Central Europe Review - EC Progress Reports 2000: Lithuania

As expected and wished for by Lithuanian officials, the "2000 Regular Report from the Commission on Lithuania's Progress towards Accession" was a relatively positive one, with the EC pointing out several accomplishments. Lithuania, for one, moved into the "can be regarded as a functional market economy" category, despite having a horrendous few years economically. This must give the outgoing government of Andrius Kubilius some heart knowing the changes made under difficult circumstances were recognised in Brussels.

The Report stated that Lithuania has maintained macroeconomic stability and lowered state interference, and notably pointed out that protective measures enacted in response to the Russian crisis have been removed. The Report also had good words to say about the state of land restitution and liberalisation of the energy sector, as well as progress in the privatisation of remaining state-owned banks.

However, the Report did caution Lithuania to keep fiscal discipline and to prevent an increase in the current account deficit. Criticism came in the weak financial sector and the medium-term sustainability of public finances, while extra work is called for in increasing trade with the EU. Lithuania's bankruptcy procedure was criticised at three points, with the Report saying it is "not working properly." On corruption issues, the Report praised progress but urged vigilance in enforcement of the national anti-corruption strategy.

The progress made from last year's disappointing report is apparent with comments like "significant" progress in legal reform with the passage of the Civil Code and Criminal Code. The Report also indicated "significant overall progress" in the transposition of the acquis communautaire, though warned that success is less in its actual implementation.

The Report called on further work to be done in improving administrative capacity, regional policy, agricultural policy, taxation and financial control and the harmonisation of standards. The Report criticised the "very weak" enforcement of intellectual properties protection and the need to lift more restrictions on the free movement of capital. Again, administrative capacity is fingered as the problem in public procurement, agriculture, customs and taxation problems, with the latter's alignment with the acquis noted as "very limited."

The Report, noting the progress of Lithuania in the process, emphasised that "as Lithuania reaches a more advanced level of alignment, greater attention needs to be paid to strengthening administrative capacity." The environment was also singled out as an area for more work in policy implementation, though its progress is again noted.

On the right path

Areas with rather positive comments in the Report include transportation and energy, especially with the decision to shut down the first unit of the controversial Ignalia Nuclear Power Plant. "Significant progress" is noted in the audio-visual sector, and the work of the Ombudsman for Equal Rights is also duly noted.

The Report cautioned that "a general, and serious weakness... remains" in justice and home affairs, against pointing fingers at administrative capacity.

The Report also criticised slower implementation of industrial policy, and had harsher words for financial control, saying it is "not yet in line with internationally accepted practices," pointing out auditing as a significant weakness.

But overall, the Report is a much more detailed look at Lithuania, clearly noting it is on the right path and has become a serious contender for EU membership. Parts of the Report are meant to deliver that message, borderline cheerleading at times. The criticisms are solid and should give lawmakers in the new parliament impetus to continue on the good side of the Commission.

Mel Huang, 13 November 2000

Also of interest:

Moving on: