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Baltic Report: November 26, 2003

26 November 2003, Volume 4, Number 35

This issue covers events in the Baltic states from 20 to 31 October 2003.
The European Commission has warned Russia that relations between Moscow and Brussels could deteriorate if that country does not automatically apply its partnership and cooperation agreement with the EU to new member states, LETA reported on 29 October, citing an RFE/RL report. European Commission foreign press secretary Diego Ojega said the EU's position will be explained at an EU-Russia meeting to be held in Moscow ahead of the EU-Russia Summit in Rome on 6 November. Russia wants to discuss the issue, fearing its foreign trade could suffer in the wake of EU enlargement. It has also been complaining of human rights violations against Russian speakers in Latvia and Estonia. Eight postcommunist countries are expected to join the EU in mid-2004: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia.

Ports in Estonia and Latvia have expressed mixed reactions to the European Union's ban on single-hull tankers carrying heavy fuel oil, which went into effect on 21 October, LETA reported the next day. predicted the ban could reduce oil transit via Estonia by one-fifth and raise fuel prices, because 156 of the 608 tankers that have used the Port of Tallinn this year are single-hull tankers. At the same time, 85 percent of tankers loaded in Estonian ports are bound for EU ports. Imants Sarmulis, the port administrator at Ventspils, said the Ventspils and Liepaja ports will not observe the ban until the requirement is binding on them in May, when Latvia is expected to join the EU. Felikss Klagiss, head of Riga's Maritime Control Department, told LETA that the Riga Port has already banned tankers carrying certain types of cargo from entering the port. Klagiss said the competitiveness of Latvia's ports can be maintained, if the Baltic countries and Russia adopt the EU ban at the same time.

The United Kingdom has officially announced its ratification of the NATO accession protocols for Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia in Parliament, LETA reported on 29 October. The United Kingdom is the 11th NATO member to ratify the protocols allowing for further enlargement of the alliance. The remaining eight NATO members (Belgium, France, Greece, Iceland, Netherlands, Portugal, Spain, and Turkey) still need to vote for ratification. British Foreign Secretary Jack Straw congratulated the NATO candidates, commending their contributions to NATO already.
* The Baltic Military Committee made up of the commanders of the three countries' defense forces signed the cooperation plan for 2004 while meeting in Parnu, Estonia, BNS reported on 24 October. The Baltic Military Committee meets twice a year to review the NATO integration process and joint defense projects of Estonia, Latvia, and Lithuania.
* The U.S. Embassy in Tallinn has begun fingerprinting applicants for U.S. visas, BNS and LETA reported on 23 October. U.S. Consul Paul Mayer told the Estonian media that a scanner will record an applicant's fingerprints and that the procedure takes about 25 seconds. Mayer said that the U.S. will also be checking fingerprints of persons arriving in the United States, once the system is implemented as part of the fight against international terrorism.
* A study conducted by the Dublin-based European Foundation for the Improvement of Living and Working Conditions found that the average Pole works 45.2 hours per week, ranking them first among the countries making up the enlarged European Union, LETA reported on 24 October. According to the study, Estonians work 42.4 hours per week, Latvians work 44.4 hours per week, and Lithuanians work 44.9 hours per week.
* According to LETA, which published the statistics on 20 October, World Health Organization data shows that maternal death rates in 2000 were four per 100,000 births in Lithuania, 42 per 100,000 in Latvia, and 63 deaths per 100,000 newborns in Estonia.
* The World Wildlife Fund (WWF) has warned that illegal logging in the Baltic states and Russia may become a serious problem for the international timber trade, LETA reported on 21 October. The WWF called on the European Union to halt illegal logging in its new member states.

Three Estonian stabilization troops from the ESTPLA-7 platoon were injured in Iraq on 16 October in a grenade attack while they were patrolling a market, LETA reported on 17 October. One of the soldiers was treated for minor injuries and is back on duty, the second is recuperating at his unit, and the third is still in the hospital. Their Iraqi interpreter was also injured in the attack. This is the second attack against the Estonian forces in two weeks. In the earlier incident, a truck and a jeep drove into an ambush where grenade launchers as well as guns were fired, but no Estonians were injured or killed. Estonian defense forces do not rule out the possibility that both attacks were prompted by the good work of Estonian units interdicting local crime bosses, as well as helping U.S. forces capture an Iraqi suspected of organizing attacks against U.S. forces.

President Arnold Ruutel thanked the 38 national organizations which came together on 20 October in Tallinn to sign the National Societal Accord Ruutel has advocated since early 2003, LETA reported. The agreement establishes a goal of doubling the living standard in Estonia by 2015, and calls for an increase in spending on education and support to young families with children. Speaking before the signing ceremony, Ruutel cited the study by sociologists that was the catalyst for today's accord. The study warned of the growing social divide in Estonia -- two Estonias, one wealthy, the other poor. "Now...a document has been completed that lays the basis for Estonia's social sustainability," Ruutel said. Ten organizations that had signed an earlier memorandum were not among the signatories of the national accord. They include senior parties of the ruling coalition Res Publica and the Reform Party; the Estonian United People's Party; as well as the largest opposition party, the Center Party. The Chamber of Commerce and Industry also declined to sign the accord, saying that the parliamentary parties first have to develop a "common, long-term vision," and only then can the aims be achieved.

