Nations in Transit - Lithuania (2003)

Capital: Vilnius
Population: 3,500,000
Polity: Parliamentary democracy
Economy: Mixed capitalist
Status: Free
PPP: $7,106
Private Sector as % of GDP: 75%
Life Expectancy: 73
Religious Groups: Roman Catholic, Lutheran, Russian Orthodox, other
Ethnic Groups: Lithuanian (80 percent), Russian (9 percent), Polish (7 percent), Byelorussian (2 percent), other (2 percent)

Introduction

Lithuania is a parliamentary democracy in which basic political rights and civil liberties are secure and transfers of power are smooth. The general commitment of the Lithuanian authorities and people to the sovereign state and the continued transformation of the economy toward a market-based system have remained beyond doubt since the country restored its independence in 1990. Lithuania's history as an independent state, first proclaimed in 1918, has been a significant stimulus to a faster and smoother post-Communist transition.

Today, public confidence in the democratic process is high, and the electoral system as a whole is stable. Elections and changes in government take place on the basis of the Constitution and other laws. Political party life in Lithuania is also vibrant, and viable parties, including those in the opposition, function at all levels of government. The country's major political parties display unity on the most significant issues facing the country's post-Communist development, including accession into NATO and the European Union (EU).

At the end of 2002, Lithuania received invitations to join both NATO and the European Union. Membership in these organizations is regarded as a historic opportunity to guarantee the country's independence and secure its future. These events provided recognition that as a sovereign state, Lithuania has a right to determine its own security arrangements. They also recognized that Lithuania has established a functioning democracy and a market economy.

Since the beginning of the 1990s, Lithuania's relations with the European Union have transformed the country's political and economic environment. Strengthening relationships with the EU has meant a gradual liberalization of trade and the transposition and implementation of EU norms. The EU is now Lithuania's major trade and investment partner. A referendum on EU accession is scheduled for May 11,2003, and public opinion polls indicate a fairly high level of public support for membership, particularly when compared to other candidate countries. There are still concerns, though, that low voter turnout could jeopardize the outcome of the referendum.

The past decade has seen continuous and peaceful changes in political power. Since June 2001, a coalition of the Social Democratic Party and New Union (Social Liberals) has formed the majority in the Seimas (Parliament). This left-wing coalition, led by former president Algirdas Brazauskas, proved victorious in the 2000 parliamentary elections, defeating the Homeland People's Union-Conservative Party and its center-right coalition government that had been in power since 1996. Following the elections, a profusion of relatively new players entered the political scene and breathed fresh air into the political life of the country.

The nongovernmental organization (NGO) sector in Lithuania is rather vibrant, but volunteerism remains a rare form of NGO support. The legal regulation of NGOs has improved significantly in recent years. Grant-giving procedures have been simplified, and NGOs are now exempt from the profit tax. Yet restrictions have been applied to the managerial structure and commercial activities of NGOs. The media are free and independent and enjoy a high degree of public confidence. However, the current government has exhibited a tendency to limit access to information and communication with the media.

Lithuania's civil service system has undergone important changes in the last decade. Categorizing civil service offices and defining the responsibility of civil servants have streamlined the system. In particular, Parliament has established general principles for applying punitive measures when civil service obligations are not fulfilled. In 2002, the tenure of municipal councils was extended from three to four years, and all permanent residents were allowed to be elected to municipal councils. However, foreign citizens may not hold the positions of mayor, deputy mayor, or member of the board of a municipal council.

The country's system of checks and balances is in place, but there is some disarray in the division of legislative and executive powers in drafting legislation. The practice of delegating lawmaking powers to lower-tier executive authorities is widespread. The legislature is also frequently criticized for over-regulation and interventionism. Other serious complaints are the high number and inconsistency of legal acts.

Reform of the judicial framework nears completion, and a new penal code and code of criminal process will come into force in May 2003. The court system has been modernized, and criminal prosecution is now subject to stricter procedures. In early 2002, a new Law on Courts was adopted, establishing the proper legal basis for judicial independence. This law filled a "legal vacuum" created in 1999 when the Constitutional Court voided much of Lithuania's court law and practice as a violation of the Constitution's system of checks and balances. The new law prohibits aggravating the financial, material, and technical conditions of courts. In addition, a new code on civil procedure will take force at the beginning of 2003. This is the first national legal act in Lithuania's history that systematically regulates civil procedural legal relationships. A new civil code, aligned with EU laws and international legal acts, came into effect in July 2001. Lithuania.

Corruption remains a serious concern, especially in lower-tier executive branches. Although all anticorruption laws and institutions are in place, inadequate enforcement impedes a more effective fight against corruption. A national anticorruption program recognizes prevention and deregulation as keys to combating corruption and minimizing abuse of official power.

Lithuania continues to maintain strong macroeconomic positions and a high rate of economic growth, with low inflation and low interest rates. A currency board regime has made it possible to preserve a strong and stable national currency. The banking system is stable and credible. Cautious budgetary policy has been pursued. The restructuring and privatization of the energy sector is under way, and the privatization of commercial banks has been completed. Steady economic growth has led to a fall in unemployment and a rise in household income. Foreign trade is expanding, with liberalization being an important factor. Lithuania continues to lower import duties in compliance with EU and World Trade Organization requirements. Business deregulation continues, but structural reforms need to be accelerated in the pension system, health care, education, and agriculture.

Electoral Process (Score: 1.75)

Lithuania has a stable political system. Elections are free and fair, and public confidence in the electoral process is secure. Since the adoption of the Constitution in 1992, half of the nation's parliamentarians have been elected in multimandate proportional balloting, while the other half have been selected in single-mandate constituencies. Party life in the country is vibrant, with a total of 36 political parties in the country at the close of 2002. Viable political parties, including members of the opposition, function at all levels of government. The Social Democratic Party and the Social Liberals have formed the parliamentary majority since June 2001.

In December 2002, presidential and municipal elections were held in Lithuania. The municipal elections had initially been scheduled for spring 2003, but at the proposal of the ruling Social Democrats they were held together with the presidential elections. The opposition severely criticized this idea as antidemocratic and politically motivated to secure the ruling forces' victory in both elections by capitalizing on current public support. Voter turnout during the elections was 54 percent, as compared to 74 percent in the 1997 presidential elections and 53 percent in the 2000 municipal elections.

A total of 25 parties contested 1,560 seats in the municipal elections. The ruling Social Democratic Party came out on top, with 21.3 percent of the vote and 332 seats in municipal councils. The opposition Lithuanian Conservatives ranked second, with 12.4 percent and 193 seats. The Union of Farmers and New Democratic Parties was third, with 12 percent and 190 seats. The Liberal Union and the Center Union followed, with 10 percent of the vote and 160 and 156 seats, respectively. Three other parties, the Social Liberals, the Liberal Democratic Party, and the Christian Democratic Party, received more than 100 seats combined. For the first time in history, a single party – the Liberal Union – is likely to have mayors in the country's three largest cities. Previously, the Farmers Party, the Social Liberals, and the Liberal Union had the greatest representation at the municipal level.

