Lituanica

As the BNS reported Lithuania has dropped five places, year-on-year, to rank 36th, on the 2008 global competitiveness scoreboard.

Lithuania has been included in the 55-country list compiled by Swiss-based International Institute for Management Development (IMD) for the second consecutive year.

On the list, Lithuania lags behind Estonia, which ranks 23rd this year, one place below its 2007 position. Yet Lithuania scores better than EU fellows Portugal (37th), Hungary (38th), Bulgaria (39th), Greece (42nd), Poland (44th), Romania (45th) or Italy (46th).

However, Lithuania ranks the second in terms of women executives number and mobile subscribers number per 1,000 population, the third in terms of corporate profit taxation level, the fourth in terms of real GDP growth and short-term interest rates announced by the central bank, and the fifth in terms of patents issued to residents.

On the other hand Mr Marcus Svedberg of the Eastern Capital gave an interview to the alfa.lt on the status of the Lithuanian economy.  Here are few points he made.

Lithuanian economy will not decline as much as that of Latvia’s and Estonia’s because the Lithuanian grew slower.

One of the most important factors for the rising inflation is the growth of the food prices.  The inflation will continue growing and will start going down in the third and the forth quarter.

The State couldn’t completely control the inflation but it could effect it by reducing the state expenditure, freezing growth of the wages, lowering the taxes.  But since Lithuania is entering the pre election period this is impossible.  The next government could do that, since those measures could be best implemented at the beginning of the new government’s term.

Forecasts of 6-7% GDP growth for next few years looks just about right.  However, it is impossible to predict how Ignalina’s closure will effect the economy.

We still invest in the commercial property as offices and wear houses in Lithuania.

Lithuania was the sole of 27 EU member states, represented in the European Union’s (EU) General Affairs and External Relations Council’s (GAERC) session in Luxembourg last week to dissent to the proposal to begin talks with Russia over the new partnership agreement.

The countries decided that EU-presidency holder Slovenia’s Foreign Minister Dimitri Rupel arrived to Vilnius to further harmonize stances on the issue.  Amongst those who arrived to Vilnius were the Swedish and Polish Ministers of Foreign affairs.  However, another issue for the Lithuanians was of another importance, expression of support to Georgia.  The plan was that all ministers should visit Tbilisi on Monday and show their support to Georgia.

However, the Lithuanian diplomats had have heard a warning from Slovenian Foreign Minister Dimitri Rupel that he would accompany his Lithuanian, Polish and Swedish colleagues to Georgia only if Lithuania abandoned its proposals to the mandate of strategic talks between the European Union and Russia.  An anonymous Lithuanian diplomat expressed his disappointment by saying “How can one propose such exchange? It is incomprehensible whether the proposal from the European Union’s presiding country Slovenia indicates the entire EU’s stance on Georgia or is it a lame Slovenian proposal aimed at forcing Lithuania to give up its legitimate requirements in the discussion of the negotiating position of the EU-Russian strategic partnership agreement”.

However, after discussion in the Stikliai hotel the Lithuanians claimed that the EU had agreed with all Lithuanian propositions with some amendments.  The Lithuanian FM stated that the EU solidarity exists not only in declarations but also in reality.  Still he remained that the positions will have to be agreed with the other 23 Member States.  The Slovenian MF noted in the press conference that: ‘All Europeans States and the EU Members understand Lithuanian position.  And I can easy tell that I understand the Lithuanian concerns’.  So, what are those demands?

As Lietuvos Rytas daily wrote last week, Lithuania decided not to approve the mandate for the EU-Russia negotiations until this mandate reflects Lithuania’s interests. This was the first time Lithuania has dared to fight for its interests in the EU with such fervour.

Vilnius demands to add to the energy declaration Russia’s commitment to observe the requirements provided for in the Energy Charter Agreement.

Moreover, Lithuania wanted the EU negotiations mandate to include the point that Russia should cooperate more actively in the field of renewing delivery of crude oil via the Friendship (Druzhba) Pipeline. This pipeline was closed in 2006 for “political repairs.”

As the Lithuanian Minister of Foreign affairs noted “Druzhba was cut off without an explanation. (…) We are worried that Russia is creating a precedent. Energy security and creating a precedent are issues of interest to the EU. This is not a bipartite issue. And we believe that the question of a precedent, and of how far one can go in not cooperating with one EU state is important to the entire EU as well. We have an alternative for Druzhba, but not one for gas”.

Lithuania also noted that Russia’s attitude toward its neighbours is related to the security of Lithuania and the entire EU. This is why Lithuania proposes a declaration on Georgia and Moldova.

