Nations in Transit - Lithuania (2006)

Capital: Vilnius
Population: 3,400,000
Status: Free
PPP: $4,500
Private Sector as % of GNI: na
Life Expectancy: 72
Religious Groups: Roman Catholic, Lutheran, Russian Orthodox, other
Ethnic Groups: Lithuanian (83 percent), Russian (6 percent), Polish (7 percent), other (4 percent)

NIT Ratings	1999	2001	2002	2003	2004	2005	2006
Electoral Process	1.75	1.75	1.75	1.75	1.75	1.75	1.75
Civil Society	2.00	1.75	1.50	1.50	1.50	1.50	1.50
Independent Media	1.75	1.75	1.75	1.75	1.75	1.75	1.75
Judicial Framework and Independence	2.00	1.75	2.00	1.75	1.75	1.75	1.50
Corruption	3.75	3.75	3.75	3.50	3.50	3.75	4.00
Governance	2.50	2.50	2.50	2.50	2.50	N/A	N/A
National Democratic Governance	N/A	N/A	N/A	N/A	N/A	2.50	2.50
Local Democratic Governance	N/A	N/A	N/A	N/A	N/A	2.50	2.50
Democracy Score	N/A	N/A	N/A	N/A	N/A	2.21	2.21

Executive Summary

Lithuania's successful transition has allowed the country to achieve a democratic system of government, political stability, and respect for the rule of law. Political rights and civil liberties are well established and protected. Power transfers have been smooth, and viable political parties function at all levels of governance. Major political forces have united the country's democratization process, market reforms, and integration with the Western community. In 2004, Lithuania joined NATO and the European Union (EU). The public strongly supported these integration processes, and aspiration for EU membership drove the country's sweeping political, economic, and administrative reforms.

The country owes much of its post-Communist success to a vibrant civil sector and free media. Since 1990, Lithuania has had 13 government administrations and has established a functioning market economy thanks to large-scale privatization, business deregulation, and liberalization of foreign trade. The country has achieved strong macro positions and remains one of the fastest-growing economies in the region. Lithuania meets all criteria (although at the end of 2005 inflation surfaced as a concern) for joining the European Monetary Union, an event that is scheduled for the beginning of 2007. Furthermore, Lithuania's judicial framework has been overhauled. Corruption, however, remains an overriding concern.

After the October 2004 national legislative elections, a left-of-center parliamentary majority and coalition government were formed. The cabinet was composed of the Lithuanian Social Democratic Party (LSDP), the New Union-Social Liberals, the Labor Party, and the Union of Peasants and New Democracy Party. The ruling coalition, led by LSDP leader Algirdas Brazauskas, was not expected to survive long. An intense rivalry for leadership was accompanied by recurrent friction and tension within the coalition. In November 2005, a conflict-of-interest scandal around the prime minister's family business provoked a cabinet crisis. The key issues on the 2005 policy agenda were the impending sale of the country's biggest industrial asset, the Mazeikiai Nafta oil refinery (after the collapse of its major shareholder, the Russian Yukos), and the long-debated tax reform.

National Democratic Governance. In 2005, parliamentary oversight was strengthened through the establishment of a new audit committee. The committee's vigorous efforts and exposure of major violations and mismanagement in the public administration sparked tension between the Parliament and the government. The National Audit Office released audit findings on 100 budgetary institutions. The auditors reported that administrative capacities were lacking and financial management and internal auditing procedures were flawed in many budgetary organizations. In 2005, the legislative work was disturbed by numerous ad hoc commissions to investigate conflict-of-interest allegations against top politicians. Law enforcement agencies became the target of increased battling for political influence, but recent top law enforcement appointments conformed to the principles of impartiality. Lithuania's rating for national democratic governance remains at 2.50.

Electoral Process. The new Parliament and coalition government were the center of attention in 2005. Recurrent confrontations and a series of conflict-of-interest scandals around the coalition leaders threatened the government's stability. In fall 2005, the Liberal and Center Union (LCU) underwent a split, and opponents of LCU leader and Vilnius mayor Arturas Zuokas established a separate parliamentary faction. Electoral and public campaign laws were tightened through a ban on using gifts, public entertainments, concerts, and similar events as election campaign tools. Despite recent turmoil in Lithuania's political sphere, political mechanisms are functioning properly, and the country's rating for electoral process remains at 1.75.

Civil Society. Lithuania's civil society sector has taken an upturn in recent years. Nongovernmental organizations (NGOs) have increasingly shown a proactive stance on public policy advocacy, and organized village communities have proliferated. The legislative framework governing NGOs has been overhauled and does not pose serious impediments to civil society groups. However, public awareness and support of civil society remain low. Lithuania's rating for civil society remains at 1.50.

Independent Media. In 2005, there was further ownership consolidation in Lithuania's media market. The leading print media group Respublika acquired a controlling stake in one of Lithuania's two main wire services, ELTA. The purchase caused some controversy and uncertainty over ELTA's future given the notorious reputation of Respublika's owner and publisher. Yet Lithuania's private media market continues to embrace numerous domestic and foreign interests and is subject to intense competition. Public confidence in the media stands at 50 percent, a marked drop from where it was several years ago. The rating for independent media remains at 1.75.

Local Democratic Governance. In 2005, political debates commenced on upcoming constitutional amendments stipulating direct mayoral elections and a new model of local government, placing the mayor as head of both the municipal council and the executive branch. Local governments were banned from spending central government subsidies designated for municipally paid social benefits on other needs. This decision followed a report by the National Audit Office concerning the misuse of one-third of social allocations from the central government. Auditors also concluded that most municipal administrations had flawed financial management and ineffective internal auditing procedures. Lithuania's rating for local democratic governance remains at 2.50.

