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Baltic Report: November 20, 2000


20 November 2000, Volume 1, Number 35
REGIONAL
U.S. PRESIDENTIAL CANDIDATES PLEDGE TO ENLARGE NATO.
Vice President Al Gore, the Democratic Party candidate for U.S. president, released a statement reaffirming his complete support for a next round of NATO enlargement as early as 2002, BNS reported on 28 October. Gore also promised that no non-NATO member would have a veto over alliance decisions such as enlargement. Gore's statement specifically referred to a U.S. national interest in the Baltic states saying, "During the collapse of the Soviet Union, the United States wavered when it came to recognizing the independence of Latvia, Lithuania, Estonia, and Ukraine. That was not a proud day for America. It was not America at its best, and did not advance American interests." The Republican Party's presidential candidate, George W. Bush, released a statement on 3 November, BNS reported, which says that he would "lead the United States' European allies to advance the process" of NATO enlargement at the next NATO summit in 2002, and "never give Russia a veto" over the enlargement issue. The statement also says that a Bush administration would "work to ensure that the countries of Central and Eastern Europe preserve their freedom and independence and advance their economic progress."

BALTIC STATES FREE TRADE AGREEMENT BEING ABANDONED.
Latvia became the last of the three Baltic states to abandon its request to the EU to keep in place the Baltic States Free Trade Agreement on agricultural goods if accepted for membership by the EU, BNS reported on 24 October. A year ago, Estonia, Latvia, and Lithuania all requested the agreement be kept valid for a transitional period in the event that only one or two of them were accepted into the EU. Under EU pressure, Estonia dropped the request for the transition period in August, thereby concluding its negotiations on the "external relations chapter" of EU membership requirements. Lithuania followed suit in September after consultations with Latvia. Andris Kesteris, Latvia's chief EU negotiator, told BNS that agricultural producers would probably be able to adjust to EU trade requirements, since EU membership was more than a year away, and because "the EU market would fully compensate the possible losses."
* According to Moscow's "Izvestiya," funds have been earmarked in a secret chapter of the Russian Federation budget for 2001 to support Russian-language publications and to shape public opinion favorable to Russia in the Commonwealth of Independent States and the Baltic countries, BNS reported on 24 October. The funding may amount to 200 million rubles ($7.16 million). The creation of this separate, classified chapter for the financing of mass media by the Russian Duma has drawn "harsh criticism in the Russian press," BNS added.
* The foreign aid bill passed by the U.S. Congress for fiscal year 2001 includes $20 million in funding for U.S. military assistance to Estonia, Latvia, and Lithuania, BNS reported 2 November. The bill also directs the U.S. Federal Bureau of Investigation to open an office in Vilnius and earmarks $3 million for the fight against organized crime in the region.
* The chief commander of Sweden's defense forces, Johan Hederstedt, distanced the Swedish government from a statement by two generals critical of Estonia's, Latvia's and Lithuania's possible membership in NATO, BNS reported on 30 October. Major-General Goran Gunnarson and Lieutenant-General Johan Kihl claimed in an international meeting at the Swedish Military Academy in mid-October that the entrance of the Baltic states into NATO would have a "negative effect on the present peaceful situation." Hederstedt said, "While I regard the expression of that opinion regrettable," the two officers were expressing only their personal opinions, and the Swedish government's policy is to "respect" the right of the Baltic states "to chose their security guarantees."
* Economic growth rates for the first half of 2000 show that Lithuania continues to struggle after the collapse of the Russian financial markets of August 1998. Estonia's GDP increased by 6.4 percent, Latvia's by 5.1 percent, but Lithuania's increased only 1.9 percent in the first six months of this year compared with the same period last year, BNS reported on 27 October.


ESTONIA
COMMISSION TO EXAMINE KGB LEGACY IN ESTONIA.
The Estonian parliament agreed to set up a commission to examine the circumstances under which the KGB was disbanded in Estonia nine years ago, and to find out what happened with its archives, BNS and ETA reported on 2 November. The latest public controversy over the Soviet-era institution erupted after proceedings in an Estonian court showed that the Estonian government led by former Prime Minister Edgar Savisaar in December 1991 signed an agreement promising neither to prosecute nor discriminate against former KGB agents. A copy of the agreement obtained from the Russian Foreign Ministry was submitted to the court by the lawyers of a former KGB agent fighting to retain his residency permit in Estonia. A commission set up by Estonian Interior Minister Tarmo Loodus on 30 October made a finding that any such agreement will be invalid under the Estonian Constitution and subsequent laws on aliens. BNS reported on 31 October that the Savisaar government signed the agreement "in exchange for thousands of files, weapons, and special equipment." ETA, however, reported the same day that the KGB had begun the evacuation of about 13,500 personal files to Ulyanovsk in November 1989, and that the agency files which included names and codes of agents along with recruitment data which remained in Tallinn in August 1991 were destroyed in the local KGB headquarters on Pagari Street. The daily "Postimees" on 2 November cited an unnamed KGB officer who claimed that nearly 2,500 active agent and surveillance files concerning the National Independence Party, the Estonian Committee, and the Popular Front remained in the safes of the nearly 300 KGB staffers still working in Estonia.

