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Baltic Report: August 15, 2002

15 August 2002, Volume 3, Number 29

This issue covers events in the Baltic states from 2 to 8 August 2002.
Presidents Aleksander Kwasniewski (Poland), Arnold Ruutel (Estonia), Vaira Vike-Freiberga (Latvia), and Valdas Adamkus (Lithuania) held talks in Palanga, Lithuania, on 2 August on European Union and NATO enlargement, as well as on increased mutual cooperation, BNS reported. Kwasniewski spoke about his recent meeting with U.S. President George W. Bush and said he is sure that the Baltic states will receive invitations to join NATO at the alliance's Prague summit in November. The participants expressed support for Kwasniewski's proposal to form a new association combining the "Vilnius 10" countries seeking NATO membership and the three Visegrad countries (Poland, Hungary, and the Czech Republic) that are already NATO members. Kwasniewski invited them to discuss the association's formation at the beginning of next year in Warsaw. After a working lunch that included St. Petersburg Governor Vladimir Yakovlev and Kaliningrad Oblast Governor Vladimir Yegorov, the presidents attended celebrations marking the 750th anniversary of the port of Klaipeda.

The cabinet decided on 6 August to name 27 January as a day of remembrance of the Holocaust and other crimes against humanity, ETA reported. The date, which is the anniversary of the liberation of the Auschwitz-Birkenau concentration camp, was suggested by the Council of Europe. Finland, Sweden, Norway, and Great Britain have also decided to mark that date as Holocaust Day. Prime Minister Siim Kallas told a press conference after the meeting that no one had pressured the government to introduce Holocaust Day in schools. It was also not related to the recent criticism of Estonia by Efraim Zuroff, the director of the Jerusalem Office of the Simon Wiesenthal Center (see "RFE/RL Newsline," 24 July 2002). Kallas pointed out that former Education Minister Tonis Lukas signed the convention on commemorating Holocaust Day nearly two years earlier. Zuroff welcomed the cabinet's decision the next day, but said that Estonia should have selected a day more closely connected with its own history.

Visiting International Monetary Fund delegation head Rick Haas advised Finance Minister Harri Ounapuu in Tallinn on 8 August that Estonia should drop its plans to compile a second supplementary budget and place this year's budget surplus in reserve, as the global economy is expected to weaken in the second half of the year, ETA reported. Ounapuu said Estonia had more than 1 billion kroons ($62 million) in budget surplus funds for the first half of the year, but it is planning to use only 788 million kroons for the extra spending. Moreover, most of the funds would be for capital expenditures that won't burden next year's budget, such as the purchase of an office building in Brussels, the renovation of border-guard stations on the eastern border, as well as emergency drought relief for farmers. The office building is particularly important since the number of officials stationed in the EU capital is expected to rise from the current 24 to at least 66 upon the country's expected EU accession.

Estonian Air Force commander Colonel Teo Kruuner said that the four U.S.-made Robinson R44 helicopters that were delivered to Estonia on 2 August are an important gift to the entire country, ETA reported on 5 August. Two of the helicopters are equipped with photo, video, and infrared cameras and will be used for search-and-rescue missions and police work. Kruuner said that six Estonian pilots, two of them women, received training at Robinson Helicopter Company's production plant in Torrance, California, and that two more pilots will be trained in Estonia. The helicopters are unarmed, but can be fitted with machine guns if necessary, and will likely participate in the international Baltic Eagle military exercises in September.

Bank of Estonia public-relations head Kaja Kell told the daily "Eesti Paevaleht" on 7 August that the bank is concerned with the country's high current-account deficit and is considering measures to reduce bank loans, ETA reported. In the first quarter of the year, the current-account deficit amounted to 15 percent of the country's gross domestic product. It was slightly reduced in the second quarter, but still remained at a high 12 percent of GDP. Hansapank board Chairman Indrek Neivelt commented that the central bank should seriously analyze the situation and choose a course that will send a message to society. Several analysts claim that the central bank intends to set a higher mandatory-reserve requirement for commercial banks and insist that they raise interest rates in an effort to reduce lending and excessive imports.

