Prime Minister who still picks up the phone himself

  • 2013-03-06
  • Interview by Linas Jegelevicius

Social Democrat Prime Minister Algirdas Butkevicius perhaps could not have gotten off to a better start in his new office. His public support ratings in the polls have soared since the swearing-in ceremony, even eclipsing those of the Black Magnolia, Lithuanian President Dalia Grybauskaite. Butkevicius has been able to do what perhaps very few Lithuanian PMs have managed to do in contemporary Lithuanian history - considerably jack up the public’s confidence in the powerful houses of government and Seimas, the Lithuanian Parliament. The Baltic Times interviewed PM Butkevicius in his office.

You could have hardly expected a better start, with the Cabinet’s approval ratings being so high. But I assume your major concern now is not the ratings, but making sure that bank collapses, like the recent one of Ukio Bankas, in Lithuania, are a very rare exception, not an annual event. What is your government intending to do in that regards?
Let’s remember that former governments, until the very same real estate bubble burst in 2008, were explaining that the state complying with European and world banking practices cannot in any significant way regulate and influence the commercial banks’ activities. However, after the 2008 finance crisis, the majority of EU member states as well as the European Central Bank changed their stance on the subject. In fact, now even the World Bank has started discussions in that direction. I believe that already in the nearest future [there will be] passed certain regulations and legislative acts, binding all countries’ central banks and governments to a stricter control of commercial bank activities and to a faster reaction to any alarming signals in their banks. All that has to be done for a single purpose: to avoid financial threats in the future.

It is obvious that the liberal policies applied, particularly in the banking system, have not justified themselves. On this, I even remember that some members of our Lithuanian parliamentary Budget and Finance Committee were insisting that any interest [shown] in commercial bank activities, like their loan portfolio, interest rate norms and issues of bad loans and some other questions, has to be deemed a direct interference in the banks and their activities, which is something you could be impeached for in Seimas.

Can the government expect a successful fight against the multi-million dollar shadow economy and be successful in encouraging Lithuanians take on business initiatives when, due to the Snoras and Ukio Bankas collapses, even the youth and some entrepreneurs do not trust local banks anymore? And more than that: the state itself and its governing bodies.
In the entire European Union, and in Lithuania, there’s a necessary legislative basis to audit all the financial institutions, banks included. The laws envision very clearly that independent audit companies are responsible for the auditing, and namely that they have to assume the responsibility for troubles at the financial institutions. What I find strange in the case of the two closed Lithuanian banks is that the troubles the banks were evidently experiencing throughout a longer period than a year have not been reflected in the independent audits, whose results were submitted on a yearly basis, if I am not mistaken. Let’s remember that right before the Snoras Bank demise, it had been declared the most successfully functioning commercial bank in Lithuania. And, to remind you, just after a year since this nomination, bankruptcy procedures were started on it. So perhaps it would make sense to ask whether the auditing companies carry out their duties responsibly. This is perhaps the biggest problem, their responsibility.

Can you reveal what bank do you keep your savings in?
(grins) You know I recall a finance accounting lecturer, still during Soviet times. He told a bunch of students and me this: “If I ask you during the exam where you keep your money, and you respond ‘in some bank,’ I will put the worst mark for you [which was two in the Soviet era] and I will not have any more questions for you…” I always keep repeating on all occasions that money should be kept in several banks. To answer your question, I keep my money in three different commercial banks.

I am sure you are aware of the strong public opinion that the decision leading to the Ukio Bankas speedy takeover by the Lithuanian-owned Siauliu Bankas has been conceived at the highest echelons of power. Didn’t this haste seem too suspicious to you?
No, it did not at all, as all the necessary procedures in such a case have been followed. Lietuvos Bankas [Bank of Lithuania] had applied to all the commercial banks with the proposal. Siauliu Bankas, as did some other financial institutions, responded right away, but the former, to the assessment of Lietuvos Bankas, appeared to be matching all the criteria the best. Therefore, it has been chosen for the takeover. I believe, with the takeover completed, the prestige of Siauliu Bankas, compared to all the Scandinavian-owned banks in Lithuania, will increase. In the bank competition, it is a positive thing.

Can you sleep calmly after the merger of the two ruling coalition parties, the Order and Justice Party and Labor Party? Won’t their appetite for power increase after the coalescence?
If the parties are joining just because they are mulling taking some another post or anything like that, then I believe they should have not engaged in the lengthy government formation. I believe that a government has to be put together taking into account competences and abilities of its members. It should be done for a single purpose: guaranteeing effective management of the state in a short-term or long-term perspective.
I really believe that wisdom, not ambitions and, in your words, “appetite,” will prevail in making all future decisions in the government.

