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Baltic Report: February 12, 2001

12 February 2001, Volume 2, Number 3
The European Commission, the executive arm of the European Union, submitted a report on the EU's enlargement and the fate of the Russian Kaliningrad region and will now await the Russian government's "ideas on the matter," Chris Patten, European Commissioner for External Relations, told a Moscow press conference on 19 January, BNS reported. Patten denied statements about granting Kaliningrad the status of an associate member of the EU. Lithuanian President Valdas Adamkus, meeting with European Commission chairman Romano Prodi in Vilnius, endorsed the EU's report on Kaliningrad the same day. Adamkus underscored Lithuania's considerable experience in working with Kaliningrad and pledged to take an active part in the implementation of the EU proposals.

Former Kaliningrad Governor Yuri Matochkin, who now serves as a deputy in the Kaliningrad regional Duma and chairman of its political economy committee, told the Russian enclave's largest daily, "Kosmolskaya Pravda v Kaliningrade" that he wouldn't have any objections if Germany took over administration of the region, BNS reported on 25 January. Matochkin said, "we shouldn't turn down German economic stewardship if that allows us to write off a portion of Russia's debt," estimated to be between 80 and 100 billion DM. Artur Kuznetsov, the Russian Foreign Ministry's representative in Kaliningrad, told a press conference on 26 January, "[i]t is possible to intensify the economic activity of Germany, here." On 22 January the German Embassy in Moscow bluntly refuted British press reports which claimed that Moscow and Berlin were conducting secret negotiations about the Kaliningrad region in light of the forthcoming enlargement of the EU, Interfax and BNS reported. The British press reports claimed that during his visit to Moscow in early January German Federal Chancellor Gerhard Schroeder discussed special privileges for German businesses in the enclave in exchange for writing off Russia's debts to Germany.
* The German automobile maker BMW has announced the beginning of a search for a location for a new assembly plant in Eastern Europe. Estonia, Latvia, and Lithuania are competing for the new investment, which is estimated to be almost 1 billion DM, IYAR-TASS and Baltic agencies reported on 24 January. The plant could be completed by 2004, employ over 2,000 persons, and annually produce 200,000 automobiles.
* The defense forces commanders of the seven Nordic and Baltic states met in Riga for their annual consultation from 23-24 January, BNS and ETA reported. The Nordic commanders stated their governments supported NATO membership for Estonia, Latvia, and Lithuania in 2002.
* The annual World Economic Forum in Davos, Switzerland, held a seminar entitled, "Road Map for the Baltics" on 26 January, BNS reported. The session dealt with the outlook for the Baltic Sea region and each separate Baltic country.

Estonia's parliament passed a much-debated law on 24 January that limits the number of hours employees can legally be forced to work, according to BNS and ETA. The law sets a national standard work day of eight hours, and the standard work week is now considered to be 40 hours. The law also prohibits employees from holding several jobs and restricts all employees to a maximum work week of 48 hours, overtime included. Among compromises reached to pass the bill, sponsors agreed to exempt executives, clerics, and the self-employed from the law's restrictions and allowed employers to expect their employees to work up to 200 hours of overtime in a given calendar year. According to a recent survey, 15 percent of the 600,000 employees in Estonia moonlight for additional income, ETA reported. In a related action, the government adopted on 23 January, and sent to the parliament for approval, amendments to the Wage Act which would equalize wages paid to men and women for similar work, BNS and ETA reported.

The government on 23 January adopted its Eurointegration action plan for 2001, BNS and ETA reported. Noting that the European Union values not what is promised, but what is realistically completed, Prime Minister Mart Laar said that this year's action plan is less ambitious than in the past but is attainable. The government intends to pass 171 decrees and expects the individual ministries to issue 268 regulations required for EU integration. It will also present 83 draft laws and 38 international conventions for ratification to the parliament this year, and 44 more draft laws and 17 ratification bills in 2002 -- to meet its self-imposed deadline for EU membership by 1 January 2003.

A recent survey by the Integration Foundation showed that stories about Russians suffering great economic hardships in Estonia are a myth, ETA reported on 19 January. It indicated that the number of average-income people is roughly the same among citizens of Estonia and non-citizens. The only significant difference is in the percentage of the skilled workforce, which is 35 percent among non-Estonians and 22 percent among Estonians. The survey showed that the economic situation of households is relatively similar, especially for low-income families, and differences are caused by the location of residence rather than ethnic background.

