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Baltic Report: March 26, 2003


26 March 2003, Volume 4, Number 10

NOTE TO READERS:
This issue covers events in the Baltic states from 1 to 14 March 2003.
ESTONIA
VIRTUAL TIE IN PARLIAMENTARY ELECTIONS.
The left-of-center Center Party took 25.4 percent of the vote and 28 seats in the 101-seat parliament in the elections on 2 March, BNS reported the next day. The newcomer Res Publica party was a close second with 24.6 percent, but also took 28 seats. The Reform Party garnered 17.7 percent of the vote and 19 seats, the People's Union 13 percent and 13 seats, Pro Patria Union 7.3 percent and seven seats, and the Moderates 7 percent and six seats. The remaining parties did not cross the required 5 percent threshold for parliamentary seats. President Arnold Ruutel will invite one of the two leading parties to form the new government. Res Publica Chairman Juhan Parts has ruled out cooperation with the Center Party. Some 499,000 voters cast ballots equal to 58.2 percent of eligible voters.

PARLIAMENT HAS NEW LOOK.
Fifty-seven of the 101 deputies elected to parliament on 2 March will be serving their first term, with 27 of the 28 deputies elected on the Res Publica ticket being first-termers, BNS reported on 3 March. Among the parties that failed to break the necessary 5 percent barrier were the Estonian United Russian People's Party (2.24 percent), Estonian Christian People's Party (1.07 percent), the anti-EU-membership Estonian Independence Party (0.55 percent), the Social-Democratic Labor Party (0.42 percent), and the Russian Party in Estonia (0.18 percent). The top vote-getters were the chairmen of the Center and Reform parties, Edgar Savisaar and Siim Kallas, with 12,939 and 10,009 votes, respectively. Of the 11 current government ministers who competed, all but Culture Minister Margus Allikmaa and Ethnic Affairs Minister Eldar Efendiyev were elected to parliament. The number of female deputies increased from 18 to 19.

COALITION TALKS BEGIN.
The Reform Party's and the People's Union's decision on 5 March to begin coalition talks with the Res Publica party suggest that the left-of-center Center Party, which won the most votes in the 2 March parliamentary elections, might be left out of the new government, according to BNS. Negotiations were expected to start on 6 March. The Center Party responded with the threat that forming a government without it would be a repetition of the mistake made after the 1999 elections. Reform Party and People's Union Chairmen Siim Kallas and Villu Reiljan both said on 5 March that a tripartite coalition composed of 60 deputies would be a desirable choice. Kallas said his party would prefer that Toomas Savi remain parliament chairman and would accept Parts as the new prime minister. The People's Union is seeking four ministries -- Agriculture, Environment, Finance, and Regional Affairs.

NEW RULING COALITION COULD ALSO INCLUDE PRO PATRIA UNION.
After talks with the Reform Party on 6 March on forming a coalition, Res Publica Chairman Parts told reporters that both parties agreed that it might be best if the potential coalition would include not only the People's Union but also the Pro Patria Union, BNS reported. He said a wider base of 67 deputies could help the government remain in office for four years. Parts and Reform Party Chairman Kallas said the coalition talks dealt with the program of the new government, and not with who would be prime minister or the distribution of ministries. Parts said that although the atmosphere at the first meeting was optimistic and open to cooperation, it could take at least a month until the new government takes office.

RES PUBLICA BOARD BACKS FOUR-PARTY COALITION.
The board of the right-of-center party Res Publica decided on 7 March to hold coalition talks with the Reform Party, the People's Union, and the Pro Patria Union, BNS reported. In negotiations with Res Publica earlier that day, People's Union representatives said they could see no reason why the Pro Patria Union should be invited to join the coalition, which would have a firm majority of 60 deputies in the 101-member parliament even without the seven Pro Patria Union deputies. People's Union Chairman Villu Reiljan said the Pro Patria Union's influence has slipped after losing more than half of its mandates in the recent elections, but that Res Publica has the right to choose with whom it wants to conduct coalition negotiations. Pro Patria Union Chairman Tunne Kelam did not comment on his meeting with Reiljan that day, although he admitted that relations between the two parties remain unclear.

FOUR-PARTY UNION TO DEVELOP COALITION AGREEMENT.
The first coalition-formation meeting of Res Publica, the Reform Party, the People's Union, and the Pro Patria Union decided in Tallinn on 10 March to establish a joint working group to draw up the main points of a coalition agreement, BNS reported. Indrek Raudne from Res Publica, Rain Rosimannus from the Reform Party, Tarmo Loodus from Pro Patria, and Janno Reiljan from the People's Union were tasked with presenting the points for the next meeting of the parties' representatives on 12 March. Res Publica Chairman Parts said no one at the meeting questioned the Pro Patria Union's participation in the coalition. "Although the income tax is an issue that carries a lot of weight, it is still only one point in the government's four-year program," he said. Parts reiterated that talks on the distribution of ministers will begin only after a common program is agreed upon.

