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LITHUANIA


 

 

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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: 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. 

Crisis abates
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 now.
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 žinios. 
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 MPs. 

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 personally.
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 East". 
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.

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ENERGY

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.

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FOREIGN COOPERATION

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 Europe reported.
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 said.
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 cooperation.

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