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Baltic Report: August 4, 2003

4 August 2003, Volume 4, Number 24

This issue covers events in the Baltic states from 19 to 27 July 2003.
Foreign Ministers Antanas Valionis (Lithuania), Sandra Kalniete (Latvia), Kristiina Ojuland (Estonia), and Wlodzimierz Cimoszewicz (Poland) have sent a joint letter to their Italian counterpart Franco Frattini, whose country currently holds the rotating EU Presidency, affirming that the construction of a modern highway and rail system in the Baltic region would significantly improve Europe's infrastructure, ELTA reported on 22 July. The letter specifically cites the importance of the Via Baltica highway and Rail Baltica projects in improving transit efficiency from the Baltic states to Western and Southern Europe via Poland, and calls on the EU to support them. It also stresses the need to integrate the Baltic states into a unified European energy system by merging the energy systems of Lithuania and Poland.

The Simon Wiesenthal Center on 23 July released its third annual "Worldwide Investigation and Prosecution of Nazi War Criminals" report, which ranks 39 countries based on their efforts from 1 April 2002 to 31 March 2003 in dealing with Holocaust perpetrators. Only the United States and Germany received the highest grades of "A" and "B," respectively. Among the seven countries in category "C" (minimal success that could have been greater; additional steps urgently required) are Latvia, Lithuania, and Poland. Estonia is among the 14 countries in category "D" (insufficient and/or unsuccessful efforts), along with Croatia, Hungary, Romania, and Slovakia. Norway and Sweden are the only European states to receive an "F" for total failure. Belarus, Russia, Ukraine, as well as Bosnia-Herzegovina, the Czech Republic, and Yugoslavia (Serbia and Montenegro), were placed in category "X," which is made up of the 13 states that failed to respond to the center's questionnaire and "show no activities to prosecute." The center termed "encouraging" the opening of 24 new investigations of possible Nazi war criminals in Lithuania, second only to Italy for the period reviewed. The report noted the positive results of the center's "Operation: Last Chance," which was launched in the Baltic states in July 2002. The operation, which offers financial rewards for information leading to the investigation and conviction of Nazi war criminals, has led to tips naming 174 suspects in Lithuania, 37 in Latvia, and six in Estonia.
* Heads of the Estonian and Latvian parliamentary Foreign Affairs Committees Marko Mihkelson and Inese Vaidere held talks with their Russian Federation Council counterpart Mikhail Margelov in Pskov, BNS reported on 23 July. Margelov said that it was not correct for Russia to link the signing of border agreements with Estonia and Latvia with other foreign policy issues and expressed the hope that border agreements would be signed soon
* Swedish Deputy Prime Minister and Equality Minister Margareta Winberg persuaded fellow ministers in Estonia, Latvia, Lithuania, Finland, Iceland, and Norway to sign a letter protesting plans to license more brothels in Athens during the 2004 Olympics, BNS reported on 23 July. Athens Mayor Dora Bakoyiannis said she was fighting for women's rights and only trying to force illegal brothels to apply for the licenses needed to regulate their business. Estonian Social Affairs Minister Marko Pomerants said: "We do not want such flagrant trade in human beings practiced at that festival of sports, youth, and joy."

The cabinet decided on 22 July to allocate 3 million kroons ($216,000) to extend the mission of the Estonian mine-clearance unit in Afghanistan to the end of this year, LETA reported. This is the fourth -- and most likely final -- extension of the mission, which the government first approved last July (see "RFE/RL Baltic States Report," 24 July 2002). The unit is composed of men and specially trained dogs that work for the Rescue Board. U.S. Ambassador to Estonia Joseph De Thomas sent a written request to Interior Minister Margus Leivo at the end of June asking that the mine-clearance mission be extended. The main task of the mission is to guarantee the safety of U.S. coalition troops stationed at airfields.