PRO PATRIA UNION EXCLUDED FROM COALITION TALKS.
Responding to a joint request by the boards of the Reform Party and People's Union to exclude the Pro Patria Union from a would-be coalition, Res Publica Chairman Parts abandoned his plan to include Pro Patria representatives in 12 March talks aimed at forming a government, BNS reported. "Estonia needs a balanced and strong government in which all parties would have equal responsibility," Reform Party Deputy Chairman Meelis Atonen said, adding that this would be impossible in a four-party coalition. Parts said he still favors a larger coalition and sees no reason to exclude Pro Patria, which he said supports similar goals. He reviewed the balance of political forces within a three-party coalition, noting Res Publica would have 28 votes versus a total of 32 held by the Reform Party and People's Union, while in a four-party coalition, he said, Res Publica and Pro Patria Union would have a combined total of 35 votes. The coalition talks on 12 March resulted in agreement on the rough text of the political portion of a draft coalition agreement, and six working groups were created to present proposals concerning the 13 topics in the coalition agreement to the next meeting on 17 March.

NEW GOVERNMENT PLANS CHANGES IN TAX SYSTEM.
The daily "Eesti Paevaleht" wrote on 11 March that the new government might change the income tax as promised by both the Res Publica party and the Reform Party during their parliamentary election campaigns, BNS reported. Res Publica called for increasing the monthly tax-exempt income from 1,000 kroons ($70) to 2,000 kroons and the Reform Party for lowering the income-tax rate from 26 percent to 20 percent. These changes combined would result in lowering annual tax revenues by some 4 billion kroons. Reform Party Deputy Chairman Meelis Atonen said the resulting gap could be covered by lowering state expenditures, as well as increased revenue from value-added taxes resulting from higher economic growth. Uhispank analyst Sven Kunsing said the changes would result in more money in taxpayers' pockets, and expressed the hope that it would not be spent primarily on imported goods thereby increasing the current-account deficit.

RES PUBLICA PROPOSES EXPANSION OF POLITICAL APPOINTEES AT MINISTRIES.
Taavi Veskimagi, a parliament member from Res Publica, said the party plans to dismiss up to 38 deputy chancellors in Estonian ministries who are career civil servants and replace them with an undisclosed number of assistant ministers, BNS reported on 13 March. The assistant ministers would be political appointees chosen by the prime minister on the recommendation of the respective minister. The proposed institution is intended to increase the political guidance to the ministries. The Reform Party, which is currently holding negotiations with Res Publica on forming a government coalition, took a cautious stance on the proposal. "A reform involving the discharge of 38 senior officials seems to be a very serious step," said Reform Party General Secretary Eero Tohver, adding, "We'd like to hear extremely competent justifications for it." Jaan Poor, a representative of the other likely coalition partner, the People's Union, said the creation of the posts is logical, adding, "We wouldn't take a very negative view of it."

