People who visit their holiday destinations in summer often have to pay hefty fees to take their cars across the water to the spit, while residents pay less tariffs. Locals also do not pay to go onto the spit with their car.

People approach local residents and ask them if they can register their address under the property.

Neringa Mayor Vigantas Giedraitis also said that many people were buying fuel over the Russian border, because it was less crowded than other checkpoints. Many petrol smugglers drive across the border then bring back cheap petrol, which is sold illegally to Lithuanians.

The mayor has called on locals not to allow others to register at their homes, but often they profit from the act.

“The Neringa population do not think that in doing so they harm the state and themselves. Not just an artificially large load for ferries and border posts, but they do damage to the municipality, which collects more local charges for the entrance to the spit,” the mayor said.

In II quarter 2010 positive changes in the value added created by industrial and services enterprises compensated for the decrease in the added value in the construction sector. The increase in the value added generated by transport, industrial and wholesale enterprises determined positive changes in GDP.

In I quarter 2010, GDP amounted to LTL 44814.3 million, i.e. by 0.9 per cent less than in I quarter 2009 (the changes have been estimated using a chain-linked volume of added value).

Fig. 1. Changes in gross domestic product, as compared to the corresponding period of the previous year 

^♦ Changes in gross domestic product, first estimate.

Fig. 2. Changes in gross domestic product

In II quarter 2010, GDP per capita amounted to LTL 7310.3 at current prices, i.e. by 1.6 per cent more than in the same quarter in 2009 (price change adjusted).

In II quarter 2010, compared to II quarter 2009, seasonally and working day adjusted GDP increased by 1.1 per cent, as compared to I quarter – by 2.9 per cent (see Fig. 2).

Revised I quarter 2010 gross domestic product

Statistics Lithuania, based on more detailed quarterly data and having estimated the added value under a more detailed list of economic activities, has revised the second GDP estimate for I quarter 2010. According to the revised data, in I quarter, GDP amounted to LTL 20527.8 million at current prices and, against I quarter 2009, decreased by 2.8 per cent (the previously announced second GDP estimate amounted to LTL 20863.1 million and also dropped by 2.8 per cent).

The revised data are announced in the pre-defined tables and in the Database of Indicators on the website of Statistics Lithuania.

Gross domestic product estimates

^◘ Provisional data.
^♦ First estimate.

Do you regret that a year ago you supported Grybauskaite’s candidacy during the presidential election?

Not at all. We work with the president closely. I can tell you that over the year Grybauskaite was able to reveal herself well. I think Lithuania is lucky to have such a president.

Do you feel the president’s support for yourself and the cabinet?According to the Constitution, we are independent institutions, and we do not necessarily have to have a united opinion on every issue. We hold discussions; sometimes we see certain things differently. Yet, in my opinion, we have the same opinion on vitally important issues.

What complaints do you hear, when you meet with the president?We definitely did not have any illusions that the president’s role during this year would be only to praise us: Look how well the government is working!Hurray! Applause! We ourselves see things were work is needed, where it is necessary to concentrate our strengths. For example, the fight against corruption, smuggling, and the shadow economy.

Yes, we are criticized and disciplined, but we still try to achieve tasks after listening to the criticism and proposals and after discussing them.

In the beginning of the term in office it seemed like the relations between the president and the cabinet were almost ideal. Later, we started seeing disagreements. Are things only getting worse with time?

I cannot say that we have a critical mass of issues on which there are big disagreements. Maybe there are different positions on some of the questions.

For example, regarding land. In my opinion, strengthening the self-government is a priority. It is impossible to strengthen them without giving them more power and responsibility. This is how we saw the issue of land. May be we did not coordinate this issue with the President’ Office fully, and the president’s proposal was adopted.

Talking about appointments to posts in the law enforcement, I can say that the government does not have some sort of special powers. I would like to wish success to the new prosecutor general in reforming the office and in improving its prestige.

