What is the political context of the Eurozone crisis period in Lithuania? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?
Note on a general background for a public reaction to the austerity measures
The crisis of 2009 is the third significant economic crisis experienced by Lithuania in the last two decades. This experience might have contributed to the general approach towards the crisis and the ‘culture of patience’ that is characteristic of the public reaction to the changes during the period at issue and the nature of the measures undertaken during the crisis.
The first crisis was the economic restructuring crisis of the 1990s which resulted in a decline of 70 percent of the country’s GDP over a few years. It also led to a decision to introduce the model of a currency board. The Lithuanian currency had been pegged to the euro from 2002 until 1 January 2015, when it became the official currency.
The second crisis – 1998-99 resulted from the financial crisis in Russia, which led to significant spending cuts and public management reforms (strategic planning).
The first election during the period at issue (see below) occurred at the very onset of the financial crisis.
Lithuania is a parliamentary democracy, governed on the basis of the Constitution of 1992. The post of the head of state, a President, is held by Dalia Grybauskaitė since 12 July 2009. She was elected in the very first round on 17 May 2009 with 68 percent of the popular vote, and reelected for her second term in office with a 58 percent in May 2014.
The parliament of Lithuania (Seimas) is a unicameral body, composed of 141 members, and elected for a four year term. The Prime Minister is appointed by the President with the approval of the Seimas. The Government is appointed by the President after nomination by the Prime Minister.
Before the financial crisis struck, the parliamentary majority was held by the Social Democratic Party which also led the government with Gediminas Kirkilas as Prime Minister. In 2007-2008 the government, supported by the opposition, made a number of decisions significantly increasing budgetary expenses (eg increasing public sector wages and social expenditure, including maternity leaves and pensions as well as introducing an automatic indexing of the budgetary pay-outs). These decisions were made despite the fact that the budget was never in surplus, even during the intensive period of economic growth in 2002 – 2007, which in 2007 was 9.8 percent of the GDP.
The first round of the 2008 Seimas elections took place a month after the collapse of Lehman Brothers, on 12 October. However, the topic of possible austerity measures never was on the political agenda. It is considered that the reason for that is that the possible impact of the external financial crisis was never sufficiently appreciated either by the opposition or the incumbent government.
October 2008 parliamentary elections
The October 2008 elections led to the following distribution of the 141 seats of Seimas:
The Conservative party (Homeland Union – Lithuanian Christian Democrats) – 45 seats.
The Social Democratic Party of Lithuania – 25 seats.
The newly established National Revelation Party (composed mostly of well-known stage performers) – 16 seats. The party’s goal was to eliminate from politics both the Order and Justice Party and the Labour Party, which, as argued by the leader, were a threat to Lithuanian internal and external security. However, the party lost its popularity quickly: during the 2009 elections to the European Parliament it collected only 1 percent of the votes. It acceded to the Lithuanian Liberal and Centre Union on 22 September 2011.
Order and Justice Party – 15 seats. It is a party which is described as a Lithuanian eurosceptical party. The main criterion of attribution is the fact that both members of this party who were elected to the European Parliament in 2009-2013 (Rolandas Paksas and Juozas Imbrasas) were members of the Europe of Freedom and Democracy political group. On 10 August 2013 this party adopted a resolution inviting the public to actively encourage the politicians to organize a mandatory referendum and obtain public mandate for the introduction of the euro. At the same time the Order and Justice Party is a member of the coalition of the government formed in 2012, which publicly declares the goal to introduce the euro. However, although it was publicly voicing eurosceptical opinions with respect to the euro (see discussion under Question V.3), the party did not take steps encouraging the initiation of a referendum on the issue.
Labour Party – 10 seats.
Liberal Movement – 11 seats.
Liberal and Centre Union – 8 seats.
Electoral Action of Lithuanian Poles (LLRA) – 3 seats.
Lithuanian Peasants’ Union – 3 seats.
New Union (NS) – 1 seat.
Independent candidates – 4 seats.
The coalition government was formed by the Conservative Party, who were joined by the National Revelation party and the two liberal parties. The leader of the Conservative Party Andrius Kubilius became Prime Minister.
The newly formed Government, presented with the macroeconomic forecast of 0 percent growth at its very first meeting, had to take immediate measures adjusting the draft budget. It thus became notorious for its ‘night reforms’, introducing sharp spending cuts and tax rises only a few days before the start of the new financial year of 2009. These measures are also often described as contributing to the severe contraction of the economy by 15 percent in 2009.