Rolandas Paksas, a member of Parliament and the leader of the Social Liberals, was elected president in the second round of balloting on January 5,2003. Paksas received a surprising 54.2 percent of the vote and defeated his rival, sitting president Valdas Adamkus, who received just 44.8 percent. In the first round, Adamkus had led his closest competitor by 15 percentage points. Adamkus also lost in spite of the fact that most of the candidates he defeated in the first round pledged their support to him in the second. Unlike Adamkus, Paksas was guided by an active public relations campaign, which political scientists said sometimes included promises that had no relevance to presidential powers. His main campaign slogans were to restore order and revive hope and confidence in Lithuania.

Seventeen candidates ran for the presidential post. Arturas Paulauskas, the current parliamentary Speaker and leader of the Social Liberals, lost the 1997 presidential election to Adamkus by a margin of less than one percentage point. In 2002, he ranked third, with 8 percent of the votes. Vytautas Serenas, the host of a comedy show on LNK television, followed with 7.8 percent. Social Democrat Vytenis Andriukaitis was fifth, with 7.3 percent. Kazimiera Prunskiene, leader of the Union of Farmers and New Democratic Parties, came in sixth, with 5 percent. Each of the remaining candidates received less than 5 percent of the vote. Presidential candidates must collect the signatures of at least 20,000 voters to register for an election. To be eligible to run, a person must be a citizen of Lithuania by birth, have lived in Lithuania for at least the past three years, and have reached 40 years of age.

Paksas, Lithuania's third president since regaining independence in 1990, will start his term on February 26,2003. He began his political career in 1997 upon election to the Vilnius City Council from the Conservative Party's list. Since then he has served twice as the mayor of Vilnius and twice as prime minister – all for very short periods of time. During this period, he also joined the Liberal Union. In spring 2001, though, Paksas left the Liberal Union and established the Liberal Democratic Party. Criticism of Paksas has centered on his varying political career and feeble support from other political forces. Concerns were also voiced over Paksas's preelection stand on the EU. Specifically, he pledged to build Lithuania's relations with the EU on the principle of benefit to Lithuania and to demand that the EU cover the costs of closing the Ignalina nuclear power plant. Critics charged that Paksas's stance could provoke a confrontation with the EU and jeopardize the results of the referendum on EU membership. Ultimately, the president-elect proclaimed that Lithuanian foreign policy would remain on its current course.

The 2002 presidential elections are not likely to effect any major changes in government. Paksas has stated his support of Prime Minister Brazauskas but has suggested that some cabinet members might be changed. Prime Minister Brazauskas, in turn, has expressed his readiness to work with the new president but prefers to retain the current cabinet of ministers. The government is not required to resign after presidential elections but must return its powers to Parliament. The procedure, called "courtesy resigning," is a kind of test to check whether after presidential elections the Parliament still has confidence in the government. The newly elected president nominates the head of the government, whom Parliament must approve. If Parliament backs the candidate, the government continues its work. Otherwise, the government resigns and the formation of a new cabinet begins.

Although the government is expected to remain stable, the 2002 presidential election results did stir up Lithuanian politics. Following the elections, former president Adamkus called on Lithuania's liberal and conservative forces to establish a coalition council and a shadow cabinet that can serve as a strong opposition and help secure victory in the 2004 parliamentary elections. The election also led the Liberal Union, the Modern Christian Democrats, and the Center Union to proceed with merger plans prior to 2004.

Lithuania's most recent parliamentary elections took place in 2000. The Supreme Electoral Commission of Lithuania acknowledged that they were free and fair. The Organization for Security and Cooperation in Europe and the EU ceased to observe elections in Lithuania in 1997. Voter turnout in 2000 was 56 percent, compared with 53 percent in 1996. The left-wing Social Democratic Coalition of former president Brazauskas proved victorious when it won 51 mandates in the 141-seat Parliament. The center-right Liberal Union placed second, with 34 seats. The center-left Social Liberals took 29 seats, and the Conservative Party won 9 seats. Another seven parties plus three independent candidates won seats in single-mandate constituencies. The threshold for legislative representation is 5 percent. Elections are valid if voter turnout is no less than 40 percent.

After the 2000 elections, a center-right ruling coalition was formed in Parliament. However, dominated by the center-right Liberal Union and the left-leaning Social Liberals, the ruling coalition proved unstable and stepped down. The Social Liberals and the Social Democratic Party established a ruling coalition and have formed the parliamentary majority since June 2001. At present, the leader of the Social Liberals, Arturas Paulauskas, is the parliamentary Speaker, and the leader of the Social Democratic Party, Algirdas Brazauskas, heads the cabinet. About one-third of the members of Parliament compose the opposition, the Liberal Union and the Lithuanian Conservatives being the most visible opposition forces.

Lithuanian political parties are largely unanimous on the most significant issues affecting the country's development, including accession into NATO and the European Union. However, right-wing critics stress that the government lacks a clear stand on many issues of domestic policy, especially on social security and education reforms. The government is also criticized for a lack of openness and transparency.

The Social Democratic Party, a highly experienced, disciplined, and popular political force, is the foundation of the left-wing bloc. The popularity of the Social Democratic Party skyrocketed after it merged with the Labor Democratic Party in January 2001. The party's victory in the 2002 municipal elections confirmed its high level of public support.

The formerly ruling Lithuanian Conservatives remain an influential opposition force. They regained their support in municipalities after the 2002 municipal elections, in which they came in second overall. The Liberal Union and the Social Liberals breathed new life into Lithuania's political arena after they reinforced their positions in the 2000 parliamentary elections. They were also among the winners of the 2000 municipal elections. But the Social Liberals, which is generally regarded as lacking a clear ideological identity and believed to be dominated by its coalition partner, the Social Democratic Party, is losing public support. In fact, the party's ratings dropped dramatically after its poor performance in the 2002 presidential and municipal elections, which party leader Paulauskas attributed to a divided electorate, a divided coalition, and a divided party. After the elections, Prime Minister Brazauskas did not rule out the possibility of a merger with its coalition partner, the Social Liberals, but members of the latter denied this.

Lithuania has seen a number of parties form around a charismatic leader rather than a common commitment to an ideology and platform. Examples include the Social Liberals, led by Paulauskas; the Homeland People's Union, led by Laima Andrikiene, a former minister of trade and industry and former minister of European affairs; and the Moderate Conservatives Union, led by former prime minister Gediminas Vagnorius. Smaller parties have tended to merge. For example, the Lithuanian Right Union united four parties in October 2001. The Christian Democratic Party and the Christian Democratic Union merged in May 2001.

Political discussions in recent years have focused mainly on EU integration and related issues, such as the sale of agricultural land to foreigners and agricultural policy in general. In November 2001, the Parliament approved in its first reading an amendment to Article 47 that would allow foreign citizens and corporations as well as Lithuanian companies to buy farmland. While center-right political forces spoke strongly in favor of removing all existing barriers to the sale of land, nationalist and small left-wing parties opposed the decision to allow the sale of land to foreigners. In response, the ruling parties pledged to establish a transition period and necessary safeguards. A second vote on the Article 47 amendment is scheduled for January 2003. A vote on constitutional amendments must be taken twice, with an interval of three months between the two ballots. A two-thirds majority vote is required in both ballots for a constitutional amendment to pass. The Constitution may also be amended by a referendum.

