BUSINESS INTERESTS IN LITHUANIA’S PARLIAMENTARY ELECTIONS.

The governing Conservatives are likely losers, and left-of-center forces the likely winners, of the parliamentary elections held yesterday in Lithuania. Left-of-center parties dominate both of the major blocs vying to form the new government: the Social-Democratic Alliance and the New Politics bloc (see the Monitor, October 6). Campaign donations by business interests have played an important role in this campaign, also ensuring that donors will influence the parties’ economic policies after the new government is formed. Lithuania’s financial disclosure requirements have made it possible for the campaign contributions to be made, at least in large part, above board; and for the electorate to form an approximate idea of which business groups supported which parties.

Ivan Paleichik, head of Lithuanian operations of LukOIL-Baltija–a subsidiary of Russia’s giant LukOIL–has told the press that he supports the Social-Democratic Alliance because he does not want the Conservatives to be in power any longer in Lithuania. Paleichik claims that Lithuanian tax authorities, at the instigation of the Conservative government, have harassed LukOIL-Baltija. That claim obscures LukOIL’s–and, behind it, the Russian government’s–strategic economic and political interests in Lithuania (see the Monitor, October 6, 1999).

LukOIL-Baltija’s twin company Vaizga, a wholesale trader in oil products on the Lithuanian market, has officially donated 150,000 litas (US$38,000) to the Social-Democrat Party and 100,000 litas (US$25,000) to the Democratic Labor Party, components of the Social-Democratic Alliance. Vaizga’s largest shareholder, officially registered, happens to be Paleichik’s wife. And the Social-Democrat Party–chief beneficiary of LukOIL’s largesse–happens to oppose the privatization of Lithuania’s oil sector by the American company Williams International, which was chosen by the Conservative government in preference to LukOIL. Social-Democrat leader Vytenis Andriukaitis describes the deal with Williams as a “shameful and humiliating for Lithuania” and strongly hints that he is prepared to call for rescinding it. According to the parties’ data, submitted to the Central Electoral Commission, Vaizga is the second-largest financial contributor overall in this electoral campaign.

The two umbrella organizations of Lithuanian national capital support, each, one of the two big political blocs. The Lithuanian Entrepreneurs’ Confederation (LEC) supports for the most part the Social-Democratic Alliance, but it has its fingers also in the New Politics pie as a form of political reinsurance. No fewer than eighteen representatives of LEC are running for parliament–some of them on the slates of several parties, others in single-mandate districts. The parties of the Social-Democratic Alliance have officially received an aggregate of 434,000 litas (US$108,000).

The Confederation of Lithuanian Industrialists (CLI), the larger of the two national business organizations, supports the New Politics bloc. Within that bloc it favors the right-of-center, free-market Liberal Union and the equally pro-business, somewhat protectionist-inclined Center Union. According to financial disclosure data, the single largest source of campaign funds overall is the tandem of the Achema (chemicals) and the Klasco (maritime shipping) companies, the main shareholder of which is Bronislovas Lubys, who doubles as president of CLI. Lubys had served in 1992-93 as prime minister of the cabinet, which ensured a smooth transition from Conservative to Democratic Labor Party rule. In the 1996 elections, CLI and Lubys supported the free-market-oriented Conservatives on the basis of a pre-election memorandum, which set the main directions of post-election economic and financial policies. In this year’s elections, CLI and Lubys renounced the practice of signing agreements with political parties; instead, they have sought to influence the parties’ views toward fiscal responsibility and incentives to private investment.

The left-of-center, populist New Union/Social Liberals (NU/SL) is generally considered the strongest party in the New Politics bloc and possibly in the country at present. Although not favored–at least not officially–by the more substantial business donors, NU/SL has reported the most impressive war chest in this campaign at 710,000 litas (US$180,000), well ahead of the Liberal Union with 572,000 litas (US$143,00) and the Center Union with 463,000 litas (US$115,000).

Within the New Politics bloc, a potential rift is emerging over the choice of the economics minister and the finance minister. NU/SL has its own candidates for those key posts, as well as eyeing the prime ministership for its upstart and unpredictable leader Arturas Paulauskas. The Liberal Union for its part hopes that its representatives, Eugenijus Maldeikis and Jonas Lionginas, will return to the posts of economics minister and finance minister, respectively, which they held in previous cabinets as temporary allies of the Conservatives. Should New Politics place first in these elections, the choice of ministers for those two portfolios will provide a litmus test of the bloc’s intentions in power. The elections are in any case likely to produce a fragmented parliament, necessitating a coalition government, possibly leading to defections from either of the two main blocs and realignments of forces. The Liberal Union may in this case end up holding the balance of power.

The Conservatives, staunch supporters of free-market economics and of Western-led privatization, in spite of the populist assault on those policies, lost the favor of business, once it became clear that the party of Vytautas Landsbergis would be swept from power. The party has reported a mere 127,000 litas (US$32,000) in campaign donations. Most business donors evidently decided to bet on what looked like the winning horses (BNS, ELTA, September 19, 22, 26, 29, October 2-3, 6; see the Monitor, January 11, March 28, July 6, August 4, 11, October 6).

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