Baltic Report: October 16, 2001

BALTIC PARLIAMENTARIANS CONDEMN RUSSIAN STATEMENTS.
Members of the foreign affairs committees of the Estonian, Latvian, and Lithuanian parliaments, meeting in Sigulda, Latvia on 7 September, condemned Russian statements comparing the ethnic-minority problems in the Baltics with the Balkans, BNS reported. They agreed on the need for the Baltic states to cooperate to prevent future Russian efforts to hinder their membership in NATO. Latvian parliament Foreign Affairs Committee Chairman Gundars Krasts noted that all three Baltic states agreed to react to any future Russian charges that Latvia or Estonia was not complying with international regulations on minorities.

BALTIC, POLISH, AND FINNISH PRESIDENTS CONDEMN INTERNATIONAL TERRORISM.
Presidents Aleksander Kwasniewski (Poland), Tarja Halonen (Finland), Lennart Meri (Estonia), Vaira Vike-Freiberga (Latvia), and Valdas Adamkus (Lithuania) issued a joint statement in Tallinn on 18 September condemning international terrorism and expressing solidarity with the United States, ETA reported. Meri declared, "We are unanimous that this was a declaration of war on all countries sharing the principles of democracy, freedom of speech, and human rights." The presidents discussed the expansion of the European Union and NATO, and expressed the hope that the NATO summit meeting in Prague in November 2002 will result in an invitation to the three Baltic states to join the Atlantic alliance. The leaders also talked about the need to further develop the transport and energy networks linking their countries through such projects as upgrading the Via Baltica highway and interconnecting the energy networks of Lithuania and Poland.

The planned merger of two Swedish banks, Swedbank and Skandinaviska Enskilda Banken (SEB), was called off on 19 September because the European Commission demanded too many concessions, BNS reported. The merger would have prompted significant changes in the Baltic states since the two banks own the largest banks in all three states and, after the merger, would have controlled more than 80 percent of the banking markets in Estonia and Lithuania.

ESTONIA COMMITS TO RAISING DEFENSE SPENDING TO 2 PERCENT OF GDP.
Defense Ministry Deputy Chancellor Margus Kolga announced on 19 September that the Annual National Program (ANP) for membership in NATO, which the government approved the previous day, commits Estonia to increase defense spending to 2.04 billion kroons ($121 million), or 2 percent of gross domestic product (GDP), in 2002, BNS reported. The funds will be given to the Defense Ministry (1.64 billion kroons) and Interior Ministry (400 million kroons). The Defense Ministry intends to focus its efforts on the development of military infrastructure, while the Interior Ministry will spend its allotted funds to purchase sea-surveillance radar and develop military-style units.

CALL FOR DIRECT ELECTION OF PRESIDENT.
President Lennart Meri at the first session of the Estonian parliament in the fall declared on 10 September his firm support for the direct election of the president by the people, but did not use his right as president to propose an amendment to the constitution, ETA reported. He said that he hoped that the president would be elected in this manner in 2006, for it would "give the people more immediate mechanisms for ruling the country." Meri, however, added: "Direct election of the president should be accompanied by a legal mechanism to balance the competence of the president and other constitutional institutions."

RULING COALITION DETERMINED TO ELECT PRESIDENT IN ELECTORAL COLLEGE.
Representatives of the Pro Patria Union, Reform Party, and Moderates decided at a roundtable meeting on 17 September that the election of Estonia's president should not be returned to the parliament, ETA reported. It is unlikely that any candidate will win the needed majority in the first round on 21 September since at least four candidates will be nominated: Toomas Savi of the Reform Party, Peeter Tulviste of Pro Patria, Peeter Kreitzberg of the Center Party, and Arnold Ruutel of People's Choice. The coalition parties agreed that in the second round they will support the coalition candidate who receives the most votes in the first round.

VISIT OF SPANISH PRIME MINISTER.
As part of his plan to visit all EU candidate countries before Spain takes over the EU presidency in the first half of 2002, Jose Maria Aznar held talks in Tallinn on 11 September with Prime Minister Mart Laar on EU enlargement and Estonian-Spanish relations, BNS reported. Aznar said that he hopes to see Estonia conclude its EU membership talks next year and become a full member of the union in 2004. Prompted by the terrorist attacks in the U.S., the two prime ministers also spoke about the expansion of security cooperation and made a common statement that expressed condolences to the American people, the relatives of victims, and President Bush. As a result of the terrorist actions in the U.S., Aznar canceled planned visits to Lithuania and Latvia, and flew back to Spain.

