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Baltic Report: July 28, 2003

28 July 2003, Volume 4, Number 23

This issue covers events in the Baltic states from 5 to 20 July 2003.
The United Nations Development Program (UNDP) on 8 July issued its annual Human Development Report for 2003 with rankings of 175 countries, BNS reported. The rankings are calculated using data on individual countries' per capita GDP, level of adult literacy, average life expectancy, and quality of education. The Baltic states all posted improved rankings compared to last year in the report's Human Development Index: Estonia from 42nd to 41st, Lithuania from 49th to 45th, and Latvia from 53rd to 50th. While the three states were all among the 55 countries listed as having "high human development," their rankings were below those of fellow EU invitees Cyprus (25th), Slovenia (29th), the Czech Republic (32nd), Malta (33rd), Poland (35th), Hungary (38th), and Slovakia (39th).
* In the rankings of the world economic freedom index covering 123 countries, Estonia was rated 16th or significantly better than its previous ranking of 41st, BNS reported on 9 July. In the index compiled by the Canada-based Fraser Institute, the Cato Institute, and more than 50 other research institutes on data for the year 2001, Hong Kong remained in first place, followed by Singapore, the U.S., New Zealand, and Great Britain. After Estonia, the highest-ranked East European countries were Hungary (35th) and the Czech Republic (39th). Baltic neighbors Latvia and Lithuania were ranked 51st and 69th, respectively.
* The upper house of the German parliament, the Bundesrat, approved the accession agreements of the seven NATO and 10 EU candidate countries on 11 July, BNS reported. This completed the ratification process since the lower house, the Bundestag, had approved the agreements on 3 July.

The cabinet decided on 8 July to back the bill proposed by 71 deputies of the 101-member parliament in mid-June calling for amendments to the constitution to introduce the direct popular election of the country's president, BNS reported. The decision was expected because the ruling coalition comprising Res Publica, the Reform Party, and the People's Union supports this idea (see "RFE/RL Newsline," 3 June 2003). The draft bill proposes that the term of the president be extended to six years without the possibility of re-election as opposed to the current system, under which the president is elected by parliament or a special electoral assembly for a term of five years with the possibility of serving a second term. Estonian citizens must approve the constitutional changes in a referendum, which is proposed to be held in June 2004 at the time of the elections for Estonia's representatives to the European Parliament.

The 32-member Estonian military unit that flew to the Persian Gulf last month started patrolling the streets of Al-Amiriyah, a western suburb of Baghdad near the city's international airport, on 7 July, LETA reported on 11 July. The unit was expected to serve in an area north of Baghdad, but will now serve at least one month in the Iraqi capital. The soldiers conduct foot patrols in groups of at least four soldiers, with one of their main assignments being to find and confiscate grenade launchers, mortars, and other weapons.

Lieutenant General Jurgen Hoche, NATO's deputy commander allied air forces north, began a three-day visit to Estonia on 16 July accompanied by a five-member NATO delegation, BNS reported. The delegation is scheduled to hold talks with defense forces Chief of Staff Colonel Alar Laneman, Deputy Chief of Staff Colonel Valeri Saar, and air force commander Brigadier General Teo Kruuner. On 18 July, the delegation will visit and inspect the air force base and the air-sovereignty operations center at Amari before proceeding to Latvia in the evening.

Foreign Minister Kristiina Ojuland and French Ambassador to Estonia Chantal de Ghaisne de Bourmont signed an agreement in Tallinn on 14 July on the status and operation of cultural institutes, BNS reported. France established the French Culture Center in Tallinn in 1992, and the Estonian Institute in France opened its doors in 2001. The institutes had operated without any founding agreement, resulting in a number of problems in their day-to-day operation. The new agreement provides them with a clearly defined legal foundation and is expected to strengthen cultural relations between the two countries.

Tonis Palts on 18 July suspended Tax Board General Director Aivar Soerd from his duties until an investigation into his performance is completed, BNS reported. Palts's reasons for taking the disciplinary measure include Soerd's alleged failures to adequately protect data, to observe the principle of uniform taxation, and to fulfill court rulings. There are also charges that his office made unjustified inquiries for taxpayers' personal information. Palts reportedly wanted to discuss the situation with Soerd before the announcement, but Soerd arrived late for the meeting and declared that doctors had forbidden him to meet with the minister. Palts appointed Customs Board Director General Aivar Rehe to head the Tax Board during the investigation.

Juhan Parts signed a cooperation memorandum in Tallinn on 9 July with Estonia's two largest business organizations, the Estonian Chamber of Commerce and Industry and the Estonian Employers Central Association, LETA reported. The memorandum calls for cooperation in developing Estonia's business environment, in promoting vocational training, in boosting Estonia's export capabilities, and in preparing bills regulating enterprises. Parts said the memorandum places obligations on both the government and the business organizations, and that their representatives will be meeting at least once every three months to exchange information to ensure successful cooperation.

