Baltic Report: May 30, 2000

BALTIC ASSEMBLY MEETS IN TARTU.
The 16th session of the interparliamentary Baltic Assembly and 6th session of the intergovernmental Baltic Council met from 25-27 May in the Estonian city of Tartu to discuss defense, economics, and tourism, BNS and ETA reported. Among its decisions, the Assembly adopted an appeal for more international attention to the violations of political liberties and human rights in Belarus by the regime of Alyaksandr Lukashenka.

* The Estonian, Latvian, and Lithuanian stock exchanges launched a joint webpage on 23 May. The address is http://www.baltic-exchanges.com. The webpage provides information about Baltic capital markets, companies on the Baltic list of the three stock exchanges, and provides access to real-time trading information on Baltic stocks, ETA reported.

CENTRAL BANK COUNCIL, MERI AT ODDS OVER NOMINEE.
The Council of the Bank of Estonia and President Lennart Meri have been unable to reach agreement on the appointment of the new governor of the central bank, BNS and ETA reported 25 May. Meri had rejected the council's nominee--ex-Finance Minister and Coalition Party member Mart Opmann--on 19 May because he wants a candidate who is "honest, trustworthy and politically independent." State Auditor Juhan Parts has presented evidence that public sector funds were misused when Opmann was finance minister. The council has rejected the charges and is evaluating the evidence. Opmann will defend himself in a meeting of the council on 29 May. Although Minister of Justice Mart Rask has said the president did not violate the constitution when he refused to confirm Opmann, the council is proceeding with its request to Legal Chancellor Eerik-Juhan Truuvali for a legal opinion over the dispute.

RUSSIAN FACTION IN ESTONIAN PARLIAMENT ACCUSED OF DISLOYALTY.
The leader of the United People's Party (EUPP) faction in the Estonian parliament, Viktor Andreyev, signed a cooperation agreement on 24 May with ex-Russian Prime Minister Yevgeni Primakov, head of the Fatherland/All Russia faction of the Russian State Duma, ETA and BNS reported 25 May. Under the agreement, which expands an earlier interparty document signed in late 1999, the two factions will coordinate activities in international organizations--especially the Council of Europe--in dealing with the well-being of Estonia's Russian-speaking population, Andreyev said. Andreyev added that the factions would also work for adoption of a series of bilateral Estonian-Russian agreements such as the border agreement, trade and economic relations, and an agreement on social insurance. Members of Estonia's parliamentary delegations to the Organization for Security and Cooperation in Europe (OSCE) and the Council of Europe's Parliamentary Assembly (PACE) sharply criticized the cooperation agreement between the two countries' parliamentary factions. Mart Nutt, a member of the Estonian parliament's OSCE delegation, termed the agreement "unprecedented," and accused the EUPP of "showing [a] lack of loyalty to the Estonian state." The leader of Estonia's PACE delegation, Kristiina Ojuland, said her delegation's primary mission was to defend Estonia's interests, and was "unable to comment on this agreement, which sets protection of the population of another country as one of its goals."

ESTONIA BANS IMPORT OF ANIMAL-BASED FOODSTUFFS FROM RUSSIA.
The Estonian Veterinary Inspection Department has banned the importation of all animal-based foodstuffs from Russia, ETA reported 23 May. The import ban starts with cattle and ends with fodder containing animal-based proteins. Import licenses were suspended in April due to an outbreak of hoof and mouth disease in some Russian regions. But now Newcastle disease--which affects poultry--and swine fever have also been discovered, leading to the wider ban on food imports. Import licenses will be restored when Russia is free of those diseases for a 12-month period.

* Estonia opened the most difficult part of its EU membership negotiations on 26 May--the three chapters dealing with the free movement of people and capital, financial and fiscal management, and cooperation in judicial and legal matters, ETA reported. Estonia hopes to wrap up the chapter on free movement of capital quickly since the parliament has adopted a law allowing foreigners to own land once Estonia is admitted into the EU.

* Estonia will double the number of its peacekeepers in Kosovo, Estonian Foreign Minister Toomas Hendrik Ilves told NATO's Euro-Atlantic Partnership Council meeting in Florence on 25 May.

* Estonian Defense Minister Juri Luik told a NATO seminar in Tallinn on 23 May said that one of Estonia's most serious defense problems is the lack of trained staff officers, ETA reported.