Before the 2012 parliamentary elections, speaking of the Visaginas Nuclear Power Plant project, you spoke out against it, but in favor of nuclear energy and its development in Lithuania. Does the decision to set up a working group tasked with working out conclusions on the Visaginas NPP project and its fate, after the voters have clearly said they are against it, mean that you may change your stance on the Visaginas undertaking?
Yes, indeed the Social Democrat Party and I, as its chairman, stand for nuclear energy, but we are against the current Visaginas Nuclear Power Plant project. Already in the capacity of prime minister I have met my Estonian, Latvian and Polish counterparts and we spoke about the Visaginas project. Our approaches have effectively coincided: no side is intending to make any investment into the project until the electric power price and capital investment return are clear. Frankly, I, as an economist, cannot perceive the approach by the former Conservative government: let’s start building the plant first and then let’s see what comes out of it. No one does this. Even richer states than Lithuania have temporarily put on hold development of their nuclear projects because of financial reasons.

My 70-year-old mother always votes for Social Democrats. Can you promise her and the army of 600,000 pensioners in the country that you are going to raise their pensions sometime soon?
No, the government is not intending to do that this year. First, we want to put the economy on solid tracks in order to make it swiftly roll ahead. If this happens, the income both of people, municipal and state budgets will grow. Sure, the coffers of the State Social Security Fund will get fuller as well. I believe that, realistically, the pension increase is likely possible in 2015. No earlier, however.

I’ve heard that you are still picking up some of the calls to your cellphone yourself. Does that mean you will be a more accessible prime minister than your predecessors?
(grins) Indeed, I would like to have a lot more possibilities to answer the calls. I have to admit, it is really hard to do physically because of the very busy schedule. But usually if I receive a text message, I always try to call the person later.

Since I live in the resort town of Palanga, let me ask you this… The two largest Lithuanian resorts, Palanga and Druskininkai, have been in a fierce competition over state budget allocations and state investments forever. Usually the allotments would be a lot higher if the prime minister and the resort mayor were of the same party, as in the case of Druskininkai, both Social Democrats, and in the case of Palanga, both Conservatives. Does this mean that again, Druskininkai’s turn has come to benefit from your prime ministership?
(grins) I am prime minister of the Republic of Lithuania, as you know… As a matter of fact, I’d like to recall something interesting and tell all your readers in regards to your question… To tell the truth, the memories still put a lot of smiles on my face… When I was the Finance Minister in the late Algirdas Brazauskas government, he called me one day in the summer and told that while on vacation in Palanga he had received many rebukes that the resorts of Druskininkai, Birstonas and Palanga were shelled out with disproportional resources for their development. This is something your question implies. In fact, Brazauskas even told me to check out a concrete fact of the supposed inequality: an absence of state financing for the Meile promenade, one of the central pedestrian streets in Palanga. And my research produced rather unexpected results. That Palanga Municipality had not submitted any application for its renovation. No government will dole out funding for anything if there are no municipality applications for it. But I am well aware of the changes that have happened in Palanga over a couple of years when the exuberant mayor Sarunas Vaitkus started heading the resort. Just taking a stroll in Palanga before last Christmas, I noticed, for instance, that it had a lot more parking lots than before. I am well aware of other significant projects being carried out in the resort. What does that mean? It means exactly what I’ve told you before:  the municipality’s new administration started more actively submitting projects for their financing. Coming back to your question on the supposedly unequal financing, the gap is not a result of the governmental favors or disfavors, but a reflection of the municipalities’ activities.

Is there’s anything you’d like to pay attention to with the Palanga administration?
I think so. For example, how to attract tourists to the resort, implementing various programs; for instance, programs of wellness tourism. The treatments have to be provided throughout the entire year, not only in summer. And the mayor understands this. In fact, wellness tourism is becoming very popular in the world and is a major revenue generator in many countries. I really encourage the three major Lithuanian resorts of Palanga, Druskininkai and Birstonas to join their efforts in setting out their individual wellness tourism development programs and working out a single one for the three. But I see the resorts being in a very different stage of development. While the last two resorts have been developing their programs for quite some time, Palanga has been lagging behind them in that endeavor. It seems to me that former Palanga mayors had had quite other priorities before: dividing Palanga’s state land and deciding who had to start construction in the lots. But, as I said, I see many positive changes in Palanga with the new mayor, so I believe Palanga is on the right path.