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Baltic Report: November 19, 2001


19 November 2001, Volume 2, Number 27
REGIONAL
BILL SUPPORTING NATO ENLARGEMENT SUBMITTED TO U.S. HOUSE AND SENATE.
Senator Jesse Helms (R-SC) and 18 other senators introduced on 24 October the draft Freedom Consolidation Act of 2001, which calls on NATO members to extend invitations to aspiring countries at the summit in Prague in November 2002. House of Representatives Speaker Dennis Hastert, International Relations Committee Chairman Henry Hyde, and 11 other representatives also submitted the bill the same day. Lithuanian Ambassador to the U.S. Vygaudas Usackas welcomed the bipartisan bill which specifically supports President George W. Bush's commitment made public in Warsaw on 15 June of NATO enlargement "from the Baltic to the Black Sea," BNS reported on 26 October.

NORDIC-BALTIC COUNCIL DISCUSSES ANTITERRORIST CAMPAIGN.
The prime ministers of the three Baltic and five Scandinavian states met in Copenhagen on 28 October to discuss ways their countries could contribute to the global antiterrorism campaign, BNS reported the next day. They also talked about ongoing cooperation in fighting organized crime, the control of infectious diseases such as AIDS and TB, and the need to fight against possible bio-terrorism. The premiers also presented their views on the enlargement of the European Union and NATO, and regional cooperation. The Council accepted Latvian Premier Andris Berzins's invitation to hold its next meeting in 2002 in Riga.
* Pope John Paul II named Archbishop Peter Stephan Zurbriggen the new Apostolic Nuncio to the Baltic states on 25 October, BNS reported. The 58-year-old Swiss-born envoy had served earlier in Bolivia, Germany, Uruguay, France, South Africa, and India, before serving as the Apostolic Nuncio to Georgia, Armenia, and Azerbaijan. Zurbriggen replaced Archbishop Erwin Josef Ender who was transferred to the Czech Republic in August.
* The chairmen of the European affairs committees of the three Baltic parliaments met in Riga on 29 October to discuss EU membership issues, BNS reported. Latvian Edvins Inkens proposed that the three states hold referendums on EU membership one after the other in the fall of 2003, while Lithuanian Vytenis Andriukaitis suggested they be held the same day. It was agreed that the individual parliaments would discuss both proposals.


ESTONIA
DUTCH PM FORESEES ESTONIA IN EU IN 2004.
Dutch Prime Minister Wim Kok told President Arnold Ruutel in Tallinn on 31 October that Estonia is making such good progress in its EU negotiations that it should become a member in 2004, ETA reported. In discussions with Prime Minister Mart Laar, Kok stressed that Holland is ready to open its labor market to workers from Estonia immediately upon its accession into the EU. He also noted that it is likely that NATO will make the final decision about membership for the Baltic states in Prague next fall, and he feels confident that the decision will be favorable. Laar pointed out that Holland has helped Estonia with police training, and in creating border checkpoints, and is the third-largest foreign investor after Finland and Sweden. Kok also asked parliament Chairman Toomas Savi about the progress of the bill that would abolish the language requirement for candidates running for Estonia's parliament and local councils.

OSCE MISSION MAY END THIS YEAR.
In an interview in the daily "Postimees" on 29 October, OSCE mission in Estonia head Doris Hertrampf said that the mission's mandate is extended every two months and may end on 31 December. The aim of the mission, which was established in 1992 and has offices in Tallinn, Kohtla-Jarve, and Narva, is to promote integration and mutual understanding between ethnic communities. She noted that Estonia has harmonized with European norms its laws on citizenship, aliens, and language, as well as legal acts associated with education and language examinations. One remaining issue is the Estonian-language requirement for candidates to parliament and local governments. Hertrampf welcomed the recent discussion in the Estonian parliament, noting that "these language requirements are not in conformity with the UN principles, which define political and civil rights," but stressed that no one is challenging Estonia's right to have a monolingual parliament.

PREMIER DOUBTS IMPROVEMENT IN RELATIONS WITH RUSSIA.
In a live broadcast on Estonian Radio on 26 October, Mart Laar asserted that one should not expect any radical improvement in Estonian-Russian relations even if Moscow's opposition to NATO's eastward enlargement has been less fierce as of late, BNS reported. He said Moscow will do everything to prevent the Baltic states from joining NATO, noting that during a speech in Helsinki, Russian President Vladimir Putin compared Latvia and Estonia to Macedonia just sentences after declaring that Russia had nothing against NATO expansion if that alliance were to become a more political than military organization. Laar also stressed the need for the OSCE to end its mission in Estonia, as this would make it a regular European country.

