Archive for April, 2008
European Union’s will to ingratiate the rotating heads of the Kremlin lies behind EU’s pressure on Lithuania to refrain from vetoing talks with Russia over the new “Partnership and Cooperation Agreement”, a a high-ranking official of the Lithuanian Foreign Ministry said to the BNS agency on April 25. “The EU just wants to present the new president Dmitry Medvedev and outgoing Vladimir Putin with a gift, not worrying over who will keep the gift in hand. Russia’s Foreign Minister Sergey Lavrov will arrive to Luxembourg next week to claim the present”.
The BNS said that the diplomat again reminded of the principles of solidarity declared by Brussels and noted that Vilnius wants for EU’s interior policy on issues of energy to be stated in one voice, constructively and based on existing juridical norms. He added that Lithuania’s interest of solving “frozen conflicts” should also not be forgotten.
The Foreign Ministry’s representative mentioned a few issues unacceptable to Lithuania present in the purportedly compromising text declaring commencement of talks with Russia, prepared in a meeting of EU ambassadors in Brussels Thursday and sent to Lithuania.
The diplomat indicated to the BNS that there’s still time for pursuing a compromise over the negotiations mandate, i.e. two months, or until the end of June to be precise, when leaders of EU and Russia are to meet in Russia and hopefully begin talks over partnership. Lithuania would like to use this time for talks within the EU and polishing of rough edges.
He also noted that Vilnius is not satisfied with this stance taken by the EU with regards to “sensitive and complicated problems”.
“There’s still time, we would like to negotiate, however if this principle isn’t upheld, we will not back up a centimetre. We are a small nation, however one that is a part of the EU”, the Foreign Ministry official said.
Lithuania is also discontented about the tone of EU talks with Russia, which is aiming for “a new quality of relations”, as well as with other post-Soviet countries, especially those in South Caucasus.
“These are double standards, the so-called “Russia first” politics, completely disregarding observation of international commitments, i.e. how the Kremlin observes them”, the Lithuanian representative said.
As the Lietuvos Rytas daily mentioned in its editorial ‘Lithuania would like Medvedev’s term in office to become a turning point for Russia: It could become more European and more civilized. However, is this something we can expect?
Is it worth waiting and hoping for something? Or is it better to have a firm position from the start? This is what our diplomats – who have infuriated not only Moscow, but, it seems now also Brussels – demand.
Lithuania’s interests should be reflected in the mandate for the EU-Russia negotiations. In other words, Lithuania does not agree to launching the negotiations first, and only then seeking that the negotiations ensure Russia’s commitments important for Lithuania.
This means that Lithuania refuses to endorse Europe’s idea that the foundations for the new relations with the Kremlin should be built on the hope that once Medvedev becomes president, Russia can change, and that mutually beneficial agreements could be signed with this country, and that it will finally start playing in accordance with the game rules accepted by the international circles.
The idea that Medvedeved, called in the West a Kremlin liberal, can change Russia at least partially, has become one of the most important discussions in the international community, just as has another topic – whether Russia will be ruled by Medvedev or Prime Minister Putin.
Recent events show, in a way, that Putin is inclined to strengthen his political position as much as possible after he leaves the presidential post.’
The same editorial maintains that ‘Perhaps Russian experts or persons interested in Russia do find it interesting to forecast such things. However, those who create plans for relations with Moscow should realize that, at least in the near future, it is not worth expecting any changes.
A question arises then, what is the point of giving Medvedev any “diplomatic gifts?”
Is it yet another concession, hoping to warm the Kremlin’s heart? Have we not overdone it already? Have we not understood yet that such policy does not give any results? Or, perhaps, it is not worth starting any negotiations with Russia, until we have a firm negotiations mandate that reflects the interests of all the EU member states?
Experience of Lithuanian diplomacy shows that we achieved the greatest victories in negotiations with Russia when our country firmly held on to its positions and we could not allow ourselves to waver.
This is why such firmness is necessary also in the EU arena. And it does not matter how our country will be labelled by Moscow, or by its friends in Europe.’
As the BNS wrote “There will be no economic recession in Lithuania. Our industry and our businesses operate really efficiently. There are certain challenges, but I would not call that a crisis. The opposition always sees a crisis. Most probably, there is a crisis in their heads.” “Our nations (the Baltic states) need a soft landing in order to prevent an overheating of their economies. This is what is taking place now. We have somewhat smaller growth rates, which is normal.” Lets have a look what the other financial institutions think about the status of the Lithuanian economy. The IMF warned Lithuanians that the dependence of Lithuania’s banking sector on foreign financing coupled with increasing macroeconomic imbalances render it vulnerable to regional and global disturbances.
