Inequality Threatens Lithuanian Cabinet in Presidential Vote

(Bloomberg) -- Frustration over widening inequality may topple Lithuania’s government as the euro-area nation votes in the first round of a presidential election.

While the country is heralded as a model of economic integration since it joined the European Union in 2004, many of its 2.8 million people are still feeling the effects of the global economic crisis. That’s fueled a campaign filled with populist and anti-elite rhetoric similar to that seen in races across the bloc for this month’s EU parliamentary elections.

Prime Minister Saulius Skvernelis, running third in opinion polls, has threatened to step down and dissolve his minority center-left government a year before its term ends if he fails to advance to a May 26 runoff. He has also attacked his front-running rivals -- a former finance minister and a popular banker -- blaming them and the central bank for missteps during the crisis, which wiped more than 15% off gross domestic product.

“There’s a feeling of social injustice in society, and all the candidates are talking about it,” said Margarita Seselgyte, a political analyst at the Institute of International Relations and Politics at Vilnius University. “But I wouldn’t bet on any scenario. The race is too tight and there are too many unknown unknowns.”

Ingrida Simonyte, who was finance minister from 2009 to 2012, and SEB Bank AB economist Gitanas Nauseda are running neck-and-neck for first in opinion polls, with Skvernelis close behind. Ballot stations opened at 7 a.m. Sunday and close at 8 p.m. If no candidate wins a majority, as is expected, the top two will advance to a second round.

Inequality Threatens Lithuanian Cabinet in Presidential Vote

While Lithuania’s president has limited powers over domestic issues, candidates are pledging to use the position’s moral authority to influence government policy. The winner will replace Dalia Grybauskaite, a staunch critic of neighboring Russia.

While living standards have surged since EU entry to more than three quarters of the EU average, hundreds of thousands of people have left to escape the bloc’s second-highest inequality, and more than one in 10 people don’t have indoor plumbing.

Skvernelis, 48, has rekindled the debate about the 2008 economic crisis and instructed prosecutors to probe the actions of regulators and the central bank. A former policeman who runs the EU’s only all-male cabinet, he’s made the election a referendum on his policies, including tax cuts, pensions hikes and subsidies for families with children.

But his government has also faced scandals and setbacks, including dismissed ministers, a teachers’ strike, and the passage of rules restricting alcohol sales that many Lithuanians opposed.

“Sunday will be an assessment of my work,” he said during a campaign event.

Bankers Beware

Nauseda, a 54-year-old independent who became a household name by appearing on everything from TV cooking shows to the nightly news, is seen as a second-round favorite if he advances because he has no government connections and has support among Skvernelis’s conservative opponents.

Still, Nauseda’s finance background could hurt him: dark-horse candidate Naglis Puteikis pulled out of the race Friday and called on his supporters to prevent a banker from winning.

Simonyte, 44, has largely fended off Skvernelis’s attacks blaming her for the rich-poor divide after she pushed through EU-endorsed wage and pension cuts in 2009. Seen by supporters as having helped prevent a worse downturn during the recession, she’s favored in larger cities and among young voters with calls for more education spending and salary hikes.

“I want to see continued stability,” said Auguste Pipinigiene, after casting a vote for Simonyte in Vilnius with her toddler. “Simonyte is about stability and clarity, she doesn’t give empty promises.”

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