Dear readers,

It’s been a long, tough year in the Baltic states. From protests to wage cuts to vigilante killers, the news has been largely negative as the collapse of the economy created misery for millions. Here’s a look back at the 10 biggest stories of the year.

1. The crisis

The economic crisis and the damage it did to the once booming economies of Estonia, Latvia and Lithuania defined the past year in these countries. Nervous investors and international lenders closely watched the latest updates, and the Baltic states were in the headlines more this year than anytime since the Baltic Way.

It’s hard to find a person here whose life was not directly affected either by a job loss, wage cut, property value decline or tax increase.

While the Lithuanian and Estonian economies have shown some anemic signs of improvement, it may take until at least the end of 2010 before a real recovery occurs.

2. The 2010 national budgets passing

Met with extensive protests in Lithuania and Latvia, the 2010 national budgets featured painful austerity measures such as pension cuts and tax increases. Both featured deficits so high that eurozone entry has been pushed back several years.

In Estonia the story was much more positive. While the budget also featured tax hikes and public employee job layoffs, it met the Maastricht criteria and secured the smallest Baltic state for eurozone entry in 2011.

3. Godmanis government falls

The Latvian government headed by then-Prime Minister Ivars Godmanis, which arranged for the nationalization of Parex Bank and the International Monetary Fund loan in 2008, collapsed on Feb. 20, considered by most observers to be do to public dissatisfaction with the economy and how the government handled it. Surprisingly though, despite all the economic turmoil and unpopular measures passed by all three governments, Godmanis’ was the only one to be voted out. How long the new government, headed by Prime Minister Valdis Dombrovskis, will last in 2010 is a hot topic.

4. Grybauskaitė elected

Lithuania elected its first female president, former European Union Commissioner Dalia Grybauskaitė, on May 18. After winning by a large margin, Grybauskaitė has remained popular while bending the parliament’s will on the controversial “protection of minors” law, clearing out personnel associated with the secret CIA prison in Lithuania and increasing regulation of the country’s largest companies.

5. Swine flu epidemic

Along with scarves and gloves, surgical masks were a popular accessory this winter came when widespread outbreak of the deadly A/H1N1 virus in the three Baltic states, closing schools and sending hundreds to the hospital. Despite measures taken 41 people have died from the disease in the three countries, but the number of cases is currently receding.

6. Energy market shake-up

As required by the EU, Lithuania’s Ignalina Nuclear Power Plant goes offline before the stroke of midnight New Year’s Eve. But the company charged with replacing the plant, the public-private LEO LT was dissolved earlier this year after its founding was declared unconstitutional.

Instead, Lithuania along with Latvia and Estonia have established the Baltic Open Energy Market to encourage private investment, but in the meantime electricity prices in the largest Baltic state are set to increase 30 percent in 2010. All three countries have committed to building a new nuclear power plant, but this won’t happen until 2018 at the earliest.

7. January riots

Riga and Vilnius saw violent riots in January outside their parliament building that caused extensive damage and injured several participants. At the time observers were worried about repeats, but while many protests have occurred since they’ve remained uniformly peaceful.

8. flyLAL shutdown

The shutdown of flyLAL in January made flying to and from Lithuania much more expensive and inconvenient and caused major problems for the country’s tourism industry in a year that was expected to be a boon for them with Vilnius’ European Capital of Culture designation.

9. The Drąsius Kedys case

The murder of a judge and a woman, allegedly by a vigilante killer named Drąsius Kedys seeking justice for the state ignoring the sexual assault of his 3-year-old daughter, captured the attention of Lithuanians fed up with their country’s troubled criminal justice system. Demonstrations in support of Kedys occurred, online fan pages were created, a Polish newspaper began an editorial campaign to grant Kedys political asylum and the case was widely reported in other parts of Europe. Kedys’ current whereabouts remain unknown and he is wanted by Interpol.

10. Vilnius European Capital of Culture year: strikes and gutters

It didn’t bring in the tourists it expected to and the organization in charge of the project remains under investigation for embezzlement and corruption. However, the Vilnius European Capital of Culture 2009, only the second in Eastern Europe and the first in a former Soviet republic, did bring increased exposure to Lithuania’s creative side and spawned exciting new cultural events that could become mainstays. The fireworks show for New Year’s Eve 2008 was particularly impressive and was covered in media publications worldwide.

I’d like to thank all our readers for using Baltic Reports as a news source and for posting their comments, and we look forward to continuing to provide daily coverage of these three countries in 2010.

Happy New Year,

Nathan Greenhalgh

Editor

Baltic Reports