FOREIGN MINISTER MAKES POLICY REPORT TO PARLIAMENT.
The foreign policy report made by Toomas Hendrik Ilves to the parliament on 25 October focused on relations with NATO and the European Union, BNS reported. It stated that Estonia will accede to the EU's new antiterrorist measures, including the planned joint European arrest and prosecution permit system, as well as hindering the financing of terrorism and imposing more stringent control of exports to prevent the transfer of technology needed to produce arms of mass destruction. Ilves expressed satisfaction that NATO headquarters evaluated Estonia's third national annual program for achieving NATO membership as ambitious but realistic. He also said that the government plans to send relief aid through the Estonian Red Cross to Afghanistan.

GOVERNMENT NOT TO SELL STAKE IN ESTONIAN AIR.
The cabinet decided on 23 October to support the proposal by Transport and Communications Minister Toivo Jurgenson not to sell the 34 percent state-owned share in Estonian Air, ETA reported. The privatization contract inked in 1996, under which 49 percent of the airline was sold to the Danish Maersk Air and 17 percent to the Baltic Cresco Investment Group, prohibited the state from selling more of its shares for five years. The airline lost 56 million kroons ($3.2 million) in 1999 and 9.8 million kroons last year, but expected to be profitable this year. The decision not to sell was influenced by the knowledge that the use of airliners in the terrorist attacks on the United States sharply reduced the potential sale price.

DEBATE OVER GRADUATED INCOME TAX.
Moderates Chairman and Foreign Minister Toomas Hendrik Ilves, in an opinion-editorial published in the daily "Eesti Paevaleht" on 24 October, suggested that the current tax system could be reorganized and replaced by a system based on a graduated income tax. The chairmen of the other parties in the ruling coalition, Prime Minister Mart Laar of the Pro Patria Union and Finance Minister Siim Kallas of the Reform Party, said in response that they support retaining the flat 26 percent income tax rate that has been in effect since 1994. The chairman of the opposition Center Party, Edgar Savisaar, who has been calling for a graduated income tax since the spring of 1998, called on the Moderates to cooperate on passing legislation to introduce a graduated income tax as soon as possible, ETA reported. A meeting of the board and parliament deputies of the Moderates later that day issued a statement declaring the party will continue to observe the coalition agreement until the 2003 elections.

PARLIAMENT POSTPONES DISCUSSIONS ON ABOLISHING LANGUAGE REQUIREMENTS.
The parliament by a vote of 39 to 32 decided on 22 October not to discuss this week the amendments to the laws on parliament and local elections that would abolish the Estonian-language requirements for candidates, ETA reported. The opposition People's Union proposed the postponement, with the Center Party suggesting that Foreign Minister Ilves make a co-report on the amendments proposed by the three partners in the ruling coalition. Moderates Chairman Ilves said he is willing to explain his reasons for amending the election laws. On the other hand, Prime Minister Laar asserted that the amendments cannot be supported in their current form and must modified to ensure that they do not a change the working language of the parliament.

ABB SELECTED TO LAY ESTONIAN-FINNISH POWER CABLE.
The consortium of seven energy companies planning to link the energy power systems of the Baltic states and Scandinavia via an electric power cable between Estonia and Finland, on 30 October selected the international concern ABB to lay the cable, ETA reported. The other bidders for the contract were Pirelli and Siemens. The cable will be nearly 70 kilometers long and have a capacity of 315 megawatts. The project, which is expected to cost about 100 million euros ($90 million), will begin next spring and should be completed by the end of 2003.

EU CONFERENCE ORGANIZED WITH LOCAL FINANCING.
Parliament Chairman Tunne Kelam opened the two-day conference "Estonia and European Union: Estonia on the Path to a Changing Europe" in Tallinn on 1 November, ETA reported. He noted that this was the eighth international conference on the EU to be held in Estonia, and unlike in previous years it was financed by the Estonian parliament and government and not through aid from the EU and Nordic countries. The conference discussed the institutional future of the EU, public participation in EU enlargement, and the future of common foreign and security policies of Europe. German Defense Minister Rudolf Scharping addressed the conference on 2 November.

