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Baltic Report: December 13, 2003

13 December 2003, Volume 4, Number 37

This issue covers events in the Baltic states from 15 to 21 November 2003.
The cabinet on 20 November approved the extension of the Estonian peacekeeping mission in Afghanistan by 14 months until March 2005, BNS reported. The parliament had authorized a 12-member mission for 10 months, ending on 3 January 2004, financed by funds from the Defense Ministry. The government said extending the mission, pending parliamentary approval, allows Estonia to contribute in real terms to the international fight against terrorism and thus to global security.

The People's Union sent a letter to its coalition partners on 17 November calling for a revision of the coalition agreement by postponing planned income-tax cuts and reducing the maximum amount of parents' benefits, BNS reported. It urged against reducing the income-tax rate from 26 percent to 24 percent next year and for lowering the maximum parents' benefit to 6,600 kroons ($515), or three times the minimum level, instead of the current maximum of 15,700 kroons a month minus income tax. The union wants to use the savings to increase child support, subsistence minimum, wages of education and culture workers, the number of state-financed student placements in universities, and raise the pension average by 100 kroons a month as of January. Although Prime Minister and Res Publica Chairman Juhan Parts and Reform Party Chairman Siim Kallas said the letter means that the union wants to quit the coalition, People's Union Chairman Villu Reiljan told a press conference that the letter was merely intended to initiate discussion. Parts met with Pro Patria Union Chairman Tunne Kelam in the evening of 17 November. Without the People's Union the coalition would have only 47 votes in the 101-member parliament.

Prime Minister and Res Publica Chairman Juhan Parts and Reform Party Chairman Siim Kallas rejected the idea of changes to the coalition agreement that were outlined in a recent letter from the People's Union, BNS reported on 18 November. The men issued a joint ultimatum to the People's Union to respond by midday on 19 November on whether it will remain in the three-party coalition and fully support all draft laws that are based on the coalition agreement. "A delay of the answer or its postponement will be viewed by us as a severance of the coalition agreement and resignation from the coalition," the joint letter states. People's Union Chairman Villu Reiljan told ETV television on 18 November that his coalition partners' response was emotional and unconstructive, and that Estonia needs a new centrist coalition that will value the individual and the social factor.