The European Union's agriculture minister, Franz Fischler, and Estonian Finance Minister Siim Kallas signed Estonia's SAPARD agreement, the EU's agriculture subsidy program for candidate states, in Brussels on 25 January, BNS and ETA reported. But, the SAPARD program is of little use to Estonian farmers, due to the strict terms imposed by the EU authorities, "Eesti Paevaleht" reported on 22 January. Jarko Lust, an Estonian Agriculture Ministry specialist, told the daily that the delay of SAPARD funds is largely caused by the EU bureaucracy, which is conducting an audit of the program. Even when funds become available, EU requirements are so strict that only 1,000 of the 12,000 farmers in Estonia will qualify. The program is prohibitive because it requires farmers to advance the funds for their investment projects and only later receive a partial reimbursement from the EU. The Estonian farmers' union says that the program is unfair because it doesn't include potato and vegetable growers. The delayed Estonian land reform and the EU requirement to buy European-produced equipment are named as additional problems for utilizing the funds. The SAPARD program has not yet been launched in any of the EU candidates.
* President Lennart Meri urged Estonians to turn their attention to the development of the whole society and not just the economy, so that all of Estonia's people share in the success of the country, ETA reported on 28 January. Meri made the remarks during the Baltic Sea Region session at the World Economic Forum in Davos, Switzerland.
* The parliament on 25 January suspended debate on Estonia's security concept after it drew sharp criticism from opposition deputies, BNS reported. According to the current draft, the main risks to Estonia's security are "international instability" and "uncontrollable political situations in the international environment", but the draft specifies that no military threat now exists. The security concept also identifies environmental risks, the possibility of ethnic conflict, international crime, and escalating social tensions from unmanaged growth as possible sources of danger. Amendments to the draft must be submitted by 7 February through the parliament's national defense committee. The government itself is expected to submit changes drafted by the Foreign Ministry in response to the parliamentary debate.
* Riigikogu National Defense Commission Chairman Tiit Tammsaar told reporters after a meeting with Commander of the Armed Forces Tarmo Kouts and Defense Minister Juri Luik on 26 January that the manufacturer of the Stinger antiaircraft missile is not allowed to sell the weapons to Estonia, ETA reported. The Defense Ministry had rejected earlier offers by the US and Sweden of less advanced antiaircraft missiles -- Chaparral and RBS-70 -- in the hope of receiving the Stingers.
* Daniel Vaarik, an adviser to the Ministry of Finance, said the decision by the Riigikogu to extend the reduction of the VAT on heating from 18 to 5 percent for the next five years will create a 90 million kroons ($5.3 million) deficit in this year's state budget, ETA reported 21 January. The Finance Ministry is preparing a negative supplementary budget.
* According to the Statistics Office, Estonia's industrial sales surged by 9.1 percent in 2000 reaching a record level of 40.44 billion kroons ($2.3 billion), ETA reported on 23 January. Growth was registered in all manufacturing sectors except for chemical products, office machines, and computers. Sales of electricity fell by 3 percent and heating by 7 percent.
* The Elcoteq plant in Tallinn, which produces cell phones for Ericsson, may stop production by mid-year because of Ericsson's recent decision to sell off its world-wide production of cell phones to Flextronic International, a U.S.-based manufacturer, ETA reported on 26 January. The Elcoteq plant is one of the largest Estonian exporters as well as one of the largest investors in the country, employing 3,200 persons.
* An Estonian court imposed a find of 20,700 kroons ($1,230) on Krediidipank (Credit Bank) employee Nina Gultyayeva, the first person in Estonia tried and convicted for money laundering, BNS reported on 22 January. Gultyayeva was charged with transferring 658,056 kroons to bank accounts in other countries without properly establishing the client's identity. Under Estonia's criminal code an employee of a financial institution guilty of violating the anti-money laundering law may be fined or deprived of further employment in the financial sector. The court fined Gultyayeva after noting that the bank had already punished her.
* "Postimees" reported on 22 January that Estonia is incapable of taking measures against a new major oil spill following the oil pollution caused by the wreck of the tanker Alambra off the coast of Estonia last fall. Four months after the spill, oil containment equipment and all three skimmers with their pumping hoses are still caked with black oil and unusable. The transfer of responsibility for fighting oil spills from the Maritime Inspectorate to the Border Guards after the Alambra disaster has contributed to the delay in hiring a firm to clean the equipment, which is estimated will cost 3.5 million kroons ($206,000). The 2001 budget allocation for cleaning oil spills is only 4.6 million kroons.
* The Baltic-Caucasian Cultural Society, which unites peoples of Caucasian nationalities in Estonia, is demanding from Russia as the legal successor of the former Soviet Union a formal apology for the bloodshed in the Azerbaijani capital, Baku, 11 years ago, BNS reported on 20 January. The statement demands both an apology and compensation for the people who were injured. Soviet special troops invaded Baku on 20 January 1990 to crush the Azerbaijan Popular Front, which had come to power advocating independence for Azerbaijan in 1989. Soviet soldiers fired on hundreds of peaceful protestors and tanks crushed to death several dozen residents of Baku. More than 100 people were killed during the week of reprisals by Soviet forces.
* A new analysis of pieces of metal taken by divers from the sunken ferry Estonia found no evidence of an explosion aboard the ship, the German magazine "Der Spiegel" reported on 27 January. The Estonia sunk in the Baltic Sea during a violent storm in 1994 with a loss of 852 lives. Three earlier reports by various laboratories in Germany and the United States indicated there could have been an explosion, although the official Estonian-Finnish-Swedish Commission report issued in 1997 blamed the sinking on faulty locks on the ferry's bow doors.