LICENSE OF TELEVISION STATION TV-1 REVOKED.
The Broadcasting Council revoked the license of the commercial television station TV-1 on 19 October for failure to pay its debt to the Broadcasting Transmission Center, ETA reported. Culture Minister Signe Kivi signed the formal license revocation on 22 October. The center suspended the station's transmissions earlier in the month, but TV-1 resumed transmissions of its programs on cable television on 11 October. Despite repeatedly declaring that the station's owner, Poland's Polsat Media, was sending funds to pay the 1.5 million-kroon ($88,000) debt, TV-1 board Chairman Rait Killandi agreed to begin the liquidation of the station. The Culture Ministry declared that broadcasting via cable television contradicts the terms of TV-1's broadcasting license, and with the revocation of the license broadcasts must be halted.
* NATO Senior Political Committee on 23 October in Brussels approved Estonia's Third Annual National Plan, which was presented by deputy chancellors of the foreign and defense ministries, BNS reported the next day. The NATO leaders noted approvingly that the parliament has endorsed the fundamentals of defense policy and the government the military defense strategy, both of which are in line with NATO's strategic concept and constitute the framework for developing defense and security policy.
* The director of IMF's second European department, John Odling-Smee, expressed approval in Tallinn on 30 October for Estonia's decision not to submit any more economic policy memorandums to the IMF for approval, ETA reported. Estonia had submitted six such memoranda since 1992, the last of which ended in August. Similar to other advanced countries, Estonia will only hold regular consultations with the IMF about economic policies.
* Finance Minister Kallas recommended on 30 October that the government should reduce the draft 2002 budget since revenues are likely to decrease due to the slowdown of the world economy after the September terrorist attack in the U.S., ETA reported. He called for expenditures to be decreased by 500 million kroons ($28.9 million) with equal budget cuts for all state institutions. The Moderates opposed such expenditure reductions as being too great and called for covering possible deficit from internal reserves and borrowing.
* Defense Forces Commander Rear Admiral Tarmo Kouts met with senior commanders of the British armed forces during his working visit to London on 21-24 October, BNS reported. The talks focused on how to increase cooperation between the defense forces as well as the development of Estonia's air-space surveillance system.
* Parliament Chairman Savi held talks in Tallinn on 1 November with President of the Assembly of the Western European Union Klaus Boehler which primarily focused on matters of European security, BNS reported.
* In the 13th round of accession talks in Brussels on 26 October, Estonia's chief negotiator Alar Streimann discussed with Belgian Ambassador to the EU Frans Van Daele the chapter on internal and judicial affairs, BNS reported the next day.
* Justice Minister Mart Rask announced on 30 October that the government decided not to support the constitutional amendments proposed by former President Lennart Meri for the direct election of the president by the people and the creation of a constitutional court whose members would be appointed by the president, ETA reported. Rask said that the parliament should discuss direct presidential elections further and there was no need for a special constitutional court as such matters are settled via ordinary courts.
* The government approved on 23 October the creation of a central exercise ground for the defense forces in the territory of the Kuusalu commune in eastern Harju County, BNS reported. The land had earlier been an exercise ground for the Soviet armed forces and is large enough to allow troop maneuvers as well as artillery and mortar firing practices.
* Ambassador to the United Nations and other international organizations in Geneva Clyde Kull and International Organization for Migration (IOM) Director General Brunson McKinley signed a cooperation agreement on 23 October, BNS reported. The agreement with the IOM, in which Estonia has observer status, should permit it to carry out more migration programs.
* At the end of September the government had a surplus of 1.05 billion kroons ($61 million) or 1.1 percent of expected GDP, ETA reported on 31 October. Compared to the same period last year, income grew by 15.2 percent while expenditures rose by 9.2 percent.


LATVIA
GOVERNMENT SUBMITS DRAFT BUDGET FOR 2002.
The cabinet finally endorsed the draft budget for 2002 and presented it to the parliament on 19 October, BNS reported. It foresees revenues of 1.52 billion lats ($2.43 billion) and expenditures of 1.66 billion lats. The budget was prepared on the assumptions that the state's GDP in 2002 will increase by 6 percent in constant prices, and the rate of inflation will be 3 percent. The expected deficit of 140 million lats would be 2.46 percent of the country's GDP under the budget. Parliament committees will begin discussing the budget this week and the parliament is expected to approve it by 29 November.

IMF WANTS REDUCTION OF NEXT YEAR'S BUDGET DEFICIT.
The IMF mission, which is in Latvia from 24 October through 5 November to assess the implementation of its cooperation memorandum with Latvia, believes that Latvia should reduce its planned 2002 budget deficit to 1.4 percent of GDP. At a meeting with Prime Minister Andris Berzins on 31 October, the IMF officials noted that Latvia had earlier agreed that the deficit would not exceed 1 percent of GDP and the current planned deficit of 2.46 percent of GDP is not acceptable, BNS reported. The IMF opposed Latvia's plan to reduce the rate of corporate income tax by 3 percent next year, and suggested reducing the large amount of planned investments by choosing only those that are the most necessary. Berzins doubted that parliament would agree to reduce expenditures, but pointed out that the deficit could be lowered to a mutually acceptable level if the efficiency of tax collection were boosted by 1 percent.