· Existing capital might not be sufficient to cope with extreme events and higher buffers would be advisable.
· Given limitations of lender-of-last-resort operations under the currency board, contingency planning for emergency liquidity support under crisis conditions should be further discussed with banks, parent banks, and authorities of foreign banks.
· The dominance of foreign-owned banks in the banking system constitutes both a source of strength and a risk. Although the foreign banks are highly rated, these ownership linkages increase regional and global contagion risks, especially against the backdrop of the recent global turmoil in financial markets.
· The loan portfolios of Lithuanian banks are sensitive to the domestic economic cycle and euro interest rates, particularly given the significant concentration in real estate-related lending.
Recommendations from the IMF
· IMF also Lithuania to strengthen supervision in the non-bank financial sector, given the rapid growth of assets and the increasing sophistication of financial institutions.
· The regulatory and enforcement framework for insider trading should also be reformed.
Lithuanian Free Market Institute
· Lithuania is already on the ‘soft landing’ stage. The GDP will grow by 6,6% this year
· Lithuania’s cushion against the global recession is its low competitiveness and productivity. We can increase the productivity applying simple solutions, at least in the short term.
· Money for the new technologies and innovation will increase due to the rising wages
· The wage rise will slow down, this year should be about 12%, to 1,779 LTL by the end of the year
· The Black Economy will be on the rise again, from 17,8% to 18,5%. The tax burden will increase from 31,9% to 40,9% in 2008.
· Imports will decline
· Lithuania is not too connected too strongly with the markets which experiencing the decline or stagnation.
· Lithuanians borrowed from the banks relatively small amounts of money
· The immigrants still transferring huge sums of money into Lithuania
· The election campaign started already, some populist decisions accepted in Seimas and are already affecting the economy
· Inflation should be 8,5%
· Some signs of the ‘hard landing’, which will be more evident in the last two quarters
· The GDP around 5%
· Inflation about 10% since increased heating prices will hit the Lithuanians hard
· More troubles ahead since the Baltic economies ‘engine’ the exports will decline
· If a bank (especially a Scandinavian) would collapse the consequences for the Lithuanian economy could be catastrophic. But a collapse of a Scandinavian Bank is almost impossible.
On the other hand the Standard & Poors published a table of the most volatile economies in the world which are very likely to feel the most negative effects of the world economical crises.Lithuania is in the tenth place
It could be argued that this week’s two most important events were the President’s address to the nation on April 15 and the Prime Minister’s evaluation of the government’s activity in last year in the form of the annual report, presented to the Seimas April 17.
It could be argued that the both address were extremely different in the evaluation of the Lithuanian situation. The President’s address by the many commentators appeared too negative and the PM’s address sounded too positive in evaluation of the Lithuania’s situation.
There is a logical explanation to it: the President Adamkus still have a year before another presidential election, the PM Kirkilas, on the other hand is facing election on October 12. The President’s executive powers are rather restricted by the constitution, unlike those of the Prime Minister’s. The President is regarded as the number one in Lithuania, followed by the Chairman of Seimas, which leaves the PM only number three. However, in practice the PM has the tools to ‘move and shake’ the most important aspects of the day-to-day life in Lithuania.
Another explanation in such differing views of Lithuania is that Adamkus more likely will not participate in the Presidential election and Kirkilas inevitably will face a Parliamentary election in this Autumn, further more, he is a chairman of the Social Democratic party, which has lost a substation number of its voters. There is also a talk in the town that Mr Kirkilas has his eyes set on the Presidential palace.
The President’s view
In his speech the President stated that ‘we could say that never before has Lithuania and its people been so secure and successful and enjoyed so many opportunities for self-realization and participation in a wide range of fields.’ However “Regrettably, in the nineteenth year of our independence, instead of discussing the challenges or problems that we face, we have to acknowledge that there is a crisis of confidence in the state. We came to this crisis slowly but steadily, ignoring all cautions and warnings to work together for common interest.”
Here are some reactions to the speech by the Lithuanian media and some commentators
The MPs reacted in a usual manner – we know all the problems already, there is nothing new in the address. The MPs listened to the address without any emotions – no clapping or other noises.
The speech was addressed not to the present parliamentarians but to the next ones.
The main message is that Lithuania is moving towards stagnation.
President criticised all spheres in politics apart from the Foreign and Defence policy, which according to the constitution are run by Him.
