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Diplomacy in Action

Lithuania (01/98)


For the most current version of this Note, see Background Notes A-Z.


Official Name:
Republic of Lithuania

Area: 65,200 sq. km. (26,080 sq. miles); about the size of West Virginia. Cities:
Capital--Vilnius (pop. 592,500); Kaunas (430,000); Klaipeda (206,000); Siauliai (148,000); Panevezys (129,000).
Terrain: Lithuania's fertile, central lowland plains are separated by hilly uplands created by glacial drift. 758 rivers (many are navigable) and 2,833 lakes cover the landscape. The coastline is 99 km (62 miles) long. Land use--49.1% arable land, 22.2% meadows and pastures, 16.3% forest and woodland, 12.4% other. With four distinct seasons, the climate is humid continental, with a moderating maritime influence from the Baltic Sea. January temperatures average -5oC (23oF); July, 17oC (63oF). Annual precipitation averages 54-93 centimeters (21-37 in.).

Nationality: Noun and adjective--Lithuanian(s).
Population: 3.75 million, 146 people/sq. mile.
Growth rate: -0.4%. Birth rate--13/1,000. Death rate--11/1,000. Migration rate--4 migrants/1,000. Urban dwellers--68%. Density--56 people/sq km (1989). Divorce rate--33% (1989).
Ethnic groups: Lithuanian 80.6%, Russians 8.7%, Poles 7%, Belarusians 1.6%, Ukrainians 1.1%. Religions: Catholic (80%), Lutheran/Calvinist (10%), Jewish (7%), Orthodox (3%).
State language: Lithuanian. A minority speak Russian and Polish.
Education: Years compulsory--9. 60% of the adult population has completed secondary education, and 11% have completed higher education. Attendance--640,000 students at 2,326 schools, plus 55,300 university students at 15 universities and institutes of higher education. Literacy--99%.
Health: Infant mortality rate--18/1,000. Life expectancy--66 yrs. male, 76 yrs. female.
Work force: 1.6 million: Industry--33%, Science, education, culture--14%. Construction--13%. Agriculture, forestry--8%. Health care--7%. Transportation/communications--7%. Trade and government--10%. Other--8%.

Type: parliamentary democracy.
Constitution: On October 25, 1992 Lithuanians ratified a new constitution, which officially was signed on November 6 that year.
Branches: Executive--popularly elected President (Chief of State); Prime Minister (Head of Government). Legislative--seimas (Parliament--141 members, 4-year term). Judicial--Supreme Court.
Administrative regions: 11 cities, 44 rural districts.
Principal political parties/coalitions: Homeland Union/Conservatives (70 seats); Christian Democrats (16 seats); Center Union (13 seats); Democratic Labor Party (12 seats); Social Democrats (12 seats); Democratic Party (2 seats); Independent candidates (12 seats); (4 seats are vacant)
Suffrage: 18 years, universal
Central government budget: $1.1 billion (education 20%, public order/safety 9%, social services 8%, defense 3%)
Flag: horizontal tricolor: yellow, green, red.

GDP: $5.6 billion. 1996 GDP growth: 3.6%.
Average annual wages: $2,322.
1996 Inflation: 13.1%.
Unemployment: 6.2%
Natural resources: peat, potential for exploiting moderate oil and gas deposits offshore and on the coast.
Manufacturing: 25% of GNP (technological instruments, energy, textiles, and footwear, machinery and spare parts, chemicals, food processing, wood/paper/pulp products), trade 17%, transportation 12%, construction 9%, energy 6% (nuclear-powered RBMK electrical plant), Agriculture/forestry 9%: cattle, dairy products, cereals, potatoes), other 22%.
Cultivable land--1.36 million ha, of which 60% arable, 18% meadow, 13% pasture.
Trade: Exports--$3 billion: minerals/energy 12%, machinery/electronics 11%, chemicals 12%, textiles 15%. Major partners--Russia 23.8%, Germany 15.7%, Belarus 10.1%, Latvia 9.3%, Ukraine 7.7%, United Kingdom 3.4%, Poland 3.2%. Imports--$3.9 billion: minerals/energy 25%, machinery/electronics 17%, chemicals 9%, textiles 10%.  Major partners--Russia 29%, Germany 16%, Poland 4%, United Kingdom 3%, Ukraine 3%, Belarus 2%, Latvia 2%.
Official exchange rate: 4 litai (Lt) = $1.00.