SPAIN SUPPORTS LATVIA'S MOVE TO EU AND NATO.
Spanish Prime Minister Jose Maria Aznar told Latvian President Vaira Vike-Freiberga on 26 October in Madrid that his country supports Latvia's efforts to join the EU and NATO, LETA reported. He expressed the hope that Latvia can complete its EU membership negotiations during Spain's presidency of the EU in the first half of 2002. Aznar affirmed that Spain supports the "open-door policy" for NATO, noting that the first round of NATO enlargement was launched in Madrid in 1997. Vike-Freiberga spoke at the International Conference on Democratic Transition and Consolidation on 28 October at the invitation of King Juan Carlos, with whom she also met over lunch to discuss ways to promote democracy and repeated her invitation for the king to visit Latvia.

PRESIDENT SUPPORTS MORE PEACEKEEPERS IN FORMER YUGOSLAVIA.
President Vike-Freiberga told a news conference that she supports doubling the number of Latvian soldiers serving as peacekeepers in the territory of the former Yugoslavia, BNS reported on 30 October. According to Vike-Freiberga, such a move would be a firm indication that Latvia is ready to extend assistance and not just wait for protection from NATO. Her statement was prompted by the U.S. call on ambassadors of NATO candidate and member states to help relieve peacekeeping operations in the former Yugoslavia. The president suggested that Latvia could send two companies instead of its single company currently serving in Bosnia.

BORDER AGREEMENT WITH RUSSIA UNLIKELY TO BE SIGNED BEFORE NATO ENLARGEMENT.
After returning from a visit to Moscow, the chairman of the parliament's Defense and Internal Affairs Commission, Dzintars Kudums, and deputy Aleksandrs Kirsteins declared on 25 October that the signing of the Latvian-Russian border agreement will probably not occur prior to the NATO summit in Prague next fall, BNS reported. Kudums said that the relations between the two countries are as cold as the weather, and that the work of the Latvian-Russian intergovernmental committee has been slowed by the recent removal of its Russian co-chairman, Aleksandr Blokhin. Kirsteins noted that although Russian President Vladimir Putin, as a "young generation" politician, has recognized that the border agreement should help the EU and Russia fight crime, he must take into account the opinions of the older generation, which sees the approach of NATO as a threat and takes the position that "the slower it happens the better."

VISIT BY U.S. MILITARY REPRESENTATIVE TO NATO.
Lieutenant General Timothy A. Kinnan began a two-day visit to Latvia on 22 October with meetings with Defense Minister Girts Valdis Kristovskis and the commander of the Latvian National Armed Forces, Colonel Raimonds Graube, LETA reported. Graube provided information to Kinnan regarding Latvia's plans for improving its armed forces, including the document to be presented to NATO headquarters in November that outlines the planned structure of the National Armed Forces until 2008. Kinnan also visited the National Academy of Defense, which has based its military education studies on a new concept this year. The next day he visited the Naval Forces base in Liepaja, the Adazi military training base, and the BALTNET air-surveillance system center at Riga International Airport.

DUTCH PM NAMES LATVIA AMONG MOST REALISTIC NATO CANDIDATES.
Wim Kok began a tour of the Baltic states on 29 October in Riga with talks with his Latvian counterpart Andris Berzins, LETA reported. The premiers discussed the global situation, bilateral relations, and NATO and EU enlargement. Kok told a press conference that the increased cooperation between the United States and Russia following the 11 September terrorist attacks suggests that NATO enlargement will take place without a "heavy exchange of words" between Russia and NATO. He mentioned Latvia as one of the most realistic candidates for NATO membership. Wok also met with President Vike-Freiberga and parliament Chairman Janis Straume before departing for Vilnius in the evening.

POSITION IN EU TALKS ON FREE LABOR MOVEMENT CHANGED.
The government decided on 23 October to change its position in EU membership talks in regard to the free movement of labor, BNS reported. Chief EU negotiator Andris Kesteris said Latvia now seeks the right to protect its domestic labor market by applying to any new EU country the same transition periods that current EU members can impose. Latvia, which along with Hungary and Slovakia had already closed this chapter, decided to change its position in light of the expectation that the Czech Republic will soon gain such a right. It is likely that other candidates, such as Estonia and Lithuania, will also be able to obtain it. Latvia will present its changed position in the next round of talks in Brussels on 25-26 October, at which it also hopes to complete the chapters on customs union and fishing.

