Baltic Report: July 16, 2002

NOTE TO READERS:
This issue covers events in the Baltic states from 5 to 11 July 2002.
'VILNIUS 10' PREMIERS MEET IN LATVIA.
The prime ministers of the countries in the "Vilnius 10" group, which is composed of nine NATO candidates plus Croatia, held a two-day summit meeting in Riga on 5-6 July, BNS reported. For the nine official candidates -- Albania, Bulgaria, Estonia, Latvia, Lithuania, Macedonia, Romania, Slovakia, and Slovenia -- it was their last meeting before the NATO summit in Prague in November at which many of then expect to receive invitations to join the alliance. U.S. President George W. Bush and British Prime Minister Tony Blair sent videotaped greetings to the meeting in which they spoke favorably about NATO enlargement in Prague, although, in keeping with previous statements, they did not specifically mention any countries that would be invited to join. U.S. Senate Republican Leader Trent Lott stressed that the question of NATO enlargement is not "whether" but "when." In his speech at the conference Polish President Aleksander Kwasniewski suggested a new association of countries combining the "Vilnius 10" and the three Visegrad countries, Poland, Hungary, and the Czech Republic, which have already gained NATO membership. Zbigniew Brzezinski, former national-security adviser to U.S. President Jimmy Carter, who also spoke at the Riga conference, spoke on 6 July about the possibility for future NATO expansion that could include Ukraine, as well as the need for more cooperation with Russia.

ESTONIAN ENERGY COUNCIL APPROVES BOND ISSUE.
The supervisory council of the utility Eesti Energia approved on 8 July a 200 million-euro ($196 million) bond issue, BNS reported the next day. The issue, which will be organized by SchrodersSalomonSmithBarney, is intended to help finance the renovation of the utility's two large shale-oil-power stations. In preparation for the bond issue, the government asked for credit ratings for the utility from international rating agencies Moody's and Standard & Poor's. The ratings for the utility, which are the same as those of Estonia, are the highest among energy firms in Central and Eastern Europe. On 11 July, Moody issued a separate rating of A3 for the eurobond issue, which was one grade higher than the ratings of Baa1 it had given the utility the previous week. The council also decided to give the utility's board two months to draw up a report on combining the shale-oil-mining company Eesti Polevkivi and Narva Elektrijaamad.

PEOPLE'S UNION AND CHRISTIAN PEOPLE'S PARTY SIGN AGREEMENT FOR LOCAL ELECTIONS.
Representatives of the People's Union, the largest political party in Estonia with more than 7,000 members, and the small Christian People's Party signed a cooperation agreement on 9 July for local-council elections on 20 October, ETA reported. The parties noted that they had found many common points in the goals of their programs. According to the agreement, the parties will open their lists to members of the partner party. Earlier this month, the council of the People's Union decided to present a list of its candidates in more than 200 local governments while the Christian People's Party has not yet announced where it will offer candidates. The People's Union has been among the most successful parties in gathering campaign donations, receiving 1.7 million kroons ($100,000) from sponsors in the second quarter of this year.

ECONOMY MINISTRY DRAFTS ENERGY-MARKET ACT.
The Economy Ministry has prepared and sent to the government a new Energy-Market Act, ETA reported on 7 July. The act takes into account Estonian negotiators' success with the European Union in postponing until 2008 the EU's requirement that 35 percent of the energy market be deregulated by 2003. At present, only those consumers who use more than 40 gigawatt-hours of electricity a year can freely select their electricity provider; thus, the Estonian market is only about 10 percent deregulated. The energy market is dominated by Narva Power Plants' two shale-oil plants, which are in need of major renovation.

