The bill, which was passed in first reading, would end Lithuania's participation in the Oslo convention prohibiting the use, transfer, production and storage of cluster bombs.
The munitions can be dropped by aircraft or fired by artillery before exploding in mid-air and dispersing mini-bombs over a wide area.
They also pose a lasting threat because many of them do not explode upon impact, thus acting like landmines that can be triggered years later.
Deputy Defence Minister Renius Pleskys, who proposed the legislation, told lawmakers that the security situation had changed "significantly" since Lithuania's ratification of the convention in 2011.
"Russia's war against Ukraine shows that it is extremely difficult to effectively substitute cluster munitions and their defensive power to stop a large-scale attack," Pleskys said.
"By replacing standard munitions with cluster munitions, the amount of munitions needed to achieve the same effect is significantly reduced," he added.
Pleskys added that being a member of the convention also created obstacles to training in Lithuania of NATO allies who do use cluster munitions.
Both Russia and Ukraine have used cluster munitions since Russia invaded its pro-Western neighbour in February 2022.
On Thursday, the Cluster Munitions Coalition and Handicap International denounced Lithuania's decision, indicating in press releases that it could constitute a dangerous precedent for the convention.
To date, 124 states have joined the convention, including 24 NATO members and 21 European Union members but not the United States.
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