion; kidnapping and stolen cars, in the last instance mainly as a transit point from Kaliningrad, the Russian enclave between Lithuania and Poland, to the West. Kaliningad has earned this reputation of a kind of black-economy Hong Kong in northern Europe.
The economy booms
Economically Lithuania is doing very well, having been given the accolade recently by The Economist of being termed 'the Baltic Tiger.' Another sobriquet for those fond of alliteration is that it is 'the Ballistic Balt.' What justifies these accolades is that GDP growth is averaging 7% annually. .
Lithuania is due to enter the EU in May this year. This should consolidate the good work done by its reformers and business schools, such as the International School of Management (ISM). The Norwegian School of Management (NSM) is the majority owner of the ISM. It began in 1995, with seven short courses. Now it has 300 programmes and has 5,000 students at any one time. Its graduates are the new business elite in Lithuania.
Belarusian, Lithuanian central bank chiefs discuss cooperation
Pyotr Prakapovich, chairman of the National Bank of Belarus (NBB), met with his Lithuanian counterpart, Reinoldijus Sarkinas, in Hrodna on 1st December. The two officials reportedly noted that the NBB and the Bank of Lithuania have maintained a mutually beneficial partnership in recent years. The meeting yielded an agreement on payment procedures, a memorandum of understanding in banking supervision and a protocol to the agreement on cooperation in personnel training, said the NBB information office, Belapan News Agency has reported.
The NBB has contracted the Bank of Lithuania five times since 2001 to produce memorial coins. The latest of these coins were dedicated to the Belarusian ballet.
Lithuanian banks have invested in two banks in Belarus - the Atom-Bank and the Northern Investment Bank. Lithuania's Snoras has an office in Belarus. Belarusian banks, however, have not invested in the Lithuanian banking system or opened offices in that country.
The central bank chiefs agreed to continue exchanging visits and consultations. Under discussion was also a concept adopted by the European Commission earlier this year. The document allows the nations that are scheduled to join the European Union in 2004 to develop relations with the EU members, receive assistance in economic and institutional reform, attract foreign investment and financial aid and guarantee access to their markets.
Brazauskas doubts RST, VST will be privatised in 2003
It is unlikely that either of Lithuania's two power distribution companies Rytu skirstomieji tinklai (RST, in the east) and Vakaru skirstomieji tinklai (VST, in the west) will be privatised this year, Interfax News Agency quoted Lithuanian Prime Minister Algirdas Brazauskas as saying.
The prime minister said he had received a letter from E.ON Energie of Germany, which owns 20.28 per cent of RST, in which the company said it was not sure whether it would be a good idea to buy more shares in RST. Eesti Energia of Estonia and E.ON Energie had earlier entered bids for the government stake in RST. "O.ON Energie has not completely refused to take part in the tender, but the concern has raised the question of energy tariffs and their stability. Additional negotiations may be needed. There will be at least one round of talks," he said. "We are in no hurry to privatise the grids," he added. Lithuania's state property fund has stopped accepting bids for the tenders. Lithuania had planned to sell the government stakes in RST and VST before the end of 2003.
Lithuania's Achemos grupe and a consortium of individuals affiliated to the trade network, Vilniaus prekyba, are taking part in the VST tender. The starting price for 71.35 per cent of RST is 421.579m litas and the starting price for 77 per cent of VST is 358.857m
Ignalina plants boosts 10-mo output
The Ignalina nuclear power plant boosted electrical output 12.2 per cent year-on-year to 12.3bn kilowatt-hours in January-October, the plant's press service told the Baltic News Service, Interfax News Agency reported. Overall electricity sales during this period rose 11.8 per cent to 11.3bn kilowatt-hours.
In October alone, the plant's output was down 10.6 per cent year-on-year at 1.116bn kilowatt-hours.
At the present time, the plant is only running its second power block, which has production capacity of 1.3 gigawatts.
The first was taken off-line for repairs on July 11th, and the work was supposed to have been completed by November 1st.
Lithuania is obliged by the European Union to take the first block out of operation before 2005, and to completely shut the plant down by 2009 in the present of sufficient funding. Building a new nuclear plant is being actively discussed both within Lithuania and without.
The Ignalina plant turned out 14.143bn kilowatt-hours of electricity in 2002, 24.5 per cent more than the year before.
Its goal is to produce 14.4bn kilowatt-hours this year. The plant produced around 80 per cent of the electricity in Lithuania.
Lithuanian premier urges Baltic states to focus on transport projects
Prime Minister Algirdas Brazauskas has urged the heads of the Baltic states to join forces in the development of the region's transport infrastructure. The prime minister believes it is necessary to complete, by 2005, the project Via Baltica [the construction of a motorway] and to start carrying out the project Rail Baltica [both the motorway and the railway will connect the Baltic states and Warsaw] which will improve the transport link between the future EU member states and western countries.
Janina Mateikiene for Lithuanian Radio reported: "Speaking at the session of the Baltic Council of Ministers, Algirdas Brazauskas said they had recently made a breakthrough in the construction of the motorway Via Baltica. He also said that the implementation of an investment programme progressed speedily and that that they planned to complete the reconstruction of the motorway on all Lithuanian territory by 2005."
Brazauskas also said it was important to draft the railway project Rail Baltica by 2007. The prime minister said the motorway and the railway would have to ensure a fast link of the Baltic states with other European states.
The Baltic Assembly and the Baltic Council of Ministers, working in Vilnius, adopted a joint statement on future cooperation in the implementation of transport, energy and other projects as part of integration into the common European market.
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