PARLIAMENT AMENDS TELECOMMUNICATIONS LAW.
The parliament passed on 1 November a new telecommunications law under which monopoly rights for the fixed-line national phone company Lattelekom expire 1 January 2003, BNS reported. The new law will also allow consumers free access to other public telecom networks, without changing their telephone numbers, from that date instead of the previously set 2005. One of the owners of Lattelekom, Tilts Communications, has already filed suit against Latvia in a Stockholm arbitration court for breaking the agreement granting Lattelekom a 20-year monopoly on fixed-line telephone communications.

PRIVATIZATION CHIEF BARRED FROM SIGNING FINANCIAL PAPERS.
Economy Minister Aigars Kalvitis issued a decree on 24 October suspending the right of Latvian Privatization Agency (LPA) Director-General Janis Naglis to sign financial documents, BNS reported. All payments by the LPA greater than 15,000 lats ($24,000) will have to be approved by Kalvitis. The action was prompted by revelations the previous day during a cabinet meeting about the legal fees LPA has paid in a lawsuit being heard in a Stockholm arbitration court between the Lattelekom telephone company and Tilts Communications. The fees were paid without approval of the minister of economy. Although not revealing how large the payments were, since the information was confidential, People's Party Chairman Andris Skele called them "shockingly large." Naglis responded that the fees could not be small since lawyers' fees are calculated in percentage terms from the amount involved, and the claims and counterclaims in this case are about $1 billion. Citing reliable sources, "Diena" on 25 October reported that the fees paid in the case had reached $11 million. Prime Minister Andris Berzins the next day categorically denied that such a large sum had been spent.

SOCIAL DEMOCRATS RE-ELECT PARTY LEADER.
The 33rd Congress of the Latvian Social Democratic Workers Party's (LSDSP) on 27 October in Riga re-elected Juris Bojars as its chairman, LETA reported. He received 432 votes, the party's faction head in the parliament Egils Baldzens received 204, and parliament deputy Peteris Salkazanovs received 132. In his report to the Congress, Bojars, who has led the party for nine years, declared that all promises have been kept and the last local government elections were the LSDP's greatest achievement since Latvia regained independence. A total of 215 deputies were victorious in the elections, with 12 party members heading these governments and another 12 serving as deputy chairmen. The party has been growing and now boasts some 2,800 members. Valdis Lauskis and Janis Adamsons were elected the party's deputy chairmen after Baldzens refused to be considered as a candidate.

NEW U.S. AMBASSADOR TO LATVIA APPROVED.
The U.S. Senate approved the appointment of career diplomat Brian Carlson as the new ambassador to Latvia on 30 October, LETA reported on 1 November. His previous assignments include London, Madrid, Belgrade, and Oslo. President George W. Bush nominated Carlson on 26 June to replace James Holmes, who ended his three-year term as ambassador on 12 September.
* Prime Minister Berzins told BNS on 23 October that his country would not follow the example of the Estonian government and support the abolition of language-proficiency requirements for candidates to the parliament and local councils. He noted that such a decision could affect the case in the European Court of Human Rights submitted by Ingrida Podkolzina, who claimed language discrimination when she was barred from running for parliament in 1998 due to inadequate knowledge of Latvian.
* Visiting German Defense Minister Rudolf Scharping discussed integration processes, bilateral cooperation, and security with his Latvian counterpart Girts Valdis Kristovskis on 1 November, LETA reported. He also met with Foreign Affairs Minister Indulis Berzins.
* Latvia closed the chapters on "Fisheries" and "Customs Union" in its EU accession negotiations in Brussels on 26 October, LETA reported. It has now completed 18 of the 31 chapters, the same number as Lithuania, Poland, and Malta.
* Interior Minister Mareks Seglins capped a two-day visit to Georgia on 26 October by signing an agreement on cooperation on combating terrorism, drug trafficking, and organized crime, LETA reported. The agreement will provide the legal basis to develop practical cooperation between the two countries and their law-enforcement institutions.
* International Financial Affairs Minister Roberts Zile and World Bank representatives signed a protocol in Warsaw on 20 October that calls for a $20 million loan for structural reforms, BNS reported on 22 October.
* Foreign Minister Berzins and Czech Ambassador to Latvia Ana Bluenose opened the new Czech Embassy building in Riga on 26 October, the Czech Republic's Independence Day, BNS reported.
* Defense and Internal Affairs Commission Chairman Dzintars Kudums declared on 30 October that Latvia lacks the political will to fight against smuggling, BNS reported. He cited the latest figures indicating that out of 96 smuggling cases only 14 had reached the court and only seven convictions were achieved.
* Bank of Latvia President Einars Repse, the future designated leader of the still-to-be-established political party "Jaunts lakes" (New Era) declared on 31 October that he would give up the plans and remain at the bank if sufficient public donations are not collected, BNS reported. He is seeking at least 900,000 lats ($1.4 million) for the party and at least 500,000 lats for his work as party leader. Although polls indicate that the party is the most popular political force in the country, only 14,000 and 60,000 lats have been donated for the party and Repse, respectively.
* Latvian Shipping Co. (LASCO) officials signed a $30 million loan agreement with Latvijas Unibanka and its parent company, Sweden's SEB banking group, on 25 October for purchasing the second tanker from Greece's Tsakos Shipping and Trade S.A, BNS reported. LASCO will take over the tanker, which will be renamed Latgale, in the Japanese port of Chiba on 5 November.
* The credit rating agency Standard and Poor's revised Riga's outlook for long-term loans in foreign currencies from stable to positive, BNS reported on 26 October. It also gave the city a long-term foreign currency rating of BBB and local currency rating of A-3, the same ratings as it gave to Latvia in August.
* The U.S. and Norwegian joint venture TGS Nopec, one of the largest oil exploration companies in the world, was the only company to apply to the Latvian Economy Ministry for an oil exploration license in Latvia's territorial waters in the Baltic Sea by the deadline of 31 October, BNS reported.