Judicial Framework and Independence. Lithuania's judiciary continues to adjust to a set of new legal codes enforced from 2003 and applying EU law. In 2005, rules on the enforcement of court judgments were revised to improve the functioning of the bailiffs system, a target of severe criticism in recent years. Starting from 2005, the equal opportunities ombudsman was given a mandate to investigate not only gender discrimination complaints, but cases relating to age, sexual orientation, disability, racial or ethnic origin, religion, or beliefs. Unsatisfactory detention conditions, police abuse, and protracted property restitution are the biggest concerns, according to a recent report by the parliamentary ombudsmen. Courts continue to rank among the least trusted institutions in public opinion polls. Lithuania's judicial framework and independence rating remains at 1.50.

Corruption. Corruption remains a serious problem in Lithuania. Recently, focus has moved from small-scale administrative corruption to rampant political corruption. In 2005, a new chain of scandals broke as several top politicians were confronted with grave corruption and conflict-of-interest allegations. This suggests that the incidence of corruption is increasing but also that exposure has improved. Surveys show that unofficial payments in dealing with business regulations have also increased. Lithuania's rating for corruption worsens from 3.75 to 4.00 owing to recurrent gross political scandals and entrenched regulatory corruption.

Outlook for 2006. The outcome and consequences of the cabinet crisis will be the center of attention in 2006. If the government falls apart, the formation of a new cabinet will be likely. Local government election campaigns will commence in fall 2006, and the elections will be held in February 2007. The 2006 policy agenda will contain a range of key issues that are expected to provoke heightened political and public debates, including the adoption of constitutional amendments stipulating a new model of local government and direct mayoral elections, preparation for the introduction of the euro in 2007, and negotiations on the sale of Lithuania's prized Mazeikiai Nafta.

Electoral Process (Score: 1.75)

Public and political attention in 2005 focused on the coalition government and the new Parliament. After national legislative elections in October 2004, the LSDP, the Social Liberals, the Labor Party, and the Union of Peasants and New Democracy Party (UPNDP) formed a coalition government and the parliamentary majority. However, friction and fights for influence provoked a series of major confrontations, and grave conflict-of-interest scandals around coalition leaders precipitated a mounting political crisis.

Cabinet and program formation after the 2004 legislative elections was one of the slowest and most controversial in the country's postindependence history. After a long and grueling series of negotiations with left-of-center and opposition parties, the coalition of the LSDP and Social Liberals, with 31 seats in Lithuania's 141-seat Parliament, teamed with the Labor Party (39 seats) and the UPNDP (9 seats). The populist Labor Party, which boasts the country's biggest party membership and highest popularity rankings since its founding in 2003, was invited to join Lithuania's 13th administration despite the antipathy of political leaders toward both the party and its chairman, Russian-born business tycoon Viktor Uspaskich. This arrangement allowed the LSDP, with only 22 seats in the Parliament, to keep Algirdas Brazauskas in office as prime minister. Arturas Paulauskas, leader of the Social Liberals, remained parliamentary Speaker. Negotiations over the division of cabinet posts focused on four key ministries administering the bulk of EU funds: transport, environment, finance, and economy.

The ruling coalition was said to constitute too many clashing interests and leaders to survive for long. From the start, the government was beset by confrontations and conflict-of-interest scandals. This distracted the Parliament and paralyzed important legislative debates, which led analysts to predict imminent political crisis. Observers widely agreed that confrontations were concerned mainly with the fight for influence between the LSDP and the Labor Party. The situation was further complicated by Labor Party chairman Viktor Uspaskich's involvement in a series of conflict-of-interest scandals. In June, Uspaskich stepped down as MP and economic minister on ethics violations, but the Labor Party remained in the coalition.

The cabinet mobilized on major policy decisions but was cast into crisis in November 2005 when Prime Minister Brazauskas was also implicated in a grave conflict-of-interest scandal. The opposition accused the prime minister of violations involving his wife and her business deals with Lukoil Baltija. It was feared that these relationships could affect the cabinet's decision on the takeover of Mazeikiai Nafta. As the opposition attempted to initiate a parliamentary investigation into these allegations, the prime minister threatened to resign and continued to defy numerous calls for greater transparency and publicity. Although talks of possible government collapse continue, cabinet fallout is unlikely, and the ruling coalition continues to display unity.

Elections in Lithuania are free and fair, and public confidence in the electoral process is secure. Viable political parties, including members of the opposition, function at all levels of government. In 2005, there were 36 registered political parties, but only 15 to 20 active players on the political scene. In 2004, the qualifying membership requirement for political parties increased from 400 to 1,000 people. This means that parties with fewer than 1,000 members will automatically be liquidated. Some argued that the tightened membership requirement was a step backward in terms of democratic freedom, while others said it discouraged "frivolous" parties from splitting up the vote.

Political parties have largely abandoned ideological rivalry and have been losing their electorate. Not incidentally, the rhetoric about the distinction between so-called traditional or established parties and nontraditional or recently founded parties disappeared after the latest elections. Furthermore, civic groups and political observers repeatedly allude to the threat of oligarchy in Lithuania. The president emphasized this in a recent annual report to the Parliament. Observers attribute these trends to the sturdy and unchanging political elite with firm ties to influential business groups over the past 15 years.

The LSDP, the foundation of the left-wing bloc, remains the most powerful and influential political party and a driving force in Lithuania's ruling coalition government. In May 2005, lacking a rival candidate, Brazauskas was reelected chairman of the LSDP by an overwhelming majority. Observers noting that the LSDP's ratings have already been affected by the scandal around Brazauskas predict serious damage in upcoming elections.

The Conservatives and the LCU are the two biggest right-of-center parties. The Conservatives' popularity ranking rose lately to the detriment of the LSDP and internal problems in the LCU. After the 2004 elections, the Conservatives (with 25 seats) and the LCU (with 19 seats) formed an opposition coalition, the first coalition of this kind in the history of Lithuania's Parliament. Despite its size and fairly broad statutory powers, the opposition is considered by some observers to be the weakest of all postindependence parliamentary oppositions.