The steering committee of the EU's Phare program approved 20 Estonian projects costing 23.5 million euros ($26.8 million) in Brussels on 10 July, BNS reported. Estonia will have to provide some 8 million euros to co-finance the projects. The aims of the projects include upgrading the infrastructure of the border with Russia, developing and implementing a state anti-drug strategy, increasing energy-efficiency investments of local governments, developing a hydrographic network, and establishing an electronic information system for structural funds. Earlier this year Phare allocated 12.5 million euros for other Estonian projects, and the government hopes that an additional 3.5 million euros will be granted before the end of the year.

The creditors of the bankrupt Concordia University decided on 14 July to accept Audentes Mainor University's offer to pay 8 million kroons ($575,000) to settle Concordia's debts, LETA reported the next day. Audentes Mainor University Rector Peeter Kross said Concordia will continue to operate in the same way it did prior to its financial troubles (see "RFE/RL Newsline," 9 April 2003), retaining its academic structure, accredited teaching plans, and curriculum. Mart Susi, Concordia's previous rector and main owner whose management was responsible for many of the university's debts, will no longer serve as its rector.

In interviews with the dailies "Postimees" and "Eesti Paevaleht" of 18 July, Juhan Parts said he is satisfied with his cabinet's achievements but pledged to present more specific proposals on promises he made, LETA reported. "We have an extremely strong road map and in 100 days we have started to face the challenges to which the people gave a very powerful 'yes' vote in the previous elections," the news agency quoted him as saying. Parts said his government's most important priorities are the EU referendum in September and preparing the 2004 state budget, as well as "preparing the process of transferring to a science-based economy." He also said a stable government is in the interests of Estonia and that he expects to stay in office at least until the next parliamentary elections, which are scheduled to take place in March 2007.

The Statistics Office announced on 7 June that inflation rose 0.3 percent in the year to June, BNS reported. This is the lowest annual inflation rate since Estonia regained independence in 1991. Month-on-month deflation was 0.4 percent, marking the third consecutive month of deflation, with the greatest price decreases being for fuel and foodstuffs. There were also drops in the prices of household goods and communication services. Bank of Estonia official Andres Saarniit said food prices were lower because prices were unusually high last June and because demand was low throughout Europe.
* A delegation from the Italian Senate and House of Representatives visited Estonia from 7 to 9 July, LETA reported. It had meetings with Prime Minister Parts, Foreign Minister Ojuland, parliament European Affairs Committee Chairman Rein Lang, and other parliament deputies. The talks focused on the positions of Estonia and Italy in the EU Convention on the Future of Europe, EU parliamentary supervision, and the perspectives of the intergovernmental conference.
* Head of the Finnish border service Lieutenant General Hannu Ahonen visited Estonia on 14-16 July, BNS reported. On 15 July he held talks on the island of Saaremaa with his Estonian counterpart, Brigadier General Harry Hein, about cooperation between their services and the relations between the border guard, customs, and police. They also discussed the security of Estonia's eastern border after the country joins the EU.
* A delegation of 20 members of the European Parliament's Environment Committee made a one-day visit to Estonia on 11 July during which they visited Estonia's state energy monopoly Eesti Energia (Estonian Energy), LETA reported. They were informed that Eesti Energia will have to spend an estimated 1.4 billion euros ($1.6 billion) to meet EU environmental requirements.
* Finance Minister Tonis Palts and Finance Ministry Chancellor Aare Jarvan attended a seminar for EU candidate states' finance ministers in Gaeta, Italy, on 4 and 5 July, LETA reported. The participants discussed the coordination of economic policies in the EU and general macroeconomic issues.
* The Russian Foreign Ministry released a statement on 16 July accusing the Estonian authorities of attempting to raise again the theme of Soviet occupation, BNS reported the next day. The statement called the opening of the Museum of Occupation in Tallinn and the unveiling of a monument to the forest brothers killed by the Red Army in May 1945 actions which cast doubt on the sincerity of the assurances of Estonian leaders that they are loyal to European principles. The statement further condemns the efforts of "Estonian nationalists to glorify Estonian Nazi henchmen as fighters for Estonia's freedom and against the Soviet occupation."
* Prime Minister Parts said in his first foreign- and security-policy interview in the daily "Postimees" that Estonia's roots lie in Europe, but that it needs to retain the close support of the United States and thus sent a military unit to Iraq, BNS reported on 8 July. He noted: "We need both and we are interested in the U.S.-Europe partnership and cooperation developing. Even though America and Europe have at times different interests but common values." Parts stated that the greatest danger to Estonia is to become a marginal member of the two organizations so it should attempt to be conspicuous in them by offering initiatives in foreign-policy matters with Georgia, Ukraine, and Belarus.
* Due to the failure of Russia to complete its pledge to build a border checkpoint at the Starozhinets port on Lake Pskov by mid-June, the plans to establish a cargo and passenger ship route between Tartu and Pskov this year remain unclear, BNS reported on 14 July. Estonia opened a floating border checkpoint at Praaga on 18 May, fulfilling its preparations for the planned route.
* Unlike in Latvia and Lithuania, political parties and the military in Estonia do not support the idea of ending the draft of youths to the armed forces and establishing a fully volunteer army. Prime Minister Parts told the daily "Postimees," "Estonia needs defense forces and the strong defense will of citizens, thus we cannot leave our defense forces to be just the business of mercenaries," LETA reported on 10 July.
* The Estonian Red Cross announced on 7 July that Germany had agreed to more than 178 million kroons ($12.8 million) as compensation to victims of Nazism in Estonia, BNS reported. Estonian Red Cross Secretary-General Riina Kabi said that money had not yet been paid out in about 300 cases, mostly when the person who applied for the compensation had died and heirs were still completing the necessary forms to receive it. About 6,000 residents of Estonia applied for the compensation prior to the 2001 deadline.
* The plans of Finance Minister Toni Palts to ban companies in which the state owns a majority of the shares from making charitable donations have been met with great resistance by previous recipients such as the Tallinn Children's Hospital, BNS reported on 15 July. Palts said that it was more appropriate that ministries, and not company executives, should determine how state money should be spent.
* Estonian Interior Defense Academy Rector Heiki Loot has agreed to become Estonia's state secretary, replacing Aino Lepik von Wiren who intends to resign and start working in the diplomatic service, LETA reported on 16 July. She has held the post since 1999. The state secretary heads the State Chancellery and has the right to vote at government sessions.
* The Labor Board announced on 9 July that the number of registered unemployed in June was 42,783 or 5.5 percent lower than in May, BNS reported. The official unemployment rate was 5.2 percent.

