Algirdas Butkevičius has been prime minister of Lithuania since December 2012. An engineer and economist, he has led the Social Democratic party since 2009.
He spoke to EurActiv Germany Editor-in-Chief Ewald König
In a few days Lithuania will take over the presidency of the Council of the European Union for the first time. The importance of the rotating presidency has significantly decreased, so what are Lithuania’s plans to remedy to this?
Of course, it is a huge challenge for Lithuania, since we are taking over the presidency for the first time. We have many tasks ahead of us, the most important being the coordination of efforts in the European Council with various committees. I believe that we will work together closely with the European institutions and make an effort to improve the role of the Council presidency.
Of course, we have to expect a few organisational difficulties. For example – the European election is a year away, which is its own significant challenge. This also means the end of the European Commission’s term.
Another important challenge is the question of the multi-annual financial framework [MFF, or the EU budget for the period 2014-2020] and the associated legal acts. The budget needs work, and many important decisions will have to be made.
I believe that Lithuania as intermediary works together conscientiously with all EU institutions and that all of us are contributing to growth.
You are taking over the presidency at such a difficult time that even EU Commissioner Günther Oettinger has called the EU a restructuring case [see related aticle]. Do you agree with him?
I think what Commissioner Oettinger wanted to say is that we shouldn’t believe that the crisis is over now, or that we can just sit on our hands doing nothing.
One of the most important challenges is implementing the measures that have already been decided. We also have to work hard on effectuating our priorities. By that I mean promoting economic growth and creating jobs. Of course, this crisis has its price, and the price is indeed very high.
Many countries have lived beyond their means and incurred debt while not producing added value. That’s how the debt bubble came into being in the first place.
We now have to follow two paths: on the one hand, we need to start control spending, and on the other hand, we need to boost the economy. At the top of the agenda is increasing the competitiveness and flexibility of the job market – this is particularly important with regard to the globalisation process. We also have to continue to work hard and not hope for miracles in short-term economic development.
We have to learn from the crisis and implement measures to create jobs and boost the economy.
Some are forcing austerity measures, especially the conservative government in Germany, while others make the case for investing and growth, particularly the European social democrats. How do you position yourself as a social democrat?
That’s a very good question. I am prime minister and, as such, a pragmatic person. As an economist, I have been watching the processes worldwide for a long time, especially the financial markets. First and foremost, we have to economise, which means we have to do a better job handling public finances.
We can realise this in three ways: first through rational planning in line with our priorities. Secondly, through effective usage of funds and a more effective tax administration in order for tax money to benefit national budgets. The third part is investments.
Of course, we have to support the infrastructure and invest into research and development. Private investors are an important factor here as well. We have to look for private investors! But we can only do that with regard to the financial capabilities of a country.
Austerity measures in line with priorities: what should be relinquished?
If we talk about saving money with regard to the administration of public funds, we have to do this in line with our priorities. We have to continue financing prioritised programmes. But we can save by not financing individual projects.
Of course, we also have to strengthen and support production. That is very important – for example with regard to the EU’s regional policy. This includes supporting small and medium enterprises.
Because of her austerity and rescue measures, Chancellor Angela Merkel has drawn extreme criticism from any number of EU member states, including Nazi-comparisons and the Hitler moustache. Can you sympathise at all with this hatred?
Germany is a leading country and role model in the EU, especially with regard to finances and economic policy. These harsh critics are likely people who enjoy living at the expense of others. The most important lesson from the crisis? If you want to earn more or have a higher pension, you have to create value. You can only achieve something by creating added value.
It is important for the eurozone that all member states follow the same rules. If just one country violates the Maastricht criteria, it has an impact on the entire eurozone.
The German-French axis seems to be more unreliable these days than it has in a long time. France seems to be facing a huge crisis. Are you worried about France?
Germany and France are very important and should set the tone in economic and finance policy. Of course, there are differences in the administration of finances in these two countries.
I was just recently in France and spoke with the prime minister. France has initiated various programmes to boost its economy. I think France understands very well the crisis it is in, and it will manage to deal with the problems.
My own financial ideology is to plan expenditures in a way that does not involve overspending with regard to the financial possibilities. Even when debt is incurred, the borrowed funds should be invested in long-term economic growth and job creation.
Unemployment among young people has reached record highs in several EU countries, and it could continue to rise under your presidency. Is there something you can do about this? Are you at all worried about massive social eruptions?
This question is immensely important, and I am happy that Germany has taken the lead in this case, too. On 3 July, a big conference about youth unemployment is taking place in Berlin, which our president and our relevant ministries will attend as well.
We naturally have to act and think European with our presidency and solve this problem from a European perspective. We want to develop and support the initiative of “youth guarantees.”
Another important initiative is European apprenticeship training, which enables young people to complete an internship with companies – a kind of dual system, if you will. Yet another programme currently implemented under the Lithuanian council presidency is to support competitiveness of SMEs. Young business people are given many options this way.
What is the current mood of the Lithuanian people regarding the crisis-ridden EU?
Despite a high EU-wide approval, my feeling is that our citizens have little interest in the council presidency. Of course, we as the government try to inform them as much as possible, but I would also like more initiative from our public.
And how supportive is the Lithuanian public with regard to the introduction of the euro, which your government has planned for 2015?
De facto we’ve already introduced the euro, as our currency has been tightly bound to the euro for many years. Seventy percent of all loans are taken out in euro.
The population's income is in Litas, which means we lose a lot of money due to the exchange rate. Forty percent of our public are for the introduction of the euro, another 40% are undecided and believe they are lacking information about the euro. There is a fear that the euro's introduction will lead to higher prices. And a mere 20% is really against euro introduction.
Of course, a few politicians who are lacking in economic competency believe that introduction of the euro will lead to an even deeper economic crisis, resulting in negative sentiments within the public. But we have to understand that all problems that might arise can be solved with good governance and a sound administration.
What role does the media play in this?
The role of the media will continue to grow, as our government has just adopted an action plan to take it into consideration. Accordingly we formed seven working groups in which representatives of the Lithuanian bank and the ministries are working together. This action plan includes media relations. We will start with the implementation July 1.
If you have the time during your summer-shortened presidency, what are your priorities? For example – the Eastern Partnership, strengthening the external borders, or the Strategy for the Baltic Sea Region?
There are three central priorities. First: a reliable Europe. We will try to implement an appropriate financial policy within this framework. Second: a growing Europe. We are talking about job creation and boosting the economy. The third priority: an open Europe. EU enlargement and the Eastern Partnership are very important as well.
The most important event during our presidency is a summit about the Eastern Partnership in November in Vilnius. The central issue will be the association agreement with the Ukraine. Strengthening the external borders is, of course, also important. In the Eastern Partnership we will also continue to work on the association agreements with Georgia and Moldavia.
Ukraine is worrisome to Brussels. Nobody can say how and in which direction the country really is going. Maybe you know?
The most important question right now is the release of Yulia Tymoshenko. And then the question in which direction Ukraine is moving: more towards Russia or towards the EU. At the moment it is unclear which path Ukraine has chosen. One day it’s one way, the next day another.
The signing of the association agreement may be planned for the summit, but it isn’t certain. Could it be that the signing won’t happen after all?
Of course, the signing is our goal, but it has a big question mark at this point. My guess is this question will remain unanswered until the summit. I will personally visit Ukraine and speak with the prime minister.
What are your plans regarding the nuclear power plant project of your previous government?
Our government has commissioned a feasibility study which has already been published. We have forwarded the conclusions to our regional partners in Latvia and Estonia. The decision about the project will depend on whether it will pay off financially and how cheap energy prices will be as a result.