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Baltic Report: April 2, 2001

2 April 2001, Volume 2, Number 8
The Kaliningrad edition of "Komsomolskaya Pravda" said that Baltic governments fear that the United States may be prepared to trade Russian acceptance of American NMD (national missile defense) plans for Washington's agreement not to include the three Baltic countries in NATO, BNS reported on 16 March. Indeed, the exclave paper said, reports of nuclear weapons in Kaliningrad may have been promoted to justify just such a deal. Meanwhile, on 17 March -- the 10th anniversary of the Soviet referendum on whether the USSR should be preserved -- said Estonia, Latvia, and Lithuania "spearheaded the process" of the disintegration of the Soviet Union.

The government on 20 March decided to raise pensions for the elderly from 1,552 to 1,602 kroons beginning on 1 April, ETA reported. The Finance Ministry opposed the increase, which Social Affairs Minister Eiki Nesto had promised, arguing that the pension insurance budget has a deficit of 30 million kroons ($1.8 million) and the deteriorating international economy might decrease tax receipts. Finance Minister Siim Kallas supported the increase, which is expected to cost about 110 million kroons, claiming that recently gathered data on the number of pensioners shows there are several thousand fewer than earlier estimated.

In a meeting with Prime Minister Mart Laar on 16 March, the leaders of the parties represented in parliament agreed that a referendum on Estonia's EU accession should be held once membership talks are completed but before the accession agreement is signed, BNS reported. They also agreed that the referendum must be kept apart from parliamentary and local municipalities' election campaigns, but reportedly they could not decide on whether the constitution would have to be amended after accession. Estonia hopes to complete the talks early next year and the Pro Patria Union has suggested that the referendum be held in the summer of 2002. The meeting also agreed that the population needs more information concerning the benefits of EU membership.

The fourth no-confidence motion in the Tallinn City Council against Pro Patria Union Mayor Juri Mois failed on 22 March when it received only 24 votes, BNS reported. To pass, the motion required a minimum of 33 votes in the 64-member council. Previous no-confidence motions in November, February (see "RFE/RL Newsline," 23 February 2001), and earlier this month gathered 23, 26, and 26 votes, respectively. Mois did not attend the session because he was visiting St. Petersburg. The opposition Center Union registered another no-confidence motion against Mois even before this latest vote. It has already gathered 20 signatures in the parliament for another no-confidence motion against Prime Minister Mart Laar.

State Procurements Board Director Ulo Sarv asserted that Economy Minister Mikhel Parnoja, who is also chairman of the supervisory council of the Privatization Agency, lied to get the board's approval for selecting the consultant for the privatization of Estonian Railway, ETA reported on 21 March. According to Sarv, Parnoja said in January that all the consulting fee bids received for the railway privatization had to be rejected because they were too expensive, but a few months later approved the offer by the British consultancy firm GIBB Ltd. for 40 million kroons ($2.4 million) plus 4 percent commission. This was more than three times greater than the highest bid in January of 12 million kroons, which was made by the PricewaterHouseCoopers firm. Parnoja told a press conference that the circumstances were different; in January only Estonian Railway would have financed the consultation fee, while later it was also co-financed by the Privatization Agency. Parnoja also claimed that the contract with GIBB was confidential, and that he had no right to inform the State Procurements Board about the fee the firm had requested. The newspapers "Aripaev" and "Postimees" are calling for Parnoja to resign.

The Bank of Estonia announced on 19 March that foreign direct investments (FDI) to Estonia grew in 2000 by 2.35 billion kroons ($134 million) to 6.8 billion kroons, BNS reported. Estonians had 2.7 billion kroons of FDI in foreign countries, resulting in a positive balance of 4.1 billion kroons, which covered 73 percent of the country's foreign trade deficit. Most of the foreign investments came from Finland and Sweden and more than half of them were investments in stock or equity capital. Such investment in 2000 was the highest ever recorded and about 80 percent of the investments were long-term loans to subsidiaries and affiliated companies abroad, especially in Latvia.
* The Tallinn district court ruled on 19 March not to implement the complaint by Rail Estonia to repeal an administrative court ruling of 1 March, which allowed the Estonian Privatization Agency to begin talks with Baltic Rail Services, the second best bidder in the Eesti Raudtee (Estonian Railway) privatization, BNS reported. Rail Estonia had won the contest initially, but failed to fulfill the requirement to have a strategic investor by the end of February,
* President Lennart Meri on 19 March met in Kiel with Schleswig-Holstein Prime Minister Heide Simonis and delivered a speech at the ceremony during which the Hermann Ehlers Academy Award was presented to former German President Roman Herzog, BNS reported. Meri said that Russia had already accepted the principle of NATO enlargement since there are no longer any objections to Slovenia or the Slovak Republic, although it still opposed the entry of Estonia, Latvia, and Lithuania.
* The government on 20 March allocated two million kroons ($120,000) to prevent and diagnose mad cow disease, ETA reported. Estonia has already banned imports of beef and related products from countries where outbreaks of mad cow disease have been registered, but Tallinn is fearful that the European Commission may include it in the list of countries jeopardized by the disease because it imported cattle from Germany, Denmark, Holland, and U.K. in 1989-2000.
* A roundtable meeting of law enforcement and distilleries representatives on 17 March stated that the illegal sale of bootleg vodka now represent about 44 percent of the market and is greater than that of any legal producer, ETA reported. The annual state's losses of excise tax revenue from this trade are estimated at about three billion kroons ($180 million).