The largest and most populous of the Baltic states, Lithuania is a generally maritime country with 60 miles of sandy coastline, of which only 24 miles face the open Baltic Sea. Lithuania's major warm-water port of Klaipeda lies at the narrow mouth of Kursiu Gulf, a shallow lagoon extending south to Kaliningrad. The Nemunas River and its dense network of tributaries connect the major inland cities and serve as a great asset to internal shipping. Between 56.27 and 53.54 latitude and 20.56 and 26.51 longitude, Lithuania is glacially flat, except for morainic hills in the western uplands and eastern highlands no higher than 300 meters. The terrain is marked by numerous small lakes and swamps, and a mixed forest zone covers 28% of the country. The growing season lasts 169 days in the east and 202 days in the west, with most farmland consisting of sandy- or clay loam soils. Limestone, clay, sand and gravel are Lithuania's primary natural resources, but the coastal shelf offers perhaps 10 million barrels' worth of oil deposits, and the southeast could provide high yields of iron ore and granite. Lithuania's capital, Vilnius, lies at the geographical center of Europe.

Border changes initiated by the U.S.S.R. from 1939-1945 have delayed a formal border agreement between Lithuania and Belarus, although a functional border exists based upon Soviet demarcations. The borders with Latvia, Poland and the Kaliningrad district are mutually recognized.

The name "Lietuva" or Lithuania, might be derived from the word "lietava," for a small river, or "lietus," meaning rain (or land of rain). Lithuanian still retains the original sound system and morphological peculiarities of the prototypal Indo-European tongue and therefore is fascinating for linguistical study. Between 400-600 AD, the Lithuanian and Latvian languages split from the Eastern Baltic (Prussian) language group, which subsequently became extinct. The first known written Lithuanian text dates from a hymnal translation in 1545. Written with the Latin alphabet, Lithuanian has been the official language of Lithuania again since 1989. The Soviet era had imposed the official use of Russian, so most Lithuanians speak Russian as a second language while the resident Slavic populace generally speaks Russian as a first language.

Lithuanians are neither Slavic nor Germanic, although the union with Poland and Germanic colonization and settlement left cultural and religious influences. This highly literate society places strong emphasis upon education, which is free and compulsory until age 16. Most Lithuanians and ethnic Poles belong to the Roman Catholic Church, but a sizable minority are Russian Orthodox.

Enduring several border changes, Soviet deportations, a massacre of its Jewish population, and postwar German and Polish repatriations, Lithuania has maintained a fairly stable percentage of ethnic Lithuanians (from 84% in 1923 to 80% in 1993). Lithuania's citizenship law and constitution meet international and OSCE standards, guaranteeing universal human and civil rights.

The earliest evidence of inhabitants in present-day Lithuania dates back to 10,000 BC. Between 3,000-2,000 BC, the cord-ware culture people spread over a vast region of Eastern Europe, between the Baltic Sea and the Vistula River in the west and the Moscow-Kursk line in the east. Merging with the indigenous population, they gave rise to the Balts, a distinct Indo-European ethnic group whose descendants are the present-day Lithuanian and Latvian nations and the now extinct Prussians.