LITHUANIA
LITHUANIAN LAB FINDS ANTHRAX IN U.S. EMBASSY MAILBAG.
Kazimiera Rutiene, the director of the Lithuanian Public Health Center's Microbiology Laboratory in Vilnius, announced on 1 November that anthrax bacteria has been found in one of five mailbags the U.S. Embassy sent for testing, BNS reported. The mailbags, which came from the U.S. State Department mail facilities in Washington, were flown to Vilnius on a regular commercial flight and had been picked up at the airport by the U.S. Embassy's postal courier. Medical officials said the incident poses no direct threat to public health in Lithuania since anthrax is not spread by casual personal contact and the small number of people who were in contact with the bags have been prescribed antibiotics and are under medical observation.

SCHROEDER PLEDGES HELP TO ENTER EU IN NEXT ROUND OF EXPANSION.
German Chancellor Gerhard Schroeder told Prime Minister Algirdas Brazauskas on 22 October in Berlin that his country will help Lithuania in its efforts to join the EU in the next round of expansion, BNS reported. He also mentioned that NATO will continue its "open-door policy" by which no country outside the alliance has the right to prevent new members from joining. Schroeder also inquired about Lithuania's plans to close the nuclear power plant at Ignalina. Brazauskas began a three-day official visit to Germany earlier that day with talks with Bundestag Vice President Anke Fuchs, who affirmed that Germany will actively support Lithuania's bids to join the EU and NATO. Brazauskas noted that Germany should pay more attention to Russia's Kaliningrad Oblast, which is bordered by Poland and Lithuania. In Stuttgart the next day Brazauskas invited the Daimler Chrysler company to manufacture car parts in Lithuania and took part in a business forum. On 24 October Baden-Wuerttemberg Premier Erwin Teufel expressed to Brazauskas his firm support for Lithuanian NATO membership.

GERMAN DEFENSE MINISTER VISITS LITHUANIA.
Rudolf Scharping told reporters in Vilnius on 31 October after meeting with President Valdas Adamkus that no non-NATO state will be given the right to veto the acceptance of any new members into the alliance, BNS reported. He said that at least three countries will be invited to join the alliance in the next round of NATO enlargement. Scharping also held talks with parliament Chairman Arturas Paulauskas, Defense Minister Linas Linkevicius, Foreign Minister Antanas Valionis, and Prime Minister Brazauskas. Brazauskas spoke with Scharping about the problems EU membership will bring to Lithuania's relations with Kaliningrad Oblast, whose permanent residents currently are not required to have visas to travel to Lithuania. He said Lithuania plans to enlarge its consulate in Kaliningrad and that he hopes Russia will allow the enclave's economy to develop under conditions of open relations with the EU.