Discussions continue in the Riga City Council on the formation of a new government. Meanwhile, councils in many other municipalities chose new leaderships with local groupings or leaders at times playing a vital role. In Ventspils, for example, Latvijai un Ventspilij (For Latvia and Ventspils) gained 86 percent of the vote and reelected leader Aivars Lembergs as mayor. In Liepaja, the Liepaja United Ticket won 9 of 15 seats and the council unanimously reelected its leader Uldis Seiks as mayor. In Daugavpils, Latgales gaisma (Light of Latgale), headed by businessman Rihards Eigims, won seven seats and after forming a coalition with leftist For Human Rights in a United Latvia (PCTVL) and LSDSP defeated incumbent Aleksejs Vidavskis, who had received 85 percent of the vote in 1997, 10 to 5. In Jurmala, LSDSP candidate Dainis Urbanovics was elected mayor even though his party had won only three of 15 seats. "Diena" on 21 March reported on the early success of the TP by noting that seven out of ten municipality leaders who had been elected had been its candidates.

The Finance Ministry has calculated that it will cost about 1.2 billion lats ($1.9 billion) over the next 10 years for Latvia to fulfill the promises it has made under the National Program for Integration into the EU, LETA reported on 19 March. The greatest share of the expenditures (646 million lats) is to come from the state budget, with 202 million lats expected from bilateral assistance, including donations and co-financing from other countries; 168 million lats from the EU as financial assistance; and 184 million lats from loans. The largest expenses are foreseen for the Ministry of Environmental Protection and Regional Development (800 million lats) to improve garbage collection, water quality, and control air and industrial pollution. The Ministry of Welfare will also spend large sums over the next four years to continue the reform of health care, social security and assistance systems, and to ensure the public has healthy and environmentally friendly food. The largest expenditures are expected this year (268 million lats) and next year (296 million lats).

Departing from an agreement made by the Baltic prime ministers last year not to implement daylight saving time, Latvia decided to follow a European Union directive and moved its clocks forward one hour on 25 March, LETA reported. Thus there is a one-hour time difference with its neighbors, Estonia and Lithuania, which continued their policy of not implementing daylight saving time changes.

Girts Valdis Kristovskis at the annual meeting of Michigan National Guard's commanders on 18 March thanked the Guard for its support for the development of Latvia's National Armed Forces and Latvia's move to NATO, LETA reported. The Guard approved an action plan for the next five years that includes further cooperation with Latvia. On 19 March he traveled to Canada where he discussed with his Canadian counterpart, Arthur Eggleton, NATO expansion in general and Latvia's movement to the alliance in particular, as well as the country's relations with Russia. The defense minister also met with Canadian Parliament Defense Committee Chairman David Pratt. Kristovskis on 20 March visited a training center at Camp Borden where Latvian officers are currently undergoing training.

Prime Minister Andris Berzins thanked OSCE High Commissioner on National Minorities Max van der Stoel on 22 March for his cooperation in Latvia's successful naturalization activities, LETA reported. While praising the fact that the number of naturalization applications was not falling, van der Stoel suggested that the Latvian language test be coordinated with requirements of the naturalization test so an individual would not be required to take two examinations. Van der Stoel also held talks with Justice Minister Ingrida Labucka, Naturalization Board head Eizenija Aldermane, and Foreign Minister Indulis Berzins, but he canceled a scheduled meeting with President Vaira Vike-Freiberga the next day in order to travel to an emergency meeting of the OSCE Permanent Council in Vienna.