The first written mention of Lithuania occurs in 1009 AD, although many centuries earlier the Roman historian Tacitus referred to the Lithuanians as excellent farmers. Spurred by the expansion into the Baltic lands of the Germanic monastic military orders (the Order of the Knights of the Sword and the Teutonic Order) Duke Mindaugas united the lands inhabited by the Lithuanians, the Samogitians, Yotvingians and Couranians into the Grand Duchy of Lithuania (GDL) in the 1230s and 40s. In 1251 Mindaugas adopted Catholicism and was crowned King of Lithuania on July 6, 1253; a decade later, civil war erupted upon his assassination until a ruler named Vitenis defeated the Teutonic Knights and restored order.

From 1316-41 Vitenis' brother and successor, Grand Duke Gediminas, expanded the empire as far as Kiev against the Tartars and Russians. He twice attempted to adopt Christianity in order to end the GDL's political and cultural isolation from Western Europe. To that purpose, he invited knights, merchants and artisans to settle in Lithuania and wrote letters to Pope John XXII and European cities maintaining that the Teutonic Order's purpose was to conquer lands rather than spread Christianity. Gediminas' dynasty ruled the GDL until 1572. In the 1300s through the early 1400s, the Lithuanian state expanded eastward. During the rule of Grand Duke Algirdas (1345-77), Lithuania almost doubled in size and achieved major victories over the Teutonic and Livonian Orders at the Battles of Saule (1236) and Durbe (1260). However, backed by the Pope and the Catholic West European countries, the Orders continued their aggression which greatly intensified in the 2nd half of the 14th century. During the period Algirdas' brother, Kestutis (Grand Duke in 1381-82) distinguished himself as the leader of the struggle against the Teutonic Order. The ongoing struggle precipitated the 1385 Kreva Union signed by the Grand Duke of Lithuania Jogaila (ruled in 1377-81 and 1382-92) and the Queen of Poland Jadwyga. Jogaila (Jagiello) married Jadwyga in 1386 and became the King of Poland. One of the conditions of the union was Lithuania's conversion to Christianity (1387) which intensified Lithuania's economic and cultural development, orienting it towards the West. The conversion invalidated the claims by the Teutonic Order and temporarily halted its wars against Lithuania.

Lithuania's independence under the union with Poland was restored by Grand Duke Vytautas. During his rule (1392-1430) the GDL turned into one of the largest states in Europe, encompassing present-day Belarus, most of Ukraine and the Smolensk region of western Russia. Led by Jogaila and Vytautas, the united Polish-Lithuanian army defeated the Teutonic Order in the Battle of Tannenberg (Gruenwald or Zalgiras) in 1410, terminating the medieval Germanic drive eastward.

The 16th century witnessed a number of wars against the growing Russian state over the Slavic lands ruled by the GDL. Coupled with the need for an ally in those wars, the wish of the middle and petty gentry to obtain more rights already granted to the Polish feudal lords drew Lithuania closer to Poland. The Union of Lublin in 1569 united Poland and Lithuania into a commonwealth in which the highest power belonged to the Sejm of the nobility and its elected King who was also the Grand Duke of Lithuania. Mid-16th century land reform strengthened serfdom and yet promoted the development of agriculture owing to the introduction of a regular three-field rotation system.

The 16th century saw a more rapid development of agriculture, growth of towns, spread of ideas of humanism and the Reformation, book printing, the emergence of Vilnius University in 1579 and the Lithuanian Codes of Law (the Statutes of Lithuania) which stimulated the development of culture both in Lithuania and in neighboring countries.

The rising domination of the big magnates, the 16-18th century wars against Russia and Sweden over Livonia, Ukraine and Byelorussia weakened the Polish-Lithuanian Republic. The end of the 18th century witnessed three divisions of the Commonwealth by Russia, Prussia and Austria; in 1795 most of Lithuania became part of the Russian Empire. Attempts to restore independence in the uprisings of 1794, 1830-31 and 1863 were suppressed and followed by a tightened police regime, increasing Russification, the closure of Vilnius University in 1832 and the 1864 ban on the printing of Lithuanian books in traditional Roman characters.