FIFTY-NINE PEOPLE DIE FROM DRINKING METHYL ALCOHOL.
The dangers of the widespread illegal-alcohol trade became apparent on 9 September, when eight people died in Parnu from acute methanol poisoning. By September 18, the total number of such deaths had reached 59, BNS reported. The police checked 395 locations in Parnu and Parnu County suspected of trade in illegal alcohol and confiscated almost 4,000 liters of illegal alcohol and 14,000 packages of black-market cigarettes from 47 of the sites.

UNIVERSITIES TO BOYCOTT GOVERNMENT?
Representatives of Estonia's public universities, the Estonian Science Foundation, and the Council of Scientific Competence issued a joint appeal on 13 September, BNS reported, proposing the "recall [of] all scientists and university academic staff from all commissions, councils, working groups, and volunteer bodies set up by the government until the start of substantial and constructive dialogue between the government and universities/academic institutions." The signatories of the appeal later met with Prime Minister Mart Laar and declared their diminishing trust in the Education Ministry and dissatisfaction with the government's educational policy. They complained that state allocations per university student declined from 13,500 kroons ($784.21) in 1999 to 12,600 kroons in 2000 and 2001, and supported raising the support to a level of 20,000 to 22,000 kroons per student. They also noted that although the Education Ministry promised to increase support for universities by 212 million kroons in 2002, the additional funds were not included in the government's first draft of the budget.

GOVERNMENT INCREASES 2002 HIGHER-EDUCATION SPENDING.
Education Minister Tonis Lukas announced on 14 September that the state will increase spending on higher education in 2002 by 150 million kroons ($8.8 million), or 23 percent, BNS reported. He said that much of the funding will go to Tallinn Technical University's new study center. Lukas called demands to raise the state allocations per university student to 20,000 kroons surprising and out of proportion, as the state would need at least an additional 400 million kroons to do so.

PARLIAMENT ADOPTS LAW ON PENSIONS.
The parliament on 12 September by a vote of 47 to 26 adopted a law on compulsory investments into pension funds, ETA reported. The country's pension system will now consist of three parts: the pension paid by the state, compulsory payments of 6 percent of gross income into pension funds, and additional voluntary payments into pension funds. Another article of the law enacts taxes on all pensions exceeding 3,000 kroons a month. The average pension in the country is now slightly above 1,000 kroons ($58.09), but the average pension of parliamentary deputies is currently about 17,300 kroons per month. The law will go into force on 1 January 2002.

PRO PATRIA UNION LEAVES TARTU COALITION.
The Pro Patria Union left the ruling coalition in the Tartu City Council on 7 September, ETA reported. The decision was prompted by the council's election the previous day of Tartu's four delegates to the electoral college that is to meet on 21 September to elect Estonia's president. Pro Patria had expected that one of its deputies would be elected to the college, but instead the Tartu council will be represented by three delegates from the Reform Party and one from the Tartu 2000-plus faction. The current chairman of the Tartu City Council, Pro Patria presidential candidate Peeter Tulviste, is expected to resign as council chairman as well.

ESTONIA ACCEDES TO OECD INTERNATIONAL INVESTMENTS DECLARATION.
Gita Kalmet, Estonia's charge d'affaires to France, on 20 September in Paris confirmed Estonia's acceptance of the Organization of Economic Cooperation and Development's (OECD) international investments declaration, ETA reported. The Estonian government approved the declaration on 19 June. It obligates Estonia to treat foreign and domestic investors equally. The declaration has been signed by all 30 OECD member states, as well as by Argentina, Brazil, and Chile. Lithuania also acceded to the declaration the same day.

* Organization for Security and Cooperation in Europe (OSCE) High Commissioner for National Minorities Rolf Ekeus met with President Lennart Meri, Prime Minister Mart Laar, Foreign Minister Toomas Hendrik Ilves, and Ethnic Affairs Minister Katrin Saks during a three-day visit on 18-20 September, BNS reported. As this was his first visit to Estonia, Ekeus was primarily concerned with meeting the country's top officials and becoming acquainted with the situation of minorities in the country. Prior to his appointment to a three-year term as commissioner that began on 1 July, Ekeus served as Sweden's ambassador to the U.S. from 1997 until 2000 and as chief of the UN Special Commission ensuring the destruction of nuclear, biological, and chemical weapons in Iraq from 1991 until 1997.

