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Baltic Report: August 12, 2002

12 August 2002, Volume 3, Number 28

This issue covers events in the Baltic states from 26 July to 1 August 2002.
In Salzburg on 26-27 July, Austrian and Portuguese Presidents Thomas Klestil and Jorge Sampaio assured their northern counterparts Arnold Ruutel (Estonia), Vaira Vike-Freiberga (Latvia), and Valdas Adamkus (Lithuania) that they strongly support their countries' efforts to join NATO and the European Union, BNS reported. The meeting was organized by Klestil, who recently visited Estonia, Latvia, and Lithuania and was impressed with their economic growth and development. The presidents, who also took time to attend the world famous Salzburg Music Festival, addressed such issues as the fight against organized crime, illegal migration, money laundering, and drug smuggling. The five presidents stressed the need for the small countries in the EU to stand together to protect their national identities. Vike-Freiberga brought up the issue of EU agricultural subsidies and received support for her position that new member states should be treated the same as current EU members. The presidents discussed relations with Russia and Ukraine as well as the question of visas for Kaliningrad Oblast residents.

Speaking at a Russian Navy Day celebration in Kaliningrad Oblast on 28 July, Defense Minister Sergei Ivanov said, "Russia's leadership will not allow Kaliningrad to be torn away from the rest of Russia," reported the next day. Ivanov also reiterated the Kremlin's concerns about the Baltic states joining NATO. He said that if they become NATO members without having signed the Treaty on Conventional Forces in Europe, it will create a "legal black hole" that "will not increase security in the Baltic region." According to RIA-Novosti, Ivanov also said that the Baltic Fleet, which is based in the Kaliningrad Oblast city of Baltiisk, "has played and will continue to play a military-strategic role in the region." He said the fleet "enables [Russia] to influence military-political events happening [in the region]." There are currently 25,000 Russian military personnel in Kaliningrad, according to a BNS report on 26 July.

The state secretaries of the three Agriculture ministries held talks in Sigulda on 29-30 July to form a common position for their membership negotiations with the EU, BNS reported on 31 July. Alfonsas Tamosiunas (Lithuania), Laimdota Straujuma (Latvia), and Tarmo Noot (Estonia) decided they should point out that, as former Soviet republics, they are in a different situation than other EU candidates and have to de-collectivize agriculture -- switching from state to private ownership of farming lands between 1991 and 1995. They declared that the agricultural quotas suggested by the European Commission were too low and proposed that the size of the quotas should be based on the average production from 1995 to 1999 and not be lower than current production. The secretaries agreed that they should hold meetings on a regular basis, and the next one will be in Estonia in October.
* Interior Ministers Juozas Bernatonis (Lithuania), Marek Seglins (Latvia), and Ain Seppik (Estonia) met in the Lithuanian seaside resort of Palanga on 26 July and evaluated favorably the tasks accomplished during Lithuania's presidency of the Baltic Council of Ministers since last July, BNS reported. These include simplification of border-crossing procedures, the recognition of ID cards as travel documents from 2003, cooperation in the fight against organized crime, and better exchange of information.
* According to a report in the 1 August edition of the Finnish newspaper "Helsingin Sanomat," a July 2002 survey shows that Estonia has the lowest level of popular support for EU membership of all 10 candidate countries, while the level of support for EU membership in Latvia and Lithuania is somewhat higher. According to the survey, only 38 percent of Estonian citizens would vote "yes" in a referendum on EU membership, while 27 percent would vote "no." The respective results in Latvia are 46 percent "yes," 31 percent "no," and in Lithuania 50 percent "yes," 20 percent "no."

Alar Streimann, Estonia's chief negotiator with the European Union and Foreign Ministry deputy chancellor, closed the energy chapter during talks in Brussels on 30 July, ETA reported. Estonia thus joined the leaders among EU candidates with 28 of the 31 chapters completed. Estonia reached agreement to open 35 percent of its electricity market by 2009 and to fully open that market by the end of 2012. The long transition period was granted because of the difficulties of converting from oil shale, which is currently used to supply 90 percent of Estonia's electricity. The EU agreed to add oil shale to the list of research cofinanced by the EU's Coal and Steel Research Fund. Estonia also succeeded in postponing to 31 December 2009 the deadline for building up a 90-day reserve of fuel oil and gasoline.