TERM OF MINE-CLEARANCE MISSION IN AFGHANISTAN EXTENDED.
The government on 4 March approved a three-month extension of the term of the Estonian mine-clearance team serving in Afghanistan, BNS reported. The extension, valid until 8 August, was requested by the U.S. Embassy in Tallinn, whose previous similar request in January (see "RFE/RL Newsline," 15 January 2003) was also granted. The first Estonian unit comprising soldiers and canines was sent to Afghanistan in August 2002 to enhance security around airfields used by U.S. armed forces. The government also approved the mission's budget of 1.45 million kroons ($100,000). The team of six military mine-clearance specialists arrived in Afghanistan on 14 March, BNS reported. They will work in Kabul in a mine-clearance company of an international brigade together with Spaniards, French, Germans, and representatives of other nations. The mine-clearance experts have passed a course within the Scouts Battalion which receives training from U.S. instructors.
* A delegation of 19 senior officers of the United States Air Force staff college arrived in Estonia on 9 March to obtain first-hand impressions of the defense forces, BNS reported. The U.S. colonels and lieutenant colonels visited the U.S. Embassy, the Defense Ministry, the defense forces headquarters, the Air Force Headquarters, and the Amari Air Base on 10 March. The next day they inspected the Baltic Defense College in Tartu before proceeding to Latvia.
* Former President Lennart Meri attended the first roundtable of Swiss and Baltic entrepreneurs in Zurich on 6 and 7 March, BNS reported. Meri spoke about the Baltic Sea as the first internal sea of the EU and drew attention to the growing importance of the Baltic Sea region as a promising economic area.
* Rescue Board Director-General Mati Raidma traveled to Armenia on 13 March to help make preparations for establishing a civil protection structure, BNS reported. The structure is being formed by a joint Swedish-Estonian-Armenian project. Rescue Board spokesman Mari Tikan noted, "This the first project where the Estonian Rescue Board is not the receiver or mediator, but the provider of aid."
* Reacting to the fact that none of the Russian parties gained enough votes to win seats in the parliament, deputies Vladimir Velman from the Center Party and Sergei Ivanov from the Reform Party began organizing the formation of a Russian deputy group, BNS reported on 5 March. The group could include up to six deputies from their parties as well as from Res Publica. Velman said the Russian deputy group would unite deputies both from the coalition and the opposition.
* Reform Party Chairman Kallas told reporters on 4 March that the party's existing coalition with the Center Party in Tallinn would not to be affected by the ongoing negotiations for the formation of a new national coalition in the parliament, BNS reported. He said, "Nothing good will come of any linkage between the coalitions of the state and of Tallinn."
* An administrative court in Johvi ruled in favor of East-Viru County Governor Rein Aidma's request to repeal the decision of the Kohtla-Jarve City Council in November electing Valeri Korb as the city's mayor, BNS reported on 4 March. The decision was based on the fact that the Public Service Act bans the employment of a person under preliminary investigation or trial for a crime that is punishable by imprisonment. Korb has been charged with criminal misconduct, and his name has also cropped up in the trial of suspected murderers of a former member of the very same city council. The next day the city's council board appealed the decision to the Tartu Circuit Court.
* The 28-deputy faction of the Center Party within the recently elected parliament, which appears likely not to be included in the yet-to-be-formed ruling coalition, elected then-Interior Minister Toomas Varek as its new chairman on 6 March, BNS reported. He had held the position before becoming a minister and his replacement as faction head, Kalev Kallo, did not win a seat in the parliament. Ain Seppik and Arnold Kimber were chosen as Varek's deputies.
* Fulfilling a request by Eesti Raudtee (Estonian Railway), the Russian Transport Ministry ordered a suspension of loading grain onto trains bound for Estonia from 5 to 10 March, BNS reported on 6 March. The request was prompted by problems in shipping grain from Tallinn's Muuga port and the accumulation of many trains filled with grain which were not being unloaded. The problem was not solved and when the number of such unloaded trains in various stations reached 36 on 10 March, Russia extended the ban until 20 March, BNS reported.
* BNS Publishing House acquired the trademark of the Estonian national news agency ETA, which was privatized in 1999, but subsequently stopped working on 31 January 2003, BNS reported on 4 March. The ETA Interactive company, which had operated ETA, filed a bankruptcy petition on 13 February which the Tallinn City Court approved on 14 March. ETA had been operating at a loss since April 2000 and had a tax debt with accumulated fines of almost 825,000 kroons ($55,000). The court appointed Kalev Magi as the bankruptcy trustee and set the first general meeting of creditors for 4 April.
* The Supreme Court decided not to hear the appeal of former KGB agent Yurii Karpov, who was convicted in October of crimes against humanity for participating in the deportation to Siberia of 41 Harju County residents in 1949 (see "RFE/RL Newsline," 1 November 2002), BNS reported on 6 March. He had been given an eight-year sentence, which was suspended due to his age, 81, and poor health.
* A joint commission formed to prepare the sale of the financially troubled Concordia University to Tallinn Pedagogical University discovered that Concordia's debts were not 5 million kroons ($387,000), but more than 25 million kroons, BNS reported on 5 March. The Pedagogical University thus decided not to buy Concordia. Efforts to sell Concordia to the private Audentes University were likewise unsuccessful. The government has refused to cancel the almost 5 million-kroon tax debt of Concordia and after the organization renting the university its facilities filed a bankruptcy application against it, Concordia's rector Mart Susi resigned on 12 March. It appears that Susi was in great part responsible for the university's financial troubles as he and his wife received large salaries and required the university to pay many of their household expenses.
* The Central Criminal Police arrested Tallinn Deputy Mayor Vladimir Panov on 4 March on charges of accepting a bribe, BNS reported. Tallinn Mayor Edgar Savisaar suspended Panov until the end of the police investigation.
* The Statistics Office announced on 7 March that in February the consumer price index (CPI) increased by 0.3 percent compared to January, and by 2.4 percent to February 2002, BNS reported. The price of goods rose by 0.4 percent and those of services by 0.2 percent.


LATVIA
DEFENSE MINISTER SAYS U.S. HAS NO PLANS TO SET UP BASES.
After talks with a number of high-ranking officials in Washington on 7 March, Defense Minister Girts Valdis Kristovskis said the United States does not yet have any plans to set up military bases in Latvia, BNS reported the next day. He said only Poland has been mentioned as a possible site for new U.S. bases, as military training centers have already been established there. In regard to Latvia, Kristovskis said: "There has been no specific discussion and no specific offer has even been formulated. For now this is only speculation made by journalists." In talks with U.S. officials, he discussed the crisis in Iraq, NATO enlargement, and the work of Latvia's security services. Later Kristovskis held talks with U.S. National Security Council staff member Walter Andrusyszyn; Bruce Jackson, the head of the nongovernmental U.S.-NATO Committee; and representatives of the World Federation of Free Latvians and the American Latvian Association. He visited the Fort Belvoir and Aberdeen military bases on 10 and 11 March and discussed planned reforms of the Latvian armed forces with U.S. Deputy Defense Secretary Paul Wolfowitz on 12 March.

RESTORATION OF LATVIAN-RUSSIAN INTERGOVERNMENTAL COMMISSION?
Latvian Deputy Prime Minister and co-Chairman of the Latvian-Russian Intergovernmental Commission Ainars Slesers on 12 March invited his Russian counterpart, Labor Minister Aleksandr Pochinok, to visit Riga, BNS reported. Pochinok accepted the invitation and suggested a date of mid-April. The Latvian side of the commission met on 12 March for the first time since 15 new members were named in February (see "RFE/RL Newsline," 26 February 2003). Slesers expressed the hope that the commission will play a greater role in improving Latvian-Russian relations in the future. He noted that bilateral agreements on air traffic, railway and tourism cooperation, collaboration on social security, and the prevention of double taxation and tax evasion have been prepared for signing. The most heated debates at the meeting concerned improving the border-crossing capacity on the Latvian-Russian border, which is reportedly hampered by Russia's outdated control system, small capacity, and lack of educated personnel.

