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LITHUANIA


 

 

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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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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