NATIONAL RULING COALITION REMAINS IN POWER IN TALLINN.
A no-confidence vote on 2 November failed in the Tallinn City Council, which is controlled by the national ruling coalition, ETA and BNS reported. The opposition, led by the Center Party of Edgar Savisaar, managed to get only 23 of the 33 votes necessary to oust current city council chairman Rein Voog and it rallied only 24 votes against Tallinn Mayor Juri Mois. On 24 October, five opposition parties and factions -- the Center Party, the People's Choice and People's Trust factions, the Coalition Party, and the Democratic Party -- signed a new coalition agreement which seemed to dictate that the ruling tripartite coalition would lose power in the Estonian capital. However, the agreement did not hold by the day of the vote because the ruling coalition managed to hold the votes of the Democratic Party and both ethnic-Russian political factions -- the People's Choice and the People's Trust -- by making a number of concessions: two deputy mayor seats will be held by a member of the People's Choice or Trust, municipal officials will have to speak both Estonian and Russian with their clients, and the city-owned Aleksandr Nevsky Cathedral in Tallinn's Toompea will be rented to the Russian Orthodox congregation currently using the church. Two of Estonia's largest dailies, "Eesti Paevaleht" and "Postimees," predicted after the vote that the ruling coalition's victory would be short-lived because the wheeling and dealing created an unstable partnership. The no-confidence motion in Tallinn was only one in a series called throughout Estonia within a week. The local governments in Narva, Voru, and Parnu were ousted, while the others survived.

DIVISIONS AMONG ORTHODOX DEEPEN.
During the six-day visit to Estonia of Ecumenical Patriarch Bartholomew I, the split between the country's 100,000 ethnic Russian Orthodox Christians and 50,000 ethnic Estonian Orthodox Christians appeared to grow deeper, AP and BNS reported on 1 November. Bartholomew, whose seat is in Istanbul, met with the clergy from the pro-Constantinople branch and also with Estonia's prime minister and president. Pro-Moscow clergy refused to meet with him, and Russian Orthodox Bishop of Estonia Cornelius issued a sharply-worded statement on the first day of Bartholomew's visit declaring non-recognition of Bartholomew's authority. Winding up his visit to Estonia, Bartholomew called on the Moscow Patriarchate to replace Cornelius as its representative saying that "unfortunately Cornelius has not abided by the official agreements concluded between the two patriarchates" and that he lacks good will needed for a dialogue by questioning "our status here as if we were heretics." Since Estonia regained its independence in 1991, Estonian courts have ruled that the pro-Constantinople wing is the sole heir to virtually all church property that was nationalized after the Red Army invaded Estonia in 1940. While the pro-Moscow side has not been threatened with eviction, it is furious that it has lost its legal rights to churches it has used for nearly five decades. The Patriarchate of Constantinople, headed by Bartholomew, officially took the Estonian branch of Orthodox believers under its jurisdiction in 1996.
* The Estonian government, the Estonian Trade Unions Central Association and the Estonian Employers and Industry Central Union agreed to raise the monthly minimum wage to 1,600 kroons ($84.79) starting in January, BNS reported on 25 October. The tripartite agreement is a major victory for Estonian trade unions which had remained firm throughout the months-long negotiations for the 1,600 kroon wage level. The monthly minimum wage is currently set at 1,400 kroons.
* The Estonian Rural Life Crisis Committee decided on 1 November to hold a farmers' protest action on 24 November, ETA reported. Urmas Laht, chairman of the committee, said that the farmers would be protesting the smaller-than-needed 2001 state budget allocation to the farm sector. The group is calling for at least 639 million kroons ($35.5 million) in subsidies and other support for farmers.
* The Russian Embassy in Tallinn has refused visas to 13 members of the Estonian parliament to visit Russia's Pechory area, which is heavily populated by ethnic Estonians, BNS reported on 2 November. The reason given by the embassy was that the governor of the Pskov region didn't have time to meet with the delegation, although the Estonian delegation had not requested such a meeting. This year, the Estonian parliament allocated half a million kroons ($27,780) for the Estonian school in Pechory -- an area which was part of Estonia before World War II, but is now included in Russia's Pskov region.