When it comes to selecting candidates for the posts in various law enforcement institutions, however, our knowledge about proposed candidates is pretty limited. In this situation I said we knew nothing about the candidate for the prosecutor general’s post. The conversation with him in the parliamentary group was very brief.

In such a situation it is very hard to accept responsibility for appointing someone to such a post.

Once you said: “Not only the government, but also the Seimas and the president should be responsible for the finance policy. Was this a complaint against the president for avoiding responsibility for the finances and for blaming everything on the government?

No. I do not want to create an impression that there are some sort of major disagreements. During discussions in the Seimas sometimes we would like to see understanding why the government presents this or that decision in the area of finances. The amount of understanding, however, is increasing, even among some of the opposition members.

Even though we discuss this or that tax or financial issue with Grybauskaite, as an experienced economist, in the end we come up with common decisions.

Do you already have the president’s support for the future decisions regarding tax hikes in autumn?

We are not planning this. Therefore, there is no need to gain support.

Does this mean that you can guarantee that in the fall there will not be tax hikes?We are definitely not planning this at this time. We will see how things are, when it is time to form the budget.I can only assure you that Lithuania will not be pushed into debt up to its neck. To achieve this, we must reduce the deficit. This is our main goal. The president understands this very well and she often has said that for a few years there will not be any opportunities to be generous with our spending.

Your answer “we are not planning this at this time” is confusing. The period “at this time” can end tomorrow. Can you say clearly whether taxes will be increased?

The next question is how to achieve the goals related to the deficit reduction. Can we continue reducing spending, or should we look for additional income, or should we try to regain more revenue from the shadow economy.

We are discussing all those issues; sometimes our discussions are too open. We are looking for solutions, and the year and a half of our work in the coalition shows that we are capable of finding them.

Do your hear complaints from the president because of improperly implemented reform of the Government’s Chancellery and leadership of ministries and because of weak office of the Prime Minister’s Chancellery?

Well, we have different views. I, for example, do not know and do not assess the chancellors of other institutions that I do not know. I know the Seimas Chancellor. I think it was no accident that in one survey he was voted number one in terms of professionalism. I also value my chancellor – Deividas Matulionis, who was third in the same survey.

I understand that the bread and butter of journalists is to look for disagreements, biggest conflicts and accusations.

Just do not tell me that your relations with the president are ideal…I only want to remind you that the media constantly escalates certain things, for example, that Kubilius’s is in conflict with Vytautas Landsbergis. This has been continuing for over ten years. I have already gotten used to the apocalyptic visions related to the alleged disagreements between myself and Landsbergis.Yes, we know what foreign policy we are implementing.Compared with the past, I see certain natural changes in his area. I think there are fewer declarative-style positions and more consistent work. The most important goal in the foreign policy is to ensure Lithuania’s geopolitical security. This will be greatly influenced by the future perspective in the region between our country and Russia. I see potential for that region to gravitate closer towards Europe.

The president is responsible for setting the foreign policy directions and is responsible for implementing the foreign policy together with the government. Do you know what our foreign policy is?

What about the fact that we are turning away from the United States, as our biggest ally?

Over the past six months I visited the United States twice. I met with President Barack Obama and State Secretary Hillary Clinton. I do not see here any turning-way. I see a changed US policy towards Russia and our region. What this means we can see from positive things. Yet, we must monitor the situation closely and analyse it.

Will the president’s support for the government last at least until the end of the term of this Seimas?

I do not know whether the issue of support needs to be raised. Here is the essence: Do we agree on essential political issues? I see such a consensus.

The fact that sometimes we are unable to convince the public is our mistake and unfinished work.

How can you explain this paradox – the president, who supports you is the most popular among the public, while your ratings are the lowest?

Perhaps it is for the best that this is how we divide things… (Laughs!)

A government that comes to work during such a difficult time must choose whether to worry about its popularity or whether to concentrate on the works it must implement quickly and effectively. In this case, popularity plays a secondary role.

Of course, one always wants to see more understanding and appreciation from the public. In the end, however, you ask yourself whether you are really doing what you are supposed to be doing, and you go do what you have to do.