Visiting Finnish Interior Minister Kari Rajamaki held talks on 22 July with his Estonian counterpart Margus Leivo, BNS reported. They decided to empower the countries' joint police group FinEsto, which mainly combats drug-related crime, to also deal with the shadow economy beginning next year. The visit, Rajamaki's first to Estonia, was held in Narva at his request because he expressed interest in seeing how the country's eastern border with Russia is guarded. The ministers agreed that Russia is not yet ready for visa-free travel with the EU and Leivo said he sees no opportunity for Russia to achieve this in the next few years. Rajamaki repeated his request that Estonian criminals sentenced for crimes in Finland be allowed to serve their sentences in Estonia, as this could help reduce the establishment of future cross-border contacts among criminals.

A roundtable meeting of the Parnu city government and representatives of several veterans' organizations decided on 24 July to replace the controversial monument featuring a World War II soldier in a German Waffen-SS uniform that was erected last summer (see "RFE/RL Newsline," 24 July 2002), BNS reported. The monument, which was privately funded by individuals who fought in the German army during World War II, was dedicated "to all Estonian servicemen who fell fighting in the second war for the liberation of Estonia and free Europe in 1941-1945." The monument will be replaced by a new one dedicated to all Estonians who fought in various armies for Estonia's freedom during World War II.
* Irish European Affairs Minister Dick Roche had meetings with Prime Minister Juhan Parts, Foreign Minister Kristiina Ojuland, and parliament European Affairs Committee Chairman Rein Lang during his visit to Tallinn on 23-25 July, BNS reported. He delivered a lecture about Irish experiences in the European Union at the Foreign Ministry on 24 July. In talks with Tallinn Deputy Mayor Margus Allikmaa, Roche asked how Estonia intended to mark its entry into the EU on 1 May 2004 and issued an invitation to cultural groups from Tallinn to take part in the festivities in Dublin that day.
* An International Monetary Fund delegation, led by Estonian mission head Richard Haas, began a 12-day visit to Estonia on 21 July to prepare a report on the country by the fall, BNS reported. In the meeting with Prime Minister Juhan Parts on 25 July they voiced concern about Estonia's current account deficit and stressed the need not to have a budget deficit. They expressed support for the current government's planned tax reform, but cautioned that this should not result in a larger deficit.
* Interior Minister Margus Leivo presented to the cabinet on 22 July the plan of Police Board Director General Robert Antropov to fight the chaos in Estonia's traffic system by establishing a special unit to catch traffic hooligans and introducing new and tougher punishments for traffic violations, BNS reported. The new special unit of some 40 policemen would be equipped with all the best equipment including powerful cars, motorbikes, as well as a helicopter. Antropov expects to find enough funds from the board's budget to launch the unit this year, but will seek additional funding from the state budget for its maintenance in the future. Leivo proposed that the driving licenses of people caught driving while drunk be suspended for 10 years.
* Finnish Police Chief Superintendent Olavi Lempinen and Traffic Police Chief Teuvo Veielainen informed Estonian Police Board Director General Antropov in Tallinn on 24 July about their experience in the organization of traffic surveillance and the establishment of a special traffic surveillance unit of the Estonian police, BNS reported. The Finns agreed to organize training for this unit in Estonia and also promised to donate 100 breathalyzers to the Estonian police.
* At the cabinet meeting on 22 July, Finance Minister Tonis Palts apologized for not consulting with his coalition partners before he suspended Tax Board Director General Aivar Soerd on 18 July (see "RFE/RL Newsline, 21 July 2003) and promised to discuss personnel issues with them in the future, BNS reported. A well-known Estonian law office prepared a 14-page report, which severely criticized the Tax Board for ignoring the law and the constitution. Economy and Communications Minister Meelis Atonen of the Reform Party and Agriculture Minister Tiit Tammsaar of the People's Union criticized Palts' decision asserting that no convincing evidence for the suspension had been presented.
* The Security Police presented indictments on 23 July against 21 youths who were involved in a demonstration in front of the U.S. Embassy in Tallinn in March (see "RFE/RL Newsline," 31 March 2003), BNS reported. Two of the youths are charged with organizing an illegal public meeting and another 19 with seriously violating the public order. Without any request for permission, an anti-Iraq war protest involving around 100 mostly Russian-speaking youths was held at the Town Hall, and then gained several hundred more participants as it marched to the U.S. Embassy. Some youths turned violent, igniting smoke bombs, breaking car windows, and piercing the tires of a U.S. Embassy car.
* When Estonia becomes a member of the EU it will be required to place an 18 percent value-added tax (VAT) on the energy produced from wind and water power, which it had freed from all VAT duties, LETA reported on 24 July. Estonian Wind Energy Association Board Chairman Jaan Tepp expressed regret that Estonia had not requested the retention of the zero VAT rate for such energy in its membership negotiations with the EU and even suggested that banks may be less willing to finance building a wind park because it will lose its financial advantage over electricity produced from shale oil.
* Preliminary data from the Statistical Office indicated that in the first half of the year, 296,000 tons of milk and 116.6 million eggs were produced, BNS reported on 25 July. That is 6 percent and 11 percent less, respectively, than in the same period last year. The amount of meat, including poultry, slaughtered was 46,400 tons or about 400 tons more than last year.