* The government on 18 September approved and sent to the parliament a draft budget for 2002, ETA reported. The budget is projected to increase by 3.6 billion kroons ($210 million), or 12 percent, over the 2001 budget to 34.68 billion kroons. Finance Minister Siim Kallas noted that this was a record one-year budget increase, but the necessary revenues had been found.

* A delegation headed by Tian Zengpei, the chairman of the Foreign Affairs Committee of the Chinese People's Political Consultative Conference, arrived in Estonia on 8 September to mark the 10th anniversary of the establishment of diplomatic relations between the two countries, BNS reported. As deputy foreign minister, Tian had traveled to Tallinn in the fall of 1991 and signed the documents establishing these relations.

* Indian Foreign Ministry State Secretary Ranjit Singh Kalha and Foreign Minister Toomas Hendrik Ilves held the first-ever political consultations between the two countries in Tallinn on 14 September, BNS reported. They discussed a variety of topics including the need for cooperation in combating terrorism, the development of information technology and gene technology, and reform of the UN Security Council.

* The State Prosecutor's Office opened a criminal case against the director general of the Privatization Agency, Jaak Liivik, on 10 September on charges of malfeasance, ETA reported the next day. Liivik is charged with taking on illegal financial obligations on behalf of the state in the privatization of Estonian Railways by signing a protocol with Baltic Rail Services, the eventual buyer of the state railway, obligating the state to compensate a claim by the Valga Refrigerator Car Depot against the railway.

* The government on 18 September rejected amendments to the language law, proposed by the Center Party, which would have allowed local governments rather than the central government to decide whether to permit the use of a second language other than Estonian as a working language in areas where the majority of the permanent residents are non-Estonian speakers, BNS reported.

* Katrin Noorkoiv, head of the EU's SAPARD (Special Accession Program for Agriculture and Rural Development) agency in Estonia, announced that the first grant in all of Eastern Europe under SAPARD was given to a farmer in Estonia's southeastern Polvamaa region, BNS reported.

* Negotiations have been begun on the merger of three universities in Tallinn -- the Pedagogical University, Academy of Art, and Estonian Institute of Humanities -- into a new Tallinn University, ETA reported on 18 September. The new university would have more than 8,000 students.

* The consumer price index in August remained unchanged compared to July, but rose by 6.1 percent compared to August 2000, BNS reported on 7 September.

* The Labor Board announced on 11 September that Estonia's unemployment rate dropped sharply in August to 5.9 percent, from 7.8 percent in July, ETA reported. The rate reflects a total number of registered unemployed in August was 50,900.

OFFICIALS STRESS IMPORTANCE OF NATO MEMBERSHIP ACTION PLAN FOR 2002.
Foreign Minister Indulis Berzins told reporters on 17 September that the implementation of Latvia's 2002 NATO membership action plan will to a great extent determine whether the country receives an invitation to join the alliance at the Prague summit in November 2002, BNS reported. Defense Minister Girts Valdis Kristovskis said that there are no major differences between next year's plan and those of earlier years since "the tasks remain the same" -- to improve the country's defensive capabilities and increase the interoperability of Latvian armed forces with those of NATO. Defense Ministry State Secretary Janis Sarts noted that while 88 percent of the goals called for in the 2000 plan had been achieved in that year, the goals in the 2001 plan had been exceeded by 123 percent by August.

FORMER PRESIDENT TO JOIN NEW PARTY.
Guntis Ulmanis, who served two terms as president but was forbidden by the Latvian Constitution to run for a third consecutive term, announced on 10 September that he will work with Bank of Latvia President Einars Repse to form a new center-right political party, BNS reported. On 6 September, Ulmanis withdrew from the Latvian Farmers' Union, of which he had been the honorary chairman and the probable No. 1 candidate in the upcoming parliamentary elections in the fall of 2002. Repse, who officially announced his intention to form the new party in August, remains the president of the Central Bank of Latvia and thus is unable to engage in political activity. Ulmanis said that "right-wing parties do not have the will and strength to shape Latvia's politics," but that the new party could be capable of effective leadership.