The People's Union responded to an ultimatum by its coalition partners, Res Publica and the Reform Party, by declaring its desire to remain in the coalition but not withdrawing its demands to change the three-party coalition agreement, BNS reported on 19 November. As if to highlight the growing rift, the People's Union voted with the opposition the same day to back amendments to a tax-reform bill that would fundamentally change the legislation. The amendments were backed by 54 of parliament's 101 deputies. The government responded by pushing through a suspension of the second reading of the tax-reform bill. Pro Patria Union Chairman Tunne Kelam has meanwhile insisted that any potential coalition with his party be preconditioned on the suspension of income-tax reform, making the replacement of the People's Union by the Pro Patria Union with Res Publica and the Reform Party unlikely. Res Publica Chairman and Prime Minister Juhan Parts met with his coalition partners late on 19 November when, according to "Postimees," he suggested a compromise that would entail cutting the income-tax rate from 26 percent to 25 percent in 2004 -- instead of the proposed 24 percent -- and allocating more funds for family benefits and education, and speeding up administrative reform, LETA reported on 20 November. The governing board of the People's Union decided on 21 November to continue negotiations to preserve the three-party government coalition, but did not agree to lowering the personal income-tax rate from the current 26 percent, BNS reported.
* Defense Forces Commander Vice Admiral Tarmo Kouts departed for Iraq on 18 November and visited the Estpla-7 infantry unit stationed in Baghdad the next day, BNS reported. He also met with the Estonian cargo handling team stationed at a U.S. air base at Tallil airfield some 20 kilometers northwest of Al-Nasariyah. Kouts had meetings at the Coalition Joint Task Force headquarters and with the U.S. civilian administration. Upon his return to Tallinn on 21 November, Kouts said that he had heard praise about the work of the Estonian troops from U.S. military officials.
* Foreign Minister Kristiina Ojuland told the two-day EU foreign ministers meeting in Brussels on 17-18 November that Estonia supports the opinion expressed by European Commissioner Chris Patten that the EU should review all the issues that remain open in its relations with Russia and then work out common positions, BNS reported. She said the shaping of a common EU position was very important, noting "Here the question is not only about the European Union's relations with Russia, but about the reliability of the union's common foreign and security policy, the European Union's reputation."
* Defense Minister Margus Hanson attended the meeting of EU member and candidate states defense ministers in Brussels on 17 November, BNS reported. The defense ministers discussed plans for developing Europe's military capability until 2010, establishing the European Defense Agency, relations between the EU and NATO, the future status of the European rapid reaction force, and measures in the fight against terrorism.
* President Arnold Ruutel delivered a lecture in the Martti Ahtisaari lecture series at the University of Jyvaskyla, Finland on 17 November, BNS reported. He spoke about the cooperation between the Baltic Sea region and the European Union. Before the lecture, Ruutel also visited the city government of Jyvaskyla and met with Mayor Pekka Kettunen.
* Former Prime Minister Mart Laar told a taxation seminar in Brussels on 18 November that Estonia will continue to fight against the harmonization of taxes in the EU Intergovernmental Conference, BNS reported. He said that Estonia views taxes as a key issue of the conference and expressed the belief that if legislation to harmonize taxes is not passed now, it will never be approved.
* The government decided on 20 November to accede to the EU common position on Burma establishing additional sanctions against the Burmese military regime, BNS reported. The countries acceding to the sanctions will not supply Burma with any kind of supplies that can be used for internal repression or terrorism and will suspend their governments' bilateral high-level visits to Burma.
* Despite the uncertainty about the coalition agreement, the parliament passed unanimously with 89 votes on 19 November a draft railway law which the leadership of Estonian Railway believes will restrict the freedom of competition, BNS reported. It provides that rail capacity can be assigned to carriers established outside of Estonia and the EU only if no Estonian or EU enterprise has applied for it. Under the law, the capacity of Estonian Railway's infrastructure will be distributed by a railway inspectorate formed on the basis of the existing Railway Board.
* Legal Chancellor Allar Joks demanded in a letter to Prime Minister Juhan Parts that the government stop the collection of what he called an illegal car tax by the municipality of Narva for crossing the Estonian-Russian border, LETA reported on 17 November. A decree passed by the Narva city government in 2002 requires all cars crossing the border to park at the municipal parking lot and pay 15 kroons ($1.15) before being allowed to move on to the border checkpoint. Joks informed Parts that people have complained about the procedure to the Estonian Embassy in Helsinki and the tax violates the Estonian-Russian car transport agreement.
* Three of the 13 trade unions belonging to the white-collar trade union confederation TALO have decided not to join the strike for higher wages that TALO is planning for 4 December, LETA reported on 19 November. Board chairman of the School Principals Association, Martin Kaasik; the Journalists Association Allan Alakula; and the Engineers' Trade Union, Vaino Verlin, expressed support for the strike but said that their organizations would not participate in it.
* The EU 6th framework program of financing for science and development activities decided to accept about 40 of the 340 projects submitted by Estonia and to allocate nearly 70 million kroons ($540,000) for them, LETA reported on 18 November. The most successful projects came from Tartu University, Tallinn Technical University, and PRAXIS.

Josette Durrieu, the head of the Parliamentary Assembly of the Council of Europe's (PACE) Monitoring Committee, began a two-day visit to Latvia on 19 November, LETA reported. In talks with Society Integration Minister Nils Muiznieks, Durrieu predicted that Latvia's membership in the EU will result in a greater number of noncitizens seeking Latvian citizenship, a view that was supported by the fact that the number of naturalization applications in October (after a "yes" vote in the September EU-membership referendum) was higher than in any other month of the year. Durrieu also met the same day with Foreign Minister Sandra Kalniete, parliament speaker Ingrida Udre, and Naturalization Board head Eizenija Aldermane. The next day she met with President Vaira Vike-Freiberga, Education and Science Minister Karlis Sadurskis, and Prime Minister Einars Repse. At a press conference concluding her visit, she said that there are no problems with observance of human rights in Latvia and that Russian Ambassador to Latvia Igor Studennikov had not mentioned any violations of them during their meeting, but only complained about the slow pace of naturalization and its complicated and expensive process.