A delegation from the Moscow city government, headed by the chief of its International Relations Department, Georgii Muradov, completed a two-day visit to Riga on 9 July with a press conference at the Russian Embassy, LETA reported. Muradov said his trip included discussions with Education Ministry officials about Latvia's plans to make Latvian the main language of instruction in all schools by September 2004. He expressed his opinion that there is already enough Latvian-language instruction in Russian schools in Latvia and he called for further talks so a mutually satisfactory solution can be found. Muradov also met with Riga Deputy Mayor Sergei Dolgopolov and the heads of the three leftist parties that comprises For Human Rights in a United Latvia (PCTVL) (see "RFE/RL Newsline," 18 February and 7 June 2003). He also visited the construction site of the future Moscow Cultural and Business Center in Riga and distributed benefits to World War II veterans and several student scholarships on behalf of Moscow's mayor.

A press release issued by the Latvian Foreign Ministry on 7 July stated that a representative of the Russian Embassy was summoned to the ministry to hear an explanation for Latvia's recent decision to declare Russian State Duma Deputy Iosef Kobzon persona non grata. International media reported on 4 July that Interior Minister Maris Gulbis signed an order on 20 May blacklisting Kobzon because he poses a "threat to [Latvian] national security." News of the ban prompted the Russian Foreign Ministry to demand an explanation from Latvia, although the 7 July statement said Russian Ambassador Igor Studennikov was informed of the action in May. According to the statement, the Russian Embassy representative was told at the meeting that "Kobzon is not permitted to enter Latvia, this decision having been taken based on information available to the relevant Latvian institutions." In addition, the ministry called on Russia to take a "well-considered...approach to relations with Latvia over this issue" and to "avoid the unnecessary provocation of controversial situations."

Kobzon told "Vesti segodnya" of 8 July that the ban humiliated "all of Russia and all Russian compatriots in Latvia" and will negatively affect Russian-Latvian relations. He told the Russian-language Latvian newspaper that the action came in response to his participation in a 9 May Victory Day performance organized by the Russian Embassy in Latvia and his criticism of Latvia's treatment of Russian veterans and plans to make Latvian the primary language of instruction in schools (see "RFE/RL Newsline," 12 May 2003). Kobzon, dubbed Russia's Frank Sinatra by some for his singing abilities and reputed underworld ties, was shown by Latvia's TV.RUS on 7 July singing "I Love You, Russia" at his 9 May performance, which was largely attended by Russian veterans. Kobzon has been invited to participate in the New Wave music festival in Jurmala on 30 July-3 August. Kobzon has yet to submit an application to enter Latvia for the event, according to Foreign Ministry spokesman Rets Plesums.

