Lithuania set on political collision course

By bne IntelliNews November 1, 2012

bne -

Setting up a collision course with President Dalia Grybauskaite, Lithuania's Social Democratic Party insisted on October 31 that it will push ahead with a plan to form a coalition government with the Labour Party.

"We're moving systematically toward our goal" of signing an agreement on November 6, Social Democrat leader Algirdas Butkevicius said after talks with Labor and Order & Justice in Vilnius, Baltic News Service reported.

The Social Democrats was left with 38 of the 141 seats in parliament following second round voting on October 27. The incumbent Homeland Union came second with 33, but Butkevicius has rejected the present government's austerity minded governance - as well as its confrontational stance towards Russia's dominance of the country's energy markets - and wants to form a coalition with Labour, despite having pronounced a greater dedication to "responsible" fiscal management than the left-leaning potential partner.

The three parties have also invited the Lithuanian Polish Election Action party to join its coalition talks, potentially increasing their bloc from 78 to 86 seats of the 141-member parliament, according to Bloomberg.

Butkevicius' announcement puts him on a collision course with Grybauskaite, who as president is responsible for approving a new prime minister and cabinet. However, on October 29, she said that although she is ready to declare the Social Democrat leader as the new PM, she would not approve any government including Labour.

Party members are currently on trial for vote rigging and bribery, while Russian-born party leader Viktor Uspaskich has been prosecuted for party accounting malpractices. The case against him broke up the last coalition between the Social Democrats and Labour in 2006. Meanwhile, he has also announced views on fiscal policy and the country's approach to joining the euro that diverge significantly from Butkevicius, prompting some to worry over the stability of the potential coalition.

However, there is also debate as to the extent of Grybauskaite's powers should the parties look to test her resolve. The president remains a popular figure in the country, making a direct challenge risky. On the other hand, her veto appears designed to force the Social Democrats to form a coalition with current Prime Minister Andrius Kubilis' Homeland Union, with whom she has worked closely on the country's tough austerity programme over the past four years, as well as the drive for energy indpendence.

Related Articles

Latvia’s Citadele Bank pulls IPO

bne IntelliNews - Latvia's Citadele Bank has postponed its initial public offering (IPO), citing “ongoing unfavourable market conditions”, the bank announced on November 11. The postponement ... more

BOOK REVIEW: “Europe’s Orphan” – how the euro became a scapegoat for policy ills

Kit Gillet in Bucharest - The euro, conceived as part of a grand and unifying vision for Europe, has, over the last few years, become tainted and often even blamed for the calamities that have ... more

Mystery Latvian linked to Scottish shell companies denies role in $1bn Moldova bank fraud

Graham Stack in Berlin - A Latvian financier linked to the mass production of Scottish shell companies has denied to bne IntelliNews any involvement in the $1bn Moldovan bank fraud that has caused ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335
Dismiss