Because of his proclamation of liberation and self-rule, many Lithuanians gratefully volunteered for the French Army when Napoleon occupied Kaunas in 1812 during the fateful invasion of Russia. After the war, Russia imposed extra taxes on Catholic landowners and enserfed an increasing number of peasants. A market economy slowly developed with the abolition of serfdom in 1861. Lithuanian farmers grew stronger, contributing to an increase in the number of intellectuals of peasant origin which led to the growth of a Lithuanian national movement. In German-ruled Lithuania Minor (K�nigsberg or Kaliningrad), Lithuanian publications were printed in large numbers and then smuggled into Russian-ruled Lithuania. The most outstanding leaders of the national liberation movement were J. Basanavicius and V. Kudirka. The ban on the Lithuanian press finally was lifted in 1904.

During WW I, the German army occupied Lithuania in 1915, and the occupation administration allowed a Lithuanian Conference to convene in Vilnius in September 1917. The Conference adopted a resolution demanding the restoration of an independent Lithuanianstate and elected the Lithuanian Council, a standing body chaired by Antanas Smetona. On February 16, 1918, the Council declared Lithuania's independence. 1919-20 witnessed Lithuania's War for Independence against three factions: the Red Army, which in 1919 controlled territory ruled by a Bolshevist government headed by V. Kapsukas; the Polish army; and the Bermondt army, composed of Russian and German troops under the command of the Germans. Lithuania failed to regain the Polish-occupied Vilnius region.

In the Moscow Treaty of July 12, 1920, Russia recognized Lithuanian independence and renounced all previous claims to it. The Seimas (parliament) of Lithuania adopted a constitution on August 1, 1922, declaring Lithuania a parliamentary republic, and in 1923 Lithuania annexed the Klaipeda region, the northern part of Lithuania Minor. By then, most countries had recognized Lithuanian independence. After a military coup on December 17, 1926, Nationalist party leader Antanas Smetona became President and gradually introduced an authoritarian regime.

Lithuania's borders posed its major foreign policy problem. Poland's occupation (1920) and annexation (1922) of the Vilnius region strained bilateral relations, and in March 1939 Germany forced Lithuania to surrender the Klaipeda region (the N�rnberg trials declared the treaty null and void). Radical land reform in 1922 considerably reduced the number of estates, promoted the growth of small and middle farms and boosted agricultural production and exports, especially livestock. In particular, light industry and agriculture successfully adjusted to the new market situation and developed new structures.

The interwar period gave birth to a comprehensive system of education with Lithuanian as the language of instruction and the development of the press, literature, music, arts and theater. On August 23, 1939, the Molotov-Ribbentrop Pact pulled Lithuania first into German influence until the Soviet-German agreement of September 28, 1939 brought Lithuania under Soviet domination. Soviet pressure and a complicated international situation forced Lithuania to sign an agreement with the USSR on October 10, 1939, by which Lithuania was given back the city of Vilnius and the part of Vilnius region seized by the Red Army during the Soviet-Polish war; in return, some 20,000 Soviet soldiers were deployed in Lithuania.

On June 14, 1940 the Soviet Government issued an ultimatum to Lithuania, demanding the formation of a new Lithuanian government and permission to station additional Red Army troops. Lithuania succumbed to the Soviet demand, and 100,000 Soviet troops moved into the country the next day. Arriving in Kaunas, the Soviet government's special envoy began implementing the plan for Lithuania's incorporation into the U.S.S.R. On June 17 the alleged People's Government, headed by J. Paleckis, was formed; rump parliamentary elections one month later were held, whereupon Lithuania was proclaimed a Soviet Socialist Republic on August 3.

Totalitarian rule was established, Sovietization of the economy and culture began, and Lithuanian state employees and public figures were arrested and exiled to Russia. During the mass deportation campaign of June 14-18, 1941 about 7,439 families (12,600 people) were deported to Siberia without investigation or trial; 3,600 people were imprisoned and over 1,000 massacred.