* After a meeting with his successor, Rear Admiral Tarmo Kouts, the former head of the Estonian defense forces, Lieutenant-General Johannes Kert, turned down the post of chief of the army until the exact structure of the land forces has been established, BNS reported on 23 October. Kert said he would serve as Kouts' advisor on land forces but that the post of army chief should remain vacant until the size of the army is determined.
* U.S. businessman Gregg Bemis, who led an August diving expedition to the wreck of the ferry "Estonia" in the Baltic Sea, said that he remains convinced an explosion sank the ship in 1994, Reuters reported on 4 November. An official investigation conducted by a joint commission of Swedish and Estonian officials found that the ferry sank in a storm when waves dashed the ferry's bow door and flooded the car deck. The Swedish news agency TT quoted German media reports as saying that two German research institutes had found traces of an explosion on the metal fragments recovered by Bemis and his divers.
* Estonian President Lennart Meri on 26 October called on judges to speed up the pace of considering court cases, BNS reported. "Administration of justice is effective and respect for the state and the court is higher if administration of justice is quick," said the president. Meri also called on judges to adopt European traditions in the conduct of cases. There are 243 judges in Estonia and the state judicial system has 1,600 employees. Ten judgeships are currently vacant.
* A regional court in Estonia supported a motion filed by the Environmental Inspectorate and ordered the seizure of the tanker "Alambra," which caused an extensive oil spill in the port of Muuga near Tallinn in mid-September, BNS reported on 27 October. The owner of the Greek tanker and its British-based insurer, The London Steamship Owners Mutual Insurance Association Ltd., have refused to pay the pollution damage claims of 45 million kroons ($2.4 million).
* The Estonian government adopted a proposal from the Education Ministry to reduce the number of universities and to cut back state-financed tuition, BNS reported on 24 October. The proposal calls for funding universities "based on results" rather than providing individual students with subsidies. The government says it would be providing more funding to education under the new formula which would finance 1.5 bachelors degree students and one graduate degree student for each successfully defended masters' degree. In addition, post-secondary school education will be divided into two branches -- the university type and non-university education. State funds would be channeled so that half of all students would study in non-academic higher education.
* Most of Estonia's meat, milk, fish processors, and bakeries have not met requirements for exporting to the European Union, ETA reported on 31 October. The worst situation is in the meat processing industry, where none of the 250 companies have received export permits, including the 17 largest processors. Estonia has not exported any meat to the EU since 1995, although the country has been given an export quota by the organization.
* The Estonian government decided to request a waiver from the European Union to allow it to keep part of its obligatory 90-day fuel reserve in Finland, which is an EU member, ETA reported on 31 October. At present, Estonia's fuel reserve is sufficient for only two days and therefore Estonia is the only EU candidate with fuel reserves of less than 30 days. EU regulations do allow fuel reserves to be kept in part on the territory of another EU member.
* The largest Estonian confectioner, Kalev, reported on 1 November that it had sold its shares in its Ukrainian and Russian subsidiaries because the company had lost over 100 million kroons ($5.5 million) in those investments this year, according to ETA and "Eesti Paevaleht." Kalev exports chocolate and other candies to Latvia, Lithuania, Russia, Germany, and Scandinavia.
* The Liberal International rejected the Estonian Center Party's application for membership on the grounds that the activities and positions of the Center Party and its chairman, Edgar Savisaar, do not correspond to Liberal Party principles, BNS reported on 3 November. The Estonian Reform Party, one of the members of the ruling coalition, is a member of Liberal International, which is based in London.
* The European Bank for Reconstruction and Development and Tallinn's water utility, Tallinna Vesi, signed an agreement on 31 October for a 22.5 million euro ($18 million) loan to be used for refinancing of the utility's state guaranteed loans, which are coming due, ETA reported. The new loan will reduce the utility's debt burden in anticipation of the city's efforts to privatize 50.4 percent of the government owned utility.
* Tallinn Mayor Juri Mois has admitted to working closely with Meelis Lao, widely reported by Estonian media to be linked with organized crime, BNS reported 30 October. Mois said that Lao had "opened the city government's eyes to the dealings of the opposition Center Party led by former Prime Minister Edgar Savisaar. According to property declarations submitted by Estonian politicians under law, Savisaar owes large sums to private individuals.
* Estonia's second largest news agency, ETA, currently under new ownership of ETA Interactive, announced on 3 November that it is expanding its network of freelancers both in Estonia and abroad.
