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Published: 31 october 2012 08:15

Algirdas Butkevičius: No ministerial post for Viktor Uspaskich and Lithuania doesn't need nuclear plant now

 Algirdas Butkevičius
Juliaus Kalinsko / 15min nuotr. / Algirdas Butkevičius

Algirdas Butkevi2ius, the leader of the Social Democratic Party of Lithuania that won the recent parliamentary elections, said on Tuesday the leaders of the Labour Party, who is accused of fraud, would get no top posts. Butkevičius, who is seen as the most likely candidate for the prime minister's position, told BNS that Lithuania should not build a nuclear power plant now and diplomatic language rather than war will be used in conversations with Russia's gas giant Gazprom.

- Do you see any realistic alternatives to the ruling coalition of the Social Democrats, the Labour Party, and the Order and Justice party?

- We, the three parties, will definitely continue talks, and I believe we’ll find agreement with the president on compromises on certain politicians' participation or non-participation in the government and Seimas leadership.

- Could you be more specific and assure us that, should you form the government, Viktor Uspaskich and Vytautas Gapšys – both standing charges in the Labour Party's black bookkeeping case – will not get posts as parliamentary speaker and minister?

- I really assure you 100 percent. These are my moral things, and other things which are very important for me as a person, and I will never agree to that.

- Amid the ongoing negotiations about ministries, I would like to ask whether the number of ministries will remain the same and, to be more precise – whether you have intentions of closing the Energy Ministry, which Social Democrats never wanted to established in the first place?

- In the nearest future, the number of ministries will not decrease or increase.

Speaking of the Energy Ministry, we were against for a few reasons: first of all, there was no clear vision of the ministry's functions. You could see they could not answer specific questions about the ministry's functions. This was the main reason we were against. About implementation of certain projects over the course of time – I just do not know whether they ignored some of our questions and did not answer them intentionally, or were simply incapable of giving an answer.

- You have already said that your party would want the prime minister and posts of the foreign minister, the finance minister, the interior minister, and the justice minister?

- As regards the Ministry of Foreign Affairs, we suggest that the president might be in control of this position and the president herself could nominate a candidate. We've had such a conversation, and I believe it would be very nice if we agreed to such a position in the coalition, and the president could nominate.

When it comes to ministries of justice and interior affairs – of course, this is a personal opinion. I see no coordination among separate law-enforcement institutions, such as prosecutors, courts, and the Police Department. There is no communication or maybe there is some sort of unhealthy competition among certain individuals holding high pots in the institutions. I am not happy with the situation because people are very sensitive about justice. I believe that people probably want more justice and decency, in addition to economic, financial, and social things. This also applies to politicians.

- Could you please specify – will you tell your coalition partners that the president should propose her candidate for foreign minister?

- Yes, that is what we want and what we plan to do.

- The 2013 state budget draft was submitted to the Seimas today. The fiscal deficit is the key figure. Is 2.5 percent of the GDP the limit you will strictly follow?

- My position is that the fiscal deficit should remain at 2.5 percent and that we could adopt the euro in 2015.

- If Lithuania meets the Maastricht criteria next year, will the government take intentional measures to stay out of the euro zone in 2014?

- So far, I see that Lithuania will have difficulties curbing inflation next year due to some unfinished homework, rising utility costs, and as we see growing prices of necessary groceries.

- Do you think the inflation figures will be short of Maastricht criteria next year?

- Yes, I think it will.

- Will you suggest the financial transaction tax, which is already supported by 11 countries of the European Union?

- Yes, I have said this before, and if we form the government, we will immediately ask the European Commission for the right to launch the financial transaction tax in Lithuania.

- You have promised to propose raising the minimum monthly wages to 1,000 litas (EUR 290) as of 1 January 2013. Have you made calculations of the effect upon public finances and compensation of the effect?

- Yes, this is one of the major issues in connection of some legal provisions of fiscal discipline, and I must say that we're calculating now and would really want the minimum monthly wages to rise to 1,000 litas. According to the preliminary calculations we have made, it would cost 220 million litas. Of course, the bad part is that there are restrictions upon increase of costs, and we have to consider the increase in debt service charges and some expenses in connection to EU presidency next year, along with payments to the EU budget. This is a huge dilemma but we will do everything in our capacity to search for a reserve and possible give up some costs to raise the minimum monthly salary.

- Do you see any areas of spending you could cut?

- No, this is because we're just starting... We set up a task force yesterday, it started to work.

- When do you expect to launch progressive taxes and what could they be?

- An expert team will be set up to look into the tax system, it will have to finish its work by about the end of June, and I think we will have all of their proposals on 1 July, first of all, on reducing the tax burden upon income from labour, and then we will be able to specify the path we have chosen for the tax reform.

- You have spoken about a 5 percent income tax for those making up to 1,200 litas per month – will this proposal still be addressed?

- Without a doubt, all proposals will be addressed. However, this would be rather difficult at the moment from the fiscal point of view.

- About the VAT privileges for fresh and frozen meat, hotel services – can they come earlier?

- They won't take effect earlier, I think this will be done gradually. I believe we will not be able to go ahead with this in this budget.

