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Lithuania: Analysis -- Parliament Approves New Government

By Kestutis Girnius

The Lithuanian parliament has approved the program of a new government led by Prime Minister Algirdas Brazauskas, thereby formally installing it in office. RFE/RL correspondent Kestutis Girnius assesses the new government's program and prospects.

Prague, 12 July 2001 (RFE/RL) -- By a vote of 81 to 36, with six abstentions, the Lithuanian parliament today approved the program of the new government headed by Prime Minister Algirdas Brazauskas, thus allowing the government to formally assume its duties.

Its predecessor, an unstable coalition of both right- and left-wing parties established after parliamentary elections last October, collapsed a month ago when the left-of-center New Union/Social Liberals (NU/SL) withdrew their ministers. The fall of the coalition was not unexpected, since it had been plagued from its inception by ideological disagreements, weak leadership, and lax party discipline.

These shortcomings are unlikely to bedevil the new government. The parties that support it share ideological affinities and a strong populist bent. But the personal authority of Brazauskas -- who was Lithuania's last communist boss and who also served a five-year term as president from 1993 to 1998 -- is beyond dispute. He is Lithuania's most popular politician, and the party he heads -- the Lithuanian Social Democratic Party, or LSDP -- dominates the new government and is known for its internal discipline.

Although four parties support the government, on the insistence of the LSDP no formal coalition agreement has been signed. Instead of a formal coalition, the parties agreed to form what they called a "majority [government] of broad agreement."

By circumventing a formal coalition agreement, the LSDP -- with 48 seats in the 141-member legislature -- avoids making any firm commitments concerning the composition of the cabinet and the allocation of individual ministries. The party remains free to alter the make-up of the government when it so desires. What is bestowed as largesse can be withheld at will.

The government's program is based on that of the LSDP, to which other parties were asked to accede. The stamp of the LSDP is less evident in the composition of the cabinet. Of the 13 ministers, six will be holdovers from the previous government. Only four are formal members of the LSDP. The relative paucity of LSDP members is in part a result of the lack of skilled administrators in the party, but also a sign of Brazauskas' confidence in his ability to set the tone for the whole government.

The new government has a comfortable majority in parliament. In addition to the LSDP bloc, the NU/SL has 29 deputies, the two minor parties another seven. Moreover, the NU/SL is locked in firmly. Even before the party left the previous government, its popularity had plummeted and it was widely perceived as undisciplined, inconsistent, and opportunistic. Its leaders now realize that another switch of allegiance would be the party's death knell.

In a sense, the LSDP is now returning to power. Six months ago, the Lithuanian Democratic Labor Party, or LDDP -- which ruled the country from 1992 to 1996 and was composed mainly of former communists -- united with the pre-existing LSDP. Because of the LDDP's superior organizational strength and Brazauskas' unique authority, the union was more of an acquisition by the LDDP than a merger of equals.

The return to power of what some consider to be neo-communists has evoked some apprehension about the new government's foreign and economic policies. Fears have been voiced that the government might slow Lithuania's efforts to join NATO and the EU, while increasing government spending to fund the generous government welfare programs favored by its electorate.

Similar fears of a tilt toward Russia and the abandonment of market reforms proved groundless in 1993. But under the guidance of Brazauskas, Lithuania became an eager and early participant in NATO's Partnership for Peace program, resolutely fulfilled all its commitments to the International Monetary Fund, reduced inflation and maintained budgetary discipline. Matters should be no different this time.

Since being chosen as prime minister, Brazauskas has already backtracked from some of his more controversial positions. Although he promised to fight unemployment, foster job training, and promote regional development, he has since emphasized that investment in these areas is conditional on improved economic conditions and a greater inflow of revenue into the government's coffers. Brazauskas also told parliament that he would not introduce a progressive personal income tax -- currently, Lithuania has a flat tax of 33 percent -- but would gradually raise the amount of exempted income.

Despite the parallels between the present and the past, several changes have occurred that are likely to have a significant effect on policy. First, in 1992 the LDDP felt it needed to prove it had shed the vestiges of its communist past and was a normal and respectable party. This led to a tendency to avoid more radical and populist steps as well as a preference for centrist courses of action.

Free of any qualms concerning its legitimacy, the LSDP is now eager to emphasize the differences that distinguish it from its political opponents rather than what it has in common with them. This -- together with the conviction that its policies are shared by many of the social democratic governments in Western Europe -- suggests that the LSDP will be more assertive in pressing for implementation of its program.

Second, questions of privatization -- in particular the role of Russian and Western capital -- have emerged with an urgency unknown in the past. Since 1997, Lithuanian governments have sought to bring in Western strategic investors, keep Russian capital out and minimize, if not eliminate completely, the government's role in managing partially privatized firms.

The LSDP has been quite critical of this policy. It proposes, instead, that the government should seek to ensure state participation in the management of strategic economic enterprises, and that more shares be made available to local businessmen as well as to Russian companies.

For several years, Brazauskas and the LSDP have waged a verbal war against the U.S. firm Williams International, which in October 1999 purchased a third of the shares of the massive Mazeikiai oil refinery. Last year, Brazauskas stated that the sale was a betrayal of Lithuania's national interests. Two weeks ago (26 June), Vytenis Andriukaitis, the head of LSDP's parliamentary faction, accused Williams of being a corrupt company. Challenged to provide proof for his assertions, Andriukaitis declined.

These polemics have been exacerbated by the forthcoming privatization of the last of Lithuania's industrial crown jewels -- the gas monopoly Lietuvos dujos and the Lietuvos energija electric company. Russian and local investors have shown great interest in participating in both privatizations.

Several actions by Brazauskas have raised doubts about his ability to ensure that the sales are fair and transparent. On 20 June, Brazauskas secretly flew to Moscow to meet officials of the gas firm Itera. He initially denied that the meeting had taken place, but subsequently claimed that his actions were aimed solely at serving Lithuania's interest.

The episode has raised several questions. First, the trip was paid for by Bronislavas Lubys, a major industrialist who belongs to a consortium bidding for shares of Lietuvos dujos. No less troubling is the question about the propriety of the putative head of government flying to Russia to talk with officials of a firm interested in purchasing Lietuvos dujos.

In addition, on 10 July, at the behest of the LSDP, parliament put off discussion on legislation required to finalize an agreement between Williams and the Russian oil firm Yukos, which would give Yukos almost a 27 percent stake in Mazeikiai in return for guaranteed supplies of oil. The agreement would free Williams International from dependence on the whims of Russia's Lukoil, which has frequently refused to supply Mazeikiai with the crude oil necessary for its operations. As a private citizen, Brazauskas has often expressed support for Lukoil.

The forthcoming privatizations will probably trigger acerbic disputes in parliament and much speculation in Lithuania's sensationalist media. More important, they will also determine whether Western companies will perceive Lithuania as a country with a favorable investment climate. Without Western investment, the new government will be hard pressed to ensure the economic growth on which its standing with Lithuania's fickle voters depends.