ECONOMY MINISTER URGES DISMISSAL OF LASCO TRUSTEES.
Aigars Kalvitis said on 12 September in Riga that the trustees of the state-owned Latvian Shipping Company (LASCO) should be fired for failing to carry out their responsibilities concerning a recent agreement to purchase three tankers, BNS reported. Kalvitis complained that the trustees did not inform the Latvian Privatization Agency and the Economy Ministry that the agreement had been signed in early July to purchase the tankers -- each costing around $42 million -- from the Greek company Tsakos, and that a nonrefundable 10 percent down payment had already been made toward the purchase of the tankers. Kalvitis said that he learned about the down payment only in late August from the media. The trustees responded, however, that they do not believe they are to blame, as their trustee agreements do not call on them to inform the Economy Ministry of expected deals.

PRIVATIZATION CHIEF SUPPORTS EXTENSION OF VOUCHERS.
Latvian Privatization Agency (LPA) head Janis Naglis expressed on 14 September his firm support for the government's plan to extend the validity of privatization vouchers, LETA reported. Some 16 percent of vouchers issued to residents in the 1990s have not been redeemed yet. The cabinet resolved to extend the validity of privatization vouchers by one year until 31 December 2002, and the validity of property compensation vouchers by two years until the end of 2003. "In this case the government made a Solomonic decision," Naglis said, while noting that it is not yet clear whether the voucher holders will be able to use them next year in the privatization of five large state-owned entities -- Latvian Shipping Company, the telephone monopoly Lattelekom, Ventspils Nafta oil terminal, natural gas monopoly Latvijas Gaze, and savings bank Latvijas Krajbanka. The government will decide separately on the privatization of each of these companies. The parliament must also approve the extension of the vouchers.

CABINET BEGINS 2002 DRAFT BUDGET DEBATE...
The Finance Ministry on 13 September submitted to the cabinet its draft of a 2002 budget that foresees an overall deficit of 114.4 million lats ($183.9 million) or 1.73 percent of GDP, LETA reported. The ministry expects revenues to be 1.52 billion lats and expenditures, 1.63 billion lats. The government initially planned for a much larger budget deficit (2.76 percent of GDP), but reduced it after consultations with the International Monetary Fund, with which it has signed a memorandum calling for a deficit no higher than 1 percent of GDP. The draft budget for 2002 estimates that GDP will grow by 6 percent real terms and that the rate of inflation will be 3 percent. The major increases in the budget are to fund Latvia's integration into NATO and the EU, and for education and health needs.

...RECOMMENDS REDUCED CORPORATE INCOME TAX.
The cabinet decided on 11 September, as part of its overall 2002 budget draft, to recommend a cut in the corporate income tax over three years from 25 to 15 percent, LETA reported. The Finance Ministry noted that the tax-rate decrease will lower budget revenues for the next several years, but will provide for a more rapid growth of GDP. Having more disposable income, enterprises will be able to increase their investments into capital, boosting the modernization and restructuring of production, it said. The lower tax rate might also help attract new investors to develop existing enterprises, or to establish new enterprises. The proposed tax cut must be approved by the parliament once it takes up consideration of the cabinet's draft budget for 2002.

OSCE COMMISSIONER VISITS LATVIA.
Rolf Ekeus, the OSCE's new high commissioner for national minorities, kicked off his visit to Latvia on 20 September with talks in Jurmala with President Vaira Vike-Freiberga, BNS reported. The president discussed with Ekeus developments that have taken place in Latvia in its 10 years of independence and the republic's policy on minorities. Ekeus declined to comment on the possible closing of the OSCE mission to Latvia at the end of this year, saying OSCE member states will make that decision. Ekeus also met with Prime Minister Andris Berzins, Education and Science Minister Karlis Greiskalns, parliament Chairman Janis Straume and other parliament deputies, and top officials of the Naturalization Board and the State Language Center.

VISIT OF CANADIAN FOREIGN MINISTER.
John Manley's talks with President Vaira Vike-Freiberga in Riga on 7 September focused on Latvia's efforts to join the European Union and NATO, BNS reported. Vike-Freiberga thanked Manley for Canada's support of Latvia after the renewal of Latvian independence, including around $1.8 million for establishing a Translations and Terminology Center, which produces translations of EU legislation and other documents. The two officials also agreed that economic ties between their countries should be increased. During a separate meeting, Manley was told by Foreign Minister Indulis Berzins that Latvia wishes to have good-neighborly relations with Russia and that Canada should sign an agreement on visa-free travel with Latvia. Manley also met with parliament Chairman Janis Straume and the parliament's Latvian-Canadian cooperation commission.