The austerity measures provoked the first massive protests on 16 January 2009. For the first time since the restoration of independence in 1990 the police applied measures involving tear gas and rubber bullets. 30 persons were injured. Although subsequently a number of protests against the austerity measures were organized, none of them led to violence. However, at the end of 2009 there were 16,000 residents less in Lithuania compared to 2008. It is commonly assumed that they left to look for better opportunities abroad.
As the economy plunged 15 percent in 2009, the government decided not to call on foreign aid and instead took further austerity measures.
This government became the first one in Lithuania’s history to serve a full four-year term in office despite its unpopularity.
The other elections during the period at focus did not attract notable public interest and were not of special importance. The elections to the European Parliament of 7 June 2009 were marked by an exceptionally low turnout – only 20 percent of the electorate participated. Most of the seats – 4 out of 12 – were taken by the Conservative Party (the Homeland Union). The municipal elections of 27 February 2011 did not lead to any surprises.
October 2012 parliamentary elections
On 14 October 2012 national Parliamentary elections and a consultative referendum on the construction of a new nuclear power plant took place.
The Social Democratic Party became the winner of the election, with 38 seats, and formed a coalition with the controversial Labour Party, led by Viktor Uspaskich (29 seats), the populist Order and Justice (11 seats), led by an impeached president and a member of the European Parliament Rolandas Paksas, and the Electoral Action of Poles in Lithuania (5 seats). The Conservatives ended only narrowly behind the Social Democrats with 33 seats. The Liberal Movement, a member of the incumbent coalition, ended with 10 seats, only one seat less than during previous elections.
In 2012 another newly established party, Drąsos kelias (DK, The Way of Courage) entered Seimas, winning 7 seats. Its establishment resulted from a non-political so-called paedophilia scandal, which allegedly involved an assistant of an influential Member of Seimas. Both him and the father of the minor subsequently died. The formal leader of the Party was a priest Jonas Varkala, however, an important role in its establishment had an aunt of an allegedly abused minor girl, formerly a judge Neringa Venckienė, who was elected to the Seimas in 2012. She fled Lithuania in April 2013, after she was stripped of parliamentary immunity in a criminal investigation against her on the charges including contempt of court and abuse of the status of a guardian of her niece. Allegedly she claimed asylum in the United States in April 2013. Her whereabouts are currently unknown. Soon after the whole party went to a disarray: it could not take part in 2014 elections to the European Parliament as it failed to collect the minimum 10 000 votes required by law, and on 19 June 2014 its separate political group in Seimas ceased to exist. Questions were raised whether as it happened this party still had the number of members to be considered a political party as required by law.
The issue which became a source of most political confusion was the result of the consultative referendum on a planned nuclear power station. On a 52 percent turnout 65 percent of voters were against the project, despite the fact that all major parties were in principle in favour of it.
25 May 2014 elections to the EP, the second round of Presidential elections and a failed attempt to have a referendum on the euro
Two eurosceptical issues were mainly raised during the EP electoral campaign: the selling of land to foreigners and introducing the euro in 2015. Referendums were attempted on both questions. The initiators managed to collect the required 300.000 votes with respect to a referendum on the selling of land to foreigners, which took place on 29 June 2014, but failed, as it attracted only 15 percent of the electorate. However, it is important that it was the first time in the country’s history that 300.000 signatures for holding a referendum were collected: all prior referendums were initiated by the Seimas. The attempt to initiate a referendum concerning the introduction of the euro was blocked at its infancy: on 7 April 2014 the State Electoral Commission refused to issue the initiators the signature collection papers, reasoning that the initiative was against the Constitution and Lithuania’s international obligations. An appeal against the decision was filed to the Supreme Administrative Court of Lithuania, which referred the case for an opinion to the Constitutional Court. On 17 July 2014 the Supreme Administrative Court, in view of the opinion of the Constitutional Court of 11 July 2014, and sitting in its extended composition, decided that the Central Electoral Commission was correct in refusing to register the initiative and to issue it the signature collection papers.