* The Estonian government on 23 May released its long-term budget strategy for 2001-2004, promising to lower the tax burden, improve living conditions, and speed up European integration. The plan calls for the tax rate to be lowered to 33 percent in hope of stimulating investment and job creation, while government spending is to be limited to 34 percent of GDP. The government confirms that the kroon will continue to be pegged to the German mark until the country becomes a member of the EU and the European Monetary Union and adopts the euro.

* The U.S. government has earmarked $500,000 for assistance to Estonian law enforcement this year, mostly in the form of training programs and technical support, the U.S. Embassy in Tallinn announced on 24 May. The first of 11 different regional training programs for the coming year concluded in Tallinn on 31 May.

* Estonian security police on 25 May arrested two women and a man suspected of organizing the bombing of Stockmann's department store last week, BNS and ETA reported. On 26 May at 8:38 pm Stockmann's received a new bomb threat from a Russian-speaking man warning that the bomb would explode in 50 minutes and adding, "the conditions remain the same." The building was searched; no bomb was found. Pentti Horhonen, director of the department store, told the daily "Eest Paevaleht" on 23 May that Stockmann's had lost 4 million kroons of business since the first bomb blast on 19 May and that the losses were growing.

* Gallup Media released a survey 24 May predicting that one-third of all Estonian residents will have Internet access by the end of 2000, according to a report by "Aripaev Online" and ETA. There are currently a total of 282,000 Internet users in Estonia, representing 26 percent of all Estonians between the ages of 16-74.

* Malle Eenmaa, former manager of the now-defunct Maapank bank, was convicted by a Tallinn city court on 24 May and sentenced to 18 months in prison. He was accused by prosecutors of misusing deposited funds. The court also ordered Eenmaa to pay 29.5 million kroons ($1.72 million) in damages resulting from the bank's 1998 collapse. Eenmaa denies the charges and plans to appeal.

* The Estonian government on 23 May approved the timetable for a transition to ID cards from internal passports. The first cards should be issued in December 2001.

* For the sixth straight year Estonian seatbelt-maker Norma has won the subcontractor's prize from the U.S.-based General Motors Corporation. The ceremony took place in Munich on 25 May where GM awarded 181 of its best contractors from 22 countries their prizes. The prize is awarded based on the performance of its subcontractors in quality, service, and technology.

EBRD MEETING IN RIGA ISSUES REPORT ON REGION.
The European Bank for Reconstruction and Development (EBRD) issued a report during its annual meeting in Riga which says that the ex-Soviet bloc nations have recovered faster than expected after the Russian financial crisis, but those that have left key reforms so far undone remain vulnerable, AP reported on 20 May. The EBRD report predicts healthy growth rates for the 29 countries of the region but said they could only sustain long-term growth by finishing large-scale privatization, battling corruption, and ensuring transparency in the banking sector. The report noted that growth in the resource-rich former Soviet republics has been largely due to steep price increases in oil and other commodities, masking a lack of fundamental reforms. By contrast, the recoveries of Hungary, Poland, Estonia, Latvia, and Lithuania are based on sound fiscal policies, the report concluded.

EBRD PRAISES LATVIA AND SHOWS INTEREST IN RIGA, VENTSPILS INVESTMENT PROJECTS.
During a meeting with President Vaira Vike-Freiberga, participants in the European Bank for Reconstruction and Development annual meeting in Riga praised the arrangements made by Latvian officials, BNS reported 22 May. The EBRD board of governors expressed its interest in financing two of five projects presented by the Riga city council, LETA reported 23 May. Mayor Andris Argalis told LETA that the project for a new bridge or tunnel across the Dauguva River and a project to build commercial facilities in Mezaparks garnered the most interest from the foreign bankers. LETA also reported discussions were underway in Ventspils with EBRD representatives on investments at the port and also small and medium-sized businesses such as fish processing and light industry.

LEMBERGS MAY SUE PAPER OVER CORRUPTION CHARGES.
Aivars Lembergs, the mayor of Ventspils, said he will sue the Riga daily newspaper "Diena" over corruption allegations made and documented in its recent series of investigative reports, according to LETA on 24 May. In the articles, "Diena" accused Lembergs and another official of involvement in creating and benefiting from offshore holding firms tied to large Ventspils businesses. LETA reports that after reviewing documents turned over by "Diena," the Latvian Prosecutor-General's office decided not to press charges against two officials because the statute of limitations for such prosecutions had run out.