U.S. Deputy Secretary of Energy Kyle McSlarrow, co-chairman of the U.S.-Russian energy task force, began a three-day visit to Latvia on 24 July following his visits to the Russian port cities of St. Petersburg, Murmansk, and Primorsk, BNS reported. Following his meeting in Ventspils on 25 July with Mayor Aivars Lembergs and leaders of the joint-stock company "Ventspils nafta" (Ventspils Oil), McSlarrow said several U.S. companies are interested in cooperating with the company, but he declined to name them. Talks with Prime Minister Einars Repse focused on the situation in the Latvian power sector, especially the transit of Russian oil. McSlarrow also met with Deputy Prime Minister Ainars Slesers and Economy Minister Juris Lujans and visited President Vaira Vike-Freiberga at her residence in Jurmala. Their discussions dealt with Latvian-U.S. cooperation in the economic sphere and the energy sector, with Vike-Freiberga urging greater U.S. investment.

The cabinet decided on 22 July to return to its earlier pledge to cut the corporate tax next year from 19 percent to 15 percent, LETA reported. The Finance Ministry's proposal to cut the tax by only 1 percentage point to 18 percent was not approved, primarily due to the uncompromising stance of coalition member Latvia's First Party (LPP). The more moderate tax reduction was supported by the Bank of Latvia and the International Monetary Fund, which has called on the country to reduce its budget deficit. Deputy Prime Minister Ainars Slesers (LPP) has said his party would not vote for the 2004 budget if the tax was not cut to 15 percent, raising the specter of a failed vote on the budget that would automatically bring down the government.

The government has decided to increase the minimum monthly wage from 70 lats ($123) to 80 lats effective 1 January, BNS reported on 23 July. The minimum wage was raised at the beginning of this year from 60 to 70 lats per month (see "RFE/RL Newsline," 3 January 2003). The Welfare Ministry noted that after taxes the monthly wage was only 59.85 lats, or only 65 percent of the country's minimum subsistence level of 91.75 lats per month. The wage increase is expected to be very beneficial for state and municipal budgets, as they stand to increase tax revenues by 9.82 million lats per year while expenditures would only rise by 4.17 million lats.

Foreign Ministry State Secretary Maris Riekstins told BNS on 24 July that the recent decision by the Latvian government to cut spending at all ministries by 6.4 percent next year will force the closure of some embassies. He said there is no other way to fulfill this decision and noted that the choice of which specific embassies to close is a political issue that the government will have to decide. Latvia currently has a total of 37 diplomatic and consular offices, including 26 embassies. The Foreign Ministry's request for additional funding in 2004 to open new embassies in Turkey, Hungary, Kazakhstan, and Japan is unlikely to be fulfilled. Prime Minister Einars Repse seems unwilling to make any exceptions, saying, "It's painful for all of us -- the Foreign Ministry will have to decide on closing embassies, and the Interior Ministry will have to reduce police staff."

