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Lithuania
// THE PAST AND SAND DUNES
Correspondents for Dengi (Money) magazine and the NTV program Namedni (The Other Day) continued their search for brands that were famous throughout the former USSR. This time, they looked for them in Lithuania, the land of amber, sand dunes, fishermen, basketball, and TV sets.
Crooks Don’t Know Where Lithuania Is
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| Many Russians are buying real estate in Lithuania in order to have a chance to get European citizenship |
In Soviet times, people went to Lithuania to vacation in Druskininkai or Palanga, admire Trakai Castle, drink Lithuanian beer, and collect amber in the sand dunes.
For its part, Lithuania had its own specialties within the Soviet Union’s division of labor. While Uzbekistan was supposed to supply cotton, uranium, and airplanes, Azerbaijan supplied persimmons, oil, and air conditioners, and Latvia produced radio electronics, railway cars, and minibuses, Lithuania was ordered to supply Moscow and Leningrad with food and consumer goods. The best known products of all were cheeses (Rokiskis, Palanga, processed Salute, etc.), knitted clothing, Silelis and Tauras TV sets, Snaige refrigerators, and of course sprats, herring, and smoked eels. They also produced distinctive amber-decorated ceramics and basketball players.
Lithuania also had something to offer to Soviet industry. Vilnius supplied machine tools and drills, Panevezys provided television tubes from the Ekranas factory, and Akmene produced high-strength cement for military needs.
Lithuanian beer is even better today, but it is foreign capital that owns the breweries. The resorts are as popular as ever, but the hotels and stores are alarmed at the expected arrival of Western chains. Russians now buy more real estate in Lithuania than amber, TV sets, or children’s socks. It never hurts: if you get Lithuanian citizenship, within two years when Lithuania joins the EU, you will be able to travel around Europe without a visa. Plus, land and house prices in Lithuania are directly dependent on the welfare of Russians.
Russians also buy fertilizer companies, and YUKOS recently bought Mazeikei Nafta; but in general, the former All-Union giants are not doing well. There was a strong radio electronics industry, but it collapsed. There are 250 ships left over from the Soviet Union, and many thought they should be sold. However, they were not sold, and as a result the fleet has amassed debts of 100 million litas.
On the other hand, small business is developing successfully, especially through outsourcing, i.e., by filling orders for Western companies. The construction business has also done fairly well. Then of course there is international trucking. Tiny Lithuania with a population of less than 4 million has 15 000 rigs that travel throughout Europe. In comparison, there are 17 000 in all of Russia and a total of 12 000 in the Czech Republic and Hungary. Finally, Lithuanian knitwear still sells well, including in Europe, and Rokiskis cheese is well known not only in Russia, but also in the United States.
Significantly, there is virtually no corruption or large-scale crime in Lithuania. Rimas Varkulevicius, the director of the Lithuanian Association of Chambers of Commerce and Industry explains this by the fact that there is simply nowhere for crooks to expand in this small country. “You might come across roving groups of pickpockets, but they aren’t very professional.”
Hardly any young people in Lithuania speak Russian. Vilnius has the country’s largest Russian-speaking population, but even here, in cloakrooms they will politely request that you “hang yourself.” Commentators on television news from Russia call it a “nightmaras” or “total confusionas.” However, the word “occupier” seems to have been forgotten forever, as the service industry is glad of Russian clients and getting into the Russian market is a cherished dream of any Lithuanian businessman. This is understandable, since after the question of independence was resolved there came a new question - dependence on money, which of course has no nationality.
The Cult of Eternity
Amber is one of Lithuania’s best known, one could even say cult, products. The word gintaro is heard in Lithuanian names and in the names of hotels, stores, and products. The world’s largest amber museum is located in Lithuania in the resort town of Palanga.
In addition to the state museum, there is also a private amber museum and gallery in the town of Nida on Curonian Spit in the house where the German writer Thomas Mann once lived. Husband and wife Kazimiras and Virginija Mizgiris are the owners of the museum.