RATIFICATION OF ETHNIC MINORITIES CONVENTION DISCUSSED.
Latvian Center for Human Rights and Ethnic Studies Director Nils Muiznieks declared in Riga on 18 September that the ratification of the Council of Europe convention on the protection of ethnic minorities would be beneficial to Latvian foreign policy, BNS reported. Latvia signed the convention six years ago, but parliament has yet to ratify it. Muiznieks suggested that Latvia should follow the example of most countries that ratified the convention and not define what constitutes an ethnic minority. Parliament Human Rights and Public Affairs Committee Chairman Antons Seiksts opposed this, asserting that such a definition is needed to prevent speculation with the concept of "Russian-speakers," who should not be regarded as an ethnic group. Even though Latvia and Turkey are the only EU candidate countries not to have ratified the convention, it is unlikely that there will be any great demands for them to do so, as EU member countries France, Spain, and Germany have also not ratified it.

* Prime Minister Andris Berzins and Jean Lemierre, president of the European Bank for Reconstruction and Development (EBRD), discussed Latvia's current economic situation in Riga on 12 September, LETA reported. They paid particular attention to the privatization of the shipping company Latvijas kugnieciba, the restructuring of the power utility Latvenergo, and the possible construction of a large cellulose plant.

* President Vaira Vike-Freiberga began an official visit to Denmark on 20 September as the guest of honor at the annual conference of the Danish industrial confederation, Dansk Industri. The next day Prime Minister Poul Nyrup Rasmussen assured her that Denmark would make every effort to ensure that the Baltic states become members of the European Union and NATO, LETA reported.

* The president of the international cultural-heritage protection organization Europa Nostra, Denmark's Prince Consort Henrik, told President Vaira Vike-Freiberga in Riga on 7 September that he was impressed by the changes that had occurred in the country since his previous visit nine years ago, BNS reported. Earlier that day Henrik opened the conference "Wooden Architecture in Cities," organized by Europa Nostra and attended by some 300 delegates from European countries.

* Parliament Chairman Janis Straume and UNESCO General Conference President Jaroslava Moserova met on 20 September in Riga and discussed possible cooperation, BNS reported. Straume asked for assistance for the construction of a new National Library building in Riga.

* Opening the 7th session of the EU-Latvian Joint Parliamentary Committee in Riga on 17 September, parliament Chairman Janis Straume said that the parliament still had to pass or amend 45 laws to bring them into harmony with EU requirements, LETA reported.

* Bank of Latvia President Einars Repse declared on 12 September that he would like his deputy, Ilmars Rimsevics, to replace him as bank president, LETA reported. Repse has declared that he will resign in order to form a new center-right political party.

* Bank of Latvia Vice President Ilmars Rimsevics told the international conference "Banking and Finances in the Baltics 2001" in Riga on 19 September that Latvia could become the financial center of the Baltic region, LETA reported. World Bank Regional Director for Poland and the Baltic States Michael Carter said that the Baltic states have great economic-development potential, but must pay more attention to drawing up macroeconomic policy, applying firm fiscal policy, creating a strong public service sector, and combating corruption.

* Education and Science Ministry press secretary Liva Biseniece announced on 9 September that the number of students in Latvia's universities had more than doubled in the last 10 years, rising from 46,000 in 1990/91 to 110,000 this year, LETA reported. About 8,000 of those students are foreigners.

* A special congress of Farmers' Union of Latvia on 7 September voted 68 to eight, with eight abstentions, to change the party's name to the Center Party/ Farmers' Union of Latvia, BNS reported. The congress also decided that the party's chairman and his deputies would be elected every second year.

* The Intra-European Organization of Tax Administration (IOTA) at its annual general assembly in Prague on 18 September elected Latvian State Revenue Service Director General Andrejs Sonciks as IOTA president for a one-year term, BNS reported. The next assembly in 2002 will take place in Riga.

* Finance Minister Gundars Berzins approved the State Revenue Service's decision of 14 September to name Kalvis Vitolins as the new head of the Customs Administration, LETA reported on 17 September. He replaces Aivars Krastins, who resigned on 19 August after Berzins criticized his performance.

* The Finance and Capital Market Commission decided on 14 September to issue a license for the Regional Investment Bank, making it the country's 23rd commercial bank, BNS reported. The bank, whose registered capital is 3.3 million lats ($5.3 million), is expected to begin operations in about nine months and will mainly provide investment-bank services.