The Conservative Club and Farmers' Assembly established a new political party, the National Conservative Party-Farmers Assembly, on 4 August, ETA reported. Conservative Club Chairman Mart Helme, a historian and former ambassador to Moscow, was elected the new party's chairman. Its program calls for a more democratic election system by introducing the direct election of the president and parliamentary elections based on majority voting. The party favors joining the European Union only on equal terms, without rushing the accession. The party has approximately 1,700 members and intends to participate in local elections in October.
* The Estonian-Russian agreement on shipping in Lake Peipus and surrounding waterways came into force on 6 August, ETA reported. It was signed in Moscow on 20 March, but it took a long time for the two governments to complete all the necessary procedures for it to take effect. For example, the agreement on border checkpoints was signed on 25 June. The agreement was intended to pave the way for opening a regular ferry link between the Estonian city of Tartu and the Russian city of Pskov, but a Port of Tartu official doubted that such a link would be established this year.
* Foreign Ministry Deputy Chancellor Juri Seilenthal and Russian Ambassador Ludvig Tsizov initialed an agreement on diplomatic real estate in Moscow on 7 August, BNS reported. The agreement provides for the free use of the land of the Estonian Embassy buildings in Moscow until the time when Russia changes its laws to permit foreign countries to acquire real estate, including land.
* The cabinet approved, and sent to parliament for ratification, the country's accession to the United Nations Convention Against Transnational Organized Crime on 6 August, BNS reported. The convention will create a common legal space in which different countries can fight together against organized crime, reducing to a minimum the differences in domestic laws, which had been an obstacle to cooperation in the past. Estonia signed the convention on 14 December 2000 and the total of such countries is now 113.
* Head of the Agriculture Ministry Fisheries Management Department Andres Jagor said that if the Warsaw Committee accepts Estonia's proposal that the stocks of herring in the Gulf of Riga be considered a separate entity used only by Latvia and Estonia and not part of the overall Baltic Sea herring stocks, Estonia will not have to suffer a 37 percent cut in its herring quota when it joins the EU, BNS reported on 6 August. Estonia has exceeded the quota set by the Warsaw Committee the past two years, but will not be able to do so after it becomes an EU member.
* The supervisory council of Estonian Air authorized its board on 5 August to start talks over leasing another Boeing 737-500 aircraft to replace one of the two Fokker 50 planes it is now using, ETA reported on 7 August. The move should allow the airline to make more trips with more passengers because the Boeing can fly 780 kilometers per hour and carry 107 passengers while the Fokker flies at only 505 kilometers per hour with 48 passengers.
* The government approved on 6 August the rental of a 79.8-hectare plot of land near Kunda in the northwest county of Virumaa for 99 years to the Estonian Cell company, which is planning to build a pulp factory, ETA reported. The construction of the plant, which will be financed by Norway's Larvik Cell and the Swedish forestry firm Rottneros, is expected to cost about 1.5 billion kroons ($93 million) and is expected to be completed by the end of 2003 or in the spring of 2004. Estonian Cell has already signed an agreement with the State Forest Center on supplying 140,000 cubic meters of timber a year.
* The number of political parties increased on 8 August when the Parnu County Court officially registered the Estonian Pensioners Party (EPP), BNS reported. An EPP initiative group first attempted to register officially in May, but its application was turned down because of errors in the registration papers. EPP board chairman Evald Laprik said that the party now has 1,028 members. Its board will meet on 13 August to discuss tactics for the local-council elections in October.
* The Statistics Office announced on 7 August that the consumer price index in July was 0.3 percent lower than in June, but 3.1 percent higher than in July 2001, ETA reported. The prices of goods decreased by 0.7 percent in July with food products falling by 1 percent, but the cost of services increased 0.4 percent.
* The circulation of newspapers in July was lower than in June, ETA reported on 2 August. The tabloid "SL Ohtuleht" continued to have the largest circulation among daily papers, although its circulation decreased by 700 to 65,400. The circulation of "Postimees" fell 1,600 to 59,600 and that of "Eesti Paevaleht" fell 1,500 to 33,800. "Eesti Ekspress" remained the largest weekly, though its circulation dropped 500 to 45,100. The most successful Russian-language weekly was "Vesti nedelya plyus" with a circulation of 19,600, while "Molodezh Estonii" and "Estoniya" were the leading dailies with circulations of 7,900 and 6,300, respectively.