Fitch IBCA upgraded Latvia's long-term foreign-currency rating from BBB to BBB+ on 21 July, BNS reported. The long-term local-currency and short-term foreign-currency ratings remained unchanged at A and F3, respectively, with a stable outlook. Fitch said the higher rating reflects the strength of the Latvian economy, which has continued to post impressive growth rates, supported by structural reforms, the privatization process, a stronger banking sector, and sustained foreign investment. The agency noted that developments in Russia remain important to Latvia due to the transit trade, but said the country is becoming increasingly integrated with Western European and Scandinavian markets. The agency said Latvia's external debt, which, following a Eurobond issue, will increase to roughly 20 percent of GDP by the end of 2003, will remain favorable compared to the BBB countries' median of 39 percent. Fitch suggested that the government should delay or modify its planned tax cuts as the current account deficit last year represented 7.8 percent of GDP.
* Foreign Minister Sandra Kalniete made a short working visit to London on 22 July during which she held talks with Secretary of State for Foreign and Commonwealth Affairs Jack Straw, Chairman of the House of Commons Defense Committee Bruce George; and the Chairman of the Latvia-UK Interparliamentary Cooperation Group John Wilkinson, a Latvian Foreign Ministry press release reported. Her talks with Straw dealt with a variety of issues including bilateral relations, the upcoming EU Intergovernmental Conference, the New Neighbors Initiative, and the integration of society and the education reform in Latvia. The talks with George focused on the situation in Iraq and those with Wilkinson on parliamentary cooperation and the planned visit to Latvia in September of members of the cooperation group.
* A NATO delegation, headed by Lieutenant General Jurgen Hoche, NATO's deputy commander allied air forces north, completed a four-day visit to Latvia on 21 July, LETA reported. Hoche held talks with Armed Forces Commander Rear Admiral Gaidis Andrejs Zeibots, Air Force Commander Colonel Vitalijs Viesins, and various headquarters officers. The delegation discussed the integration of Latvia's air force into NATO, its development and use of airfields, air patrolling, and the assistance and support that could be provided to Latvia.
* Russian Ambassador to Latvia Igor Studennikov on 21 July presented a letter from Russian President Vladimir Putin to a 10-year-old student at Riga's Lomonosov high school, who had written Putin several months earlier that he would like to continue to get an education in his native Russian language, LETA reported. Putin wrote that he understood the student's wish and expressed the hope that Russian would be spoken in Latvia in the future, as "this will only enrich Latvian society, culture, and international economic relations." Putin closed the letter by praising the boy for learning Latvian because "that is the language of your country, after all, and I am glad that you understand this."
* U.S. Ambassador to Latvia Brian Carlson handed Foreign Minister Sandra Kalniete a letter from U.S. Senate Foreign Relations Committee Chairman Richard Lugar on 23 July in which he thanked Latvia for its contribution to enhancing trans-Atlantic ties, LETA reported. Lugar also wrote that he is confident that the countries will continue to cooperate in the future. The ambassador also presented Kalniete with the U.S. flag that was flying over the Capitol the day the Senate approved Latvia's accession to NATO.
* Social Integration Minister Nils Muiznieks discussed the upcoming 2004 education reform in Latvia with Russian Ambassador to Latvia Igor Studennikov on 18 July, LETA reported the following day. They agreed about the need for more discussion about the matter with Studennikov suggesting that the transition to Latvian as the language of instruction should be postponed and not be mandatory. He also expressed the fear that many Russian teachers would lose their jobs.
* In a weekly interview for Latvian Radio on 24 July Prime Minister Einars Repse said that he still believes that it would be beneficial if foreign specialists could apply for the currently vacant position of director of the Corruption Prevention Bureau, BNS reported. He noted how difficult it was to remove the requirement that candidates have a law degree and thus did "not dare to come out with any other such suggestions." Repse mentioned that his advisor on anticorruption issues, David Wallis, would be a "very serious candidate" if foreigners could compete.
* Deputy Director of the Corruption Prevention Bureau Rudolfs Kalnins handed in his resignation on 21 July, BNS reported. His action was prompted by the decision by the Constitutional Protection Bureau not to give him a permit for access to classified information (see "RFE/RL Newsline," 11 June 2003), in effect nullifying his appointment as the acting director of the bureau. Kalnins intends to work at the bureau until 1 August and will also appeal the classified information rejection.
* Bank of Latvia President Ilmars Rimsevics proposed on 18 July that the government should not increase budget spending again this year, but use any additional revenues to reduce the budget deficit, BNS reported. The parliament had raised expenditures by 32.4 million lats ($58 million) in June when revenues in the first quarter were above expectations. Rimsevics also praised the plans to form the 2004 budget with a deficit less than 2 percent of GDP.
* New Era (JL) press secretary Martins Murnieks informed LETA on 24 July that the JL board is backing the establishment of the post of state forestry minister in order to promote the development of forestry. He mentioned that the board has no objections if the Union of Greens and Farmers (ZZS) nominates a candidate for the post as long as he is a professional supported by Latvia's foresters. Prime Minister Repse had earlier expressed his support for the office as long as it is set up within the existing budget.

