Five Years in the EU

Today is International Labor Day, but more importantly, today marks the 5th anniversary of Lithuania's membership in the European Union. According to last autumn's "Eurobarometer", 69 percent of Lithuanians are happy with EU membership. The relationship has helped the economy grow quickly, but Lithuania has not yet satisfied the requirements set by the EU to adopt the Euro. Prime Minister Andrius Kubilius estimates the switch sometime in 2010.

Lithuania has been hit hard by the current global economic crisis. The unemployment rate is at 10% in a country just over 3.5 million people. During this difficult time, it is comforting to have the protections and support of the EU.

Lithuania and its Baltic neighbors just signed a Memorandum of Understanding for the construction of an electricity bridge from Sweden as a solution to the closure of the Ignalina Power Plant, a nuclear plant that provides a majority of power to Lithuania. This project will create a common Baltic electricity market and eliminate dependence on Russian energy. The EU has earmarked 175 million euros for the planned power link.

The Lithuanian GDP shrank by 12.6% in the first quarter of 2009 as compared to 2008. Lithuania has projected a 10.5% yearly decline in GDP, but on a quarter-to-quarter basis the decline was 9.5%. According to the BBC, Lithuania's Prime Minister Andrius Kubilius hopes that next year we show a much lower GDP decrease or even stability in GDP. Lithuania is forecasting that the GDP will not improve until 2011.

Lithuania is cutting public spending as the economy contracts, but the next step is to request a loan from the IMF in June. Latvia was approved for IMF loans in December but doesn't anticipate distribution until June, 2009. According to the Financial Times, the Fund "has suspended lending to Latvia until it sees more progress in cutting public spending" and "Latvia is racing to prepare more cuts to keep its $9.9 billion stabilisation plan on track ... [as] the budget deficit threatens to overshoot the target of 5 % of gross domestic product agreed with the IMF."

Regardless of the economic struggles around the world, it is shocking to think that Lithuania became part of the EU only five years ago. Vilnius is such a westernized city that one would think it had always been part of western Europe.