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Baltic Report: April 17, 2000

17 April 2000, Volume 1, Number 13
Baltic Sea Premiers Meet In Denmark
Prime ministers from the Council of Baltic Sea States (CBSS) met in Kolding, Denmark on 12-13 April to boost regional cooperation. Joining the group was European Commission President Romano Prodi, who promised rapid movement in EU enlargement: "We have to do it very well, in a very accurate way, and our way is to do it as soon as we can," BNS reported. The CBSS includes Denmark, Estonia, Finland, Germany, Iceland, Latvia, Lithuania, Norway, Poland, Russia, and Sweden. Ambassador to Denmark Aivars Baumanis represented Latvia, due to the resignation this week of Prime Minister Andris Skele. (see below).
* Latvian Foreign Minister Indulis Berzins traveled to Estonia to meet his counterpart Toomas Hendrik Ilves to discuss various bilateral issues, including the joint purchase of military arms, ETA reported.
* Defense ministers from Estonia, Latvia, and Lithuania met with their Danish, German, and Polish counterparts in Copenhagen on 13 April for a regular meeting. The ministers from the three NATO countries reaffirmed their support for the Baltics' NATO integration, BNS reported.
* Latvian Environment Minister Vents Balodis hosted his Lithuanian counterpart Danius Lygis in Ventspils on 12 April to discuss cooperation in environmental protection, especially issues of pollution in the Baltic Sea.

No-confidence Motion Against Finance Minister Fails
An opposition-sponsored no-confidence motion against Finance Minister Siim Kallas failed on 10 April by a vote of 36 to 45. The opposition, in presenting their motion on 5 April, criticized Kallas for holding a ministerial portfolio while facing a criminal charge. The indictment against Kallas for providing false information as governor of the central bank is currently on hold in a Tallinn court. The opposition tried in November to oust Kallas, but failed then as well (see "RFE/RL Newsline," 29 November 1999). The opposition also ended its boycott against Kallas in the parliament.
* Prime Minister Mart Laar made a three-day visit to France on 9-11 April. Laar discussed Estonia's integration into the EU and NATO with his counterpart Lionel Jospin, who expressed support for both, ETA reported. During a speech at the French Institute for International Affairs, the prime minister stated that his government plans to have Estonia ready for EU membership by 2003.
* President Lennart Meri on 13 April confirmed the election of statistics professor Vello Vensel as the new governor of the Bank of Estonia. Vensel was the upset winner in a 30 March vote by the bank's board.
* President Lennart Meri on 6 April received an honorary doctorate from St. Olaf's College in Northfield, Minnesota. The college plans to create a scholarship in the name of the president for students from Estonia. Meri also met with heads of Minnesota-based NRG Energy, which is seeking to invest in Estonia's main power plants.
* The parliament on 12 April unanimously approved a 13 million euro ($13.5 million) loan from the Nordic Investment Bank for the construction of a new 500-inmate, EU-standard prison in Tartu.
* The government on 11 April decided to create the Estonian Foreign Policy Institute Foundation, to serve as the analytical center for foreign policy issues.
* Estonia's Statistical Department reported a 0.7 percent rise in consumer prices on 7 April.
* Estonia's official unemployment rate jumped to 5.7 percent in March. The highest regional jobless rate was again in the northeastern Ida-Virumaa region at 10.4 percent.
* The parliament on 11 April passed amendments to the immigration law that would exempt the immediate family of Estonian citizens from the immigration quota.
* The Statistics Department on 10 April announced that in 1999 a total of 34.4 million tons of cargo were handled at Estonian ports, up 26 percent from 1998. Transit from Russia formed 69 percent of total cargo, up 29 percent.

Prime Minister Resigns, Parties Jockeying For Position
Prime Minister Andris Skele resigned on the morning of 12 April after the ruling coalition fell apart the previous evening. Both junior coalitions partners--For Fatherland and Freedom (TB) and Latvia's Way--withdrew support for Skele as prime minister, AP reported. The collapse comes as Skele earlier in the day rejected the re-nomination of Vladimirs Makarovs as economics minister by TB. Later in the day the cabinet, without support from TB, voted to retain Janis Naglis as head of the Latvian Privatization Agency until its dissolution in January 2001 (see End Note).

Russian Citizenship Awarded To Convicted Latvian War Criminal
Russian President-elect Vladimir Putin on 12 April granted citizenship to Vasilii Kononov, a former Soviet partisan convicted of war crimes in Latvia, AP reported. However, Kononov told an appellate court as proceedings began on 13 April that he has no documents confirming any Russian citizenship, BNS reported. Kononov said that he has not renounced his Latvian citizenship. Kononov also told the court that his conviction should be reviewed by an international commission of experts, as "It is almost impossible to understand war situations looking from the vantage point of peaceful times," Reuters reported. About 30 people protested outside the courtroom and tried to enter the courtroom during the proceedings, LETA added.

