Lithuania forms new government

Lithuania's ruling coalition formed a new government with the Labour opposition yesterday after a power-sharing deal that promised to keep the Baltic state on track for deeper ties with the European Union.

The former Soviet state joined the EU and Nato this year but its future commitment to both seemed at jeopardy after Labour, seen as more pro-Russian, won most votes in last month's elections, though not enough for an outright win.

"Let's shake hands," veteran Prime Minister Algirdas Brazauskas told his partners at a signing ceremony ending a week of negotiations as his centre-left alliance of Social Democrats and Social Liberals sought partners to limit Labour's power.

Finance Minister Algirdas Butkevicius said there would be no changes in current policy including Lithuania's aim to join the euro single currency by early 2007.

"There will be no changes in financial policy or its implementation," he said in an interview. "I don't see any changes in any of our international commitments." Some politicians had warned that Labour's charismatic leader, Russian-born millionaire Viktor Uspaskich, could push the Baltic state more towards Moscow if he won power, though Uspaskich denied this.

But Mr Brazauskas said on Tuesday Labour would not dominate the coalition, thus guaranteeing "the continuity of government which is what Brussels is looking and hoping for".

After the second round of elections on October 24, Mr Brazauskas had initially sought an alliance with the Conservatives and the Peasants' Party. The new coalition, which must now be approved by President Valdas Adamkus, would just scrape through with a majority in the Seimas, the 141-seat parliament.