Agriculture proved to be the most politically sensitive and controversial issue in Lithuania during accession negotiations. Other frequently cited fears regarding membership pertain to the potential loss of sovereignty and unfair competitive conditions. Political debates in Lithuania have also focused on the closure of the Ignalina nuclear power plant, which supplies around 76 percent of the country's electricity. Lithuanian authorities have pledged to decommission the first of Ignalina's two reactors by the year 2005, while the second one is scheduled to be closed by 2010. Given that the Ignalina plant is the country's biggest electrical energy producer, the issue of its closure is closely related to energy reform as a whole, which is focused on creating conditions for new market entrants and linking Lithuania's energy market with the other Baltic markets and, subsequently, with Western and northern European markets. Opponents claim that the closure would have disastrous effects on the country's entire electricity market and on consumers.

The takeover of the Mazeikiai oil refinery's operational control by Russia's oil giant YUKOS in September 2002 was another much debated issue. The Lithuanian government, which continues to hold a 40.66 percent stake in the Mazeikiai company, approved a transaction between U.S.-based Williams International and YUKOS on the sale of Williams's stake and the transfer of operational control in the oil refinery.

Lithuanian citizens are free to form political parties or associations, provided their goals and activities do not contradict the Constitution and laws of Lithuania. To be registered, a party must have at least 400 members. One extreme nationalist party, the Lithuanian Union of National Social Solidarity, was refused registration 10 times on the grounds that articles in its bylaws on the superiority of the Lithuanian nation contradicted the constitutional principles of democracy and equality as well as the Law on Political Parties and Organizations. The Communist Party was banned after the failed coup d'etat in Moscow in 1991.

About 2 percent of Lithuania's 3.5 million people belong to political parties. Of the 36 registered parties, at least 3 represent ethnic minorities. One, the Union of Russians, joined the Social Democratic Party in the 2000 elections and formed the parliamentary majority. Female representation decreased from 17.4 percent, or 24 seats, in the previous Parliament to 10.6 percent, or 15 seats, in the current Parliament. Five parties have women's divisions, and most parties allot a certain proportion of their candidate lists (2 to 5 out of 10) for women. The 2002 elections secured 321 seats out of 1,560 for women on municipal councils – an increase of 46 seats over the 2000 elections.

Civil Society (Score: 1.50)

The NGO sector has been developing steadily in recent years, but public awareness about it remains rather low. Most organizations are registered in the largest cities. According to a survey conducted by the NGO Information and Support Center, there were 7,075 nongovernmental (excluding religious) organizations in Lithuania in 2000. A civic organization, the prevailing legal form of nongovernmental nonprofit institution in Lithuania, is a voluntary membership-based union of citizens seeking common goals or needs.

Over the past two years, the regulation of nongovernmental organizations and charitable activity has improved significantly. Grant-giving procedures and reporting are now simpler, anonymous giving is legitimate, and the directors and accountants of associations and charitable funds may work without labor contracts. However, labor contracts are required for other kinds of nongovernmental organizations. Beginning in 2002, NGOs are exempt from the profit tax (a 5 percent tax was applied previously). Donations from companies of up to 40 percent of taxable profits are tax-exempt. NGOs must submit quarterly reports to the Tax Inspectorate and the Department of Statistics. One of the most controversial regulations states that only officially listed nonprofit organizations may receive donations. Although the aim is to prevent the abuse of concessions applicable to private giving, critics charge that the register actually creates conditions for corruption and amplifies bureaucracy.

NGOs may bid for government contracts, and the range of services they provide has expanded to include social, economic, and environmental services. However, this practice remains rather uncommon for most NGOs owing to a complex administrative process. Government support in the form of grants comes mostly from the Ministries of Culture, Education, and Social Security and Labor, as well as municipalities.

The organizational and managerial capacity of NGOs has improved considerably in recent years, and today the management and administration of approximately 200 NGOs is comparable to that of leading business enterprises. Efficient project administration, good management, and constituency building are increasingly viewed as key elements of an organization's sustainability. It is also more common now for NGOs to have permanent staff and recruit volunteers. NGOs have learned to establish contacts with their local constituencies through local media channels and fund-raising events and by involving local stakeholders in project activities. Yet weak public relations skills and the absence of properly functioning boards of directors still pose constraints. Likewise, since advocacy remains an abstract concept for many groups, they are less effective at benefiting from the use of communication and political access at the national and local levels. The NGO Information and Support Center and other groups provide a number of technical, consulting, and training services. Information on NGO management issues in the native language is available, albeit rather scarce.

Volunteerism remains a rare form of NGO support, primarily because Lithuania lacks a tradition of volunteerism. In addition, economic difficulties have so far prevented most citizens from contributing to charitable activities. NGO Information and Support Centers in the largest cities – Vilnius, Kaunas, and Klaipeda – represent the main efforts to increase philanthropy. The Commission for NGO Affairs, which consists of NGO representatives, advises the government on NGO issues and participates in related public policy debates.

Most Lithuanian NGOs are not financially viable owing to a lack of permanent sources of income. According to a new Law on Personal Income Tax, which will enter into force at the beginning of 2003, citizens may transfer 2 percent of their taxable income to a governmental or nongovernmental organization. As opinion polls indicate, 60 percent of the population will use this opportunity to support NGOs, mainly educational, social, and health care initiatives. In 2001, a total of 73.5 percent of charity and support came from abroad; local firms and individuals donated 26.5 percent. Overseas support went mostly to health care (34 percent), religious organizations (14 percent), social care and welfare (12 percent), and education (11 percent). Lithuanian donors gave mostly to sports (38 percent), health care (13 percent), religious organizations (11 percent), culture (10 percent), and education (10 percent). The bulk of charity and support, about 60 percent, comes in the form of in-kind contributions. Cash funds account for 38 percent and services a mere 0.5 percent. Individual giving is not widespread.

Sports, cultural, children, and youth organizations are the most numerous. According to the Women's Information Center, there are more than 70 women's organizations in Lithuania, including over 20 regional organizations, over 20 national organizations, 10 branches of international women's organizations, and 4 women's studies centers. There are about 800 associations in Lithuania and over 300 business organizations. Small-business associations unite the overwhelming majority of small enterprises. Ethnic groups are quite active in civic and cultural life. The Russian community, for example, has 60 NGOs engaged in cultural activities. Equally effective are Polish cultural organizations.

Lithuania's various religious communities are vital, autonomous social institutions, and about 32 religious denominations are represented in the country. About 70 percent of Lithuania's inhabitants consider themselves to be Roman Catholic. They constitute some 826 communities. The second largest religious group is the Orthodox Church, with 180,000 members and 51 communities. Other groups include Old Believers (50,000 members and 43 communities), Lutherans (30,000 members and 40 communities), the Evangelical Reformed Community (11,000 members and 12 communities), Jews (6 communities), Sunni Muslims (5,000 members and 5 communities), and neo-pagans (5 communities).

