Books on Lithuania
Update No: 304 - (28/04/06)
Lithuania's politics in turmoil; elite in major shake-up,
says Lithuanian press digest
There has been a major power redistribution in the leadership of Lithuania: the
Seym speaker has been dismissed, the foreign minister has resigned and the
coalition has broken down.
One of the oldest leaders of independent Lithuania, Speaker of the Seym Arturas
Paulauskas, was quite unexpectedly dismissed from his office on April 11th.
Though the son of a KGB officer, Paulauskas obtained the office of Public
Prosecutor, was twice Seym Speaker and even acted as President for some time.
Attractive and steady, he almost won his presidential race with Valdas Adamkus.
The reason for his rise and fall is still shrouded in mystery. Since Paulausaks
is the leader of the New Union (Social-Liberals) (one of the four coalition
parties having a quota in the cabinet), the fate of the coalition is open to
question. Now that the New Union has broken away, the ruling majority may break
up, which may lead to political instability.
But the situation is not as dramatic as it may seem at first glance - the New
Union has only two ministerial offices and is not the key player in the
coalition. It got into the Seym only because it went into electoral alliance
with the Social-Democratic Party of Lithuania (led by Algirdas Brazauskas), and
it was due to the selfsame alliance that Paulauskas got the office of Speaker.
Then media wondered how the leader of such a small party (only 11 seats of 141)
could lead the Seym. A speaker from the biggest faction - Labour Party (39
seats) - would be something much more logical. That's what the LP is seeking
Meanwhile, Lietuvos radijas reports Brazauskas as saying on April 13th that he
will continue leading the coalition after the secession of the Social Liberals,
but the remaining three parties will search for possible substitutes: "We
will search for ways to reinforce our coalition."
The previous day the three parties from the former coalition - LP, SDPL and
Party of Peasants (with only one ministerial seat) signed a new coalition
agreement: Algirdas Brazauskas remains Premier, while one of the Labour Party
leaders Viktoras Muntianas becomes Seym Speaker. Brazauskas says that the two
ministerial officers left by the New Union may also be given to the LP. This is
logical as the LP has more seats in the Seym than the SDPL. Earlier it was not
an obstacle: the Social Democrats took half of the Cabinet and the office of
Premier. But now the situation is different, and they will have to give in.
Reasons for the crisis
Few experts expected such a rumpus. The opposition's argument for impeaching
the Speaker was hardly serious - a small scandal in the Seym office: one
employee used an office car for her personal purposes. For several days the
Lithuanian media chewed over the news that Paulauskas' employee took her dog in
an office car. Paulauskas said he could not - and even had no right - to control
all his employees. His duty is to hold Seym meetings, while to control his
office is the duty of the head of the office.
But almost at the same time, similar - even bigger - scandals took place in the
government and the presidential offices: the governmental office secretly
mortgaged the presidential residence, got a credit and built cottages for its
officials, including two presidential advisers. Both the Premier and the
President said they knew nothing about it and were not responsible for the
actions of their respective offices. But nobody said they should be impeached,
says Lietuvos inios.
Still these arguments did not convince the opposition, who collected the
necessary votes for impeaching the Speaker. But the ruling majority is ruling
exactly because it can veto any decision by the opposition. So, Paulauskas'
impeachment means that voting against him were also MPs from the ruling
majority. Experts call this "a betrayal." Shocking was not so much the
dismissal itself as the quantity of MPs voting for it: 94 against 11. Experts
say this would be impossible without secret instructions by the leaders of the
ruling majority on how to vote.
The opposition collected only 36 signatures to start the procedure, mostly from
the MPs from Pro Patria, Liberal Centrists, Liberal Democrats, some Liberals.
The Seym's regulations say that the Seym should consider the initiative for
impeaching the Speaker, if it is supported by at least 1/5 of the MPs, i.e. 29
The reasons for the Speaker's dismissal
But the unanimity of the Seym's verdict against its Speaker obviously needs
more detailed explanation. One reason might be the quick growth of the
popularity of the New Union and its leader. The party obviously showed to good
advantage in the light of endless scandals over the ruling SDPL and LP and their
leaders Brazauskas and Uspaskich. No scandal at all has besmirched its
reputation. And in March Paulauskas was already among the most popular
politicians, and, most importantly, his party took the 3rd place from their
"elder brothers" in the SDPL. Though still the leader, the LP has lost
its big popularity lead over its rivals and now has only 3% more than the 2nd
placed Pro Patria.
The other reason may be the idea is forming of "a rainbow coalition,"
i.e. a new coalition with one or several presently ruling "left-wing"
parties. The haggle for offices would be decisive here.