FOREIGN INVESTORS URGE CLEAN UP OF SHADOW ECONOMY, CUSTOMS.
Latvian Foreign Investors Council Chairman Monty Akesson said the council considers Latvia's general development as rather positive, but urges the government to focus more attention on fighting the shadow economy, bringing order to the work done by customs authorities, and reducing excessive tax-violations fines, which can reach 100 or even 200 percent of the unpaid amounts, BNS reported on 10 March. He praised the country's ongoing anticorruption efforts, noting that corruption has been one of the most frequently mentioned problems named by investors in Latvia. Akesson questioned whether Latvian customs officials will be prepared to work under the new requirements that expected membership of the EU will bring in 2004. At its sixth top-level meeting with the government, the council on 6 and 7 March submitted a total of 66 World Bank recommendations to be implemented within a year. Council Honorary Chairman Arvid Grundekjon said Latvia has the potential to become a "fantastic place for investments," and expressed his pleasure that an understanding has been reached with the new government on what is needed to improve the investment environment.

NEW TAX-AUTHORITY HEAD APPOINTED.
In a unanimous decision on 11 March, the cabinet appointed Karlis Ketners, an adviser to the finance minister and the head of the International Transactions Department of the Customs Administration, as director-general of the State Revenue Service, LETA reported. The 26-year-old Ketners, who holds a doctorate in economics, replaces Andres Sonciks, who was fired in February (see "RFE/RL Newsline," 5 February 2003) for failing to recover debts owed by the Dinaz Nafta oil company. As possible measures for improving tax collection, Ketners mentioned establishing a fixed fee for small companies to replace the corporate-income-tax system they are currently subject to; banning mediation activities by customs warehouses, thus eliminating possible fraud concerning value-added taxes; and eradicating under-the-table salaries.

LOCAL COALITION FORMED IN RIGA.
Social Democratic Workers Party (LSDSP) Chairman Dainis Ivans and National Harmony Party (TSP) Chairman Janis Jurkans on 13 March signed an agreement setting up a new governing coalition within the Riga City Council, BNS reported. Following his election as LSDSP chairman in November, Ivans expressed dissatisfaction with the party's coalition in Riga with For Human Rights in a United Latvia (PCTVL) -- in particular with two of the PCTVL's three members, the Equal Rights party and the Socialist Party. He supported forming a coalition with the TSP, a scenario that became possible after the TSP withdrew from the PCTVL last month (see "RFE/RL Newsline," 18 February 2003). The LSDSP has 17 seats and the TSP six seats on the 60-member council. The new coalition is expected to muster majorities through cooperation with the union of small parties Centrs, which holds seven seats, and with two members of the Green Party.

VISIT BY LITHUANIAN PRESIDENT.
Rolandas Paksas paid an official working visit to Riga on 10 March, ELTA and BNS reported. His talks with President Vaira Vike-Freiberga focused on bilateral relations, regional cooperation, and Euro-Atlantic integration, as well as the implementation of joint infrastructure projects. Paksas and Prime Minister Einars Repse discussed the maritime border treaty between their countries that Lithuania ratified more than three years ago, but which Latvia's parliament only approved in its first reading in September 1999. Repse agreed to present it to parliament for ratification after the countries form a working group for developing an economic-cooperation agreement. Paksas also met with parliament Chairwoman Ingrid Udre, the Lithuanian Chamber of Commerce in Latvia, and attended a reception at the Lithuanian Embassy in Riga celebrating the re-establishment of Lithuanian independence on 11 March 1990.

LATVIA TO IMPOSE ANTIDUMPING DUTIES ON LITHUANIAN MILK?
At a meeting of Baltic agriculture ministers in Parnu, Estonia, on 5 March, Latvia's Martins Roze rejected his Lithuanian counterpart Jeronimas Kraujelis's suggestion that Latvia drop its plans to impose additional duties on imported Lithuanian milk, BNS reported. Alleging that some Lithuanian dairies had sold milk at dumping prices, Latvia's domestic market-protection bureau recommended that antidumping duties be imposed. The ministers agreed on all other issues discussed, such as signing a joint request to Poland not to apply export subsidies to pork being exported to the Baltic states. The Baltic ministers also expressed regret that EU candidate countries were not invited to take part in EU debates on changing the EU's Common Agriculture Policy.

EARLY PRESIDENTIAL ELECTIONS PROPOSED...
A joint meeting of representatives of the parliament factions and the parliament presidium decided on 3 March that presidential elections will be held on 12 March in an extraordinary parliamentary session, BNS reported. Current President Vike-Freiberga was elected to a four-year term on 17 June 1999 and has been endorsed for another term by the four parties in the ruling coalition as well as by the opposition People's Union. The opposition National Harmony Party and For Human Rights in a United Latvia factions voted against advancing the date of the elections.