Parliament's Constitutional Committee voted to disregard a recent Estonian Supreme Court ruling that retired servicemen of the Soviet and Russian military may be issued permanent residency permits, BNS reported on 21 October. The current practice of the Citizenship and Migration Board has been to issue temporary permits for a period of up to five years. As a result of the court decision, the Estonian Interior Ministry in September asked the parliament to amend the Aliens Act to create a list of retired foreign servicemen who could then be issued the new permanent-residency permits. There are nearly 4,300 retired former Soviet and Russian soldiers living in Estonia on the temporary permits, with an additional 2,200 dependents.

The Estonian Migration Board authorized the first arrest of a retired Russian military officer who has ignored orders of the Estonian state to leave the country, BNS and LETA reported on 30 October, citing the daily "Eesti Paevaleht." The police arrested Nikolai Mikolenko, 49, at his home in Tallinn and brought him to jail to await a court hearing. The court may fine him or imprison him for one month as punishment for ignoring the expulsion order. The Migration Board has issued orders to 12 former Russian military officers to leave Estonia in connection with violations of the law. Mikolenko in the mid-1990s received funding from a U.S. aid program to buy an apartment in Russia, but he remained in Estonia without a residence permit. He has already appealed his case in the European Court of Human Rights.

Arancha Gonzalez, a representative of European Trade Commissioner Paul Lamy, has predicted that Russia's double tariffs on Estonian products will be eliminated upon Estonia's accession to the European Union, which is expected in May 2004, LETA reported on 23 October. Gonzalez said that if Russia fails to remove the double tariffs, it will be in violation of its cooperation agreement with the EU signed in 1994 that requires a most-favored-nation regime with all EU member states. The European Commission will include this issue within the negotiations on World Trade Organization membership that Russia seeks, Gonzalez said, and "under no conditions" will the EU allow Russia to preserve the double tariffs. However, Estonian businesspeople remain skeptical, LETA reported, citing the daily "Eesti Paevaleht." "Nothing will change," Pakterminal head Raivo Vare said, "[Russia] will find 110 tricks to avoid it or renegotiate it." Estonia has negotiated with Russia for 10 years on abolishing the double tariffs without success.

The Estonian Foreign Ministry summoned Russian Ambassador Konstantin Provalov and delivered a protest note over a "premeditated attack" against an Estonian consular officer working in Pskov, LETA reported on 24 October, citing the daily "Postimees." The issuing of Estonian visas has been temporarily suspended in Pskov. The diplomat, who was brutally beaten in the hallway of his apartment building on 21 October, is recovering from a concussion at home. The Russian Foreign Ministry expressed regret over the incident, which is under investigation by Pskov police officials.

The International Monetary Fund (IMF) has published its annual report on Estonia, in which the fund expresses its concern that the country's current-account deficit might reach 12.8 percent of GDP by the end of the year, reported on 27 October. The IMF warns that such a deficit is not sustainable in the long term and advises the government to toughen its budgetary policy. The report also draws attention to Estonia's high unemployment rate and calls for a reduction in the number of local municipalities through consolidation.

Estonian customs agents arrested a Latvian truck driver after finding 20 tons of sugar in a cargo declared as mineral wool, BNS and LETA reported on 27 October. The Ikla checkpoint officials detected the undeclared, Latvia-bound sugar on 24 October and have opened a criminal investigation. Sugar is three times more expensive in Latvia than in Estonia because of national taxes.

Nearly 334,000 Estonians, or four out of five workers, have joined a new pension fund created under the pension-reform laws, LETA reported on 29 October, citing the daily "Postimees." Employees choosing to participate in the pension fund, which starts operating in January 2004, must sign up by 31 October. "Our preliminary calculations said that 250,000 [participants] would be a very good result," said parliamentarian Eiki Nestor, one of the planners of the new system. One reason for the positive results is the fund formula, which requires the Estonian government to contribute two kroons ($0.15) for every kroon paid by the employee into the pension fund.