The Foreign Ministry on 18 July handed an official note to the Russian Embassy protesting a Russian representative's claims at a 16 July meeting of Council of Europe deputy ministers that tensions over Latvia's educational reform (see "RFE/RL Newsline," 10 April 2003) could lead to civil unrest and conflict in Latvia, BNS reported. On 17 July the ministry told BNS that the unidentified representative had "taken upon himself the role of spokesperson for Latvia's minorities and suggested and toyed with a provocative question -- do minorities really have to tackle extreme measures for their rights to be satisfied?" The note called upon Russia to provide any information it has regarding the possibility of civil unrest or to retract the statement. In addition, it said the Russian representative's statement does not reflect the true situation and draws false conclusions with respect to the situation of minority rights regarding education and language in Latvia. The ministry also urged Russia to take note of the positive assessments made by international human rights organizations on the human rights situation in Latvia.

Latvian Privatization Agency Director-General Arnis Ozolnieks on 16 July signed an agreement in Riga with representatives of the company Latvijas Naftas Tranzits (Latvian Oil Transit, LNT) under which LNT will purchase a 5 percent stake in Ventspils Nafta (Ventspils Oil) for 4.54 million lats ($7.96 million), BNS reported. The deal will give LNT a majority stake in the joint-stock oil company; prior to the agreement, LNT owned a nearly 47 percent stake in Ventspils Oil and the state 43.6 percent. The remainder is owned by various entities. The purchase price, which must be paid within three years, was based on the average price of shares in Ventspils Oil over the past month on the Riga stock exchange.

Vaira Vike-Freiberga and Thomas Klestil held talks in Vienna on 10 July and noted that they have similar opinions about future EU reforms, BNS reported. They both support retaining the rotating six-month EU Presidency and each member state having its own commissioner with voting rights. Both presidents called for closer cooperation and partnership between the small states in the EU to ensure that they have the same rights as the larger member states in determining the future of the union. Vike-Freiberga also met with Austrian Chancellor Wolfgang Schuessel, whom she invited to visit Latvia before its EU membership referendum on 20 September. They discussed how to boost economic relations between their countries, including cooperation in tourism, business, and higher education. The Latvian president then traveled to Graz, where on 11 July she opened the Latvian honorary consulate, held talks with Styrian Governor Waltraud Klasnic, and attended a concert of the Graz music festival. On 12 July Vike-Freiberga had a meeting with Styrian Landtag President Reinhold Purr and attended a reception hosted by Graz Mayor Siegfried Nagl.

Einars Repse paid a short working visit to Rome on 10 July at the invitation of his Italian counterpart Silvio Berlusconi, whose country took over the six-month presidency of the EU at the beginning of the month, BNS reported. The two-hour talks revealed many points of agreement; however, the opinions of the two countries were not the same on all matters. Repse opposed the idea of forming a joint EU border-guard unit, although he backed the idea of Latvia receiving funding from all EU countries for monitoring its border with Russia. Considerable attention was given to EU relations with Russia, with Repse noting that the EU could help resolve the Latvian-Russian border treaty problem. Berlusconi praised Latvia's position on the Iraq issue and its active participation in international peacekeeping operations.

A delegation from Riga headed by Mayor Gundars Bojars began a three-day visit to Minsk on 10 July, LETA reported. The delegation included Andris Ameriks, chairman of the Riga City Council's City Development Committee and member of the Riga Free Port's board; the council's Information Department head Guntars Kukuls; and Leonids Tenis, the director of the joint-stock company Rigas Centraltirgus. The Riga and Minsk city councils signed a cooperation agreement in March 1999. Bojars held talks on 11 July with his Minsk counterpart Mikhail Pavlov about the possible construction of a Minsk terminal on the territory of the Riga Free Port, the purchase of Belarusian trolley buses for Riga, and other issues. The delegation also visited a trolley bus-manufacturing plant and a waste-processing enterprise.

Prime Minister Einars Repse held separate talks on the 2004 national budget with representatives of For the Fatherland and Freedom/LNNK (TB/LNNK) and Latvia's First Party (LPP) in Riga on 14 July, LETA reported the next day. TB/LNNK parliamentary deputy Guntars Krasts said his party will agree to the cutting of some special budget items but will oppose any reduction in the highway fund, as stepped-up road repairs will be needed to justify the planned higher fuel excise tax. Deputy Prime Minister Ainars Slesers stressed that the LPP firmly backs the coalition's earlier pledge to reduce the corporate-tax rate from 19 percent to 15 percent in 2004 and does not support New Era's recent suggestion to lower it to 18 percent.

Following lengthy debate, the cabinet decided in its 15 July session to name integration into the European Union and NATO as the highest priorities for the 2004 budget, LETA reported. After some ministers suggested that other areas should also be listed as priorities, Prime Minister Repse halted the discussion by asking for a separate vote on five alternatives. The 18 cabinet votes were divided in the following way: eight listing only EU and NATO membership; four for EU, NATO, culture, and children's rights; three for EU, NATO, and culture; two for EU, NATO, and legal rights; and one calling for priority to be placed on areas chosen by each of the 16 ministers. National Culture Council Chairwoman Nora Ikstena submitted her resignation to protest the failure to include culture as a budget priority.