...THEN CANCELED.
Three days later, a joint meeting of the parliamentary presidium and representatives of parliament factions decided to cancel their earlier decision to advance the presidential elections to 12 March (see "RFE/RL Newsline," 4 March 2003), LETA reported on 6 March. The Latvian Attorneys' Association and the opposition National Harmony Party had declared that advancing the elections by three months would not be compatible with the constitution, which stipulates that newly elected presidents are to be sworn into office at the first parliamentary session following their election. As the first parliamentary session following a 12 March election would be on 13 March, the current term of President Vike-Freiberga that is to end on 8 July would have been shortened. Prime Minister Einars Repse said the ruling coalition's decision to re-elect her as president remains unchanged and he expects that she will be re-elected in June.
* French National Assembly deputy Alfred Almount visited Latvia on 11 and 12 March to prepare a report for the French parliament on Latvia's achievements on its road to the EU, BNS reported. At a meeting on 11 March with President Vike-Freiberga, he praised Latvia's rapid development and reforms and spoke about further cooperation between the two countries in the training of officials. The next day Almount met with representatives from the pre-referendum information management group "Latvia in Europe," who informed him about the public campaign consisting of three stages: information, discussion, and invitation.
* Citing a report in the Brussels news agency Agence Europe, the daily "Diena" wrote on 7 March that the European Commission had decided that among the EU candidate countries only Poland has failed to meet more of its commitments, LETA reported. Latvia was found to have done almost nothing to eliminate deficiencies noted in the fall 2002 progress report in five areas: IT improvement at customs checkpoints, weak tax-administration capacity, incomplete harmonization of laws with structural funds, maritime transport, and free movement of capital.
* Latvian Constitutional Court judge Anita Usacka was sworn in on 12 March as one of 18 judges seated on the International Criminal Court, LTV's "Panorama" reported that day. Usacka is the only East European judge elected to a seat on the ICC, the first permanent, treaty-based, international criminal court established to promote the rule of law and ensure that the gravest of international crimes do not go unpunished.
* Foreign Minister Sandra Kalniete visited the Netherlands on 11 and 12 March, LETA reported. She attended the opening ceremonies of the International Criminal Court and held talks with UN International Court of Justice President Shi Jiuyong and Permanent Court of Arbitration Secretary-General Tjaco van den Hou. Kalniete discussed the EU Convention on the Future of Europe with the Dutch government representative to it, Gijs de Vries, and met with her Dutch counterpart, Jaap de Hoop Scheffer.
* During a visit to Liverpool on 5 to 8 March, a Riga City Council delegation and the Liverpool mayor signed a protocol of intent about future cooperation, BNS reported on 10 March. The protocol did not mention any specific projects but laid the foundation for future developments. A delegation from Liverpool is planning to visit Riga in May during the finals of the Eurovision international song contest since a Liverpool band will be representing the United Kingdom in the contest.
* Defense Ministry State Secretary Edgars Rinkevics told the parliament Defense and Interior Affairs Committee on 11 March that Latvia has made a commitment to set up a safe communications network between Riga and Brussels in a year after signing NATO accession protocol, BNS reported.
* The European Court of Human Rights in Strasbourg rejected the complaint against Latvia's plan to change the language of teaching in high school classes at Russian-language schools to Latvian in 2004, BNS reported on 1 March. It ruled that the claimants had not exhausted all legal remedies available to them in the Latvian court system, specifically mentioning no attempt to ask the Latvian Constitutional Court whether the plan was discriminatory.
* U.S. Ambassador to Latvia Brian Carlson told the annual meeting of the American Chamber of Commerce in Riga on 14 March that Latvia will not develop into an influential business center as long as it has problems with corruption and economy transparency, which is scaring away investors and hindering local businesses, BNS reported. Noting the need for more dialogue between the government and the business community, he praised Prime Minister Repse's emphasis on transparency and the establishment of the Corruption Prevention Bureau.
* Responding to a statement by Russian Ambassador to Latvia Igor Studennikov expressing satisfaction that the current parliament did not have a Chechen support group, four parliament deputies established such a group on 6 March, LETA reported the next day. One of the group's leaders, Arvids Ulme of the Union of Greens and Farmers, said that it would analyze information about the situation in Chechnya, especially issues concerning human rights.
* The National Security Council approved on 5 March the strategy for reorganizing the country's security services which had been proposed by a government's task force, LETA reported. It calls for the Constitutional Protection Bureau to be responsible for intelligence, counterintelligence, and ensuring the safety of classified information and NATO classified data; for the Security Police to deal with counterintelligence, counterterrorism, and counterextremism operations; while the Military Counterintelligence Service would continue working under the auspices of the Defense Ministry.
* The parliament passed amendments to the Law on the Corruption Prevention Bureau on 6 March, LETA reported. They raised the number of deputies the bureau's head had from one to three and defined more clearly the bureau's functions. It will be responsible for checking the declarations of state officials and evaluate the investigations carried out by other institutions.
* Riga City Council Environment Committee Chairman Valdis Kalnozols has proposed prohibiting the use of mobile telephones in public places in the city, LETA reported on 4 March. He suggested that a fine of 20 lats ($32) be imposed on offenders. The committee made no decision on the proposal, noting that the issue cannot be reviewed because a definition of a public place has not been formulated in Latvia.
* A congress of the Latvian Farmers' Union (LZS), held on 1 March in Jelgava, re-elected Augusts Brigmanis as the party's chairman, LETA reported the next day. Party Deputy Chairman Vilnis Edvins Bresis was also nominated, but withdrew his candidacy. The congress also elected Agriculture Minister Martins Roze as first deputy chairman and parliament speaker Ingrida Udre as deputy chairwoman. In a change from its position during the parliament election campaign, the congress adopted a resolution supporting Latvia's membership in the EU.
* The National Statistics Office announced on 10 March that in February the consumer price index had increased by 0.3 percent compared to January and by 2.1 percent compared to February 2002, LETA reported. In February the price of goods rose by 0.4 percent, primarily due to a 0.8 percent increase in food prices, and of services by 0.1 percent.
* The National Employment Service announced on 12 March that at the beginning of the month there were 93,617 registered unemployed persons in Latvia, or 2,037 people more than a month earlier, BNS reported. The unemployment rate increased by 0.2 percent to 7.9 percent. A total of 24,572 had been without a job for more than one year.