Latvia Plans To Lift Controversial Pork Tariffs
Agriculture Minister Aigars Kalvitis on 6 April proposed canceling the controversial import tariff on pork, replacing it with subsidies. Kalvitis justified the proposal, suggesting that the European Union could retaliate against the tariff by imposing restrictions for Latvian dairy exports, LETA reported. Foreign Minister Indulis Berzins, while on a visit to Tallinn, held out the possibility that the tariffs could be lifted by 1 July. The government on 11 April approved the move. In a related story, on 10 April President Vaira Vike-Freiberga lambasted Kalvitis on radio for suggesting Latvian agriculture would hinder the country's entry into the EU. Vike-Freiberga called it "shocking" and "openly contradictory to everything stated by the Latvian government so far," BNS reported.
* The ad hoc parliamentary commission investigating government involvement in the so-called pedophilia scandal issued its report on 13 April. The report supported earlier claims by its chairman, Janis Adamsons, that well-known public figures were involved (see "RFE/RL Newsline," 18 February 2000), BNS reported. All the officials named have denied the charges. Four commission members charged that the final report was biased, saying their objections were not noted in the final report, LETA added. Prosecutor Modris Adlers said that it has no evidence to support the commission's allegations against the named individuals.
* A memorial plaque was unveiled in Liepaja on 8 April for U.S. Navy airmen who lost their lives 50 years earlier when Soviet forces shot down their airplane over the Baltic Sea near the port city.
* Latvia's affiliate of Transparency International released a poll on 12 April indicating that 75.9 percent of Latvians believe it is impossible to become wealthy by honest means. The poll also shows that 78.2 percent of respondents feel bribes are necessary in the present bureaucratic system, and 72.1 percent feel corruption is unfair but inevitable.
* A parliamentary committee on 11 April rejected a proposal to strip deputy Janis Adamsons of his mandate. A court had earlier found that Adamsons was linked to the KGB during the Soviet occupation. On 13 April the full parliament voted not to debate a draft resolution seeking to revoke Adamson's mandate. Under Latvia's election law, KGB operatives are not allowed to serve as parliamentary deputies.
* Latvia's unemployment rate in March was 9 percent, down 0.1 percent from the past several months. The Statistics Office reported that highest regional jobless rates were from Rezekne (27.5 percent) and Balvi (22.7 percent), while Riga had the lowest at 4.6 percent.
* Latvia registered a 0.2 percent fall in consumer prices in March, according to the Statistics Office.

Sharp Economic Decline In 1999
The Statistical Department on 7 April announced that in 1999 Lithuania's GDP dropped by 4.1 percent. Per capita GDP in 1999 was 7,374 litas ($1,843) as the total GDP sat at 42.59 billion litas at year's end. This ends two years of economic growth (7.4 percent in 1997 and 5.2 percent in 1998), ELTA reported.

The Statistical Department also reported that Lithuania's trade deficit in 1999 declined to 7.3 billion litas ($1.825 billion), down 12.2 percent from 1998, reflecting a massive drop in overall trade. Total exports were 12 billion litas, down 19 percent, while imports fell 16.6 percent to 19.3 billion litas, ELTA reported. Trade with the CIS dropped most drastically, as exports fell by 58.7 percent and imports by 17.8 percent. Immediately after the reports were released, the central bank announced that the current account deficit in 1999 stood at 4.776 billion litas, or 11.2 percent of GDP, down from 12.1 percent in 1998.

Vytautas Sustauskas, leader of the radical Freedom Union, was elected mayor of Lithuania's second city, Kaunas, on 13 April. Sustauskas garnered 23 votes in the 41-seat council, while 17 voted against him. Sustauskas is best known for organizing public campaigns and rowdy street protests, in one case forcing Austria's ambassador to cancel a charity event (see "RFE/RL Newsline," 24 January 2000). Jewish groups also protested the election, because Sustauskas has said that businesses "are in the hands of the Jewish mafia," APF reported.

As of 13 April, all 60 local councils had elected mayors. In total, the Democratic Labor Party, the Peasants' Party, and the New Alliance (Social Liberals) each won 11 mayoral seats, followed by 8 for the Center Union and 6 for the Liberal Union.
* Ramunas Karbauskis, the leader of the Peasants Party, threatened to organize mass protests if protesting sugar beet farmers are fined for earlier protests. Officials said that damages caused to highways during the protest totaled 150,000 litas ($37,500), not counting losses to Lithuanian and foreign carriers blocked by the protest, BNS reported. Karbauskis also voiced objections to Lithuania's current EU integration program, saying, "we are against joining the [European] Union under present terms."
* Lithuania's equal opportunity ombudsman began an investigation into alleged gender discrimination in cancer care after a group of about 400 individuals signed a letter, ELTA reported on 7 April. The letter charges that the cost for the primary breast cancer drug is fully covered under the national health service, while its prostate cancer counterpart requires a 20 percent payment by the patient. The equal opportunity ombudsman, Ausrine Burneikiene, asked Health Minister Raimundas Alekna to investigate the charges.
* A poll released on 11 April by Baltijos Tyrimai/Gallup showed that former President Algirdas Brazauskas was the most popular politician in Lithuania at 71 percent, followed by President Valdas Adamkus (70 percent), and Vilnius Mayor Rolandas Paksas (68 percent). Vytautas Sustauskas, head of the radical Freedom Union, placed seventh at 47 percent, up by five points.
* Lithuania registered a 0.2 percent fall in consumer prices in March, according to the Statistics Department.