The Health Ministry, on the recommendation of the Finance Ministry, has decided to turn down the World Bank's offer to lend $20 million to upgrade the structure of Latvia's health-care providers, LETA reported on 17 July. Health Minister Ingrida Circene said that in rejecting the loan offer the ministry is not rejecting the so-called master plan for upgrading the structure, which would involve 24 local hospitals and 10 multipurpose emergency-aid centers, but will seek loans from other sources that have fewer conditions. "The [World Bank] demands involvement of foreign experts in supervision, control, [and] analyses and, this costs a lot," she said. Circene also said some money from EU structural funds granted to Latvia could be used for the plan.

Vaira Vike-Freiberga on 9 July took her oath of office to serve a second four-year term as president during an extraordinary session of parliament, BNS reported. Parliament elected her to the post in June by a vote of 88-6 (see "RFE/RL Newsline," 20 June 2003). In a speech following her oath, the 65-year-old Vike-Freiberga compared Latvia to the Garden of Eden, which needed tending and love so it would bloom. "We are an open country and an open community" in which various ethnic groups can reside, she said, but "we all need one language to communicate between ourselves and one Mother Latvia." After the ceremonies, Vike-Freiberga placed a bouquet of flowers at the Freedom Monument, attended a special church service at the historic Dom Church, and hosted an inaugural ball at the Rundale Palace in southern Latvia.
* Health Minister Ingrida Circene and UN Resident Coordinator in Latvia Gabriele Kohler signed a cooperation agreement on improving health-care services for youth in Riga on 10 July, LETA reported. The agreement stipulates educating health-care employees about young people's health, especially reproductive and sexual health, dependency, and mental health.
* Interior Ministry State Secretary Juris Reksna and Belarus Minister for Emergency Situations Valery Astapov signed a cooperation agreement in dealing with emergencies and consequences of crises in Minsk on 9 July, BNS reported. It calls for bilateral cooperation in the prediction of accidents, natural disasters, and other emergencies, preventive measures, assessment of consequences, and mutual assistance in case of emergency. The two countries will also cooperate in rescue operations, sharing technical equipment and medical aid, training of experts, exchange of experience, research results, and technologies concerning emergency situations, organization of conferences, seminars, and exercises.
* The heads of the European Union Committees of both chambers of the Italian parliament, Mario Greco and Giacomo Stucchi, held talks on Latvia's integration into the EU and its referendum on EU membership with Foreign Minister Sandra Kalniete and numerous Latvian parliament deputies in Riga on 10 July, BNS reported. They also attended a lunch and a reception hosted by parliament Deputy Chairman Eriks Jekabsons and Italian Ambassador Maurizio Lo Re, respectively. The next day they went sightseeing in Old Riga and visited the Occupation Museum.
* Children and Family Affairs Minister Ainars Bastiks participated at the fifth annual World Family Policy Forum at Brigham Young University in Utah on 14-16 July, LETA reported. The theme of the forum was "The Family as the Basis for Society -- Reality and Rhetoric." There were panel discussions on marriage, family budgets, children's needs, rights of parents, and basic values.
* An extended board meeting of the New Era party on 9 July announced a new plan to review thoroughly the administrative-territorial reform strategy and launch new local governments on the basis of 33 boroughs (the current 26 districts plus seven large cities), BNS reported the next day. This was a shift from the government's previously proposed plan of 102 boroughs. Opposition People's Party deputy Janis Lazgdins condemned the new plan as "criminal" and Latvia's Way called it a step toward a totalitarian state. New Era parliament faction Chairman Krisjanis Karins called the plan "optimal" because small municipalities are not viable.
* The cabinet backed the transition to a volunteer army and the ending of the military draft at its meeting on 8 July, LETA reported. A report calling for these changes was presented by Defense Minister Girts Valdis Kristovskis who was asked to draw up the required draft legislation and economic estimates for the transition and hand them to the government in the fall. Several ministers mentioned that the draft sometimes plays a role in the social integration of youths by helping them learn Latvian. The report noted that draftees now account for 27 percent of the armed forces and that a volunteer army would be better-trained and more able to carry out NATO tasks outside Latvia.
* On 9 July Riga City Council deputies from For Human Rights in a United Latvia (PCTVL) organized rallies in front of the French, German, and Italian embassies in Riga with about 30, 70, and 50 participants, respectively, LETA reported. They protested against the planned education reforms which will increase the use of the Latvian language at minority schools from September 2004. The demonstrators held signs in English and Russian which had been used in earlier protests and visited the embassies to present letters expressing their views.
* Prime Minister Repse presented to the ruling coalition parties on 8 July the new framework for drawing up the 2004 national budget which envisages liquidating the special budgets, LETA reported. He said that the special budgets would be included in the national budget and ministers would have greater control over their use. The new framework will also allow ministers to suggest reducing the funding of other ministries if they believe that part of it is unnecessary.
* The Statistics Office announced on 8 July that the consumer price index (CPI) in June was 0.7 percent higher than in May and 3.7 percent higher than in June 2002, BNS reported. The increase in June was due to the price of goods rising by 0.9 percent mostly due to seasonal growth of fruit and vegetable prices. The price of services grew by only 0.1 percent.
* The Statistics Office announced on 10 July that in the first five months of this year the exports of goods amounted to 644 million lats ($1 billion) and imports to 1.11 billion lats or 16.2 percent and 18.4 percent, respectively, more than in the same period last year, BNS reported. The most important export partners were: Germany (16.4 percent), Great Britain (15.3 percent), Sweden (10.4 percent), Lithuania (7.9 percent), and Estonia (6 percent) and the most import partners were Germany (15.2 percent), Russia (10.7 percent), Lithuania (9.4 percent), Finland (7.4 percent), and Sweden (6.5 percent).
* The Transport Ministry announced on 11 July that Latvian ports handled a total of 28.91 million tons of cargo in the first six months of the year or 1.9 percent more than in the same period last year, BNS reported. Ventspils handled 15.48 million tons of cargo or 9.9 percent less than last year, while Riga increased its cargo by 18.3 percent to 10.47 million tons and Liepaja by 42.1 percent to 2.65 million tons.

