Nations in Transit 2009 - Lithuania

by Aneta Piasecka

Capital: Vilnius
Population: 3.4 million
GNI/capita: US$16,830

The data above was provided by The World Bank, World Bank Indicators 2009.

Nations in Transit Ratings and Averaged Scores

* Starting with the 2005 edition, Freedom House introduced separate analysis and ratings for national democratic governance and local democratic governance to provide readers with more detailed and nuanced analysis of these two important subjects.

NOTE: The ratings reflect the consensus of Freedom House, its academic advisers, and the author(s) of this report. The opinions expressed in this report are those of the author(s). The ratings are based on a scale of 1 to 7, with 1 representing the highest level of democratic progress and 7 the lowest. The Democracy Score is an average of ratings for the categories tracked in a given year.

Executive Summary

In 2008, Lithuania celebrated the 20th anniversary of Sajudis, the movement that led to the restoration of Lithuania's independence in 1990. Since then, Lithuania has established a functioning democracy with well-protected political and civil rights and a robust market economy. Lithuania joined NATO and the European Union in 2004 and the Schengen visa-free zone in late 2007. Although Lithuania has achieved impressive gains and recognition in the foreign policy arena, political life within the country appears to be backsliding from further reforms. The legislature has lacked efficiency and discipline in recent years. Political bickering and intrigues, unexpected ad hoc coalitions, and protracted reforms have downgraded Lithuanian politics. Public apathy and alienation from the political process have deepened, and trust in major democratic institutions, including the Parliament, government, political parties, and courts, remains critically low. Civil society is not growing as rapidly as was expected a decade ago, and large-scale labor migration has taken a toll on the country's political and civic developments. In general, though, the country has made great strides in improving the quality of life, and public attitudes and perceptions of change are unambiguous.

Double-digit inflation hit a 10-year high in fall 2008, and the public sector deficit swelled. Yet the government was largely preoccupied with energy issues, in particular the creation of a national investor for a new nuclear power plant, as well as its own survival, and held back long-overdue reforms. Despite this, lawmakers saw no prospects of replacing the ruling coalition and were set to preserve the status quo until the parliamentary elections in fall 2008. The national legislative elections in October brought a shift to the center right. The new coalition replaced the Social Democrat-dominated rule established in 2001. Andrius Kubilius, leader of the Christian Democrats, was appointed prime minister of Lithuania's 15th administration.

National Democratic Governance. In January 2008, Lithuania's first ever minority government secured a slim parliamentary majority after the Social Liberals joined the four-party ruling coalition led by the Lithuanian Social Democratic Party (LSDP). Parliamentary Speaker Viktoras Muntianas of Civil Democracy Party (CDP) stepped down in April over conflict-of-interest allegations, and Ceslovas Jursenas of LSDP replaced him in the post. Cleavage, inefficiency, and disorganization within the Parliament paralyzed important legislative debates, including much-needed reforms in the judiciary, higher education, health care, and other areas. The upcoming closure of the Ignalina nuclear power plant heightened concerns over an imminent energy shortfall and energy price hikes. Lithuania's bureaucratic apparatus continued to grow, while the heavily underpaid police, fire services, courts, and schools faced a shortage of workers. The military draft was stopped in September pending Lithuania's transition to a professional volunteer-based army. The inefficient, disorganized, and split legislature highlighted the depth of Lithuania's political immaturity. This, coupled with the government's reckless economic policy, stagnant public administration reforms, and swelling bureaucracy amid a shortage of civil servants, worsens Lithuania's rating for national democratic governance from 2.50 to 2.75.

Electoral Process. The parliamentary elections in October 2008 drew a low voter turnout of 48 percent. The Homeland Union-Lithuanian Christian Democrats came in first, winning 45 mandates. The incumbent LSDP won second place with 26 seats. The biggest news was the success of the Liberal Movement and the Liberal and Center Union (LCU), which unexpectedly passed the 5 percent threshold to secure legislative representation. Importantly, voters downgraded the populist Order and Justice Party and Labor Party, which excluded them from any coalition negotiations. The Rising Nation Party, founded in May 2008 by TV celebrity Arunas Valinskas, ranked third overall and joined the new center-right ruling coalition of the Christian Democrats, Liberal Movement, and LCU. Andrius Kubilius of the Christian Democrats was appointed prime minister. The Homeland Union-Lithuanian Christian Democrats became the country's largest political party after the Lithuanian Conservatives merged with the Christian Democrats in May 2008. In the wake of the legislative elections, a ban on audiovisual political advertising came into effect. The recent parliamentary elections were free and fair, and the change in power and cabinet was smooth. Lithuania's rating for electoral process remains at 1.75.