The Central Election Commission announced on 6 August that 21 political parties have submitted candidate lists for the 5 October parliamentary elections, LETA reported. Among the 1,024 candidates (729 men and 295 women) are 164 individuals who are, or have been, members of parliament. More than 80 percent of the candidates are ethnic Latvians (820), but there are also 123 Russians, 16 Poles, six Belarusians, six Ukrainians, and 15 members of other nationalities, as well as 36 candidates who did not list their nationality. The results of a poll of 1,000 people conducted on 17-26 July by the SKDS polling center indicated that just six parties will likely pass the 5 percent voting hurdle for parliamentary representation: New Era (21 percent), For Human Rights in a United Latvia (12.3 percent), Latvia's Way (10.3 percent), People's Party (10.2 percent), Latvian Green Party and Latvia's Farmers' Union (7.1 percent), and the Latvian Social Democratic Workers Party (6.7 percent).

The Central Election Commission voted six to one on 7 August to remove Janis Adamsons and Tatjana Zdanoka from the lists of candidates for the 5 October parliamentary elections, LETA reported. In doing so, the commission accepted the recommendations of the Totalitarian Legacy Documentation Center (see "RFE/RL Newsline," 5 August 2002). A court had ruled that Adamsons, a leading member of the Latvian Social Democratic Workers Party, had been on the staff of the USSR's KGB border guard after 13 January 1991, and was thus ineligible under the parliamentary election law. Adamsons said he will appeal the commission's decision. Zdanoka, who had been barred from the previous parliamentary elections and had even lost her seat on the Riga City Council in 1999 because of her post-January 1991 Communist Party membership, welcomed the decision, saying it would buttress her argument in her ongoing case against Latvia in the European Court of Human Rights. Their removal reduced the number of election lists and candidates to 20 and 1,022, respectively. Zdanoka is the only candidate on the list of the National Harmony Party, one of the three components of the union For Human Rights in a United Latvia (see "RFE/RL Baltic States Report," 7 August 2002).

Accompanied by her husband Imants Freibergs, President Vike-Freiberga began a three-day working visit to Estonia's largest island, Saaremaa, on 5 August, LETA reported. Estonian President Ruutel, who was born on Saaremaa, invited his Latvian counterpart to visit the island and the presidents agreed that future presidential meetings should occur more often outside their respective capitals in order to draw attention to regional development and tourism. At Vike-Freiberga's initiative, the two presidents discussed the need for a common stance in the agriculture negotiations with the European Union. In separate meetings, Jaanus Tammkivi, the mayor of Saaremaa's capital Kuressaare, discussed with Vike-Freiberga the possibilities of launching regular ferry service between Latvia and Saaremaa. Saaremaa Governor Juri Saar later told the presidents about projects for establishing regular ferry traffic between the Estonian islands and Finland. On 6 August, Vike-Freiberga visited an ostrich farm in the nearby Muhu Island and learned more about the success of Saaremaa farmers in getting SAPARD funding for nontraditional farming projects. The next day, both presidents had an opportunity to make a short trip on the new fast catamaran "Linda Express," which they suggested could be used to establish a Latvia-Saaremaa-Helsinki route.