The Lithuanian Greens issued a statement on 14 July urging the population not to buy fuel and other products from the Russian oil company LUKoil, BNS reported. The action was prompted by the statement made by Vladimir Grachev, chairman of the Russian State Duma Ecology Committee, in Kaliningrad on 11 July that no international commission would be allowed to inspect the ecological safety of LUKoil's planned oil-extraction project in the Baltic Sea not far from Lithuania's maritime border. Requests by Lithuania and the UNESCO World Heritage Committee (see "RFE/RL Newsline," 7 July 2003) for detailed information about safety studies that have been conducted have not been answered. Prime Minister Algirdas Brazauskas said he thinks Russia would not bar international inspection, as his Russian counterpart, Mikhail Kasyanov, assured him that all aspects of the extraction project will be transparent.

Representatives of Lithuanian Energy, the European Bank for Reconstruction and Development (EBRD), and Polskie Sieci Elektroenergetyczne, held talks in Vilnius on 9 and 10 July, at which they decided to establish a new joint venture called the Project Development Company, BNS reported. It will prepare, before the end of the year, a project to link the energy networks of the two countries with a 1,000-megawatt power-transmission line. A consortium led by Britain's IPA Energy Consulting has estimated that the project, which would also modernize power plants in the two countries as well as in Estonia and Latvia, would cost about 434 million euros ($495 million), of which about 275 million euros would be requested from the EU. Prime ministers Leszek Miller of Poland and Algirdas Brazauskas of Lithuania sent a joint letter to European Commission President Romano Prodi asking for EU assistance for the project in late June.

Moscow Mayor Yurii Luzhkov met with President Rolandas Paksas in Vilnius on 6 July to discuss possibilities for further business cooperation between the two cities, BNS reported. The two cities signed an economic-cooperation agreement in 1999, and about 32 percent of all Lithuanian exports to Russia are consumed in Moscow, according to ITAR-TASS. Luzhkov said Moscow and St. Petersburg offer good opportunities for Lithuanian construction firms, as there are numerous construction projects in the two cities. Luzhkov spoke later that day with representatives of the Lithuanian Industrialists Confederation to discuss opportunities for business cooperation. Luzhkov traveled to Vilnius to participate in the 6 July festivities commemorating the 750th anniversary of the coronation of Lithuania's only king, Mindaugas.

The number of airplane passengers flying between Moscow and Kaliningrad rose 800 percent in the first week of July compared to the last week of June, Interfax reported on 8 July, citing a spokesman for the Civil Aviation Service. According to the service, the hike can be attributed to the perceived difficulty of traveling by train between the Kaliningrad exclave and the rest of Russia following the imposition of new transit rules on 1 July (see "RFE/RL Newsline," 3 July 2003) and to newly lowered airfares between the two cities. The cheapest round-trip air ticket between the two cities costs 990 rubles ($33). On the same day, ITAR-TASS reported that many truck drivers have been stuck at the border between Belarus and Lithuania because they lack the necessary transit documents from Lithuanian authorities.

The Lithuanian Consulate in Kaliningrad will begin issuing travel documents for Russian citizens traveling between Kaliningrad Oblast and mainland Russia via Lithuania by automobile or other private vehicles, ELTA reported on 9 July. While similar documents for train travel are free of charge, auto travelers will pay 5 euros ($5.70) for multientry travel documents that will be valid for three years. Auto travelers must complete their trip across Lithuania within 24 hours. After visiting the Lithuania-Belarus border region, Russian Human Rights Commissioner Oleg Mironov told BNS on 9 July that the rights of Russian nationals transiting Lithuania are not being violated. He acknowledged that Russian citizens who were unaware of the new transit regulations that were implemented on 1 July encountered some problems, but said that the system is working well now.