Civil Society. The growth of Lithuania's civil society has been slowed by low public involvement and awareness of nongovernmental organizations (NGOs). Almost half of the population gives to charity and people are quite willing to contribute to local communities, but 40 percent of Lithuanians do not participate in any kind of civic initiatives, and protest-type civic manifestation is particularly low. In March 2008, the Constitutional Court passed a groundbreaking decision on higher education ruling that the state may not regulate university enrollment, fees, and curriculums. This is expected to advance long-overdue higher education reform and transform Lithuania's inflexible and stagnant state-run universities. A lack of noticeable change in public perceptions of NGOs leaves the rating for civil society unchanged at 1.75.

Independent Media. In 2008, several new information portals joined Lithuania's extensive online media market. Internet connectivity expanded, and almost half of Lithuanian households had access to the Internet. The majority of Lithuania's 1.5 million Internet users read the press online. The number of national TV broadcasters multiplied with the start of digital terrestrial television, though national television channels have been losing audience in favor of foreign or local TV channels, the Internet, radio, and the press. A recent launch of new media outlets and several media takeovers by politicians indicated a trend toward politics-driven media ownership. Public trust in the media has been damaged by a decline of watchdog media and increased media bias toward political and business interests. Increased competition due to expanding Internet use and online media and the rise of new media outlets were offset by growing political interests in media ownership; thus the rating for independent media remains at 1.75.

Local Democratic Governance. A long-debated constitutional amendment in favor of direct mayoral elections passed a second reading in Parliament in June 2008, but lawmakers could not agree on the division of power between directly elected mayors and municipal councils. Financial audits carried out by the National Audit Office showed that mismanagement and misuse of funds, including central government subsidies, were widespread among municipalities, yet little progress was made in improving internal audit procedures. In 2008, central government allocations accounted for 42 percent of municipal budgets, down from 58 percent in 2004 owing to growing revenues from personal income tax. A lack of progress in revising local government legislation and improving local financial management leaves Lithuania's rating for local democratic governance unchanged at 2.50.

Judicial Framework and Independence. The year saw continued political battling over judicial reform, reflected in a controversial refusal of the Parliament to dismiss the Supreme Court chair after expiry of his constitutional term in July 2008. Meanwhile, lawmakers adopted a package of amendments to the Law on Courts that established the law of precedent, computer-based case assignment, cassation in administrative cases, compulsory audio recording of court hearings, and periodic evaluation of judges' performance. The judiciary remains severely underpaid, which exacerbates a shortfall in judges. In July, lawmakers amended the Law on Citizenship after grappling with the issue of dual citizenship for almost two years. The right of dual citizenship was granted to children of Lithuanian nationals born abroad. Meanwhile, about 1,500 citizens were stripped of their Lithuanian passports over the past two and a half years. Improvements in court legislation were offset by continuous political battling over fundamental court reform and a number of judicial framework and human rights issues; therefore Lithuania's judicial framework and independence rating remains unchanged at 1.75.

Corruption. In 2008, the National Audit Office revealed that Lithuania's largely stagnant anticorruption program, launched in 2002, had failed. A series of corruption scandals surfaced in the spring in which a dozen high-ranking municipal officials were indicted for bribery and graft. The investigation and exposure of corruption and conflict-of-interest allegations have become more open, but there has been little follow-through in high-profile corruption allegations. In 2008, corruption prevention efforts were limited to fragmentary policies, such as a ban on audiovisual political advertising and preparations for the online issue of construction permits. Failure of the national anticorruption program and a lack of progress in streamlining anticorruption initiatives leave Lithuania's corruption rating unchanged at 3.75.

Outlook for 2009. The presidential election in May 2009 will be the central event of the year and will test the new center-right government. The Christian Democrat-led coalition will face a dire need to tighten fiscal policy and cut public spending. Initiatives to reduce government bureaucracy are likely to bring some tangible results, but it remains to be seen whether promised and eagerly awaited improvements in the business environment will turn into a reality. The outcome of these initiatives will largely determine the course Lithuania will take. The government also intends to institute business crediting co-financed with European funds and an extensive dwelling renovation program. The Ignalina nuclear power plant will be closing at the end of 2009; therefore addressing the forthcoming energy shortfall and a leap in energy prices will be a priority for the new government. Other top policy issues include long-overdue judiciary reform, direct mayoral elections, revision of local government structure, and higher education reform. The recent parliamentary elections may spur some changes in party life, including stronger cooperation on the fractured liberal flank.