* The Estonian Privatization Agency signed an agreement selling a 49 percent share of the Estonian Broadcasting Center to TeleDiffusion de France, ETA reported on 3 November. Telediffusion is paying 95.4 million kroons ($5.3 million) and committing itself to invest an additional 282.3 million kroons over the next few years. The company won the tender after talks with the highest bidder, Swedish Teracom, failed earlier this year.


LATVIA
PARLIAMENT VOTES TO BUST 2000 BUDGET DEFICIT CAP.
The Latvian parliament on a vote of 79 to 12 with one abstention passed amendments to this year's budget increasing the budget deficit from 2 percent to 3.2 percent, LETA and BNS reported on 2 November. The International Monetary Fund mission visiting Latvia told Aija Poca, chairwoman of the Saeima's Budget and Finance Committee on 31 October that the IMF was "not satisfied" that the parliament was considering amending the 2000 budget to increase spending beyond the agreed upon 2 percent deficit cap. The IMF acknowledged that Latvia's budget had been impacted by higher world oil prices and the drop in the euro's exchange rate, but the mission emphasized the necessity of the Latvian parliament observing the promised deficit cap in next year's budget, which is still being compiled by the government. The parliament, on the government's recommendation, increased 2000 spending on health care by discharging the debts of seven state-owned rural hospitals and expanding the funds for emergency care, providing the funds for the purchase of a critically needed new embassy building in Washington, and authorized the purchase of equipment for the state security agency. However, Prime Minister Andris Berzins emphasized to the press on 3 November that the growth in the budget deficit is mainly linked to the previous government's commitments in early 2000 to raise teachers' salaries and increase subsidies to farmers.

LATVIAN COURT UPHOLDS KALEJS ARREST WARRANT.
A Latvian court on 3 November upheld a lower court's ruling to allow prosecutors to seek the extradition and arrest of Konrads Kalejs from Australia on charges of suspected war crimes, Reuters, AP, and LETA reported. Attorneys for Kalejs had appealed the lower court's ruling arguing their client -- who suffers from dementia -- was too old and sick to stand trial and that the charges against him are insufficient to justify an extradition. Under Latvian law the ruling in this appeal is final and cannot be overturned. Latvian prosecutors say that the extradition process could take up to a year because Kalejs has the right to appeal the process in Australia as well. Prosecutor Liana Dadzite said that the Prosecutor-General's office would move ahead in preparing the extradition request documents but that the heads of the office would have to decide how to achieve the extradition since the Latvian parliament has not yet ratified the treaty. After a day-long debate on 26 October, the Latvian parliament voted 66 to 17 with 7 abstentions to send the extradition treaty back to its Foreign Affairs Committee requesting additional information, BNS reported.

LATVIAN PUBLIC RADIO CELEBRATES 75th ANNIVERSARY.
Latvian national radio, "Latvijas Radio" celebrated its 75th anniversary on 1 November, LETA reported. The first broadcasts went into the ether in Riga in October 1925, although the official opening of Latvian state radio was on 1 November with a broadcast of the opera "Madame Butterfly." Under Soviet occupation, Latvian state radio was a tool of ideological propaganda, but in the late 1980s, when censorship eased, the radio station participated actively in the restoration of the country's independence. It played an important role calling people to the barricades in January 1991 and later during the August attempted putsch. The radio became a public, non-profit company in 1995. Currently, 345 employees produce four different channels of programming: Radio 1 broadcasts national and cultural information, Radio 2 airs Latvian popular music, Radio 3 plays classical music, and Radio 4 broadcasts an integration program for minorities.
* About 1,000 people, including Defense Minister Girts Kristovskis, attended the unveiling of a monument built in a cemetery in Lestene (about 60 miles from Riga) to Latvians who fought alongside the German army in World War II, Reuters reported on 5 November. The Nazis drafted some 146,000 Latvian men into a Waffen SS unit in 1943 and 1944 in a last ditch effort to stop the Red Army. The Latvian unit, known as the Latvian Legion, was one of the last holdouts during the war helping the Germans to fend off Soviet troops at Kurzeme in western Latvia until Berlin surrendered to the Allies. The legionnaires say they have been misrepresented as aging Nazis nostalgic for the days of Hitler and note that they were drafted illegally by the Germans.