“I am pleased with the results of the ongoing economic recovery, proving that we are on the right track, and that the Lithuanian economy is climbing out of the recession, and, finally, that our economic stimulus plan is working. It will certainly require our further steadfast efforts and time to tame current unemployment and budget deficit. Then, the bare statistic figures of growth will translate into palpable results for the population.”- said Prime Minister Andrius Kubilius.

According to the Prime Minister, unemployment, the lowest as it is among the Baltic states, still lingers high, and the Government is determined to continue promoting creation of new jobs, foreign investment and reducing red tape for business.

With reference to the above statistics, Advisor to the Prime Minister Mykolas Majauskas has pointed out that despite the economic recovery, the budget deficit remains very high and one of the largest in the EU, thus calling for further consolidation of public finances next year through a reform of state property management, which has revealed significant negligence; through fight against smuggling; and energetic efforts to boost small and medium-sized businesses.

Statistics Lithuania Wednesday published figures that show a 1.1 percent year-on-year growth in gross domestic product for the second quarter. A 6.6 percent increase in GDP was also recorded against the first quarter of the year.

Though there was growth annually and on a quarterly basis, the economy in the first half of the year is still 0.9 percent slower than in 2009.

There was a minor revision to the first quarter GDP figures by the statistics department, but the base percentage remains at 2.8 percent quarterly growth.

Most analysts expect there to be annual growth this year, meaning that the second half of the year should be better for industry.

Domestic demand, particularly in retail, has been extremely low since late 2008 and continues to move slowly. Industrial orders have however picked up recently as other countries begin to recover and order Lithuanian goods.

Faster growth is expected in 2011.

The report states that the average size of the shadow economy in this Baltic nation made up almost 32 per cent of official GDP in 1999-2007.   The smallest size of the shadow economy was in 1999 making up 30 per cent of GDP.  In 2007 the shadow economy reached 34 per cent.

Estonia was ranked 102 with avarage 40,3 per cent of the shadow economy making up its official GDP in 1999 to 2007, Latvia accordingly was left in 109 place with 46.6 per cent and Poland was 52 with 28 per cent.

In recent months Prime Minister Dombrovskis has been invited to speak to numerous international audiences about the measures Latvia has undertaken to overcome the economic downturn. As can be seen from the attached overview of economic trends in Latvia in July 2010, there are clear indications that Latvia’s efforts are paying off.

Prime Minister Dombrovskis has noted that Latvia’s experience shows that internal devaluation and disciplined fiscal consolidation in small open economies like Latvia’s, although socially painful, can be successful in helping a country overcome economic turbulence “It allows within a short time span to regain the confidence of international financial markets and thus to stabilize the situation promptly. It grants the enterprises much needed access to financing which, in turn, is a pre-condition for revitalizing the economy, restart exports and get out of crisis”.

Increasingly, international observers are praising Latvia’s ongoing reform agenda as a leading example for the reform process in Europe, especially in euro zone countries. Dombrovskis has stressed: “This means that they are following the Latvian example and at some point we may bring some valuable experience to our European partners”.

The Prime Minister has underlined: “I have a large collection of news headlines from last year predicting total economic and financial collapse for Latvia. There were also large speculations against the Lats and I am glad to say that those predictions were wrong, and Latvia not only survived, but is recovering well.”

As the Wall Street Journal noted on April 10 this year “the case of Latvia shows that with enough political will, it is possible to slash a fiscal deficit even when an economy is collapsing”. Prime Minister Dombrovskis admits: “The case of Latvia also shows that it is very difficult to apply a “one size fits all” approach to economic problems, due to local conditions and culture. There is no magic remedy.”

On July 20, the Commissioner for Economic and Monetary Affairs of the European Commission Olli Rehn signed the new Supplemental Memorandum of Understanding between the European Union and Republic of Latvia. According to Commissioner Rehn, “The program is on track, financial conditions have largely stabilized and the economic situation is showing signs of improvement. ” Rehn also stated that the Memorandum “puts strong emphasis on steps to improve the business environment, competitiveness, public procurement, public sector efficiency, EU funds absorption and other elements important for Latvia’s economy to be efficient and competitive.” 

