Unholy alliance could spell trouble for Lithuania

  • 2008-01-02
  • In cooperation with BNS

VILNIUS -- The potentialforming of a coalition between the Liberal Democrat Party led by impeached former LithuanianPresident Rolandas Paksas and the Labor Party lead by Viktor Uspaskich,accused of corruption, would would put Lithuaniain danger of a fiscal crisis, the international credit rating agency FitchRatings warns.

The agency notes that having again chosenRussian-born Uspaskich as its leader, despite the fact that he had been in hiding from Lithuania's law enforcement agencies for a year, the Labor Party could score one of the bestpositions in the parliamentary elections due to take place in October.The prospects of the Liberal Democrats are also assessed as good, following municipal elections in February 2007 in which theyobtained almost 13 percent of the vote.

However, Fitch Ratings believes that the Social DemocratGediminas Kirkilas' led minority coalition is "likely to remain in poweruntil scheduled parliamentary elections, as neither the Social Democrats nor the Conservativeswould necessarily benefit from an early poll."

According to the agency, "parliamentary elections arelikely to yield another coalition government and Fitch believes another SocialDemocrat-led coalition is likely. However, the return to Lithuania from Russia of the founder of the Labour Party, Russian-born businessman ViktorUspaskich, is a factor which could affect the outcome of parliamentaryelections."

Should the Social Democrats retain control over the Cabinetfollowing the elections, and should Kirkilas win in the presidential electionsin 2009, the agency notes that this "could lead to a weakening of the checksand balances in the Lithuanian political system."

Fitch Ratings is a non-governmental international agency,which rates the development level of nations as well as theireconomic perspectives.