LRT English Newsletter – March 14, 2025
This past Tuesday, we celebrated the 35th anniversary since Lithuania declared independence. Amid geopolitical anxieties and Russia’s resurging expansionism – underlined in last Friday’s intelligence report on security threats – it was an occasion to celebrate freedom and take stock of national achievements over the last three-and-a-half decades.
COALITION FISSURES
The unity of national celebrations does, however, extend to politics. The three-party coalition has been showing signs of strain almost since the beginning, mostly due to the mercurial leader of one of its parties, the Nemunas Dawn. This time, again, Remigijus Žemaitaitis is the source of contention – the politician is facing a disciplinary probe over his scam trip to the United States. The president has for a while been signalling he would like Žemaitaitis’ party out of the government – and now he is backed by Seimas Speaker Saulius Skvernelis, who was recently re-elected as the leader of another junior coalition partner, the Democrats “For Lithuania” party.
Social Democratic Prime Minister Gintautas Paluckas, however, persists: the coalition works and is able to overcome any “temporary setbacks”.
There is, however, one more potential source of strain: tax changes. The Social Democrats have proposed a property tax and raising the corporate tax. While observers have long suggested that Lithuania needs tax reform to make its public finances more sustainable, there is now an additional incentive – plans to ramp up military spending. However, Skvernelis says his party will not support either the property tax or the corporate tax raise.
TRADE WAR ECONOMY
The president once suggested that higher military spending could be funded from faster economic growth. Well, that does not seem to be forthcoming. The central bank has slightly lowered its GDP growth projections for this year, putting it at 2.9% (down 0.2 points from its previous forecasts in December), and only slightly higher for the next two years.
A trade war with the US is, obviously, a storm on the horizon. While Lithuania does not export all that much directly to the US, its industry is serving supply chains of other EU countries that do, so indirect effects will be felt. According to the Bank of Lithuania, if the war of tariffs were to escalate, this could slow economic growth by up to 1.3 points.
EU MILITARY SPENDING
Not just Lithuania, but the entire EU is making pledges to ramp up defences and spending on the military. Lithuanian leaders have welcomed the European Commission’s 800-billion-euro “re-arm Europe” proposal, with Defence Minister Dovilė Šakalienė going on Fox News to call it “paying back a debt” to the US.
Meanwhile, the French president’s suggestion to shield Europe with French nukes was met with more nuanced reactions. President Gitanas Nausėda welcomed it, saying he personally told Emmanuel Macron during the European Council that Lithuania would indeed love to get under the French nuclear umbrella. Prime Minister Gintautas Paluckas, meanwhile, has been more cautious. “The French proposal is interesting, but […] the French nuclear arsenal and their ability to secure the European umbrella is still very weak,” he said.
EDITOR’S PICKS
– Artificial intelligence (AI) is opening new frontiers in the problems of bullying and child pornography. Parents, schools, and legislators all have an important role to play in mitigating the new risks.
– In a report from Ukraine, comrades pay tribute to Tadas Tumas, the only known Lithuanian volunteer killed on Ukraine’s frontlines.
– There are many Lithuanians fighting in Ukraine. While some are thinking of returning home, others see no way back.
– Donald Trump's decision to halt aid to Ukraine and attempt to improve relations with Russia has put the Baltic states in an awkward position – which they try to deal with by striking a balance between Europe and the US.
Written by Justinas Šuliokas
Edited by Ieva Žvinakytė
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