A delegation of U.S. congressmen headed by Representative David Dreier paid a brief visit to Riga on 2 August, LETA reported. They assured President Vike-Freiberga that Latvia should get an invitation to join NATO and the EU and become a good partner for all member countries in these organizations. Dreier told reporters that he was very impressed with Latvia's achievements in overcoming 50 years of Soviet oppression, according to BNS, and was pleased with the active role Latvia is playing in the U.S.-led antiterrorism campaign. The eight-member delegation first visited Estonia (see "RFE/RL Baltic States Report," 12 August 2002) and also plans to stop in Russia, Georgia, and Cyprus.

The 12-member council of Latvijas Kugnieciba (Latvian Shipping Co., LASCO) confirmed Zigurds Vaivods as its chairman and Girts Rungainis as his deputy on 2 August, BNS reported. Vaivods worked previously for the SWH Group and has business ties with Juris Savickis, the head of Itera Latvia, which some observers suggest may be involved with one of the offshore enterprises that bid on the LASCO privatization. Vaivods replaces Druvis Skulte who was removed from office on 26 July, along with the entire board of directors and all but one of the council members, at the first shareholders meeting after the sale of 51 percent of the company's shares. Imants Vikmanis was elected the company's new board chairman, replacing Andris Klavins.
* Armed forces commander Colonel Raimonds Graube traveled to Britain on 8 August for talks with representatives of the British Ministry of Defense and Armed Forces staff on cooperation in current and future peacekeeping missions, LETA reported. He also spoke about the development and reorganization of Latvia's armed forces. The next day, Graube visited the Royal Military Academy in Sandhurst, which is currently hosting a Latvian student.
* The government approved on 6 August the Preaccession Economic Program that all EU candidate countries must prepare and that Latvia will submit to the European Commission on 15 August, BNS reported. The program states that the economy in recent years had been characterized by rapid growth, greater activity in all important branches, growing investments, and low inflation, but the relatively large current-account deficit and high employment in separate regions still remain major problems.
* The new United Nations resident coordinator in Latvia, Gabriele Koehler, said that she would continue to work on the projects of her predecessors with the problems of poverty, environment, integration, and public administration, as well as AIDS/HIV, as the priorities, BNS reported on 7 August. She affirmed that Latvia's relations with the UN will change after it becomes a member of the EU with the role of the UN Development Program in Latvia becoming less important.
* Ventspils Mayor Aivars Lembergs told a press conference on 5 August that the government should distribute its ministries throughout Latvia, BNS reported. He suggested that the Transport Ministry be moved to the port of Ventspils, the Agriculture Ministry to Jelgava, the Justice Ministry to Daugavpils, and the Foreign Ministry to Pavilosta, Latvia's most westerly point. This would in part solve the problem that too much of Latvia's development takes place in Riga to the disadvantage of other regions of the country. Prime Minister Andris Berzins, commenting on Lembergs's suggestion, said that the government is already planning to move several ministries to locations outside of metropolitan Riga as part of Latvia's administrative territorial-reform program.
* Several political parties are protesting the decision of Latvian State Television (LTV) general director Uldis Grava to allow only parties that have at least a 4 percent popularity rating in the polls by SKDS and Latvijas fakti to participate in the pre-election debates hosted by LTV, saying that it is not democratic, LETA reported on 7 August. Grava countered by noting that all parties will be given 20 minutes of free program time and can purchase more advertising time for a fee. President Vike-Freiberga told BNS on 8 August that she supported LTV's decision, noting that unless some criteria exist for participation in the debates, "three or four friends would get together, announce they have a new party here, and demand broadcasting time."
* The Economy Ministry has prepared amendments to the law on privatization vouchers, foreseeing an extension of their expiration date by a year, i.e., property compensation vouchers would be valid until 31 December 2004, and other vouchers until 31 December 2003, LETA reported on 5 August. The ministry claims that about 98.1 million of the 111.28 million issued vouchers have been used: 33.4 million for privatizing apartments and homes, 7 million for privatizing enterprises and other private property, 44.4 million for purchasing shares, and 13.3 million for privatizing land.
* President Vike-Freiberga presented Foreign Ministry Deputy State Secretary Martins Virsis with credentials as the new Latvian ambassador to Germany on 8 August, LETA reported. He was deputy foreign minister until 1993, then a parliamentary deputy, and later ambassador to Austria from November 1995 to September 2000.
* In the first seven months of the year, the Ventspils Nafta oil terminal handled 10.1 million tons of crude oil and oil products, or 26.3 percent less than in the same period last year, BNS reported on 6 August. The cargo turnover in the port of Liepaja in the same period increased by 15.9 percent to 2.28 million tons, with that of oil products increasing by 38.1 percent to 491,300 tons, LETA reported on 2 August.
* The Central Statistics Bureau announced on 8 August that the consumer price index in July was 0.4 percent lower than in June, but still 1.0 percent higher than in July 2001, BNS reported. In July, the 9.4 percent price drop for fruits and vegetables led to a 0.6 percent fall in the price of goods, but the costs of services rose by 0.3 percent.