TRADE UNIONS DEMAND HIGHER UNEMPLOYMENT BENEFITS.
On 10 July, the Estonian Central Trade-Unions Association (EAKL) rejected the government's offer to raise monthly unemployment benefits from the current 400 kroons ($25) to 500 kroons, ETA reported. The monthly benefits to an unemployed person during retraining would be raised from 600 to 750 kroons. Arguing that the unemployment benefits, which have not been changed since 1999, are below the International Labor Organization requirement that they be at least half of the national minimum wage, EAKL is demanding that they be raised to at least 700 kroons and to at least 1,050 kroons during retraining. According to the Labor Market Board, unemployment benefits last year were paid to 70,440 people for an average of 143 days per person. The board also announced that the number of registered unemployed continued to decline over the last three months and was 45,200 in June, an unemployment rate of 5.5 percent.

PEOPLE'S UNION CHAIRMAN CALLS FOR RESTRICTING LAND SALES TO FOREIGNERS.
In an interview in "Eesti Paevaleht" on 11 July, Villu Reiljan spoke about the plans of the People's Union to collect signatures in support of prohibiting the sale of agricultural and forested land to foreigners until 2012, ETA reported. He said Estonian land is undervalued in comparison to that of European Union countries, and that Estonia should follow Poland's and Hungary's example in EU accession negotiations and should seek a transition period in the Free Movement of Capital Chapter. Reiljan's proposal was severely criticized by other political parties, which called it a pre-election campaign maneuver. "Eesti Paevaleht" pointed out that the parliament passed the law allowing the sale of land to nonresident physical and legal persons in 1996, when Andres Varik, one of the leaders of the People's Union, was agriculture minister. European Integration Bureau head Henrik Hololei noted that Estonia closed the Free Movement of Capital Chapter in May 2000, and said reopening the chapter now would be extremely harmful to Estonia.

* Estonian Defense Ministry officials held talks in Parnu on 10 July with representatives from the British Ministry of Defense as part of regular political and defense talks they are holding with 21 mostly NATO member and candidate countries, BNS reported. The Estonians presented an overview of the country's preparations for membership in NATO and the ongoing military reforms. The need for greater bilateral cooperation and the role of NATO in the fight against international terrorism were also discussed.

* Center Party Chairman and Tallinn Mayor Edgar Savisaar spoke at a conference on the Enlargement of the European Union: Local and Regional Prospects in Brussels on 5 July, BNS reported. He noted that the finances of local governments of Estonia and most candidate countries are very limited, being mostly centralized through the state budget, and that they will have difficulties in finding the necessary co-financing for EU projects and in presenting their positions in EU institutions. To improve the situation, Savisaar called on Estonia to launch tax reforms to widen the income base of local governments

* Efraim Zuroff, director of the Jerusalem Office of the Simon Wiesenthal Center, gave National Security Police Director Juri Pihl in Tallinn on 10 July a list of 17 people suspected of participation in the genocide of Jews during World War II, BNS reported. He also announced his organization's new initiative called Operation Last Chance, which offers a $10,000 reward for reliable information that would lead to the trial and conviction of Estonian Nazi war criminals. Zuroff made similar announcements in both Latvia and Lithuania earlier in the week. An editorial in "Postimees" on 11 July expressed doubt whether any new cases would result from the new list, as it is based on material developed by the International War Crime Commission established by former Estonian President Lennart Meri and focuses on one episode: the active participation of the 36th police battalion in the massacre of Jews in Belarus on 7 August 1942.

* Italian parliamentary Foreign Affairs Committee Chairman Gustavo Selva held talks in Tallinn on 8 July with Defense Minister Sven Mikser, Foreign Ministry Deputy Chancellor Vaino Reinart, and the heads of several parliamentary committees, BNS reported. Selva's visit was probably prompted by his participation in the NATO candidate summit meeting in Riga on 5-6 July.

* The Finnish daily "Helsingin Sanomat" wrote that the EU, in an attempt to reduce the possible spread of animal diseases such as foot-and-mouth disease and swine fever, is planning to ban the import of meat and dairy products from nonmember states, ETA reported on 10 July. A Finnish suggestion that the EU candidate countries be exempted from the ban was rejected. This would have a serious effect on Estonia, which is visited by many Finnish tourists purchasing these products.