According to a survey conducted by, about 500 Finnish companies operate in Estonia, providing jobs to 22,000 Estonians, LETA reported on 24 October. Most of the companies are small or medium-sized firms, consulting firms, or subcontractors of state-owned firms Finnair or Fortum. A total of 2,000 Finnish companies are registered to do business in Estonia.
* Prime Minister Juhan Parts criticized the rivalry among Estonia's universities, saying that higher education in the country needs reorganization to ensure quality educations, BNS reported on 24 October. The Res Publica party, founded by Parts, has also proposed that elementary and secondary schools be separated from local municipal control, giving the headmasters of schools a free hand over school budgets.
* A recent poll by the Emor company found that nearly 40 percent of Estonians see no need for the national accord initiated by President Ruutel, BNS reported on 24 October.
* The EU's Phare program has provided funding to reimburse persons for Estonian-language courses after they have achieved naturalization. BNS reported on 25 October that 7,000 persons have been reimbursed by the program so far, and that there will soon be free courses on the Estonian Constitution for Estonian-citizenship applicants. As of the end of September, 123,647 persons have achieved Estonian citizenship.
* Members of the Estonian Estpla-7 peacekeeping platoon, now stationed in Baghdad, restored a local kindergarten under a U.S.-led project to rebuild elementary schools in Iraq, BNS reported on 22 October. The Abu Ghurayb kindergarten is the first of seven schools the Estonians plan to rebuild.
* The Estonian government decided to allocate an additional 1 million kroons ($75,000) to support reconstruction efforts in Iraq, BNS reported on 23 October. At the end of April, Estonia donated 1 million kroons for humanitarian aid in Iraq.
* Russia has decided to pay compensation to those people repressed by Soviet power, but only if they were arrested in Russia, LETA reported on 29 October. Nearly 600 people have contacted the Estonian Red Cross to file claims for compensation from the Russian government -- 95 percent of them are victims of Soviet repression in Estonia from 1941 through 1949.
* Estonia's largest financial group, the Hansapank Group, earned 35.7 million euros ($42 million) of net profit in the third quarter of this year, LETA reported on 24 October. The amount was 2.5 percent less than last year for the same time period.
* The Estonian government adopted new regulations for fighting dangerous contagious diseases at the state border, LETA reported on 23 October. The decree will be implemented at ports, airports, railways and highway border crossing checkpoints.
* The council of the Res Publica party has appointed Ott Lumi, a domestic adviser to Prime Minister Parts, as its new secretary-general, BNS reported on 25 October.
*The Estonian Police Board awarded Sara Squire, the British ambassador to Estonia, its police services badge in recognition of her efforts to secure U.K.-sponsored police-training projects for Estonia, LETA reported on 23 October.
* The Estonian Veterinary and Food Board plans to start spreading rabies vaccine in fodder from planes next year in order to reduce the number of rabies cases among Estonia's wild animals, LETA reported on 22 October. In the first nine months of this year, 568 cases of rabies have been identified among animals in Estonia.
* According to a Saar poll conducted in September, Estonians have the greatest trust in their country's border guards (74 percent), the Bank of Estonia (71 percent), and the defense forces (71 percent), BNS reported on 23 October. The president was trusted by 70 percent of those interviewed, with considerably lower figures for other government institutions. The parliament's trust rating was 45 percent and the government's 48 percent.
* Tarmu Tammerk, managing director of the Estonian Newspaper Association for seven years, will become the editor in chief of the "Postimees" daily in mid-November, LETA reported on 24 October. Tammerk is the former editor in chief of "The Estonian Independent" newspaper and an international correspondent for both Reuters and AFP.
* A painting by Konrad Magi, an early 20th-century Estonian landscape painter, was auctioned in Tallinn for 341,500 kroons ($25,000), which is the highest price for a painting auctioned in Estonia, BNS reported 24 October. The auction of the Saaremma landscape painting was held at the Haus Gallery along with 42 other works of art.

Latvian border guards concluded two days of training operations with their Finnish, Lithuanian, and Estonian colleagues on Latvia's eastern border on 18 October. Speaking to LETA, the State Border Guard's Daugavpils Administration, which coordinated the exercise, confirmed that Belarusian border guards also took part. The goal of the operation was to uncover illegal routes of immigration and trafficking in humans, stolen automobiles, and contraband. According to the U.S. Embassy, the Latvian State Border Guard will soon receive a donation of 25 Global Positioning Systems (GPS) and 175 sensors, LETA reported on 16 October. By the end of the year, Latvia should receive from the United States 334 more sensors that will be installed on the Latvian-Russian and Latvian-Belarusian borders. The U.S. Embassy also is providing training for the new equipment.

Prime Minister Einars Repse, who heads the New Era party, endorsed a proposal by Latvia's First Party to encourage births by introducing a new monthly subsidy equal to the newborn baby's mother's or father's salary, LETA and BNS reported on 20 October. Repse told reporters on 20 October after a meeting of New Era's parliamentary faction that he was "shocked" by the statistical data showing 33,000 persons die annually in Latvia while only 20,000 babies are born. The new child-care benefit would cost the government approximately 30 million lats annually ($54.1 million) according to Repse. Acknowledging that the government does not have the funds at present, Repse said the goal could be reached by 2005. "The Latvian nation is dying out, there will be no one to work soon," Repse said, explaining that the additional financial benefit has to be introduced to prevent this demographic crisis.

The Russian government again canceled the planned 27 October scheduled meeting of the Latvian-Russian Intergovernmental Commission amid recent tensions in bilateral relations, BNS and LETA reported on 21 October. Russia has repeatedly accused Latvia in recent months of violating the minority rights of Russian speakers living in Latvia. Russian Ambassador to Latvia Igor Studennikov visited the Foreign Ministry and told Deputy State Secretary Andris Teikmanis that "taking into account recent developments, the Russian side regards the previously planned untimely." In response, the Latvian Foreign Ministry issued a statement that questioned Moscow's motives. "The Latvian party regrets the obvious reluctance of Russian officials to work on matters of bilateral relations, citing excuses that make sense only to themselves," the statement read. "Latvia has always been willing to build constructive cooperation and hopes that...the Russian party will cease to be guided by short-term political conjecture and return to a business-like attitude." Since its formation in 1997, the commission has never met on the highest level; its expert groups have held talks only a few times.

