Publication: Monitor Volume: 7 Issue: 126

Lithuania is traversing a difficult crisis of its government and, to a certain extent, of its political party system. The coalition government, formed by the right-of-center Liberal Union (LU) and the left-of-center New Union/Social Liberals (NU/SL), collapsed on June 18-20 after only seven months in office. That bloc, “New Politics,” had been midwived by President Valdas Adamkus and his advisers before the October 2000 parliamentary elections, as the then-ruling Fatherland Union/Lithuanian Conservatives were clearly headed for defeat.

The New Politics bloc was intended to rein in the ambitious but as yet untested NU/SL leader Arturas Paulauskas, to prevent the formation one big left-of-center bloc, to form a viable parliamentary majority, and to create a government with the free-market-oriented LU as the nucleus.

LU, NU/SL and three small allied parties held only seventy-one seats in the 141-seat parliament. The coalition was riven by ideology-colored differences between the two main parties, by rivalries between the affiliated business interest groups, and by the competing presidential aspirations of parliamentary chairman Paulauskas and of LU leader Prime Minister Rolandas Paksas, both of whom plan to run next year. Those internal disagreements and rivalries interfered with economic reforms, notably slowing down the privatization of large state-owned companies. Paksas ultimately battled successfully for the privatization of the state maritime shipping company, but lost much support from NU/SL as a result.

On the other hand, LU leaders very nearly mishandled the government’s relationship with the American company Williams International, the number one foreign investor in the country, operator and one-third owner of Lithuania’s Mazeikiai oil-processing complex. With Russia’s Lukoil company targeting Mazeikiai for a predatory takeover, LU leaders dithered. They did regain their balance and closed ranks with Williams last week after the company signed a long-term supply agreement with Russia’s Yukos company, a competitor to Lukoil.

The opposition Social-Democratic Party (SDP)–with forty-eight seats the strongest in parliament, and led by the highly popular ex-President Algirdas Brazauskas–sought from the outset to bring down the government and capture the prime ministership for the former head of state. In recent weeks, the SDP and NU/SL initiated a rapprochement at the expense of LU. A big left-of-center bloc of those two parties and small left-leaning groups–the very bloc that the New Politics coalition had been intended to forestall–is now taking shape. SDP with forty-eight seats, and NU/SL with twenty-nine, control an absolute majority of the 141 seats. Additionally, they count on the support the New Democracy Party of former Prime Minister Kazimiera Prunskiene, the Russian Union and the populist Farmers’ Party; these three small parties hold about ten seats between them.

The SDP-NU/SL bloc has officially proposed Brazauskas as prime minister. Within that bloc, ideological opponents of privatization seem to have seized center stage. They do not predominate numerically, but are especially vocal. SDP parliamentary floor leader Vytenis Andriukaitis is the leading critic of privatization in that party. Andriukaitis has taken to accusing Williams of corruption and incompetence, without the slightest proof and in spite of the American company’s impeccable reputation. He and even Brazauskas–the latter in a reported reversal of his initial position–have come out against the approval of the Williams-Yukos supply agreement. Adamkus has publicly termed that position “anti-state.” Within NU/SL, the business tycoon Viktoras Uspaskich is reported by the Lithuanian press to be personally interested in the privatization of the state gas company by local offshoots of Gazprom.

A conflict-of-interest problem is apparent. Uspaskich is the chairman of the parliament’s economics commission. Andriukaitis’ political group was the number one recipient of campaign funds from Lukoil Baltija chief Ivan Paleichik’s family and business, according to the mandatory financial disclosure data filed by the candidates themselves during last October’s parliamentary elections. Fortunately for Lithuania, the SDP and the NU/SL have responsible majorities that can prevail after the dust settles on this crisis.

Meanwhile, the Liberal Union runs an interim government in which Economics Minister Eugenijus Gentvilas is the acting prime minister. The LU seeks to push through the approval of the Mazeikiai-Yukos agreement. It also still hopes to put together a minority government of LU (thirty-three parliamentary seats), the Conservatives under former parliament chairman Vytautas Landsbergis (eight seats), and several small right-of-center groups with another twelve seats for a total of some fifty-three seats in the 171-seat chamber. The president is believed to support this effort. The 74-year-old Adamkus was briefly hospitalized three times last month, but is reported to be directing his team of advisers to encourage the formation of a center-right coalition. A minority government, however, seems a very long shot at the moment.

In the final analysis, Lithuania’s mainstream political forces are agreed on the top national priorities: joining NATO and the European Union. Any new government would seek to ensure the continuity of internal and foreign policies. Should that be a left-of-center government, however, it would have–for its own credibility–to discipline populist-socialist and “third-road” elements within the majority coalition and to address the conflict-of-interest problem. On June 29, the president made public what he described as a reluctant decision to nominate Brazauskas for the post of prime minister (Survey based on BNS, ELTA, and Lithuanian radio and television monitoring, June 20-28; see the Monitor, October 6, 9, 20, 26, November 7, 13, 2000, January 25, 29, March 22, May 11, June 21; Fortnight in Review, March 30).