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The challenges for Lithuania’s new government

Dec 12, 2012
By Rokas M. Tracevskis

“Feeling lonely? The EU will &!%$ you every time,” reads the poster by Norwegian leftist-leaning protesters demonstrating in Oslo against the Nobel Peace Prize award for the EU. Whatever emotions a European has toward the EU, positive or negative, everybody knows that the EU is important for the everyday life of each European, even in Norway which is not an EU member. In July-December of 2013, Lithuania will preside over the EU Council. This will be the main international challenge for the new Social Democrat PM Algirdas Butkevicius-led Lithuanian cabinet of ministers, which is expected to start its work this week. Therefore, President Dalia Grybauskaite was absolutely right when she arranged a foreign language exam for each ministerial candidate. Great – all of the ministers of the new cabinet will be able to communicate with their EU colleagues in English.

On the economics front, energy issues will continue to play the central role. The total rejection of the Visaginas nuclear project in the outline program of the new government disappeared, and was replaced with vague promises to analyze the financial aspects of this project. The LNG terminal project was announced as a priority.

Butkevicius made a sane statement on the LNG project’s financing: the current practices, which were introduced by the center-right government of Andrius Kubilius, i.e. the inclusion of the price of future construction of the LNG terminal into each monthly gas bill for each Lithuanian household, should be stopped because these practices are simply illegal from the point of view of EU law. It is illegal to impose such an obligatory payment for services which do not even exist yet. While the EU co-financing for this LNG project remains rather a vague perspective, a bigger (but not too big – it is a strategic project!) involvement by private capital could be a solution.

Butkevicius agrees with the point of view of his coalition partner Viktor Uspaskich, who is the leader of Labor Party, on the apartment block renovation issue, which is one more energy security issue. During the parliamentary election campaign, Uspaskich was correct in criticizing Kubilius for the total collapse of plans to renovate thousands of apartment blocks. The mass renovation would allow using millions of euros from EU funds. During the four-year rule of PM Kubilius, the impressive sum of EU money, 127 million euros, intended for the renovation project in Lithuania was kept idle in the European Investment Bank in Luxembourg. The mass renovation of apartment blocks would boost the Lithuanian construction firms’ business and it would save millions from the Lithuanian state budget which are now paid to Russian Gazprom due to apartment block heating needs.

Uspaskich said all the costs of renovation should be covered with money borrowed by the state and the EU co-financing, while the current obligatory financial participation of flat owners should be skipped – after the renovation, flat owners will gradually return their share of the costs for renovation by paying monthly a little bit more for heating, which will not be so painful because the heating price in renovated apartment blocks will be cheaper anyway.

Many city dwellers are rather skeptical toward the new government: the Social Democrats are the political party of elderly politicians, with its main electoral base in small towns, while the Labor Party has its scandalous legal problems related to this political party’s bookkeeping. Let’s wait and see: maybe these guys, who are nicknamed the reds and populists by their opponents, will surprise us positively…

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