Guenter Verheugen, the EU's commissioner for enlargement, told an audience at the Diplomatic Academy in Moscow that members of the Russian minority in the Baltic states who have decided to stay should seek to naturalize, BNS reported on 28 October. The European Commission's delegation to Estonia released a statement quoting Verheugen's remarks. "It is internationally accepted that certain constitutional rights are reserved for those who are citizens of the country," Verheugen said. "Stateless people in Latvia and Estonia will enjoy the rights of permanent residents in the EU, but they won't have the rights determined by citizenship and cannot automatically claim the rights given to EU citizens under EU law." He encouraged those who have decided to stay in Latvia and Estonia to apply for citizenship, noting that the younger generation is "interested in integration." One day earlier, Verheugen told Russian State Duma Foreign Affairs Committee Chairman Dmitrii Rogozin that the issue of the admission of Latvia to the European Union will not be reopened -- saying, "That is a decided matter" -- Interfax and BNS reported on 27 October.

The Constitutional Protection Bureau, Latvia's national-security service, has detected and seized hazardous radioactive substances, thus averting a possible threat to state security, according to bureau spokesman Dainis Mikelsons, LETA and BNS reported on 23 October. Mikelsons said several people have been detained in the case, but to safeguard the investigation he declined to identify how many or reveal where the incident took place. He also said the seizure was made through the "joint efforts" of the bureau, the security police, and a special unit from the National Defense Forces. The radioactive substances have been transferred to the Radiation Safety Center. The center's director, Andris Salmins, told BNS that specialists are working to identify the composition and precise amounts of the substances to aid the investigation.

Latvian President Vaira Vike-Freiberga, speaking in Riga at an international conference on the Holocaust, said Russian politicians continue to create problems in Latvian-Russian relations because they refuse to recognize the Soviet Union's nearly 50-year occupation of Latvia, BNS and LETA reported on 24 October. "The burden of history and its interpretation has become a vital issue in Latvian-Russian relations," Vike-Freiberga said, causing "such problems [that] concern the large number of noncitizens and their status in Latvia, and evaluation of Latvia's language and citizenship laws." Relations between the two countries have become increasingly strained. The Russian Foreign Ministry confirmed that a meeting of the Latvian-Russian Intergovernmental Commission planned for 27 October was canceled by Moscow, but said Latvia "brought it on itself," BNS and Interfax reported on 23 October.

The Defense Ministry has been warned by NATO to increase spending on the National Armed Forces, Defense Ministry State Secretary Edgars Rinkevics said during a press conference on 24 October, according to LETA. Rinkevics said NATO expects 40 percent of Latvia's army to be able to participate in NATO-led missions outside the country. It is estimated that this will require an additional 35 million lats ($68 million).

The Latvian cabinet will hold an extraordinary session on 30 October to amend this year's budget in light of unexpected revenues, LETA reported on 28 October. The parliament on 23 October granted the government permission to amend its fiscal plans based on its projection of increased revenues. Any final revisions are scheduled for a vote in the parliament on 6 November.

The International Monetary Fund's (IMF) mission to Latvia commended the government in Riga for proposing a 2004 budget deficit of just 2 percent of GDP, LETA reported on 29 October. The IMF specialists also told Latvian Finance Minister Valdis Dombrovskis that Latvia's tax collection has been highly successful and that they are confident the budget's revenue projections will be achieved. Dombrovskis said better collection of the social-security tax, value-added tax (VAT), and excise taxes will enable the government to reduce the corporate-tax rate next year as planned, from 19 percent to 15 percent.

Latvia's Constitutional Court struck down as unconstitutional a provision under Latvian law that assigns criminal liability for the defamation of state officials, BNS and LETA reported on 29 October. The court ruled that the provision will be invalid from 1 February 2004 unless the parliament specifies a list by that time of officials whose honor should be granted special protection. The law was ruled to be overly broad in its present form. Sarmite Elerte, the editor in chief of Latvia's leading daily, "Diena," brought the lawsuit that led to the ruling. Elerte said the court's decision appears to be a compromise and added that she is disappointed that the court held that some officials still need to be protected from the press. "It was not correct to leave [the matter] for political decision," Elerte said in a reference to the list that the parliament should draw up. The ruling also stipulated that a special organization be created to supervise journalists' compliance with a code of ethics, similar to the ombudsman position in Sweden that both supervises and protects the work of journalists. Since 1999, when the current criminal libel law was adopted, two people have been convicted under its provision -- with one sentenced to a jail term and the other required to perform community service.

After a protracted debate, the Latvian parliament voted to recall Socialist Party lawmaker Martijans Bekasovs from Latvia's observer delegation to the European Parliament on grounds of antistate activity, LETA and BNS reported 30 October. The vote was 64 to 22 with three abstentions in the 100-seat Saeima. Conservative parties such as For Fatherland and Freedom/LNNK brought the issue to the parliament, accusing Bekasovs of having violated his oath of office and "telling sheer lies [and] discrediting the Latvian state" when he circulated a statement in the European Parliament on discrimination against ethnic minorities in Latvia. After the vote, Bekasovs told the press that he will protest the decision by filing a case with the Latvian Constitutional Court on grounds that his rights to freedom of speech are being violated.

