Lithuania, a former Soviet republic, is one of the poorest countries in the European Union. Lithuania has been an EU and NATO member only since 2004 and is still in the midst of a profound social and cultural transition. It has not fully completed the transformation from a half-century of Soviet occupation to mature Western-style democracy. Weak governmental and judicial institutions, a media manipulated by business interests, ambivalence about foreign investment, and corruption remain challenges.

The largest and most populous of the three Baltic states, Lithuania is situated on the eastern shore of the Baltic Sea, in northeastern Europe. It is bordered by Latvia to the north, Belarus to the southeast, Poland to the southwest, and Kaliningrad, a territory of Russia, to the west. It has 60 miles of sandy coastline, of which only 24 miles face the open Baltic Sea. Lithuania's major warm-water port of Klaipeda lies at the narrow mouth of Kursiu Gulf, a shallow lagoon extending south to Kaliningrad. The Nemunas River and some of its tributaries are used for internal shipping. Situated between the 54th and 56th latitudes and the 20th and 27th longitudes, Lithuania is glacially flat, except for the hills (of no more than 300 meters) in the western and eastern highlands. The terrain is marked by numerous small lakes and swamps, and a mixed forest zone covers 30% of the country. According to some geographers, Lithuania's capital, Vilnius, lies at the geographical center of Europe.

Lithuania became a member of the United Nations (UN) on September 17, 1991 and is a signatory to a number of UN organizations and other international agreements. It is also a member of the Organization for Security and Cooperation in Europe, the North Atlantic Coordinating Council, and the Council of Europe. Lithuania gained membership in the World Trade Organization on May 31, 2001. In November 2002, Lithuania was invited to join the North Atlantic Treaty Organization (NATO) and officially became a member on March 29, 2004. On May 1 of that same year, Lithuania joined the European Union.

Lithuania's foreign policy is based primarily on protecting itself and the Eastern European region from what it perceives as an expansionist Russia. Lithuania uses its membership in both NATO and the EU to promote security and democracy in Eastern Europe. It strongly advocates NATO membership for both Georgia and Ukraine and increased EU political and economic engagement to the region as a whole, including its neighbor Belarus. Lithuania maintains foreign relations with 98 countries through a network of 42 embassies and 35 honorary consuls. It has seven diplomatic missions to international organizations and one special mission to Afghanistan.

Lithuania, a member of the North Atlantic Treaty Organization (NATO) since 2004, fully endorses the concept of "collective defense." National policy recognizes the primacy of NATO as the guarantor of security in Europe. The goal of Lithuania's defense policy is to create a military that can contribute to international missions through the NATO alliance, the UN, and other groups, and to continue to integrate Lithuania into Western defense structures. The Defense Ministry is responsible for combat forces, search and rescue operations, and intelligence. The government has committed to but never reached the goal of dedicating 2% of GDP to defense spending, but current funding levels sit below 1%.

As of 2011 Lithuania maintained approximately 8,000 active duty troops and 5,000 reserve troops. Previously, Lithuania had maintained approximately 10,000 active duty troops and 8,000 reserve troops. The core of the Lithuanian force structure is the Iron Wolf Motorized Infantry Brigade, which consists of five battalions and appropriate support elements. The Lithuanian Air Force operates 17 fixed wing aircraft and nine helicopters. The Home Guard is organized into five districts. The Border Police, with 5,400 guards, fall under the jurisdiction of the Interior Ministry; they are responsible for border protection, passport and customs duties, and the interdiction of smuggling and trafficking activities.

Lithuania cooperates with Estonia and Latvia in the joint naval squadron BALTRON, and plans to contribute to a trilateral Baltic land forces element for future NATO Response Force rotations. Lithuania deployed troops to Iraq until 2008. Since the summer of 2005, Lithuania was also part of the NATO International Security Assistance Force (ISAF) in Afghanistan, leading a 190-member Provincial Reconstruction Team in Ghor province. Lithuanian Special Operation Forces also serve in Afghanistan under NATO command.

Relations with Poland are now among the closest enjoyed by Lithuania. Although a similar bilateral friendship agreement was signed with Belarus in 1995, Lithuania has joined the United States and other European nations in strongly urging the Government of Belarus to adopt much-needed democratic and economic reforms. President Adamkus was instrumental in brokering a peaceful resolution to the electoral challenges in Ukraine in 2004, and Lithuania plays an important leadership role in promoting democracy throughout the region. The United States established diplomatic relations with Lithuania on July 28, 1922. The Soviet invasion forced the closure of the Legation to Lithuania on September 5, 1940, but Lithuanian representation in the United States continued uninterrupted. The United States never recognized the forcible incorporation of Lithuania into the USSR and views the present Government of Lithuania as a legal continuation of the interwar republic. In 2007, the United States and Lithuania celebrated 85 years of continuous diplomatic relations. Lithuania has enjoyed most-favored-nation treatment with the United States since December 1991. Since 1992, the United States has committed more than $100 million in Lithuania to economic and political transformation and to humanitarian needs.

The disadvantages of a centrally planned economy became evident after the collapse of the USSR. in 1991, when Lithuania began its transition to a market economy. Owing to the availability of inexpensive natural resources, the industrial sector had become excessively energy intensive, inefficient in its utilization of resources, and incapable of manufacturing internationally competitive products. More than 90% of Lithuania's trade was with the rest of the USSR, which supplied Lithuanian industry with raw materials for production and a market for its outputs. The need to sever these trading links and to reduce the inefficient industrial sector led to serious economic difficulties. The process of privatization and the development of new companies slowly moved Lithuania from a command economy toward a free market. By 1998, the economy had survived the early years of uncertainty and several setbacks, including a banking crisis, and seemed poised for solid growth. In 1997, exports to former Soviet states were 45% of total Lithuanian exports. In 2006, exports to the East (the Commonwealth of Independent States--CIS) were only 21% of the total, while exports to the EU-25 were 63%, and to the United States, 4.3%. After joining the EU in 2004, Lithuania saw its economy boom, reaching a record 8.9% GDP growth in 2007.

Economic inequality in Lithuania may be much greater than reported by official figures, which do not include the income of the large percentage of Lithuanians who work "off-the-books." For younger, better-educated urban residents, the transition from a command to a free-market economy had been beneficial. This well-educated segment of the population derives additional income from unreported work. The other segment of Lithuanian society suffered from the old economy's collapse. These less-educated people rely upon their low wages and meager pensions to meet basic needs. They labor in the countryside or in Soviet-style industries and subsist at or below the poverty line. About one-third of the Lithuanian population is poor, and discontented. There is also a sizable group of discontented people who held prestigious professional positions in Soviet Lithuania, and whose fortunes plummeted with the collapse of the Soviet Union.

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