* Katrim Stella, the Slovak weapons manufacturer, has still failed to remove from Latvian Defense Ministry warehouses the weapons the Latvian government rejected after delivery on the grounds that they were partially defective and in part the wrong order, BNS reported on 31 October. The weapons dispute began five years ago when the Latvian government agreed to guarantee the purchase of $3.9 million worth of equipment and supplies from the Slovak firm. After lengthy talks the two sides agreed that Latvia would pay 30,000 lats ($50,000) for the equipment it wished to keep and the firm would remove the unwanted 1,300 assault rifles and 400 grenade launchers. The Defense Ministry believes that the firm is delaying the process because it is disadvantageous to transport the weapons until it has found a buyer for the weapons.
* The Latvian Navy's coast guard vessel "Spulga" ran aground the Swedish coast near its destination, the Swedish port of Karlskrona, but no one was injured in the accident, Defense Ministry spokesman Janis Podins told BNS on 3 November. Latvian Navy Commander Ilmars Lesinskis said that a special task force will investigate the accident, which appears to have been caused by a navigation error, LETA reported.
* The spread of infectious diseases at the Latvian Police Academy continues with 79 more students diagnosed with streptococcus and suffering from tonsillitis, BNS reported on 25 October. Last week 55 police cadets were diagnosed with the same condition. The Police Academy is located next to the National Defense Academy, where over 100 students fell ill with diphtheria in September.
* Latvian Border Guard chief Gunars Dabolins said on 25 October that the government will have to invest 40 million lats ($64.51 million) to meet all European Union requirements for border control by 2004. This is the conclusion of a group of EU experts examining the issue. Dabolins also said that the EU experts were surprised by the progress of the Latvian Border Guards over the last year, noting in particular the low incidence of corruption among the guards.
* The Latvian parliament on 2 November passed an amendment extending the validity of privatization vouchers for one more year, leaving their holders eligible to purchase state and municipal properties until 31 December 2001.
* The Latvian government hopes to be able to export at least 1.2 million tons of milk annually to the EU market once it has become a member of the organization, LETA reported on 1 November. The export figure is contained in the agricultural sector document being submitted by the Latvian government in its membership negotiations with the EU.
* Prime Minister Andris Berzins on 3 November said that he hopes the new charter for the state-owned energy monopoly "Latvenergo" will be approved at the next cabinet meeting on 7 November, LETA reported. Previous attempts to reach agreement have failed because the ruling coalition parties disagree on the number of Latvenergo proxies to be awarded. Currently, the government influences decision-making at the energy monopoly only through contacts between the Ministry of Economy and the company's state-appointed board members.
* Minister of Agriculture Atis Slakteris told a group of farmers in the Vidzeme region on 3 November that the funds Latvia will receive next year from the EU's SAPARD program will largely be allocated to farm subsidies -- in total 20.88 million lats ($34.8 million) or 3 percent of the total Latvian national budget for 2000, LETA reported. Slakteris noted that the dairy sector will receive the largest amount of funds according to the regulations for next year's state subsidies.
* Representatives of Latvija Statoil Ltd. and the state-owned railroad monopoly Latvijas dzelzcels (LDz) met on 31 October concerning their protracted conflict over the refusal of the railway to allow the transit and export of oil products at Riga's Ziemelblazma railroad station, LETA reported. LDz says it cannot allow the transit of this "hazardous material" because the railroad station is too close to a residential area and could endanger the population.
* Ventspils Mayor Aivars Lembergs said on 30 October that "the 10 years of Latvia's independence have been a time of missed opportunities," LETA reported. Lembergs was speaking on his return from a conference in China for major producers and consumers of mineral fertilizer. Having seen the progress China has made, Lembergs maintained that as long as Latvian politicians fail to set state interests above their own interests, the investment climate in Latvia will be unfavorable. Lembergs added that "in these 10 years, all efforts were made to hamper the normal course of economic development. Joint ventures were established contrary to world practice. The privatization of Latvia destroyed industry."
* The National Radio and Television Council adopted a proposal by council chairman Ojars Rubenis to amend the law on public broadcasting organizations financing system by introducing a subscription fee, BNS reported on 3 November. Latvian State Television Director-General Rolands Tjarve said that both state radio and television need alternative financing to allow the public broadcasting organizations to be truly independent, and he believes the public is ready to pay a subscription fee if the cost corresponds to the economic situation and average person's ability to pay.
* The National Radio and Television Council announced a tender for establishing another nationwide commercial television channel, BNS reported on 3 November. The applications for the tender will be accepted through 11 December. The winner will have to provide broadcast coverage to 85 percent of Latvia's territory by its second year of operations.