FOUR SMALL RIGHTIST POLITICAL PARTIES MERGE.
Four small right-of-center parties -- the Homeland People's, Democratic, Independence parties, and Lithuanian Freedom League -- formally merged and founded the Lithuanian Rightist Union during a congress in Vilnius on 20 October, "Kauno diena" reported on 22 October. Arunas Zebriunas, a well-known 71-year-old film director and former "Sajudis" democratic movement activist, was elected chairman. The new party will have eight deputy chairmen, two each from the merging parties, and a council made up of 80 members. The congress also approved the statutes and program of the party, which will have about 4,000 members. Representatives of other rightist parties, such as the Conservatives, Christian Democrats, and Union of Lithuanian Political Prisoners and Deportees, addressed the congress and urged greater cooperation in the future among right-of-center parties to counter the successful union of the left-wing Social Democrats and Democratic Labor Party.

COUNCIL OF EUROPE SECRETARY-GENERAL VISITS LITHUANIA.
Walter Schwimmer told a press conference in Vilnius on 29 October that Lithuania is well prepared for taking over the leadership of the Council of Europe's Committee of Ministers, starting on 8 November, BNS reported. The chairmanship rotates among member states every six months. Among the most important issues that the council will deliberate during Lithuania's leadership are whether to accept Bosnia-Herzegovina as a member state; setting conditions for Yugoslavia's entry; and whether to return observer status in the council to Belarus, which was suspended in 1997. The last issue will be deliberated by the Council of Europe Parliamentary Assembly's Political Affairs Committee in Vilnius on 19-20 November.

LITHUANIAN-SPANISH TIES EXPANDED.
Defense Ministers Linas Linkevicius and Frederico Trillo signed a protocol on cooperation in the defense sphere on 25 October in Madrid, BNS reported. Lithuania has made similar agreements with 14 other NATO countries, but not with Portugal, Greece, Luxembourg, or Iceland. President Adamkus, who began an official four-day visit to Spain the previous day by attending a reception marking the 10th anniversary of the restoration of Lithuanian-Spanish diplomatic relations, also attended the signing ceremony. Adamkus held talks with the chairwoman of Spain's Senate, Esperanza Aquirre de Biedma, and in the evening attended a reception hosted by the Madrid region's president, Alberto Ruiz-Gallardon. The main purpose of the president's visit was to participate in the international Conference on Democratic Transition and Consolidation on 26-27 October.

LITHUANIA'S POPULATION DECLINED BY 5 PERCENT SINCE 1989.
Petras Adlys, the deputy director of the Statistics Department, announced on 30 October that the preliminary results of the census conducted in April 2001 indicate that Lithuania has 3,491,000 permanent residents, ELTA reported. This is 5 percent less than the 3,674,802 permanent residents recorded in the January 1989 census. Adlys said the decrease of 184,000 residents is the result of a number of factors, including the end of the Soviet tradition of padding population figures, the departure of some 50,000 Soviet soldiers, and the emigration of some 120,000 to 130,000 people. City populations decreased by 142,000, with the largest decline -- 9 percent -- recorded in Kaunas. The rural population fell by 42,000. The population decline in Lithuania is considerably less than that of Estonia and Latvia, which recorded 12 and 11 percent drops respectively over the same time period.

FIRST BILATERAL TREATIES SIGNED WITH AZERBAIJAN.
Justice Ministers Vytautas Markevicius and Fikrat Mamadov signed treaties on judicial practices in Vilnius on 23 October, BNS reported. These are the first bilateral accords between the two states. The treaty on legal aid provides for the exchange of information and cooperation in civil and family actions as well as in criminal cases. The second treaty will allow persons convicted of crimes in the other country to serve their sentences in their homeland. Currently, there are three Azerbaijani nationals in Lithuania's prisons, but no Lithuanians in Azerbaijan's prisons.

PM INCLINED TO MAKE CONCESSIONS TO LATVIA ON FISHING AREAS.
The daily "Respublika" reported on 24 October that Prime Minister Brazauskas reached an agreement with his Latvian counterpart Andris Berzins in late September to allow Latvians to continue fishing in Lithuanian territorial waters after the sea border treaty, signed in 1999, comes into effect. The Lithuanian parliament ratified the treaty quickly, but Latvia's parliament, pressured by its fishermen, has delayed ratification. Latvian Fisheries Association President Inarijs Voits said that without access to these waters, Latvian fishermen will lose about $3.5 million per year in income. He also noted that the decision to grant the concession is wise and logical since the territorial issue would lose its relevance in a few years when both countries join the European Union as expected. The next day Brazauskas denied that he had promised Latvian fishermen any special rights and that the premiers in Riga had only agreed to transfer the deadlocked talks from the department to the ministry level.