RUSSIA'S ROAD TO WTO PASSES THROUGH LATVIA.
Officials from Latvia and Russia met in Geneva on 24 May for the first bilateral meeting of delegations on the admission of Russia to the World Trade Organization, LETA and BNS reported. Latvia, which is already a WTO member, wants Russia to end various discriminatory policies and customs duties against Latvian industry, particularly transport and banking. This first meeting concentrated on decisions by the Russian Central Bank and accessibility of the Russian market for the Latvian service sector.

* President Vaira Vike-Freiberga said in Paris on 24 May that Latvia wants to complete European Union accession negotiations by 2003, so that the country can join the EU in 2005, according to dpa and LETA. Vike-Freiberga also met with French President Jacques Chirac, who affirmed his country's support for Baltic EU membership, and pledged to help Latvia recover its prewar embassy building in Paris which is currently occupied by Russian diplomatic staff.

* Portugal, currently the presiding country of the European Union, at a meeting of the OSCE permanent council in Vienna on 25 May, rejected Russia's criticism of alleged human rights violations in Latvia and of the arrest of Mikhail Farbtukh, convicted in Latvia for genocide. The Portuguese delegation also released a statement which in part read, "During the last few months Russia, using very sharp statements, has expressed reproaches to Latvia and Estonia. Such policy is not only unproductive, but is simply unacceptable for modern Europe," BNS reported.

* Four members of the environmental group Greenpeace were detained and questioned by Riga police outside Congress House where the annual meeting of the European Bank for Reconstruction and Development was still in session, BNS and LETA reported on 22 May. The protesters, three from Germany and one from the United States, were removed for staging an unsanctioned picket against the EBRD's plans to finance the construction of two nuclear power stations in Ukraine. On 28 May 20 protestors from the local Environmental Protection Club (EPC) gathered outside the EBRD meeting with posters calling for the prevention of "globalization" and "financial totalitarianism."

* Vasilii Kononov, tried for war crimes in Latvia, filed an application to give up his Latvian citizenship, LETA reported on 25 May, citing the Russian-language daily "Chas." An official from the Citizenship and Migration Department said that his request would follow normal procedures, which means Kononov's Latvian citizenship could be annulled by fall. Kononov requested and was awarded Russian citizenship last month by Russian Federation President Vladimir Putin. His appeal of his war crimes conviction is currently pending further legal inquiries by the Supreme Court of Latvia.

* The Latvian parliament's Defense and Internal Affairs Commission announced on 23 May that it will control the work of the finance and economy police in the future because it is unsatisfied with the police effort to uncover numerous instances of money laundering in the country. The commission estimates that at least 40 million lats ($70 million) was involved last year, while the police uncovered only 200,000 lats.

* The newspaper "Neatkariga Rita Avize" reported on 22 May that Latvian state officials have already spent more days on business trips this year than there are calendar days. Ex-Prime Minister Andris Skele's cabinet spent 199 days on business trips and Andris Berzins' new administration had already spent 16 days in May. The Saeima deputies had spent 209 days on trips in the first four months of the year. This is in part a reflection of the number of European governmental organizations and the meetings they sponsor.

* The State Veterinary Service has issued a temporary ban on food imports from the St. Petersburg region and the Republic of Kabardino-Balkariya in the Russian Federation because of an outbreak of Newcastle disease, LETA reported 22 May. The ban includes live poultry, eggs, poultry meat, and feed, and came one day before a similar ban in Estonia (see above).

* The Riga International Airport signed a credit agreement with the European Investment Bank for a loan of 10 million euros ($8.9 million), LETA reported 22 May. The 15-year loan will fund the reconstruction of the airport terminal, including a new wing and an access road.

* Russian NTV television aired their own production of a biography of Latvian President Vaira Vike-Freiberga on the evening of 22 May. The program included segments of an interview with Vike-Freiberga. The program concluded with the words of a popular clairvoyant, Eizens Finks, "Latvia will flourish when the nation is led by a woman."

NATO CANDIDATES PRAISED, BUT FAIL TO INFLUENCE ALLIANCE TIMETABLE.
Nine NATO candidates meeting in Vilnius adopted a joint statement urging the Western defense alliance to invite them all to join by 2002 and agreed to work together to ensure that happens, AP and BNS reported 20 May. NATO Secretary-General George Robertson, who addressed the meeting, welcomed the joint statement and said that NATO's decision to keep "its door open to new members is fostering cooperation." Meeting in Florence, Italy on 24-25 May, the North Atlantic Council welcomed the so-called "Vilnius declaration" in the ministerial's final communique, but failed to make a commitment on further enlargement on a certain date. The Vilnius statement was also praised by U.S. Secretary of State Madeleine Albright, German Foreign Minister Joschka Fischer, and others for its commitment to cooperate with one another and complying with the member action plans.