Daily Lietuvos Zinios
Zuokas, chairman of the Liberal centrist party was the main critic and expressed his disappointment towards the address. The address so pessimistic that it encourages not to act but to emigrate from Lithuania. ‘The President identified the right problems but rather than talking about them there should be more actions to resolve them.’ According to Zuokas, the President should also take a blame for many problems he raised.
Siauliene, the elder of the Social Democratic faction in Seimas – there is a lot of criticism but no proposed solutions how to solve the problems.
Commentator Grinius – ‘The President could not decide on what emphasis the address should be concentrated: overview the situation, set the road map for the future or just criticize the Government. It could appear that address was read not by the head of Lithuania but by a foreign commentator’.
Daily Vilniaus Diena
Landsbergis MEP – the President should avoid to present all political parties in the same light. The Conservatives should not be placed in the same basket with the other scandalous populists. By doing so, the President is planting even stronger mistrust of the political parties amongst the Lithuanian society.
The opposition Liberal Movement’s leader Eligijus Masiulis says that the president highlighted all problems in an accurate manner, however, looked like “an experienced wolf standing aside of all political processes.
Rasa Jukneviciene Conservatives “If I were the Prime Minister, after such address to the nation I would either resign or come to the Seimas to check the trust in a secret ballot. This should be the practice in a democratic country because, obviously, the President was very critical of the situation in Lithuania – not only of the past year but also of the past period. The Communists (…) have been in power for eight years. This is the consequence of their rule.”
The Prime Minister’s view
The Prime Minister on the other hand highlighted Lithuania’s achievements. According to his address the year 2007 entered the country’s history as a year that Lithuania decided to remain a nuclear state, and the greatest victory in foreign policy became the accession to the Schengen free-travel zone.
As the BNS reported according to the report, not all of sore issues were solved and some transferred onto year 2008, such as ensuring of safe traffic and putting a halt to arbitrary constructions.
Among the “meaningful tasks” implemented, the report mentions the decision to remain a nuclear state, which is consolidated it the Seimas-approved National Energy Strategy as well as in the Nuclear Power Plant Law prepared by the government and approved by the Seimas.
The government sees Lithuania’s accession to Schengen – a step that required considerable effort – as the most meaningful victory in foreign policy. Together with eight other European Union (EU) newcomers, Lithuania lifted border controls at inner EU borders. Considerable preparation procedures with regards to transport and accommodation of border infrastructure for Schengen needs were implemented prior to accession.
As the BNS noted the document also states that the country’s accession to the EU had a basically good impact on local economy, naming acceleration of constructions, better prospects for the transport sector and a stronger agriculture industry.
Development of Lithuanian agriculture in 2007 was among those, which experienced fastest growth in the EU. In response to increased domestic consumption, all branches of agriculture experienced growth, average wages went up and unemployment dropped.
The continually increasing level of employment of inhabitants reached 64.9 % last year and was highest over the past few years. According to preliminary data, the average level of unemployment dropped from 5.6 % in 2006 to 4.3 % in 2007, thus dropping below the average EU unemployment level (6.9 %).
Even though declared migration hasn’t decreased, the document notes an increase in the re-immigration of Lithuanian citizens. Almost 70 % of citizens returning to Lithuania are under 35 years old.
In the report, the government promises that Lithuania will continue sticking to the strictly fixed rate of the litas with respect to the euro and will seek to join the euro zone as soon as it satisfies criteria for convergence.
As the BNS writes according to the report among tasks awaiting the government this year, the document mentions efficient utilization of EU support, which will reach 23.4 m litas (EUR 6.8 m) over the 2007-2015 period; preparation for commemoration of a millennium since the first mention of Lithuania in written sources as well as successful implementation of the Vilnius European Capital of Culture 2009 program.
The truth lies somewhere in the middle, even though Kirkilas has became infamous in giving promises without keeping them.
The Lithuanians are not only one of the most mobile-connected nations in the world, but they started to get somehow intimate with this device.
As the BNS informed some 54 percent of Lithuanians would “feel naked” if they left home without their mobile phones, a RAIT poll showed on April 15.
The poll states that wearing no underwear would be the second worst thing: that would cause great discomfort to 34 percent of those polled.
According to the same poll some 27% of the respondents would find it hard to get through the day without their glasses or contact lenses.
The poll also found that the last thing one-third of Lithuanians touch before going to sleep at night is their mobile phone (to active the alarm function), ranking second only to the TV set 57 %.
I have to say that I would not leave home without my glasses.