Representatives of the Reform and Center parties, which make up the ruling coalition, decided on 29 July to abandon their plans to propose that election alliances be allowed only for elections to the smaller local councils, ETA reported. The parties decided to advocate the prohibition of such alliances beginning with the 2005 elections. The ruling parties issued a joint statement declaring that their new position was "a goodwill compromise" since they wanted to make sure that the elections would not be delayed by any further legal disputes. As expected, on 30 July the Riigikogu with a vote of 63 to 1 with 37 abstentions approved the amendments to the local elections act, which allow electoral blocs for local elections until the 2005 elections. The Estonian Supreme Court ruled earlier in the month that the prohibition of election alliances for the local-council elections on 20 October is unconstitutional (see "RFE/RL Newsline," 16 July 2002).

Advertising specialist Kaur Hanson told the daily "Eesti Paevaleht" on 30 July that the plans of Efraim Zuroff, the director of the Jerusalem Office of the Simon Wiesenthal Center, to place ads in Estonian newspapers offering a $10,000 reward for reliable information that leads to the trial and conviction of Estonian Nazi war criminals might conflict with the country's advertising law, BNS reported. Under the law, advertising is deemed offensive if it incites or supports discrimination on the grounds of nationality, race, color, sex, age, language, origin, religion, political, or other circumstances. Hanson said that fanning hatred and interethnic hostility carries a criminal punishment under Estonian law. He called Zuroff a successful propagandist whose efforts in Estonia have produced negative results as "more and more residents of Estonia are feeling a growing sympathy for Arabs and antipathy toward Jews."

Foreign Ministry Deputy Chancellor Harri Tiido said on 31 July that Estonia is seriously considering joining the Treaty on Conventional Forces in Europe (CFE), BNS reported. Tiido noted that the original CFE treaty, which was signed in November 1990 by NATO and Warsaw Pact countries, was not open to new members, and the updated version signed in 1999 has not yet been ratified and therefore is not in force. His comments were prompted by recent statements by Russian officials, including Defense Minister Sergei Ivanov, that the Baltic states should sign the CFE treaty before joining NATO, as otherwise there is the potential for NATO to place large amounts of weaponry in these countries and destabilize the region. Tiido called Russian concerns about this "groundless" and added, "The accession of Estonia, Latvia, and Lithuania to NATO would increase the number of Russia's partners in NATO by its three neighbors, and that is a positive, rather than negative, outlook."

A delegation of U.S. congressmen headed by Representative David Dreier (R- CA), paid a brief visit to Tallinn on 1 August, ETA reported. In talks with Prime Minister Siim Kallas the delegation stressed the countries' need to improve bilateral economic cooperation. The two sides agreed that they can learn a lot from each other's experience and that future cooperation should involve small businesses. State Secretary Aino Lepik von Wiren discussed with the U.S. congressmen Estonia's e-government system, and the delegation took a sightseeing tour of Tallinn's Old Town and visited the port of Muuga. The delegation departed for Riga the next morning and is scheduled to visit Russia, Georgia, and Cyprus before returning home.