Foreign Minister Antanas Valionis told a press conference in Vilnius on 25 July that seven diplomats who were working in Russia and Belarus submitted their resignations the previous day after the State Security Department recommended that their access to classified information be rescinded, "Lietuvos rytas" reported the next day. Valionis said only that the issue pertains to "information about a state secret," but the media reported that the seven had been receiving bribes to speed up the granting of visas for various Russian and Belarusian firms. Loss of access to classified information, in effect, meant being fired, because such access is a requirement for the positions the seven officials held. Gediminas Siaudvytis, the director of Consular Services, was the highest-ranking of the seven to resign. He had been nominated to become Lithuania's next ambassador to Turkey.

President Rolandas Paksas signed a decree on 22 July dismissing the chairmen of three county courts -- Arvydas Gudas in Lazdijai, Darius Japertas in Panevezys, and Palmira Linkeviciene in Birzai -- accused of interfering in smuggling cases, "Lietuvos rytas" reported the next day. On 18 July Paksas had signed a decree permitting the filing of criminal charges against the three judges. According to the Lithuanian Constitution, judges cannot be criminally charged without parliament's consent, or that of the president if parliament is not in session. The decision to dismiss the judges was made upon the recommendation of the Council of Courts and signed during Paksas' meeting with Supreme Court Chairman Vytautas Greicius, Appeals Court Chairman Vytautas Milius, and Chief Administrative Court Chairman Virgilijus Valancius. Also on 22 July, Vilius Karalius, who is suspected of heading an international cigarette-smuggling ring and is reportedly a close friend of Gudas's daughter, was detained on suspicion he gave bribes to the dismissed judges.

Antanas Valionis told a meeting of the EU General Affairs and External Relations Council (GAERC) in Brussels on 21 July that the draft European Constitution is too important a document to be sped through simply to fulfill the Italian EU presidency's wish to complete the document under its six-month tenure, ELTA reported the next day. Valionis said EU member states agree that the constitution can be signed after 1 May 2004, when the 10 candidate countries are expected to become full-fledged members. Austrian Foreign Minister Benita Ferrero-Waldner said she has no objections to Italy's suggestion that the Intergovernmental Conference on finalizing a constitution begin its work on 4 October; but she added that she opposes setting any date for its conclusion. The Italian EU Presidency ends on 31 December.

Foreign Minister Antanas Valionis held a telephone conversation with his Russian counterpart Igor Ivanov on 23 July and expressed his concern about Russian oil company LUKoil's plans to begin extracting oil this year from the D-6 field in the Baltic Sea, BNS reported. Valionis complained that Lithuania's repeated requests to see the results of a Russian environmental-impact assessment have not been fulfilled. The ministers agreed that their countries' environment ministries should hold consultations on the project. Parliament speaker Arturas Paulauskas and Prime Minister Algirdas Brazauskas have also recently addressed similar requests to their Russian counterparts. In their 23 July phone conversation, Valionis and Ivanov noted the success of the new facilitated travel-document procedure for transit travel from Russia to Kaliningrad Oblast, as some 32,000 Russians traveled to the exclave by train from 1-18 July in comparison to 39,000 for the entire month of July last year.