Lithuanian revolt against the U.S.S.R. soon followed the outbreak of the war against Germany in 1941. Via Radio Kaunas on June 23, the rebels declared the restoration of Lithuania's independence and actively operated a Provisional Government, without German recognition, from June 24 to August 5. Lithuania became part of the German occupational administrative unit of Ostland. People were repressed and taken to forced labor camps in Germany. The Nazis and local collaborators deprived Lithuanian Jews of their civil rights and massacred about 200,000 of them. Together with Soviet partisans, supporters of independence put up a resistance movement to deflect Nazi recruitment of Lithuanians to the German army.

Forcing the Germans out of Lithuania by 1944, the Red Army reestablished control, and Sovietization continued with the arrival of Communist party leaders to create a local party administration. The mass deportation campaigns of 1941-52 exiled 29,923 families to Siberia and other remote parts of the Soviet Union. Official statistics state that over 120,000 people were deported from Lithuania during this period, while Lithuanian sources estimate the number of political prisoners and deportees at 300,000. In response to these events, an estimated several ten thousand resistance fighters participated in unsuccessful guerilla warfare against the Soviet regime from 1944-53. As a measure for integration and industrial development, Soviet authorities encouraged immigration of other Soviet workers, especially Russians.

Until mid-1988, all political, economical and cultural life was controlled by the Lithuanian Communist Party (LCP). First Secretary Antanas Snieckus ruled the LCP from 1940-74. The LCP, in turn, was responsible to the Communist party of the U.S.S.R. In 1947 Lithuanians comprised only 18% of total party membership in 1947 and continued to represent a minority until 1958; by 1986, they made up 70% of the party's 197,000-strong body. During the Khrushchev thaw in the 1950s, the leadership of the LCP acquired limited independence in decision-making.

The political and economic crisis that began in the U.S.S.R. in the mid-1980s also affected Lithuania, and Lithuanians as well as other Balts offered active support to Gorbachev's program of social and political reforms. Under the leadership of intellectuals, the Lithuanian reform movement Sajudis was formed in mid-1988 and declared a program of democratic and national rights, winning nation-wide popularity. On Sajudis' demand, the Lithuanian Supreme Soviet passed constitutional amendments on the supremacy of Lithuanian laws over Soviet legislation, annulled the 1940 decisions on proclaiming Lithuania a part of the U.S.S.R., legalized a multi-party system and adopted a number of other important decisions. A large number of LCP members also supported the ideas of Sajudis, and with Sajudis support, Algirdas Brazauskas was elected First Secretary of the Central Committee of the LCP in 1988. In December 1989, the Brazauskas-led LCP split from the CPSU and became an independent party, renaming itself in 1990 the Lithuanian Democratic Labor Party.

In 1990, Sajudis-backed candidates won the elections to the Lithuanian Supreme Soviet. On March 11, 1990, its chairman Vytautas Landsbergis proclaimed the restoration of Lithuanian independence, formed a new Cabinet of Ministers headed by Kazimiera Prunskiene, and adopted the Provisional Fundamental Law of the state and a number of by-laws. The U.S.S.R. demanded to revoke the act and began employing political and economic sanctions against Lithuania as well as demonstrating military force. On January 10, 1991, U.S.S.R. authorities seized the central publishing house and other premises in Vilnius and unsuccessfully attempted to overthrow the elected government by sponsoring a local "National Salvation Committee." Three days later the Soviets forcibly took over the TV tower, killing 14 civilians and injuring 700. During the national plebiscite on February 9, 91% of those who took part in the voting (76% of all eligible voters) voted in favor of an independent, democratic Lithuania. Led by the tenacious Landsbergis, Lithuania's leadership continued to seek Western diplomatic recognition of its independence. Soviet military-security forces continued forced conscription, occasional seizure of buildings, attacking customs posts, and sometimes killing customs and police officials.

During the August 19 coup against Gorbachev, Soviet military troops took over several communications and other government facilities in Vilnius and other cities, but returned to their barracks when the coup failed. The Lithuanian government banned the Communist Party and ordered confiscation of its property.