* The state-owned joint-stock railroad company Latvijas dzelzcels (LDz) carried a total of 26,791,000 tons of freight during the first eight months of 2001, or 10.1 percent more than during the same period in 2000.

* The parliament on 20 September did not approve amendments to the law on resident income tax, proposed by the Latvian Social Democratic Workers Party, which would have implemented a progressive tax system, LETA reported.

* The consumer price index (CPI) in August decreased by 0.7 percent compared to July but was 3.0 percent higher than in August 2000, BNS reported on 10 September.

PRESIDENT'S VISIT TO WASHINGTON CUT SHORT BY TERRORIST ATTACK.
Valdas Adamkus began a planned week-long visit to Washington, D.C., with a working breakfast on 10 September with U.S. NATO committee members, BNS reported. In a speech at the Center for Strategic and International Studies he argued that the Baltic states should be admitted in the next round of enlargement in 2002. That evening, Adamkus attended a reception in the U.S. Congress organized by the Joint Baltic American Committee to celebrate a decade of restored diplomatic relations between Washington and Vilnius. The expected high point of his trip, a scheduled meeting on 11 September with Vice President Richard Cheney during which President George W. Bush was expected to drop by, was canceled after the terrorist attacks at the Pentagon and in New York City. Since all civilian airline flights were canceled, a U.S. Air Force plane the next evening flew Adamkus and Latvian Foreign Minister Indulis Berzins to Reykjavik, Iceland, from where a special charter flight of Lithuanian Airlines returned them to Vilnius.

PRIME MINISTER MAKES WORKING VISIT TO RUSSIA.
Algirdas Brazauskas flew on 20 September to Moscow, where he was met at the airport by Russian First Deputy Foreign Minister Aleksandr Avdeev, BNS reported. He then traveled to Mytishchi in Moscow Oblast, where he opened the exhibition "Lithuanian Export" in which more than 60 light-industry, furniture, food, electronics, and transport companies are participating. Moscow Oblast Governor Boris Gromov praised the quality of the Lithuanian goods and expressed an interest in increasing trade with Lithuania. Russian Energy Minister Igor Yusufov discussed with Brazauskas the possible import of electricity from Lithuania and the participation of Russian companies in the privatization of Lietuvos Dujos (Lithuanian Gas). In later talks with his Russian counterpart Mikhail Kasyanov, Brazauskas urged Russia to make more use of the Lithuanian port of Klaipeda, which can handle about 30 million tons of cargo per year, but is currently utilizing only half of its capacity.

TALKS CONTINUE ON LIETUVOS DUJOS PRIVATIZATION.
Russian Transport Minister Sergei Frank and Gazprom Chairman Aleksei Miller visited Vilnius on 17 September to discuss the privatization of Lietuvos Dujos (Lithuanian Gas), ELTA reported. President Valdas Adamkus told Miller that he backs a plan to sell 34 percent of the company to a strategic Western investor and 25 percent to a gas supplier, while leaving 17 percent in the hands of the government. Miller informed Prime Minister Algirdas Brazauskas that Gazprom is interested in participating in the privatization and believes that the winning gas supplier should be given at least parity with the Western investor. In Miller's opinion, the best plan would be for Gazprom and its Lithuanian partners to be sold 50 percent of the company. Miller denied that Gazprom is planning to raise the price of gas to Lithuania by 50 percent next year if this condition is not met.

RUSSIA'S PREMIER PUSHES FOR GAZPROM ROLE IN LIETUVOS DUJOS.
Russian Prime Minister Mikhail Kasyanov on 20 September discussed with his visiting Lithuanian counterpart Algirdas Brazauskas Gazprom's plan to purchase a 25 percent share of the Lithuanian gas utility Lietuvos Dujos and another 25 percent through its Lithuanian subsidiary, Lithuania-Itera, RIA-Novosti reported. Vilnius is reluctant to agree to this formula, but Kasyanov apparently believes that he will succeed in securing Brazauskas's approval for the deal. At the same time, Kasyanov sought to promote the extension of a transit corridor from Kaliningrad to the Lithuanian border at Klaipeda, which Russian and Asian firms would like to use.