* Latvian Privatization Agency (LPA) Director-General Janis Naglis praised the completion of the privatization of the national news agency LETA as one of the most successful ever undertaken in Latvia, LETA reported on 1 November. Naglis said that all of the privatization conditions for the news agency had been completed and "finally, LETA is released from 'slavery' under the LPA." He also announced the decision of the LPA board adopted on 31 October on the completion of the privatization process. Currently LETA issues more than 50 different informational products to about 450 commercial clients in Latvia and abroad. The agency has hired 95 additional employees in the past three years.


LITHUANIA
NEW LITHUANIAN GOVERNMENT AWAITING CONFIRMATION.
The formation of the eleventh post-Soviet Lithuanian cabinet of ministers was completed on 3 November when President Valdas Adamkus submitted his nominee for the future government's 13th ministerial post, ELTA and BNS reported. The new prime minister, Rolandas Paksas, was confirmed on a vote of 79 to 51 on 26 October, but he and his cabinet will only take office when the parliament approves the government's program. The vote is expected late next week. Five members of the cabinet, including the prime minister, are members of the Liberal Union: Paksas, Finance Minister Jonas Lionginas, Economy Minister Eugenijus Maldeikis, Environment Minister Henrikas Zukauskas, and Transport and Communications Minister Gintaras Striaukas. Minister of Education and Science Algirdas Monkevicius is the only New Union/Social Liberal Party member. The remaining ministers, although nominated by the Liberals and Social Liberals, are not members of any party: Minister of Foreign Affairs Antanas Valionis, Minister of Defense Linas Linkevicius, Minister of Social Security and Labor Vilija Blinkeviciute, Minister of Health Vinsas Janusonis, Minister of Interior Vytautas Markevicius, Minister of Agriculture and Forestry Kestutis Kristinaitis, Minister of Culture Gintautas Kevisas, and Minister of Justice Gintautas Bartkus. Only four ministers are members of parliament as well: Paksas, Maldeikis, Lionginas, and Monkevicius.

NEW GOVERNMENT'S PROGRAM INCREASES DEFICIT.
Prime Minister Rolandas Paksas submitted his government's four-year program for discussion and approval to the parliament on 3 November, dpa, Reuters, and ELTA reported. The speaker of the parliament, Arturas Paulauskas, said the vote could be held as early as 10 November. The program proposes to increase social spending on education and health, thereby increasing the budget deficit to 3 percent in 2001 despite an IMF agreement with the previous government that the deficit should be held to 1.7 percent in 2001. Paksas assured the parliament that he will continue to fund Lithuania's defense sector so that the country can be invited to join NATO in 2002. Nonetheless, the program delays the increase of defense spending to 2 percent of GDP until 2002, one year later than the previous government's plan. There are also concerns that Paksas may try to engage in some creative bookkeeping on defense because on 27 October, speaking in parliament, he acknowledged that the defense spending commitment gave him little freedom of movement, adding,"However, we can maneuver within this figure, and I believe that we will carefully revise the composition of the 1.95 percent of GDP for the defense sector," according to BNS reports. The program also calls for the streamlining of the state administration, cutting taxes which are "choking" investment and economic growth, cutting the income tax gradually from 29 percent to 24 percent, and increasing spending for agriculture to 10 percent of the state budget. The program proposes yet another reorganization of public administration by doing away with the current 10 regions and establishing five institutions of regional government more in keeping with EU requirements. The social security system SoDra, which is close to fiscal collapse, is to be immediately reformed. The new government expects Lithuania to be ready to join the EU in 2004 and will work to maintain good neighborly relations, especially with Poland, which it views as its "strategic partner." The program also calls for creating a better environment for Lithuanian businesses to seek partners and markets in Russia.

NEW PARLIAMENT ORGANIZED AND AT WORK.