Interior Minister Ain Seppik and acting Rescue Board General Director Jaanus Vessart were present at Tallinn's International Airport on 26 July for the departure of an explosives-detection team comprising five men and three canines, BNS reported. The team will participate in a three-month mission in Afghanistan, where its primary task will be ensuring the safety of U.S. military personnel at an air base participating in Operation Enduring Freedom. The team's participation is considered an important opportunity for Estonia to show that it can be a contributor to safeguarding international peace.
* The government approved a defense cooperation agreement with Turkey on 30 July that is intended to boost collaboration in training, technology, and research, and to promote overall defense cooperation, ETA reported. The two countries previously signed an agreement on military training, technology and research, but officials say the international situation makes it necessary to intensify and broaden contacts.
* Environment Ministry Fishery Resources Department official Aare Tuvi declared on 29 July that talks the previous week in Canada did not result in a settlement in the shrimp-fishing dispute that prompted Canada to close its ports to Estonian fishing boats in April, BNS reported. Canadian officials claim that, based on the amount of time Estonian ships spend in Canadian waters, the size of their reported catches are too low. The two sides agreed to examine additional materials and meet again in August in Estonia.
* The cabinet decided on 30 July that Estonia should join the North-East Atlantic Fisheries Convention in order to increase its fishing opportunities in the Atlantic, BNS reported. It charged Environment Minister Heiki Kranich with sending the required written application to the British government to join the 1959 convention and become an equal member of the North-East Atlantic Fisheries Commission.
* Finance Minister Harri Ounapuu told the daily "Eesti Paevaleht" on 29 July that he supports the passage of a second supplementary budget of 788 million kroons ($50 million) to use up the greater part of the budget surplus, BNS reported. He suggested that the funds be used to purchase a building to house the expanding Estonian mission in Brussels, to renovate border guard stations on the eastern border, and to set up a buffer fund to help bring EU structural funds to Estonia.
* The cabinet approved a proposal by Foreign Minister Kristiina Ojuland and on 30 July appointed Estonia's ambassador to the European Union, Priit Kolbre, as the Foreign Ministry's new chancellor, replacing the recently dismissed Indrek Tarand, ETA reported. Kolbre started working at the Foreign Ministry in 1990 and served as deputy chancellor in 1994-97 before being posted to Brussels.
* The international rating agency Moody's Investors Service announced on 29 July that it was upgrading the financial-strength rating of Hansapank from C- to C and changing the outlook to positive, ETA reported. Moody's said the upgrade reflects the bank's continuing dominant position in Estonia, its sound financial fundamentals, and good profitability while maintaining a conservative risk profile. It views Hansapank as the strongest financial institution in the Baltic region.
* According to customs statistics, in the first half of the year exports totaled 40.1 billion kroons ($2.4 billion) and imports 55.7 billion kroons, resulting in a foreign-trade deficit of 15.6 billion kroons, BNS reported on 31 July. This was slightly less favorable than in January-June 2001, when exports were 42.6 billion kroons and imports 52.7 billion kroons.

The second competition to find a director for the new Corruption Prevention Bureau ended unsuccessfully on 30 July when the cabinet rejected the three top candidates proposed by a special selection jury, BNS reported. The candidates were Security Police Deputy Chief Didzis Smitins, deputy head of the Service for Preventing Legalization of Illegally Acquired Funds Aldis Lieljuksis, and Presidential Security Service official Raimonds Avdejevs. Prime Minister Andris Berzins announced that applications for a third competition will be accepted until 12 August. He said the same selection jury will continue to examine candidates, as he has found it to be "trustworthy." Berzins noted that in the event that no suitable candidate is found in the third competition, he will likely ask parliament to amend the law founding the bureau by abolishing the requirement that the candidate have a law degree.

As reported by LETA on 29 July, Latvian politicians interviewed by BNS have concluded that Russia has reoriented its policies concerning the Baltic countries, with the goal of using the "Russian-speaking" minorities in those countries to positively influence public opinion about Russia and its interests. Some of the signs of this change in Russian strategy include the creation of a new department within the Russian presidential administration to develop relations with co-ethnics living abroad, as well as facilitating the distribution of Russian mass media in the Baltics as a Russian information-policy priority. The majority of politicians surveyed felt that one of the reasons behind this reorientation is Russia's belief that it cannot prevent the Baltic countries from joining NATO. According to former Prime Minister and Foreign Minister Valdis Birkavs, since the 11 September attack on America, Russia has become more deeply involved with NATO and understands that it cannot stop the enlargement of NATO to the Baltics, so it fell back on a second available instrument of influence -- the status of "co-ethnic" in Latvia and the other Baltic countries.