The Parliamentary Assembly of the Council of Europe on 23 January voted to end its monitoring of Latvia and thereby recognized its achievements in the observance of human rights and the integration of non-citizens, BNS reported. The final report on Latvia read before the vote praised its decision to ratify a number of Council of Europe conventions and to adopt the state language law and a social integration of program. The assembly urged Latvia to continue the democratic reforms and social integration of the population and to ratify the universal convention on protection of minorities which it signed in 1995. Latvian President Vaira Vike-Freiberga, in a speech after the vote, said that the multicultural environment of Latvia is reflected in its general education system that provides education not only in Latvian, but in five other languages: Russian, Polish, Yiddish, Ukrainian, and Belarusian. The monitoring procedure began in September 1997 and was focused on the abolition of the death penalty in Latvia and the treatment of minorities, dpa reported. Meanwhile, PACE called on Russian government officials to urge Latvia's non-citizens to acquire Latvian citizenship through naturalization, BNS reported on 23 January.

The long-drawn-out effort to privatize the state-owned Latvian Shipping Company (LASCO), which is one of the largest maritime cargo companies in the world, has been further complicated by accusations from state proxy Eizens Cepurnieks that former Prime Minister Andris Skele offered a $1 million bribe to Riga Mayor Andris Argalis and Saeima (parliament) Chairman Janis Straume to garner support for one of the bidders for LASCO, BNS and LETA reported on 25 January. Cepurnieks' accusations came to light in an interview in the 25 January edition of "The Baltic Times," where the president of the Latvian chapter of Transparency International, Inese Voika, said Cepurnieks had told her on 17 January that he had learned of the bribe from prominent businessman Normunds Lakucs, who along with For Fatherland and Freedom Party leader Maris Grinblats is said also to have been at the meeting. Voika was quoted by "The Baltic Times" as saying "this story sounded too unbelievable, but anything should be checked. I told it to several journalists before but it somehow never had been published." When asked by reporters about the alleged meeting, all parties strenuously denied it had ever occurred, accused each other of lying and demanded a full investigation of the charges. Meanwhile, Cepurnieks himself is in Spain on vacation, and has said he will not return to Latvia until 1 February, at which time he is to meet with prosecutors looking into the charges. Prime Minister Andris Berzins, noting that "Cepurnieks has created great chaos with his statements," said during an interview on Latvian State Radio that he is ready to demand Cepurnieks' immediate resignation as LASCO state proxy, without waiting for his return to Latvia.

President Vaira Vike-Freiberga said on 22 January that the privatization of the Latvian Shipping Company (LASCO) will be a touchstone for the government of Premier Andris Berzins, BNS reported. The privatization process will indicate whether Latvia and its government have "indeed achieved a stage in development where a credibly transparent privatization process can take place," the president said. The failed privatization of LASCO could have negative consequences from an international perspective and contribute to the impression that corruption is flourishing in the country. The January 2001 issue of "Lloyd's List Economist" indicated that LASCO in 1999 ranked third in the world in terms of the volume of oil products transported.