Moreover, Lithuania would like to have a declaration on legal cooperation, which should promote constructive cooperation in the investigations of the 13 January 1991 events in Vilnius and the 31 July 1991 massacre in Medininkai, as well as of the disappearance of EU citizens in Russia.  There is also an ongoing case of disappearance of Lithuanian businessmen Mr Jucys in Kaliningrad a year ago.

Lithuanian is also seeking to add an additional declaration to the negotiations mandate to compensate for the damages incurred by the persons deported from the occupied Baltic countries. Ensuring such support to the deported persons was one of the international commitments Russia undertook when it joined the Council of Europe.

Lithuania does not impose demands on Russia. It urges the EU to protect Lithuania’s interests, the same way it protects the interests of other EU members.  Lithuania is not trying to change Russia, it is impossible, it simply tries to change the EU attitude towards Russia, in sake of the EU.

The another point is that Lithuania is a Member State, the same as Germany, France, Italy, Cyprus, Greece, Poland or Ireland who are also defending their interests by blocking decision making.  However, Lithuania is standing not only for the ‘meet’ as the Poles did, but for the values of justice.

Lets see how it will go.

As the BNS informed the Lithuanian press is seen as having one of the highest levels of free press among Eastern European and post-Soviet countries and is even ahead of counterparts in some of European Union’s (EU) old-timer countries.

According to the BNS this finding was revealed by the Global Press Freedom Survey 2008 announced by US-based NGO Freedom House, promoting global development of freedom.

BNS pointed out that as shown in the survey, Lithuania together with the Czech Republic share the second and third places ,both countries were rated 18, among Central and Eastern Europe as well as former Soviet Union countries according to freedom of press. Estonia is a leader when it comes to freedom of press in this group of countries, and received the rating of 16 in the report.

The aforementioned countries, together with slightly lower rated Hungary, Latvia, Slovakia, Slovenia and Poland, made it to the ranks of nations, which enjoy free press.

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.’

The Prime Minister Kirkilas announce in his radio interview that Lithuania is not experiencing any economic crisis.

He said that opposition politicians who are talking about an economic crisis must be experiencing “a crisis in their heads”.

“Our economy is currently growing at a rather fast rate. We do not have final data for the first quarter yet, but we anticipate a similar growth rate to that we had last year. Inflation is a problem not only for Lithuania and the European Union, it is a global problem.”

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

SEB

·        Inflation should be 8,5%

·        Some signs of the ‘hard landing’, which will be more evident in the last two quarters

Danske Bank

·        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

               1.Iceland 

               3. Rumania

               4. Latvia

               7. Hungary

               8. Bulgaria

               9. Poland

               10. Lithuania

Amongst 40 mentioned Estonia is not in.  The Danske Bank analyst for the Baltic countries Mrs Klyviene is surprised because the Estonian economy in the private sector looks much more volatile that Lithuania’s.  Nevertheless, perhaps the S&P paid more attention to the more strict Estonian fiscal policy.

Hansabankas

Lithuanian economy could soften the effects of the world economy if it would redirect its exports to Russia and the other resources rich countries.

There are some since of looming crises, the construction industry which according to some estimates generates some 25% of all Lithuanian GDP, is slowing down.  The logistics companies also feeling a crunch.  The beauty salons complaining the less ladies making their hair.

Lets wait and see, but the slowing down mood is in the air.

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!

The Lithuanian news portal alfa.lt published an interview with Edward Lucas.  Lucas was the first foreigner to receive a Lithuanian visa after the country proclaimed its independence from the Soviet empire exactly eighteen years ago today, on March 11, 1990.

His first book, The New Cold War: How the Kremlin Menaces both Russia and the West, was launched at the beginning of February. A Lithuanian edition was released three weeks later.  Read all interview

Slowly but surely, according to the Lithuanian Statistics Department data the female half is taking over in running not only the Lithuanian households but the state also.

Women made 37 % of all leaders in the Lithuanian ruling elite such as the parliamentarians, senior state officials and executives of companies and establishments.The number of female businessmen is also on the rise but still remains lower than that of men.  In 2007, women made 31 % of businessmen in Lithuania, as compared with 26 % in 2006. Even though Lithuania amongst the leaders in the world regarding the gender equality women are still make lower salaries than men.Females made 60 percent of all students of universities and colleges in 2007 and early 2008.

The department said that 1,797,600 women lived in Lithuania in the beginning of the year, which is 230,000 more than men. Women made 53 % of the population, with 1,146 women registered per 1,000 men.  Average life expectancy of women is 77 years, as compared with 65 years of men. The average life expectancy of a statistical Lithuanian woman is 12 years longer than that of men, she marries and gives birth to her first child at the age of 25, shows data issued by the Lithuanian Statistics Department. According to the data, 63 % of women and 69 % of men of employable age had jobs.Women’s average gross wages per hour was 19.3 % lower than men’s wages.It needs to be noted that there are no set quotas in the state institutions and the parliament for women.  Hence, everything what is achieved by the women in Lithuania is achieved by the natural causes, or by the Darwin laws, if you wish.