The Congress of the Union of Lithuanian Political Prisoners and Deportees (LPKTS), held in Kaunas on 12 July, voted 348 to 117 to merge with the Homeland Union (Conservatives of Lithuania), or TS(LK), the daily "Lietuvos rytas" reported on 14 July. The LPKTS formally has about 40,000 members, of whom about one-third regularly pay membership fees, while the TS(LK) has 18,000 members. In the last parliamentary elections, the two parties formed a joint ticket that won nine seats, but the only LPKTS winner was its chairman, Povilas Jakucionis. Prior to the merger vote, TS(LK) Chairman Andrius Kubilius spoke of the need for right-of-center forces in Lithuania to unite.

The efforts by Christian Democrat parliamentary deputy Petras Grazulis to begin running the Chechen pro-independence website Kavkaz-Tsentr from his apartment in the parliamentarians' residence in Vilnius failed on 16 July, "Lietuvos rytas" reported on 18 July. The server had operated in Lithuania from January to mid-April, then moved to Estonia in April before returning to Lithuania in late May. On 20 June, Lithuanian State Security Department (VSD) officials confiscated the server as evidence, charging that it was propagating terrorism and national hatred. Grazulis protested the confiscation, charging that the department yielded to Russian pressure, as no evidence to support the charges had been presented and only a court may decide whether the website was indeed propagating terrorism. On 16 July telephone workers discovered that the phone lines leading to Grazulis's fifth-floor apartment had been cut on the third floor. Grazulis accused the VSD of cutting the lines at Russia's request, which a VSD representative called "absolute nonsense." The parliament's chancellery had told Grazulis that he has no right to set up the website's server in his apartment, which is state-owned.

The head of the World Bank Office in Lithuania, Mantas Nocius, Vilnius Mayor Arturas Zuokas, and heating utility Vilnius Energy President Jean Sacrester reached an agreement on 15 July for the provision of 19.5 million litas ($6.5 million) from the Global Environment Facility (GEF) to make Vilnius apartment buildings more efficient and to upgrade the city's heating system, BNS reported. The GEF's program is aimed at reducing pollution by improving heating efficiency. Most of the grant (12 million litas or $3.3 million) will be spent to make apartment buildings more energy efficient.

The government decided on 16 July to increase the monthly minimum wage for most workers from 430 litas ($140) to 450 litas as of 1 September, "Lietuvos rytas" reported the next day. The hourly minimum wage is to be increased from 2.53 litas to 2.67 litas. The action was taken on the recommendation of the Trilateral Council, which comprises representatives of the government, trade unions, and employers organizations. According to the Lithuanian Statistics Department, slightly more than one-sixth of the workers in Lithuania earn only the minimum wage, which had not been changed since June 1998. However, the monthly minimum wage will remain at 430 litas for agricultural workers, politicians, judges, public officers, and civil servants.

