Lithuanians to pick new parliament in vote clouded by economic angst, Russia fears

By Andrius Sytas

VILNIUS (Reuters) - Lithuanians are expected to punish the centre-right government of Prime Minister Ingrida Simonyte in Sunday's national election over soaring living costs while reaffirming their support for high defence spending to counter potential threats from Russia.

Opinion polls show the main opposition Social Democrats led by Vilija Blinkeviciute ahead in the race with about 18% support, while Simonyte's Homeland Union is placed third with 9%, behind the anti-establishment Nemunas Dawn party on 12%.

A former finance minister and fiscal hawk, Simonyte has built a broad consensus in the Baltic nation of 2.9 million over the need to raise military spending following Russia's 2022 invasion of Ukraine, doubling the size of the defence budget.

But with inflation topping 20% two years ago, then-second highest in the euro zone after neighbouring Latvia, cost of living concerns and a widening gap between haves and have-nots have weighed heavily on her popularity.

"After four years in power, you always have some, you know, challenges. Especially in Lithuania, where there's a tradition of power changing after elections," Laurynas Kasciunas, Homeland Union's deputy leader, told Reuters.

The Social Democrats also support higher defence spending, the party's deputy leader Gintautas Paluckas said, suggesting it could rise further to 5% of national output from over 3% this year as Lithuania upgrades its armed forces and builds a new base for 5,000 combat-ready German troops due to open in 2027.

Three quarters of Lithuanians believe that Russia could attack their country, a NATO and EU member state, in the near future, a Baltijos Tyrimai/ELTA poll found in May.

Lithuania has also announced plans to ramp up its missile defence capabilities.

HEALTH WORRIES

But the Social Democrats pledge to avoid raising taxes to pay for that and instead plan to increase the budget deficit, in contrast to Simonyte's party which has hiked excise duties from next year to finance additional defence spending.

"We are proposing laws which will actually bring some hope to people faced with income inequality, rising prices and declining public services," said the Social Democrats' Paluckas.

The opposition has criticised the government for failing to tackle long hospital waiting lists, a key concern of voters.

"I hope the health system improves after the election, so I don't have to wait six months to see a medical specialist," former medic Irena Stefonavicienė, 87, told Reuters before casting her ballot in early voting in central Vilnius.

Lithuania's economy has grown steadily since the pandemic, buoyed by trade with Germany, but some political analysts say Simonyte's coalition, which also includes two liberal, pro-business parties, has failed to connect with voters.

"Communication is probably the main existential problem of this coalition. They have this mentality that they know best and they don't need to explain what they are doing. But politics does not work like that," said analyst Vytautas Bruveris.

Neither party is likely to win a majority and will need to negotiate with smaller parties to form a coalition government.

Both main parties have ruled out leading any coalition that included the populist Nemunas Dawn party.

Its firebrand leader Remigijus Zemaitaitis resigned from parliament in April after the Constitutional Court found he broke his oath by stirring up hatred against Jews.

(Editing by Justyna Pawlak and Gareth Jones)