This also benefits the Labour Party, whose leader Viktor Uspaskich had to accept
the place of second fiddle in the coalition despite their victory in the last
parliamentary elections. He failed to become Prime Minister and was even forced
to resign from the Economy Ministry after the scandal over his allegedly faking
his diploma and giving Euro-money to "his" firms. Now the LP has hope
for a better position in the new coalition.
Vilnius Expected to Cede to Berlin's Pressure
Algirdas Brazauskas, the head of the Lithuanian government, is scheduled to
visit the German capital soon. From the viewpoint of the hosts, the main
objective of the visit is to persuade him of the commitment of the new German
government under Angela Merkel to cooperation with Russia in the energy sphere.
Brazauskas would be quite unequivocally told that official Berlin views Moscow
as its strategic partner and has no intention to give up cooperation in the
energy field. Russia of course has the trump card, its vast energy resources
which the whole EU, not just Germany, needs, as do the Baltic states.
German diplomats have informed the press of the establishment of good personal
terms between Angela Merkel and Vladimir Putin, including regular phone
conversations on different issues. Each speaks the other's language.
Russian-German relations have been striking the right note.
On April 26-27th, in the Russian city of Tomsk the regular Russian-German
intergovernmental session took place, discussing cooperation in different
fields, first and foremost, the energy sphere. The European Union-Russia summit
will follow as the next step in Sochi in May. Then the July summit of the full
Group of Eight (G-8) will come round and the German side, unlike the Americans,
has no doubts of its necessity. And finally, in November, the regular session of
the Russian-German "Petersburg Dialogue" forum will be held in
Dresden, this time with the participation of the Russian president Putin
These and many other active contacts with Moscow are promising considerable
economic and political dividends to Berlin in the very near future. This is the
very thing to be explained to Algirdas Brazauskas during his forthcoming visit
to the German capital. It would be proposed to him either to join the developing
cooperation of the two powers as a junior partner, or to lag behind the process.
In any case, as German diplomats insist, the chancellery of the Federal
Chancellor has no intention to sacrifice a good relationship with the Kremlin
for the sake of satisfying the pretensions of Vilnius as regards the
construction of the German-Russian North-European gas pipeline (NEGP).
In this connection the German diplomats have been pointing out that on February
27 the heads of governments of Lithuania, Latvia and Estonia had met in Trakai,
Lithuania, and actually reached an agreement on the establishment of a joint
anti-German-Russian energy front. It was supposed that the basis of it would be
set down in the form of unified regional power strategy, that was due to be
developed by teamwork till the end of 2006.
However only a month later prime ministers of Latvia and Estonia one after
another were invited to Berlin. Aigars Kalvitis of Latvia paid a working visit
to the German capital on April 6th, and Andrus Ansip of Estonia visited Berlin a
week later. They both got roundly the same message that will be delivered to
Brazauskas, that is - Germany is not going to abandon its strategic partnership
with Russia and suggests the Baltic countries join its new "advance to the
In an official statement of the Chancellery of the Prime Minister of Latvia, it
was announced in this regard that "both sides discussed cooperation in the
energy sector". The Chancellery of the Estonian Prime Minister turned out
to be more outspoken. It was said in the statement distributed by its press
service, that "both sides have discussed in detail the significant role of
Russia in providing fuel to Europe and are interested to begin a constructive
dialogue with Russia on the subject".
It is worth recalling the fact that no dialogue with Russia had been envisaged
by the agreements reached in Trakai. It is noteworthy in this context that since
the return home of Kalvitis and Ansip, neither Riga nor Tallinn have ventured a
critical remark addressed to Berlin or Moscow regarding the construction of the
German-Russian gas pipeline.
On the eve of the Berlin visit by the last participant of the February Trakai
meeting, hopes have been expressed in the German capital that Brazauskas would
turn out to be not less compliant than his Latvian and Estonian counterparts. It
is indicative here that he has been rather quietly agreeing to the participation
of the Russian oil company, LUKOIL, in the privatisation of the Lithuanian oil
refinery, Mazeikiu Nafta.
MN price agreed - US$1.2bn plus 2005 dividends
The Lithuanian government and Russia's YUKOS have agreed a price for the oil
company's 53.7 per cent stake in Lithuanian oil concern Mazeikiu Nafta (MN),
which will amount to US$1.2 billion (about 3.5 billion litas). The Russian side
will also receive dividends of almost one billion litas from MN profits for
2005, the Lithuanian newspaper Lietuvos Rytas reported.