Social Security and Welfare Minister Vilija Blinkeviciute told a press conference on 8 July that the unemployment rate at the beginning of the month was 9.4 percent, BNS reported. This was a drop of 0.6 percentage points from June and 1.5 percentage points from the beginning of the year. She predicted that the unemployment rate will continue to fall in the second half of the year. Blinkeviciute also said she will propose at the next cabinet meeting on 9 July that the minimum monthly wage be increased to 450 litas ($150) from the current 430 litas, which has been the minimum wage since 1998.
* The celebrations of the 750th anniversary of the coronation of Lithuania's only king, Mindaugas, in Vilnius on 6 July were attended by King Carl XVI Gustaf and Queen Silvia of Sweden, Grand Duke Henri and Grand Duchess Maria Teresa Mestre of Luxembourg, Estonian President Arnold Ruutel, Polish President Aleksander Kwasniewski, Kaliningrad Governor Vladimir Yegorov, Moscow Mayor Yurii Luzhkov, the Russian president's special representative Georgi Poltavchenko, and Latvian Interior Minister Maris Gulbis, BNS reported. Ukrainian President Leonid Kuchma planned to attend the ceremonies, but canceled due to illness. The main events of the celebrations included a service at the Vilnius Cathedral, a flag-hoisting ceremony outside the President's Office, the unveiling of a new monument to King Mindaugas, and a parade by the participants of the World Lithuanian Song Festival which ended that day.
* Parliament Deputy Chairman Ceslovas Jursenas visited Kyiv on 9 and 10 July in his capacity as the co-chairman of the Lithuania-Ukraine Interparliamentary Assembly which was formed in March (see "RFE/RL Baltic States Report," 26 March 2003), ELTA reported. It was decided in talks with Ukrainian parliament speaker Volodymyr Lytvyn and other deputies that the assembly's first meeting would be held in Kyiv at the end of September.
* During his visit to Japan on 14-19 July, Foreign Ministry State Secretary Evaldas Ignatavicius held talks with the prime minister's office foreign policy adviser Shotaro Yachi, head of the group for interparliamentary relations with Lithuania Hirofumi Nakasone, and members of the parliamentary Foreign Affairs Committee, BNS reported. He also visited Japan's Foreign Ministry, the Defense Agency, Japan's foreign trade organization, the Japan Industrialists' Confederation, and the Japan Foundation. Ignatavicius discussed changes in bilateral relations which will occur with Lithuania's membership in the EU and NATO as well as the upcoming visits of Japanese parliament deputies to Vilnius in September and of a Lithuanian parliament delegation to Japan in November.
* President Paksas and visiting Grand Duke Henri of Luxembourg agreed that small countries can successfully represent their interests in the EU in Vilnius on 7 July , BNS reported. A good example of a small country official holding a high post in the EU was former Luxembourg Prime Minister Jacques Santer, who worked as president of the European Commission.
* Defense Minister Linas Linkevicius signed on 11 July a 10-year military reform implementation plan which describes the actions Lithuania will carry out to comply with NATO structures and procedures, BNS reported. The plan details how the armed forces will be reorganized to enable Lithuania to join the collective defense system and to respond to crisis operations.
* Defense Ministry Undersecretary Jurate Raguckiene told BNS on 9 July that the armed forces will purchase 69 Humvee cross-country vehicles, eight trailers, and spare parts using financial aid from the U.S. The aid was provided by a $12 million agreement signed by the Defense Ministry and U.S. officials on 30 June, the day before the U.S. suspended military aid to 35 countries, including Lithuania, which had not signed bilateral agreements barring the handing over of members of the U.S. armed forces to the International Criminal Court.
* The cabinet formed a commission to work out a plan for restructuring the governmental European Committee on 16 July, BNS reported. The committee will be restructured into a EU affairs coordination unit at the government, which will have Chancellor Zenonas Kaminskas as its chairman and the committee's former director-general, Petras Austrevicius, as deputy chairman.
* Representatives from 35 countries gathered in Vilnius on 8-11 July for the 11th Congress of the World Lithuanian Community, BNS reported. President Paksas told the congress that he will try to create the most attractive conditions for fellow countrymen to return to Lithuania. The congress passed a resolution calling on the Lithuanian parliament not to amend the law passed by the previous parliament on compensation for the damages done by the Soviet occupation.
* Deputy Economy Minister Nerijus Eidukevicius and the regional head of E.ON Energie, Heinz-Peter Schierenbeck, signed a 76.24 million-litas ($25 million) share swap deal, covering four Lithuanian energy companies, in Vilnius on 10 July, ELTA reported. E.ON Energie traded its 10.9 percent shares in the power-transmission company Lithuanian Energy and the Lithuanian Power Plant in exchange for 9.37 percent and 3.72 percent of the shares in the two Lithuanian power-distribution-network operators Rytu Skirstomieji Tinklai and Vakaru Skirstomieji Tinklai, respectively.
* The board of Mazeikiai Oil approved plans on 8 July for the building of two new oil reservoirs each with a capacity of 52,000 cubic meters at the Butinge terminal, ELTA reported. The construction is estimated to cost about 18 million euros ($20.5 million) and should be completed by the end of the year. The terminal already has three reservoirs with similar capacity, but they are deemed insufficient for the plans to raise the terminal's annual volume from 8 million to 14 million tons.
* The Vilnius City Council elected Social Democrat Gediminas Pavirzis as the third deputy mayor of the city on 16 July, ELTA reported the next day. His candidacy was backed by 41 of the 46 deputies attending. The former head of the city's public procurement unit, Valdas Klimantavicius, was elected director of the municipality administration.
* The Statistics Department announced on 8 July that the consumer price index (CPI) in June was 0.1 higher than in May, but 0.4 percent lower than in June 2002, ELTA reported. The CPI was pushed up by a 0.7 percent increase in prices of foods and nonalcoholic beverages and a 0.2 rise in the price of services.
* The Statistics Department announced on 10 July that preliminary customs data indicated that in the first five months of the year exports were valued at 8.7 billion litas ($2.9 billion) or 8.5 percent more than in the same period last year while imports rose by 2.1 percent to 11.4 billion litas, ELTA reported. The major export partners were: Switzerland (11.4 percent), Russia (11.2 percent), Germany (10.3 percent), and Latvia (9.3 percent) and the major import partners were Russia (22.6 percent), Germany (15.6 percent), Poland (4.8 percent), and France (4.3 percent).