A delegation from Moscow, including Moscow Municipal Government Trade Minister Vladimir Malishkov and International Relations Department Deputy Chairman Vladimir Lebedev, held talks in Riga on 1 August with Riga Deputy Mayor Sergei Dolgopolov, BNS reported. They discussed plans for holding Moscow Days in Riga next June, which are to include an extensive cultural program as well as an exhibition of scientific and industrial achievements. Malishkov also noted that his city has approved financing for the construction of a Moscow Culture and Business Center in Riga, which could later become the foundation for future Moscow representation in Estonia and Lithuania.

Vilis Kristopans announced on 29 July that he has accepted the invitation of the union of the Green Party and Latvia's Farmers Union to run on their list of candidates in the October parliamentary elections, LETA reported. He, however, declared that he had no intention to join officially either one of the parties. Kristopans was one of the founders of Latvia's Way and served as transportation minister in three different cabinets before heading Latvia's government from November 1998 to July 1999. Earlier this month, he resigned from Latvia's Way, saying he was unable to influence the party's policies. Kristopans said he has examined the programs of the political parties and found that the union's priorities largely correspond with his own.
* Prime Minister Berzins had an unofficial meeting on 29 July with Russian Deputy Prime Minister Valentina Matvienko, who was vacationing in Jurmala, BNS reported the next day. They discussed "in a favorable atmosphere" various matters, including the future of bilateral agreements that have not yet been ratified by the parliaments.
* During his farewell meeting with Prime Minister Berzins on 29 July, UN Resident Coordinator in Latvia Jan Sand Sorensen said that Latvia has been particularly successful in the past two years and the UN Development Program will consider it a donor country, LETA reported. Gabriela Koehler is replacing Sorensen as the main UN representative in Latvia from 1 August.
* The Finance Ministry announced on 29 July that the European Commission had approved the EU PHARE program for Latvia for 2002, which calls for distribution of 35.36 million euros for 18 projects, BNS reported. International Financial Affairs Minister Roberts Zile said that, while he is pleased with the projects that were approved, he regrets that due to poor cooperation between state institutions and the inability of some of them to prepare quality projects, Latvia has failed to receive additional funding of 12 million euros.
* The European Court of Human Rights rejected Russia's request for an independent expert analysis of what it claims is a forged signature of Tatyana Slivenko on a form of the Latvian Population Register as well as a petition for an additional hearing, BNS reported on 26 July. Slivenko launched the case, arguing that Latvian authorities illegally deported her and her husband, a former USSR military officer.
* The Foreign Ministry released a statement on 31 July saying that comments by the Russian Foreign Ministry on the report on Latvia by the Council of Europe's European Commission Against Racism and Intolerance once again "demonstrated its inadequate understanding" of the situation of ethnic minorities in Latvia, BNS reported. It claimed that its Russian counterpart totally ignored the report's conclusions praising Latvian policy on ethnic minorities and noting that the UN, OSCE, and European Council have found the human rights situation in Latvia to be in compliance with international standards. The Russian ministry mentioned only shortcomings in the report and urged Latvia "to ratify the convention on protecting national minorities and harmonize Latvian legislation with it."
* The Latvian Food and Veterinary Service has issued an order restricting imports of pork and food containing pork from Germany, Italy, Belgium, and Spain because of a report that Dutch-manufactured animal feed used in those countries contains the hormone methoxyprogesteroneacetate (MPA), BNS reported on 30 July. Only shipments accompanied by a certificate confirming that the products do not contain MPA will be allowed into Latvia. Other shipments will be tested in laboratories by the Latvian Sanitary Border Inspectorate and sent back to the exporting country if the tests are positive.
* A shareholders meeting of Ventspils Nafta (VN) on 26 July unanimously elected board member and construction affairs Director Janis Adamsons as the company's new president, LETA reported. The company's director general, Ritvars Priekalns, was elected vice president. Adamsons said that VN's recent purchase of shares in the Latvian Shipping Company should benefit both VN shareholders and the state.
* Moody's Investors Service upgraded the financial-strength rating of Latvijas Unibanka from D+ to C- on 29 July, BNS. Moody's said the upgrade reflects the bank's important position in Latvia's banking market, where it controls 27 and 32 percent shares of domestic deposits and loans, respectively, as well as its sound financial fundamentals, improving profitability, and solid asset quality.
* A July 2002 survey by "Latvijas Fakti," reported by LETA on 30 July, shows that 30.4 percent of Latvian residents predict that the overall economic situation in the country will improve over the next 12 months, while 17.7 percent believe it will worsen. Concerning their personal circumstances, 25.2 percent of Latvian residents feel their own financial situation will improve, while 15.1 percent think it will worsen.
* The faith of Latvian residents in state government institutions has dropped dramatically since the last parliamentary elections in late 1998, even though their confidence in all community institutions has remained essentially stable, according to a comparison of two "Latvijas Fakti" surveys that ran in the 31 July issue of "Neatkariga rita avize." The surveys -- from July 2002 and December 1998 -- show that confidence levels in the State Income Service have fallen by about 30 percent, while those in the Saeima (parliament) and the Privatization Agency have dropped by about 25 percent; in the Cabinet of Ministers, judiciary, and Bank of Latvia by about 20 percent; and in the state auditing agency and Customs Service by 15 percent. Over the same period of time, institutions such as state television, radio, the mass media, and the church have maintained high confidence ratings among Latvia's residents, while faith in the country's armed forces, border guards, and municipal governments has increased.

