Lithuanians vote out government, vote down nuclear plant

By bne IntelliNews October 15, 2012

Ben Seeder in Riga -

Lithuanians dealt a double blow to the country's unpopular Christian Democrat government on October 14, as voters overwhelmingly rejected the party's plan to build a €6bn nuclear power plant in the country and handed the opposition Labor party more than a fifth of the vote in the election for parliament based on partial returns.

With over three-quarters of ballots counted, the centrist Labor Party, led by former canned pickles magnate Viktor Uspaskich, took 21.34% of the vote, while left-leaning fellow opposition group, the Social Democrats, took 19%. The Christian Democrats, headed by current Prime Minister Andrius Kubilius, took just 13.83% - in line with pollsters' earlier predictions that the electorate, dismayed by strict spending cuts and high unemployment, would trounce the government. The conservative government, under Kubilius, became deeply unpopular after it raised taxes and slashed public sector salaries by up to 30%, and pensions by 11%, in 2009. The government said the belt-tightening was necessary to help the country cope with the global financial crisis, during which unemployment in the Baltic nation of 3.2m hit 18.3%.

The populist Order and Justice party, led by former president Rolandas Paksas, who was impeached in 2004 for abuse of office, took 9%.

The leaders of the two leading parties said they had arranged to meet Monday, October 15 to begin discussions over the formation of a coalition government, although the final composition of the parliament won't be known until after the second round of voting, on October 28.

This was the the first parliamentary elections since the introduction of strict campaign financing laws, and the campaign saw fewer advertising, but more public relations - both good and bad kind, according to Ignas Zokas, general manager at Vilnius polling company Sprinter Research. He points out the release by a state-funded website of names of Lithuanians alleged to have collaborated with the KGB intelligence agency in Soviet times. The allegations of collaboration with the KGB - a serious charge in Lithuania, where memories of Soviet repression are still fresh - forced several candidates from the race.


A Labor Party victory in this first round of the election is a stunning comeback for Uspaskich, who is still under investigation in Lithuania for allegations of fraudulent party finance. In 2006, he was forced to resign as economy minister over an alleged conflict-of-interest with Russia, and was suspected of using a fake diploma from a Moscow-based university.

Labor, along with the Social Democrats, oppose the present government's plan to adopt the European single currency in 2014; they say instead Lithuania should wait for the crisis in the Eurozone to resolve itself before joining. Both parties have advocated an end to the present government's strict spending controls, and have proposed boosting the minimum wage from its current level of LTL800 (€230) to over LTL1500 - something that Kubilius said the country cannot afford at present.

Other policies include improving the country's strained relations with Russia, and reducing the cost of heating in winter.

Meanwhile, voters solidly rejected a government plan to construct a 1350-megawatt (MW) nuclear reactor in the country, in a referendum on the issue that ran alongside the general election. Based on over 80% of ballots counted, 62% opposed construction of the plant, while just 35% favoured it.

The result is a blow for PM Kubilius, who championed the nuclear plant as a solution to Lithuania's energy reliance on Russia. Since 2009, when the EU forced the closure of Lithuania's old Soviet-era nuclear plant, Lithuania has been 70%-reliant on electricity imports from Russia.

The government signed a concession agreement with Japan's Hitachi to build the new nuclear plant in an effort to reduce the reliance on Russian power. Yet voters in the referendum were dismayed not by the concerns over safety, but by the €6bn price tag of the project, says Sprinter Research's Zokas. "Lithuania is already a nuclear country, people are very familiar with the technology, so the unpopularity of this project isn't about that - it is about cost," he says.

The Social Democrats energy spokeswoman, Birute Vesaite, also told bne her party wants to investigate the project to build a liquefied natural gas (LNG) terminal at the port of Klaipeda. This terminal the Kubilius government's other flagship policy designed to move Lithuania away from its reliance on expensive gas transported from Russia via pipelines.

Lithuania currently pays around $490 per 1,000 cubic metres (cm) of gas - one of the most expensive rates in the EU. It is this high price of gas that is thought to be pushing up prices around the country for central apartment heating - one of the biggest issues on voters' minds, according to Zokas. "We are now coming into winter, and this season, it is predicted that heating prices for apartment buildings around Vilnius will exceed the level of the minimum monthly wage for the first time," he said.

Heating prices came to the forefront of the election campaign when it emerged that Vilniaus Energija, one of the country's largest heating companies, earned over €15m in net profits in 2011, despite operating in a market with highly regulated prices. The disclosure prompted Lithuania's non-partisan president to condemn the company, and the Lithuanian Financial Crime Investigation Service to announce a probe.

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