LITHUANIA
POLISH, LITHUANIAN PRESIDENTS URGE TRANS-ATLANTIC UNITY OVER IRAQ.
Polish President Aleksander Kwasniewski said after a meeting with his Lithuanian counterpart Rolandas Paksas in Warsaw on 7 March that neither country rules out the possibility of a military solution to the Iraq situation should peaceful methods prove unsuccessful, Polish Radio reported. "At present, all countries, including Poland and a NATO candidate, Lithuania, have a very important task of strengthening and recalling the need for trans-Atlantic unity, for the closest possible cooperation between the United States and Europe," Kwasniewski said. PAP reported that the presidents also discussed the functioning of schools for the Lithuanian minority in Poland and the restoration of land in Lithuania confiscated from Poles by the Soviets after World War II. Paksas reportedly assured Kwasniewski that Lithuania will settle the problem of property restitution to Poles by 2004. The presidents also discussed the fight against international terrorism with EU foreign- and security-policy chief Javier Solana, ELTA reported. During his first official foreign visit, Paksas also met with Polish Prime Minister Leszek Miller, Sejm speaker Marek Borowski, Senate Chairman Liongin Hieronim Pastusiak, and Cardinal Jozef Glemp.

NEW GOVERNMENT APPROVED.
President Paksas signed a decree on 6 March approving the cabinet of 13 ministers presented by Prime Minister Algirdas Brazauskas, ELTA reported. The cabinet is the same as the one in power prior to the presidential elections with the exception of Social Democrat Juozas Olekas, who is to replace Social Liberal Konstantinas Romualdas Dobrovolskis as health minister. Olekas is the only minister who was not installed immediately, as he still must take the official oath of office at the parliamentary session scheduled for 10 March. Social Liberal Chairman Arturas Paulauskas on 6 March expressed his dissatisfaction with the reduction of the number of ministers allocated to his party from six to five without consulting him, but a meeting that evening of representatives of the Social Democratic Party and the New Union (Social Liberals) decided that their coalition will remain firm.

PRESIDENT VISITS SOLDIERS IN AFGHANISTAN.
Rolandas Paksas, accompanied by Defense Minister Linas Linkevicius, Field Forces commander Brigade General Valdas Tutkus, parliament's National Security and Defense Committee Chairman Alvydas Sadeckas, and presidential adviser for foreign-policy issues Alvydas Medalinskas, traveled on 28 February to Baghram Air Base, some 50 kilometers from Kabul, to visit Lithuanian troops serving in Afghanistan. Some 40 soldiers have been serving in Operation Enduring Freedom in Afghanistan since last November. The Lithuanians did not meet with any Afghan officials, but heard praise about the performance of the troops from Combined Joint Task Force commander Lieutenant General Dan McNeill. Paksas said at a press conference at Vilnius airport after returning on 2 March that the service of the coalition troops is totally different from that of the Soviet troops 20 years earlier and that he supports the current Lithuanian missions abroad, BNS reported.

U.S. FINALLY RECOGNIZES LITHUANIA AS FUNCTIONING MARKET ECONOMY.
Lithuania's Ambassador to the United States Vygaudas Usackas announced on 4 March that U.S. Commerce Department Assistant Secretary for Import Administration Faryar Shirzad signed a memorandum on 28 February recognizing Lithuania as a functioning market economy, "Lietuvos zinios" reported. Lithuania learned in the spring of 2002 that the United States did not consider the country as a market economy when the U.S. International Trade Commission launched an antidumping probe. The U.S. investigation of the actions of the Lithuanian nitrogen-fertilizer producer Achema was later called off when it was determined that the company accounted for less than 3 percent of such imports to the United States. Repeated requests by former President Valdas Adamkus, Prime Minister Brazauskas, and Foreign Minister Antanas Valionis to change the nonmarket-economy status designation failed to speed up the Commerce Department's deliberations on the issue that began on 10 September.

