Dargis, who runs a construction company, defeated a strong competitor in his running for presidency – Visvaldas Matijošaitis, CEO of Vičiūnų Group. Dargis succeeds the previous LIC president, late Bronislavas Lubys, and will head the organization for four years.
- You have been given great responsibility – to preserve the confederation's authority and influence on government policies. How are going to do that?
- I believe that the LIC will remain the most influential organization in the country; however, it would be odd to declare that this is my goal. To my mind, it is more important that it stays a viable and dynamic structure that unites businesspeople and is able to participate on equal terms in the countries financial and economic processes, offer solutions to problems. For that purpose, however, one needs a clear and, most important, long-term government policy.
- Over the last several years, when business was undergoing hard times, government policies were somewhat lacking in consistency.
- The state should be on harmonious and predictable terms with the business community. Before joining someone in marriage, both partners thoroughly reflect if that is the person one imagines spending one's future and old days with. If this person will not only listen but hear what you say. In any given country, business can only thrive if it can predict the situation, if it does not have to fear that one morning, some politician will climb on a box an announce additional taxes: VAT going up to 25 percent – so we can all live better – and than a 5-percent property tax on top of it – to seal our happiness. In that case, business feels confused, all calculations don't make sense any more, everything collapses and you don't know what to do.
- Are you saying that measures taken by the state to pull the country out of the financial crisis did more harm than good?
- What measures were they? I, for one, have never seen them in one clear and consistent list. I've personally participated in various debates, we've submitted numerous suggestions, but we all know how everything turned out – empty talk and nothing more. The array of measures was hardly sufficient so, to my mind, the state failed to achieve its goals.
We took the easiest way – additional borrowing. The rate of change in our sovereign debt is enormous compared to other European countries. We had a debt of 17.4 billion litas (5 billion euros) and over the four years of the crisis, it has swollen to 51 billion (14.8 billion euros) – that's the figure we're having by the end of this year. Such a hike in debt is very dangerous to the state, so at least today, we must choose measures that make future predictable.
- Will the proposed changes in the labour code, effectively liberalizing labour relations, provide any relief?
- Flexible labour relations make life easier for creative people who have business ideas and are eager to try them out in reality. Everyone knows global brands like Coca-Cola, Microsoft, Apple, General Motors, Ford, etc. But do you know how many jobs they create? Only 10 percent of the entire US labour market.
The absolute majority of jobs come from small businesses that provide various services, that employ relatives in family-run restaurants, inns, hotels, etc. [Flexible] labour relations are of crucial importance to small businesses, as they provide some security: one can hire people more easily, but also fire them if problems arise. If you're lucky, you can increase your operations and staff, if you fail – you can fire people. This business failed, let's try something else.
- Employees probably see it differently – people feel insecure if they are unprotected by law.
- Security is not created by laws that make firing people difficult, but rather by employees' own professionalism. Trust me, being a businessman, I do all I can to keep employees who create the biggest added value to the company. After all, I'm not the one who builds houses, lays bricks, or digs earth – my employees are. Together we create a product that we sell – professionals in their respective fields have never lost their jobs during any crisis.
People must realize one basic thing – it is not the law that more or less protects them; it is their qualification.
- Demographic situation in the country is so appalling that several decades from now, it seems, employers will be happy to find anyone to work in their companies. Half of the population will be retired.
- It won't even take fifty years, as various studies suggest – we will have problems much sooner. There are many reasons that caused this massive emigration. On the one hand, emigration is not something particular to Lithuania, it happens in the entire post-communist Europe. Lithuania's problems are more aggravated compared to Estonia, but situation in Latvia, Bulgaria, Romania, or Poland is even worse. We're undergoing a period of migration of peoples.
There's no easy formula for making people come back, since what we have now results from years and years of state policies. It results from long-term idleness. Therefore, healing will not happen in a day – it will be a long and painful process.
- Your own son has already returned to Lithuania, while your daughter is in the middle of her studies in the UK, but she is also coming back. Have you asked them what makes them return?
- People – family, friends. But that alone would not do the trick. My son is gradually taking over the business, since it interests him. I could not say, however, what he would do, if he felt that the Lithuanian business environment was unwelcoming. Young people can just as easily find their place in a different community.
- Do you believe that Lithuania will successfully follow through with Visaginas Nuclear Power Plant?
- What I resent most is that we have elevated this issue into some religious realm, one of having faith or not having faith. What's even worse is that those who believe in the project now call themselves patriots of the country, while those who don't are deemed Russian-paid agents. Those who speak that the nuclear plant is ultimate good are not experts, while expert opinions are being ignored.
My faith is based on figures and economic logic, not emotions. I believe that we must sit down and calculate everything thoroughly. We must weigh all options.
If it makes sense to invest 9 billion litas, we will reap great benefits. But is it really sensible to invest into electricity production? Perhaps we should rather invest into renovation of houses and energy use efficiency? If we look at the energy consumption balance scheme, we'd see that electricity accounts for only 20 percent and oil products – for another 20 percent. Around 60 percent, meanwhile, consist of heating.
