Lithuanian energy security – a high salience issue

Lithuan­ian politi­cians keep on talk­ing inten­sive­ly at all lev­els about the Lithuania’s dif­fi­cult sit­u­a­tion in the ener­gy sec­tor and Lithuan­ian ener­gy secu­ri­ty which will be endan­gered when “Ignali­na nuclear pow­er plant” – the main provider of ener­gy in Lithua­nia – has to be closed accord­ing to the Treaty of Acces­sion to the Euro­pean Union. For exam­ple, dur­ing the Octo­ber Euro­pean Coun­cil meet­ing, the Lithuan­ian Pres­i­dent, Val­das Adamkus, empha­sized that with­out the elec­tric­i­ty inter­con­nec­tions with Swe­den and Poland, Lithua­nia can face ener­gy bankruptcy.[1] The Prime Min­is­ter, Andrius Kubil­ius, claims that the Russ­ian and Ukrain­ian gas cri­sis has clear­ly demon­strat­ed that each Euro­pean state can face big prob­lems of ener­gy secu­ri­ty. Fol­low­ing him, we have to do every­thing with the Euro­pean Union that next year, i.e. after the clo­sure of the “Ignali­na nuclear pow­er plant”, we will not come across such prob­lems as Slo­va­kia did.[2]

Victory of the right-wing parties in the national elections

In autumn of 2008, a new Lithuan­ian par­lia­ment was elect­ed. The Con­ser­v­a­tive par­ty, Home­land Union – Lithuan­ian Chris­t­ian Democrats,[3] received the biggest num­ber of seats in the Par­lia­ment (45 seats out of 141); the Lithuan­ian Socialdemocrats[4] got 25 seats; Nation­al Awak­en­ing Party[5] – 16 seats; right wing rad­i­cal par­ty Order and Justice[6] – 15 seats; Lib­er­al Movement[7] – 11 seats; Lib­er­al and Cen­ter Union[8] – 10 seats. Oth­er 4 par­ties and inde­pen­dent mem­bers shared the remain­ing 25 seats. There­fore com­par­ing with the last elec­tions, the vic­to­ry dur­ing those elec­tions went to the right-wing parties.

Four par­ties formed the gov­ern­ing coali­tion: con­ser­v­a­tives, the Nation­al Awak­en­ing Par­ty, the Lib­er­al Move­ment, and the Lib­er­al and Cen­ter Union. After sign­ing an agree­ment upon the coali­tion for­ma­tion, the new gov­ern­ment has declared to work for the fol­low­ing goals: to com­plete an audit of the cur­rent sit­u­a­tion, ini­ti­ate a plan for cri­sis man­age­ment, and to take mea­sures to fight corruption.[9]

Crisis management plan adopted to fight the crisis in Lithuania

Coali­tion gov­ern­ment signed a plan to fight the eco­nom­ic cri­sis in Lithua­nia, which fore­sees var­i­ous mea­sures do deal with this chal­lenge. As it is stip­u­lat­ed in the plan, “many macro­eco­nom­ic indi­ca­tors demon­strate that Lithua­nia faces the eco­nom­ic cri­sis and quick­ly declines into eco­nom­ic reces­sion” and that the sit­u­a­tion with state finances is dif­fi­cult and the gov­ern­ment sec­tor deficit of 2008 is not equal to 0.5 per­cent of the gross domes­tic prod­uct (GDP) as planned, but might be as high as 2.5–3 per­cent GDP, and in 2009 might reach 4 per­cent instead of the planned 2.7 percent.[10]

Accord­ing to the plan, actions are to be tak­en to decrease the wages of the high­est Lithuan­ian offi­cials (par­lia­ment mem­bers, gov­ern­ment mem­bers, etc.) and the appro­pri­a­tions for dif­fer­ent state insti­tu­tions. It is also pro­posed to make changes to the tax sys­tem (to increase the VAT, while decreas­ing the per­son­al income tax, and to elim­i­nate dif­fer­ent tax exemp­tions, etc.), while also stim­u­lat­ing busi­ness and bal­anc­ing mon­ey flows. By imple­ment­ing this plan it is expect­ed to decrease the bud­get expens­es by two bil­lion Litas (the annu­al Lithuan­ian bud­get is about 20 bil­lion Litas) and to increase the rev­enues to the bud­get by two bil­lion Litas.