The Latvian parliament passed an amendment to the law on privatization extending the validity of state-issued vouchers by one year, LETA reported on 30 October. The new expiration date is 31 December 2004. The new amendment also changes the end dates for Latvia's privatization program. The Latvian Privatization Agency will continue accepting bids for the privatization of state-owned properties until the end of 2003, municipal properties until the end of 2004, and applications for the privatization of state-built apartments until the end of 2005.

More than 1,000 state-owned enterprises and real estate in Latvia remain available for privatization, according to the acting director-general of the Latvian Privatization Agency (LPA), LETA reported on 22 October. The assets include 21 insolvent factories, 1,068 state-owned plots of land, two state enterprises, capital shares in 74 partially privatized state enterprises, and 28 commercial-development sites. LPA expects its work to continue through the end of 2004. A task force within the Economy Ministry is considering various models for turning over the LPA's responsibilities to other institutions.
* Latvian Foreign Minister Sandra Kalniete told the Iraqi donors conference meeting in Madrid that Latvia could offer training to Iraqis in banking and financial sectors, state and local administration, the protection of Iraqi cultural heritage, as well as offer cooperation in the documentation of crimes by totalitarian regimes, BNS reported on 24 October.
* Latvian National Armed Forces Chief of Staff Brigade General Karlis Kreslins, speaking at a press conference, said Latvia spends 1,600 lats ($2,700) per year to clothe, feed, house, and provide medical care per soldier in its defense forces, LETA reported on 24 October. Defense Minister Girts Valdis Kristovskis agreed that the amount was inadequate and that the soldiers lack equipment. Kristovskis said that one soldier serving in a mission in Iraq costs 39,000 lats ($70,000).
* Latvia will be sending 100 troops to Kosova for a six-month period starting in January, LETA reported on 24 October. Defense Minister Kristovskis hopes this will be the last time a Latvian mission goes to Kosova. The first Latvian squad was sent to Prishtina in February 2000 as part of the international peacekeeping operation Joint Guardian.
* Latvia's long-range 3-D radar located in Audrini County that is integrated into NATO's systems became operational on 31 October, BNS reported. The radar is part of the BALTNET regional air-space-surveillance system. The radar cost Latvia over 12 million euros ($14 million), controls an air space of 450 kilometers in radius, and is set up at the Rezekne airfield.
* Deputy Prime Minister Ainars Slesers held a meeting with representatives of Latvia's commercial banks, to encourage the banks to fund more economic development projects in Latvia, LETA reported on 22 October. Teodors Tverijons, president of the Latvian Commercial Bank Association, said that the banks had enough disposable income to provide loans, but there were too few projects.
* Nuclear fuel waste from Latvia's Salaspils experimental nuclear reactor will be stored in portable containers outside the reactor building until they can be transported to the fuel production country, Russia, BNS reported on 21 October. Radiation Safety Center Director Andrejs Salmins said that the waste will be taken out of the reactor building next year as part of the decommissioning plan for the nuclear facility.
* Swedish Ministry of Defense Major General Karlis Neretnieks told a symposium on Latvian-Swedish defense-technology cooperation that since Sweden is short of scientists for its military projects, it may in the near future invite Latvian specialists to work in its defense industry, LETA reported on 29 October.
* Latvia's newly elected Radio and Television Council head Imants Rakins recommended that a television subscription fee be introduced in Latvia to help finance public media, BNS reported on 25 October. The fee per household for a radio could be set at 0.6 lats ($.70) and 1.5 lats ($1.55) for each television set.
* Latvia's Finance Ministry will apply to the European Union for a maximum transition period to implement the EU's excise duty tariffs on fuel which come into force next year, LETA reported on 29 October. The goal of the new EU directive is to unify energy taxes on coal, natural gas, and electricity in all EU member states and encourage consumers to save energy.
* The annual promotion of the trademark "Quality Product from Latvia," or the "green spoon" symbol, began on 29 October, LETA reported. Marketing Council Director Inguna Gulbe said that the campaign's goal this year is to draw attention to food products. The trademark was created in 2001, spotlighting top-quality products that contain 75 percent of Latvian-grown ingredients. The trademark has been awarded to 120 products from 27 producers.
* Latvian Interior Minister Maris Gulbis and European Police Office (Europol) Director Juergen Storbeck signed a cooperation agreement between Latvia and Europol, BNS reported on 29 October. The agreement creates the basis for improved cooperation in the fight against organized crime. The Latvian police will receive training to upgrade their skills as well as new information systems.
* "Newsweek" magazine's online version includes a story titled "A Baltic Striptease" that analyzes the problem of corruption and transparency in Latvia, particularly the role of Ventspils Mayor Aivars Lembergs, LETA reported on 28 October. According to "Newsweek," Lembergs' income last year exceeded $1 million although his official city salary was only $7,112.

