Publication: Monitor Volume: 7 Issue: 139

Lithuania has a new, left-of-center government, headed by former President Algirdas Brazauskas, and resting on a majority of eighty-four in the 141-seat parliament. The government is a coalition of Social-Democrat Party (SDP) and the New Union/Social Liberals (NU/SL), which are headed respectively by Brazauskas and Parliament Chairman Arturas Paulauskas. The two parties hold forty-eight and twenty-nine seats, respectively, and are supported by a bloc of small left-of-center parties with seven seats between them, led by former Prime Minister Kazimiera Prunskiene.

The government’s program and Brauzauskas’ statements emphasize continuity with the policy of the preceding government, in which NU/SL had been a partner of the right-of-center, pro-business Liberal Union (LU). Accession to NATO and to the European Union remain the top national priorities: The government is pledged to spare no effort in order to meet the qualifications for admission to NATO in 2002, close all chapters in the negotiations with the EU in the same year and actually join the EU by 2004. Under this timetable, the coming twelve months are the most decisive for Lithuania–as they are for Estonia and Latvia also–since the 1990-91 restoration of the Baltic states’ independence.

To underscore those priorities and the continuity of policy, the new government retains Foreign Affairs Minister Antanas Valionis and Defense Minister Linas Linkevicius from the predecessor government. While Valionis is a NU/SL nominee, the nonparty Linkevicius was an LU nominee in the preceding government and had earlier been the defense minister in Conservative-led governments.

Petras Cesna, director of a large, export-oriented furniture factory and vice-president of the Confederation of Lithuanian Industrialists (CLI), has been appointed economics minister. Lithuanian cabinets traditionally draft CLI leaders for ministerial posts, and this left-of-center government is no exception. The new finance minister, Dalia Grybauskaite–who served as deputy minister in several preceding cabinets, is a nonparty figure with the reputation of a strict fiscal conservative. That reputation will be tested against likely pressure from the SDP’s left wing to increase social spending faster than economic growth would allow.

Those encouraging appointments notwithstanding, the formation of the new government has met with a cautious reception from Lithuania’s Western partners. President Valdas Adamkus had sought to prevent the political realignment that produced a left-of-center majority, and openly admitted to have been reluctant to nominate Brazauskas as prime minister. The reasons, stated or implied, have to do with the past record and present connections of some of the forces now in power, particularly in the SDP.

The SDP’s core consists of the former Democratic Labor Party (DLP), which governed in 1992-96 and collapsed amid a corruption scandal. During those years, Lithuania marked time in terms of economic reforms, and was slow to reorient its trade from east to west. That government and DLP-dominated legislature bequeathed a heavy mortgage to the successor, Conservative-led governmment and parliament (1996-2000), and left the country exposed to the effects of Russia’s crisis. The Conservatives had to launch overdue market reforms simultaneously with austerity programs–a recipe for loss of popularity and a new swing to the left among the electorate last year.

The SDP’s other major component, which fused with the DLP last year, are the original Social-Democrats led by Vytenis Andriukaitis. Both components of the unified party insist that the state must retain a substantial share of control in “strategic” sectors of the economy. That view is partly responsible for the slow and difficult progress of privatization in Lithuania. As a recent accretion to that view, influential elements in the SDP promote the interests of “native capital” in the privatization of choice state assets such as the energy utilities. In some cases, however, those local firms are offshoots or proxies of Russian energy giants.

Such dubious connections create conflict-of-interest situations. In recent months, certain substantial local businessmen associated with Russian energy firms have tried to promote their interests through Lithuanian cabinet ministers and key politicians in both the LU and the SDP. For its part, the SDP includes a hard leftist core, personified by Andriukaitis–hitherto the SDP floor leader, now a vice chairman of parliament–and the incoming Internal Affairs Minister Juozas Bernatonis. These politicians have been quoted as suggesting a longer timeframe for Lithuania’s accession to NATO; such suggestions have exposed Brazauskas as incoming prime minister to embarrassing questions on television. Some months ago Bernatonis led an abortive parliamentary move to establish relations with the internationally unrecognized parliament of Belarus. About the same time, on the same side of the aisle, Prunskiene became the most prominent of a small group of parliamentarians to submit a motion for Lithuania’s neutrality. She later said that she had not really meant it.

For his part, the influential Andriukaitis has recently vowed to “fight to the end” against the privatization of Lithuania’s oil sector by the American company Williams International, the largest Western investment project in the country. While sincerely believing in state control of “strategic” sectors, Andriukaitis and his group happened to receive substantial electoral funds in last October’s parliamentary elections from the Russian Lukoil’s Vilnius branch and its associated firms, according to the mandatory disclosure information submitted by the candidates themselves. The Lukoil company wants to squeeze Williams out of Lithuania.

In the NU/SL, the tycoon Viktoras Uspaskikh with his multiple business interests nevertheless chairs the parliament’s Economics Committee. Those interests, according to local press reports, include participation in privatizing the gas distribution system. Recognizing and eliminating such conflicts of interest will be a significant test of Brazauskas’ leadership abilities.

The right-of-center and right-wing opposition holds some fifty parliamantary seats. The opposition includes an internally fractured LU with thirty-three seats, FatherlandUnion/Lithuanian Conservatives under Vytautas Landsbergis with nine seats and five smaller parties. The newly formed center-left majority looks stable and durable. The government’s goals of joining NATO and the EU rest on a broad national consensus (Roundup based on recent reporting by BNS, ELTA, LNK Television, Vilnius Radio, July 12-19; see the Monitor, January 29, March 22, May 11, June 21, July 2, 12).