Lithuania Steps Up to Head European Council

On July 1, Lithuania will become the first Baltic State to head the Council of the European Union.  Having gone through its own deep economic slump only to recover through a tough austerity program, Vilnius will have credibility in pressing for further European economic reform.

Indeed, Lithuania has been enjoying some good economic news of late.  Inflation is slowing, falling from an annualized rate of 2.3 percent in February to 1.6 percent in March.  Corporate earnings for the fourth quarter of 2012 were up 48.8 percent over the previous year.  Household assets also rose during the last quarter of 2012.  And the takeover of Ukio Bankas, the country’s sixth largest bank, has been completed.  The smooth process, observed the Financial Times, was “a clear sign that Lithuanian banking has been stabilized after the upheaval.”

Vilnius worked with Ireland, which presently holds the Council presidency, and Greece, which will take the helm next January, to develop an 18-month “trio program.”  The joint agenda, presented in December, seeks “to stimulate growth, create jobs and boost EU competitiveness.”  The three countries emphasized strengthening the Euro, improving financial regulation, continuing EU expansion, and making industry more competitive.

Vilnius is likely to add its own touches.  In November 2011, the Lithuanian parliament approved several objectives for the country’s presidency.  Top of the list are measures to promote economic growth, including finalizing the Multiannual Financial Framework regulations.  Legislators also affirmed the importance of energy security and work on the EU’s common external energy policy and strengthened protection of EU borders against fraud and smuggling.

Moreover, Vilnius is interested in enhancing the role of its near and distant neighbors in the EU.  Lithuania hopes to encourage greater involvement by Eastern Partnership countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine) through EU agreements.  Further, Vilnius hopes to expand cooperation through the European Union Baltic Sea region.  This has been a consistent emphasis for Lithuania, which promoted many of the same objectives when it held the presidency of the Council of the Baltic Sea States in 2010.

The Lithuanian government has been at work on these goals.  In March, Minister of Foreign Affairs Linas Linkevivius visited Estonia to discuss his country’s upcoming presidency and its impact on Nordic-Baltic cooperation, as well as plan for the Eastern Partnership Summit scheduled for November in Vilnius.  On that meeting’s agenda are free trade negotiations with Armenia, Georgia, Moldova, and Ukraine.  Both Estonia and Lithuania were particularly interested in better integration in Europe’s energy market.

In January, Linkevivious held several preparatory meetings in Brussels, explaining:  “Financial stability is needed to fully restore confidence in the EU economy.  Therefore, Lithuania’s Presidency of the EU Council will aim to achieve progress in the architecture of Europe’s Economic and Monetary Union, on the Banking Union, and the Stability and Growth Pact.”

Important for encouraging growth will be implementing the Single Market Act I and II, as well as finalizing the Multiannual Financial Framework.  Linkevivious observed:  “Smart growth also encompasses such important for Lithuania initiatives as the creation of the internal energy market, financing of energy and transport infrastructure, effective implementation of the Baltic Sea Region Strategy.”

Vilnius inevitably will be drawn further into the debate over how best to extricate troubled European states from their economic difficulties.  On her visit to Brussels last month Lithuanian President Dalia Grybauskaite cited fiscal discipline as one of her country’s three main emphases, along with economic growth and European openness.  Lithuania is particularly interested in stabilizing the eurozone since Vilnius hopes to enter the monetary union in 2015.

Journalist Egle Digryte reported that “The hopes are high:  Lithuania expects to settle issues it deems important, finally shed the newbie status, host international leaders and high officials as well as thousands of other guests from the EU and beyond.”

Of course, it might be wise to dampen ambitions a bit.  Although some 200 meetings are scheduled for Vilnius during Lithuania’s presidency, most will be routine.  Digryte noted that “Diplomats and analysts familiar with the workings of Brussels say that Lithuania’s success or failure of presiding over the EU Council will be down to its ability to mediate in decision-making processes and achieving consensus.”

Linkevivius stressed that his nation intended “to ensure that the Presidency runs effectively and efficiently, building on the results of the former presidencies.”  Indeed, he added, “We are working to be noted as a country that can show—without unnecessary grand gestures, pomposity—that it is a modern, creative, innovative, and at the same time cosy European state.”  It sounds like an agenda that all of Europe should support.