In 2005, the LCU was beset by internal squabbling and finally underwent a serious split. The party divided into two circles: One opposed party chairman and Vilnius mayor Arturas Zuokas, accused of deviating from the party's core values and autocracy; the other supported him. As a result of severe criticism of Zuokas, the chairman's opponents were evicted from the party and set up a separate, liberal faction in the Parliament. They are planning to found a new liberal party in 2006.

According to pollsters, the Parliament and political parties remain the most unpopular public institutions, supported by only 10 and 5 percent of the population, respectively. A recent opinion poll from the Civil Society Institute (CSI) shows that 70 percent of society is dissatisfied with today's government, but 65 percent does not think it should be replaced, and as much as 40 percent does not see any political force able to ameliorate the present situation. According to the CSI, these results reflect society's political depression and growing alienation from the political process. Passive public engagement in political life is reflected by low party membership and voter turnout; about 2.5 percent of Lithuania's citizens belong to a political party, and the current Parliament was elected on a record low voter turnout of 44.3 percent. Voter turnout was higher for the presidential elections.

Snap presidential elections were held in June 2004 after former president Rolandas Paksas was removed from office for gross violations of the Constitution. Ex-president Valdas Adamkus defeated UPNDP's leader, Kazimiera Prunskiene, in the second round of elections. Since the Paksas scandal, the presidency has been rehabilitated and public confidence generally restored, although society seems more attentive to the way the presidency functions. Adamkus remains the most popular political figure.

In 2005, the Parliament tightened electoral and public campaign laws. In November, lawmakers banned politicians from using gifts, public events, concerts, and so forth as election campaign tools. The previous year, the second round of elections was reintroduced, political donations from a single private individual were lowered, political advertising was restricted, and control of donations and advertising contracts was tightened. This was meant to reduce political parties' demands for private funds and to curb the influence of campaign contributors. Yet political campaign funding contains serious flaws, and the mechanisms for ensuring compliance and transparency are inadequate.

Civil Society (Score: 1.50)

The Constitution guarantees the right to freely form societies and associations, and the rights of the independent civil society sector are well established and protected. Lithuania's civil society has experienced an upturn in recent years. NGOs have become increasingly engaged in policy advocacy, and local communities have proliferated. The legislative framework governing NGOs has been overhauled and does not pose serious barriers to their proper functioning. Lithuanian NGOs have significantly enhanced their organizational and managerial capacities, including in the area of constituency building. They commonly have permanent staffs but lack properly functioning boards of directors.

The past two years saw a massive proliferation of organized village communities. Their number soared from 80 in 2000 to 800 in 2003 and 1,000 in 2004. This trend was spurred largely by EU structural funds, as indicated by local communities surveyed by sociologists from Vilnius University. Some communities formalized in order to apply for ongoing rural Internet projects. Yet research shows that growing community awareness and joint efforts to address local community concerns gave rise to these numbers. Reportedly, many communities were mobilized to renovate crumbling school buildings and other decaying areas. As the survey indicates, village communities also aim to organize sports and cultural events, to promote leisure youth activities, and to elevate education, training, and information dissemination within the community. Village communities have reportedly good relationships with local authorities.

The Open Society Fund-Lithuania (OSFL) has established several public policy groups in the past few years. The Human Rights Monitoring Institute (HRMI) was founded in 2003 and the CSI in 2004. In early 2004, the OSFL in cooperation with 12 NGOs set up the I Can Live coalition to represent on a public policy level and to reduce social exclusion of vulnerable social groups, including drug addicts, HIV and AIDS patients, prostitutes, and convicts. The coalition is pursuing broad-based activities in Lithuania and numerous international projects. Interestingly, this coalition, and specifically the OSFL and other organizations funded by philanthropist George Soros, came under attack from the Respublika publishing group, allegedly as a counterattack for their role in a recent anti-Semitic libel case against Respublika.

Lithuanian society remains poorly organized, according to a 2005 survey from the CSI. For the past six years, 17 percent of the population has belonged to NGOs or participated in civil movements. Sports and leisure groups have the biggest membership (3.2 percent), while a mere 2.6 percent belong to educational and cultural organizations, 2.2 percent to religious organizations, 2 percent to health clubs, and 1.8 percent to youth organizations. People with higher education are the most organized (29 percent). The most common reasons for nonparticipation are lack of interest and confidence in NGOs and low public outreach.

Most NGOs are registered in larger cities, but regional groups constitute the bulk of functioning organizations, with sports and active leisure groups dominating. Most foundations are devoted to youth or cultural activities. According to the Women's Information Center, there are 107 women's organizations. Ethnic groups are quite active in the country's civic and cultural life. No prominent extremist groups are active in Lithuania today. Charitable activities of religious communities include care for the elderly, orphans, and disabled. Volunteerism was a rare form of NGO support until recently, mainly because Lithuania lacked a strong tradition of volunteerism and regulations discouraged the practice. Regulations were eased a few years ago but still place excessive bureaucratic constraints on some areas of volunteer work.

Legislation on nonprofits was overhauled in 2004. The previous distinction between associations and societal organizations was dropped, thus simplifying the regulation of NGOs. The change, which affected 10,000 to 11,000 of Lithuania's 15,000 nonprofits, helped establish equal legal conditions and a clearer regulatory environment for NGOs. Nonprofit associations may now generate profit, and charitable and sponsorship funds no longer have to hire paid administrators, but the use of their property and funds is regulated more strictly. Many experts continue to push for a single Law on Civil Society Groups.

Companies can donate up to 40 percent of their annual taxable profits to NGOs. Proposals to strengthen control of corporate giving and tighten reporting requirements on large donations are pending. From 2003, Lithuanian taxpayers could donate up to 2 percent of their income tax to private or public nonprofit entities. NGOs are exempt from profit tax. Most NGOs lack permanent sources of income and sufficient fund-raising capabilities. Many suffered a shortfall in funding in recent years as international donors began to withdraw from Lithuania. NGOs may also bid for government contracts, but this practice remains rather uncommon owing to a complex administrative process.