* In its first week in operation, the new catamaran "Linda Express" hit something on the sea during a trip between Helsinki and Tallinn on 5 July, which resulted in water seepage into the engine room and the ship listing, ETA reported. The catamaran was able to reach Tallinn safely, but the Estonian Maritime Administration withdrew its operating license. The catamaran, which can reach speeds of 55 knots per hour, was expected to cover the trip in 60 minutes, compared to 90 minutes by other catamarans or three hours by large ferries.

* Estonian Central Trade-Unions Association Chairwoman Kadi Parnits declared on 11 July that trade unions in Narva are considering blocking the entrances to the Narva Power Plants if foreign workers are brought in to carry out the plants' reconstruction, BNS reported. Finland's Foster Wheeler, the winning bidder for the plant-renovation contract, is allegedly unwilling to hire local welders or other local skilled workers, because it has already come to terms with less-expensive Polish and Czech subcontractors.

* The Statistics Office announced on 5 July that the consumer price index in June declined by 0.1 percent compared to May, but remained 3.8 percent higher than in June 2001, BNS reported. The seasonal decline in May in the prices of vegetables, fruits, and dairy products led to a fall of 0.5 percent in food prices, while the costs of nonfood products and services rose by 0.1 percent.

* The Finance Ministry announced on 9 July that revenues to the state budget in the first half of the year amounted to 17.22 billion kroons or 51.34 percent of the target for the whole year, BNS reported. In 2001, the state budget was 47.33 percent full at the end of June. The main revenues were from social-tax receipts (6.15 billion kroons), VAT payments (4.82 billion kroons), excise taxes (2.08 billion kroons), personal income taxes (1.51 billion kroons), and corporate income taxes (579.4 million kroons).

* The Statistics Office announced on 5 July that imports in May totaled 6.9 billion kroons ($405 million) and exports 4.8 billion kroons, which resulted in a trade deficit of 2.1 billion kroons, ETA reported. The deficit was some 200 million kroons less than in April, since exports remained the same while imports decreased by 3 percent.

* The cargo turnover of the Port of Tallinn in the first half of 2002 increased to 19.01 million tons or 19.2 percent more than in the same period last year, ETA reported on 11 July. Shipments of oil rose by 18.1 percent to 12.29 million tons. Tallinn replaced Ventspils as the busiest port on the eastern shore of the Baltic Sea in the period.

GOVERNMENT GRANTS FUNDS TO APPEASE MEDICAL WORKERS.
The government decided on 9 July to allocate 3.2 million lats ($5.3 million) to increase the salaries of medical workers beginning on 1 October, BNS reported. The funds are intended to raise the average monthly salary in the sector to 140 lats. This was one of the main demands during the first of what was intended to be a series of eight-hour strikes by medical workers, beginning in June. It is not yet clear whether the other strikes, scheduled for July and September, will be held. Welfare Minister Viktors Jaksons said that he is pleased that the ministry has "succeeded in proving that doctors actually need this money." Finance Minister Gundars Berzins noted that the grant was only "a move to extinguish the fire" and urged the Welfare Ministry to change the system for funding health care.

TAX REVENUES UP IN FIRST HALF.
The State Revenue Service announced on 10 July that it collected 788 million lats ($1.31 billion) in taxes and other payments in the first half of the year, or 11.29 percent more than in the same period last year, BNS reported. Higher revenues were collected from most tax categories. Excise-tax revenue rose 14 percent to 86.5 million lats and VAT collections increased by 8.4 percent to 182.3 million lats. Even the revenue from the corporate income tax, whose rate had been cut by 3 percent on 1 January, collected 2.5 million lats more, yielding 57.1 million lats for the first half of the year.

