Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Lithuanians to Vote in Honey-Pot Referendum

VILNIUS, Lithuania -- How would you like the government to tack a couple of zeros on the end of your bank account balance, increasing your savings by a factor of 100?

This is the seductive offer Lithuanians will vote upon Saturday in a nationwide referendum that, if approved, would oblige the government to index bank savings to account for the hyper-inflation that ravaged the country in the early 1990s.

Supporters of the referendum say it will restore economic justice. Opponents -- including the International Monetary Fund, the World Bank and Lithuania's ruling Liberal-Democratic Labor Party -- say it will bring more inflation, and, in the end, Lithuania's complete economic destruction.

Devastating inflation has been a common feature throughout the former Soviet Union. Street corners and kitchen tables in Minsk, Moscow and Kiev echo to complaints like those of Kostas Pietrovsky, 44, a Vilnius cab driver who has had 10,000 rubles in the bank since 1990.

"I could have bought a car. Now I couldn't buy a pair of shoes with that money," he said, angrily swinging his taxi down Vilnius's steep and narrow streets. "What about our old women, who set aside savings to pay for their own funerals? Now that funeral money would barely cover a bouquet or wreath, much less a coffin and a cemetery plot.

"Someone has to help those people."

Hyperinflation has been experienced by all the former Soviet republics, but only in Lithuania is there the widespread expectation among the country's 3.7 million people that the government ought to pick up the tab.

The seeds of this notion were first planted in 1991, when Lithuania -- led by Vytautas Landsbergis and the grass-roots Sajudis movement -- had set up its own government and was staring down Soviet tanks in a bold bid for independence. To punish the rebels, Moscow cut off the flow of Soviet rubles to Lithuanian branches of the state savings bank.

Nervous Lithuanians who began doubting the value of independence against that of their life savings were reassured by Prime Minister Gediminas Vagnorius -- President Landsbergis' right-hand man -- who promised that the government would cover all confiscated Soviet rubles with new Lithuanian litas.

Citizens were encouraged not to touch their ruble accounts -- advice that helped head off a run on Lithuania's banks -- and the government registered the amounts in each bank account as of February 1991.

"My mother listened to that talk of how an independent Lithuania would protect us by exchanging litas for rubles," said taxi driver Pietrovsky. "She then sold all her gold and jewelry at the market, and deposited the earnings in the bank. Now look at her, without her gold and without her savings."

The Soviet Union never did seize the accounts; it collapsed first. But inflation accomplished what the Soviets had only threatened.

Vagnorius and Landsbergis -- now leaders of the opposition Conservative party -- say the government ought to compensate those losses. To do so would require about 8 billion litas ($2 billion) -- or roughly two Lithuanian national budgets.

It is a popular idea among Lithuanians, 70 percent of whom live from paycheck to paycheck and cannot save. Thousands of voters supported Landsbergis' petition drive to hold the referendum. But along the way, the original, simple request -- 100 times as much money, thank you very much -- ballooned into an entire legislative program. Conservatives frustrated by two years in opposition have tacked on bills covering everything from fighting organized crime to coverage of obscure aspects of procedure in the Seimas.

The poster-sized ballot, crammed front and back with fine print, is so large that the election commission fears the usual ballot boxes will not be big enough.

The text is so dense that a Lithuanian actress hired to read the ballot into a tape-recorder, for transmission to sailors wishing to vote at sea, needed 44 minutes to get through it. And it is so confusing that Vagnorius, the referendum's architect, is one of the few people in Vilnius who can actually explain it.

"The people do not understand any of the details," Vagnorius admitted.

As he tells it, the core of the referendum is not the savings compensation at all, but a review of the privatization process. The Conservatives say Labor has used privatization to steal choice businesses and real estate; the referendum would set up a special commission to review certain privatization cases.

Such talk alarms the IMF, which has said the referendum could discredit Lithuanian privatization. President Algirdas Brazauskas, 62, says the Conservatives are in favor of "nationalizing" newly privatized businesses.

As for the pledge of 100-fold indexation -- the one the Conservatives continue to dangle before panting voters -- it's no longer exactly explicit.

Instead, the referendum calls for selling one-third of Lithuania's state-owned property -- exactly which one-third remains unclear -- and using the earnings for compensation. Vagnorius calculates that scheme would net 10 billion litas, which would mean savings could be indexed 100-fold with money to spare.

The IMF and government officials counter that Vagnorius has drastically over-estimated the value of Lithuania's property. They also argue that anything near 100-fold indexation would kick off a new round of inflation and make a mockery of the Lithuanian lita, which has been rock stable since its introduction in 1993.

Voters left cold by such arcane debates are desperately clinging to the original promise.

"People are still convinced that they'll be voting for a 100-fold increase, and the ballot is impossible to read," said Rasa Alisauskiene, a sociologist tracking the referendum.

Yet despite broad support for compensation among the populace, neither Labor nor Conservatives believe it will pass. Conservatives say the referendum will probably fail because Labor has sabotaged the poll.

Landsbergis accused the government of adding fake names and addresses to the voting rolls.