Russia's Kaliningrad Oblast governor, Vladimir Yegorov, said on 5 August that Russia and the European Union should resolve potential problems in implementing Schengen visa requirements for travel between Russia and its western exclave by accepting Lithuanian President Adamkus's suggestion of issuing identification cards, BNS reported. During a recent meeting with Yegorov in Palanga, Adamkus proposed issuing five-year visas or magnetic ID cards to Kaliningrad residents in order to ease border-crossing problems after Lithuania ends its visa-free policy next year (see "RFE/RL Newsline," 2 August 2002). Yegorov said, "The most promising way of resolving the issues of cargo transit and movement of people is to get away from the word 'visa' in the negotiating process." He suggested that it should not be very difficult to issue ID cards to the 1 million Kaliningrad residents, as well as to other Russian citizens, wishing to travel to the region.

Representative Elton Gallegly, chairman of the House Subcommittee on Europe of the Committee on International Relations, visited Lithuania on 6-11 August, ELTA reported. On 8 August, he told Prime Minister Algirdas Brazauskas that he is impressed by the country's work to join NATO and is satisfied with its contribution in the fight against international terrorism. Gallegly said he sees no reason why Lithuania would not receive an invitation to join NATO at the Prague summit in November. That day, he also held meetings with Foreign Minister Antanas Valionis and Defense Minister Linas Linkevicius. Gallegly is scheduled to travel to Palanga on 9 August to meet with vacationing President Adamkus and Tom Schneider, the head of the U.S.-operated Mazeikiai Oil concern.

Although the Russian natural-gas giant Gazprom submitted the only application to the State Property Fund for purchasing the 34 percent share in the natural-gas utility Lietuvos Dujos (Lithuanian Gas) earmarked for a natural-gas supplier (see "RFE/RL Newsline," 17 July 2002), it has not yet responded to the request to list what share of the purchase would be assumed by its local strategic partner, Dujotekana, or to identify its shareholders, BNS reported on 6 August. Lithuanian government officials have unofficially expressed the opinion that the government would prefer that Gazprom supply the gas directly to Lietuvos Dujos without employing the subsidiary. Economy Minister Petras Cesna said that if Gazprom does not submit a revised application by the 12 August deadline, Lithuania might begin talks with the Russian government on an international gas-supply agreement.