PAKSAS AND BUSH DISCUSS IRAQ.
During a 10-minute telephone conversation with U.S. President George W. Bush on 12 March, President Paksas said a peaceful resolution of the conflict with Iraq would be the best solution, ELTA and BNS reported the next day. Bush reportedly said the United States has always sought a peaceful solution, but unfortunately talks have been long and have not yielded any positive results. He also congratulated Paksas on his election to Lithuania's presidency and expressed the desire for successful personal cooperation in the future. Paksas said the National Defense Council will soon meet to discuss Lithuanian policy on the Iraq crisis and will inform Bush of the results. He also said the recent U.S. decision to confer "functioning market economy" status on Lithuania should foster greater economic cooperation.

VATICAN OFFICIAL VISIT.
Archbishop Jean Louis Tauran, the secretary for the Holy See's relations with other states, arrived in Vilnius on 2 March for a five-day visit. On 3 March he spoke at the conference "Lithuania and the Holy See: the Past, Present, and Future" at Vilnius University, marking the 80th anniversary of Lithuania's diplomatic relations with the Vatican and the 75th anniversary of the first Vilnius-Vatican concordat, ELTA reported. President Paksas also addressed the conference and at a later meeting presented Tauran with the Great Cross of Grand Duke Gediminas Order for contributing to the expansion of bilateral relations and supporting Lithuania's foreign-policy goals. Talks with Foreign Minister Valionis primarily focused on the implementation of bilateral agreements. Tauran was scheduled to meet on 4 March with parliament Chairman Arturas Paulauskas and Prime Minister Brazauskas.

BRAZAUSKAS REAPPOINTED AS PRIME MINISTER.
President Paksas signed a decree naming Algirdas Brazauskas as prime minister on 4 March, ELTA reported. Several hours earlier parliament approved the nomination by a vote of 82 to 12, with 18 abstentions. Brazauskas was supported by the Social Democrats, the New Union (Social Liberals), the Union of Peasants and New Democracy Parties, and the Liberal Democrats. The Liberal Union opposed Brazauskas' nomination and the Conservatives abstained from the vote.

NEW HEALTH MINISTER PROMISES CHANGES.
Juozas Olekas, upon his return to the post of health minister that he held in 1990-92, pledged to seek higher salaries for medical workers and to stop people referring to the ministry as the "Medicine Ministry," "Lietuvos zinios" reported on 12 March. He said the ministry could use World Bank funds to improve primary medical facilities in rural areas. Olekas also advocated changing the system that barred doctors from giving specific recommendations for referrals to specialists. In an effort to end the prevalent system of "gifts," he called for raising the wages of doctors and other medical personnel. Olekas affirmed that the system of deciding which medicines will be compensated by the state must be made clearer and their prices cannot be higher than in the rest of Europe.

NEW MERGED FACTION ESTABLISHED IN PARLIAMENT.
The center-right Liberal Union, the Center Union, and the Modern Christian Democratic Union (MKDS) on 5 March formed the temporarily named Joint and Liberal faction in parliament, thus fulfilling the merger agreement they signed in January, BNS reported (see "RFE/RL Newsline," 15 January 2003). The group, which will be headed by Liberal Eligijus Masiulis, has 25 members: 20 Liberals, three Centrists, and two Modern Christian Democrats. Center Union Chairman Kestutis Glaveckas and Liberals Klemensas Rimselis, Raimundas Palaitis, and Raimundas Sukys were appointed as his deputies. The two deputies from the Polish Election Action who belonged to the previous faction with the Center Union and the MKDS have been invited to join the group.

NEW CHAIRMAN OF LIBERAL DEMOCRATS ELECTED.
A congress of the Liberal Democratic Party in Vilnius on 9 March elected Valentinas Mazuronis as the party's new chairman by a vote of 466 to three, with 44 abstentions, "Kauno diena" reported the next day. Two other party deputy chairmen, parliamentary deputy Henrikas Zukauskas and Klaipeda University professor Vytautas Valevicius, were nominated, but withdrew their candidacies. The 49-year-old Mazuronis is an architect from Siauliai who was appointed acting party chairman in January (see "RFE/RL Newsline," 15 January 2003) to replace Rolandas Paksas, who was required to end his party affiliation after being elected Lithuania's president. The congress elected Zukauskas as first deputy chairman, six other deputy chairmen, and in a secret ballot 14 other members to an executive committee. It also approved a resolution supporting Lithuania's future membership of the European Union.

'SPECIAL ROLE' IN EU-BELARUS RELATIONS SOUGHT.
Lithuanian Ambassador to Belarus Jonas Paslauskas told Belapan on 10 March that his country could play a special role in the development of relations between the European Union and Belarus, the agency reported. Paslauskas said Lithuania hopes to become an active member of the EU and will advocate closer relations with neighboring states, including Belarus. He said Lithuania and Belarus should consider joint cooperation projects in the European context. He added that such projects could relate to environmental protection, combating illegal migration, or the development of the border-protection infrastructure.