Latvians built bonfires outside the parliament during the evening of 20 January to remember the five people shot to death by Soviet soldiers ten years ago, AP reported. Thousands of people gathered in the cobblestoned streets singing folk songs and warming themselves around the bonfires just as those who manned the makeshift barricades did a decade ago. Parliament Speaker Janis Straume, launching the commemorative evening, recalled the courage of his countrymen who defended the parliament, serving as human shields against possible military assaults. "Your faith and determination flamed as brightly as the campfires," Straume said. Ten years ago, Soviet troops managed to storm Latvia's Interior Ministry. Five people, including two policemen and two documentary filmmakers, died recording the assault. Some Latvian and Lithuanian leaders have called on Russia to bring those responsible for the deaths in the Riga and Vilnius crackdowns to trial. Natasha Dushen, the widow of filmmaker Andris Slapins, who was the first to be slain, said she doesn't think that will happen. "I've thought endlessly about who is to blame, but in the end, I think it was the system," she told AP, "[i]t created primitive people by teaching them that everything can be solved by force of arms."

Latvia's main intelligence agency, the Constitutional Protection Office, has denied controversial parliament deputy and former Interior Minister Janis Adamsons the security clearance necessary to access state secrets, according to a 24 January LETA report. The announcement was made by parliamentary National Security Commission Chairman Andrejs Pantelejevs, who said the decision was based on a consensus that Adamsons' personal and professional qualities constitute grounds for doubting his ability to maintain confidentiality. Deputy Constitution Protection Office Director Uldis Dzenitis told LETA that the original finding had been made on 9 November. Adamsons, currently a member of the National Security Commission, said he will appeal the decision.
* During a meeting with President Vaira Vike-Freiberga, Secretary General Walter Schwimmer of the Council of Europe praised Latvia's performance in its presidency at the Council of Europe, LETA reported on 23 January. Schwimmer focused on the significant contribution of Latvia helping to pave the way for Armenia and Azerbaijan to become members states of the CE later this year during Latvia's presidency.
* Deputy State Secretary of the Latvian Finance Ministry Inguna Sudraba signed the SAPARD agreement on behalf of Latvia with the European Commission in Brussels on 25 January, LETA reported. Under the agreement, Latvia is to receive annual financial support of 13.8 million lats ($24 million) for its agricultural sector. As much as 230 million lats ($440 million) could be available in loans for the sector, if Latvia approves its agricultural development plan and carries out certification of its Rural Support Service.
* In his farewell visit to Daugavpils on 19 January, Aleksandr Udaltsov, the departing Russian ambassador, declared that Latvian-Russian relations showed a tendency to improve lately, LETA reported. He praised the work of the Daugavpils City Council for its understanding of the problems of non-citizens and Russian-speakers living in the city. Udaltsov said, however, that the two main issues hampering more rapid improvement in relations are the problems of non-citizens and Latvia's wish to gain membership in NATO.
* The Latvian Consulate-General in St. Petersburg was again attacked by vandals the night of 23 January, LETA reported. Two panes of the consulate's entry doors and two windows on the first floor were broken. There was no night guard on duty.
* Latvian Prime Minister Andris Berzins said he had expelled four MPs from his ruling coalition for voting with the opposition on a budgetary issue, Reuters reported on 26 January. Berzins said the expulsions would not hurt his four-party centrist cabinet, which has the support of 65 members of the 100-seat parliament. The four MPs come from a five-member splinter group which last year quit the New Party, a junior partner in the government.
* German Jewish leaders unveiled a monument in Riga commemorating the murder of over 1,000 Jews deported by the Nazis from the German city of Hanover to Latvia in 1941, AP reported on 26 January. Nearly 20,000 German Jews were deported to ghettos and concentration camps in Latvia where they were murdered during the 1941-44 Nazi German occupation of Latvia.
* Prosecutor-General Janis Maizitis told BNS on 22 January that the investigation into the missing 3 million lats ($4.893 million) of Latvenergo's operating funds will be terminated only when the statute of limitations runs out on the crime. The criminal case involving four former officials of Latvia's electricity monopoly was sent to court on 4 November 2000, but has stalled since no one can find the misappropriated money. David Berrey, the liquidator of the failed Baltija Bank, has told investigators that one of the Latvenergo defendants, lawyer Armants Capkevics, told him that debt obligations between Latvenergo and Baltija Bank could be settled through a Liechtenstein-based company called the International Finance Company Establishment, which received 3 million lats as the fee for intermediation. Liechtenstein officials have refused to send seized documents from the IFCE offices to Latvian prosecutors.
* A Latvian court gave Didzis Azanda, a former board member of the Latvian Privatization Agency (LPA), a suspended 2-year jail term and fined him the sum of 50 minimum wages (about $4,000), BNS and LETA reported 22 January. Azanda was arrested by police on 28 July 2000 accepting a 3,000 lats ($5,640) bribe from a person involved in a privatization bid. Azanda was dismissed from the LPA board three days after his arrest for "loss of trust."
* The leader of the National Bolsheviks in Latvia, Vladimirs Moskovcevs, halted his six-week hunger strike on 22 January after being taken to the hospital, LETA reported. Moskovcevs has been protesting his incarceration for aiding and abetting the illegal border crossing of persons suspected of engaging in terrorism in Latvia late last year. Moskovcevs has filed a petition concerning his illegal arrest with the Prosecutor-General's office. In a related action, 100 persons, including some National Bolsheviks, picketed in Riga's Esplanade on 26 January protesting the detention and prosecution of former Red partisan Vasilijs Kononovs, LETA reported.
* The Riga City Council has approved a mobile drug prevention project to tour Riga schools, and has appropriated 17,000 lats ($32,000) to support the education project, LETA reported on 25 January. Drug Rehabilitation Center Director Janis Strazdins told a press conference that the mobile brigade is made up of people with special training who will describe to students the biological, social, and psychological damage drugs inflict and the legal consequences for drug-users and sellers. The team will travel around in a specially equipped bus and they hope to visit 100 of Riga's 152 schools this first year of operations.
* Latvia's Infectious Diseases Center has confirmed that eight employees of Tukuma piens (Tukuma Dairy) are recovering from bouts of dysentery, LETA reported on 26 January. Earlier in the week, Minister of Agriculture Atis Slakteris ordered the State Veterinary Service to suspend the license and stop production at the plant to safeguard the public, and prevent a loss of confidence in Latvia's food-processing sector. Slakteris began a series of meetings with milk suppliers, processors, representatives of the Latvian Central Association of Dairy Farmers, and the managers of Tukuma piens to prevent another such crisis from erupting. Before scientific confirmation was received, the dairy farmers had been demanding the resignation of public officials for suspending the operations of the dairy processing facility.