Public awareness about NGOs remains low, and most people mistrust the way they use donations. Data showing the use of the 2 percent income tax deduction confirm these attitudes and perceptions. The 2 percent deduction, originally meant to boost civil society, went mostly to underfunded state-run institutions, reflecting weak public relations and fund-raising capacities of many NGOs. Some worried that voluntary giving would be discouraged if philanthropy came to be associated with compulsory taxes. Furthermore, there was room for narrow interests to abuse this provision, including fictitious organizations surfacing to absorb income tax deductions.

Citizens and noncitizen workers are free to form and join trade unions. Although unions claim a relatively small share of the workforce (about 15 percent), they are quite strong and influential. A large-scale labor migration, which has intensified since Lithuania joined the EU, and a sinking labor pool may further bolster their influence. Together with employers and the government, unions make recommendations on national labor policy. By law, unions sign collective agreements with employers on behalf of all employees, and the 2003 labor code requires all employers to comply. Members of a union's elected governing body may not be dismissed or penalized by their employers without the union's approval. The Lithuanian Confederation of Trade Unions, the Lithuanian Labor Federation, and the Employees Union are coalitions of labor groups.

Business associations and trade unions are the most active and influential players taking part in the policy-making process through policy advocacy, advising, and lobbying; government cooperation and consultation with NGOs are not yet fully established. The media are receptive to independent public policy groups as reliable sources of information, but in general media coverage of civil activity is limited. Observers noted that the 2005 increase of registered lobbyists may be related to extensive informal representation of interest groups and legislative corruption. In current law, the concept of lobbying is applied quite broadly and includes any paid or unpaid actions of individuals or legal entities aimed at influencing legislative processes. Thus, lobbying regulations can be applied to any publicly aired opinions on legislation or policy research. NGOs worry that as Lithuanian law does not regulate policy advocacy per se, and the boundaries between paid lobbying and advocacy are quite fuzzy, public policy groups actively expressing their opinions are being discredited and disrupted.

Lithuania's education system is generally free of political influence, but the government exerts pressure on school administrations through budgetary controls. The private education market has been evolving steadily over the past decade. There are 19 private secondary schools, and 6 out of the country's 21 universities are private. Yet private establishments account for a negligible 2 percent of all educational institutions.

Independent Media (Score: 1.75)

Press freedom is well established and protected in Lithuania. Freedom House's annual Freedom of the Press survey has rated Lithuania "Free" since 1994. Most media outlets are privately owned, with the exception of the state-owned Lithuanian Radio and Television (LRT). The media market is subject to self-regulation. The Commission of the Ethics of Journalists and Publishers, which is composed of prominent and authoritative representatives of media associations and other public leaders, and the Office of the Inspector of Journalists' Ethics, which is appointed by the Parliament (at the recommendation of the Commission of the Ethics of Journalists and Publishers), function as independent supervisory institutions. Publications can be closed and journalists penalized only by court order. The intensely competitive private media sector includes a diverse range of print and electronic outlets at both national and local levels. One major development in 2005 was that ELTA, one of Lithuania's two main wire services, was acquired by the Respublika group.

In recent years, the degree of public confidence in the media has fallen dramatically; currently, only half of society reportedly trusts the media, which played no small role in the 2003 presidential scandal and numerous other corruption affairs. Media publications and reports commissioned by political or business interests as a public relations tool have attracted heightened public attention; according to a recent opinion poll, 40 percent of the population could decipher hidden PR articles and reports – and as a result, half of this percentage lost respect for (and trust in) media outlets.

The media are editorially independent and free of government interference. There are five national daily newspapers: Lietuvos Rytas, Kauno Diena, Respublika, Vakaro Zinios, and Lietuvos Zinios. The most popular are Lietuvos Rytas (with a reported circulation of 60,000), Vakaro Zinios (56,000), and Respublika (37,000). Lietuvos Rytas and Respublika, each of which owns significant interests in the print media market, are the most prominent players and old rivals, especially in their political viewpoints. Newspaper distribution was put into private ownership after the Lithuanian Post, the country's number one kiosk chain, was sold to Finland's Rautakirja.

The television market comprises 4 nationwide and 27 regional operators. The only public service television, Lithuanian Television (LTV), broadcasts two national programs, LTV1 and LTV2. The leading national broadcasters are LNK, owned by Lithuania's leading private equity concern, MG Baltic; and TV3, owned by the Scandinavian Modern Times media group. These two channels captured 25 and 24 percent of viewers, respectively, according to data from October 2005, with LTV and Baltijos TV-owned by Lithuanian business giant Achema Group – following with 13 and 10 percent, respectively.

Of the 47 radio stations in Lithuania, 10 commercial stations and 1 public broadcaster (with 2 stations, LR1 and LR2) operate nationwide. The state-run Lithuanian Radio continues to enjoy the largest audience. Other popular radio stations are Lietus (12 percent), M-1 (10 percent), Pukas and Russkoje Radio Baltija (9 percent each), and Radiocentras (8 percent). The largest commercial radio stations are owned by four major groups, three of which belong to local owners and reach the vast majority of listeners. So far, radio has been dominated by small local shareholders, but they are increasingly attracting large industrial and other capital. In 2005, a retail trade company, Senukai, bought a news-oriented radio station, Ziniu Radijas, from a U.S. owner.

Acquisitions of leading media outlets by domestic business companies in recent years heightened consolidation of media ownership among a few influential business groups and minimized foreign ownership in the Lithuanian television market. Achema Group is now the most active player on the Lithuanian media market. It owns the national daily Lietuvos Zinios; the fourth largest national commercial television station, Baltijos TV; popular radio stations RC2 and Radiocentras; and two publishing houses. Lithuania has no sector-specific regulation of media ownership concentration, but competition law sets a general limit at 40 percent of the market share.

