By Valdas Samonis

The current Prime Minister Andrius Kubilius Government of Lithuania adopted a very ambitious (no IMF help even sought!) and a rather very harsh austerity modeled on the reigning traditional EU thinking in order to clean the Augean stable of Lithuania’s finance wrecked by the former Soviet nomenklatura hijacked governments that largely used “easy” EU money to place their cronies in plum jobs in LT and Brussels (to the exclusion of younger generation of course), “prikhvatize” real estate and keep it from any socially beneficial taxation, etc.

The Kubilius Government’s harsh austerity policies (the so called internal devaluation) cutting public sector wages, social expenditures (by about one third) and increasing some taxes, etc, in a national fiscal belt tightening (“diet”) that has probably been the steepest in recent memory globally. Predictably, the GDP collapse was horrible at some 20%. The LT people have been pretty much resigned to the fate, in a stark contrast to Greece.

Despite repeatedly proving the nation’s responsibility and sacrifice (investment) capabilities via austerity, etc, LT did not attract much European/Western direct investment so the productivity remained at low post-communist levels at the time when emerging Asia provides a stiff global competition.

Before they realized what is going on and who was robbing them, the Lithuanian people got clabbered by this new ambitious austerity policy and the younger ones started emigrating in catastrophic numbers, seeing no future in the country whose GDP was reduced (from a low post-Soviet level) by some 20% by the combination of the old nomenklatura rent-seeking policies and the continued global Great Recession. Lithuania is hollowing out, unfortunately.

While the Lithuanians made huge sacrifices and so “invested” in the future, the Greeks have been continuing the party here and now until the last bottle or perhaps they can get another one, and another :).

In the current state of European affairs, Greeks won, Lithuanians lost!

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