In Palanga on 30 July, Russian Defense Minister Sergei Ivanov told Lithuanian Defense Minister Linas Linkevicius that Russia is satisfied with current conditions for military transit to and from Kaliningrad Oblast via Lithuania and would not want to encounter "additional difficulties," BNS reported. The two ministers agreed to form a group of Russian and Lithuanian experts to investigate the possibilities of transporting 1,600 tons of spent liquid missile fuel from Kaliningrad to plants in Russia for reprocessing. They also discussed the idea of installing a hot line between the Lithuanian Air Force and Russian air bases in Kaliningrad to exchange information about flights over the border zone. Linkevicius invited Russian officers to attend the Amber Hope 2003 exercises that will be held next year in Lithuania as part of NATO's Partnership for Peace. After the meeting, Ivanov told reporters the discussions were very open and that the close dialogue was much better than with the other Baltic states.

Prior to meeting Kaliningrad Oblast Governor Vladimir Yegorov in Palanga on 1 August, President Valdas Adamkus told reporters that the question of visas will be an important topic of discussion, BNS reported the next day. He said that Lithuania will meet its EU commitments to introduce Schengen agreement visa requirements next year but suggested that five-year visas or magnetic identification cards could ease border crossing for Kaliningrad residents. Yegorov told the president he has received a full guarantee from Russia's LUKoil that the planned exploitation of the D-6 oil field -- 22 kilometers off the Curonian Spit and five kilometers from the Lithuanian sea border -- will not threaten the environment and that oil extraction will not begin until next year. Yegorov also told Adamkus that water-treatment facilities are being constructed at the cellulose factory in Neman to treat polluted effluent being discharged to the Nemunas River.

President Adamkus on 31 July appointed parliamentary Foreign Affairs Committee Chairman Gediminas Kirkilas as his representative for resolving transportation issues concerning Kaliningrad Oblast, ELTA reported. It seems likely that the selection of Kirkilas, who is a deputy chairman of the Lithuanian Social Democratic Party, was probably prompted by the decision of Russian President Vladimir Putin to appoint State Duma Foreign Affairs Committee Chairman Dmitrii Rogozin as his special envoy for Kaliningrad (see "RFE/RL Newsline," 15 July 2002). As part of its negotiations to join the EU, Lithuania agreed to introduce Schengen agreement visa requirements for Kaliningrad residents next year, thus ending their previous visa-free travel to Lithuania.

World Bank Director for the Baltic Countries and Poland Michael Carter and Lithuanian Finance Minister Dalia Grybauskaite signed a loan agreement in Vilnius on 29 July to finance a program for the restructuring and renewal of Lithuania's educational institutions, ELTA reported. The 29 million euro ($28.6 million) loan should be repaid in 17 years, with repayment postponed for the first five years. The Lithuanian state budget will also provide 11.76 million euros and local governments 8.46 million euros for the program. Since 1992, the World Bank has granted Lithuania a total of $490.8 million in loans for 19 projects.