Deputies on 20 November rejected the imposition of an administrative fine on Union of Greens and Farmers (ZZS) Chairwoman and parliament speaker Ingrida Udre in connection with the discovery of illegal party contributions, LETA and BNS reported. The vote was 27 to 12 with 49 abstentions. The entire New Era faction and a few other coalition deputies, including Latvia's First Party (LPP) Chairman Eriks Jekabsons, voted for imposing the fine, while the ZZS voted against and the opposition abstained. The Corruption Prevention Bureau discovered that the ZZS received more than 56,000 lats ($100,000) in illegal contributions ahead of elections in 2002 and asked that the funds be transferred to the Finance Ministry. When this was not done, the bureau imposed a fine of 250 lats on Udre as the party's leader. According to the Latvian Constitution, parliamentary authorization is required before a fine may be imposed on one of its deputies. ZZS faction head Augusts Brigmanis said the funds in question were not transferred because the ZZS simply did not have the money, but the party will comply once it is able. He also claimed that the Corruption Prevention Bureau found that roughly 65 percent of all party donations are questionable, adding that "the problem is in the system and legislation, not the parties."

Sandra Kalniete told a meeting of the EU's General Affairs and External Relations Council in Brussels on 17 November that the EU should remain united in its talks with Russia, LETA reported the next day. Kalniete called Russia's attempts to link EU concerns over human rights in Chechnya with the situation of Russian-speakers in Latvia unacceptable. Kalniete stressed that the EU-Russia Partnership and Cooperation Agreement will be automatically applied to the new member states as soon as they accede to the EU. She reiterated that view at the meeting of the EU Intergovernmental Conference in Brussels on 18 November, where EU member and candidate states' foreign ministries discussed the section of the draft European constitution on the role of the EU foreign affairs minister.