The very initiative for a referendum on the introduction of the euro was taken in February – March 2014, with the initiators arguing that introducing the euro in 2015 was too early as ‘it might cause a crisis and Lithuania would end up like Greece or Portugal’. The initiators argued that they did not contest Lithuania’s EU membership, but that they only wanted to give a chance to the people to express more clearly their will on the issue, especially because after the referendum on EU membership of 2003 the legal framework of EMU had changed significantly. One of the initiators, R. Ozolas, who is also known as the father of the national currency, argued that a key factor of the Baltic States’ success in dealing with the crisis was the fact that they had their own national currencies. Although the initiators of the referendum were not against euro membership in general, they thought that it was too early for Lithuania to join the eurozone. They formulated a draft law on a constitional amendment supplementing Art. 125 of the Constitution with two additional parts providing, first, that the national monetary unit of Lithuania is the litas, and second, that the Bank of Lithuania has an exclusive right to issue money. It was suggested to include a third part of the article that was to provide that the decision to change the national monetary unit may be decided only by a referendum and that international treaties may allow for payments in other monetary units.
Both selling of land to foreigners and introducing the euro in 2015 were topics that were raised by a nationalist party during the elections to the European Parliament of May 2014. However, in view of the Ukrainean crisis and the Russian aggression in the Crimea the mainstream political parties did not put them on their agenda emphasizing instead the European security issues. The entry to the eurozone was presented as a security, not an economic issue, and the mainstream media presented the supporters of the referendum on land ownership as undercover agents for separation from the EU. Questioning the importance of the EU (or NATO) was viewed as betrayal.
Another factor in the European Parliamentary elections was the fact that their date coincided with the date of the second round of the Presidential elections. The fact that Dalia Grybauskaitė did not collect a sufficient number of votes to be reelected at the very first round meant higher participation rates at the elections to the European Parliament. However, this also had an impact on the nature of campaigning: the major topics of the campaign were security issues and Russian aggression. The other topics included fighting unemployment, promoting Lithuania’s energy independence, social inclusion, security, Lithuania’s role in the EU, federalization of the EU and discrimination of Lithuanian farmers with respect to direct payments.
The critical view on the introduction of the euro in 2015 equally failed to persuade the electorate. Although the Eurobarometer 2013 autumn results showed that as many as 49 percent of the respondents did not support the single currency, compared with 40 percent who did and 11 percent who were undecided, support grew to 50 percent in 2014 and constituted 73 percent in July 2015. Lithuania became a member of the eurozone on 1 January 2015.
A surprising outcome of the EP elections was that the incumbent Social Democratic Party won only two seats at the European Parliament, which was substantially less than expected on the basis of the opinion polls. The same number of seats went to the opposition Conservative Party (Homeland Union), the Order and Justice Party and to the Liberal Movement, which was the best result in its history. The Labour Party, the Peasants and the Greens got one seat each.
Municipal elections of March 2015
The municipal elections of March 2015 were the first municipal elections through which mayors were directly elected. This might explain an elevated public interest in the event: compared with the elections of 2011, the public participation increased by 3 points (2011- 44.08 %, 2015- 47.17%). After the elections two political parties changed their leadership: Andrius Kubilius resigned from the Conservative Party giving way to the member of the European Parliament Gabrielius Landsbergis, and Loreta Graužinienė resigned from the leadership of the Labour Party. Its newly elected leader is a member of the European Parliament (ALDE group) Valentinas Mazuronis, who only recently left another party, Order and Justice. Although the majority of municipal mandates (359) were collected by the Social Democratic Party, followed by the Conservative Party (253), the results demonstrate an increasing political influence of the Liberal Movement, which received 217 mandates. The Labour Party ended with 148 mandates, the Peasants and Greens – 82, a coalition of Polish Electoral Action and Russian Alliance – 62 mandates. The community electoral committees – non-party units collected 118 mandates throughout the country.
 R. Vilpišauskas, V. Nakrošis, V. Kuokštis, The Politics of Reacting to the Crisis in Lithuania from 2008-2013: Exiting the Crisis, Entering Politics as Usual? In: K. Bukovskis (ed.) The Politics of Economic Sustainability: Baltic and Visegrad Responses to the European Economic Crisis. Riga: Latvian Institute of International Affairs, 2014, p. 38- 63, p. 38.
 M. Jastramskis, Lietuvos visuomenės ir politinių partijų nuostatos ES atžvilgiu.[Positions on EU of the Lithuanian Public and Political Parties] Lietuva Europos Sąjungoje. Metraštis [Yearbook] 2009-2013, Europos Integracijos studijų centras: 2014.