Lithuania's State Security Department has submitted evidence to parliamentary speaker Arturas Paulauskas allegedly linking President Rolandas Paksas and his defense and national security adviser, Remigijus Acas, to Russian crime groups, specifically the 21 Century Corporation and its leader, Anzor Aksentev, BNS and ELTA reported on 30 October. The commercial LNK-TV reported that Paulauskas has suspended parliament's recent vote recalling Mecys Laurinkus from the post of director-general of the State Security Department. The daily "Lietuvos rytas" reported on 31 October that there are tapes of conversations between Acas and a major Paksas campaign contributor, Jurij Borisovas, as well as Aksentev allegedly demanding favors from the president based on pre-election promises, as well as alleged threats against the life of Laurinkus.

The European Parliament has placed the controversial issue of oil drilling at the D-6 site in the Baltic Sea on the agenda for the EU-Russia summit scheduled for 6 November, ELTA reported on 17 October. The Liberal Democratic (ELDR) faction at the European Parliament initiated the move in response to a request made by the Lithuanian observer delegation to the EU. The European Parliament's Environment and Health Committee soon will review the plans by one of Russia's largest oil companies, LUKoil, to drill at a site, named D-6, in the Baltic Sea that is just 22 kilometers from the UNESCO-protected Kursiu Nerija Spit (Curonian Spit). The Council of Europe recently appointed an expert-rapporteur from the French delegation, Daniel Goulet, to examine the D-6 controversy.

Lithuanian troops who participated in the coalition peacekeeping mission in Iraq have returned to their home base in Rukla and were awarded medals "For International Missions" by Defense Minister Linas Linkevicius, ELTA and BNS reported on 29 October. The 43 members of the Grand Duke Algirdas Mechanized Infantry Battalion served with Danish forces in the British-controlled sector northeast of the port city Al-Basrah. Eight military cargo specialists from the National Defense Volunteer Forces had worked at the Talil Air Base in Iraq, distributing humanitarian-aid shipments. Head of the defense forces Major General Jonas Kronkaitis praised the "volunteer peacemakers," saying that "in Iraq they were equal partners to the servicemen from larger democracies." The Lithuanian platoon LITCON 1 has already been replaced in Iraq by their colleagues in LITCON 2, also from the Grand Duke Algirdas battalion. Two Lithuanian military physicians, Captain Laimute Krisciuniene and Captain Gintautas Skurdenis, left on 29 October for Afghanistan to join the coalition effort in that country, replacing two Lithuanian physicians who have just left Afghanistan. They will work for six months in the German field hospital in Kabul, ELTA reported.

Mecys Laurinkus, the outgoing head of Lithuania's State Security Department, has warned that "dangerous international organized crime groups are making their way into Lithuania as the country integrates into European and trans-Atlantic structures," BNS reported on 28 October. In an address to the parliament before ending his term in office, Laurinkus cited some groups by name, including the "Czech-based Falcon Capital company, which attempted to privatize Mazeikiai Oil," the "Moscow-based Luzniki group," and the "21st Century company, whose chief, Anzori Aksentev, maintains contacts with leaders of Lithuania's criminal groups." The parliament, at the recommendation of President Paksas, voted to end Laurinkus's term shortly after the speech. Appointed by former President Valdas Adamkus, Laurinkus had served as the head of state security since June 1998. A confirmation vote on his proposed replacement, Lieutenant Colonel Gintaras Bagdonas, is expected later in the week.

President Paksas submitted the name of Lieutenant Colonel Gintaras Bagdonas to parliament for confirmation as the new director-general of the State Security Department, BNS and ELTA reported on 24 October. Bagdonas, 38, is director of the Defense Ministry's Second Investigation Department and is a career military officer who joined the Lithuanian defense forces in 1991. Bagdonas served in the first group of Lithuanian peacekeepers sent to Croatia in 1994 and is a graduate of the NATO College in Rome.

Member of parliament Viktoras Uspaskikh, a Russian-born, self-made millionaire with agricultural and energy interests in Lithuania, founded a new national party over the weekend in Vilnius, naming it the Labor Party, ELTA reported on 20 October. The program, adopted by the 812 delegates who attended the founding congress, calls for replacing the current mixed parliamentary election system with single-mandate election districts based on a majority vote. The party also seeks to abolish counties and introduce the direct election of mayors. The party platform excludes any mention of NATO membership, but Uspaskikh told reporters that the Labor Party would support Lithuania's NATO membership. The party aims to participate in the fall 2004 parliamentary elections and estimates that its membership will reach 8,000 in the near future. Uspaskikh, who recently resigned as chairman of the parliament's Economy Committee, has in the past funded the New Union/Social Liberals led by current parliamentary speaker Arturas Paulauskas.

The board of Lithuania's Central Bank has granted permission to the Russian Konversbank and its subsidiary, Luxembourg-based Incorion Investment Holding Company, to raise its ownership stake in the commercial bank Snoras, assuming management control as well, ELTA reported on 23 October. This ruling will take effect as soon as Konversbank secures permission from Russia's Central Bank to invest the funds in the share capital of Snoras. The authorized capital of Snoras totals 137 million litas ($46 million), and after the stock purchase Konversbank will hold a combined 57.6 percent stake in the Lithuanian commercial bank. The other major stakeholders are Nuntel Holding LLC with 9.9 percent, Hoffman Development LLC with 9.9 percent, and Axcol Properties Limited with 9.9 percent. Snoras reported a profit of 10.3 million litas last year.