GENTVILAS ELECTED LITHUANIAN LIBERAL UNION CHAIRMAN.
Acting Chairman of the Liberal Union Eugenijus Gentvilas defeated former Prime Minister Rolandas Paksas in the election for party chairman at the extraordinary congress on 27 October in Panevezys by a vote of 374 to 208, "Lietuvos rytas" reported on 29 October. Paksas was elected first deputy chairman, and Vilnius Mayor Arturas Zuokas, parliament Deputy Chairman Gintaras Steponavicius, and Kaunas party leader Klemensas Rimselis as deputy chairmen.
* President Adamkus flew to Paris on 19 October to speak at the UNESCO general conference and stressed that the eradication of terrorism is a goal favorable for the interests of all cultures and civilizations, ELTA reported. UNESCO Director-General Koichiro Matsuura asked Adamkus to send more representatives to work in the organization.
* Deputy Foreign Minister Giedrius Cekuolis presented Lithuania's third NATO accession program to the NATO Senior Political Committee in Brussels on 26 October, BNS reported. The panel praised Lithuania's achievements in regional cooperation, good relations with neighbors, and active participation in peacekeeping operations in the Balkans as well as its ongoing army reforms and the decision to spend 2 percent of GDP for defense.
* The government approved on 31 October the structure of the army in year 2002 specifying manpower limits, ELTA reported. The regular forces will have up to 13,400 servicemen, of whom 5,000 will be drafted, and the active reserve is limited to 25,000 servicemen. The army will have two generals, 19 colonels, 66 lieutenant colonels, and 212 majors.
* President Adamkus on 23 October vetoed amendments to the health institutions law which would have required the permission of local governments to found new private medical institutions, arguing that it "would add up to bureaucracy and corruption, prevent competition among medics, and limit access to quality medical aid," ELTA reported.
* Speaking at a seminar in Kaliningrad on 26 October, Lithuania's EU chief negotiator Petras Austrevicius urged the Russian exclave to demonstrate interest in joint programs and make use of opportunities offered by regional cooperation. ELTA reported. The seminar was part of the Lithuania-Kaliningrad Cooperation Days held on 23-28 October in Kaliningrad.
* Finance Minister Dalia Grybauskaite and Ambassador Michael Graham, the head of the European Commission delegation to Lithuania, signed a financing memorandum for Lithuania's 2001 national PHARE program in Vilnius on 30 October, BNS reported. The EU will contribute 29.9 million euros ($26.9 million) and the Lithuanian government 6.4 million euros for various technical assistance projects.
* The European Bank for Reconstruction and Development signed an agreement on 26 October to extend a 15-year loan of $54 million to the national railway company Lithuanian Railways for a track renewal project, BNS reported.
* Lithuanian Energy doubled its export of electricity abroad from 400 million kilowatt-hours (kWh) in September to 800 million kWh in October, BNS reported on 31 October. Exports to Belarus rose from 150 to 390 million kWh, to Kaliningrad from 103 to 220 million kWh, and to Latvia from 140 to 180 million kWh.
* The parliament on 30 October voted 58 to 20 with 15 abstentions to adopt a new excise tax law, which will raise fuel, tobacco excise taxes from July 2002, BNS reported. The duty per ton of diesel fuel will increase from 560 litas ($140) to 720 litas, of heavy fuel oil from 20 to 45 litas, and of gasoline from 1,210 to 1,250 litas. The tax per 1,000 units of cigarettes will rise from 32 to 36 litas.
* Germany's Konrad Adenauer Fund announced the halting of cooperation with the Lithuanian Christian Democrats because its chairman, Kazys Bobelis, and board chairman, Petras Grazulis, had proposed the re-establishment of the death penalty for war criminals and terrorists, BNS reported on 25 October.
* The State Gambling Supervision Commission issued on 19 October its first gambling license to the Estonian casino operator UAB Olympic Casino Group Baltija, ELTA reported. The company plans to open a slot-machine salon in Vilnius before the end of the year.


EXTRADITION AGREEMENT SIGNED WITH U.S.
Foreign Minister Antanas Valionis and U.S. Ambassador to Lithuania John Tefft signed an agreement on extradition in Vilnius on 23 October, ELTA reported. The agreement provides for the extradition of people for actions defined as criminal by both countries' laws and carrying a sentence of more than one-year imprisonment. It replaces the Lithuanian-U.S. accords signed in 1924 and 1934, and will come into force after ratification by the parliaments. The officials also exchanged the ratification letters for the bilateral agreement on investment promotion and protection that had been signed in 1998.

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