Central Europe Review - Lithuanian News Review

	Vol 1, No 17 18 October 1999

C E N T R A L E U R O P E A N N E W S:
News Review for Lithuania
All the important news from Lithuania
since 9 October 1999

Mel Huang

*NOTE: The News Review for Lithuania will go on a temporary hiatus and should return in early November.

Lithuania expressed satisfaction at the European Commission's recommendations to open negotiations with Lithuania and all other candidates. The report on Lithuania was somewhat critical, even on the market reform issue. However, the report did commend Lithuania for its decision on Ignalina. The report is seen as a satisfactory one, but still not as good as those presented to Latvia or some other candidates in the lower tier (EC Report summary).

The Russian oil giant LUKOil announced it's intention to pull out of Lithuania, after the Lithuanian government failed to take its offer of a larger stake in the Mazeikiai Oil complex. This leaves Lithuania searching for crude oil supplies, as LUKOil stressed future crude purchases would be made at world prices.

This was immediately followed by uncertainty with the oil supply, as the flow of oil from Russia stopped for several days. At the time, officials hinted it was a Russian government order, which the Russian Embassy in Vilnius criticised. The supply of crude resumed soon after, though future supply problems are likely to crop up.

This was capped off by President Adamkus signing the amendments for Mazeikiai Oil's sell-off into law. The opposition begged him not to sign it and threatened a court challenge. The amendments would allow US-based Williams International to take a majority stake in the company, under very questionable terms for Lithuania.

Then the boat was rocked more, as Mazeikiai Oil director Vidmantas Macevicius was sacked by the company's board and replaced by Vita Petrosiene. Macevicius was sacked due to "poor work," but some speculated it might have been due to his ties with Russian oil officials - including the LUKOil representative in Lithuania.

Suspiciously late, the Statistical Office revealed that second quarter GDP dropped by 4 per cent. This is worse than the Central Bank's forecast of a 3 per cent drop. The delay was due to late data, according to officials. The GDP result came out a day before the EU made its annual report on Lithuania known. Analysts warn that Lithuania will likely have no growth this year, if not a loss, though the Finance Ministry holds the forecast at 0.3-1.3 per cent growth. First quarter GDP dropped by 5.8 per cent.

The Central Bank announced that they will look at a repegging of the Lithuanian lita (LTL) in the latter half of 2001. Instead of the original plan to switch to a half-half, dollar-euro basket in 2000, the plan foresees a full euro peg in 2001.

The Seimas, after heated debate, passed the amendments to the 1999 budget. The remarkably late spending cuts lower the budget by 450 million litas, down to 6.76 billion litas. The opposition voiced anger at the lack of cuts and the areas cut.

The Visaginas town council is deliberating whether to make Russian an official language. Visaginas is home to most of the workers at the Ignalina Nuclear Power Plant, and is predominately Russian-speaking. This will no doubt spark controversy in Vilnius, as well as Moscow.

The newspapers stirred up lots of interest delving into the background of the new Russian ambassador to Lithuania, Yuri Zubakov. Zubakov is a career KGB agent and was deputy to Yevgeni Primakov.

September CPI went up by 0.7 per cent, the biggest jump in the region, and the biggest in Lithuania in months.

The Helsinki-based Human Rights Federation chided Lithuania for its prison system. They cited bad conditions as a massive problem, and also the alarming prison population figure - 383 inmates per 100,000 residents, which is just under the rates of Russia, Belarus and Ukraine.

The Seimas approved a resolution to continue the peacekeeping force in Kosovo, and the force will have a rotation soon.

Lithuanian female cyclists again reign supreme, as Edita Pucinskaite took gold at the World Road Race Championships in Verona. Last year's winner, Diana Ziliute, was pushed back to bronze, but it was an excellent showing for Lithuania.

A destitute woman drowned her 90-day old twins, saying she cannot support them.

Finally, President Adamkus is launching a campaign on campaign finance reform. The bill sponsored by the President would ban anonymous donations and impose other conditions. Will this get through the current Seimas?

Exchange Rates
As of 14 October 1999