A change in ELTA news agency's ownership was the biggest news from the media market in 2005. In July 2005, the Respublika group, publisher of Lithuania's most popular tabloids, won the auction for the state's 39.51 percent stake in ELTA. The Respublika group outbid majority owner MG Baltic, which subsequently sold off its controlling share in ELTA to the new owner. Controversy surrounded ELTA's acquisition by Respublika's owner, Vitas Tomkus, a notorious publisher and writer of anti-Semitic and homophobic articles. It is feared that Tomkus's presence can jeopardize the integrity of ELTA, which has demonstrated a solid performance on a news agency level in recent years.

According to the Lithuanian criminal code, libel or false information defaming a person can result in a fine, two years in prison, or two years of penitentiary labor. In recent years, few journalists have been convicted of such crimes. Notably, the media have obtained greater protection from the Supreme Court, which has drawn on the jurisprudence of the European Court of Human Rights, stating that criticism could be more rigorous for political figures than for private individuals.

The Radio and Television Commission regulates the activities of commercial broadcasters and participates in forming national media policy. It consists of 12 members, 1 designated by the president, 3 by the Parliament, and the rest by NGOs. The commission is financed by a percentage of broadcasters' advertising proceeds in order to secure independence from government and political groups. The government exerts some pressure on the national broadcaster, LRT, through budgetary controls. Private television operators increasingly complain that LRT, with 75 percent of its budget provided by the state, is allowed to sell advertising.

The public enjoys unhindered Internet access. Almost 22 percent of the population uses the Internet regularly. In the first quarter of 2005, about 14.4 percent of Lithuanian households were connected to the Internet, up from 2 percent at the end of 2000, reports Statistics Lithuania. However, a wide gap between urban and rural indicators exists; in the first quarter of 2005, every fifth urban household had Internet access, as compared with 4 out of 100 in rural settlements. The ongoing state-run rural Internet project is expected to help bridge this gap. Costly Internet services, inadequate Internet content, and a lack of home computers are the main reasons it is not used more widely. Some of the most popular information portals are www.delfi.lt (targeting the Baltic States), www.google.lt, www.one.lt, www.lrytas.lt (the Web site of Lietuvos Rytas), and www.takas.lt (Lithuanian Telecom). There is no government agency controlling online media. According to 2003 legal regulations, online media are subject to the same self-regulation (independent supervisory institutions) as those that apply to the press, radio, and television. Proposals to write specific statutory regulation for online media have so far failed.

Judicial Framework and Independence (Score: 1.50)

Fundamental political, civil, and human rights are well established and protected in Lithuania, and equality before the law is observed. Accession to the European Convention on Human Rights has provided an extra tier for Lithuanian nationals to appeal human rights violations.

Several state institutions merit praise for their active protection of human rights. In 2005, the parliamentary Office of the Ombudsman exposed several major violations of human rights by public officials. Unsatisfactory detention conditions, police abuse, and protracted property restitution were reported as the biggest problems. The parliamentary ombudsmen investigating such complaints are acclaimed for swift and credible performance.

In 2005, the equal opportunities ombudsman was given a mandate to investigate complaints of discrimination by age, sexual orientation, disability, racial or ethnic origin, religion, or beliefs through a new Law on Equal Treatment. Until now, the equal opportunities ombudsman worked only with complaints about gender discrimination. The most conspicuous discrimination case in 2005 was the Vilnius municipality's destruction of buildings in the Roma quarter in Vilnius, on the grounds of alleged drug-related crime and unlawful building activities in the quarter. The parliamentary ombudsmen found that the decision by the Vilnius authorities violated the law.

The Constitutional Court continues to serve as a powerful, independent, and reliable guardian of the country's basic laws and rights. The Constitutional Court's rulings have become central arguments in political debates, as lawmakers have increasingly tried to transfer controversial political decisions to the Constitutional Court by framing these questions as issues of constitutionality. Recent proposals suggested allowing private persons to address the Constitutional Court. This idea has met with approval by the Constitutional Court's chair, the parliamentary Speaker, and public leaders.

Lithuania's legislative and judicial framework has been overhauled in recent years. A code on civil procedure, enforced from 2003, significantly eased civil legal proceedings. The new penal procedure code was tailored to secure a faster completion of procedural actions, investigations, and trials. Judges are now more involved in the pretrial stage of investigation. The new penalty execution code removed some excessive restrictions on the rights and liberties of convicts and improved the mechanism for filing and investigating their complaints. Notably, criminal penalties in Lithuania have been among the strictest and the number of prisoners among the highest in Europe. Yet as a result of loosened sanctions, the number of prisoners fell from 15,000 to 8,000 in 2005.

The presumption of innocence and the right to a fair and public hearing are guaranteed by law and secured in practice. However, criminal investigations and trials are frequently protracted with lengthy court hearings. Tighter control of investigations in courts has reduced the number of protracted cases fourfold in recent years. The right to a fair trial is undermined by poor court representation, yet recently a legal aid provision was finalized. There are concerns over detention without trial and arbitrary arrests. The HRMI reports that illegally prolonged detention, failure to bring persons promptly before the court, and inadequate conditions for police detainees are the main problems in police work. There is a critically low level of public trust in the police, reportedly less than one-fifth of the population.

The president nominates, and the Parliament approves, the chair and judges to the Supreme Court and the Court of Appeals. The president appoints district court judges. The country's prosecutor general is appointed and discharged by the president upon approval of the Parliament. Most judges rule fairly and impartially, but public mistrust of judges is high. Lower-tier courts are trusted the least. Corruption, protraction of trials, and a lack of respect for trial participants are the main factors undermining public confidence. Politicians and the media also distrust the judicial branch. As a result, judges work in a hostile atmosphere. Yet statistics show that a very small percentage of verdicts are appealed.

The government has no formal control over court decisions. In the lowest tier, where most cases are tried, three judges now share one assistant. Because of a high workload, high responsibility, and relatively low pay, numerous vacancies in the lower-tier courts have been reported. Judges and court chairs perform administrative functions, which not only impairs their work capacities, but raises doubts about the transparency in case assignment and judges' independence.

