Latvia's recent economic development belies a degree of internal political instability, however, that must be resolved prior to entering EU accession talks. While the November elections brought to power a center-right minority government supportive of the revised laws, the new coalition is unstable and could prove unworkable. Prime Minister Vilis Kristopans must depend upon ideologically disparate left-wing and nationalist parties to govern. His government will likely fall before the year's end. Unlike its neighbors, Lithuania maintains a stable government and good relations with the Russian Federation.
Economic conditions are less favorable, however.
Although Lithuania was the first of the Baltic states to declare its independence from the Soviet Union, its external trade remains closely tied to the former Soviet states-making it more vulnerable to both the immediate and systemic effects of devastating economic conditions in the Russian Federation and Commonwealth of Independent States. Lithuania's projected growth for 1999, at 3 percent of GDP, is equal to that expected in Latvia. Yet unlike Latvia's, the majority of Lithuania's exports are not competitive in Western European markets. With slow growth in Europe and negative growth in Russia and the near abroad, reorienting the flow of trade from east to west presents a daunting challenge for 1999. Geography, however, may prove central both to Lithuania's economic future and to its future candidacy for membership in European institutions.