It is our objective to have VAT privileges for frozen meat and hotels. However, they probably won't take effect as of 1 January of next year.

- What is a more likely date?

- By 1 July, experts will do their work and make proposals, it may be approved by 1 July.

- You have expressed disapproval of the prepared Visaginas Nuclear Power Plant project. When will you terminate the negotiations with Hitachi?

- First of all, we have to adopt a legal act – either a resolution or a separate law to be discussed at the Seimas. The document must specify further actions in connection to the project that has been started and the adopted laws. About termination of the negotiations with Hitachi – we haven't raised the matter yet.

- So will you still speak to Hitachi?

- I must say that we should always speak because I think that, with the new government formed, the new government will have to give an answer to Hitachi.

- Is it clear now that the answer to Hitachi will be a 'no'?

- That is what we think now, but this is only the Social Democrats' position.

- The matter has not yet been discussed in the projected coalition and the coalition has no opinion?

- No.

- But you're not saying that Lithuania shouldn't have a nuclear power plant. What could the model be?

- A much stronger financial assessment is needed for such strategic projects. We see well that we haven't implemented a single strategic energy project over four years. My pragmatic position is that the liquefied natural gas (LNG) terminal should be the first project. Power connections with Poland, closure of Ignalina nuclear power plant that constantly involves problems... I do not see a possibility of building four or five projects simultaneously, which cost billions, not millions. Energy independence can transform into financial dependence here.

- If you're saying that the discussion could be postponed, when could the power plant be built?

- The issue will have to be addressed much later, but today we're saying that the project should not be implemented in Lithuania.

- You're saying that the LNG terminal is your priority. Will you leave the legal provision unchanged that gas suppliers should necessarily buy 25 percent of gas from the terminal?

- We would like to revise two positions, namely, the mandatory buying of 25 percent and increasing the tariff that would go towards the construction of the terminal.

- Does the revision means dropping the required 25 percent purchase rule?

- I think that is so.

- Would the project be economically viable in this scenario?

- We'll have to make calculations. I think the possibility of attracting private capital would also be considered. The state would have the controlling stake but private capital could also be involved.

- Will you stick to the position that separation of the operations of the gas sector should be finished by the end of 2014, even knowing Gazprom's objections to the plan?

- I can say the communication between Gazprom and the Lithuanian government was inefficient. I think that Estonians and Latvians went for a much better option. I think the result is that we have higher prices for natural gas. In my opinion, task forces should have been set up from the Lithuanian government side and invite some from Gazprom. The task forces should have evaluated the properties up for separation, i.e., networks. Afterwards, a mechanism of payment should have been specified in line with our Constitution, with specified permissions to use and include rent. This is a subject of negotiations and a path of diplomacy, which I think should have been chosen. What I see is a war that took place but didn't lead to a good result.

- Is there a way back? Could we initiate monitoring of implementation?

- Let me be open – I cannot say anything now, I should look at the information, the legal acts and see what can be revised to achieve the same result which the current government aspired to.

- You are accentuating the need to set the renovation of residential buildings in motion. What measures could help with that? What is the model that would be viable in Lithuania?

- There should be a separate financing program, such as Jessica, which should additionally include money from climate change and allowances, as well as borrowed money from the European Investment Bank or some other with low interest. Also, the state should contribute to the investment part, as this is the state duty, as well. Later the money should be used for renovation of residential quarters. After the renovation, people should receive two bills. One bill would be for heating and the other for the investment. Both bills together should be a 20 percent lower price. The 20 percent should be covered by the state investment money transferred to the program.

- What measures could help achieve that more biofuel than gas is used for heating?

- More EU money should be earmarked for a programme financing biomass boilers. We would first of all encourage municipalities with higher than average heating prices.

- The clash between Lithuania and Gazprom was assessed in the context of the Lithuanian-Russian relations. Will you seek changes in the bilateral relations?

- We worked in the government and I was the minister of transport and communication, indeed, the relations with Russia, Belarus, Ukraine, and Poland were normal. There were biannual meetings – one in one country over six months and another in the other country in the other six months. We would discuss the agenda and the most relevant matters on the ministerial level, sometimes by phone. The issues would then go to task forces, seeking compromise and agreements that both countries would benefit from.

I think we will use diplomatic ways to improve the relations with our neighboring countries – with Poland, Russia, and others.

- Lithuania should also take responsibility for the condition of the relations?

- I think it should. This government did more to fight than it did to trade.

- Would your government demand Russian a compensation for the damages caused by the Soviet occupation?

- There was a referendum, people stated their opinion. However, this can only be achieved by way of diplomatic negotiations.

- Will you revise the current government's proposal to raise defense spending by 50 million litas next year to leave financing at 0.79 percent of the GDP?

- No, there won't be any changes. The projected figures will remain. I was among the first ones to put my signature under the agreement of leaders of political parties (to raise defense spending).

- Some foreign observers, for example, Jerzy Haszczynski of the Polish daily Rzeczpospolita, wrote after the elections that Lithuania was now headed for the East. What is your comment on that?

- I can say this – Lithuania is not shifting East or West. The new coalition will solve the problems of the people of Lithuania.

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