Public outrage peaked in 2005 concerning the inefficiency of the bailiffs system. Citizens have not been notified regarding legal restraints on their property and reported that exacted sums were significantly higher than imposed fines because of the long interval between imposition and fine payment. Several bailiffs were disciplined, and investigations were carried out by the National Audit Office. The Ministry of Justice reacted by revising the rules on enforcement of court rulings and putting a limit on the costs of recovering small amounts. It has been generally recognized that protection of creditors' interests and implementation of court judgments has improved. Yet only 6 percent of the population trusts bailiffs.

Corruption (Score: 4.00)

Corruption is a systemic problem in Lithuania, and the public's perception and tolerance of corruption is high. Lithuania's legislative framework for combating corruption consists of nearly 10 laws on prevention and a national anticorruption campaign. However, enforcement is inadequate, and state agencies responsible for implementing the campaign have been blamed for inattention. In 2005, an interagency anticorruption commission assessed the campaign's progress and concluded that only 62 percent of the stipulated policies and measures were achieved and that coordination between law enforcement agencies, state institutions, and civil society groups was inadequate. Based on these conclusions, the government recently supplemented the campaign to strengthen control of political advertising and party donations.

Lawmakers have increasingly used legislative anticorruption impact assessment analysis as a tool to combat legislative corruption. In March 2005, proposals tasked additional law enforcement and customs agencies with corruption investigation in order to strengthen anticorruption work. The Parliament declined this proposal, suggesting it would eliminate the single institution coordinating anticorruption investigation, dissolving responsibilities, duplicating functions, and creating ambiguities in the division of competence.

The chain of scandals that broke in 2003 continued in 2005. About 10 ad hoc parliamentary commissions were established to investigate conflict-of-interest allegations against top officeholders in 2005. Former economic minister and Labor Party leader Viktor Uspaskich, LCU leader and Vilnius mayor Arturas Zuokas, and Prime Minister and LSDP leader Algirdas Brazauskas became targets of the gravest corruption and conflict-of-interest allegations, and chairman of the Chief Official Ethics Commission Algirdas Meskauskas stepped down in December on allegations of violating public procurement procedures.

Zuokas was enveloped by a number of corruption affairs during his term as mayor of Vilnius. He and several associates were sued for bribing and exerting undue influence on a Vilnius City Council member for favorable voting during the spring 2003 mayoral ballot but were cleared of all charges. The so-called subscriber affair erupted in May 2005, accusing Zuokas of receiving regular payments from Rubicon Group, a business giant engaged mostly in public utility services, in exchange for favorable decisions by the Vilnius municipality. Later, a package of documents allegedly revealed Zuokas's protection of a company linked to him in state-level project negotiations with Moscow authorities.

Uspaskich stepped down as an MP and economic minister in June 2005 after the parliamentary ethics commission found him guilty of two conflict-of-interest violations during his six months in office. The first scandal dated back to April, when the then minister was suspected of lobbying on behalf of his company during business negotiations with Moscow's government. Also, several Uspaskich-related companies received allocations of EU funds allegedly through a counterfeit business plan. To make matters still worse, Uspaskich was suspected of forging his higher education diploma. The politician claimed he had received a university-level degree from a prestigious economics institute in Moscow but was unable to provide the certificate.

Finally, in the fall of 2005 a scandal broke around Prime Minister Brazauskas. The affair involved the controversial 10-year privatization of the hotel owned by the prime minister's wife, Kristina Brazauskiene, and subsequent business deals with the hotel's former stakeholder, Lukoil Baltija. The opposition suspected these business connections could serve as a conflict of interest in deciding who should be the new strategic investor in Mazeikiai Nafta, in which Russia's largest oil company, Lukoil, was one of the bidders. The prime minister defied numerous calls to reveal the circumstances surrounding his family's business, a situation that precipitated mounting political crisis. Finally, a pretrial investigation of the hotel deal and possible abuse of official power ended with a lack of evidence of criminal offense or damage to the state.

In 2005, legal provisions on reconciling public and private interests were amended. The obligation to declare private interests was extended to chairpersons and deputy chairpersons of political parties who do not hold any official positions in state service. Instead of annual declarations, civil servants and politicians will now submit private interest declarations when they take office or assume leadership in political parties, and these declarations will be posted on the commission's Web site. Yet the one out of five local politicians failed to submit declarations in time.

Persons reporting cases of corruption receive general legal protections. Accepting or demanding a bribe is punishable by denying offenders the right to hold certain professional positions and by imprisonment for three to eight years. Punishment for abuse of official power includes fines, denial of the right to hold certain positions, and imprisonment for four to six years. State servants may be dismissed for abusing official power and ethics violations and can be punished by a three-year prohibition from state service.

Transparency International's 2005 Corruption Perceptions Index scored Lithuania at 4.8, a slight improvement from 4.6 in 2004. In 2005, according to Transparency International's Global Corruption Barometer 2005, almost one-third of Lithuanians gave bribes over the past 12 months. The majority believes the level of corruption in Lithuania has grown over the past three years. Political parties, courts, customs offices, the police, and the Parliament are seen as the most corrupt institutions. Yet according to a Transparency International survey in November 2004, most Lithuanians consider bribes an effective tool, and two-thirds are ready to use them if needed. Paradoxically, about half the population purports never to have given bribes, but an overwhelming majority thinks that corruption is deeply entrenched. Such perceptions can be explained by a wide and extensive airing of corruption allegations in the media, the main source of information on which people base their opinions about corruption. In 2005, Transparency International, the Lithuanian Free Market Institute, the CSI, and the HRMI founded the Civil Alliance Against Corruption to promote corruption prevention.