LITHUANIA LODGES PROTEST TO BELARUS OVER NEW MINISTER.
Lithuania warned neighboring Belarus that the appointment of General Vladimir Uskhopchik--an indicted suspect in the killings of Lithuanian civilians during the attempted Soviet coup in January 1991--to deputy minister of defense, could impair relations between the countries, BNS and "Lietuvos Rytas" reported 22 May. Uskhopchik headed the Vilnius-based division of Soviet troops which stormed the TV tower with tanks, killing 14 unarmed civilians. In 1994, Belarus refused an extradition request for Uskhopchik by the Lithuanian prosecutor-general. Lithuanian authorities have not dropped the charges against the general. On 25 May, the Belarusian government released a statement through its embassy in Vilnius noting that "the appointment has no political undertones and was not aimed at creating tension in Belarusian relations with Lithuania."

LITHUANIAN DEPUTY RAISES ISSUE OF COMPENSATION FOR NAZI CRIMES.
Lithuanian MP Emanuelis Zingeris, chairman of the parliament's human and civil rights committee, has denounced the 1996 document signed by Lithuania and Germany in which the Lithuanian government settled all claims for damages of citizens of the Republic of Lithuania in return for a grant of DM 2 million, BNS and ELTA reported on 23 May. Zingeris considers the document a disgrace to the memory of the hundreds of thousands of victims of the Nazi occupation. The money under the agreement was used to build retirement or nursing homes for Nazi victims in Lithuania. Zingeris, who heads the Lithuanian government's international commission to assess the consequences of Nazi and Soviet occupations, said that the compensation for damages suffered by the people of Lithuania could be as high as several billion dollars. Zingeris also said he learned last week that Russia, Ukraine, and Belarus have been claiming to represent Lithuania on issues of Nazi damage for the past decade, most recently at negotiations with the Austrian government in Vienna over compensation to World War II forced laborers.

CARDINAL SLADKEVICIUS DIES.
After a long illness, His Eminence Cardinal Vincentas Sladkevicius, 79, died on the evening of 28 May in Kaunas, ELTA reported. Pope John Paul II called Sladkevicius a "diligent servant of God" in his tribute to the only Lithuanian cardinal in 400 years. He was first ordained in 1944 and faced continuous repression from communist authorities in Soviet-occupied Lithuania. Pope John Paul named him to the college of cardinals in June 1988 when it appeared that Soviet rule was loosening under Moscow's policies of glasnost and perestroika. His funeral will be held on 1 June in Kaunas where he served first as bishop and later archbishop from 1988 to 1995.

* Almost half of the teachers of Lithuania's northern city, Rokiskis, began an indefinite strike because local authorities have failed to commit to a payment schedule for overdue salaries, BNS reported 23 May. The 600 teachers had participated in the two-hour warning strike last week at the nine schools. The strike affects students who are in final exams this month. The annual budget of the Rokiskis city government is 41 million litas ($10.25 million), however, the city's debts currently stand at 20 million litas. The teachers are demanding 3 million litas in back salaries from mid-March. Prime Minister Andrius Kubilius urged Rokiskis city officials to follow the example of Telsiai city officials who reordered their priorities and met striking teacher demands earlier in the year.

* Mazeikiu Nafta and LUKoil, Russia's largest oil company, have agreed to establish a joint marketing venture of oil products in the Baltic region and a joint venture for crude oil transit from Russia to the Lithuanian refinery, ELTA reported 22 May. The negotiations, conducted in London, concluded with a protocol of intent which will provide the oil refinery with 6 million tons of Russian crude oil from LUKoil per year. Mazeikiu Nafta reserves the right to purchase an additional 6 million tons independently. Negotiations continue with the Russian Yukos oil company and Kazakh oil producers.

* The Economy Ministry and Kaunas City officials agreed to begin negotiations with the French energy firm Dalkia to lease and operate the Kaunas city-owned utility Kauno Energija (Kaunas Energy), ELTA reported 24 May. The decision was taken after the board of directors of the Swedish firm, Vattenfall, rejected the city's terms for a 15-year lease management agreement. The daily "Lietuvos Rytas" reported that the decisive factor was the insistence by Kaunas officials that heating rates not be increased. Kauno Energija losses are 57 million litas ($14.25 million) to date and it owes 400 million ($100 million) in loans.