 Resolution of the Order and Justice Party of 12 August 2013, available in Lithuanian at http://www.tvarka.lt/index.php?id=8125 [last accessed on 23 November 2015]. Also see T. Janeliūnas, „Tvarka ir teisingumas“ remsis euroskeptikais? [Order and Justice will draw on eurosceptics?] www.iq.lt, 2013-08-14. [last accessed on 23 November 2015].
 G. Davulis, Global Crisis and Economic Processes in Lithuania and other Baltic Countries. Business Systems and Economics No. 2 (1), 2012: 134-147, p. 139, 140; J. Čičinskas, A. Dulkys, Finansų krizė ir nauji sprendimai Europos Sąjungoje: mažos valstybės atvejis. [Financial Crisis and new decisions in the European Union: a case study of a Small State] Lietuvos metinė strateginė apžvalga 2012-2013, p. 125; S. Jakeliūnas, Lietuvos krizės anatomija [The Anatomy of Lithuanian Crisis], Iš arčiau: 2010, p. 68; LRV 2008 m. veiklos ataskaita, pritarta 2009 m. kovo 25 d. nutarimu Nr. 223, [report of the Government of the Republic of Lithuania on its activities in 2008].
 Discussed in detail at I. Hawkesworth, R. Emery, J. Wehner and J.Saegert, Budgeting in Lithuania, OECD Journal on Budgeting 2010/3, p. 8, available at http://www.oecd.org/countries/lithuania/48170576.pdf
 V. Uspaskich was indicted with criminal charges for for fraud and fraudulent bookkeeping and was sentenced to four years in prison by Vilnius Regional Court on 12 July 2013. See BNS, Vilnius Court pronounced the verdict in Labour Party’s case, available at http://www.lithuaniatribune.com/44590/vilnius-court-pronounced-the-verdict-in-labour-partys-case-201344590/ On 7 August 2013 another case was filed against V.Uspaskich for contempt of court. The factual circumstances are discussed in detail at European Parliament, Report on the request for waiver of the immunity of Viktor Uspaskich, A8-0149/2015, 11 May 2015.
 The Lithuania Tribune, Venckienė‘s attempts to seek political asylum abroad seem suspicious, 2013- 04-13, http://www.lithuaniatribune.com/35766/venckienes-attempts-to-seek-political-asylum-abroad-seem-suspicious-201335766/
 Lietuvos Respublikos politinių partijų įstatymo pakeitimo įstatymas XII-614 [The Law amending the Law on Political Parties], Žin., 2013-12-14, Nr. 128-6513. Art. 5(3) of the Law currently requires 2000 members for the purpose of establishing a party. If the number of members becomes less than the required statutory minimum, and the party does not reorganize itself within two years so that its number of members fulfils the legal requirements, the party is removed from the register of political parties.
 Lietuvos Vyriausiosios rinkimų komisijos sprendimas Dėl atsisakymo įregistruoti iniciatyvinę grupę privalomajam referendumui paskelbti [Decision of the Central Electoral Commission on refusal to register the petition on announcement of a referendum] 2014-04-07, nr. SP-101.
 Ruling of the Constitutional Court of the Republic of Lithuania on the compliance of the provisions of the Republic of Lithuania’s law on referendums [sic] with the Constitution of the Republic of Lithuania, an official translation is available in English at http://www.lrkt.lt/en/court-acts/search/170/ta859/content
 Decision of the Supreme Administrative Court of Lithuania of 17 July 2014 No. R-858-11-14.
 R. Vilpišauskas et al, Lithuania. Available at: http://www.eu-28watch.org/?q=node/1203
 J. Ūdris. Member of the Central Electoral Commission. Pažyma dėl referendumo iniciatyvinės grupės prašymo [Certificate on the request to register the petition to announce a referendum] 2014-04-07, www.lrs.lt
 G. Aleknonis, European Parliament elections in Lithuania: populist competition in the shadow of the presidential vote. Political preferences 9/2014: 39-56, p. 41.
 Ibid, p. 46.
 Standard Eurobarometer 80, autumn 2013, p. 25. Available at http://ec.europa.eu/public_opinion/archives/eb/eb80/eb80_first_en.pdf
 Standard Eurobarometer 81, autumn 2014, p. 20, available at http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/surveyKy/2040
 Standard Eurobarometer 83, first results May 2015, p.26.