Yesterday's ruling said that Paksas violated the constitution by granting citizenship to Russian businessman Yurii Borisov and by leaking classified information to him.
The Constitutional Court's decision follows its investigation into charges made against Paksas when 86 parliamentarians voted to start impeachment proceedings earlier this year. The parliamentarians accused the president of abuse of office, contravention of the law, and of having contacts in Russian organized crime. Paksas, who came to power a year ago, denies the charges.
Because the ruling empowers parliament to continue the impeachment process, Paksas could be forced to step down as early as next week.
Lithuanian parliamentarians predict there will be more votes than needed to remove the president.
Gediminas Kirkilas is one of the leaders of the ruling Social Democratic Party and a member of parliament. He said that an "absolute majority of the Social Democratic faction will support the impeachment." He also said the president is not acting in the interests of the state and is instead serving some "shady" elements.
"In fact, he was acting not on behalf of the state but pursued his personal interests and acted in the interests of this man who supported him [Borisov]," Kirkilas said. "In this sense, he is completely vulnerable."
However, Kirkilas, a member of the National Security Committee, declined to comment on allegations that Paksas might have links with Russian intelligence services.
Vytautas Landsbergis, a former chairman of parliament and a member of the Conservative Party, said that after yesterday's verdict, Paksas should not be allowed to be in power. However, he admitted that Paksas has some support among Lithuanian voters who continue to believe his promises to make life better. "Some people believed him to be a kind of magician who could immediately change their life for the better," Landsbergis said.
Landsbergis said these are people who did not benefit from market reforms. "They will likely look for another populist politician after Paksas is forced to leave," Landsbergis said.
Vytautas Radzvilas, an analyst in the Lithuanian Institute of International Affairs in Vilnius, agreed. He said the reasons Paksas -- a former stunt pilot -- became president lie in the frustration some people feel about Lithuanian political and social life. He said this resentment cannot be removed immediately.
"Essentially, the removal of Paksas will not remove the causes that allowed for such a person and politician to come to power. That's why very difficult challenges await Lithuania," Radzvilas said. "They will continue at least until the parliamentary elections [next autumn]."
Radzvilas said populist forces, such as a newly created Labor Party, are on the rise in the country. The Labor Party promised to raise Lithuanian living standards and ruthlessly fight corruption, and polls now show the party is the most popular in the country.
If Paksas is voted out, speaker of parliament Arturas Paulauskas would serve as acting president for two months until the election. He would likely compete for the presidency. Among other candidates, Lithuanian analysts mention former Lithuanian President and current Prime Minister Algirdas Brazauskas, and also Paksas's predecessor, Valdas Adamkus. Radzvilas said the three politicians represent an old guard and many Lithuanian voters will not be happy with them.
Pressure for Paksas's impeachment has been building since October, when Lithuanian intelligence leaked a report describing him and his closest advisers as posing a threat to national security.
The report focused on the fact that Borisov, the greatest contributor to Paksas's election campaign, was granted Lithuanian citizenship by the newly elected president.
Secret recordings allegedly showed that Borisov had close contacts with Paksas. Borisov's company, AviaBaltika, is widely described in the Lithuanian press as a front for Russian intelligence in Lithuania.
On 31 December, the Constitutional Court found Paksas's decree granting citizenship to Borisov unconstitutional. In mid-January, Borisov was stripped of his Lithuanian citizenship.
The controversy over Paksas's relationship with Borisov increased further last week when the president named the businessman as his public-affairs adviser. Many Lithuanian politicians were stunned or infuriated by the decision, causing Paksas quickly to retract the nomination and to apologize on national television.