The Lithuanian state recognizes nine religions as traditional. These are Roman Catholicism, Greek-rite Catholicism, Evangelical Lutheranism, Evangelical Reformers, Orthodoxy, Old Believers, Judaism, Sunni Islam (the traditional religion of Lithuanian Tartars), and Karaitism. The Lithuanian Law on Religions allows for other nontraditional religions to be officially recognized by an act of Parliament as part of Lithuania's historical, spiritual, or social heritage if they enjoy public support and do not violate laws and morals. As a result, there is a four-tier system of traditional, state-recognized, registered, and unregistered religions. The Law on Religions allows religious communities to ask for state recognition after 25 years have passed since their registration with the Ministry of Justice. There are calls to name pagans, who practice the ancient Baltic religion, a traditional religious community.

Both traditional and state-recognized religious communities can receive state subsidies and do not pay social and health insurance for clergy and other employees. They are not charged a value-added tax on electricity, telephone, and heating. Only "traditional" communities have the right to teach religion in state schools and to buy land for building churches. Religious communities that are simply registered by the Ministry of Justice are not eligible for state subsidies, tax exemptions, or social benefits, but they may rent land for religious buildings. Unregistered communities may not rent land, but there are no reports that such groups have been prevented from worshiping or seeking new members. The charitable activities of religious communities mostly include providing care for the elderly, orphans, and the disabled.

The Lithuanian Alliance of Trade Unions, the Center of Trade Unions, the Lithuanian Labor Federation, and the Employees' Union unite trade union and labor groups. Industrial restructuring, privatization, and bankruptcies of large state-owned enterprises have adversely affected the trade union movement. Despite that, the number of workers belonging to trade unions is increasing steadily. In 2001, there were about 80 professional organizations with a total of 200,000 members. The activities of individual trade unions and the percentage of workers belonging to them differ significantly across areas of activity. The largest trade union memberships are in the chemical industry, construction, the energy sector, and the food industry.

Trade unions exercise broad powers, and the new labor code, which will enter into force in 2003, expands them further. Trade unions sign collective agreements with employers on behalf of all employees. Under the new labor code, trade unions make decisions to begin or terminate strikes. However, in the case of an unlawful strike, unions must compensate employers for their losses.

The members of trade unions' elected bodies may take six days off for additional training. A recent amendment to the Law on Labor Contracts eliminated a provision requiring employers to receive the approval of the trade union in order to dismiss one of its members. Approval is still necessary, though, to dismiss or penalize a member of a trade union's elected governing body. The new labor code also expands the role of collective agreements and now requires all employees to abide by them.

Interest groups may take part in the political process through policy advocacy, counseling, and other forms of participation. Business associations and trade unions are the most active and influential players in the policymaking process. The Lithuanian Industrialists Confederation is the leading group in this respect. Trade unions are becoming more influential owing to their large membership bases and organizational structures. In most cases, the authorities are attentive but not always responsive to the opinions of interest groups. The policy-making process relies increasingly on joint task forces and policy initiatives, comprising public officials, businesspeople, specialists, and independent policy analysts. The Sunrise Commission, established in 1999 to formulate proposals for improving business conditions, comprised a dozen task forces of government officials, independent experts, and business representatives. Public hearings in Parliament are becoming popular tools in the policy-making process.

Lobbying was legitimized in July 2000. The law regulates individuals and legal entities engaged in paid lobbyist activities that are aimed at influencing the legislative process, improving legal acts, and streamlining the drafting thereof. A person or a company wishing to engage in lobbying must register with the Central Commission of Service Ethics. The law bans former politicians and state officials from conducting lobbyist activities for a year after leaving their posts. Politicians and officials, who are prohibited from being paid members of the managing bodies of corporations or being hired by private institutions, may not engage in lobbying. Registered lobbyists are subject to reporting requirements regarding their clients, commissions, and other remuneration.

Given that the policy-making process is also influenced by professional associations and other groups that are not covered by the law, critics charge that the boundaries between paid lobbying and public policy advocacy are too fuzzy and cause a great deal of controversy. Lobbyists complain that the representatives of such groups, when appointed to official policy-drafting commissions, receive remuneration from the state for what is in essence lobbying activity. It is also feared that the law is likely to expand the powers of well-organized, narrow-interest groups.

In response to these concerns, a new draft Law on Lobbying has been proposed. It envisages expanding the notion of lobbying to include any actions of individuals or legal entities aimed at influencing legislative processes. Under such provisions, lobbying regulations would also apply to NGOs whose mission is to engage in policy advocacy and express opinions about legislative activities without representing any interest group and without receiving remuneration. NGOs would have to register as lobbyists and pay a registration fee or hire registered lobbyists to express their civil opinions. Opponents say that the adoption of such provisions would discredit and disrupt the functioning of NGOs.

Lithuania's educational system is considered free of political influence and propaganda. A mere 1.7 percent of all educational establishments are private. There are 19 private schools providing primary (grades 1-4), basic (grades 5-10), and secondary (grades 11-12) education. There is 1 private vocational school, 9 professional colleges, 9 other colleges, and 4 universities. Over the last two years, the number of undergraduates in private universities has increased 15 times, while that in colleges has more than tripled.

Independent Media (Score: 1.75)

The media in Lithuania are editorially independent and enjoy a high degree of public confidence. The vast majority of media outlets are privately owned, and the leading private media are financially viable. The constitutional freedom to "pursue, receive, and disseminate information and ideas" is properly secured and fulfilled. Yet the Constitution also provides that this freedom may be limited by law if it is necessary to "protect a man's health, honor, dignity, private life, and morals or to protect the constitutional order." Publications may be closed and journalists penalized only by court decisions.

Although media independence in Lithuania is well established, the current government, led by the Social Democratic Party and the Social Liberals, has attempted to limit public access to information and communication with the media. Since July 2002, documents submitted for government sittings, including draft laws and other legislative proposals, have not been made available to the public, NGOs, and the mass media as they once were on a regular basis. No official order to withhold information has been issued, and some organizations obtain materials while others do not.

The media are in the same situation. The government has limited communication with the media and instructed journalists and reporters that they may communicate with cabinet members only in a remote press conference hall in the government's building and only if cabinet members agree. Reporters have also been banned from gathering in a room near the cabinet sitting hall where they used to conduct interviews. Direct radio broadcasts of cabinet sessions to reporters in the halls near the cabinet sitting room have also been terminated. Filming by the media of parliamentary sessions is prohibited.

The state owns part of the ELTA news agency and National Radio and Television, the public broadcasting company. National Radio and Television remains under considerable pressure from the government, which controls its budget allocations. Other media are privately owned. The major national dailies are Lietuvos Rytas, with a reported circulation of 50,000, Kauno Diena (40,000), Respublika (35,000), and Lietuvos Zinios (8,000). Verslo Zinios, with a circulation of 10,000, is the most popular business paper.