Russian Prime Minister Mikhail Kasyanov offered visiting Lithuanian Prime Minister Algirdas Brazauskas help in keeping open the Ignalina nuclear-power plant, which is scheduled for a two-phased closure in 2005 and 2009 under an EU agreement, ELTA reported on 21 October. "Russians are ready to offer technical assistance to Lithuania, participate in the reconstruction of the nuclear plant, and help to solve problems related to the plant's operations in the future," Kasyanov said, speaking to reporters after his meeting with Brazauskas. He also said the Lithuanian cabinet is already considering the offer of assistance. "Russian companies have actually found their place and a niche in the Lithuanian market [the gas-, oil-, and electricity-supply sectors]," Kasyanov added. "The Russian-Lithuanian interaction is very intensive, but the Lithuanian authorities have to ensure a normal work regime for Russian companies."

During their meeting in Moscow, Lithuanian Prime Minister Brazauskas and Russian Prime Minister Kasyanov agreed to prepare a bilateral agreement on cooperating to clean up accidents, an environmental-monitoring program, and compensation for possible damages from activities at the D-6 oil-drilling site in the Baltic Sea, BNS reported on 21 October. Kasyanov told the press after the meeting that the agreement will be signed only after "exploitation works at the deposit are opened." On the previous day in Moscow, Brazauskas met with LUKoil President Vagit Alekperov and agreed to prepare an agreement on compensation for damages in the event of oil spills at the company's D-6 deposit near Lithuania's Baltic Sea coast.

Lithuania's former president, Valdas Adamkus, and current parliament head Arturas Paulauskas joined forces in criticizing Prime Minister Brazauskas on his return from Moscow, ELTA and BNS reported on 22 October. Adamkus said he was shocked to learn that Brazauskas and his delegation suggested legalizing the "allegedly safe utilization of the D-6 oil field and agreed to cooperate with Russia [in] exploiting the deposit." "Presently, Lithuania's position looks ambiguous," Adamkus said. "On one hand, we have protested against the plans of LUKoil, and on the other hand, we capitulated to Moscow." Paulauskas suggested that further work on the D-6 platform be suspended "until independent findings by Western experts are received." Opposition Liberal-Center Union faction in the parliament called Brazauskas's performance in Moscow "disgraceful," citing not only the D-6 oil drilling issue but also his alleged failure to defend Lithuania's economic interests in the 2K Transportation Project and the privatization of gas utility Lietuvos Dujos. Brazauskas appeared to confirm a reversal of policy on the D-6 site, saying, "It would be ridiculous if we required [Russia] to lift [eliminate] the oil platform, which cost $150 million."

Lithuania's Environment Ministry has released an expert report by ministry staff claiming design flaws in the D-6 oil-drilling project in the Baltic Sea by the Russian firm LUKoil, BNS reported on 23 October. The task force acknowledged that the oil platform at the D-6 site has been built with "up-to-date technologies" but said LUKoil has not prepared adequately to contain oil spills if "waves are more than 2 meters high, [although] such hydrometeorological conditions are common." They also said oil leaks of less than 8 cubic meters per day from underwater pipelines could remain unnoticed for long periods and result in "huge" environmental damage. Prime Minister Brazauskas told "Izvestiya" in a recent interview that the Lithuanian government will not interfere with LUKoil's plans to drill in the Baltic Sea because "Lithuania has no right to pressure Russia [over the project], since it is situated on Russian territory," "The St. Petersburg Times" reported on 24 October.

During a two-day visit to Lithuania, Russian State Duma Chairman Gennadii Seleznev sought to promote Russia's interests and better Russian-Lithuanian relations but was instead dogged by concerns over the arrest in Russia of Yukos CEO Mikhail Khodorkovskii, BNS and ELTA reported on 27 and 28 October. Yukos is a strategic investor and managing partner in Lithuania's Mazeikiai Oil complex. Seleznev rejected Yukos's public claims that Khodorkovskii was arrested on political grounds, saying, "The main thing is to stick to business and not to jump to conclusions." Seleznev added that Yukos "owes the state the sum of over $1 billion." In response to questions from Lithuanian lawmakers concerning a possible renationalization of Yukos, Seleznev said Russia "must be in a position to carry out de-privatization in case of need." Lithuanian President Paksas expressed concern that Russia's actions against Yukos might torpedo Mazeikiai Oil's negotiations with the European Bank for Reconstruction and Development (EBRD) to secure loans for the modernization of the oil refinery. Conservative Party leader Andrius Kubilius, meanwhile, urged the Lithuanian government to suspend the planned sale of Lietuvos Dujos (Lithuanian Gas) shares to Russia's Gazprom "until the economic and political situation in Russia clears up." Kubilius also warned that in the event of Yukos's collapse, the Lithuanian government would have to buy out the Yukos stake in Mazeikiai Oil or risk a "threat" to national security.

