by Vladimir Socor, IASPS Senior Fellow

ROLANDAS PAKSAS: A PROFILE IN RECKLESSNESS ?

A politician with considerable personal appeal, highly successful in his private career, telegenic and cutting a dashing figure at 47, Rolandas Paksas has consistently displayed poor and reckless judgment in high office. His victory in the 2003 presidential election was almost accidental.

Paksas is a former multiple champion of the Soviet Union in acrobatic flying. He continues avidly practicing this sport; indeed, he performs such high-risk stunts as flying a plane under a bridge during electoral campaigns. During the 1990s, Paksas established a successful construction company in Vilnius, and was twice elected mayor of the capital city. Politically affiliated at that time with the governing Fatherland Union/Lithuanian Conservatives, Paksas was that party’s choice for filling the vacant post of prime minister in 1999.

From that point on, he rapidly compiled the record of an erratic, unpredictable, and divisive politician. He resigned the prime ministership after less than a year, stabbing his party and government in the back over a crucial issue: privatization of the Mazeikiai oil refinery and its supply pipeline and maritime terminal, which form Lithuania’s largest economic entity. The government had earlier chosen the American company Williams International for privatizing and operating Mazeikiai and the associated installations. Russia’s state-controlled Lukoil however was seeking to take over Mazeikiai, and it cut off the supply of crude oil so as to force it into bankruptcy and acquire it on the cheap. At that point, in the autumn of 1999, Paksas staged a dramatic resignation as prime minister, claiming that Fatherland Union and members of his own government were favoring the American company at Lithuania’s expense. Although the financial terms of the Williams contract were controversial and unpopular, the Lukoil alternative would have been far worse for Lithuania both financially and with  respect to national security.

Paksas switched to the Liberal Union (LU, led by members of the business elite) in 2000, headed its successful ticket in that year’s parliamentary elections, regained the post of prime minister, and took over as LU leader as well. Within one year, however, Paksas had quarreled with the LU and the government, resigned again as prime minister, and split off from that party in 2001, taking one faction away with him. In 2002, Paksas created the Liberal-Democratic Party (LDP) as his personal vehicle in that year’s presidential election campaign. The party’s upper echelon consists of obscure figures without a discernible vision for the country, who played no roles in the liberation movement or the reforms that brought Lithuania to the threshold of the European Union and NATO. This team cast its lot with Paksas the charismatic-populist vote-getter with a lock on about a fifth or a quarter of the electorate.

In Lithuania’s highly diversified political landscape, a stable share in that range can turn a responsible party into a necessary coalition partner, and an irresponsible party into a nuisance to the political system, as the LDP turned out to be. Paksas and the LDP ran a typically populist presidential campaign in 2002-2003. Exploiting the discontent of social groups that had been left behind in the transition to the market economy, candidate Paksas cast himself as a protector of ordinary people against “the elites” and foreign interests. The incumbent president, Lithuanian-American Valdas Adamkus, won the first round with 35 percent of the votes cast, to Paksas’ 18 percent in a split field of candidates. In the January 2003 runoff, however, Paksas garnered 54 percent to Adamkus’ 46 percent, the voter turnout being only 52 percent.

A stunning surprise to Lithuanians and to foreign observers, Paksas’ victory was largely accidental in three respects. First, the low turnout meant that he was the choice of slightly more than a quarter of the total electorate. Second, the Adamkus team had felt confident of reelection and ran a complacent campaign. (Their confidence was not entirely misplaced, as Adamkus continues to enjoy the highest trust-rating among the country’s politicians). And, third, mainstream governing parties--particularly the Social-Democrats--endorsed Adamkus largely pro-forma while adopting in practice a wait-and-see attitude in the runoff. 

Paksas’ close associate Yurii Borisov (coincidentally an ex-Soviet airforce pilot) and the Russian public-relations companies Almax and Nikollo-M played important roles in the Paksas campaign. Borisov and Almax now figure at the center of impeachment proceedings, in which Paksas is charged with tolerating the penetration of his election campaign and presidential office by individuals apparently linked to Russian intelligence and Russian organized crime (see Part One).

IMPRESSIVE  ECONOMIC PERFORMANCE NOT AFFECTED

Although Paksas was catapulted to the presidency by an anti-reform backlash from sections of the electorate, this outcome had no effect on Lithuania’s completion of market reforms, impressive macroeconomic performance, and favorable investment climate. Lithuania is due to join the European Union and NATO as a full member in May and June 2004.

The country’s GDP growth is highest in Europe at 6.8 percent in 2002,  8 percent in 2003, and a projected 6.5 to 7 percent for 2004 and 2005. The fiscal deficit was 2.6 percent in 2003 and is set at 2.95 percent for 2004, thus below the EU’s 3 percent benchmark (which certain EU countries are breaching year after year). The 2003 budget revenue targets were exceeded, making it possible in the 2004 budget to raise allocations for health care, education, and agriculture, and to increase the minimum wage by 10 percent. Inflation remains negligible, and the consumer price index fell by 0.9 percent in 2003. The exchange rate is stable, and Lithuania is on track to adopt the Euro in 2006/2007, as well as to join the Schengen system by January 2007. Moody’s recently raised Lithuania’s rating on local and foreign currency debts to AAA from Baa1. It noted that, in contrast to most EU accession countries, Lithuania’s indebtedness has in recent years stabilized, rather than increased. (Reuters, December 11, December 30, 2003, January 16, 2004). Such macroeconomic performance opens realistic prospects for overcoming within this decade the worst Soviet and early post-Soviet legacy problems, particularly high unemployment and rural underdevelopment.

Nor has the situation in the presidential office affected Lithuania’s reliability as a Euro-Atlantic ally. The State Security Department, working closely with the U.S. and other allies, had taken timely measures for the protection of NATO- and national security-related information. Lithuania is consistently spending an annual 2 percent of its GDP on defense, in line with NATO’s benchmark (which many NATO countries chronically fail to meet). Lithuania has two platoon-size units operating in Iraq under British and Polish command, respectively, as well as peacekeeping units under NATO command in the Balkans.

Lithuania is due to hold parliamentary elections in October 2004. Whether the impeachment process will have run its course by then seems uncertain. The president looks and sounds set for a protracted struggle. The certainties for now are that the impeachment is not turning into a political crisis, that the country’s institutions are standing up well to the test, and that Lithuania is about to join NATO and the EU as a member in good standing.

                                    -- End of Part Two (of two) --