The most popular television stations are LNK and TV3, which capture about 25 and 22 percent of viewers, respectively. Local and cable television channels rank third (20 percent), followed by Lithuanian Television (13 percent) and TV4 (11 percent). State-run Lithuanian Radio enjoys a large audience, with about 13 percent of listening time. Other popular radio stations are Radiocentras (15 percent), Pukas (12 percent), M-1 (10 percent), Lietus (7 percent), and Russkoje Radio Baltija (7 percent).

Other electronic sources of information, particularly the Internet, are expanding rapidly. In particular, the public is increasingly accessing the Web sites of news agencies, radio stations, television channels, and daily newspapers. Some of the most popular information portals are Delfi, which targets the Baltic states; takas.lt, which is run by Lithuanian Telecom; Sala.lt, the site of radio station M-1; and the Web sites of the news agencies ELTA and BNS.

The newspaper distribution system is privately owned. The only exception is the Lithuanian Post, the national postal service, which holds a negligible share of the market and distributes small periodicals mainly in rural areas. The largest press distribution company, Lietuvos Spauda, was formed out of a former Soviet company. Lietuvos Rytas, like other major papers, operates its own subscription service. Several private companies distribute periodicals through a chain of gas stations, grocery stores, hotels, and supermarkets.

The Lithuanian criminal code provides for two years of imprisonment, two years of penitentiary labor, or a fine for libeling or disseminating false information that defames a person. Drawing on the civil code, courts can impose penalties of 500 litas (US$145) to 10,000 litas (US$2,900) for doing moral harm to persons by publicizing false information or information on their personal lives without prior consent. In October 2002, the Lithuanian Constitutional Court ruled that journalists must reveal their sources upon a court order. In the ruling, the Court protected the media's right to publish information about a public figure's private life if it doesn't cause the individual harm and reveals facts important to the public. Specifically, the Constitutional Court found the Law on the Provision of Information to the Public unconstitutional for failing to uphold the equality of all citizens before the law. The Court ruled that the stipulation granting journalists the right to veil their sources gave them exceptional privileges compared with the rest of the population. Although the Court's decision stated that the freedom to freely receive and publish information is fundamental to an open and democratic society, it also called for a ruling in all cases to determine whether the veiling of an information source violates the law.

The Commission on the Ethics of Journalists and Publishers and the Office of the Inspector of Journalists' Ethics function as supervisory institutions. Attempts to establish an ombudsman's office to control the media failed when the 2000 Law on the Provision of Information to the Public was adopted. Notably, most influential media representatives act in accordance with the ethical code of journalists and publishers. The Journalists Union and the Journalists Center are the most prominent media organizations.

A public opinion poll conducted by SIC Gallup Media in summer 2002 showed that 21 percent of the Lithuanian population uses the Internet – nearly double the figure from the previous year. Thirteen percent of Lithuanian citizens use the Internet at least once a week, 17 percent at least once a month, and 34 percent at least once every six months. Surveys show that almost half of Lithuanian companies (49 percent) use the Internet, while 4 percent of Lithuanian residents are connected to the Internet at home. There are no restrictions or regulations on the use of the Internet, but there are calls to limit the electronic dissemination and storage of information that is restricted by law. The Internet market has also been affected by the 1998 Law on Telecommunications, which granted Lithuanian Telecom a monopoly in terrestrial communications until 2003.

Freedom House's annual Survey of Press Freedom has rated Lithuania "Free" since 1994.

Governance (Score: 2.50)

The governmental system in Lithuania is stable. Elections and changes in government take place on the basis of the Constitution and other laws, and the system of checks and balances functions well. Policy changes are made on the basis of established rules.

In 2002, many important changes were made regarding the civil service system and local governments. A new law was adopted to streamline the system of civil service. The tenure of municipal councils was extended from three to four years. And a constitutional amendment extending the right to all permanent residents to stand for elections to municipal councils was approved. However, foreign citizens may not be elected mayors, deputy mayors, or members of the boards of municipal councils. At the close of 2002, just after the municipal elections, the Constitutional Court found the current division of representative and executive authorities in municipal councils in violation of the constitutional principle of accountability and subordination. Specifically, it determined that the mayors should not be able simultaneously to serve as the heads of municipal executive authorities and to lead elected municipal councils. Consequently, the current model of local governments must be altered. In another ruling, the Constitutional Court stated that members of Parliament may have only one mandate and may not serve concurrently in municipal councils. According to the Central Election Commission, 64 out of 81 lawmakers who ran for city councils in the 2002 municipal elections won local government mandates. They will have to decide by the first sitting of the municipal councils which of the mandates they will retain.

As of July 2002, civil servants were divided into four categories: career civil servants, politically appointed civil servants, heads of institutions, and substitute civil servants. The 2002 Law on Civil Service excluded from the list of civil servants persons who provide public services or perform technical functions. It defined the responsibility of civil servants and outlined general principles for applying punitive measures when those obligations are not fulfilled. A new system of remuneration, based on three qualification categories, was introduced in April 2002. Critics charge that the salary levels are too high. The provision of extra pay to civil servants is now up to the discretion of supervisors, and annual evaluations are authorized. The number of vice ministers is reduced to one. Amendments in 2002 to the Law on the Government introduced the position of state secretaries. These changes were viewed largely as measures to depoliticize government ministries.

Lithuanian law provides for the disclosure of government documents and for the imposition of sanctions such as no-confidence votes and impeachment. Also in place are self-policing mechanisms such as ethics committees. The Office of the State Ombudsman is responsible for external monitoring of state behavior. Although both legislative and executive authorities are becoming more open, in many cases proposals submitted for government consideration are not easily accessible to the public. Cabinet sessions take place behind closed doors, and in July 2002, the government decided not to dispense draft decrees to the public and media. Although the law requires ministries to announce their policy proposals on the Internet, they often adopt new regulations without prior notice or public scrutiny.

Parliament operates much more openly. Bills and other legislative proposals are posted on the Internet from their introduction through adoption. It is also possible to monitor all stages of parliamentary discussions and legislative amendments. The practice of public hearings is being increasingly used in parliamentary committee debates. However, Parliament is not obligated to provide information to the public and media. Government authorities are beginning to use the Internet more widely to encourage public discussion on important national strategies and programs such as economic development, education reform, and the building of an information society. However, these efforts are not systematic, consistent, or properly focused. A Law on Public Information, establishing freedom of information, was adopted in 2000. It requires that any information be presented truthfully, precisely, and impartially.

The ongoing reforms of the public service system notwithstanding, civil servants are criticized for lacking sufficient competence in their jobs. The professional skills and managerial abilities of local officials vary significantly across municipalities. In most municipalities, local leaders and civil servants lack skills and experience and are inclined toward excessive interventionism. Political connections and cronyism play no small part in hiring civil servants, but they have less influence on professional activities. The average salaries of civil servants have been 10-20 percent higher than in the private sector for the past seven years. In November 2002, the average gross salary of public servants was 1,318 litas, compared with the country's average of 1,127 litas. This, coupled with slow reforms and entrenched bureaucracy, explains the high degree of public mistrust in state institutions. As public opinion polls show, 50-70 percent of the population lacks confidence in them.