PRESIDENT PROPOSES JOINING EU MILITARY MISSION IN MACEDONIA.
Rolandas Paksas asked parliament on 13 March to approve participation in the EU-led international peacekeeping mission in Macedonia, BNS reported. The proposal came in response to the invitation Lithuania received from the European Union on 12 February to take part in the first mission the EU will be taking over from NATO in late March. Defense Ministry Secretary Povilas Malakauskas said if parliamentary approval is granted, Lithuania will probably send a staff officer and a specialist in logistics to Macedonia. The Defense Ministry would provide 34,000 litas ($11,000) to fund the mission from April to October.
* President Paksas telephoned Russian President Vladimir Putin in the evening of 4 March to fulfill his earlier promise to inform him about his trip to Afghanistan, BNS reported the next day. They also talked about bilateral relations and the EU-Russian summit meeting scheduled for 29 May in St. Petersburg.
* Shortly after returning from visiting troops serving in Afghanistan, President Paksas sent a letter to U.S. President Bush on 4 March in which he pledged support for the coalition to fight international terrorism, ELTA reported. He wrote that the trip to Afghanistan convinced him that "the international community can eradicate this evil only through joint action."
* Deputy Foreign Minister Justas Vincas Paleckis attended the conference on "European Union Enlargement and Assistance Policy after Admission of New Members" in Copenhagen on 12 and 13 March, BNS reported. He also held talks with Denmark's Secretary of State Friis Arne Petersen and Nordic Council of Ministers Secretary-General Per Unckel on bilateral Lithuanian-Danish ties, regional cooperation, and transit via Lithuania between Russia and the Kaliningrad Oblast.
* The parliament decided to establish a parliamentary assembly with Ukraine on 5 March. BNS reported. The assembly, which will have 15 deputies from the Lithuanian parliament determined on a proportional basis from the various factions, should discuss issues and projects of mutual interest and will be able to put forward proposals and offer recommendations. The parliament already has similar assemblies with Poland, and a three-party grouping with Estonia and Latvia called the Baltic Assembly.
* The cabinet approved on 5 March the opening of consulates in Georgia's capital Tbilisi and the border city of Sovetsk in the Kaliningrad Oblast, ELTA reported. The consulate in Sovetsk will begin operations on 31 March and that in Tbilisi on 1 August. The government also decided to close the consulate in Daugavpils, Latvia.
* U.S. President Bush presented the candidacy of Stephen Mull to the U.S. Senate for the post of ambassador to Lithuania, BNS reported on 6 March. Mull, who is currently deputy chief of the U.S. Embassy in Indonesia, has served earlier in the State Department as the director of Southern European affairs. If approved by the Senate, he would replace John Tefft as ambassador late this summer.
* Director of state-run Lithuanian Radio and TV (LRT) Valentinas Milaknis resigned from his post on 4 March charging excessive political pressure, ELTA reported. In an open letter to the parliament and the public, he explained that his 22 months in heading LRT had been made more difficult by the constant pressure of politicians, especially parliament Education, Science, and Culture Committee Chairman Rolandas Pavilionis. The LRT council accepted his resignation and appointed Lithuanian Radio Director Kestutis Petrauskis as LRT acting director.
* By a vote of 57 to three with 25 abstentions the parliament approved a new copyright law on 5 March, ELTA and BNS reported. The new law which was drafted by the Culture Ministry has been harmonized with the EU standards. Its most noticeable feature will be the imposition of a small tax on all blank audio or videotapes and compact disks which will be used to give remuneration to holders of the copyright of artistic works.
* The Chief Election Commission announced on 6 March that special parliamentary elections will be held in four districts on 15 June, ELTA reported. The elections are necessary because President Paksas and his advisers, Alvydas Medalinskas and Dalia Kutraite-Giedraitiene, gave up their parliament seats in Vilnius. Conservative Vitas Matuzas also decided to serve in the Panevezys City Council with the hope that he will be elected the city's mayor.
* The State Food and Veterinary Service imposed a ban on the import of fowl, poultry, and eggs from the Netherlands from 3 March because the European Commission reported an outbreak of fowl flu in the country, BNS reported the next day. On 14 March the ban was also applied to poultry imports from Belgium after a flu case was discovered in a Belgian farm a kilometer away from the Dutch border.
* The Lithuanian Forum on the Future of the European Union, an organization of NGOs, trade unions, and public organizations founded in February 2002, held its annual conference in Vilnius on 1 March, BNS reported. Former President Adamkus, parliament Chairman Arturas Paulauskas, Foreign Minister Valionis, and European Committee Director General Petras Austrevicius spoke at the conference, which approved a declaration urging the people to vote "yes" in the referendum on EU membership on 10 and 11 May.
* The cabinet decided on 5 March to accept the recommendation of the economy minister to revise the privatization program for selling a 34 percent stake in Lithuanian Gas by giving Russia's Gazprom an extension until 11 April to present its final offer for the shares, ELTA reported. Gazprom has offered 80 million litas ($25 million) while Lithuania wants to get at least 116 million litas.
* The Bank of Lithuania announced on 14 March that the country had a 232 million-litas ($72.5 million) current account surplus in January, ELTA reported. The surplus was primarily due to a much smaller foreign trade deficit because compared to January 2002 exports grew by 38 percent and imports by only 5.5 percent.
* The Statistics Department announced on 10 March that in February the consumer price index decreased by 0.3 percent compared to January and by 2.0 percent compared to February 2002, ELTA reported. In February the costs of goods fell by 0.4 percent while those of services rose by 0.2 percent.
* The Labor Office announced on 6 March that at the beginning of the month there were 196,400 officially registered unemployed people in the country or an unemployment rate of 12.1 percent, BNS reported. This is a 13.2 percent decline from the same period in 2002.


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