EU WANTS IGNALINA NUCLEAR PLANT CLOSED BY 2009.
During a two-day visit to Lithuania on 17-18 September, EU commissioner for enlargement Guenter Verheugen praised Lithuania's progress in membership negotiations but also said that the second reactor of the nuclear power plant in Ignalina must be phased out by 2009, BNS reported. During discussions with President Adamkus the first day and with Prime Minister Algirdas Brazauskas the second, he affirmed that Lithuania has made more progress than expected and is a strong candidate to enter the EU during the first enlargement wave expected in 2004. Verheugen told parliament Chairman Arturas Paulauskas and the parliament's European Affairs and Foreign Affairs committees that no exceptions will be made regarding the closure of the Ignalina plant "because an accident in such a power plant would affect not only the residents of the country but also those of all Europe." Lithuania earlier agreed to close the plant's first reactor by 2005, and must make a similar decision on whether to close the second reactor by 2009, as Verheugen has requested. Verheugen said Lithuania would be granted considerable financial support from the EU budget to solve social and economic problems resulting from the plant's closure once it becomes a member of the union.

LITHUANIA WILL NOT SEEK TRANSITION PERIOD FOR DIESEL-FUEL EXCISE HIKES.
Chief EU negotiator Petras Austrevicius announced on 7 September that Lithuania has changed its position in its European Union membership talks and is no longer seeking a transition period to raise the excise tax on diesel fuel to EU levels, BNS reported. Diesel prices in Lithuania are now lower than in other EU candidate countries. The excise tax, currently 560 litas ($140) per ton, will be raised to 720 litas per ton early next year, and to the EU required level of 1,003 litas per ton in 2004. The government decided, however, to compensate for the tax increase to the most affected groups, namely farmers and fishermen. Lithuania will retain its position of seeking a transition period until 2009 for raising the excise tax on tobacco to the EU's required levels.

EBRD PRESIDENT REAFFIRMS COMMITMENT FOR FURTHER INVESTMENTS.
European Bank for Reconstruction and Development (EBRD) President Jean Lemierre declared during the opening of a new bank office in Vilnius on September 10 that his bank expects to invest up to 100 million euros ($90 million) in Lithuania in 2001, ELTA reported. The EBRD plans to be involved in the granting of a $54 million loan for upgrading Lithuanian railroads. Finance Minister Dalia Grybauskaite noted that the EBRD may also become the biggest investor in the modernization of Mazeikiai Nafta (Oil). In talks with Vilnius Mayor Arturas Zuokas, Lemierre said that the capital will not need government guarantees in order to obtain EBRD loans for major projects. The next day Lemierre discussed with Prime Minister Algirdas Brazauskas a feasibility study on constructing a power bridge between Lithuania and Poland, the privatization of Lithuanian Gas, and funding for the shutdown of the Ignalina nuclear power plant. On his way to Riga, Lemierre stopped in Siauliai, where he signed an agreement with Siauliu Bankas (Siauliai Bank) for a 2 million euro loan meant for local farmers, traders, and food processors.

GOVERNMENT FAVORS RAISING TAX-EXEMPT MINIMUM INCOME.
The cabinet decided on 12 September to propose to the parliament that the basic tax-exempt minimum income be raised from 214 litas to 250 litas ($62.50) beginning on 1 January 2002, BNS reported. The last time the minimum was raised was in February 1998. The government also proposed that tax-exempt minimum income for first-degree disabled persons be raised from 368 to 430 litas, for second-degree from 324 to 379 litas, and for families with three or more children under the age of 18 from 368 to 430 litas. The Finance Ministry estimates that if parliament approves the amendments in 2002, local government budget revenues would decrease by 136 million litas, while health insurance revenues would drop by some 58 million litas.

GOVERNMENT WON'T DISCUSS UNIVERSITY TUITION BEFORE BUDGET APPROVAL.
After talks with university rectors and students that were also attended by Education Minister Algirdas Monkevicius and Finance Minister Dalia Grybauskaite, Prime Minister Algirdas Brazauskas asserted on 14 September that the government will not debate a controversial university tuition plan before the parliament approves the 2002 budget, ELTA reported. The plan would require most university students to pay tuition fees of 1,000 litas ($250) per year. Brazauskas noted that everyone agreed on the need to increase the quality and effectiveness of higher education and to raise the salaries of professors to at least the level in neighboring Baltic states. Meeting participants also discussed other possible sources of university funding aside from the introduction of tuition fees.