One day after the resignation of former Transportation Minister Gintaras Striaukas, ELTA reported on 25 January that Lithuanian Seimas (parliament) Chairman Arturas Paulauskas is calling for the resignation of Economics Minister Eugenijus Maldeikis over accusations of unethical conduct for accepting free luxury hotel accommodations and other travel expenses from the Russian natural gas monopoly Gazprom, which is expected to bid on the privatization of Lietuvos Dujos (Lithuanian Gas). Maldeikis has asked Lithuania's ethics commission to review his case, and Prime Minister Rolandas Paksas said he will await the opinion of the commission before making any decision on Maldeikis. On a related note, the strain of the ongoing scandals within the Paksas government has left its mark both on Maldeikis, who suffered a heart attack on 24 January, and on Finance Minister Jonas Lionginas, who was diagnosed on 23 January as suffering from hypertension, according to "Lietuvos Aidas."

Pope John Paul II on 21 January created cardinal Archbishop of Vilnius Audrys Juozas Backis, ELTA reported the next day. Backis is only the second Lithuanian named as a cardinal in the past three centuries. The first one, Vincentas Sladkevicius, who was raised to that rank in 1988, died last summer. Although born in Lithuania, Backis grew up in France, graduated from the Lithuanian seminary in Rome, and had a successful career as a diplomat of the Holy See before being appointed archbishop of Vilnius in 1991.

By a vote of 74 to none with two abstentions, the parliament on 23 January approved the appointment of Reinoldijus Sarkinas for a second five-year term as governor of the Bank of Lithuania, BNS reported. Sarkinas was nominated by President Valdas Adamkus, who stressed that his continued work would help ensure the stability of the country's financial system while it unpegs its currency, the litas, from the U.S. dollar and pegs it to the euro. In confirmation hearings in the parliament earlier in the week, Sarkinas said that 1 January or 1 February 2002 would be the most convenient dates for the switch, especially for businesses which make contracts for imports or exports on an annual basis. The parliament and the government still have to make a number of decisions to enable the switch, Sarkinas observed, but the date should be announced at least six months in advance.