The existing system of subnational government is based on the 1992 Constitution, the 1994 Law on Local Government, and the 1994 Law on Administrative Territorial Units. Lithuania has one level of local government, which includes 60 municipalities with 30,000 to 50,000 inhabitants. There are 10 regional administrations, or territorial units of the central government, which are headed by centrally appointed governors. At the municipal level, subnational officials are elected in general elections. Candidates can run for local governments through party lists only. Elected councils appoint mayors. However, as of this writing, Parliament was scheduled to debate an amendment to the Constitution concerning direct elections of mayors. As opinion polls show, 65 percent of Lithuanian citizens are in favor of direct elections; only 13 percent support the present system. Also, proposals have been made to amend the election laws and allow citizens to cast their votes for specific candidates in local polls. It has been argued that this would enable the electorate to choose persons who enjoy the trust of the local community but are not affiliated with any party.

In compliance with the Constitutional Court's ruling regarding the discrepancy in the division of executive and representative authorities in local governments, Parliament will have to change the Law on Local Government to ban members of Parliament from parallel work in local governments and to separate representative and executive powers in municipalities. With regard to the latter, it has been proposed that mayors should remain the heads of municipal councils and that executive powers should be delegated to the director of municipal administration, who is appointed by the municipal council at the suggestion of the mayor. The director of administration would be responsible, among other things, for administering municipal funds. Opposition right-wing parties and local governments do not support these proposals, arguing that elected mayors, not appointed functionaries, should exercise real power in local governments.

The responsibilities of local governments are divided into independent functions and duties delegated by the government. The main independent responsibilities are municipal development, management of municipal enterprises, and the establishment and supervision of protected areas and objects. The main responsibilities delegated by the central government are primary and secondary education, primary health care and disease prevention, culture and sports, development of the leisure and tourist industry, environment protection, social assistance, garbage collection, fire protection, heating, water supply, and sewerage. In some areas, such as territorial planning, health care, and education, both central and local authorities are involved. Ambiguities in the division of power have impeded decentralization and the establishment of a stable fiscal structure for municipalities. They have also led to intergovernmental tensions, the inefficient provision of services, and unclear accountability.

The government program for 2001-2004 envisages the further decentralization of state governance. Consistent with this program, in 2002 oversight in the regulation of the agricultural sector was passed from regional administrations to municipalities. However, since municipalities will perform these functions on behalf of the state and with state subsidies, these changes can hardly be defined as a true decentralization.

Municipal governments generally lack funds to meet their expenditure obligations, owing mainly to mismanagement and expanding local government authority. Municipalities are free to allocate funds among expenditure categories, with the exception of functions delegated by the central government. Municipal revenues are raised and transferred by the central government, and changes are negotiated between municipalities and the central government and approved by Parliament. Local authorities are not authorized to introduce or collect taxes, but they may levy some local charges and user fees. They can also lower tax rates at the expense of their own revenues. Approximately 50 percent of municipal revenues come from personal income taxes and roughly 20 percent from central budget subsidies. The fiscal capacities of local governments are equalized according to expenditure-need assumptions.

Constitutional, Legislative, and Judicial Framework (Score: 1.75)

Lithuania is completing reforms of the legislative and judicial framework that were initiated after the restoration of independence. Major codes, including the civil and civil procedure codes, the penal and penal procedure codes, and the labor code, have been overhauled. A post-Communist, democratic Constitution was adopted by referendum in October 1992. Established in 1993, the Constitutional Court adjudicates the issues of legislative constitutionality. It has proved to be an independent, powerful, and reliable guardian of constitutional rights. Lithuania has ratified major international conventions on human rights, including the European Convention on Human Rights and the Framework Convention on Protection of National Minorities. All citizens are treated equally under the law. Freedom of religious conviction, freedom of expression, and the rights of ethnic minorities are properly protected.

Major changes in Lithuania's legislative and judicial framework were made in 2002. A new Law on Courts, adopted in early 2002, created the proper legal basis for an independent judiciary. The law filled "a legal vacuum" dating to a 1999 Constitutional Court decision that voided much of Lithuania's court law and practice. The executive branch was also found to have undue influence, in violation of the Constitution's system of checks and balances. The new law defines the competencies of courts, the organization of court activities, administrative principles, the status of judges, the principles of selecting and appointing judges, responsibility procedures, and social guarantees. The law prohibits aggravating the financial, material, and technical conditions of courts, except when the country's general economic and financial situation deteriorates.

A new civil code, aligned with EU law and international legal acts, came into effect in July 2001 after three years of preparation. A new code on civil procedure was passed in February 2002; it will enter into force at the beginning of 2003. This is the first national legal act in Lithuanian history that systematically regulates civil procedural legal relationships. The new civil procedure code will provide the conditions for more effective court investigations.

A new code of penal procedure was also adopted in April 2002. It will take effect in May 2003 along with a new penal code that Parliament approved back in 2000. The new penal code divides crimes into criminal offenses and misdemeanors and prohibits the imposition of prison sentences for the latter. To date, criminal penalties in Lithuania have been among the strictest and the number of prisoners among the highest in Europe. Under the new code of penal procedure, judges will be more involved in the pretrial stage of investigation. They will have to take measures to secure evidence and solve complaints against investigators and prosecutors.

Lithuania's new labor code generated considerable public discussion. The opposition Liberal Union sharply criticized the new document as restricting freedom of contract and employment relationships. On the positive side, the new code contains more flexible language and less restrictive regulations on the termination of labor contracts. Under the new code, labor contracts can be ended for reasons such as enterprise restructuring or an employee's lack of qualifications for the job. This provision is intended to reduce the risk of hiring new employees and, therefore, is expected to stimulate job creation. New types of labor contracts, such as temporary, supplemental, household, and commission contracts, were legitimated in addition to existing fixed-term, permanent, and seasonal contracts. Yet many obsolete regulations, such as mandatory reporting to the labor exchange, remained. Also, the role of collective agreements was expanded so that all employees must abide by them. Unpaid vacations cannot be taken unless provided by a collective agreement. Employers were banned from concluding contracts for a fixed period of time if the job is permanent. However, the law provides no definition of permanent jobs. Overtime limits were also set.

The Constitution provides for a separation of legislative and executive powers, but there is serious disarray in their division. Although the legislature is the effective rule-making institution, the government prepares some two-thirds of bills. The practice of delegating lawmaking powers to lower-tier executive authorities is also widespread. Executive authorities may enact legal provisions and statutory regulations that they themselves are responsible for implementing. They also may adopt procedures for regulating compliance with legal requirements they themselves carry out. Such inappropriate, over-extensive powers lead to over-regulation, arbitrariness in law enforcement, and abuse of official power.