Despite Lithuania's achievement of complete independence, sizable numbers of Russian forces remained on its territory. Withdrawal of those forces was one of Lithuania's top foreign policy priorities. Lithuania and Russia signed an agreement on September 8, 1992 calling for Russian troop withdrawals by August 31, 1993, which now have been completed in full, despite unresolved issues such as Lithuania's compensation claims.

For over a year after independence, political life was fettered by an unclear delineation of powers between parliament and government. Political polarization increased, and name recognition played a much more significant role in politics than party affiliation. Sajudis remained part of an unofficial ruling coalition with two other politically right-wing parties, but rivalries were heightened by personally divisive political attacks and bureaucratic gridlock.

In an effort to reduce the size and recalcitrance of a government bureaucracy allegedly impeding reform, in April 1992 then-Prime Minister Vagnorius unsuccessfully attempted to enact a measure permitting the dismissal of former Communist party members and of those unwilling to enforce government decrees.

Two deputies and a minister unsuccessfully tendered resignations in support of Vagnorius, but the rest of the cabinet wrote a letter to Chairman Landsbergis complaining of Vagnorius' confrontational governing style. Vagnorius unsuccessfully submitted his resignation in May. When a referendum in May to establish a permanent French-style office of president failed, Landsbergis also threatened to resign. Right-wing members of parliament boycotted legislative sessions to stall attempts to form a quorum and successfully forestalled Vagnorius' resignation until June, when a quorum passed a no-confidence motion. Landsbergis then chose Aleksandras Abisala as Prime Minister.

A constitution was approved by 53% of eligible voters (85% of those who actually voted) in an October 1992 referendum. The results of the October 25 and November 15 runoff elections handed the Democratic Labor Party (LDDP) headed by former Communist Party boss Algirdas Brazauskas a plurality of votes and a clear majority of parliamentary seats. February, 1993 presidential elections gave Brazauskas victory over a non-LDDP coalition led by independent candidate Stasys Lozoraitis, Lithuania's former ambassador to the U.S. Economic mismanagement and collapse, fueled by chronic energy shortages and political factionalism, played a decisive role in the election results.

Since then, the Lithuanian Government has worked steadily to improve relations with its neighbors and to implement necessary Western reforms. In August 1994, the Government, backed by the IMF, lobbied the public successfully to defeat a populist referendum backed by its own far left-wing as well as the opposition which called for the indexation of peoples' savings. However, LDDP candidates took a beating at the hands of the opposition in nationwide municipal elections held in March, 1995. Public perception that the government was not doing enough to promote prosperity and to combat corruption and organized crime again were significant issues,

Caused primarily by a lack of supervision and regulation over the banking sector, a long-simmering financial crisis boiled over in December 1995, leading to the resignation in February of Adolfas Slezevicius as Prime Minister and LDDP Chairman. The new LDDP Prime Minister, Mindaugas Stankevicius, instigated an IMF-backed, comprehensive banking sector bailout plan.

These measures were not enough to persuade voters in the October 25 and November 10, 1996 rounds of parliamentary elections. The Landsbergis-led Conservative Party, gained 70 out of 141 seats, and another 16 seats went to its coalition partner, the Christian Democrats. The new coalition established a new government in early December and won a significant majority in nationwide municipal elections held in March 1997. Valdas Adamkus was elected president in December 1997 and will be sworn in on February 25, 1998.

The seimas (parliament), a unicameral legislative body, is the highest organ of state authority. It initiates and approves legislation sponsored by the Prime Minister. The Prime Minister has full responsibility and control over his cabinet.