The Russian Foreign Ministry on 20 March condemned the gathering of Latvian veterans of the German Waffen SS and said the Latvian government is supporting the meeting, Russian and Western agencies reported. The ministry's statement said, "those who struggled against fascism on the side of the anti-Hitler coalition, not Nazi accomplices, should enjoy the state's patronage." A Latvian Foreign Ministry spokeswoman said the Latvian government had nothing to do with the meeting, adding that "to talk about the revival of fascism in Latvia is simply absurd." Meanwhile, a commentary in "Nezavisimaya gazeta" the same day suggested that the Latvian authorities were "clever," by allowing the veterans to meet but preventing them from staging a march as they have in the past.
* The district courts of the counties of Bauska and Preili in separate decisions on 21 March annulled the results of the 11 March municipal elections in the Viesturi and Preili electoral districts, BNS reported. Bauska District Court Judge Inara Andzane ruled that 31 ballots from one of the ballot boxes in Viesturi were subject to challenge because the election commission chairman had arbitrarily opened the ballot box and mixed its contents with other ballots. In Preili, four ballots where the intentions of the voters were unclear were found that could have influenced the voting results. The judges decided that repeat elections would have to be held in the two districts.
* Martins Bondars resigned as the head of the Chancery of President Vaira Vike-Freiberga on 12 March hoping that he had been elected to the Riga City Council as a For Fatherland and Freedom/LNNK candidate. Vike-Freiberga then nominated Aivars Zakis, a prosecutor from the International Cooperation Department at the Prosecutor-General's Office, to replace him. She continued to support Zakis even after several former political prisoners wrote to her claiming that he had worked for the KGB. Zakis, however, decided not to accept the post. Bondars, who was not elected to the Riga City Council, was reappointed to his former post on 19 March, LETA reported
* Latvian Medical Care Trade Union Chairwoman Daina Bruvele announced on 20 March that a reconciliation meeting decided to recommend to the cabinet that an additional 4.032 million lats ($6.4 million) be spent to raise the monthly salaries of nurses by 25 lats from the second half of the year, LETA reported.
* The government on 20 March decided to drop several requests for transition periods in the environment chapter of its EU-accession talks, BNS reported. It will accept in full the EU requirements concerning fuel quality by the end of the talks and approve without transition periods the waste management plan and water structure directive. Transition periods will, however, be asked for the implementation of the directive about hazardous waste, the rehabilitation of existing waste dumps, and for improving the quality of tap water.
* Finance Minister Gundars Berzins and Bank of Latvia President Einars Repse have signed Latvian and International Monetary Fund (IMF) economic cooperation memorandum, BNS reported on 21 March. Its main goals are retaining the high pace of economic growth, reducing the vulnerability of the state economy, and securing as early as possible accession to the EU. It calls for a budget deficit this year of less than 1.75 percent of GDP, less than one percent of GDP in 2002, and a balanced budget in subsequent years.
* Parliament deputy Helena Soldatjonoka quit Latvia's Way on 22 March and intends to join the Latvian Social Democratic Workers Party because her personal convictions and opinions correspond to that party's views, LETA reported.

Concluding a four-day visit to Lithuania on 21 March, Russian Duma delegation head (Unity) Aleksandr Chuyev rated it as highly successful, ELTA reported. He said the trip had eliminated some controversies between the countries and laid the groundwork for a closer relationship in advance of the upcoming visit of President Valdas Adamkus to Moscow at the end of this month. On 19 March, the delegation held talks in the parliament in which Chuyev assured its chairman, Arturas Paulauskas, that the Duma would ratify the Russia-Lithuania border treaty within two months. Paulauskas declared that the law adopted by the previous parliament demanding compensation from Russia for damage inflicted during the Soviet occupation would not be recalled, but revised to make it acceptable to both sides. The next day at the Lithuanian- Kaliningrad border post of Nemune-Sovetsk, members of the Kaliningrad Duma, including its chairman Vladimir Nikitin, told the delegation that the quick ratification of the border treaty would benefit their region. The deputies also met with the local Russian community and visited a secondary school in Klaipeda.

The parliament, by a vote of 69 to 47 with seven abstentions, on 22 March passed amendments to the laws on Employment Contract, Wages, Holidays and Trade Unions, which are aimed at liberalizing the labor market and reducing illegal labor, ELTA reported. The amendments provide wider opportunities for an employer and employee to agree on employment terms, but reduce by three times the compensation an employer is required to pay when dismissing a worker. Businesses on the verge of bankruptcy would often retain workers on their payrolls because they did not have the funds to pay the required compensations, and would then seek a pretext to fire them and avoid having to provide compensation. The amendments also diminished the role of trade unions by requiring employers to get their approval only for firing its representative and not all workers.