Skele Loses Job In Privatization Struggle

By Martins Zvaners

Weeks of tension within Latvia's three-party governing coalition finally boiled over this past week, forcing Prime Minister Andris Skele to resign on 12 April. Some of the tension reflects longstanding personality clashes between Skele, a young, highly successful businessman, and other politicians Skele had clashed with during two previous terms as prime minister. And some of it has grown from controversial decisions adopted early during the Skele government's 9-month tenure, when a disputed Latvian-language law was modified to pass European muster and reform of the state's pension system was forced through a reluctant parliament.

The primary reason for Skele's resignation and the collapse of his government, however, was the battle for control of the Latvian Privatization Agency (LPA) and thus the right to determine the sale of large-scale, state-owned companies such as natural gas monopoly Latvijas Gaze, electricity monopoly Latvenergo, and ocean freight company Latvian Shipping Company (LASCO), as well as the sale of the state's remaining shares in companies such as oil transshipment firm Ventspils Nafta.

The privatization of Latvia's state-owned business empire has been controversial throughout the past decade of renewed freedom. In spite of confident statements by LPA head Janis Naglis in late 1998 that "privatization has almost been completed," government and parliamentary approval for privatization of several major enterprises has been hard to achieve. Just last month, a third attempt to privatize LASCO fell apart when the only bid received for a majority stake was found to be incomplete. Arguments continue involving the sale of state shares in Latvijas Gaze and Ventspils Nafta, and the parliament rejected an attempt by opposition deputies to force a national referendum on government plans to restructure and privatize Latvenergo.

Naglis has long had both powerful friends, like Skele, and equally influential enemies who have tried to bring about his removal from office. Among the most prominent has been the powerful mayor of the oil transshipment port of Ventspils, Aivars Lembergs, who has large interests in state-controlled Ventspils Nafta. Lembergs provided campaign funds to several political parties during last year's parliamentary election to influence the privatization process and derail Naglis' efforts to complete privatization by 2001. Skele's People's Party was not one of them.

On 6 April, Skele fired Economics Minister Vladimirs Makarovs of the conservative "For Fatherland and Freedom/LNNK" party, ostensibly because Makarovs had stripped privatization chief Naglis of his authority to approve privatization proposals. Makarovs had long been "a thorn in the government's side," according to Skele spokesman Jurgis Liepnieks because of his independent style, but his dismissal came as a surprise to many in Latvia. For Fatherland and Freedom refused to accept Skele's rebuke and pledged its determination to force a government crisis by renominating Makarovs to the economics post. Following a morning meeting with coalition partner Latvia's Way on 12 April, and facing an opposition-sponsored, no-confidence motion the next day in the parliament against himself and two other People's Party colleagues, Skele resigned.

Reactions to Skele's departure suggest that there will not be any changes in Latvia's economic and fiscal course or in the country's foreign policy priorities of NATO and EU membership. This confidence manifested itself in the Finance Ministry's successful sale on 12 April of more than $66 million in 5-year treasury bonds at a lower-than-expected rate of 8.82 percent. In addition, the price of the national currency, the lats, remained strong on 13 April in spite of the government turmoil. Vereinsbank Riga currency trader Andris Greivulis told Reuters that the lats would remain strong "because I don't think the new prime minister will be worse than the last." Nor will Skele's resignation affect Latvia's hopes for EU integration, according to EU expansion commissioner Guenter Verheugen.

Consequently, despite this change at the top, Latvia's next government is likely to resemble the one that just fell. Negotiations to patch together a new governing coalition have begun between Skele's Peoples Party and Latvia's Way, the two largest parties in the 101-seat parliament with 24 and 21 seats, respectively. Latvia's Way wants to include the centrist New Party in the coalition (8 seats), and both the People's Party and Latvia's Way remain willing to talk to For Fatherland and Freedom/LNNK (16 seats), in spite of the party's role in bringing down Skele's government. One thing is certain--For Fatherland and Freedom will not enjoy the same level of influence in the next government that it had in the last one.

On 16 April, Latvia's Way representatives agreed to back popular Riga Mayor Andris Berzins as its candidate to be Latvia's next prime minister. According to LETA, all potential coalition parties have reacted positively to Berzins' candidacy. Both Latvia's Way and the People's Party have stated that they would like to assemble a new coalition and pull together Latvia's next government no later than 4 May--the 10-year anniversary of the country's declaration of renewed independence. President Vaira Vike-Freiberga is willing to designate a prime minister by that date, bringing an end to this government crisis--but not to the continuing battle over privatization.