October 8, 2020

Europe

LITHUANIA: Close Electoral Contest Favors Ruling LVZS

BY Andrius Tursa

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The October general election will see a close race between the ruling Lithuanian Farmers and Greens Union (LVZS) and the opposition Homeland Union-Lithuanian Christian Democrats (TS-LKD). If both parties win a similar number of mandates, the ruling LVZS would have better chances of forming the next coalition government. The ruling party’s pre-election pledges might lead to new/higher taxes, while calls for a greater role for the state in the pharmaceuticals, banking and alcohol retail sectors raise concerns for private sector operators.

In the first-round vote scheduled for Sunday, 11 October, 70 deputies (out of 141) will be elected on a proportional basis from national party lists and 71 deputies will be elected in single-mandate districts under a majoritarian system. If candidates in single-mandate districts do not secure an outright majority of votes, a run-off between the top two contenders will be held on 25 October.

Given no major shifts in opinion polls in the last weeks of campaigning, the vote will see a tight race between the ruling center-left LVZS and the opposition center-right TS-LKD. The center-left Lithuanian Social Democratic Party (LSDP) ranks third, and at least five other lists have good chances of passing the 5% threshold to win seats in parliament.

Turnout in parliamentary elections usually fluctuates around 50% but this figure might be lower this time due to fears over Covid-19. Early reports indicate that only a fraction of citizens in self-isolation have applied for voting. Lower turnout would benefit the established parties with stable electorates, such as the TS-LKD, LSDP or the minority Electoral Action of Poles in Lithuania – Christian Families Alliance (LLRA-KSS). In addition, latest polls indicate that up to 18% of voters are still undecided, which might benefit the populist Labor Party (DP) or the liberal newcomer Freedom Party (LP). Both parties could be considered as wild cards in the upcoming vote.

If the two leading parties secure a similar number of mandates, the ruling LVZS would have a greater chance of leading the next government. It has more potential coalition partners and, importantly, is more likely to cooperate with the third largest parliamentary group after the election, expectedly the LSDP. Meanwhile, the TS-LKD’s only natural ally is the Liberal Movement (LM), which is on the verge of the 5% threshold. As a result, the TS-LKD has hinted at forming a minority government, but this would become possible only if LVZS and LSDP fail to reach a cooperation agreement.

LVZS’s second straight term in office would generally mean policy continuity in most areas. However, the ruling party’s electoral pledges to introduce the 13th pension, start indexing child benefits and ensure free higher education – without indicating funding sources – are on the verge of populism. A potential LVZS partnership with the LSDP, DP or LLRA would add pressures to lower VAT rates on essential food products and raise public sector salaries. The need to fund such initiatives might lead to new/higher taxes, possibly targeting high-earners, real estate and environmental pollution. More generally, the ruling party appears to have abandoned its earlier plans to overhaul the underperforming education and healthcare sectors, suggesting incremental changes instead. Finally, the LVZS’s calls for the creation of a state-owned bank, pharmacies and alcohol stores raise concerns for private operators in these sectors.

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