Dapkus Mr Prime Minister, the political season has ended together with the end of the Seimas spring session. What has the ruling coalition and the government managed and not managed to achieve during this political season? Which of the tasks that you assigned to the government and the ruling coalition at the beginning of the session would you like to mention?

Kubilius Indeed, even though the Seimas and the government are not the same institution, when a parliamentary sessions ends, we assess the work we have done. The government has very clearly defined the most important priorities for this year and it has been making every effort to implement them.

One of the most important priorities has been the same everywhere in the world and in Europe – to deal with the aftermath of the crisis and to ensure economic revival. I am happy that even though it was difficult to make the decisions, and even though these decisions were painful to the people, we managed to make them, and we continued cutting some expenses, including social expenses. Because we have done that we can now be more optimistic about our future and say that because we were responsible enough, our generation will not burden Lithuania with debt, which means that we feel responsibility for the future of our children.

Another thing that I would like to emphasize, and this was an important issue during this session, we have adopted the legal acts that would help us cope with unemployment. I have in mind the amendments to the Labour Code that will encourage businesses to create new jobs, which sometimes can be temporary jobs, and to employ new workers.

And the third thing I would like to mention is that we will continue looking for ways to help businesses. We see certain signs that some businesses are recovering from the economic crisis.

It is very important that there are first signs that our policy of inviting IT companies, big global companies, to open their businesses in Lithuania, has started showing results. Barclays has established its global computer-engineering centre in Lithuania. We are in the process of signing an agreement with Western Union, which will also set up a similar centre. We are about to sign an agreement with IBM. All this is very important if we consider our long-term perspective.

What other strategic economic issues could I mention? Perhaps changes in the energy market. I would like to remind you that we have been living without the nuclear power plant since 1 January. We had to quickly adjust to the new situation. An open electric power trading market was launched. We have been successfully creating a common Baltic electric power market. We are going to have changes in the gas sector. I would also like to mention the administrative reform. By reforming the system of regional governments we were seeking to bring local government decisions closer to the people. We have not yet managed to ensure that all local governments take over or seek to take over as many duties of regional governments as possible, but we will keep moving in that direction.

As you have mentioned, Lithuania has been living without the Ignalina nuclear power plant since 1 January. What are the government’s plans regarding a new nuclear power plant or regarding other ways that could be employed to ensure electric power supply?

First, I would like to note the fact that the price of electricity went up a little after we closed the Ignalina nuclear power plant, but it did not go up as much as it was forecasted in 2008. They were saying that the price of electricity could reach 0.80 Litas or even 1.00 Litas per kilowatt-hour. But this did not happen. The price of electricity went up by 15-20 per cent (to 0.42 Litas). We certainly have managed to protect Lithuania from bigger problems. And we have started getting ready for further developments.

During this political season we announced an international tender for a strategic investor. I believe we will have such an investor by the end of this year. And then together with our neighbours Latvians, Estonians, and Poles we will move on to concrete preparation for the construction. We are in contact with our neighbour Belarus. I think that through such cooperation we will perhaps manage to persuade the Belarusians that it is not very wise of them to build a nuclear power plant near the Lithuanian border. But these issues will be discussed in the future.

You have mentioned that nuclear power plants in Belarus and Kaliningrad may be built. What will happen with our own construction project if so many nuclear power plants are planned to be built in our neighbourhood?

I think that if we coordinate our plans with our neighbours, if we implement them, if we do not get distracted, and if we adhere to our plan, perhaps some of our neighbours will change their minds. But to achieve that we should ensure that our plans are not misunderstood. And I think that there is more and more understanding as far as our plans are concerned.

I am pleased that, not so long ago, perhaps at the beginning of May, there was a meeting of the four energy ministers or economy ministers responsible for energy issues in Brussels. The meeting was organized at our initiative and the initiative of EU Energy Commissioner Guenther Oettinger. This was a meeting of the Lithuanian, Latvian, Estonian, and Polish ministers, and Oettinger also participated in the meeting. They signed a very important document, a declaration on the regional importance of the Visaginas nuclear power plant. The document includes the EU’s involvement in the implementation of this project.

