New Year's expectations in Lithuania

VILNIUS - Lithuania had its municipal and parliamentary elections in 2000. This
means that political passions might not be so heated this year.
However, experts say that the breath of a presidential election
campaign in 2002 might begin to be felt in 2001.

Lithuania's president is elected in a general election, and it always
provokes a lot of passion. Some left-leaning opposition politicians
hope that it might cause some tension in the ruling coalition of the
center-right Liberal Union of Prime Minister Rolandas Paksas and
Social Liberals of Parliament Chairman Arturas Paulauskas.

Both Paksas and Paulauskas spoke about their presidential ambitions
in 2000, leading to discussions among opposition members about the
breakup of the ruling coalition.

"We are ready to take power in case some part of the ruling coalition
will join us. We have already created our shadow government," Vytenis
Andriukaitis, leader of the parliamentary Social Democratic Coalition
faction, told The Baltic Times.

In January 2001, two major leftist parties - the Social Democratic
Party and the Democratic Labor Party - are planning to merge. This
powerful left-wing force will be one of the main players in the
Lithuanian political arena.

There are no disagreements among Lithuanian parties about the
country's main strategic goals - membership in the European Union and
NATO. President Valdas Adamkus proclaimed the year 2001 in Lithuania
to be "the year of NATO." Alvydas Medalinskas, chairman of
Parliament's foreign affairs committee, says that 2001 might be
decisive in convincing NATO leaders not to harbor doubts on extending
an invitation for Lithuania to join in 2002.

He emphasized the importance of the NATO Parliamentary Assembly,
which will gather in Vilnius on May 27-30. It will be the first
meeting of this political forum in the territory of the Baltic states.

Valionis said that the 1 million strong Lithuanian-American community
and the several-million strong Polish-American community, as well as
the Jewish Diaspora, should be used as Lithuania's lobby in
Washington in 2001.

"We plan to get an invitation to join NATO in 2002 and also to finish
EU entry negotiations in 2002," said Foreign Minister Antanas
Valionis.

"Negotiations about our membership in the EU should be our goal No. 1
this year. Sweden, known for its friendly attitude towards us, is
heading the EU in the first half of 2001, and we should use this
fact," Andriukaitis said.

Astrologer Naglis Sulija said that the "year of the snake" will be
especially good for deepening cooperation between Lithuania and
Poland, an obvious fact even without astrology.

Andriukaitis says that the main financial issue of 2001 might be the
tightening of the litas with the euro. The litas is currently pegged
to the U.S. dollar. This move seems more likely with President Valdas
Adamkus' nomination of Reinoldijus Sarkinas for a second five-year
term as head of Lithuania's Central Bank. Sarkinas has been quiet
about discussing his re-nomination with the press, as it still
requires parliamentary approval.

Sarkinas is widely regarded as a beacon of stability by members of
the financial community, having maintained a tough stand on not
devaluing the litas during periods of financial crisis in the last
years. The U.S. dollar was once the de facto currency across the
former Soviet Union given the collapse of financial structures;
Lithuania's litas has been pegged at 4:1 against the dollar since
1994. With Lithuania's exports to Europe ever on the increase and the
move by the government to negotiate for European Union membership,
many feel the time is now for a re-peg and Sarkinas has been hinting
at making the move in mid-2001. With the U.S. economy showing signs
of softness and the rebound in the euro on world markets, this move
may be more likely than ever.

Sarkinas has publicly predicted that a decision regarding the litas
will be made in 2001. He has also stated that there will be more bank
mergers, that the Lithuanian economy will continue to grow and that
the joblessness rate will drop in the coming year.

Mark Horton of the International Monetary Fund in Vilnius said his
organization predicts further GDP growth in Lithuania for 2001. "A
few weeks ago we were predicting 3.2 percent [GDP growth], but with
the drop in the dollar this could improve even more," he said. He
said that re-pegging to the euro is about picking the right time.
"The second half of 2001 looks reasonable as it is possible to expect
the dollar to weaken," said Horton. He does expect a further increase
in exports.

Paksas says that the main economic issues of 2001 will be the
privatization of the Lithuanian energy sector, two state banks and
the Lithuanian shipping company.

After a few legal and financial hiccups in 2000, Denmark's DFDS Tor
Line has resumed negotiations with the State Privatization Fund to
privatize the state-owned shipping lines. DFDS Tor Line takes over
from a consortium that had included Dutch interests as well. The new
deadline for completing negotiations is Feb. 15. The deal fell apart
in December largely because members of the Lithuanian government felt
the price was too low. The SPF estimates the transaction will
conclude with an estimated 200 million litas sale.

Lithuania's biggest difficulties in privatization seem to be in
selling off its energy companies. Lietuvos Dujos, Lietuvos Energija
and Kauno Energija have all been up on the chopping block in one way
or another, but the bride always seems to get cold feet on the day of
the wedding. Media reports indicate that Lietuvos Energija's deal
with CIBC World Markets seems to be faltering and Swedish and French
interests have dallied with Kauno Energija to no avail in 2000.