Seleznev promised Lithuania's parliamentary leader Arturas Paulauskas that the Russian Duma will soon ratify bilateral treaties on avoiding double taxation and protecting mutual investments, ELTA reported on 27 October. Seleznev also pledged to "do our best to remove the cover of secrecy from such projects as 2K [a cargo transit project] or LUKoil operations in the Baltic Sea, to ensure environmental expertise and public control, as well as to remove all irritants in the development of bilateral relations." He lobbied Lithuanian officials to sign a new treaty to legalize military transit through Lithuania, and to accelerate the introduction of a bullet train to speed visa-free travel between the Kaliningrad exclave and the rest of Russia, BNS reported on 28 October.

The Lithuanian parliament on 22 October hosted a conference marking the 15th anniversary of the constituent congress of the country's democratic reform movement of the late 1980s, known as "Sajudis," BNS reported. Many founding members attended and received accolades for the grassroots movement that brought about the restoration of Lithuania's independence on 11 March 1990. The first constituent congress was held in Vilnius on 22-23 October 1988, with 1,021 elected delegates from all across Lithuania, including representatives of the country's ethnic minorities. The delegates declared their support for the reform policies of then-Soviet leader Mikhail Gorbachev and demanded the "guarantee of state and national sovereignty for Lithuania," economic autonomy, free general elections, a rescission of the ban on demonstrations, and rehabilitation of political prisoners. The congress also condemned Stalinism as a "crime against mankind and the Lithuanian nation" and declared its solidarity with Lithuanians living abroad. The founding date of Sajudis, however, is considered to be 3 June 1988 -- the day its Initiative Group was formed from among the country's intellectuals.
* The Lithuanian government voted to provide 100,000 litas ($34,000) from the country's reserve fund for humanitarian aid for Iraq, BNS reported on 22 October. Foreign Minister Antanas Valionis said, the "modest" sum would be transferred to the Multilateral Donor Fund, and was in addition to previous assistance already provided through other institutions working on reconstruction in Iraq. In April, Lithuania donated 235,000 litas ($76,000) to Turkey to be used for Iraqi refugees, ELTA reported.
* A NATO squadron of minesweepers from Denmark, Germany, Norway, Belgium, the Netherlands, and the United Kingdom conducted three days of operations in Lithuania's economic zone in the Baltic Sea from 24 through 27 October, ELTA reported. Lithuania's ship, "Suduvis," the Latvian ships "Virsaitis" and "Viesturs," and the Estonian "Vambola" also participated in the minesweeping operations. After the naval operations, the ships docked in Klaipeda and were open to visitors.
* The cities of Vilnius and Kaunas presented a joint strategic-development plan which could allow the new "dual city" to be granted Euro City status by the European Union, BNS reported on 24 October. The plan calls for joint development of transportation and infrastructure such as the Vilnius-Kaunas highway, modernization of the railway, as well as development of river navigation, both cities' airports, and cargo-handling facilities. The projects total some 5 billion litas ($1.7 billion). The two metropolitan areas currently account for 54 percent of Lithuania's GDP, and nearly 40 percent of the country's environmental and cultural heritage sites.
* Lithuania's new permanent representative to the Council of Europe, Neris Germanas, presented his credentials to Secretary-General Walter Schwimmer, ELTA reported on 21 October. Germanas said that Lithuania's priorities in the council will remain the fight for human rights, democratic values and the rule of law in Eastern Europe and the South Caucasus.
* Vytenis Andriukaitis, the chairman of the parliament's European Affairs Committee, has suggested that Lithuania change its policy of limited relations with Belarus, BNS reported on 21 October. Andriukaitis advocates a more intensive policy of both formal and informal relations with members of the Belarusian parliament and government.
* Klasco, a company of the Achema Group owned by former Prime Minister Bronius Lubys, reported a small pre-audit profit of 5,990 litas ($2,000) in the first nine months of the year, ELTA reported on 22 October. Last year, the stevedoring company based at the Port of Klaipeda reported a 2.9 million-litas loss. Klasco reported that cargo volumes at the port rose 17 percent to 5.28 million tons compared to last year.
* The National Stock Exchange unveiled plans to elect a new supervisory council because the authorized capital managers are underrepresented in the current one which is made up of seven members led by Ana Tursiene, the deputy director of the Treasury Department at the Ministry of Finance, ELTA reported on 29 October. The Finance Ministry controls 44.3 percent of shares, but that will change with the decision to fully privatize the exchange.
* The Lithuanian Greens have called for a boycott of the Russian oil company LUKoil's products and services, ELTA reported on 28 October. The environmental movement objects to LUKoil's plans to drill for oil in the Baltic Sea off the coast of Lithuania threatening the fragile ecosystem of the Curonian Spit.
* Lithuanian municipal governments still have a collective debt of 273 million litas ($91 million) as of 1 October, according to the Finance Ministry, ELTA reported on 28 October. Five municipalities (Neringa, Silute, Druskininkai, Svencionys, and Trakai) despite increased revenues failed to reduce their indebtedness. Vilnius and 13 other municipalities increased their debt during the month of September. The towns of Ignalina, Siauliai, Birstonas, and Sirvintos County as of 1 October had no outstanding debt.