Publication: Monitor Volume: 6 Issue: 208

The New Politics bloc, narrow winners of the October 8 elections, has since then taken control of the 141-seat parliament and completed the formation of Lithuania’s new government.

New Politics holds a total of sixty-seven seats, including thirty-four of the right-of-center Liberal Union and twenty-nine of the left-of-center New Union/Social Liberals. Arturas Paulauskas, the Social-Liberal leader, is the new parliamentary chairman. Social Liberals also hold the chairs of the main parliamentary committees concerned with the economy. Party deputy Viktor Uspaskich, owner of the Vikonda conglomerate of food-processing, transportation and construction firms, chairs the new parliament’s Economics Committee–a selection widely regarded as a potential conflict-of-interest situation. The Liberal Union for its part dominates the new cabinet of ministers (see below).

The opposition Social-Democratic Alliance holds forty-eight seats in the new parliament. That alliance’s leader, former President Algirdas Brazauskas, did not run for a deputy’s seat and is consequently out of parliamentary politics. In his absence, Social-Democratic Party leader Vytenis Andriukaitis, an ideological critic of privatization, has been elected head of the opposition’s caucus. His elevation risks radicalizing the opposition’s resistance to privatization projects.

The new government will need the support of several small parliamentary groups. These include Fatherland Union/Conservatives with nine seats, two Christian-Democratic parties with a combined three seats, Polish Electoral Action with two seats, and the newly formed joint group of the Farmers’ Party and the New Democracy Parts of former Prime Minister Kazimiera Prunskiene with four and three seats, respectively.

President Valdas Adamkus has nominated the Liberal Union’s Rolandas Paksas as prime minister. Paksas, 44, won parliamentary confirmation by a comfortable 79-51 margin. The average age of the thirteen ministers is reported to be only 43. Most ministers are nonparty figures selected by the two main parties in the coalition.

Lithuania’s Western partners will find Linas Linkevicius back as defense minister–the post he had held in 1993-96 when he helped lay the foundation for military cooperation with the United States and NATO. Linkevicius has since headed Lithuania’s mission to NATO in Brussels. The new foreign affairs minister, Antanas Valionis, has a special interest in Polish affairs and is currently the ambassador of Lithuania in Warsaw. His selection reflects the close relationship between the two countries and the role of Poland as a connecting link between NATO and Lithuania. Linkevicius and Valionis are nonparty ministers nominated by Liberal Union and the Social Liberals, respectively.

The main economic ministries will be firmly in Liberal Union hands. Jonas Lionginas and Eugenijus Maldeikis are back as finance minister and economics minister, respectively–posts they had held temporarily in the Conservative-led government. They and Paksas quit that government last year in disagreement over the terms of the privatization of Lithuania’s oil sector by the American company Williams International. Lionginas and Maldeikis are close to the Confederation of Lithuanian Industrialists, which switched support from the Conservatives to the Liberal Union ahead of the recent elections.

The government’s program sets as its top priorities an official invitation in 2002 to join NATO and entrance into the European Union by 2004. As presented by Paksas to the parliament, the program seeks to:

–Raise the defense budget to the NATO benchmark of 2 percent of the gross domestic product in 2002, with an intermediate target of 1.5 to 1.7 percent in 2001. It is not clear how this schedule will accord with the existing law, passed by the Conservative-led parliament, which envisages a level of 1.95 to 2 percent in 2001. The outgoing Conservative government has in fact set aside 1.95 percent in the draft budget for 2001.

–Develop political and economic relations with Russia, seeking market outlets and improved business conditions for Lithuanian firms there.

–Build direct ties with the Kaliningrad Region of Russia and contribute to drawing that region into European processes–a goal shared with the European Union and with neighboring Poland.

–Modernize the education system with an emphasis on informatics–an area in which Lithuania seeks to emulate the Baltic leader Estonia.

–Limit the budget deficit to between 2 and 3 percent of the value of the gross domestic product and reduce the deficit annually to zero.

–Shift the litas currency’s peg from the dollar to the euro–a move demanded by Lithuanian exporters.

–Cut the personal income tax, eliminate the capital gains and corporate taxes, replacing the latter with a tax on dividends.

–Amend the constitution to allow sales of agricultural land to indigenous legal entities as well as to foreign citizens and entities. The second part of this goal is not a popular one, but its enactment represents a condition to the country’s admission to the European Union.

–Allocate up to 10 percent of the annual state budget to agriculture and general “rural development.” This formula falls well short of the Farmers’ Party’s original demand for legally mandated subsidies to agriculture, to the tune of a full 10 percent, and not just of the state budget but of the “national budget” which encompasses the state budget and the local budgets. The government needs the votes of the Farmer Party’s four deputies to have a working majority in parliament.

–Continue the privatization of state companies, “because,” as Paksas told the parliament, “the state has never been and will not be the best manager.” The admonition seems addressed not only to the opposition Social-Democratic Alliance but also to the Social Liberal component of the new governing coalition. The Liberal Union favors full privatization. The Social Liberals insist that the state retain a 51 percent interest in “strategic” energy, transport and communications companies. The coalition will probably work harmoniously to restructure those companies before privatization, but may show cracks when the privatization is actually underway.

In that event, privatization bills may produce significant realignments of Lithuania’s political parties. The Liberal Union and the Conservatives may join forces to push for full privatization, while Social Liberals may combine with the opposition Social-Democrats to resist full privatization. The portents emerged even before the official installation of the new government. The Liberal Union and the Conservatives together managed to vote down a Social-Democrat bill which would have mandated the retention of state management control over “economically strategic” companies. The Social Liberals for their part joined forces with the Social-Democrats to rescind the Conservative government’s decision on the pre-privatization restructuring of Lietuvos Energija.

Overall, the elections have changed Lithuania’s political landscape, but not her national priorities or the government’s basic policies (BNS, ELTA, Ziniu Radijas, October 28-November 6; see the Monitor, March 28, July 6, August 4, 11, October 6, 9, 20, 26).

The Monitor is a publication of the Jamestown Foundation. It is researched and written under the direction of senior analysts Jonas Bernstein, Vladimir Socor, Stephen Foye, and analysts Ilya Malyakin, Oleg Varfolomeyev and Ilias Bogatyrev. If you have any questions regarding the content of the Monitor, please contact the foundation. If you would like information on subscribing to the Monitor, or have any comments, suggestions or questions, please contact us by e-mail at, by fax at 301-562-8021, or by postal mail at The Jamestown Foundation, 4516 43rd Street NW, Washington DC 20016. Unauthorized reproduction or redistribution of the Monitor is strictly prohibited by law. Copyright (c) 1983-2002 The Jamestown Foundation Site Maintenance by Johnny Flash Productions