According to the report, the initial price offered for the shares was more than
US$1.4 billion (over four billion litas), but this was reduced during
negotiations. The completion of negotiations should be announced soon. The
Lithuanian government plans to sell the MN shares immediately; adding another 21
per cent owned by the state to the stake it is buying from YUKOS. According to a
company audit, Mazeikiu Nafta net profit last year amounted to 929.915 million
litas, up 28.8 per cent from 2004. Company revenue increased 45.6 per cent to
11.154 billion litas. Meanwhile, Russian oil companies LUKoil and TNK-BP are
still interested in buying shares in Mazeikiu Nafta, the Lithuanian government's
press service said.
Lithuanian Prime Minister, Algirdas Brazauskas, met with Andrei Gaidamak, head
of the LUKoil investment analysis and investor relations department recently.
"The LUKoil representative asked about the possibility of acquiring
Mazeikiu Nafta shares if the Lithuanian government bought the 53.7 per cent
stake in the company controlled by a subsidiary of YUKOS," the government
press service said. According to the press service, in recent weeks other
foreign companies also expressed interest in buying the shares from Lithuania,
and Brazauskas and members of a government working group met with
representatives from KazMunaiGaz and TNK-BP.
LUKoil Baltija Director General, Ivan Paleichik, told Interfax LUKoil would make
a bid to buy the Mazeikiu Nafta shares from the Lithuanian government. "We
are interested in Mazeikiu Nafta, so LUKoil will submit an offer to the
government," he said. He said that LUKoil's advantage over other potential
investors is that it can meet the main condition being demanded by Lithuania -
the provision of guarantees of long-term oil supplies. There have been no
official announcements about progress in negotiations for the sale of the
Mazeikiu Nafta shares for about two months. Earlier the main contenders were
KazMunaiGaz and PKN Orlen. But Brazauskas has repeatedly said that after the
government buys the stake from YUKOS, other oil companies may offer to buy the
almost 75 per cent stake in the company. The Lithuanian government plans to sell
the 53.7 per cent stake bought from YUKOS along with another 21 per cent owned
by the state. Lithuanian Economics Minister Kestutis Dauksys, who was assigned
the top position in the Lithuanian government's negotiation team for the
purchase of shares in Mazeikiu Nafta, recently expressed apprehension that the
Moscow Arbitration Court ruling concerning YUKOS might complicate the process
for Lithuania to buy 53.7 per cent of Mazeikiu Nafta controlled by the Russian
oil company. The Moscow Arbitration Court has ruled that a demand by Russian oil
company Rosneft for the bankruptcy of YUKOS Oil Company was justified, and
started oversight procedures at the latter until June 27th, when the company's
bankruptcy case would be heard.
Polish president calls for Warsaw-Vilnius cooperation
Polish President, Lech Kaczynski, expressed a wish to continue Poland's
strategic partnership with neighbouring Lithuania at the start of a visit
recently in Vilnius where he met his Lithuanian counterpart, Valdas Adamkus, New
Speaking to journalists, both leaders stressed the continuance of bilateral
relations and giving regional politics new impulses. Topics on their agenda
included the upcoming elections in Ukraine and Belarus. The latter was presently
far from a real democracy, Adamkus said.
Foreign policy had often been coordinated with Kaczynksi's predecessor,
Aleksander Kwasniewski, with whom he had served as a mediator during the Orange
Revolution in Kiev, Adamkus added.
Kaczynski also addressed parliament or the Seimas while in Vilnius, and later
met with Lithuanian Prime Minister Algirdas Brazauskas. Their talks focussed
mainly on trans-border energy projects, a spokesman said afterwards.
Kaczynski urged to broaden cooperation and joint enforcement of energy security.
The Polish head of state also urged Lithuania to join forces in combating energy
security threats, since he said energy sources could lead to a political
domination of their recipients.
Kaczynski showed particular interest in cooperation in nuclear energy, according
to the spokesman. Adamkus invited Poland recently to join Lithuania, Latvia and
Estonia in helping to build a new nuclear reactor in Lithuania that could help
wean the region off Russian energy supplies. "Independence in the energy
sector can guarantee our political independence in the future," Adamkus
Adamkus invited Poland to join the Baltic states in constructing the new nuclear
reactor at Ignalina, some 130 kilometres northeast of Vilnius, where the current
nuclear reactor is set to be shut down by 2009. As part of its deal to join the
EU, Lithuania agreed to shut the Ignalina plant down completely by 2009.
Polish minorities in Lithuania were the main topics on the agenda of talks
between the Polish head of state and Lithuanian politicians. During his visit to
Vilnius President Kaczynski underlined that EU membership carries some hazards,
like restrictions of the sovereignty, which both Lithuania and Poland regained
not long ago.
Newspapers in Vilnius underlined that Poland and Lithuania are keen on deepening