* The Lithuanian parliament on 25 May debated in plenary session the controversial initiative of the New Union (Socialist Liberals) requiring a reallocation of 148 million litas ($37 million) from the country's defense budget to the education budget, BNS reported. Representatives of the parliament's standing committees on state administration and local government; budget and finance; education, science, and culture; and national security and defense, all rejected the proposal. The chairman of the education, science, and culture committee, Conservative MP Zibartas Jackunas, said that state funding of the education system has been substantially higher over the last decade. In 1999, education received appropriations six times higher than defense. The second debate is scheduled for early June. Under this year's austerity budget, the appropriations for defense are only 1.7 percent of GDP, although Lithuania had promised NATO in 1998 to be spending closer to 2 percent by this year.

* On 22 May, Lithuanian border police detained 15 Russian soldiers at the Kena railway border crossing near Vilnius. The Russian military personnel did not have transit visas issued by the Lithuanian Defense Ministry's transport office. The Moscow-Kaliningrad train was delayed two hours while the unarmed Russian soldiers sought and were issued proper visas. This is the third incident this year when groups of Russian military personnel have been removed from trains traveling to Kaliningrad lacking proper documentation.

* Lithuanian negotiators in Geneva claimed a breakthrough in their negotiations on World Trade Organization membership, ELTA reported on 25 May. Deputy Foreign Minister Algimantas Rimkunas said that in this round of bilateral talks with Australia, Canada, New Zealand, and Cuba "Lithuania succeeded in adjusting an absolute majority of problems related to agriculture." Rimkunas added that he thought Lithuania could successfully conclude these negotiations by autumn. Lithuania has been trying to become a member of the WTO since 1995, and is the only European Union candidate which is not yet a member. WTO membership is a pre-condition for EU membership.

* The Lithuanian Democratic Labor Party (LDDP) faction in parliament is opposed to the proposal put forth by President Valdas Adamkus and the government of Prime Minister Andrius Kubilius to change article 47 of Lithuania's Constitution and allow the purchase of farm land by foreigners. The LDDP insists that there be a referendum on the proposal during the parliamentary elections scheduled for 8 October.

* Editors of six regional newspapers published a joint letter to the Lithuanian government on 23 May, charging that a proposal, now being considered in parliament, to abolish the special VAT rebate for newspapers, would drive their papers into bankruptcy if it were adopted.

* The Lithuanian Confederation of Industrialists (LPK) on 23 May proposed draft regulations on export incentives and actions to be taken if the euro continues its decline, ELTA reported. The LPK has been lobbying for some to unpeg the litas from the U.S. dollar to increase the attractiveness of Lithuanian exports on the European market. The euro has declined by 20 percent since its introduction in 1999.

* Oil spilled off the coast of the Russian exclave of Kaliningrad has reached the Lithuanian part of the Kursiu Nerija sand spit and is threatening the beaches of Lithuania's popular resort town, Nida, ELTA and AP reported 25 May. The oil is polluting a 32 kilometer (20 mile) long coastline, and may have leaked from a ship.

* The French company Dijon Cereales has made a proposal to Lithuania for the purchase of a significant portion of "ecologically clean wheat cultivated for food" in Lithuania this year. The company proposes paying 2,000 francs ($250) per ton of wheat, including transport costs to their factories in France. The company is also prepared to support the development of ecologically clean farms in the Baltic states.

NATO Communique From Florence Meeting

The North Atlantic Treaty Organization held its annual ministerial meeting in Florence, Italy, on 24-25 May to discuss alliance developments and issues. The meeting's final communique touched on the declaration of the Vilnius conference co-hosted by Lithuania and Slovenia:

"36. We welcome the strong commitment of the nine aspiring countries to the MAP, and to reform and co-operation, as reaffirmed at Vilnius on 19 May, and are pleased with the progress made to date in implementing the MAP. This spring, meetings of the North Atlantic Council have taken place with senior members of the governments of each of the aspiring countries to examine progress made. Advice, feedback, and assistance given by the Alliance and by individual NATO members has contributed significantly to better focusing their preparations for possible future membership in all areas covered by the MAP, including political and economic issues, defence and military issues, resource, security and legal issues. MAP-related Partnership Goals and tailored PfP Individual Partnership Programmes have been agreed with the aspirants, to assist them in their efforts to meet the goals they have set themselves in the defence/military field. These goals are challenging. The establishment of priorities and the allocation of sufficient resources by the aspirants will be essential to achieve them."