This week could be considered a hot week in the Lithuanian political scene. The political life (scandals) is intensive on daily bases in here. However, not every week there is the non-confidence vote for the Prime Minister in the Parliament, resignation of the Speaker (second most important person in Lithuanian politics, at least according to the Constitution). We also witnessed an election of the new Seimas’ Speaker, refusal to elect the Vice- Speaker, election of the Head of the Constitutional Court, the disappearance of a political group in the ruing majority Government coalition, rise of the Social Democratic political group in the Parliament to the 38 MPs, failing to recognise the Independence in Kosovo, and then… I should stop here. That happened in one single week! Welcome to the soap opera of the Lithuanian politics! Who was the winner?
There is nothing new about disappearance of the Civil Democracy faction. The ex Seimas’ Speaker’s Muntianas’ Civil Democracy party was a party which clearly has no future. It formed after a splinter group of the MPs left the populist Labour party, and joined the ruling minority coalition. It has a very little public support, and its representation in Seimas is disproportional to its influence. Muntnianas, who lacks charisma, to say the least, is not popular amongst politicians, even though he was ‘comfortable’ to the many for the time being. However, his mission is over.
During the process of the formation of the majority government the Social Liberal party joined the coalition. The negotiators of the Social Democrats offered the Social Liberals the Minister of the Environment post and other not too influential positions. However, what the Social Liberals were after was the Head of the influential Seimas National Security Committee, which is at the moment is headed by MP Matulevicius, member of the Civil Democracy party.
MP Matulecivius has refused to give up the post. The Social Liberals warned Muntinas that if Matulevicius will not go, you will.Since the Civil Democracy party had a minimal (7) amount of MPs needed to form a political faction in Seimas, there was a real threat that after Muntianas resignation from the Speakers post, the faction will lose some of its members to the other party and will cease to exist. It happened just that yesterday. Hence, the disappearance of the faction has open the way for the Social Liberals to head the Seimas’ National Security Committee.
The Committee has a crucial importance for the Social Liberal party since this would bring the party back to the classified information in the possession of the Committee. Even though the Social Liberals had its member in the Committee already it is more convenient to head it. Furthermore, the ruling coalition did not like MP Matulevicius who was accused of serving the opposition Conservative party.If (perhaps ‘when’ is more appropriate) the Social Liberals would start heading the Committee of the National Security this would give a very strong tool in the hands of the party in the forthcoming elections in October 12. In the past the Social Liberals proved to be the true masters in manipulating information to gain the political influence in Seimas. Since almost every Lithuanian politician has a ‘tail’ of some sort, a leak of such info into the press in the right time can damage a political figure.
The latest example was the Muntianas case. The Speaker has paid a 2.000 Litas (EUR 1 – 3.45 LTL) in cash payment for services to a Kaunas official. This operation was recorded on the camera and leaked to the press on the March 18. Since the Speaker could not prove that this was not a bribe but a payment for services he decided to resign. However, the information was leaked few weeks ago, and the action of giving the cash took place in the summer of 2007. Right time, right place, so to say. Such and similar info is available on majority of the Lithuanian politicians. Hence this is a very important tool in the political fighting.
Another reason for Muntianas’ resignation was an element of the ‘sweet revenge’ from Mr Viktor Uspaskich. Mr Uspaskich is the Labour Party leader, the same party that MP Muntinas deserted and was one of the closest Uspaskich comrades in business. Uspaskich thinks that Muntianas has betrayed him. Well, actually Muntianas did just that.
The Prime Minister Kirkilas not only withstands the possible vote of non-confidence in the parliament but also came out of it with gains for the Social Democrat party in the parliament. The defection from the Civil Democracy party, including MP Muntianas made the Social Democrat party the most numerous party in Seimas. In addition to all of that the Social Democrats gained the post of the Speaker of Seimas.
A question remains if this Lithuanian political Soap Opera would impress the Lithuanian voters. According to the opinion polls the support for the Social Democrat party has not been so low for few years at least. However, the Social Democrat party is famous for being as the ‘power party’. This party joined the Seimas in 2004 as the third largest party with 20 MPs. Now the party has 38 MPs in its faction and is the largest in the Parliament. As the PM Kirkilas, who is happened to be the head of the party also, recently said that the best opinion poll is the elections. Well, he is right, lets wait and see, October 12 is very soon.
Lithuania has always been known for its Agriculture sector. However, the steep rise of the other sectors left the agriculture sector lagging behind and the sector’s contributions to the national GDP is in constant decline.
Never the less, apparently doomed industry is experiencing a revival. This process is not confined only to Lithuania; this is the world’s tendency. The recent grab of the ‘Agrowill Group’ stock in the auction only reveilles that the sector is on the way to recovery. Especially encouraging sign for the company and for the sector as a whole is that the Scandinavian funds bought about 95% of all shares.