Curonian Spit is one of the largest sand dune areas in Europe, with a length of 70 km and dunes up to 70 m high. In the 18th and 19th centuries, the dunes on Curonian Spit buried 14 fishing villages in sand and the village of Nida was moved three times because of the encroaching dunes. The Danish scientist Berne succeeded in stopping the dunes by building up a dune near the village to act as a barricade against sand advancing from the sea and then proposing to plant dwarf Scots pines, whose roots systems would hold the soil in a 30 m radius. In the 19th century, 434 amber articles dating from the Neolithic period were discovered on the point near Juodkrante; a large part of the collection known as the Treasure of Juodkrante was lost during the Second World War.
Kazimiras Mizgiris is now a businessman and promoter of amber, but until recently he was a photo artist. Among master photographers he is best known for his attachment to a single theme. He was born in a small fishing village and from childhood had observed the whimsical tricks the elements played on the dunes; and all his life he tried to capture sand and wind on film.
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| In order to increase amber’s prestige, Lithuanian craftsmen create not only ornaments from it, but also interior objects |
The name Mizgiris has also left its stamp on science in the name of a spider. The spider has the honor of being the only known representative of its genus and apparently the oldest spider of all (it is 50 million years old). In spite of its advanced age, it is in excellent shape. The spider was discovered in a piece of amber in Mizgiris’ collection, and science named it Sosybius mizgirisi.
Mizgiris explains his passion for amber very matter-of-factly: he wanted to earn a bit of money. Business was right under his feet: the couple picked up interesting pieces of amber during morning runs and over time amassed a fair collection. Then they came up with the idea of a commercial amber museum.
Mizgiris admits that at first it was an “experts’ game,” but as things progressed, the museum owners learned more and more about amber and became experts themselves. Thus, his conversation with Russian journalists began a bit aggressively: “You’ve already photographed hawker’s stalls with amber ornaments? Then there’s nothing for us to talk about. I don’t want to be lumped in with trash. My goal is to raise amber’s prestige to the level of high art.”
Then he told us that excavations on the coast show that people were making ornaments out of yellow amber as early as 3000 B.C. For some reason, they seem to have attached a certain ritual significance to yellow amber, since most of the ornaments were clearly used as amulets.
There are amber workshops on the coast to this day, but they mainly produce crude articles. Kazimiras thinks they only discredit and cheapen amber; therefore, he attracted Lithuania’s best artists and jewelers. During our visit to the museum, preparations were underway for the exhibition “Amber Inside.” Imagine if you will all household items made entirely of amber, including a toilet. Of course, this last item is not very functional because of its roughness, but it looks impressive.
Today, besides the Mizgiris Amber Museum-Gallery, the Mizgiris’ company includes a branch in Vilnius and three stores. There is also a traveling exhibition with a total of 650 kg of samples insured for 1 million litas. “We promote amber around the world,” said Mizgiris, “with varying success: they understand amber better in Rome than they do in Reykjavik. But in Rome there’s a stronger tradition, because there was once a Great Amber Road from the Baltics to the Mediterranean. The best amber traditions are found in Northern Europe, where amber merchants’ guilds were established in Bruges, Lübeck, Danzig, and Königsberg in the 17th and 18th centuries.”
A microscope used to determine the authenticity of amber stands in the museum hall. According to Mizgiris, 30% of the amber items sold on the market are fakes made of epoxy resin. It is not difficult to spot an imitation, because real amber floats in salt water and burns well, giving off the scent of incense. Amber is also soluble: the museum tour includes samples of vodka prepared from an amber infusion (soothes the stomach).
The microscope also helps to determine which group a piece of amber belongs to. There is massive amber, which is mainly mined in quarries (the world’s largest specimen weighs 9750 g). Then there are beads, round or oblong, foliated, and specimens with sinuous grooves that are painfully reminiscent of a human brain.
However, amber is distinguished most of all by its color. Along with yellow amber, there is white amber that foams in the sun; such pieces may contain up to 1 million bubbles per cubic millimeter. Green amber gets its color from chlorophyll, and black amber results from interactions with soil and peat. Rarest of all is blue amber, which is the product of a chemical reaction with iron sulfide. If amber is polished, it reddens after about 80 years. The cheapest variety is heated amber, which is held in a microwave oven to produce artificial reddening. The most highly valued variety is amber with inclusions, such as plants, seashells, spiders, mosquitoes, flies, ants, and other organisms.