As a businessman, I find it easier to make decisions once I know all the alternative options. Some people say that the alternatives have been considered and the nuclear power plant was judged the best. However, I've never seen any alternative calculations. I've asked my friends, experts, scientists – no one has heard of them.
- Nuclear advocates have one magic word to rebut all opposing arguments – energy independence.
- Oh yes. Energy independence is the loudest aspect in all discussions. I do not, however, see how we will become independent the minute we build a nuclear plant; and vice versa, we'll become dependent if we don't. A liquefied natural gas terminal means that we have an option to buy non-Russian gas.
Power links with Poland and Sweden would allow us to buy electricity from various sources and at competitive prices. If need be, we could buy electricity from a nuclear plant in Finland that is currently being built.
Energy independence is not automatically secured by building a nuclear plant – it is secured by having multiple links and options to buy things from multiple suppliers at competitive prices.
After what I've said, they might call me a Russian-paid agent too, so I want to stress I am not against the state. I'm simply in favour of an efficiently-run state.
- That includes efficient use of EU structural funds?
- That's a big topic in its own right. We raised concern with the way we handle EU money several years ago. Lithuania does not have a plan for systemic use of EU structural funds. Money goes to those who put together a project. What happens after that, no one cares.
For instance, we are not interested in upgrading our water supply system in any fundamental way – all we care about is meeting one set of requirements or another. We are well aware that some areas are more densely populated than others. It sort of goes without saying that city residents must be supplied with water. But do we really have to strive to get every single resident in some remote rural area have water supply? Do we have to lay pipelines to homesteads kilometres away from water pumps? Oftentimes, when you conclude a project like that, what happens is that people do not want to connect to the public water supply any more. They say they do not want to pay and they drill their own well instead.
Something similar has happened with heating, when we were upgrading boiler-rooms in small towns. No one took into account that these areas had depopulated and aged. Who is going to repay the investment? The remaining residents who are mostly pensioners? No, the state will – through pensions, social benefits, etc.
I have an impression that the state is still being run with soviet methods inherited from the socialist culture: we waste budget money because we desperately need to use it up by the end of the year or else they'll take it away. It reminds somewhat of the times when you could feel patriotic by wasting Moscow's money. Stealing was a form of resistance. Who are we stealing from now? Ourselves, of course.
Business must take interest in these things and regard it as one of its risks.
- You are an ardent supporter of education reform, saying that the current system fails to address the needs of the state and business. Are you planning to raise these issues as industrialists' spokesman?
- Studies show that 66 percent of all students have to be re-trained, so one of my goals as the LIC president is to strengthen links between business and universities.
Our Prime Minister relishes in speculating about how awesome a country Lithuania is, that there might be the next Steve Jobs walking somewhere in Ukmergė who will invent something that will make Lithuania famous throughout the world. However, we should not forget the basic law of energy conservation: nothing appears out of nothing. All that exists is a product of hard work.
If you want to create something, you first need a suitable environment. Then, ten or fifteen years later, something might happen.
Lithuania, meanwhile, is well behind the Western European average in terms of business investment into scientific research. Depressing as it sounds, I don't see anything happening in our so-called science valleys that have sprung up under the supervision of universities. Some of them have become our competitors – they've built huge structures, named them “valleys” and now rent them out cheaper than real estate companies. And that's the end of the inventiveness shown by these universities.
- The LIC represents our businesspeople in foreign countries too – Russia, Belarus, Kazakhstan, Poland. How easy is it to make way in this area, bearing in mind political tensions?
- The Lithuanian government has done little to increase exports of Lithuanian products. Let's take the Ministry of Foreign Affairs, for example. It is a public institution with huge potential, it has concentrated huge brainpower, but it does not work with businesses at all. There's a huge difference between our ambassadors and those of foreign countries residing in Lithuania! As soon as Areva saw a niche in Lithuania, the French Ambassador went on the offensive. Parties, receptions, meetings, etc. Such behaviour shows intent to sell one's country's production, since it is economically beneficial to the entire country.
The rule of Lithuanian government institutions, by contrast, is to not have anything to do with business, as the state is the ultimate good and business – evil. As if the bigger the distance you maintain, the more successful you are in keeping public and private interests apart. I am appalled at such talks from our politicians – I cannot bear to listen to them.
- What is the image of Lithuanian industrialists in the public? Are they seen as the backbone of the country's economy, potential patrons – or, rather, greedy enterprisers who exploit cheap labour to increase their own personal wealth?
- I would like for the society to understand that business is one of the main guarantees of the state's survival. Of course, there are people of all sorts among businessmen – including those who do not stick to agreements and come from the criminal world. But I'd like to talk instead about business that has a long-term vision and strategy, that aims to make something, to look to the future, evolve, adapt. I'd like for people to have a positive image of industrialists – they are the ones who produce the bulk of our GDP.
One must admit that Lithuanian business still has very shallow roots, we're still learning to be public-spirited and social. I believe, however, that the business community cannot be set apart from the society at large.
The stratum of Lithuanian business elite is still very thin. It is still in the process of formation. Thus it is a task for the LIC to make it thicker, to increase the ranks of public-spirited businesspeople who are able to take a broader look at our problems and offer solutions.