AGRICULTURE MINISTER RESIGNS.
Agriculture Minister Kestutis Kristinaitis submitted a letter of resignation to Prime Minister Algirdas Brazauskas on 19 September, ELTA reported. His decision is not surprising, since farmers organizations had been calling for his ouster, the Peasant and New Democracy faction in the parliament had begun collecting signatures for a no-confidence motion against him, and some members of the Social Democratic Party had expressed dissatisfaction with his work. Kristinaitis had been nominated to the post by the New Union (Social Liberals), whose leader, parliament Chairman Arturas Paulauskas, declared that he did not see any serious reason why the minister should resign. Paulauskas admitted, however, that Kristinaitis' manner had offended many farmers. The New Union recommended Kristinaitis be replaced by the parliament's Rural Affairs Committee chairman, Jeronimas Kraujelis.

PROSECUTORS LAMENT DEATH OF ALLEGED WAR CRIMINAL.
The Prosecutor-General's Office issued a statement on 13 September expressing regret that suspected Nazi war criminal Antanas Gecevicius (Gecas) died the previous day in an Edinburgh hospital before his case could be tried, ELTA reported. Lithuania requested the extradition of Gecas in March (see "RFE/RL Newsline," 27 March 2001) accusing him of participation in the genocide of Jews and other minorities in Lithuania and Belarus during World War II when he commanded a squad in the German-sponsored Lithuanian Auxiliary Police Battalion. The office reiterated its resolve to intensify work in all other cases dealing with the prosecution of persons implicated in crimes against humanity and bringing them to justice.

* Chief EU negotiator Petras Austrevicius told Lithuania-based EU ambassadors in Vilnius on 12 September that he hopes to conclude the chapters on free movement of persons, customs union, and competition before the end of the year. ELTA reported. He also noted that the government had presented to the parliament more than 40 changes in laws that were necessary to comply with EU requirements.

* In opening the fall session of the parliament on 10 September, Chairman Arturas Paulauskas declared that deputies will spend most of their time dealing with legislation related to integration into the European Union and NATO, ELTA reported. He mentioned that 43 bills related to EU integration are already listed on the agenda.

* The NATO Political Military Steering Committee in Brussels on 18 September released a very favorable assessment of the reforms in Lithuania's armed forces and military management, rating their progress "as huge and evident," ELTA reported. Deputy Defense Minister Povilas Malakauskas accepted the evaluation, which recommended that Lithuania further streamline its reserve-formation system, prepare to accept forces from partner countries, and increase supplies to peacekeeping units.

* The former Commander of NATO northern headquarters, General Joachim Spiering, advised Defense Minister Linas Linkevicius in Vilnius to maintain the pace of reforms and other measures preparing for NATO membership, BNS reported on 11 September. He praised the recent international exercises Amber Hope 2001 held in Lithuania. Spiering also held talks with armed forces commander Major General Jonas Kronkaitis and visited the regional airspace-surveillance center in Karmelava and the Jonas Zemaitis Military Academy.

* The head of the European Commission (EC) Enlargement Directorate General, Eneco Landaburu Illaramendi, led a delegation of EC officials on a two-day visit to Lithuania on 18-19 September, BNS reported. During the delegation's visit to the Medininkai-Kamenyi Log border checkpoint, he praised the progress of the Lithuanian border service, but warned that much still had to be done before its work would comply fully with EU norms.

* After the intervention by Russia's human rights commissioner, Oleg Mironov, in Klaipeda on 7 September, the owners of the ship "Nadir," whose Russian crew had spent almost three years stranded in the port, finally received 90 percent of their wages on 11 September, BNS reported. The crew had barricaded themselves on the ship in late August in a protest designed to bring greater attention to their plight.

* Extraordinary general meetings of the Lietuvos Taupomasis Bankas (Lithuanian Savings Bank) and Hansabankas on 13 September approved the merger of the two banks and its new name, Hansa-LTB, BNS reported. The authorized capital of the merged bank will be raised from 53 million litas ($13.25 million) to 370.33 million litas.

* The utility Lietuvos Energija (Lithuanian Energy) resumed the export of electricity to Kaliningrad on 15 September after a break of more than 10 years, BNS reported. Under an agreement with the Russian company Inter RAO UES, Lithuania will export some 102 million kilowatt-hours of electricity to Kaliningrad in September.

* The Statistics Office announced on 10 September that the consumer price index in August increased by 0.6 percent compared to July and by 2.4 percent compared to August 2000, BNS reported.