The legislature is frequently criticized for over-regulation and interventionism. The high number and inconsistency of legal acts are two other serious complaints. These weaknesses are mainly the result of chaotically and hastily adopting laws without setting forth a clear conceptual framework that gives proper regard to the state's strategic objectives. Instant amendments to newly adopted laws have also become the norm. To address the situation, at the beginning of 2002, the Ministry of Justice enacted a methodology for preparing the conceptual framework of legal acts before drafting new laws or replacing existing ones. Each framework will indicate the rationale for adopting a new law, contain an impact analysis, list legal documents that will be replaced or revoked, and analyze international legal norms. This measure is expected to be a watershed in legislative reform, but compliance with it has been lacking so far.

A law adopted in June 2002 legitimizes two types of referendums, binding and consultative. (The law will take effect in 2003.) Under the new law, binding referendums are mandatory for proposals that affect Lithuanian sovereignty. Consultative referendums can be held on issues of state and public life that do not require a binding referendum and have the support of Parliament or 300,000 eligible voters. Referendums of both types will be considered valid if no less than half of all eligible voters participate. A binding referendum will pass if at least 50 percent of all persons who participated in the ballot, but no less than one-third of all eligible voters, give their support. Under the previous law, passage of a referendum required the approval of more than half of all eligible voters. It is expected that the lower vote requirement will make it easier to adopt a decision on EU membership in 2003.

The Constitutional Court resolves conflicts between the Constitution and legal acts and defends basic human rights against interference and overregulation by legislative and executive authorities and the president. It also settles disputes between the legislative and executive branches. The chairman of the legislature, the chairman of the Supreme Court, and the president each nominate one judge to the court. During a year, the court decides 13 or 14 cases. Under the Constitution, a legal act becomes void the day a Constitutional Court decision against it is published. In 2002, the Constitutional Court was quite active and issued many important verdicts. For example, the Court ruled that provisions of the Law on Telecommunications and the penal procedures code violate constitutional rights to private property and privacy by obliging telecommunications operators to record "all telecommunications operations and their participants" and to provide information about their clients to law enforcement institutions.

The courts of the Republic of Lithuania include district and county courts, the Court of Appeal of Lithuania, and the Supreme Court of Lithuania. Because of the reluctance of ordinary courts to apply directly provisions of the Constitution when there is no specific functioning legislation, a system of administrative courts has been developed to address the needs of citizens and other subjects. Their main responsibility is to resolve disputes between citizens or other entities and the state. Judicial verdicts are enforced quite effectively in criminal cases, but not in civil cases. There are serious concerns over delays in criminal investigations and the lengthiness of court hearings. However, the new penal procedures code is expected to bridge these gaps.

Although the Ministry of Justice has no formal control over court decisions except in matters of technical support, it is still quite influential. The state and state officials allegedly exert undo pressure on judges for favorable decisions. A study by the Open Society Institute on the independence of the courts in the 10 EU candidate countries found that Lithuanian courts have inadequate financial autonomy and that judges work in unsatisfactory conditions. The study also found that a reduction in judges' salaries threatened to interfere with independence of the judiciary and create unacceptable pressures on judges' impartiality. These issues are addressed in the new Law on Courts.

The country's prosecutor-general is appointed and discharged by the president upon the approval of Parliament. In October 2002, Parliament approved a proposal to set out in the Lithuanian Constitution the procedures for nominating and appointing the prosecutor-general. This amendment would not alter existing procedure but rather secure it in the principal law and thereby ensure the prosecutor-general's independence. At present, the Law on Prosecutor-General regulates the procedure. The opposition Lithuanian Conservatives criticized the proposal, arguing that the ruling majority simply wanted to secure the post of the sitting prosecutor-general.

The president also nominates, and Parliament approves, judges to the Supreme Court and the court of appeals. The president appoints district court judges as well. All judges are appointed for life. Although the number of judges grew from 456 in 1996 to 637 in 2001, an increase in caseloads has resulted in a net lack of judges, especially at the local level. By law, the state must provide public defenders. Most judges rule fairly and impartially, but opinion polls show that public mistrust of judges is as high as 80 percent. Politicians and the media also distrust the judicial branch. As a result, judges work in a hostile atmosphere. Reportedly, a significant part of legal costs takes the form of bribes to both solicitors and judges.

The Constitution provides for human rights and their protection, including the right to own property and the right to own and work in business. Yet Lithuania lacks a viable tradition of ownership protection. This deficiency, coupled with insufficient regulation and enforcement of property rights, has become a serious concern. In fact, integration processes, particularly Lithuania's inclusion under the jurisdiction of the European Court of Human Rights and its adoption of EU legal provisions, have further accentuated these problems.

According to a 2001 survey commission by the United Nations Development Program, the human rights situation in Lithuania is "very good in the world context." In the region, Lithuania stands out in terms of the work performed by ombudsmen. As the survey shows, freedom of religious conviction, freedom of expression, and the rights of ethnic minorities are best protected. Yet almost 39 percent of Lithuanian citizens claim that human rights are systematically violated in Lithuania, and only 3 percent think violations are totally or almost nonexistent. The number of investigations of the Office of the Controller for equal gender opportunities has been increasing since the establishment of the office in 1999.

In 2001, a total of 1,913 applications regarding violations of human rights were filed with the Office of the State Ombudsman; of these, 661 were recognized as reasonable. According to the ombudsman's reports, restitution of property rights, the actions of public prosecutors, and poor prison conditions are the most frequent complaints. An inspection and study by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment in 2001 described the conditions of detainees in police lockup in Lithuania as inhuman and degrading. They found ill-treatment, abuse, violence, and even torture of those detained by police to be of great concern. Prison inmates filed relatively fewer allegations of physical ill-treatment by prison staffs. However, a high level of interprisoner violence was recorded. Overcrowding at Lithuanian prisons was determined to be a serious problem.

Corruption (Score: 3.50)

Although anticorruption laws and institutions are in place in Lithuania, the level of corruption remains high. Indeed, domestic authorities and international organizations recognize corruption as one of the country's biggest concerns. Most problems are associated with anticorruption laws containing loopholes that grant excessive authority to public officials and create conditions ripe for the abuse of power. In November 2002, the Open Society Institute published a report emphasizing the need for reform in such areas as courts, public administration, public procurement, political party financing, customs offices, health care, and the police. The European Commission also has urged Lithuanian authorities to strengthen corruption prevention and place more emphasis on corruption associated with public procurement and customs.

The year 2002 saw the adoption of a number of official documents and laws related to the fight against corruption. These include a National Anti-Corruption Program, a Law on Corruption Prevention, and a Law on Public Procurement. The Special Investigation Bureau (SIB), an independent institution set up in 1997 to carry out official anticorruption activities, is in charge of implementing the National Anti-Corruption Program. The bureau reports to the president and Parliament. The president appoints and dismisses the director of the bureau at the recommendation of Parliament.

The National Anti-Corruption Program envisages streamlining interagency structures and reducing bureaucracy and regulations as key mechanisms for fighting administration corruption. The main focus is on eliminating legal loopholes that bestow excessive authority on public officials: simplifying the issuance of permits and licenses, simplifying customs procedures, and instituting a one-stop system in public institutions, among others. The program also seeks to make public officials personally responsible for enacting inadequate legal provisions, regulations, or administrative decisions.