Visiting U.S. Undersecretary of Defense Dov Zakheim said at a press conference at the Defense Ministry in Vilnius on 24 July that the United States will only restore military assistance to Lithuania if it signs a bilateral agreement exempting U.S. citizens from prosecution at the International Criminal Court, BNS reported. The United States suspended military aid to 34 countries that had not signed such agreements at the beginning of the month (see "RFE/RL Newsline," 2 July 2003). During his two-day visit, Zakheim had meetings with armed forces commander Major General Jonas Kronkaitis, Deputy Defense Minister Jonas Gecas, and other ministry officials. He noted that the suspension of military assistance would not have any effect on the support given to Lithuanian troops serving in peacekeeping operations in Iraq and Afghanistan. Lithuania will pay only the wages of these soldiers, and all other expenses will be covered by the United States.
* Parliament Chairman Arturas Paulauskas made an official visit to Spain on 21-22 July, ELTA reported. The first day he discussed with Spanish Congress Chairwoman Luisa Fernanda Rudi bilateral relations and how they will change after Lithuania officially joins the EU and NATO. They also discussed Spain's experience in using EU structural funds. On 22 July, Paulauskas had meetings with Spanish Senate leader Juan Jose Lucas Jimenez and European Affairs Minister Ramon de Miguel y Egea. Paulauskas also participated in the signing of an accord on avoiding double taxation and held talks with Spain's Police Director General Augustin Diaz de Mera Garcia-Consuegra, who noted that the number of illegal workers from Lithuania has decreased significantly and that Lithuanians accounted for only 0.88 percent of crimes committed by foreigners in Spain.
* Lithuanian and Polish Foreign Ministers Antanas Valionis and Wlodzimierz Cimoszewicz agreed in Brussels on 21 July that their countries should hold consultations next year and work out more detailed plans about bilateral cooperation after they become EU members next May, BNS reported. They also talked about the joint Lithuanian-Polish infrastructure projects, which will be discussed in greater detail during the meeting of the Baltic Council of Ministers in September.
* President Rolandas Paksas met with representatives from Lithuania's clothing and textiles companies, meat, construction, and dairy associations as well as officials from the Agriculture and Environment Ministries on 24 July to discuss their opportunities for competing in the Moscow market, BNS reported. The businessmen said that double taxation remains a severe impediment to their gaining stronger positions in Russia. The two countries prepared an agreement on avoiding double taxation in 1999, but the Russian Duma has not yet ratified it.
* The European Commission (EC) agreed on 23 July to allow Lithuania to import nuclear fuel rods from Russia for its Ignalina atomic power plant without paying the EU's 3.7 percent import tariff until the end of 2004, BNS reported. It is not clear whether the EC will agree to Lithuania's request to extend this exemption until 2009 when the second reactor of the Ignalina plant is to be shut down.
* Latvian Foreign Ministry State Secretary Maris Riekstins said on 22 July that Lithuania has not yet repaid the debt of about $1.5 million that arose in the period before the re-establishment of independence, BNS reported. After the funds from Lithuania's gold reserves ran out in 1980, Latvia provided some $145,000 a year between 1981 and 1991 to maintain the Lithuanian exile diplomats. Lithuania had planned to repay the debt this year, but failed to do so.
* European Court of Human Rights Registrar Paul Mahoney told Danute Jociene, the Lithuanian government's representative at the Strasbourg-based court, that Lithuania was among the least problematic countries for applying the European Convention on Human Rights and his court's rulings, BNS reported on 24 July. Jociene said that this did not mean that the country does not have any problems in applying the convention. She noted that since 1996 the court has found 490 complaints against Lithuania inadmissible, but Lithuania was guilty of violating the convention in 11 cases.
* In the first six months of the year a total of 1.68 million foreigners visited Lithuania, 6.7 percent fewer than in the same period last year, BNS reported on 25 July. Most of the visitors came from neighboring countries: Russia (29 percent), Latvia (28 percent), Belarus (14 percent), and Poland (9 percent), but they also had the greatest decreases: Belarus by 21.5 percent, Latvia by 12.1 percent, and Russia by 9.8 percent. The number of visitors from the West increased: United Kingdom by 64.7 percent, Spain by 41.1 percent, Netherlands by 31.8 percent, and Poland by 18.8 percent. Some 81 percent of visitors arrived by road, 12 percent by rail, 5 percent by air, and 2 percent by sea.