Einars Repse traveled to Berlin on 14 November for a meeting with German Chancellor Gerhard Schroeder, BNS reported. Repse said that he reiterated his position that every EU member state should have a European commissioner and his state's opposition to EU tax harmonization. Repse dismissed rumors that Latvia will pull its troops out of Iraq, saying they will remain as long as necessary. He also denied that ethnic Russians in Latvia are disadvantaged, arguing that many of them have not acquired Latvian citizenship because they never felt the need to do so. Repse also held talks with Berlin Mayor Klaus Wowereit and participated in an official reception held by the Latvian Embassy in Germany in honor of Latvia's Independence Day (18 November). On 15 November, Repse told the 9th European Forum, organized annually by the Herbert Quandt Forum and the "Financial Times," that 50 years of Soviet occupation did not suppress Latvia's desire to return to Europe, as evidenced by the strong support for EU membership in the September referendum.
* Prosecutor General Janis Maizitis sent a repeated request to the Russian Prosecutor General's Office asking for the extradition of Vladimir Linderman, the chairman of the Latvian civic group Pobeda (Victory), which serves as a front for the Russian National Bolsheviks, on charges of calling for the violent overthrow of the Latvian authorities and illegal possession of explosives, BNS reported on 20 November. Russia had rejected in October an earlier request for Linderman's extradition, arguing that Latvia was persecuting him for his political activities and views. Maizitis dismissed this view, stressing that Linderman would only be tried for criminal activities.
* Economy Minister Juris Lujans declared on 19 November that Latvia will not take any further steps to privatize the remaining state holdings in Ventspils Nafta (VN) while no oil is being sent to Ventspils by pipeline, BNS reported. He said that the value of any company is greater when it is working at full capacity so that it would not be appropriate to sell VN when its value is lower due to the decision of the Russian company, Transneft, to stop sending oil by pipeline this year.
* Latvian and Turkish Deputy Prime Ministers Ainars Slesers and Mehmet Ali Sahin agreed in talks in Riga on 15 November that their countries should open embassies in each other's capitals, BNS reported. Mehmet had traveled to Riga to attend the soccer game between Latvia and Turkey, who were competing for a place in the European Championships in Portugal in 2004. Latvia won the game 1-0 and more importantly played to a 2-2 draw in the return match on 19 November in Istanbul after initially trailing by two goals. This is the first time that a soccer team from one of the Baltic states has gained a place in the European soccer championships.
* A delegation from the Slovenian National Assembly Foreign Policy Committee, headed by Chairman Jelko Kacin, met with its Latvian parliament counterparts, led by Chairwoman Inese Vaidere, in Riga on 20 November, LETA reported. They discussed bilateral relations, future cooperation within the EU after both countries become members next May, and Latvia's relations with Russia. Vaidere called for closer cooperation in tackling problems and supporting common goals, for improving parliamentary relations, and establishing connections in various sectors, including trade, tourism, and attracting investments.
* NATO Regional Naval Headquarters' deputy head for strategic planning, Rear Admiral Marc Ectors, and Integration and Planning Department's head, Commander Senior Grade Peter Prahl, visited Latvia on 19 and 20 November, LETA reported. They inspected the Liepaja Warship Flotilla, the Baltic Divers Training Center, and met with the Naval Forces Commander Captain Ilmars Lesinskis, NATO Integration Secretary Brigadier General Raimonds Graube, and other Navy officers.
* Poland's armed forces chief of staff, General Czeslaw Piatas, visited Latvia on 19 and 20 November, LETA reported. The first day he had meetings with National Armed Forces commander Rear Admiral Gaidis Andrejs Zeibots, Defense Ministry Executive Secretary for NATO Integration Brigadier General Raimonds Graube, and visited the Navy Search and Rescue Coordination Center in Riga. On 20 November Piatas visited the Mobile Infantry Training Center in Adazi and the National Defense Academy.
* The Corruption Prevention Bureau announced on 21 November that its recent investigations of donations to five political parties in 2002 had found violations in three of them, BNS reported. It is requesting that the New Era, the Latvian Social Democratic Workers Party, and the People's Party transfer to the Finance Ministry by 2 December 11,000 lats ($19,500), 18,450 lats, and 21,000 lats, respectively, which they had received from disputable sources. The bureau has also started criminal investigations in three cases of forged documents.
* The parliament rejected on 20 November amendments to the law on value-added tax (VAT), proposed by the People's Party (TP), which would reduce the VAT on drugs, veterinary medication, infant commodities, and books to 5 percent, LETA reported. These items are not subject to VAT today, but will have a 9 percent VAT placed on them from 1 May 2004 when Latvia is expected to join the EU. TP noted that a 5 percent VAT meets the EU directive and is applied in Estonia and Lithuania.
* Ambassador to the United Nations in Geneva Janis Karklins was elected chairman of the International Organization for Migration Council (IOM) on 18 November, LETA reported. The IOM, established in 1951 to resettle European displaced persons, refugees, and migrants, currently has 102 member states and 30 observer states. Karklins will be chairing the IOM Council, which is required to meet at least once a year, until December 2004.

Rolandas Paksas left Vilnius on 18 November at the head of a Lithuanian delegation to Iraq, "Lietuvos rytas" reported the next day. Paksas was joined by Defense Minister Linas Linkevicius, Foreign Ministry Secretary Evaldas Ignatavicius, Presidential Defense Adviser Algirdas Norkus, U.S. Defense and Military Attache to Lithuania Larry Beisel, and Defense Ministry press spokeswoman Rita Grumadaite. The plane landed in Ankara, Turkey, where Paksas had a meeting with Lithuanian Ambassador to Turkey Halina Kobeckaite before continuing on to Iraq the next morning. Arriving in Baghdad, he held talks with U.S. administrator L. Paul Bremer before continuing on to Babylon for a meeting with 45 Lithuanian soldiers serving in the international division led by Polish Major General Andrzej Tyskewicz and to Al-Basrah where 54 soldiers from the Grand Duke Algirdas Battalion are serving in a Danish battalion in the British-controlled area. The political opposition has criticized the trip as being expensive and of questionable benefit and timing.