Key Government Officials
President--Algirdas Brazauskas
Prime Minister--Gediminas Vagnorius
Foreign Affairs--Algirdas Saudargas
Defense--Ceslovas Stankevicius
Interior--Vidmantas Ziemelis
Justice--Vytautas Pakalniskis
Finance--Algirdas Semeta
Trade and Industry--Laima Andrikiene
Economics--Vincas Babilius
Admin. Reforms, Local Rule--Kestutis Skrebys
Communications/Information--Rimantas Pleikys
Construction/City Planning--Algis Caplikas
Transportation--Algis Zvaliauskas
Agriculture--Petras Knasys
Education and Science--Zigmas Zinkevicius
Health--Juozas Galdikas
Social Security and Labo--Irena Degutiene
Culture--Saulius Saltenis
Environment--Imantas Lazdinis
Seimas Chairman--Vytautas Landsbergis
European Affairs--Laima Andrikiene

Lithuania maintains an embassy in the United States at 2622 16th Street, Washington DC 20009 [tel: (202)234-5860].

The Soviet era brought Lithuania intensive industrialization and economic integration into the U.S.S.R., although the level of technology and State concern for environmental, health and labor issues sagged far behind Western standards. Urbanization increased from 39% in 1959 to 68% in 1989. From 1949-52 the Soviets abolished private ownership in agriculture, establishing collective and state farms. Production declined and did not reach pre-war levels until the early 1960s. The intensification of agricultural production through intense chemical use and mechanization eventually doubled production but created additional ecological problems.

Industry is Lithuania's largest economic sector. It is being privatized and most small firms are now under private ownership. Large industries, accounting for the bulk of Lithuania's capital investment, are still mainly under state control. Food-processing and light industries dominate but furniture, footwear, and textile manufacturing are important. Machine industries (tools, motors, computers, consumer durables) account for over one-third of the industrial work force but generally suffers from outdated plant and equipment. In agriculture, Lithuania produces for export cattle, hogs and poultry. The principal crops are wheat, feedgrains and rye. Farm production has dropped as a result of difficulties with agricultural privatization and poor weather.

The transportation infrastructure is adequate. Lithuania has one ice-free seaport with ferry services to German ports. There are operating commercial airports with scheduled international services at Vilnius and Kaunas. The road system is good but border crossings may be difficult due to inadequate border facilities at checkpoints with Poland. Telecommunications have improved greatly since independence as a result of heavy investment. The banking/financial sector is weak but improving.

Lithuania recorded a $369 million trade deficit in 1994. Its main trading partners are countries of the former Soviet Union (FSU) and Central Europe, and the main categories of imported products are energy, vehicles for transport and machinery. Exports consist mainly of machinery and food products.

Trade with Western countries increased from 8% of the total in 1992 to over 24% in 1994. In 1996, exports to European countries accounted for 94.3%, and exports to countries of the EU stood at 33.4% of Lithuania's export total.

Although gross national product (GNP) accounts comparable to Western figures are not yet fully available, real GDP has been declining since 1990 and finally broke even in 1994. Inflation is also high due to price deregulation and higher costs of imported energy and other inputs from the traditional suppliers in the FSU. The spread of private sector activity, not always reflected in national accounts statistics, is creating productive jobs and boosting consumer spending. Approximately 50% of Lithuanian workers are in the private sector, which accounts for half of Lithuania's GNP. The introduction in summer 1993, of a stable national currency backed by a currency board and pegged to the U.S. dollar has stimulated investment.

The government focuses its efforts on stabilizing the economy, taking measures to secure supplies of energy and other vital inputs, providing a social safety net to alleviate the worst consequences of the economic depression and combating economic crime. It has enacted legislation providing a reasonably transparent and favorable regulatory regime for private investment.

In 1996, Lithuania exported $34 million in goods to the U.S. and imported $63 million. In 1994, the Government privatized 70% of its state property, and to date has registered 5,300 foreign/joint ventures, whose authorized capital exceeds $400 million. Philip Morris is a major investor. As of January 1997, American companies have invested over $166 million (over 24% of total foreign direct investment) in Lithuania.