LATVIA OPENS OFFICE AT EUROPEAN PARLIAMENT.
Latvia on 11 July became the first EU candidate country to open a permanent office at the European Parliament in Brussels, LETA reported. The office was formally opened by European Affairs Commission Chairman Edvins Inkens, who was attending a regular meeting of the European Convention. He said the key task of the office is "to prepare Latvia for the moment when eight deputies from Latvia will begin working in the European Parliament, first as monitors and then as full-fledged members from the summer of 2004." The European Parliament offers offices and equipment to all EU member countries' parliaments, but currently only the parliaments of Denmark, Finland, Great Britain, France, and Italy are using them.

* Latvian and Bulgarian Foreign Ministers Indulis Berzins and Solomon Passy, respectively, signed three agreements in Riga on 5 July, a Latvian Foreign Ministry press release reported. The first provides for the mutual abolition of visa requirements, allowing citizens of one country to reside in the other country for a period up to 90 days over a six-month period. The second is for the mutual protection of classified information. It provides regulations for the exchange of the classified information and defines the safety measures to be taken to save and protect the information properly. The third agreement is on the readmission of persons, providing a clear regulatory basis for combating illegal immigration and the return procedure of illegal immigrants.

* Latvian and Romanian Prime Ministers Andris Berzins and Adrian Nastase, respectively, participated in the official opening of the Romanian honorary consulate in Riga on 5 July, BNS reported. It will be the first permanent Romanian representative office in Latvia and will cooperate with the Romanian embassy in Vilnius. Its aims are to promote cooperation in business, culture, sports, education, medicine, and tourism, as well as to facilitate understanding between the two countries. Earlier that day, Foreign Ministers Indulis Berzins and Mircea Geoana signed bilateral agreements on the mutual abolishment of visa requirements, which will take effect in 30 days, and on the readmission of persons.

* Italian parliamentary Foreign Affairs Committee Chairman Selva, in addition to attending the NATO candidates' ministerial meeting in Riga, also held talks on 5 July with Foreign Minister Indulis Berzins, LETA reported. He expressed Italy's support for Latvia's integration into NATO and discussed the role of contacts between the two parliaments in the development of bilateral relations.

* Defense Minister Girts Valdis Kristovskis held talks with his Finnish counterpart Jan-Erik Enestam during the "Vilnius 10" summit in Riga on 5 July, BNS reported. They agreed that cooperation in defense training, so far limited due to a lack of knowledge of the Finnish language, should be stepped up and Latvia could learn from Finland's experience in training reservists and its mobilization process. Kristovskis also met with Croatian Defense Minister Jozo Rados concerning Latvia's preparations for NATO membership. In discussing bilateral cooperation, the ministers agreed that a defense-cooperation agreement should be signed, with Kristovskis suggesting the neutralization of unexploded ammunition as a good field for cooperation.

* A panel of 16 NATO Antiaircraft Defense Commission officials from seven countries visited Latvia on 8-9 July to become acquainted with the country's facilities, BNS reported. On the first day, Defense Minister Kristovskis gave them a report about Latvia's airspace surveillance system and its antiaircraft defense capacities. He emphasized the recently adopted civilian-military cooperation concept and cooperation between Latvia's military and civilian structures. On 9 July, the panel visited the Air Force information center as well as the Air Force antiaircraft division in Lielvarde, some 60 kilometers from Riga.

* Prime Minister Andris Berzins discussed bilateral relations in separate talks with outgoing Canadian, Czech, and Estonian Ambassadors to Latvia Peter McKellar, Jana Bulenova, and Juhan Haravee, respectively, on 9 July, BNS reported. McKellar has served in Riga since 1999 while the other two assumed their posts in 1998.

* Latvian Social Democratic Workers' Party (LSDSP) Secretary-General Janis Dinevics announced on 10 July that Dainis Ivans, chairman of the Culture, Art, and Religious Affairs Committee of the Riga City Council and a hero of Latvia's independence drive as the first chairman of the Latvian Popular Front, had agreed to participate on the party ticket in the October parliamentary elections, LETA reported. Ivans is expected to be in first position in the LSDSP list in Zemgale, in second position in Riga and Vidzeme, and in fourth position in Kurzeme.