The government has decided to merge the electric power networks and to establish a new electric power group. Does it have anything to do with the strategic investor? Besides the construction plans, what are you going to do to restructure the electric power sector?

The restructuring plans are also based on the European Commission’s directives on the separation of the electric power transmission, distribution, and production networks. However, at the same time, the state will remain the owner of all these companies. We will seek to manage all the assets that belong to the state in a proper and effective way. I would like to draw your attention to the wider context here.

We are about to prepare the first public report, which we will publish next week. The report is being prepared in accordance with international standards. It will show how the state is coping with the management of its assets, and the value of these assets is really high – about 18 billion litas. This constitutes about 25 per cent of all the assets existing in our country. For the first time we will announce the results of the management of these assets. The results will be calculated in accordance with international standards.

I have to admit that the results do not look very good. If, for example, such assets were managed by Sweden, the state budget would have received additional 1.5 billion Litas. This is how much profit we could generate from the management of the state-owned assets. This includes the energy and transport sectors, railways, the national mail service, the state-owned woods, and the state-owned buildings where various bureaucratic organizations have their offices.

This leads us to an obvious conclusion that we should reform the management of our assets so that it is done in accordance with internationally accepted principles. There are three key principles. First one is transparency: Reports on the state’s management of the assets should be made public quarterly and the main report should be made public yearly. This will allow the public, our electorate, and international markets to evaluate our success.

This will allow us to show clearly and in accordance with international standards how we are managing our assets. We have not been doing that for 20 years. Nobody has tried to do that; there was just talk about our assets in general terms. Some were saying that we were managing them well, others that we were doing not so well. Now, however, we have clearly shown what the real situation is. The second principle is that we should formulate our goals in a very clear way; we should define what is it that the state is seeking by managing its assets. As we can see from the experience of other countries, one clear goal should be the increase of value of such assets. And the third one, a very clear principle, is to depoliticize the management of state-owned companies.

We are going to base our work on the aforementioned principles. There will be very important reorganizations and changes that should bring benefits to all people of Lithuania.

We should do the same in the energy sector. The assets controlled by the energy companies should be used to implement important energy goals, including the construction of the new nuclear power plant. The same goes for the construction of the electric power bridges, and we have made progress in both projects, with Sweden and Poland. As you can see, we have a lot of important work to do here. As for the gas sector, we are methodically seeking to correct the really big strategic mistakes that had been made in the past when the entire Lithuanian gas sector was privatized and when the distribution and transfer pipelines were not separated. And now we are prepared to implement the EU directives without any exceptions and reservations and to separate these two functions.

Without a doubt, the owners of the Lithuanian gas sector, be it Gazprom or somebody else, are not happy and will never be happy with the changes. But we are seeking to carry out this reorganization because this is the only way to ensure that Lithuanian gas users – individual users and businesses – could finally get the possibility of an alternative gas supply. This is why our next step, which we are going to make, is the construction of a liquefied gas terminal.

As for the gas sector, the separation of the functions and the implementation of the EU directive may lead us to the deterioration of relations with Gazprom. What would be the consequences? How would the owners of Gazprom and Lithuanian Gas react to these initiatives? For a long, time they have been successfully opposing the plans, such as the construction of the liquefied gas terminal.

I do not know what attitude Gazprom has towards the package of measures approved by the EU. If it does not like these measures, it could discuss this with the European Commission. We see the implementation of this directive as a huge strategic benefit to Lithuania, because it is absolutely obvious that our gas sector will not be interested in any alternative pipelines, links with Poland, or the construction of the liquefied gas terminal as long as it is controlled by Gazprom. This is a natural reaction if you are a monopolist, and this is what is today…

It is not important whether this monopolist is Gazprom or some Western company. It would be insane to ask them to allow others to enter the market. We should make it very clear that perhaps we overlooked something, or, if we want to be more precise, perhaps we made a mistake when we allowed one monopolist to privatize the entire Lithuanian gas sector. Seven or eight years have passed since the privatization, and despite all the declarations that alternatives would be created, nothing is happening. This is because, and I will repeat my words again, a monopolist would never agree to such things. And we should understand that very clearly.