In a statement to reporters, President Valdas Adamkus reproached the actions of the New Policy bloc which comprises the current coalition government for "creating unnecessary tensions in the country" and "dissipating its efforts in the corridors of state institutions, violating ethical standards and protracting the process of appointing government officials" ELTA reported on 24 January. Adamkus expressed deep concern that the government was losing time for needed reforms as well as the public's confidence. Another target of presidential criticism was the government's foreign policy which "has to acquire a more solid face." In a clear reference to the scandal surrounding the economy minister's recent trip to Moscow, which appears to have been subsidized by a local subsidiary of the Russian gas monopoly Gazprom, Adamkus said, "I want to remind some government ministers that we represent the State and not a private firm or research institute." Adamkus also accepted the resignation of Transportation Minister Gintaras Striaukas who was found guilty by the ethics commission earlier in the day for awarding contracts as head of the National Road Directorate in 1998-99 to a construction firm where his wife was a substantial stockholder.
* The parliament's Committee on Foreign Affairs voted on 23 January not to appeal to the Russian Duma for assistance in investigating the massacre by Soviet troops of civilians in Vilnius on 13 January 1991, BNS and ELTA reported. The committee rejected the proposal made by Conservative MP Vytautas Landsbergis on the recommendation of the Justice Ministry, the Foreign Affairs Ministry, and the office of the Prosecutor-General, which argued that the 1991 cases should be taken up through the 1994 Russian-Lithuanian legal aid treaty. Liberal MP Alvydas Medalinskas, chairman of the foreign affairs committee, expressed concern that the 1994 bilateral treaty has yet to be implemented and that Russia had responded to only 20 of 229 legal aid appeals from Lithuania last year.
* About 40 Belarusians attended a five-day seminar in Vilnius to learn methods of non-violent resistance to the dictatorial regime in their country, ELTA and BNS reported on 26 January. Representatives from almost all of the opposition groups and parties in Belarus attended, as well as three exiled Belarusian opposition leaders living in the United States, among them Zyanon Pozniak. The seminar was organized by the Citizens' Defense Support Fund, headed by human rights activist Stasys Kausinis. One of the trainers at the forum is Gene Sharp, who heads the U.S. Einstein Institute and is a well-known theorist in non-violent resistance. The Belarusian Embassy in Vilnius issued a statement 26 January expressing "indignation" at the seminar and "hopes that the official authorities of Lithuania have no relation to the event since such 'lectures' do not add to the strengthening of our countries' relations."
* At a meeting with Economy Minister Eugenijus Maldeikis, members of the parliament's Social Democratic faction called for an independent audit of the use of state funds and loans by the Mazeikiu Nafta (Mazeikiai Oil) refinery, BNS reported on 23 January. The honorary leader of the leftist opposition, ex-President Algirdas Brazauskas charged that the U.S.-based Williams International, which operates the refinery, had "maliciously squandered" about 1.5 billion litas ($375 million) over the last two years. Brazauskas also told Maldeikis that the main reason behind Russian oil giant LUKoil's refusal to sign a long-term deal to provide the refinery with oil was because of "unrealistic proposals from the U.S. side." On 26 January, the parliament adopted a protocol instructing the State Audit Office to investigate how the working capital allocated by the government is being used at the oil complex, BNS reported.
* The Lithuanian government has received a letter from outgoing U.S. Deputy Secretary of the Treasury Stuart Eizenstat, raising concerns about the treatment of U.S. investor Williams International in the Mazeikiu Nafta oil refinery complex, BNS and ELTA reported on 23 January. Eizenstat referenced a decision by the Constitutional Court of Lithuania late last year that the laws on restructuring the oil complex were unconstitutional and therefore called into question the privatization tender and contract of the U.S. company.
* The Lithuanian parliament adopted a resolution obligating the government to draw up a list of enterprises having vital strategic significance to the nation's security, ELTA and BNS reported on 25 January. The leftist opposition, the sponsor of the legislation, expects the move to strengthen its fight against privatization of state-owned enterprises.
* The head of Lithuania's western Klaipeda county administration, Virginija Lukosiene, told reporters after returning from Kaliningrad that Russia is now enforcing a new customs code which has made Kaliningrad less attractive to foreign investors, BNS reported on 19 January. Lukosiene said that tax privileges for Lithuanian firms working in Kaliningrad have been cancelled and Kaliningrad no longer has the status of a special economic zone. With the imposition of the 25 percent value added tax (VAT), about 300 Lithuanian investors and joint ventures registered in Kaliningrad will probably lose their business, according to Lukosiene.
* The chairman of Transparency International's Lithuania branch, Aleksandras Dobryninas, told a press conference on 22 January that neither Lithuanian political parties nor the Lithuanian population appear to care about corruption, BNS reported. From December 2000 to January 2001, the organization reviewed the anti-corruption planks of party platforms which had just been used in the October 2000 parliamentary elections, and conducted a public opinion survey on corruption issues. Only four of Lithuania's 39 political parties answered the questionnaire concerning their proposals for fighting corruption: the Homeland Union/Conservatives, the Liberal Union, the New Union/Social Liberals, and the Social Democratic Coalition (LDDP/SD). Of these four parties, none had a concrete strategy for attacking corruption, Dobryninas said. And, the results of the survey showed that only 29 percent of the population felt it was important that a party's list of candidates not include people suspected of corruption. However, 84 percent agreed that increased criminal penalties are the best measure for fighting corruption.
* In a letter to Swedish Ambassador Jan Palmstierna, Lithuanian parliamentarians from the Center Union have expressed their indignation at what they said were "outrageous" and "anti-Semitic statements" to Swedish reporters by fellow MP Vytautas Sustauskas, a leader of the radical Lithuanian Freedom Union, ELTA and BNS reported on 25 January. Sustauskas made the comments during an interview to Swedish television where he also boasted that he had "expelled from Kaunas" Swedish energy company Vattenfall, which wanted to rent the local debt-ridden utility Kauno Energija (Kaunas Energy) for a 15-year period. The Center Union vows to approach the Prosecutor-General to investigate whether Sustauskas' comments violate the laws and Constitution of Lithuania.
* The Lithuanian Social Democratic Party (LSDP) and the Lithuanian Democratic Labor Party (LDDP) on 27 January merged into a single Social Democratic Party at a congress in Vilnius, dpa reported. The new combined party has 49 seats in the parliament and will be headed by ex-President Algirdas Brazauskas. Both parties saw dramatic increases in their rank and file during the weeks leading up to the merger, BNS reported on 24 January. About 1,000 new members joined the LSDP, and 500 joined the LDDP bringing their total memberships to nearly 5,000 for the LSDP and 10,000 for the LDDP.


