Lithuania parties open talks on new coalition govt

Lithuania's left-wing and populist opposition parties opened talks on forming a new government Monday as austerity-weary voters evicted the Baltic state's Conservative-led coalition in a general election. In power since 2008, the defeated Prime Minister Andrius Kubilius drove through biting spending cuts amid one of the world's deepest recessions, but the resulting economic recovery failed to woo voters. Under Kubilius, Lithuania's economy clocked 1.4 percent growth in 2010, before hitting 6.0 percent in 2011, after shrinking by 14.8 percent in 2009, without resorting to a currency devaluation or an international bailout. But his painful austerity drive -- much wider in scope than measures adopted in western members of the European Union -- coupled with a jobless rate of 10 percent, turned the tide of public opinion in the ex-Soviet Baltic EU state of three million against him. Analysts say not enough voters have felt the benefits of renewed growth.  As an anti-dote to austerity, Kubilius's left-wing rivals pledged to raise the minimum wage and introduce a progressive income tax. They also vowed to "reset" ties with Moscow, rocky since independence and spiking over alleged market abuses by Russian energy giant Gazprom, Lithuania's sole natural gas supplier. As the results of Sunday's vote favouring left-wing parties rolled in, the leaders of Labour, the Social Democrats and Order and Justice parties focused on coalition-building in a closed-door meeting in a Vilnius hotel. "We're creating a working group to start consultations on a coalition," Labour leader Viktor Uspaskich told reporters after the trio's talks, but added that no cabinet decisions would be made before the October 28 runoff round. "We won't talk about the prime minister or ministers before the results of the second round are clear," he said.Although his leftwing populist Labour party scored 21 percent of the vote, Uspaskich -- a controversial Russian-born ex-minister and businessman who made his fortune on Russian gas imports and dill pickles -- is now subject to a party funding probe, and highly unlikely to become premier. Social Democrat leader Algirdas Butkevicius, whose party has taken second spot, is tipped to take the helm but has kept his cards close to his chest. "We did not talk about that. So far we agreed only on forming a ruling majority," said the former finance minister.  According to Butkevicius, President Dalia Grybauskaite is unlikely to support Uspaskich as premier due to his legal problems. "In this case, the position might become ours," he said. Butkevicius's Social Democrats polled 19 percent according to Monday morning tallies from 85 percent of polling stations. They are also in talks with the rightwing populist Order and Justice -- run by impeached former president and ex-stunt pilot Rolandas Paksas -- which scored nearly eight.Meanwhile, Prime Minister Kubilius's Conservatives scored almost 14 percent, ahead of their liberal ally who took seven percent. Three other parties were shown clearing the five-percent hurdle required for seats in parliament: the new anti-graft Way of Courage, the Conservatives' Liberal Movement governing allies, and the Polish minority party. with 5.14 percent. Full official results are due after the October 28 final round of voting, as less than half the constituency seats tend to be decided in the first round.