Coming back to the liquefied gas terminal, what are the plans, with whom the government is going to build it, and which investors is the go averment going to invite?

We want to move fast forward, the time for discussions is over. If we look at the situation in the world market, international markets, it is absolutely obvious that we are painfully losing because we do not have any alternative to the monopolistic gas supply. In a situation like ours, the monopolist can set his own price that is about $100 higher than Gazprom’s price in the European market. Or the price for 1,000 cubic meters is $150 higher than the price of liquefied gas sold on the world market.

Big changes have taken place in the world when the Americans discovered the technology of extracting shale gas. The United States has got the possibility of having its own gas resources thanks to that. This is why there is a huge oversupply of gas right now in the market. The price of gas extracted in various Middle Eastern countries, such as Qatar and other countries, has fallen drastically, which means that we do not have much time to consider and discuss things.

But are these countries interested in investing in Lithuania, in coming to Lithuania with their capital?

Without a doubt, they are willing to do that. We see a possibility of negotiating with the countries that produce liquefied gas, be it Qatar or some other country; that is an object of discussion. But it is clear that if the state is building such a terminal, it should maintain its leading role in the project.

When will negotiations with an investor and the actual construction be launched?

I certainly would like the process to be as speedy as possible. I think that we should agree on certain organizational issues this summer and after that we will move forward.

But there were plans for you and your delegation to visit one of such countries, and the visit did not take place.

It has been postponed a little, but that is not a problem. We want to have a very clear vision of our actions and our plans. And I hope we will have a plan in the near future. According to our calculations, Lithuania may need about 1.5-2 billion cubic meters of liquefied gas per year. This will give us a very important alternative, because Lithuania uses about 3 billion cubic meters of gas per year. I would like to mention here another new initiative. As you know, during my recent visit to Belarus I had meetings with the Belarusian prime minister and president, the Belarusian representatives expressed their very clearly-formulated strategic interest and asked Lithuania for a certain help or cooperation so that Belarus could also have alternative gas supplies…

… Because they are tired of the constant pressure…

… Yes, they are tired of that; they also went through the so-called gas war. I had an impression that their interest was not melodramatic; it was a very real interest. Without a doubt, their needs are much bigger; they would like to have a liquefied gas terminal for the capacity of up to 8-10 billion cubic meters of liquefied gas, which would clearly change the nature of such a terminal. This is another reason why we need to make swift decisions.

Does this mean that there is a possibility of Belarus participating in the project in one way or another; is it really interested in that?

Belarus is interested, we just need to quickly consider all the possibilities, whether we start with a small terminal, the one we have already planned and which would suit our needs, and then think about how to expand it, or whether we should consider some other options. But I think that the fact the Belarus is looking for alternative sources of gas supply is a very important new tendency.

There have already been attempts to build a terminal in Vilnius, but interest groups had ruined the plans with the help of the legal system. Do you think this time the project will succeed?

All I can say is that our strategic priority is to transform our energy sector into an independent, autonomous, and integrated into the EU energy system. This does not mean that we will stop buying gas from the countries like Russia if the price seems competitive to us. But our strategic priority is an autonomous and independent energy system, and it should be integrated into the EU network.

Over the year and a half that we have been in power, we have demonstrated very clearly that in the areas where we see our most important strategic goals, we manage to achieve the results we need. We manage to implement our decisions even when our coalition is not stable, when it engages in discussions, or when it is chaotic, despite all the discussions and other political peculiarities we manage to achieve our goals. Therefore I do not see any reason why we should doubt whether we will be able to make decisions on such an important strategic issue.