* The national AIDS Prevention Center asked intravenous drug users visiting syringe-exchange counters to complete a questionnaire and give a saliva sample to be tested for HIV, BNS reported on 8 July. Although saliva tests are not as conclusive as blood tests, they indicated that about 20-25 percent of the 215 drug users tested have HIV or AIDS. About 60 percent of the respondents were under the age of 25 and 70 percent of them preferred using heroin. Latvia now has 2,081 registered HIV-infected people and 139 registered AIDS cases. Most of the HIV-infected people (1,576) received the infection from intravenous use of drugs, 198 were infected through heterosexual sex, 96 through homosexual sex, two children contracted the virus from their mothers, and the source of infection for the remaining 209 has not been identified.

* In the wake of a sudden storm that blew unexpectedly through Latvia on 4 July, killing three people, new procedures were announced calling for severe-weather warnings to be passed directly to media outlets, not just to government agencies and the National Radio and Television Center.

* In the first half of the year, the ports of Ventspils, Riga, and Liepaja handled 27.9 million tons of cargo or 4.9 percent less than in the same period last year, BNS reported. The decline was caused by a fall of 13.7 percent to 17.18 million tons in trade through Ventspils, primarily due to lower exports of crude oil (1.8 million tons) and oil products (0.7 million tons). Cargoes through Riga rose 16.2 percent to 8.85 million tons and through Liepaja by 8.7 percent to 1.87 million tons.

* The consumer price index in June was 0.6 percent lower than in May but 0.9 percent higher than in June 2001, BNS reported on 8 July. The price of goods declined by 0.5 percent and of services by 0.8 percent, primarily caused by a decline in mobile-telephone charges.

* The State Employment Service announced on 11 July that the number of registered unemployed on 1 July was 93,479 or 971 lower than a month earlier, LETA reported. The unemployment rate in June was 7.9 percent or 0.1 percent lower than in May.

LOCAL, PRESIDENTIAL ELECTIONS TO BE HELD SIMULTANEOUSLY.
By a vote of 56 to 20, with two abstentions and 63 not voting, parliament decided on 5 July at the last meeting of its spring session to hold elections to local councils concurrently with the presidential election on 22 December, BNS reported. The local-council elections were originally scheduled for February-March 2003, before the terms of the current local councils end in April. The ruling coalition of Social Democrats and Social Liberals, as well as the Liberal Democrats and Christian Democrats, supported the change, noting that it will result in savings of about 10 million litas ($2.8 million) and higher voter turnout. Opponents argued that the presidential elections will detract attention from the local elections. Owing to recent amendments to the constitution, new council deputies will serve for four years instead of three.

PREMIER ASKS PRESIDENT TO VETO AMENDED HEALTH-INSURANCE LAW.
Prime Minister Algirdas Brazauskas held talks with President Valdas Adamkus on 10 July during which he urged a veto of the recently passed amendments to the health-care-insurance law, the daily "Kauno diena" reported the next day. The amendments would require the government to increase the per capita allocation to the Compulsory Health-Care-Insurance Fund (PSDF) from 187 litas ($53) this year to 310 litas in 2003. Finance Minister Dalia Grybauskaite said the government cannot provide the needed 270 million litas and might even ask the Constitutional Court to rule the amendments unconstitutional, since they were not coordinated with the government or the parliament's Budget and Finance Committee. The amendments were proposed by the parliament's Health-Care Committee, which argued that the PSDF would otherwise go bankrupt. Breaking with their coalition partners, the Social Liberals voted with opposition parties to pass the amendments.