Amber is still a mystery even today, and there are various theories about its origin. The most commonly accepted version is that amber floated over from Scandinavia about 50 million years ago, because it was only there and in a number of other countries that pines exuding copious amounts of resin grew. Then after long journeys in the earth and sea the resin was transformed into this amazing product through polymerization and oxidation.
“I used to replenish my collection through smugglers, but now I can buy it officially,” Mizgiris said.
This sentence is the key to understanding the mystery of Lithuanian amber. The intriguing thing is that Lithuania itself does not produce amber, not counting the bits that tourists find on the beaches. Amber was once quarried on Curonian Spit near Juodkrante, but the quarry was worked out in the 19th century. Then a huge deposit was discovered near Kaliningrad (then Königsberg, or Karaliaucius in Lithuanian), and the quarry in Juodkrante was declared unprofitable.
Thus, most of the world’s amber supply is produced in Russia near Kaliningrad (500 tons per year) and generally not for decorative purposes. About 90–95% of production goes to the defense industry. Amber is a good insulator and protects against heating; therefore, it is made into a varnish used as a coating for missiles.
The Absolute Zalgiris
This word is the most famous Lithuanian brand of all. Not only the basketball team, but also knitted clothing and chocolate produced by Kraft Foods Lietuva bear it. Without knowing the exact translation, it might seem that “Zalgiris” means something simply fantastic. In fact, it merely means “Green Forest,” or Grünewald in German. In case anyone has forgotten, Russian, Polish, and Lithuanian forces defeated the Teutonic Knights in the battle of Grünewald on July 15, 1410, thus bringing about the decline to the Order.
Although the Kaunas basketball players were united into the Zalgiris club in 1944, experts usually speak of its history in a roundabout way. For example, “Lithuania is a small country that really needs its national heroes.” Although there were plenty of them in the glorious Middle Ages, in the years of independence (1920–1940), the nation had an acute need for symbols of victory and self-affirmation, in other words, its Zalgirises.
And it found them. First of all, they remember Darius and Girenas. Both were Americans, but every Lithuanian knows their names by heart and in that order, like Johnson & Johnson, Marx and Engels, or Ilf and Petrov. Like many other Lithuanian-Americans, they returned to their homeland after the revolution and tried to win world renown for their republic. They promoted baseball and American basketball traditions, but above all they were famous for organizing a transatlantic flight from New York to Kaunas in 1933 (at that time, Kaunas was the capital of Lithuania, since the Poles occupied Vilnius). The flight ended tragically when Steponas Darius and Stasys Girenas crashed in Germany. Lithuanians were convinced that Hitlerites had shot them down out of hatred for Lithuania.
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| The word “zalgiris” became a symbol of national self-affirmation in Lithuania and simultaneously the most popular brand |
Other American-Lithuanians succeeded in popularizing basketball in the country. In 1937, Frank Lubin, the tallest player at the Berlin Olympics (202 cm) and a member of the victorious American team, returned to Lithuania. The Lithuanian team lost to Latvia in the 1935 European Championship, but were the winners in the next two tournaments in a row. This whetted the appetite for more: nearly all Lithuanians became basketball fans, and the country nurtured a whole new crop of strong players.
Baltic basketball players later made up the core of the USSR team, and many people even started to talk about the nearly genetic predisposition of Lithuanians to the sport. The Zlagiris club was a five-time USSR champion, including three years in a row between 1985 and 1987, ending CSKA’s domination. In Lithuania, Zalgiris competed with the Statyba (Builder) team of Vilnius. This reflected the age-old rivalry between Kaunas and Vilnius, which was similar to the rivalry between St. Petersburg and Moscow.
The collapse of the USSR also affected Zalgiris. In 1994–1995, the club was in crisis and its players dispersed. However, it managed to avoid a breakup and today the crisis has been overcome. At one time, well-known entrepreneur Shabtai Kalmanovich was a co-owner of the club, but now 42.5% of the shares belong to Kaunas businessman Mindaugas Plukas and another 15% to Arvydas Sabonis. The club consists of three businesses employing 1000 people: the Sabonis basketball school, a sponsorship company (which includes a fund and marketing and financial structures), and an advertising agency. However, the club will not be able to earn money from its brand, because the rights to the name were sold during the crisis.