The chairmen of 12 parliamentary committees and two additional deputy chairmen of the parliament were confirmed on 26 October, almost completing the leadership team of the Seimas, BNS and ELTA reported. The speaker of the parliament, Arturas Paulauskas, who is head of the New Union/Social Liberals Party, has four deputies: Liberal Union member Gintaras Steponavicius, Peasants' Party leader Ramunas Karbauskis, New Union/Social Liberal member Arturas Skardzius, and opposition Social Democracy bloc member Ceslovas Jursenas. The committees headed by the Liberal Union are: Alvydas Medalinskas (Foreign Affairs), Raimundas Sukys (Legal and Law Enforcement), Klemensas Rimselis (Public and Local Administration), Juozas Raisenskis (Environment), Arturas Melianas (Social and Labor), and yet to be chosen European Affairs chairman. The New Union/Social Liberal Party also has six committee chairmanships: Viktor Uspaskich (Economy), Alvydas Sadeckas (National Security and Defense), Jeronimas Kraujelis (Rural Affairs), Rolandas Pavilionis (Education, Science and Culture), Kestutis Kuzmickas (Health Care), and Gediminas Dalinkevicius (Human Rights). The Center Union, also a ruling coalition member, has one chair: Kestutis Glaveckas (Budget and Finance). President Valdas Adamkus on 27 October vetoed six laws passed by the former parliament and urged the new parliament to revise them, but the members of parliament are already submitting draft legislation to the parliament's secretariat. For instance, deputies from the Farmers' Party registered a draft law on the strategy of financing agriculture, BNS reported on 27 October. Parliament speaker Paulauskas told a press conference on 30 October that promoting "close parliamentary relations" with Russia was of great importance. ITAR-TASS reported on 27 October that members of the new Seimas already are demonstrating that concern with 45 of the 141 members joining the Lithuanian-Russian interparliamentary group, while in the previous Seimas only 23 Lithuanian deputies were members. The next largest interparliamentary group is for relations with the German parliament and has 40 Seimas members.
* Members of NATO's Political Committee have approved Lithuania's national program for integration with NATO, calling the country's Membership Action Plan "convincing and realistic," BNS reported on 2 November. The alliance also praised the Lithuanian government's hard work in informing the public about the NATO integration process and urged Lithuania to keep focused on the public information effort.
* Ambassador Linas Linkevicius, who has been nominated for defense minister in the new government, said that Lithuania does not need Russia's approval for its NATO membership bid, BNS reported on 30 October. Linkevicius said, "There are certain positions which the state should uphold resolutely and unambiguously and expect to be supported internationally." Linkevicius, a former defense minister, has been serving as the head of Lithuania's mission at NATO in Brussels.
* The parliamentary opposition said it would bring a suit in Lithuania's Constitutional Court against the decision of the new parliament to reject one of three people's initiatives sponsored by the Social Democracy bloc, BNS reported on 25 October. The lawmakers sitting in plenary session voted to include in their agenda a vote on lowering the value-added tax (VAT) to 9 percent on consumer heating, and also the question of raising the minimum taxable monthly wage from 214 litas ($53.50) to 320 litas. But the parliament rejected the proposal for legislation to retain state management control of so-called economically strategic objects, thereby slowing the government's privatization program. All three proposals had been people's initiatives garnering enough signatures for consideration by the parliament.
* Parliament speaker Arturas Paulauskas told ITAR-TASS on 30 October that Lithuania is not interested in worsening relations with Russia as a result of the law on damages caused by the Soviet occupation, so the form of the implementation may change and the damage may be re-estimated. Currently the damages are officially estimated at $20 billion.
* Former Prime Minister Kazimiera Prunskiene, now a member of parliament and leader of the New Democracy Party, criticized the new government's draft program saying it lacks attention to Russia, BNS reported on 3 November.
* The new parliament registered for consideration two drafts of an amendment to the Law on the Prosecutor's Office seeking to change back the procedure for appointing the Prosecutor-General to an earlier procedure, BNS reported on 25 October. The two amendments -- one presented by President Valdas Adamkus, the other by Social Democrat deputy Aloyzas Sakalas -- are similar and likely to be merged. Both call for the chief prosecutor to be nominated and dismissed by the president on the parliament's approval. The law was changed in March 1997 to have the parliament appoint the chief prosecutor for a term of seven years based on a nomination from the parliament's Legal Committee.
* Lithuania's Central Service Ethics Commission has found former Public Administration Minister Sigitas Kaktys guilty of violating the law on coordinating public and private interests. Kaktys had failed to declare income he was receiving from the rental of his home to officials of Williams International, which manages the Mazeikiu Nafta oil refinery, BNS reported on 2 November.
* The Lithuanian Christian Democratic Party's council voted on 28 October to merge with the smaller Lithuanian Christian Democratic Union led by member of parliament Kazys Bobelis, BNS reported. The council authorized the party's leaders to proceed with consultations and to prepare the necessary documents for the merger. Both parties, running separately, failed to cross the 5 percent threshold for party lists in the recent parliamentary elections.
* The city council of Kaunas, on a vote of 26 to 12, elected Gediminas Budnikas -- member of the Lithuanian Freedom Union and an ex-basketball player -- mayor on 30 October, BNS and ELTA reported. He succeeds the controversial Vytautas Sustauskas, head of the Freedom Union, who resigned his mayoral post after serving only six months of his term to devote full time to his new seat in parliament. Prior to his resignation, a vote of no confidence that had been brought against him for "exceeding his authority" and "damage caused to the city," failed on a vote of 15 to 26. Council members maintained that Sustauskas signed an agreement for the construction of a toll bridge in Kaunas without the approval of the city council. Sustauskas endorsed Budnikas for mayor.