Corruption and bribery are entrenched in many areas. According to a joint Transparency International and Special Investigation Bureau survey in 2004, unofficial payments are most widespread among traffic police, health care institutions, land restitution services, and higher education establishments. Half of the encounters with traffic police involved bribes, nearly every third student made unofficial payments to schools or teachers, and one-third of patients offered under-the-table payments to doctors. A lack of accountability and responsibility in public administration, red tape, and the wide powers of civil servants are seen as the three main causes of corruption. In 2005, medical workers were banned from accepting gifts from patients or their relatives during and after treatment.

Corruption continues to plague land restitution and relocation procedures. Public purchase announcements must now be published on the Internet, but officials retain discretionary powers in applying public procurement criteria and assessing bids. Corruption is pervasive within Lithuania's extensive regulatory system. The state intervenes in the economy mainly through this avenue by setting quality standards, requiring numerous permits and inspections, prescribing a mandatory minimum wage, regulating energy prices, and so forth. Many see this as excessive regulation. According to a recent survey by the World Bank and Economic Bank for Reconstruction and Development, the scope of unofficial payments by firms dealing with regulatory agencies and payments to obtain government contracts has tripled since 2002. Direct state participation in the economy has been minimized through large-scale privatization, including infrastructure. Privatization of the transportation and energy sectors is under way.

The Civil Alliance Against Corruption has highlighted three priorities for official anticorruption work. The first is increasing transparency and communication of the public administration. The second is fighting legislative corruption, including cost and benefit analysis of public spending and other effective tools of legislative impact assessment. The third priority is ensuring effective corruption investigation by professional law enforcement institutions.

Author

Aneta Piasecka is a senior policy analyst, and Giedrius Kadziauskas is a policy analyst at the Lithuanian Free Market Institute, a nonprofit think tank based in Vilnius.

Local Governance (Score: 2.50)

Substantial power is situated at subnational levels of government. Lithuania has one level of local government, which encompasses 60 municipalities led by elected councils and 10 regional administrations governed by central appointees. Its responsibilities include municipal development, primary and secondary education, primary health care, environmental protection, social assistance, and public utilities. In certain areas such as land planning, health care, and education, both central and local authorities are involved. Ambiguities in power divisions have impeded decentralization, the distribution of fiscal allocations for municipalities, and transparent and accountable governance at the municipal level. Political parties propose abolishing regional administrations from time to time, especially before elections. However, regional governors remain influential political officials, so the removal of the regional tier of governance is unlikely.

In October 2005, the Parliament began debates on constitutional amendments stipulating direct elections of mayors and a new model of local government under which mayors would lead both municipal councils and the executive authorities. A similar system functioned in Lithuania until 2003 but was overhauled to comply with a 2002 Constitutional Court ruling that deemed unconstitutional the lack of separation of representative and executive powers in local government. From 2003, mayors remained municipal council heads, but their executive duties were delegated to the municipal council and administration. The municipal administration is led by a director appointed by the municipal council at the suggestion of the mayor. Mayors are elected by municipal councils, whose members in turn are chosen through general elections. Experts charge that the mayor has limited power to influence and control the executive branch and administration and that the existing model is prone to abuse of power and conflicts of interest.

Until recently, the idea of direct mayoral elections was supported by the political spectrum, but now it provokes disagreement within both the ruling coalition and the opposition. The ruling Social Liberals and the opposition Conservatives worry that direct mayoral elections will undermine the role and influence of political parties in municipal authorities, stimulate autocracy, and open the door for populists. It is also feared that vesting more authority in mayors would reduce the powers and role of elected councils and hence local communities. Experts also note that the new model will be at odds with the constitutional principle of the separation of powers.

Local government elections are scheduled for early 2007, but the ruling LSDP has proposed late 2006, prior to the introduction of the euro on January 1,2007. They argued that an earlier date would help avoid discussions on the euro introduction during local government election campaigns. Opponents claimed that altering the election date would be seen as an attempt to manipulate society. Nevertheless, in December the Parliament decided that the elections would be held in February 2007.

Municipal elections are universal and free. The current municipal councils were elected in December 2002, with 22 parties sharing 1,560 council seats for four years. Pursuant to a January 2005 ruling of the Constitutional Court, permanent residents of Lithuania will be able to vote and run for municipal councils in upcoming municipal elections. Amendments to the Law on Political Parties allowing residents to be party members are pending before the Parliament. Furthermore, the Lithuanian Association of Heads of District Neighborhoods has received calls to legitimate mixed municipal elections through proportional and single-mandate constituencies in order to enable local communities to put up their candidates to local government councils.

Legal acts by municipal councils are rarely available on the Internet; decisions are not known to the public until their enactment. Cooperation with local constituencies revolves mostly around land planning issues. Polling data cited by Transparency International's Lithuanian branch suggest that municipal officeholders dealing with routine applications receive the largest bribes from businesspeople.

Municipal governments generally lack funds to meet their obligations, owing mainly to mismanagement and their expanding sphere of authority. Misuse of funds is widespread. In some municipalities, administrative expenses tied to social allowances accounted for as much as 12 percent. Many municipal administrations were found to have flawed financial management and inadequate or ineffective internal auditing procedures. The Parliament thus banned local government authorities from using social allocations from the central government to finance other needs and required them to return unused funds. Some worry that this restriction will bar local authorities from solving social problems independently.

The bulk of municipal revenues comes from the central government, with changes negotiated between municipalities and the central government and approved by the Parliament. Central budget subsidies accounted for 56 percent of total municipal revenues in 2005, with the remaining portion collected from personal income tax and local charges and dues. Revenue volumes differ markedly across municipalities and are equalized according to specific, projected expenditure needs. Municipalities with revenue growth of more than 7 percent are required to transfer part of these funds to the state budget. Obviously, this discourages municipalities from raising more income and limits their capacities to finance independent functions. Legislative amendments proposing a revision of this provision are pending before the Parliament.

National Governance (Score: 2.50)

Lithuania has a democratic government, with a functioning system of checks and balances. The state is a parliamentary republic in which the president nominates and, with the Parliament's endorsement, appoints the prime minister and approves the composition of the cabinet.