This plan cur­rent­ly has been prob­a­bly the most dis­cussed issue in Lithua­nia both by the politi­cians and the gen­er­al pub­lic. There have been var­i­ous eval­u­a­tions of this gov­ern­ment cri­sis man­age­ment plan. Speak­ing about the eval­u­a­tions of finance ana­lyt­ics, part of them crit­i­cize the plan, oth­ers call it not a good one but inescapable, the rest of them say that this plan is a far-reach­ing but unpop­u­lar move. Some rec­og­nized finance spe­cial­ists would like to see a stricter plan. For exam­ple, Euro­pean Com­mis­sion­er from Lithua­nia, and for­mer Finance Min­is­ter, Dalia Gry­bauskaitė, claimed that this plan is “yet to soft for Lithua­nia”, but she pos­i­tive­ly eval­u­at­ed the gov­ern­ment efforts to decrease inter­nal consumption.[11] Finance ana­lyst, Riman­tas Rudzkis, is con­vinced that Lithua­nia will come across the reces­sion despite the cri­sis man­age­ment plan. Accord­ing to him the “cri­sis man­age­ment plan is already too soft, the sit­u­a­tion is get­ting worse in the eyes; there­fore, the plan should be revised. Gov­ern­ment must bor­row more brave­ly to safe enterprises”[12].

 

 

 

[1] Bernar­di­nai (news por­tal): V. Adamkus įspėjo ES vadovus, kad Lietu­vai gre­sia ener­ge­ti­nis bankro­tas (V. Adamkus warned the EU lead­ers that Lithua­nia might face the ener­gy ban­crup­cy), 16 Octo­ber 2008, avail­able at: http://www.bernardinai.lt/index.php?url=articles/86364 (last access: 25 Jan­u­ary 2009).
[2] Lithuan­ian gov­ern­ment: Pre­m­jeras A. Kubil­ius susirūpinęs dėl ener­ge­tinio saugu­mo (Prime Min­is­ter A. Kubil­ius is wor­ried about the ener­gy safe­ty), press release, 12 Jan­u­ary 2009, avail­able at: http://www.lrv.lt/main.php?id=aktualijos_su_video/p.php&n=7004 (last access: 25 Jan­u­ary 2009).
[3] Tėvynės sąjun­ga – Lietu­vos krikščionys demokratai.
[4] Lietu­vos socialdemokratų partija.
[5] “Tau­tos prisikėlimo par­ti­ja” is a new­ly cre­at­ed par­ty com­posed main­ly of Lithuan­ian showmen.
[6] Par­ti­jaT­var­ka ir teisingumas.
[7] Lietu­vos Respub­likos lib­er­alų sąjūdis.
[8] Lib­er­alų ir cen­tro sąjunga.
[9] Bal­sas (news por­tal): Pasir­ašy­tas susi­tari­mas for­muoti val­dančiąją koali­ci­ją (An agree­ment to form the rul­ing coali­tion has been signed), 27 Octo­ber 2008, avail­able at: http://www.balsas.lt/naujiena/220798/pasirasytas-susitarimas-formuoti-valdanciaja-koalicija-atnaujinta-11–50-nuotr-video/rubrika:naujienos-lietuva-politika (last access: 25 Jan­u­ary 2009).
[10] Alfa (news por­tal): Ugnė Nau­jokaitytė, Andrius Sytas, Galuti­nai paaiškėjo antikrizi­nis planas (The anti-cri­sis plan has final­ly become clear), 15 Novem­ber 2008, http://www.alfa.lt/straipsnis/10236732/?Galutinai.paaiskejo.antikrizinis.planas..plano.tekstas..apzvalga.=2008–11-15_12-12 (last access: 25 Jan­u­ary 2009).
[11] Kauno diena (news­pa­per): D. Gry­bauskaitė: antikrizi­nis planas yra „per švel­nus“ (D. Gry­bauskaitė: the cri­sis man­age­ment plan is “too soft”), 10 Decem­ber 2008, avail­able at: http://kauno.diena.lt/naujienos/lietuva/d‑grybauskaite-antikrizinis-planas-yra-per-svelnus-189207 (last access: 25 Jan­u­ary 2009).
[12] Alfa (news por­tal): Kubil­ius: antikrizi­nis planas turėtų sušvel­nin­ti ekonomikos nuos­mukį (Kubil­ius: cri­sis man­age­ment plan should soft­en the eco­nom­ic reces­sion), 20 Jan­u­ary 2009, avail­able at: http://www.alfa.lt/straipsnis/10247731 (last access: 25 Jan­u­ary 2009).