FREE-MARKET INSTITUTE CRITICIZES GOVERNMENT.
At a press conference on the first anniversary of the current government, Lithuanian Free-Market Institute President Ugnius Trumpa said on 9 July that the current "impressively growing" economy is not only the result of the work of the cabinet of Prime Minister Brazauskas, but also that of earlier governments and the people's desire to live better, "Kauno diena" reported the next day. He criticized the government for procrastinating on the structural reforms and modernization needed for EU membership and for a lack of continuity and transparency in its work. "It looks like the government wants to control everything, but does not want to be controlled or even observed from outside," Trumpa said. He also noted that most decisions are made without discussion with the opposition, and there are major disagreements among parliament, the government, and the president. Institute Vice President Ruta Vainiene described the year 2002 as one in which a great number of laws is passed to fulfill "the five-year plan in three years."

VILNIUS MAYOR SUGGESTS REBURYING NAPOLEONIC ARMY REMAINS IN PRESTIGIOUS CEMETERY.
Vilnius Mayor Arturas Zuokas and French Ambassador to Lithuania Jean-Bernard Harth discussed on 11 July the possibility of reburying the remains of soldiers from Napoleon's army at the prestigious Antakalnis Cemetery, "Lietuvos rytas" reported the next day. The remains of nearly 2,000 soldiers were discovered in a mass grave at a former military base in Vilnius in March and experts estimate that their number could rise to 5,000 if archeological excavations continue. Zuokas suggested that a suitable place in the cemetery would be between the monuments to the victims of the 13 January 1991 clashes between Soviet troops and Lithuanian citizens around the Vilnius television tower and to World War II soldiers. The French government has pledged to cover most of the costs for reburial and the construction of a memorial. Zuokas also mentioned that BBC Television and the Discovery Channel have asked for permission to participate in the archeological work and to film footage for their "Meet the Ancestors" and "Moments in Time" serials, respectively.

BELARUS, LITHUANIA SIGN COOPERATION PROTOCOL.
The Belarusian Interior Ministry's Investigation Committee and the Lithuanian Interior Ministry signed a protocol on cooperation on 11 July during an official visit to Minsk by Interior Minister Secretary Jonas Liaudanskas, Belapan reported. In addition, the Belarusian State Border Troops Committee signed a cooperation agreement with the Lithuanian State Border Guard Service. The purpose of the accords is to facilitate cooperation in the field of cross-border law enforcement. The head of the Belarusian Investigation Committee, Leonid Glukhovski, said after the signing ceremony that, "Those who combat crime both in Belarus and Lithuania know very well that criminals recognize no borders, so it is absolutely necessary that the two countries' law-enforcement agencies unite their efforts."

* Foreign Ministry Secretary Neris Germanas headed a delegation that conducted talks in Rome on 11 July with Italian Foreign Ministry Coordinator for Central and Eastern Europe Ambassador Luca Daniele, BNS reported. The talks centered on the pre-World War II Lithuanian embassy building in a prestigious district of Rome that Italy handed over to the Soviet Union during the war and Russia today uses as its consulate. Earlier, Italy had refused to discuss the question, saying it was a matter for Russia and Lithuania to settle. The change may have been influenced by the French government's decision to settle the fate of a similar embassy in Paris by paying Lithuania sufficient compensation to purchase a new building. Germanas said that Italy showed "real good will" and that the next round of talks will be in Vilnius in the fall.

* Polish Deputy Prime Minister and Infrastructure Minister Marek Pol told President Adamkus in Vilnius on 11 July that Poland is now more interested in improving railway and highway traffic between the Baltic states and western Europe, BNS reported. These topics were at the center of the Conference on a Pan-European Transport Corridor I, which Adamkus hosted that day. The president suggested that the EU programs for transport development in the Baltic region should be completed before the planned date of 2015 and called for the construction of a rail system with trains traveling at up to 160 kilometers per hour, thereby reducing the trip between Vilnius and Warsaw from 10 to five hours. Pol talked with Prime Minister Brazauskas about speeding up the construction of the Via Baltica highway in Poland and the start later this year of joint Lithuanian-Polish border-control posts. In talks with Economy Minister Petras Cesna, he discussed the merging of Lithuania's and Western Europe's power systems.