In 2005, parliamentary control was strengthened through the establishment of a new parliamentary audit committee after the 2004 elections. The committee was charged with overseeing enforcement of national audit findings and recommendations and enhancing efficiency and transparency of public administration. In one year, the committee exposed more than 30 major cases of law violations, mismanagement, illegitimate construction projects, protracted land restitution, and squandering of state property, prompting executive authorities to take note of national auditors' recommendations.

Initiated and led by the New Union-Social Liberals (Social Liberals), the committee caused tension between the government and the Parliament. Prime Minister and LSDP leader Algirdas Brazauskas stated that the committee exceeded its competence, interfered with the executive branch, and duplicated national auditors. Brazauskas defied the committee's findings and called for narrowing its powers. Parliamentary Speaker and Social Liberals leader Arturas Paulauskas insisted that parliamentary control become the Parliament's core focus and urged other committees to follow suit.

Admittedly, the spectrum of parliamentary oversight was never clear, so the committee's activity caused some ambiguity over the division of competence in the area of governmental and municipal oversight. In 2005, the National Audit Office made news by releasing audit findings from 100 budgetary institutions accounting for more than 80 percent of total budget spending. More than half of the audited organizations received serious remarks on mismanagement of government allocations.

Lithuania's Parliament operates in an open manner, and all bills are posted on the Internet. Interest and public policy groups may take part in the political process through policy advocacy, advising, and lobbying. Yet draft legislation is not always readily available to the public. Executive authorities often propose bills or adopt new regulations without prior notice or public scrutiny, though required by law to announce policy proposals via the Internet. In 2005, the Parliament enacted 400 laws, but only 16 were entirely new or new versions of existing laws. In practice, most bills, especially systemic and regulatory documents whose drafting requires administrative capacities, originate in the government. In terms of internal management, the Parliament is plagued by a disregard for rules and discipline. Parliamentarian absenteeism, unauthorized vacations, and other violations required tightening the procedures of parliamentary work.

In February 2005, the Constitutional Court resolved that a member of Parliament (MP) may lead a political party, a professional union, or an association but may not work under a labor contract or receive remuneration from said organizations. The Constitutional Court addressed ambiguities concerning the legitimacy of the parliamentary mandates of two MPs, the president of the Lithuanian Chamber of Agriculture and a professional union leader. The two MPs renounced their previous posts and retained their parliamentary seats. In 2005, a number of interim commissions set up to investigate conflict-of-interest and other allegations against top politicians and government officials upset the Parliament's work. Pollsters showed that the society was skeptical of these kinds of parliamentary commissions.

The executive branch is less transparent than the legislature. The government often provides limited public access to information on regulatory proposals, arguing that the cabinet's position is not finalized in the drafting process. Cabinet sessions take place behind closed doors. To enhance transparency, government and municipal resolutions, decrees, and other legal acts will come into effect on the day of their signing after being posted on the Internet, according to legislative amendments adopted in July 2005. Currently, laws are enforced upon publication in the official gazette. Also, pursuant to EU directives, information regarding official documents of all state institutions will be available on one Web site.

Key issues on the 2005 policy agenda included the future of Lithuania's most prized industrial asset, Mazeikiai Nafta, tax reform, gas and energy price regulation, introduction of the euro, and the allocation of EU structural funds. The Parliament allowed the government to buy the Russian Yukos-controlled stake in Mazeikiai Nafta and to sell it with a portion of outstanding state-owned shares to a new investor. Among the contenders is Russia's largest oil company, Lukoil. The opposition fears that Kremlin-loyal Lukoil's presence would threaten national security. In June, the Parliament gave the green light to a long-debated tax reform. The introduction of the euro was another much-debated issue supported practically on all sides of the political spectrum, while society is split, with slightly more leaning in favor of the euro.

The military is entirely under civilian control. The run-up and accession to NATO improved the military's administration and transparency. The main security and law enforcement services have rehabilitated after accusations of involvement in political battles in 2004. However, the government was accused of overstepping its authority in 2005 by establishing a division of law and order and governance to coordinate the work of law enforcement institutions. Political analysts noted that the ruling LSDP showed signs of discontent over the Social Liberals' "friendship with law enforcement agencies" via affiliations with law enforcement chiefs. Nevertheless, recent top appointments to the Special Investigation Bureau, the National Audit Office, and the Office of the Prosecutor General conformed to the principles of impartiality. Law enforcement institutions remain largely resistant to political pressure, thanks primarily to the president's role in the appointment process.

The much-debated investigations into the status of KGB reserves continued in 2005 after suspicions surfaced that several top officials, including the foreign minister and the state security chief, were enlisted in the KGB reserves in the 1980s. The lustration commission investigating collaboration with the Soviet security service was reorganized and investigated 78 cases in 2005, as compared with 2 cases from 1999 through 2004. The Parliament is contemplating granting an additional grace period for persons willing to plead collaboration.

The civil service comprises four categories: career civil servants, political appointees, heads of institutions, and acting or temporary civil servants. The bureaucratic apparatus now accounts for 0.7 percent of the country's population and absorbs roughly 8 percent of the state and municipal budget, or 2 percent of the gross domestic product. The number of civil servants rose from 18,000 in 1997 to 25,150 in 2005 and continues to grow. The EU has become a popular argument to boost the bureaucratic machine, and in 2005 about 500 new positions requiring an additional LTL10 million (US$3.6 million) were opened in the government to meet the growing EU membership workload.

Despite ongoing public service reform, civil servants are criticized as incompetent. Political connections, cronyism, resistance to change, inefficiency, entrenched bureaucracy, and corruption all contribute to the high degree of public mistrust in the civil service. Nevertheless, professionalism and qualifications among civil servants have improved over the past decade thanks to extensive foreign assistance and the approximation of Lithuanian law with the EU acquis communautaire.