The founding congress of Lithuania's Polish People's Party was held in Vilnius on 27 July, BNS reported. The congress was attended by 85 delegates, who elected former Vilnius Rajonas (region) official Antonina Poltaviec to head the party, while Ryszard Maciejkianiec, Pavel Mikuto, and Edward Tomaszewicz were chosen as deputy chairmen. Former parliamentary deputy and head of the Lithuanian Polish Union Maciejkianiec criticized the existing Polish Election Action -- which has deputies in the parliament and local councils -- for not preparing a development program for the Vilnius district, where the majority of Lithuania's Poles live. The new party plans to participate in local council elections on 22 December with a program calling for accelerating the economic development of the Vilnius district and a special emphasis on property restitution, regional policy, education, and youth programs.
* A commemoration ceremony of the tragic events at the Medininkai border checkpoint on the Lithuanian-Belarusian border 11 years ago was held on 31 July, ELTA reported. Seven Lithuanian customs officials and police officers were brutally slain by Soviet OMON forces in the early hours of 31 July 1991, while one witness survived the attack. President Adamkus attended the ceremony, expressing the nation's respect and gratitude to the devoted sons of Lithuania.
* During a trip to Kaliningrad on 26 July, Deputy Foreign Minister Justas Vincas Paleckis was assured by various Russian officials that there was no danger of separatism in the exclave, BNS reported. He held talks with Kaliningrad University Rector Andrei Klemeshev on Lithuania-Kaliningrad cooperation at the university level and the possibilities for opening a department of Lithuanian Studies at his university. Paleckis also met with Kaliningrad City Mayor Yurii Savenko and Kaliningrad Oblast Duma Chairman Vladimir Nikitin, who raised the question of the planned abolition of visa-free travel.
* In talks with a delegation of Russian transport experts on 31 July, Road Transportation Department Director Romualdas Petravicius succeeded in gaining an extra 10,000 permits for Lithuanian truckers to transport cargoes in Russia, ELTA reported. He said the added permits were needed because about 60 percent of exports from Lithuania to Russia are carried by trucks.
* Reacting to a statement by the EU that the MPA hormone was found in feed grain in Belgium, the Netherlands, and Germany, the State Food and Veterinary Service on 30 July imposed a temporary ban on imports of animal, fowl, and fish feed from these countries, BNS reported. The service's deputy director, Darius Remeika, said there was only a remote chance that the hormone, which is used to make animals gain weight faster and cheaper, entered Lithuania since farmers primarily used local feed.
* The State Property Fund and municipal governments raised a total of 271 million litas ($70 million) from privatization in the first seven months of the year, BNS reported. The SPF sold 311 state-owned entities for 240 million litas and the local governments 212 for 30.9 million litas. The major sales were 116 million litas for Lithuanian Gas and 71 million litas for the Lithuanian Agricultural Bank.
* The Statistics Department announced on 30 July that the gross domestic product (GDP) in the second quarter of the year was 12.6 billion litas, or 6.9 percent more than in the same period last year, ELTA reported. Per-capita GDP rose to 3,628 litas. The GDP of 23.8 billion litas in the first half of the year represented an increase of 5.8 percent.
* The oil concern Mazeikiu Nafta (Mazeikiai Oil) announced that according to U.S. Generally Accepted Accounting Principles (GAAP) it suffered a loss of 136 million litas ($34 million) in the first half of the year, ELTA reported on 31 July. The greater part of the loss (104 million litas) was in the first quarter of the year due to a halving of oil-refining margins.
* The Statistics Department announced on 29 July that the flow of railroad cargo in the first half of 2002 increased to 17.2 million tons, or 20.2 percent more than in the same period last year, BNS reported. The turnover of cargo in the port of Klaipeda grew by 2.2 percent to 11.8 million tons; air cargo rose by 0.1 percent to 1,576 tons; and the number of air passengers increased by 1.7 percent to 169,800.