President Paksas told a press conference at the Vilnius airport on 20 November that he "can declare openly, precisely, and unambiguously that I have no intention of resigning," "Lietuvos rytas" reported the next day. Paksas has come under increasing pressure following reports of ties between presidential staff members and the criminal underworld. When asked whether he will testify before an ad hoc parliamentary commission formed to investigate the resulting potential threat to national security (see "RFE/RL Newsline," 4 November 2003), Paksas said he asked the commission to present him questions in a written form, which he will answer "in a way acceptable to all." Commission Chairman Aloyzas Sakalas responded that the commission decided that it will not present any written questions, as it must be able to pose follow-up questions. The commission urged the president to answer its questions in a public hearing. Presidential advisers Visvaldas Rackauskas (legal questions), Remigijus Acas (national security), and Alvydas Medalinskas (foreign policy) were questioned on 20 November by the commission in a hearing broadcast live by Lithuanian state television and radio.

Prosecutor Mindaugas Duda told reporters on 17 November that in a 3.5 hour session, President Paksas answered all the questions that he and Judge Valdas Petraitis of the Second District Court of Vilnius had submitted regarding alleged attempts by entrepreneur Yurii Borisov to influence the presidency, ELTA reported. Borisov and his lawyer Adomas Liutvinskas did not ask any questions at the session. Following his testimony, Paksas said only that "it went smoothly" and that Borisov had never tried to blackmail him nor had he felt threatened by Borisov. The parliamentary ad hoc commission formed to investigate the allegations and their potential threat to national security hopes to question Paksas later in the week.

Dalia Kutraite-Giedraitiene on 15 November announced her resignation as President Paksas's adviser on domestic policy, BNS reported. Kutraite-Giedraitiene, who had worked for Paksas since his election as Vilnius Mayor in 1997, cited fatigue as the reason for her decision. As regards the six senior advisers who submitted their resignations on 12 November (see "RFE/RL Newsline," 13 November 2003), presidential press spokesman Rosvaldas Gorbaciovas will be temporarily replaced by Sigutis Jacenas, a former television host who was in charge of public relations for the president. In addition, Paksas on 17 November chose not to approve the resignation of legal-issues adviser Ona Buisiene. Also on 15 November, two other advisers from the foreign-policy group, Eitvydas Bajarunas and Ricardas Slepavicius, submitted their resignations, but Paksas persuaded them to stay on for a while, ELTA reported on 18 November. Neither of the advisers had been Paksas supporters, but career officials at the Foreign Ministry who had agreed to assist the president.

On 19 November, Antanas Valionis suggested to the parliamentary ad hoc commission formed to investigate the potential threat to national security posed by presidential office staff that President Paksas ignored repeated warnings concerning his national security adviser, Remigijus Acas, "Kauno diena" reported the next day. At a hearing broadcast live by Lithuanian state television and radio, Valionis said he had informed Paksas at least four times since August about concerns expressed by NATO ambassadors about Acas's activities. Valionis said the president reacted simply by declaring that the matter was unworthy of attention or by not discussing the matter further. The commission also heard allegations that the Paksas election committee violated campaign regulations by not reporting that Avia Baltica, the company led by Paksas's main financial backer, Yurii Borisov, had paid 105,000 litas ($31,600) for the publication of 300,000 copies of the 3 January issue of the tabloid "Vakaro zinios" that were distributed free as campaign literature and contained an unsubstantiated claim that the largest commercial bank in Lithuania had a liquidity problem, setting off a run on the bank.