The Lithuanian State Security Department has sent a request to the Taurage area chief prosecutor asking that criminal charges be brought against Saulius Ozelis, the leader of the Lithuanian Freedom Union's branch in Taurage, for inflaming ethnic tension with several anti-Semitic actions this year, BNS reported on 7 August. Ozelis tore up and tried to burn an Israeli flag in Taurage on 17 April, but was stopped by police. On 28 July, he burned a mock Israeli flag, allegedly to protest the offer made by Efraim Zuroff, the director of the Jerusalem Office of the Simon Wiesenthal Center, to provide a $10,000 award for information leading to the conviction of an alleged Nazi war criminal in Lithuania. The department concluded that as the Israeli flag is universally recognized as the symbol of the Jewish nation, Ozelis intentionally attempted to incite public violence against Jews, a crime under the Lithuanian Criminal Code.
* A delegation of high-ranking officers from the U.S. National War College made a three-day visit (6-8 August) to Lithuania to become familiar with the country's defense forces and its political and cultural life, BNS reported. On 7 August, they held talks with armed-forces commander Major General Jonas Kronkaitis at the Rukla Training Base and visited the Karmelava Regional Air Space Surveillance and Control Center. The next day, they met with Defense Minister Linas Linkevicius and the Foreign Ministry secretary responsible for NATO integration, Giedrius Cekuolis.
* Following the example of the EU and the U.S., the government decided on 7 August to recognize Russia as a market economy and to remove it from its list of nonmarket economies that are subject to a special economic regime on 1 September, ELTA reported. Lithuania's efforts to get official U.S. recognition that it has a market economy have not yet been successful.
* The cabinet agreed on 7 August to place the four state-owned alcoholic-beverage producers on the privatization list, ELTA reported. The state currently owns 92 percent of Stumbras, 84 percent of Alita, 82 percent of Vilniaus degtine, and 73 percent of Anyksciu vynas. The stakes are to be sold before the abolition of the state's monopoly on the production of strong alcoholic beverages scheduled for 1 July 2003.
* State Food and Veterinary Service (VMVT) officials decided on 6 August that it will resume issuing licenses for the export of milk powder to the European Union from 10 August, BNS reported. It had placed the temporary ban on exports on 11 July after the EU reported for the third time that forbidden foreign substances had been found in exported Lithuanian milk powder. Subsequent tests, however, revealed that the powder had not been produced in Lithuania.
* The number of investors interested in participating in the privatization of Kauno Elektrine (Kaunas Electrical Power Plant) has decreased from eight to three: Finland's Fortum Oy; a German consortium of Verbundnetz Gas and Stadtwerke Leipzig; and a consortium of Russia's Gazprom, its local Lithuanian partner Dujotekana, and the U.S.-based Clement Power Venture, ELTA reported on 8 August. The plant, whose balance-sheet value is more than 100 million litas ($35 million) is expected to be sold this year. It is controlled by Kaunas Energy, 85 percent of whose shares are owned by the Kaunas municipality.
* The Finance Ministry announced on 2 August that in the first seven months of the year, the central government collected 5.71 billion litas ($1.6 billion) or 6 percent more than planned, BNS reported. Revenues in July were 11 percent less than planned primarily due to shortfalls in value-added taxes (VAT), which from 1 July were no longer paid in advance but collected only after the delivery of goods from producers or even later.
* Cyclist Raimondas Rumsas, who won third place in this year's Tour de France, traveled secretly from his home in Italy to Riga, where he underwent independent doping tests on 8 August, ELTA reported. Urine samples were also sent to laboratories in Sweden and Germany. He had successfully passed several doping tests during the race, but his wife Edita has been detained by French police since 28 July when almost 40 types of medications were found in her car.
* In the first seven months of the year, Lietuvos Energija (Lithuanian Energy) exported 3.85 billion kilowatt-hours (kWh) of electricity, or more than four times greater than the 902 million kWh exported in the same period last year, BNS reported on 5 August. The increase is in great part due to the introduction of electricity export to Kaliningrad Oblast and Poland.
* The State Social Insurance Fund (SoDra) announced that it had a small budget surplus for the first time this year as its seven-month revenues of 2.58 billion litas ($735 million) exceeded expenditures by 26.6 million litas, ELTA reported on 8 August. SoDra officials said the surplus reflected the better general economic situation of the country and newly adopted legislation on increasing the age for pension eligibility and maternity benefits.