59
Th e F a i l u r e o f t h e Con s e r vat i v e P r o j e c t…
It would be hard to say now what kind of measures, short of a comprehensive re-educa-
tion campaign, could have achieved such a turnaround in society’s values. It would not be
imprecise to claim, however, that the more thorough-going Conservative reforms were
hindered by the social and political inertia which surpassed initial estimates. Both Soviet
indoctrination and deeply-rooted political attitudes were proving to be more difficult to
overcome than was originally maintained. Overall, the project of conservative political
and social transformations fell onto very rocky ground on which to take root.
The end result was that the section of the population which was not amenable to the
Conservative agenda remained virtually undiminished. It was largely passive in 1996, but
turned up at the polls in one big protest vote against the Conservatives in 2000. By then
this was also a society characterized by increasing mistrust for political parties and for
the democratic political process as a whole. It was likewise angered by the perception of
an ever wider chasm between political power-games in Vilnius, on the one hand, and the
neglected, disenfranchised periphery, on the other.
One of the key pieces in understanding the jigsaw-puzzle of this period is the Russian eco-
nomic crisis of 1998-1999 and its effects on Lithuanian economy and politics. Insofar as
Russia was Lithuania’s main trading partner at the time, the collapse of its currency and
economy could not fail to send deep reverberations through the Lithuanian economy, as
well. The Russian crisis followed upon a year of exceptionally high economic growth in Lith-
uania (GDP grew by 8.5% in 1998), and the Vagnorius government ignored the early signs
of disaster. The government budget was committed to extremely high spending based on an
estimated 5.5% GDP growth, and this was not revised down until it was too late. As a result,
the Lithuanian economy showed negative growth in 1999: down by 2.8% from the previous
year’s GDP. Towards the end of 1999, the unemployment level rose by two percentage points
to 11.4%. In November 1999, the government defaulted on its electoral promises to compen-
sate
ruble
deposits. By then, however, it was too late to save the economy from crisis, but not
too late to incur the rancor of those who were pinning their hopes on government hand-outs
of cash in expectation of returning to their pre-1990 levels of affluence.
Austerity measures and radical reforms adopted by the Kubilius government eased the
country out of the economic crisis, and in 2000 the growth of the Lithuanian economy
returned to its pre-1998 level with GDP growth of 4.1%. In political terms, however, it was
too little, too late.
Another feature that needs to be factored into the complex field of Lithuanian politics is
the covert direct interference in it by the Russian state and by its energy-supplying subsid-
iaries, Gazprom and Lukoil. Russian money is reported to have fuelled Paulauskas’ failed
presidential campaign in 1997, as well as Paksas’ successful one in 2002. Gazprom’s exclu-
sive franchise to Viktor Uspaskih elevated the former plumber into the ranks of Lithuania’s
richest businessmen, and the ruthlessly populist Labor Party he created would capture the
biggest share of parliamentary seats in 2004. Lukoil money was almost undoubtedly be-
hind the virulently anti-American campaign that in 1999 mobilized the extreme right and
the ex-Communist left alike behind their opposition to the sale of the Mažeikiai Oil Re-
finery to Williams International – it was then that Paksas, future presidential impeachee,
started having
liaisons dangereux
with “easy” Russian money. Several political fringe fig-
ures noted for their past links to the KGB have, by some surprise coincidence, led the vo-