Polish President Aleksander Kwasniewski met with his Lithuanian counterpart, Rolandas Paksas, in Warsaw on 20 November, Polish media reported. "I did not break either the [presidential] oath or any laws," Paksas told journalists in reference to allegations that his closest aides served the interests of the Russian underworld. Asked to give the reason for the allegations, Paksas said, "Maybe not the right man became president." Paksas added that he has no plans to resign and that the scandal will not harm Lithuania's bid to join the EU and NATO.
* Interior Minister Virgilijus Bulovas and his Belgian counterpart, Patrick Dewael, signed a governmental agreement on cooperation between the police forces of their countries in Vilnius on 19 November, BNS reported. Dewael said that the agreement was especially important because after Lithuania joins the EU next May its external state border becomes an EU external border. Cooperation between the law enforcement agencies of the two countries started in 1999 with the signing of a memorandum of understanding on the exchange of financial intelligence information about money-laundering operations.
* A two-day forum of the Kaliningrad Duma and the Lithuanian parliament to discuss Lithuanian-Kaliningrad cooperation after Lithuania joins the EU next May opened in Vilnius on 21 November, BNS reported. Lithuanian parliament Foreign Affairs Committee Chairman Gediminas Kirkilas and Kaliningrad Duma Speaker Vladimir Nikitin gave reports about the current state of the Kaliningrad region and its prospects in the EU enlargement process. Kirkilas urged Russia to grant the Kaliningrad region greater economic self-rule in expanding trade with the EU and to pass a new law on a Kaliningrad free economic zone as soon as possible. Nikitin called on Russia to pass a constitutional act on the Kaliningrad region which would allow for the establishment of some EU norms in the region.
* Ambassador to Singapore Ginutis Voveris signed an agreement on the avoidance of double taxation with Singapore during his visit to the country on 16-19 November, BNS reported. He met with Singapore ministers of health care, transport and information, communications and arts, as well as high-ranking officials of the ministry of foreign affairs. Voveris resides in Vilnius, but also serves as Lithuania's ambassador to Thailand, Malaysia, and Indonesia.
* Director of Sic Gallup Media Gytis Juodpusis told the parliament ad hoc commission on 19 November that independent experts had determined that the presidential campaign of Rolandas Paksas had two times more television commercials and three times more press advertisements than the campaign of Valdas Adamkus, although official reports show only a 30 percent difference in costs, ELTA reported the next day. He noted that any possible discounts for greater amounts of advertisement were unlikely to account for the differences.
* The parliament adopted a Law on Equal Opportunities on 18 November, which forbids any immediate and indirect discrimination by age, sexual orientation, disability, race, religion and beliefs, BNS reported. It also passed by a vote of 34 to zero with four abstentions the law on tobacco control, which calls for a reduction in nicotine and tar levels in cigarettes and bans the use of misleading cigarette descriptions, such as "mild," "low tar," "light," or "super light," and imposes measures to prevent the sale of tobacco products to underage persons. The law also prohibits the sale of a package of cigarettes containing less than 20 cigarettes starting next May.
* The Internal Audit Division of the Foreign Ministry and the inspector general checked the activities of the Lithuanian embassies in Russia and Belarus and concluded that the charges that some Lithuanian diplomats had been systematically violating procedures for issuing visas were true, BNS reported on 17 November. The report noted that the seven officials had been dismissed for good reasons.
* The parliament adopted a bill on elections to the European Parliament on 20 November, BNS reported. It provides that the elections will be held on 13 June under a proportional election system to choose 13 deputies. Political parties, registered at least 65 days prior to the elections, will be able to nominate no fewer than five and no more than 26 candidates in their list. Citizens of other EU states, who reside in Lithuania, will have the right to run for the elections and vote.
* The State Property Fund announced on 20 November that the consortium, set up by nine persons associated with VP Market, the largest Baltic retailer, was the winner of the privatization contest for the Vakaru Skirstomieji Tinklai (Western Distribution Network, VST), ELTA reported. Its bid of 540 million litas ($180 million), or nearly 1.73 litas per share, for a 77 percent stake in VST defeated the bid by the Achema Group, which was some 20 million litas lower.
* The State Property Fund decided on 21 November not to open talks with Eesti Energia (Estonian Energy) over the privatization of the Rytu Skirstomieji Tinklai (Eastern Distribution Network, RST), but to ask for additional information, which must be submitted within two weeks, BNS reported.
* The Vilnius Area Court adopted a ruling on 18 November supporting the State Property Fund's lawsuit to terminate the privatization agreement with Asean Interests, a Singaporean company that acquired 47.3 percent of the local textile producer Alytus Textile, ELTA reported. The court ruling binds the foreign investor to return its stake in Alytus Textile to the national government and to pay interest accrued due to the default of payments for the shares.