If the EU Commissioner Dalia Grybauskaitė (who was voted the best EU Commissioner in 2005) will agree to run for the Lithuania’s President post in 2009, it is almost certain that she will win.  Hence, the situation in Lithuania is changing rapidly.  Lithuanian woman not only pretty but very bright and ambitious.

All Lithuania celebrated the 90^th Independence Day.  In 1918, February 16 group of 20 Lithuanian intellectuals gathered in Vilnius and declared Lithuania’s Independence.  A week later the Estonians followed suit, the Latvians caught up in November of 1918.

I am not going to remind you importance of this day in the Lithuanian history, and would recommend you to visit the Wikipedia site.  I would like to talk about the present.

Interestingly enough but the Baltic States of Lithuanian, Latvia and Estonia has a great tradition of raising the flags of all three countries in marking each country’s Independence Day.

This was decided when the three Baltic States regained their hard thought Independence in 1990.  However, few years later our states turned into competitors, even in achieving their strategic aims of joining the NATO, and especially the EU.  Of course, there is nothing wrong with a good competition, and after all, perhaps because of that the occupied ex-Soviet provinces managed to catch up and join the EU together with Eastern European States like Czech Republic and Slovenia.

The well-deserved Baltic States acceptance to the Western political and security club almost left those states without a future direction.  There is a feeling of achievement and calmness, and an attitude that since we are in, we are safe, prevails.  Estonia is concentrated in becoming a Golden Province of the EU and completely turned into itself in perusing its goal.

Furthermore, Riga is experiencing the ‘eyes opening revelation’ and is conciliating of becoming a Russian advocates in the Brussels.  The influx of the Russian investment into Riga is playing its part in ‘turning’ some politicians into ‘friendly’ mood.  Of course, one has to have in mind a ‘delicate’ size of the national minority, especially in Riga.  If one is running Riga, one could run the all country.

In short the Baltic States are so pleased with themselves to such extend that we begun to forget our history lessons.  We can survive only when we stick together.  Lets remember 1920s and 1930s when we never managed to create a block together and lost our independence, and lets compare it to the 1990s.  The Economist called Latvia a ‘swing state’, which is starting to become manipulated by the Kremlin.  The same author warns that Russia is starting to retrieve the Eastern European states ‘not by tanks but by banks’.  Edward Lucas also notices that the West is loosing its influence in the Eastern Europe and is ‘rolling back’.

In short the Empire is striking back.  The Baltic States should drop an illusion that the ‘West will help us’ and start uniting its act together.  The West will not help anyone unless one is willing to help yourself.  The Baltic States should enhance their cooperation and start thinking about the Baltic region as one entity.  At least the three should begin cooperating closely in the security and information areas.  If the Finnish President voiced an initiative to begin an enhanced cooperation in security amongst the Baltic and Nordic States it should be taken as a wake up call to the region.

The Baltic States are also loosing the information war to Russia.  An average Balt knows much better what is happening in London or in Stockholm rather than in Vilnius, Tallinn or Riga.  Apart from the Baltic Times weekly there is not a Pan Baltic information outlet, which would cover all three Baltic States.  I am not talking about the City Paper that is based in Riga but writes mainly about Estonia that is not a bad think in itself.  A trouble with the Baltic Times is that, at least in Lithuania, we have very few politicians with a decent command of English, even though the young generation has no problem with that.

Despite the advancement of the IT the absolute majority of the Balts receive their main news from the TV.  Hence, what about a Pan Baltic TV channel which would broadcast in all three languages with the local subtitles.  Such a channel could ‘introduce’ all three states to each other, and hence will make us closer.  From what I understand the Lithuanian National translator approached the Latvian colleagues with such an idea.  However, the answer was negative due to lack of funding.

The Romans wisely observed that if a nation doesn’t provide for its own army, sooner of latter it will have to provide for the foreign troops.  The Baltic States already providing to the foreign troops, in the face of the Pan Baltic Kremlin’s financed Russian language First Baltic Channel, which is, by coincidence is registered in Riga. Lets hope that the New Pan Baltic and the Polish Ignalina Nuclear Plant project will be a source of growing unity amongst all four and especially amongst the Balts.  The project might take more than a decade to complete, hence we will be compelled to cooperate and get know each other better.

Lets hope that the news about the building of the plant will reach the general participant countries’ public not only via the First Baltic Channel, Regnum.ru or other Kremlin controlled media outlets but by our own media outlets.  The Kremlin is extremely skilful in manipulating information to its own needs.  Hence, lets unite, lets work together!