Interestingly enough, the business daily ‘Verslo Zinios’ (owned by the Swedish capital) announced an interesting article. Minister of the Foreign Affairs, Mr Vaitiekunas paid a visit to Kuwait last month. He also brought a large delegation of the Lithuanian businessmen with him.
Apparently the representatives of the Lithuanian Agriculture sector had a proposal from the Kuwaiti businessman to replace the Danish agriculture products in Kuwait. This is of course an aftermath of the caricature scandal in 2005. As the article claims, the Lithuanians have a great opportunity to replace all Scandinavian products in the Gulf States. According to the paper the Gulf States imported USD12 bln worth of the agriculture products in 2006, or 98% of all agriculture products.
The Lithuanians are shocked with the proposal and admit that this would be a huge challenge to the sector. Not the major concern I guess but rather important to the Lithuanians how to not offend our strategic partners! Hence, the Lithuanian businessmen are considering cooperating with their Scandinavian colleagues and becoming an intermediate between the Gulf States and Scandinavia. The Scandinavians could send their products to Lithuania and the Lithuanians could pack them into the Lithuanian packages and provide the products to the Gulf States! The wolf is fed and the sheep is intact!
At first I was convinced that this was an April fools’ joke. Well, it was not – the Lithuanian Parliament Seimas failed to recognise the Kosovo Independence. The draft resolution was returned for improvement, even though some MPs were shrugging over what’s left to change. What have happened in Seimas?
As the BNS those parliamentarians who didn’t approve the recognition of a new state and raised the question of how Kosovo Albanians, which constitute an ethnic majority in the region, are different from other peoples striving for independence – the Kurds in Turkey, Basks in Spain, inhabitants of Abkhazia and South Osetia in Georgia.
The MP and member of Liberal Movement Party Austrevicius mentioned to the BNS that “It now seems that Lithuania has some sort of specific motives for disapproving Kosovo’s independence “.
The President Adamkus, who welcomed Kosovo independence already in February 17 was rather disappointed about the decision. Just before the President left for the for the NATO summit in Bucharest he issued a press release. In it the President maintained that a “such an irresponsible and unprofessional attitude towards a new state is detrimental to thus far coordinated and authority-carrying Lithuania’s foreign policy and degrading to our international prestige”.
He reminded the Parliamentarians “The most renowned lawyers, diplomats and politicians of the Euro-Atlantic community agreed that Kosovo’s case was unique and cannot, for many reasons, become a precedent for autonomy-seeking territories in Georgia and Moldova”.
So, what has had happened in the April Fools’ Day in Seimas? There are few explanations. The first theory worth of the April Fools’ Day is that the critical mass of the Parliamentarians did not participate in the voting since they were away… celebrating their colleague’s fiftieth anniversary. The MP is Mr. Sabatauskas, a Social Democrat and a head of an influential Seimas’ Committee of the Legal Affairs. I was shocked not because of the birthday as such, but after finding out that Mr. Sabatauskas is actually only 50! I would never give him more than 40!
However, another reason is rather controversial. Amid the growing interest of the Lithuanian businessmen in Balkan countries, Lithuania is considering opening a diplomatic mission in the region. As the PM Kirkilas said to the BNS the mission could be established in Serbia, with the diplomats representing Lithuanian businessmen’s interests in Montenegro, as well. “I believe that if we decide to open a mission, it will most likely be based in Serbia,” Kirkilas noted to the BNS.
Hence, keeping in mind Belgrade’s reactions to the countries, which are recognising the Kosovo independence a long work of establishing of the Lithuanian embassy in Serbia would certainly slip away for some time to come. The Lithuanian business lobby had put some pressure on the government to open the embassy as soon as possible. Never the less, the same Lithuanian business lobby was advising to the President Adamkus to attend the 60th World War Two celebrations in Moscow.
All situation is rather peculiar since the Lithuanian Ministry of Foreign Affairs, which acts hand in hand with the Presidential office almost, ignored Seimas’ April 1 decision regarding Kosovo. It looks as though this time the business lobby had prevailed over Lithuania’s strive to not to fall out of its allies choir in Kosovo affair. All Lithuania’s major allies in Nato and in the EU had recognised the Kosovo Independence already, including the USA, the Baltic States, most of the Nordic nations and Poland.
Even though the Seimas Chairman of the Foreign Affairs Committee MP Karosas acknowledged that the resolution over Kosovo will be adopted after amendments in few weeks, the April 1 decision rose some eyebrows in few capitals already. Who would claim that the Lithuanian politicians don’t listen to the basketball supporters!