* The State Security Department charged Algirdas Pilvelis, the publisher and managing director of the daily "Lietuvos Aidas," with violating the law on inciting ethnic discord for publishing several anti-Semitic articles in its 18 October edition, BNS reported on 28 October. The prosecutor's office filed its case against Pilvelis on 3 November, ELTA reported.
* Lithuania has made the largest leap forward of any country included in the Heritage Foundation's Index of Economic Freedom in its seven-year history, RFE/RL's Lithuanian Service reported on 1 November. The annual index ranks the world's economies according to 50 economic variables. Lithuania leaped from 61st last year to 42nd position this year among the 155 countries evaluated.
* On a vote of 83 to 7 with 7 abstentions, the parliament adopted a resolution to suspend the privatization of Lithuania's shipping company (LISCO), until the new government can investigate the circumstances of the sale and the contracts that lack transparency, ELTA reported on 3 November. The same day, a group of small shareholders in LISCO filed a lawsuit asking the Klaipeda district court to void the decision made at the LISCO stockholders meeting in October approving the sale of 75 percent of the shares of the company to the Netherlands-based B.B. Bredo B.V. for $50 million. Danny Johananoff, chief executive of B.B. Bredo, told ELTA on 31 October that the company planned to go forward with the purchase, despite public opposition. The State Control Agency, which is investigating the privatization of LISCO, issued a recommendation that the sale of Lithuania's state-owned shipping company to B.B. Bredo was detrimental to Lithuania's national interests and appealed to the courts to invalidate the agreement, ELTA reported on 31 October.
* The government cut tariffs on imported agricultural products by 5 percent on average, ELTA reported on 31 October. The tariffs were reduced in compliance with obligations to the International Monetary Fund (IMF) and the World Trade Organization (WTO). The import duties on beef went down from 50 to 40 percent, on pork from 40 to 35 percent. The import duties on chicken eggs went down from 40 to 35 percent and turkey and goose eggs to 15 percent. Lithuania was forced to raise its tariffs in August 1998 after the Russian financial crisis, which collapsed the ruble. Lithuania is expecting to become a full member of the WTO no later than May 2001.
* The state-controlled energy monopoly Lietuvos Energija (Lithuanian Energy) has established two new directorates for Eastern and Western distribution networks and will aim to make these two separate companies when the monopoly is privatized, ELTA reported on 31 October. However, the reorganization of the energy monopoly has been suspended by the new parliament, which voted on 26 October to void the former parliament's law on splitting the authorized capital and duties of Lietuvos Energija, which also outlined the reorganization and privatization of the company. On 3 November, officials of Lietuvos Energija reported that they have been unable to resolve differences with the Belarus state energy monopoly Belenergo and will be unable to renew exports of electricity to Poland that were suspended early this year, ELTA reported.
* The Silale credit union, which recently received its license from the Lithuanian Central Bank, became the 29th member of the Association of Lithuanian Credit Unions, ELTA reported on 30 October. Assets of credit unions who belong to the association totaled 12.1 million litas ($3.025 million) as of September. The loan portfolios of credit unions amounted to 7.58 million litas ($1.895 million).
* The opposition parliamentary faction of the Social Democratic Party said it will demand that the government revise the commitments made to the U.S.-based Williams International, which bought a 33 percent share in Mazeikiu Nafta and is the managing partner of the oil refinery, BNS reported on 23 October. Vytenis Andriukaitis, chairman of the SDP and faction leader, said that Premier Rolandas Paksas, when he headed the previous Conservative government, had "considerably worsened the conditions in the agreement" which was eventually signed with Williams.
* Guards at the presidential palace in Vilnius foiled an attempt by a desperate worker who had been staging a hunger strike to self-immolation in the public square outside the building, dpa and ELTA reported on 3 November. Stasys Andreikenas, who is owed more than 5,000 litas ($1,250) in wages by the Tauras furniture factory in Taurage had been asking for help for over a mont from President Valdas Adamkus to collect those back wages. Andreikenas, who poured gasoline over himself, was tackled by the guards before he could light a match. Lithuania has experienced a wave of hunger strikers protesting the failure of employers to pay them their wages for the last year. As dpa noted, "Self-immolation is a very rare but respected form of protest in Lithuania. Romas Kalanta, a student who burned himself to death in protest against Soviet rule in 1972, is regarded by many as a national hero and martyr."


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