By Mel Huang

Sweden's high-tech manufacturer LM Ericsson announced on 26 January it was discontinuing mobile phone production, a decision that hit Estonia's Elcoteq, which has produced mobile phones for that company. Elcoteq stock fell by more than half in Helsinki the day of Ericsson's announcement. And the future of the Estonian company and its 3,000 workers is now problematic.

Elcoteq has been one of the top exporters in Estonia over the past few years, and was the single biggest exporter in the year 2000; in the first nine months of 2000 Elcoteq exports totalled EEK 9.8 billion ($580 million) -- or about a quarter of all exports in 2000. Ironically, a week before the Ericsson announcement, the Estonian Export Agency predicted a 12 percent growth in exports in 2001, mostly fuelled by Elcoteq's projected increase in sales.

Initially, Elcoteq said there would be no plant closures or layoffs as a result of Ericsson's decision, but then on 2 February, managers said that they would let go approximately 20 percent of the workforce.

Ilmar Petersen, board chairman of Elcoteq Tallinn, told Aripaev-Online, "At the moment we cannot predict what changes will take place in the Estonian plant because Elcoteq is a global company and the activities of its separate plants cannot be predicted." Analysts for Hansapank and Uhispank have suggested that the short-term impact on exports will be significant but argued that the longer-term impact on the country's economy will be small.

But that may be an overly optimistic reading of the situation. Elcoteq symbolized the ideal high-tech foreign investor for Estonia, and highlighted that Baltic country's role as a successful base of high-tech manufacturing with a low-cost, highly-educated workforce. Now that Elcoteq has suffered this reversal from abroad, others may question whether Estonian can continue to play that role. Mel Huang is the Baltics Editor of Central Europe Review and an occasional contributor to RFE/RL.