Over 139,000 enterprises now exist in Lithuania. State companies are now authorized to sell up to 50% of their shares for hard currency without cabinet approval, and many of over twenty commercial banks offer a full range of international banking services. Monthly inflation in 1996 was about 1%. In acceding to its European Union Association Agreement, the Government removed some restrictions on foreign ownership of land.

Lithuania's defense system is based upon the Swedish-Finnish concept of a "total," rapid response force composed of a mobilization base and a small group of career professionals. The defense ministry is responsible for combat forces, border control, customs, civil defense, search/rescue and intelligence operations. The "Iron Wolf" Brigade consists of eight battalions of about 200 men each. The "SKAT," or home guard, consists of over 50-60 units varying in size from company to platoon strength. Perhaps the most prestigious arm of the military, SKAT was born during Lithuania's struggle to regain independence in the early 1990's and consists entirely of volunteers. The 500-man navy and coast guard use patrol boats and former Russian corvettes and frigates for coastal surveillance; the 800-man air force operates 20-30 helicopters and 35-45 planes used mostly for reconaissance and border patrol. There is a mandatory one-year active-duty draft period, and alternative service for conscientious objectors is available.

The 5,400 border guards fall under the Interior Ministry's supervision and are responsible for border protection, passport and customs duties, and share responsibility with the navy for smuggling/drug trafficking interdiction. A special security department handles VIP protection and communications security.

Lithuania became a member of the United Nations on September 18, 1991 and is a signatory to a number of its organizations and other international agreements. It also is a member of the Organization on Security and Cooperation in Europe, the North Atlantic Coordinating Council and the Council of Europe. Lithuania is unaffiliated directly with any political alliance but welcomes membership in NATO, EU, WTO, OECD, and other Western organizations.

Lithuania maintains Embassies in the United States, Sweden, Finland, the Vatican, Belgium, Denmark, the EC, France, Germany, Poland, the United Kingdom, and Venezuela. It also operates missions in Estonia, Latvia, Russia, the Czech Republic, Italy, Ukraine, and in New York City, to the United Nations and a Consulate. Honorary consuls are located in Argentina, Australia, Canada, Iceland, Korea, Greece, Norway, the Philippines, and in the cities of Los Angeles and Chicago.

Lithuania's liberal "zero-option" citizenship law has substantially erased tensions with its neighbors. Lithuania's suspension of two strongly ethnic Polish district councils on charges of blocking reform or disloyalty during the August 1991 coup had cooled relations with Poland, but bilateral cooperation has markedly increased with the holding of elections in those districts and the signing of a bilateral Friendship Treaty in 1994. A similar agreement has been signed with Belarus in 1995.

The United States established diplomatic relations with Lithuania on July 28, 1922. U.S. representation accredited to Lithuania served from the legation in Riga, Latvia until May 31, 1930, when a legation in Kaunas was established. The Soviet invasion forced the closure of Legation Kaunas on September 5, 1940, but Lithuanian representation in the United States has continued uninterrupted for over 70 years. The U.S. never recognized the forcible incorporation of Lithuania into the U.S.S.R., and views the present Government of Lithuania as a legal continuation of the interwar republic. Lithuania has enjoyed Most-Favored-Nation (MFN) treatment with the U.S. since December, 1991. Through 1996, the U.S. has committed over $100 million to Lithuania's economic and political transformation and to address humanitarian needs. In 1994, the U.S. and Lithuania signed an agreement of bilateral trade and intellectual property protection, and in 1997 a bilateral investment treaty.

Principal U.S. Officials
Ambassador--Keith Smith
Deputy Chief of Mission--John Stepanchuk
Political/Economic Officer--Jonathan Moore
Administrative Officer--Susan Page
Consular Officer--Debra Heien
AID Director--Ron Greenberg
Public Affairs Officer--Lisa Helling
Defense Attache--Col. Michael Litwinowicz (USA)

The U.S. Embassy in Lithuania is located at Akmenu 6, 2600 Vilnius [tel/fax: (370) 670-6083/4].

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