* Head of the United Kingdom National Audit Office Sir John Bourn was in Vilnius on 11-12 July to sign a 1.5 million-euro ($1.51 million) bilateral Twinning Project with Lithuania's State Control Office, ELTA reported. The program will enable British officials to share their work experience, organize training, and build up the legislation base in Lithuania on a more intensive basis. State Controller Jonas Liaucius said that Vilnius had selected the British office for the 18-month project because it is one of the most experienced in Europe with which his office has been cooperating for nine years.

* Foreign Ministry State Secretary Evaldas Ignatavicius participated in the seminar Lithuania and Russia: a Bridge to the 21st Century, which was organized by the St. Petersburg Eastern European International Institute and the Lithuanian consulate in that city, BNS reported on 8 July. The main goal of the seminar, attended by representatives of the Russian Foreign Ministry, St. Petersburg city administration, Kaliningrad Oblast Duma, foreign diplomats, and university students and political scientists from universities in Lithuania and St. Petersburg, was to begin a broad-based dialogue in the two countries on the prospects of bilateral ties.

* The State Food and Veterinary Service imposed a temporary ban on the import of pork and poultry from the Netherlands on 8 July after receiving data from the Dutch agriculture minister that 29 farms had been discovered to be using the growth hormone MPA in pigs' feed, which is used in the U.S., Australia, and New Zealand, but banned by the EU, ELTA reported. The service also reimposed bans on the importation of pork from Romania and Luxembourg, which had been lifted the previous week, when new cases of swine fever were reported.

* Aleksandr Ryazanov, deputy chairman of Gazprom's executive board, said that his company wants to pay only 70 percent of what the German consortium of Ruhrgas and E.ON Energie paid for a similar 34 percent share of Lietuvos Dujos, BNS reported on 10 July. The consortium transferred 116 million litas ($33.8 million) to the Lithuanian Privatization Fund, and thus, Gazprom is seeking to pay only 81 million litas. Liberal Union Chairman Eugenijus Gentvilas sharply criticized the government's privatization policy, noting that while he served as prime minister in a previous short-lived government, he advocated selling the utility's shares to the strategic investor and gas supplier at the same time.

* The Constitutional Court on 11 July ruled unconstitutional the laws passed by the parliament that set minimal floors for the annual state expenditures in education and science, health, and defense at 6.6 percent, 5 percent, and 2 percent of the gross domestic product, respectively, "Lietuvos rytas" reported the next day. The court said that under the constitution, only the government had the authority to stipulate in the state draft budget the amount of funds and income.

* The cabinet decided on 10 July that it will ask the EU to reopen negotiations on the Free Movement of Capital Chapter, which had been closed in March 2001, in order to seek a seven-year transition period for the sale of agricultural and forest land to foreigners, ELTA reported. The parliament had recently passed a resolution advocating such a change, but President Adamkus opposed it, saying that it would set a bad precedent. The next day, Lithuanian negotiators began negotiations on the Agriculture Chapter in which they are seeking considerably higher agricultural quotas than the European Commission has proposed.

* The volume of cargo through the Port of Klaipeda in the first half of the year was 9.8 million tons, or 10.46 percent greater than in the same period last year, BNS reported on 10 July. The increase was due to greater exports of fuel oil and oil products (almost 4 million tons), while other freight declined by 2.58 percent to 5.8 million tons.

* The June consumer price index in Lithuania fell by 0.3 percent compared to May, and by 0.5 percent compared to June 2001. Gitanas Nausedas, an adviser to the president of Vilnius Bank, noted that the fall in prices was partly caused by the higher value of the litas versus the U.S. dollar and greater competition among retail chains.