POLITICAL PARTIES ARGUE OVER MERITS OF REFORMS AHEAD OF ELECTIONS.

An economic downturn (see the Monitor, January 10) and the controversy over the privatization of the country’s oil sector by an American company are severely complicating Lithuania’s politics in this election year. The main governing party, Fatherland Union/Lithuanian Conservatives (FU/LC), which has since 1996 spearheaded market reforms and the drive to NATO, is currently experiencing a dramatic decline of its popularity. The latest public opinion polls show voter support for FU/LC just below the 5 percent threshold of parliamentary representation. FU/LC’s junior ally, the Christian-Democrat Party–which holds the ministries of foreign affairs and defense–has slumped to 2 percent in the polls.

FU/LC leader Vytautas Landsbergis, the chairman of parliament who basically shaped the cabinet of ministers since the party came to power in 1996, is being challenged by the party faction of former Prime Minister Gediminas Vagnorius. That faction professes to hold Landsbergis co-responsible for the recent economic setbacks, calls for his retirement and threatens to form an opposition party. The attacks contain a dose of vendetta, dating back to Vagnorius’ loss of the prime ministership in early 1999, when Landsbergis withdrew the party’s support from Vagnorius because of the latter’s public polemics with President Valdas Adamkus. Landsbergis has in fact acted as Adamkus’ main political ally, which is significant because Adamkus is a Lithuanian-American with a relatively narrow political base in his country of origin. The Adamkus-Landsbergis-FU/LC alliance has formed the foundation of political stability and policy continuity in Lithuania.

Another major conservative group, led by former Prime Minister Rolandas Paksas and the incumbent Vilnius mayor Juozas Imbrasas, has defected to the rival Liberal Union. Paksas currently leads all Lithuanian politicians in the individual popularity ratings, has been elected by the LU as its leader–the original LU leaders quickly made way for him–and has helped pull that small party to the top of the opinion polls. Between the Paksas and the Vagnorius defections, FU/LC is undergoing a three-way split–before the parliamentary elections, which are due in the autumn, though some parties call for bringing them forward (see below).

The ideologically colorless Liberal Union (LU) and the left-of-center Labor Democratic Party (LDP) are, each in its own way, expressing serious reservations about the country’s privatization program. These parties are feeding, as well as feeding upon, a public backlash against the privatization measures as planned and implemented by FU/LC. The backlash stems in part from a perception that the country has been short-changed in the recent takeover of the Mazeikiai oil refinery and associated oil transport installations by the Williams International company of the United States (see the Monitor, October 10, 1999). FU/LC, with Landsbergis out in front, as well as Adamkus accepted the political responsibility for the deal with Williams. They considered it imperative to avoid a takeover by Russia’s state giant Lukoil, the only other bidder. Paksas, however, resigned as prime minister because he objected to the financial terms of the deal with Williams. The two ministers of the Liberal Union resigned with Paksas, paving the ground for the latter’s defection to LU. While the Conservatives viewed the issue as a strategic choice between East and West, the Liberal Union and Paksas ultimately chose to treat it as a straight economic and financial transaction. The policy decision went against them; but they earned–whether they intended it or not–political capital for themselves and the party. Pending the parliamentary elections, the LU objects to specific privatization projects of the government, their “lack of transparency” or the destination of the proceeds, but not to privatization as such.

The LDP, successor to the pro-independence wing of the Communist Party of Lithuania, governed the country from 1992 to 1996, a period basically squandered in terms of market reforms. The party currently calls for a moratorium on the privatization of state-owned “strategic” enterprises, pending the parliamentary elections. The LDP wants to bring the elections forward from the autumn to May or June, apparently hoping to capitalize on the slump in the Conservatives’ popularity. The Social-Democratic Party supports the LDP’s stand. The two left-of-center parties look forward to shaping privatization legislation in the new parliament in accordance with their ideology, envisaging the retention of a substantial state interest in energy utilities, transport and other companies.

The government plans this year to auction off, or restructure preparatory to privatization, the telecommunications, airline, electric power, gas, railway and maritime shipping companies. A full implementation of these plans during the remaining months of the present parliament seems unlikely. The president and the government of Prime Minister Andrius Kubilius, however, seem determined to demonstrate political leadership in pushing those projects and persuading the public of their merits. FU/LC has issued a statement in which it takes issue with “demagogic attacks on privatization, foreign investment, the West, the Americans and the European Union.” Adamkus, while also refuting the anti-privatization case and rejecting a moratorium, has initiated consultations among all parties represented in parliament with a view to facilitating the passage of privatization legislation during the few remaining months before the electoral campaign (BNS, Radio Vilnius, January 3-10).

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