Instead, the club creates and successfully promotes new brands, for example, Danish Basic Five vitamins. Last fall, Lithuania’s largest distillery, Stumbras, began producing soft drinks and low-alcohol cocktails under the Doze brand name. The name means “dose” and has an antidrug connotation.
Still, as Aleksas Zakis, director of the Sabonis school admitted, commercial successes directly depend on the team’s victories and victories depend on the players. Thanks to help from the city and sponsors, the club has brought back its stars (Timinskas, Einikis, Stombergas) and lured foreign players, for example Hungarian Kornel David and American Edward Cota. Stars, of course, are not cheap—from 1 million litas (about $300 000) on average—and the players’ total salary fund amounts to 5 million litas (out of a club budget of 8 million litas).
Last year, club alumnus and school founder Arvydas Sabonis concluded a $7 million contract in the United States; he also owns real estate in Málaga (he played in Spain for many years) and has built a hotel for new Lithuanians in Palanga. His school in Kaunas, with places for 800 children, is a strong competitor with the Marciulionis basketball school in Vilnius.
Along with the sponsors and the rising generation, the fan club, which calls itself “Green Death,” is also fierce supporter of the players.
Silelis Shows and Tells
TV sets were the former pride of Lithuania, but the Ekranas factory in Panevezys is the only television tube factory to survive in the post-Soviet space. Manufacturers of TV sets fared far worse. In Siauliai, they once produced 250 000 Tauras color TV sets per year, but now they produce about 30 000 under different brand names (the Tauras brand has already been forgotten). Anywhere from 100 to 300 people work at the factory depending on production requirements.
The Silelis brand, which was produced by the Banga (Wave) Production Association (PO Banga) in Kaunas, is more familiar. This was the only place in the USSR that produced small-format color TVs with a 32-cm diagonal (60 000–100 000 per year). Banga also produced 200 000–250 000 black and white sets with a 16-cm diagonal. And as a contribution to the country’s defensive capacity, there was collateral production of TVs for tanks (would someone please explain why the hell a tankman needs a TV, as if he doesn’t hear anything on his headset?).
From the very start of production in 1972, Silelis TVs gained a reputation for being especially responsive and reliable. Veterans recall how in order to achieve greater reliability, the TVs were put through the most refined torture tests: they were dropped on the floor, heated, and nearly chopped up with an axe. Still, there was no escaping the Soviet element base: the picture tubes glowed weakly and fired intermittently, and the gold in the microcircuits was not of the right purity.
Right after independence, PO Banga with 20 000 employees went bankrupt, because the company’s management was not prepared for shrinkage of the sales market and competition with foreign products. They tried to sell the factory to foreigners, but no one needed a site the size of a village. The buildings were designed for military purposes, with 10-m-wide corridors to allow a tank to pass (obviously going to the warehouse to pick up a TV). This facility was too expensive for foreigners to maintain; they were used to locating production in a light shell of a building where a handful of workers assembled a million TVs per year.
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| Silelis now sells 20 times fewer sets than before, but the brand itself is not forgotten |
Nevertheless, the Silelis brand survived. In 1994, the former managers of PO Banga set up ÇÀÎ Naujasis Silelis (New Silelis) and immediately ran into stiff competition from student radio technicians in Kaunas who assembled Silelis TVs in dormitories and garages. Tauras also made itself felt. Lastly, a former supplier of printed circuit boards for PO Banga starting producing TVs under the Banga brand name.
The struggle lasted for two years. By that time, the Banga brand had gone bankrupt and the Tauras factory in Siauliai had become visibly weaker. Today, Naujasis Silelis sells about 15 000 Silelis TVs per year, although only in Lithuania (except for a very few that end up in Kaliningrad Region).