How will this influence the price? Now we are paying a very high price for gas…

As I have already mentioned, the current price of 1,000 cubic meters of liquefied gas on the international market is about $150 less than the price we are paying Gazprom, the monopolist that provides gas to Lithuania. I have discussed this with Russian Prime Minister Vladimir Putin. I told him that Gazprom’s representatives should themselves realize that they have to analyse their price policy and they have to make it more flexible. Otherwise the price will only motivate us to seek alternative supplies. Actually, we find alternative supplies important and necessary to us in any case.

What has the Russian prime minister said about the prices of gas and Gazprom’s activities in Lithuania in general? As far as I remember, there had been cases of politicking and meddling in our domestic policy.

We dedicated a lot of time, perhaps half an hour, to the discussion of the tendencies in the global gas market. Perhaps the Russian prime minister thought that we did not know and did not see what was going on, so he was trying to explain to me that the Americans had discovered shale gas. I told him that we knew that and that the Poles could do the same. In other words, we exchanged the information we had. I think that the times when Gazprom could be a monopolist and could dictate its conditions in Europe will soon be over. When during the meeting with the Russian prime minister I said that we were planning to build a liquefied gas terminal, he repeated three or four times that Russia was not against such plans.

Mr Kubilius, what can you say about the rumour that after the electricity distribution networks are merged, they will be privatized?

This interpretation is again not exactly correct… We are speaking about the management of all state assets; which is about 17 billion Litas, including the electricity networks. After we deal with the initial arrangements, that is after there is the initial transparency and order, and after we announce all the data, and after we organize the management process, then we will allow private capital to contribute partially to the state companies, but this part will be very small, we will certainly not give away the entire state portfolio. And we are going to do that not the way we used to do such things in the past when privatizing objects, but we will distribute part of the shares in the market, at the same time we will strengthen capital markets and create new financial instruments. In any case, when the partially private capital enters the management of such assets, it brings positive changes. Private capital always seeks to reduce all expenses and stop all types of squandering. If this is done, state-owned assets could generate profit.

You have mentioned that there has been progress made in the construction of the electricity bridge to Sweden. What have we achieved?

Last year, we achieved crucial political agreements. We had to persuade our neighbours Latvians. Without any doubt, we had to work very consistently to do that. We also had to do a lot of work to persuade the Swedes that we were really ready to build not just some line between a Lithuanian and a Swedish business, but a real infrastructure line that the entire Baltic electric power market will be able to use. The Baltic electric power market will be connected to the Scandinavian electric power market.

In the past, the owners of our energy companies, including the owners of LEO LT, did not manage to persuade the Swedes. Perhaps they had some other plans. We have managed to reach an agreement and to ensure that this project is partially financed by the EU. Now we are doing the concrete practical work. According to the Swedish standards, and according to all international standards, such work cannot be done in one day. We have been urging our neighbours Swedes to accelerate the work, because according to the initial plan of the Swedish energy sector, such a line could start working in 2016.

You have mentioned that the price of electricity after the Ignalina nuclear power plant was closed did not go up as much as it was expected. You have said that this was because of the open electric power market? However, others are saying that we could have made agreements with Russian monopolies and receive electricity for an even lower price.

We think that the situation with the prices was exactly what it was because we created a possibility for the market to function, and the market is operating in accordance with the established Scandinavian model, we applied the same rules. And this is why we managed to avoid the rapid growth of prices that was predicted in all the reports that were used to try to convince [the EU] that the closure of the Ignalina nuclear power plant would be catastrophic for Lithuania. The previous government made an official statement that the price would double after the Ignalina nuclear power plant is decommissioned.

Does this mean that an agreement with RAO (Russian electricity company) was not needed?

It was not needed, that is for sure. And, in my opinion, the fact that the Scandinavian model is working is one of the key reasons why we have a competitive electricity price.

’Of course, we’d like to see the project proceeding more actively. However, things have been moving faster since the current government took office. The Visaginas Nuclear Power Plant is an important project for the whole region. Estonia is interested in taking part in it,’ the Estonian Prime Minster said to Veidas