In November 2002, in compliance with the National Anti-Corruption Program, the Ministry of the Economy adopted an Anti-Corruption Program and Action Plan for the years 2002 and 2003. The program envisages the revision of legal acts regulating the energy sector, enterprise bankruptcy, and restructuring, privatization, product safety, and licensing. It proposes prohibiting legal entities from financing political parties and introducing thorough reviews and background checks of public appointees or candidates as a means of reducing political corruption.

Overall, the first year of implementation of the National Anti-Corruption Program lagged behind schedule, and by the end of 2002, only a third of its measures had been implemented. However, the program has produced some positive results. For example, the Special Investigation Bureau and the Competition Council analyzed proposed heating legislation in 2002 and found that some of its provisions granted excessive discretionary rights to municipal authorities and posed a threat to free competition. At the request of the Special Investigation Bureau, the parliamentary Anti-Corruption Commission evaluated the document and upheld the SIB and the council's evaluation. On the commission's advice, the draft law was returned for revision.

Civil servants are not allowed to sit on enterprise boards, represent enterprises, or make contracts with related entities, according to the Law on Civil Service. Yet numerous political ties to businesses are being disclosed. The worst situation is in state-owned sectors, where old nomenklatura-type appointees have close connections with central government and municipal authorities. Ethical standards concerning relationships between businesses and politicians are in place, but they are frequently ignored. Public opinion does not exert much pressure on politicians to obey these standards. On the other hand, the public is often suspicious about businesspeople in politics. The media has proved to be the most active institution monitoring and featuring violations of ethical norms. The parliamentary Commission on Ethics and Procedures has been rather active in addressing problems related to possible conflicts of interest of members of Parliament. At present, codes of ethics for politicians and civil servants are under consideration.

Civil servants are prohibited from representing any interests related to their former place of employment for one year after entering into state service. The Law on Coordination of Public and Private Interests in State Service prohibits conflicts of interest and requires financial disclosures by politicians, managers of companies, and their spouses. Presidential, parliamentary, and local council candidates must publicly declare their property and income before elections. Elected politicians, political appointees in the civil service, and directors of companies must make annual declarations of their income and property. The criminal code includes provisions against, and prescribes severe penalties for, racketeering. Executive and legislative bodies operate under audit and investigation rules, but in many cases these are applied in a rather formal or fragmented manner. Government officials and members of Parliament have been found to be involved in conflicts of public and private interests.

Corruption and bribery are entrenched in many areas. The most vulnerable areas are courts, customs, public procurement, traffic police, offices issuing licenses and permissions, and tax inspections. According to the Special Investigation Bureau, corruption occurs in as much as 75 percent of public procurements. Public procurement officials have broad powers and ample opportunity for subjective decisions, and this has led to numerous scandals over the years. One recent scandal led the head of the State Social Insurance Board to resign after an obscure transaction of 14 million litas for the purchase of computer services.

The new Law on Public Procurement makes officials responsible not only for procedural infringements, but also for violations of the principles of public procurements, including equality, nondiscrimination, transparency, and efficiency. The new law enshrines such principles in law for the first time. It also outlaws purchases from a "sole supplier" and imposes public procurement requirements on "small purchases." To enhance transparency, the government must publish public purchase announcements on the Internet. By increasing transparency and responsibility in public procurement, the law is expected to minimize opportunities for corruption and abuse.

Corruption is particularly pervasive within Lithuania's extensive regulatory system. The biggest cause for concern is the inconsistency among regulatory authorities in interpreting, applying, and enforcing regulations. Routine administrative procedures and decision making are frequently protracted, and companies are subject to extensive employment, sanitary, and reporting requirements. Regulatory authorities have a right to perform on-site inspections for labor safety, fire prevention, hygiene, and other work conditions and to impose large penalties in the case of noncompliance without court proceedings. All this creates ample opportunity for corruption.

The leading complaint is related to the issuance of permits, such as licenses, certificates, approvals, or warrants. Numerous controlling authorities make the licensing system a breeding ground for corruption. In many cases, permissions must be obtained not only for entities to function in the marketplace, but also for particular products and professional activities. Following the National Anti-Corruption Program, in October 2002 the Special Investigation Bureau launched an interagency task force, comprising officials, businesspeople, and independent experts from NGOs, to overhaul Lithuania's licensing system. At the end of 2002, the SIB submitted to the government a proposal on general licensing principles formulated by the task force. The government is expected to approve the proposal, which would serve as the basis for reducing the number of licenses, simplifying licensing procedures, and ensuring transparency and efficiency within the system.

The salaries of civil servants, at both the national and subnational levels, generally have been higher than those paid to individuals with comparable qualifications and responsibilities in the private sector. However, economic growth has recently led the private sector to increase salaries to levels exceeding those in the public sector. As a result, by the end of 2002, the average gross salary of white-collar employees in the private sector amounted to 1,473 litas, compared with 1,318 litas for public servants. Still, the salaries of public servants remain higher than the national average of 1,127 litas. The salaries of the lowest-level civil servants are set at 2.35 times the country's minimum wage of 430 litas, while those of the highest-level officials can be up to 13 times the minimum wage. Civil servants can also receive bonuses and extras, which can amount to as much as 70 percent of their salary.

An opinion poll conducted by the Lithuanian branch of Transparency International in April 2002 revealed that 77 percent of Lithuanian citizens and 60 percent of businesspeople think corruption is a serious drag on civil and business development. According to the survey, 37 percent of residents and 36 percent of businesspeople have given bribes at least once in the last five years, while 2 and 6 percent, respectively, had given bribes more than 10 times. Respondents considered customs offices, traffic police, tax inspections, and social security offices the most corrupt institutions.

Most people condemn corruption but recognize that it has become the norm. Reportedly, the average bribe citizens offer is around $200, while businesspeople shell out an average of $2,000. As businesspeople reported, bribes to customs officials range from $8 to $2,350, while those to tax officers range from $310 to $1,270. Private individuals give from $50 to $240 at customs offices and from $20 to $180 to doctors. Bribes to traffic police range from $6 to $160. Transparency's survey showed that businesspeople usually pay half of the bribe in cash, while the rest is paid in the form of services or goods.

From January to September 2002, the Special Investigation Bureau exposed 96 crimes. Of these, 63 were crimes against state offices – a drop of 41 percent over the previous year. Forty-nine public officials were determined to be under suspicion of crimes, including 20 police officers, 6 customs officers, and 3 bailiffs. Sixty-nine criminal investigations were launched.

In Transparency International's 2002 Corruption Perceptions Index, Lithuania ranked 36th among 102 countries surveyed. This indicator places Lithuania among countries with serious corruption problems. According to the World Bank, the degree of corruption in Lithuania's top administration, rated 12, is not high in comparison with other countries in Central and Eastern Europe. However, corruption in the lower executive branches is more widespread than in the other two Baltic states.

Author

Aneta Piasecka is a senior policy analyst at the Lithuanian Free Market Institute, a private think tank established in 1990 to promote the ideas of individual freedom and responsibility, free markets, and limited government.