Now we will reveal a fearful secret. Do you know where Lithuanian Silelis TVs are made? That’s right, in the same place where many other modern TVs are made, including Russian, Japanese, and European models. In Turkey, and in the same factory no less.
Here is another fearful secret: not only the innards, but also frame designs have been a global concern for a long time already. When you order a TV set, you choose one of hundreds of design options from a catalog. There is one restriction: you cannot select a design that is already used in another brand sold in your district and in the same class of TV sets. If a JVC or Panasonic model is produced in your frame but in another district, this is OK; this frame is yours, and you are the manufacturer of a modern TV with a Philips element base, a Thomson picture tube, and a design from Pininfarina. This is how television production operates around the world today.
Sergei Druzhinin, the director of ZAO Naujasis Silelis, estimates Lithuania’s market capacity at 200 000 units per year and dreams of getting 10% of it. Growth trends give him reason to hope: in 1996, they sold 500 units but now they sell 30 times more. There is a choice of more than 20 models from small to 1.5-m sizes. There are portable car models for long-distance truckers (this is where their experience with tanks has come in handy). Twenty employees keep the entire company running.
Druzhinin is still debating whether it makes sense to turn Silelis into a national brand name in order to produce refrigerators, washing machines, and other appliances under it. The entry into the Russian market planned for this year promises to be a major breakthrough. The main problem is how to reduce product costs. Take the most popular model, the one with a 54-cm diagonal. It costs $200, but a Turkish Beko made in the same factory is cheaper. “What can we do,” sighs Druzhinin. “Our order to the Turks is 1500 units per month, which is half a day’s work for them. It’s piddling.”
Disarmament of the Peaceful Atom
There is still one more brand that was famous throughout the USSR—the Ignalina Nuclear Power Plant (Ignalinskaya AES). It is still another All-Union installation whose prospects are unclear.
Construction of the power plant began in 1975 with a community of power engineers that was first called Sniechkus (named after the revolutionary). However, the name did not endure and in 1990 the community was renamed Visaginas after a nearby lake. The first reactor started up in late 1983 and the second in August 1987.
These sites are in some of the most picturesque areas of Lithuania. They say there is excellent fishing in the local lakes, where big, fat fish leap for the bait. Lithuanians are confident of the reliability of their reactors and are not afraid of radiation.
However, the West is afraid of Ignalina. The fear started after Chernobyl, when calls to close obsolete Soviet reactors began to be heard, although the same high-power channel reactors (RBMK) and water-moderated water-cooled reactors (VVER) were still operating in Kozloduy, Bulgaria and in East Germany and that was all right.
At a meeting of the Big Seven held in 1992, it was decided that the EU would allocate funds for radiation safety. Negotiations over money between Lithuania and the EU are still going on.
In a conversation with a Dengi correspondent, Lithuania’s deputy minister of economics, Arturas Dainius noted that “we are confident of the very high reliability of Ignalina, but we also want to join the EU.” According to the deputy minister, closing the reactor would cost about $1 billion (this is without including the costs of burying the nuclear fuel). Everyone realizes that in any case the plant has to be closed for technical reasons because it is obsolete. The first unit is scheduled to be dismantled at the end of 2004 and the second, in 2009. All disassembly work must be completed by 2030. It remains only to assess the consequences.
The social aspect of the problem is not that bad. Dismantling the plant will require a large construction force, and more than half the personnel will be involved in the work. There are also plans to provide Ignalina Region (along with two others) with favorable conditions for attracting foreign investments.
Lithuania will also not be left without energy, even though Ignalina provides 70–75% of all electric power. There is a lot of surplus capacity in the country, and more than 50% of the power is exported. The problem is what to do next. There is a ready-made site and if an investor can be found, both units can be replaced. However, it will not be easy to find an investor, because a nuclear power plant is a heavy installation. Local capital will not be able to cope, while foreigners will have to figure out what to do with the power. Selling it to EU member countries is an unlikely option: these countries have restrictions on concluding long-term exclusive contracts due to the requirement for free competition. Lithuania’s Eastern European neighbors do not need this power, as they have enough of their own.
by
Vladimir Gendlin and Dmitry Lebedev (photos)
All the Article in Russian as of Jan. 27, 2003
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