The law, "On Compensation for Damages From the U.S.S.R.'s Occupation," obligates Lithuania to seek compensation from Russia as the legal successor state to the Soviet Union for damages incurred over the period from the end of World War II to its withdrawal of armed forces in 1993.
It provides for two stages: first setting up a committee to calculate the sum, then forming a negotiating group to enter talks with Russia.
The passage of the law, one of several measures the Conservatives pushed through the Parliament as elections drew near and their low ratings tumbled further, caused something akin to shock in the Russian political community. "We gave the Lithuanians independence," the general sentiment went, "and they come back with a scheme to blackmail us."
The reaction among the Lithuanian left and center wasn't enthusiastic either. They considered this to be the right's latest folly, painting the Conservatives as children with sticks picking a fight with a sleeping bear.
The Conservatives lost the election, newer and younger faces took the reigns, and the issue went to the back burner. Damage was tallied at some $20 billion, but the government has never approached Moscow as the law demands.
When the Social Democrats and Social Liberals formed a new government last summer the issue was dropped completely although the law stayed in effect.
Current MP and former Russian Foreign Minister Yevgeny Primakov has blamed the Lithuanian law for the Duma not ratifying a border treaty between the two countries. When Russian Foreign Minister Igor Ivanov visited Vilnius in March, he said the law should be rescinded in order for Lithuania and Russia to move forward.
What is at stake in the Lithuanian law is two different versions of history, one true and one false. The true version is that the Baltic states were occupied by the Soviet Union in World War II. The false version has been Moscow's official line until now that the Baltic states joined the U.S.S.R. as constituent republics of their own volition.
The Lithuanian law could be dismissed quite simply as another example of Lithuania seeking to equate communism with Nazism to evade a dark wartime past. Instead of recognizing its complicity in the Holocaust, Lithuania can grind its ax with Moscow for damages that will never be paid.
But if the Germans can come to terms with their wartime dictatorship and pay damages to victims, then Russia's public recognition that the Soviet Union occupied the Baltics is surely one of the first steps in the healing process among the four countries.
Russian President Putin, who is an accomplished martial artist, knows non-action can pay higher dividends than rushing into battle. The more Russia opposes NATO expansion, the more the Baltics and other non-member states will push to get in.
By refusing to ratify the border treaties with all three Baltic states, and by refusing to recognize the historical truth of the three independent countries' occupation in World War II, Moscow has set the stage for a new cold war in the Baltics.