Coalitions collapse in Lithuania, Latvia

LITHUANIA: The collapse of government coalitions in Lithuania and Latvia has thrown the Baltic neighbours into political turmoil as they seek to convince the European Union that they are on track to adopt the euro.

Both countries are now limping along with weakened governments after corruption scandals set erstwhile coalition members at loggerheads.

Lithuanian deputies ousted Arturas Paulauskas as parliamentary speaker after members of his staff were accused of misusing state cars and other perks for personal needs.

That prompted his party to withdraw from the ruling coalition, leaving it with just 71 of the 141 seats in parliament, and led a controversial Russian-born food tycoon to press his claims to be the new prime minister.

Viktor Uspaskich, the Labour Party leader, whose pickled food empire has seen him dubbed the "Gherkin King", declared the old coalition dead and put himself forward as a potential premier, despite enduring his own sleaze scandal last year.

"This coalition must naturally fall," said Mr Uspaskich, whose party is the largest in parliament.

"We want to take more responsibility and that is why we shall seek the prime minister's position."

Mr Uspaskich led his newly formed party to election victory in 2004, but after forgoing a bid for the premiership he was forced to resign as finance minister last year when accused of using the post to benefit companies in which he has interests.

In opposition to Mr Uspaskich, however, the Social Democratic Party of prime minister Algirdas Brazauskas insisted it would fight to preserve the current government. "We are ready to continue to work in the coalition. We believe that the prime minister is a guarantor of stability in the government," said defence minister Gediminas Kirkilas, adding that the president, Valdas Adamkus, also backed Mr Brazauskas.

The upheaval comes at a crucial time for Lithuania, as it strives to convince Brussels that it is ready to adopt the euro next January.

While Lithuania's budget deficit and interest rates are within required limits, its inflation is a whisker too high.

Mr Brazauskas announced this week that he had requested an early evaluation of the country's euro-readiness from the European Commission and European Central Bank.

The Baltic states are struggling with inflation as a side effect of enjoying the strongest economic growth in the entire European Union, which they joined in 2004.

Estonia put its bid to join the euro zone next January on hold last month, admitting that it would not meet the inflation target, while Latvia's push to be ready by 2008 is undermined by the highest inflation rate in the EU.

It will also be hampered by the departure of the ruling coalition's largest party, after trading corruption allegations with a supposed ally.

That row has left the government with a minority in parliament as it tries to survive until elections scheduled for October.

The current government is Latvia's 12th since it regained its independence in 1991, during the collapse of the Soviet Union.