The parliament passed a new bankruptcy law on 20 March by a vote of 85 to one, with 14 abstentions, ELTA reported. The law, which will go into effect on 1 July, will allow a company to declare bankruptcy when its debts exceed 50 percent of the balance value of its assets, as opposed to the 100 percent currently required. Under the new law, priority in fulfilling creditors' claims will be given to holders of collateral (banks), followed by claims by employees and agricultural producers, and then claims connected with the state budget, state social insurance, and other creditors. According to data from the Economic Ministry, 406 companies declared bankruptcy last year, but under the new law the number is likely to increase to around 1,000 this year.

The main aims of a one-day visit to Vilnius on 19 March by British Foreign Office Minister Brian Wilson were to discuss bilateral relations and the country's preparations for EU and NATO membership, ELTA reported. Wilson informed Economic Minister Eugenijus Gentvilas of Britain's decision to donate 1.5 million euros ($1.7 million) to the fund for closing the first reactor of the nuclear power plant at Ignalina. Wilson and Foreign Minister Antanas Valionis signed an agreement on avoiding double taxation of income and capital gains, and preventing tax fraud. Lithuania has now signed such agreements with 23 countries, including eight from the EU. He also talked with parliament Chairman Arturas Paulauskas about the expansion of NATO, although he noted that the debates in London on this question have not yet started.

Parliament Deputy Chairman Ramunas Karbauskis was reelected as party chairman during the Peasant Party congress held on 17 March in the northern Lithuanian town of Kursenai, "Lietuvos rytas" reported on 19 March. The congress did not admit 54 delegates from the Kaunas region, two of whose leaders the party's council had dismissed last month after they severely criticized the activities of Karbauskis. The Kaunas delegates then decided to leave the Peasant Party and join the Social Democratic Party. The National Democratic Party congress held in Kaunas the same day elected former parliament deputy Kazimieras Uoka as its chairman. The small party, which has no deputies in the current parliament, criticized Lithuania's plans to join the EU and NATO.
* Deputy Foreign Minister and chief NATO coordinator Giedrius Cekuolis on an one-day visit to Warsaw on 20 March discussed with officials from Poland's Foreign and Defense ministries Lithuania's readiness for NATO membership, a common European security and defense policy, relations with Russia, Belarus, and the Ukraine, and other topics, BNS reported. Expansion of the joint Lithuanian-Polish military battalion LITPOLBAT remains the most important item in military cooperation.
* The parliament overwhelmingly rejected proposals made by deputy Julius Veselka to declare Lithuania a neutral country that does not want NATO membership and to annul the law adopted by the previous parliament demanding compensation from Russia for damages incurred during the Soviet occupation of the country.
* Head of European Commission's enlargement directorate Lithuanian division Anders Henriksson on 21 March praised the recently passed bankruptcy and company restructuring laws, ELTA reported. However, he cautioned Economy Minister Eugenijus Gentvilas that any further delays in restructuring energy companies would endanger the completion of the energy chapter in the EU entrance talks.
* Prime Minister Rolandas Paksas on 21 March told Peder Gellert Pedersen, manager of DFDS Tor Line shipping company, that the government supported the privatization of the Lithuanian shipping company Lisco, ELTA reported. Lithuania expects the shipping company to pay $51.2 million for Lisco and also make additional investments of $92 million.
* Justice Minister Gintautas Bartkus on 20 March presented the nation's progress in combating corruption at both the national and international levels at the annual meeting of OECD European transition markets in Istanbul, ELTA reported. He also invited his Turkish counterpart Suthas Ngenmuem to visit Lithuania to sign a ministerial cooperation protocol and expressed disappointment that Turkey had not yet ratified the bilateral treaty on legal and judicial cooperation in commercial and civil actions, signed in 1995 and ratified by Lithuania in 1996.
* Foreign Minister Antanas Valionis met in Moscow on 22 March with Russian Transport Minister Sergei Frank with whom they head the Lithuanian-Russian cooperation commission, BNS reported. Frank rejected the request to include on the commission's working agenda the question of compensations for damages the Soviet Union inflicted on Lithuania, which are estimated at $20 billion.
* Army Commander-in-Chief Brigade General Jonas Kronkaitis attended the annual conference of European army chiefs in Heidelberg on 21-22 March. He discussed the projects Lithuania has completed this year, including the training regiment reform, the reconstruction of a school for non-commissioned officers, modification of military academy programs and changes of infrastructure.