Baltic Report: June 14, 2001

TALLINN ELECTS NEW MAYOR.
The Tallinn City Council on 5 June elected telecommunications businessman Tonis Palts as the city's new mayor, BNS reported. He received 37 votes while opposition Center Party Chairman Edgar Savisaar received 27. In the previous round on 31 May both candidates had gained 31 votes. The council also elected seven deputy mayors with the only changes being made in the Reform Party, which replaced Ants Leemets with Andres Tsahkna and Priit Vilba with Toivo Ninnas. The council meeting also restored the credentials of Yevgenii Kogan, a former leader of the pro-Moscow Internationalist Front, by a vote of 30 to 26, with one abstention and seven deputies not participating in the vote.

FOREIGN MINISTER VISITS WASHINGTON.
Toomas Hendrik Ilves concluded a three-day working visit to Washington on 6 June with a meeting with U.S. Secretary of State Colin Powell primarily focusing on NATO enlargement, ETA reported. On 4 June, Ilves held talks with U.S. National Security Adviser Condoleezza Rice and advisers to Vice President Dick Cheney, who assured the foreign minister that NATO enlargement will continue without any historical or geographical limitations. He also held meetings with Democratic and Republican congressmen as well as with Republican Senator John McCain, all of whom expressed support for NATO membership of the three Baltic states. Ilves also delivered a report at the Washington Center for Strategic and International Studies, stressing that the admission of the Baltic states to NATO will increase stability in the region. He told the Estonian newspaper "Postimees" that the Baltic states have made remarkable progress in the U.S. on NATO membership since last year. "Nobody asks any more whether the Baltic states should be invited to NATO," Ilves said. "The question now is, how many Baltic countries should be invited next year -- just one, or all three of them?"

ENVIRONMENT CHAPTER AT EU TALKS CLOSED.
Estonia concluded the environment chapter in its European Union membership negotiations in Brussels on 1 June, BNS reported. It thus joined the Czech Republic, Hungary, and Slovenia in concluding the chapter, and was granted transition periods ranging from 2004 to 2013. The longest transition period granted to Estonia was that of the Drinking Water Directive, necessary for the renovation and construction of water supply systems and drinking water treatment facilities. The transition period for the Urban Wastewater Directive is until 2010 and the Landfill Waste Directive will be in effect until July 2009. Environment Minister Heiki Kranich noted that the EU is ready to finance projects related to drinking water, wastewater treatment, and clean air for up to 75 percent of their total cost, provided that Estonia contributes the rest.

LITHUANIAN PARLIAMENT CHAIRMAN VISITS.
Arturas Paulauskas began a two-day visit to Estonia on 4 June with talks with his Estonian counterpart Toomas Savi, BNS reported. The main issues discussed at their meeting were accession to the European Union and NATO. Paulauskas said that the declarations adopted at the NATO Parliamentary Assembly session in Vilnius the previous week should provide an impetus for the process of NATO enlargement. He emphasized the need for unanimous action by the Baltic states in their NATO membership efforts, noting: "I am convinced that we have to bolster each other and emphasize the unity of Baltic countries in our common interest." Paulauskas also met with parliament Deputy Chairman Tunne Kelam and visited the electronics company Elcoteg Tallinn AS, whose production accounts for a significant share of total Estonian exports. The next day he told the Estonian parliament that competition between the Baltic states was a good thing, but that cooperation should not be forgotten. Paulauskas also discussed privatization issues with Prime Minister Mart Laar.

FOREIGN MINISTRY, ORTHODOX CHURCH CONCERNED BY ESTONIA'S POSITION.
Foreign Minister Igor Ivanov met with Metropolitan Kirill of Smolensk and Kaliningrad and Metropolitan Kornilii of Tallinn and all Estonia, as well as with parliamentarians and diplomats, to consider how to respond to the refusal of the Estonian government to register the Estonian Orthodox Church of the Moscow Patriarchate, Interfax reported on 6 June. Tallinn has refused to do so unless the church changes its name and accepts the subordination of the church to the universal patriarch in Istanbul that existed in pre-1940 Estonia.

CONSUMER PRICE INDEX INCREASES 0.7 PERCENT IN MAY.
The Statistical Office announced on 7 June that the consumer price index increased by 0.7 percent in May compared to April and 6.9 percent compared to May 2000, ETA reported. The price of goods grew by 0.9 percent (food products by 1.1 percent and industrial goods by 0.8 percent) in April, while the price of services increased by 0.2 percent. The greater than expected price increases were primarily due to higher food costs and a 3.6 percent increase in the price of gasoline. The only item whose price declined was communication, which fell by 0.6 percent in April.

* The Statistical Office reported that in April Estonia imported goods worth 6.75 billion kroons ($368 million) and exports goods worth 4.77 billion kroons resulting in a trade deficit of 1.98 billion kroons or 290 million kroons more than in March, BNS reported on 5 June. EU states were clearly the most important trade partners in April, purchasing 73 percent of Estonia's exports and selling 51 percent of imports. CIS states, on the other hand, accounted for 4 and 11 percent of exports and imports, respectively.

* The business magazine "Business Week" included Prime Minister Mart Laar in a list of the 50 most influential persons in Europe, ETA reported on 4 June. He is the only person from the Baltic states in the list. Included in the agenda-setters section of the list together with German Chancellor Gerhard Schroeder he is presented: "In Estonia, prime minister Mart Laar is applying free-market solutions, igniting growth."

* Hansapank, the largest commercial bank in the Baltic states, transferred 150 million litas ($37.5 million) to the Lithuanian State Property Fund (SPF) for 90.733 percent of the shares in the state-owned Taupomasis Bankas (Lithuanian Savings Bank) on 1 June, thus becoming the official owner of the bank, BNS reported.

* Parliament Foreign Affairs Committee Chairman Andres Tarand, in an interview in the 2 June issue of the Russian newspaper "Nezavisimaya Gazeta," said that the main problem for Estonia's Russian-speaking minority is unemployment, BNS reported on 4 June. He noted that many of the Russians had come to Estonia to work in large Moscow-subordinated enterprises and became unemployed when they were closed. He, however, observed that the life of Russians in Estonia is better than in Kaliningrad.

* The government on 5 June appointed Tarmo Turkson as the new intelligence chief, BNS reported. The 34-year old Turkson had served in the information service since 1998, and, as of 1 March, held the post of acting general-director of the information board.

BALTIC ASSEMBLY'S 18TH SESSION CONCLUDES.
During its two-day session in Riga on 1-2 June, the interparliamentary Baltic Assembly approved a number of documents, BNS reported. It adopted a statement about stepping up cooperation between the assembly and the Nordic Council, a resolution about developing a common Baltic education region, and an appeal to the Baltic Council of Ministers to curb drug- trafficking and trade. The assembly also adopted an appeal to Russia and its breakaway republic of Chechnya to form delegations for peace talks. Due to the objections of the Latvian delegation, the session did not approve a resolution calling on Russia, as the successor of the Soviet Union, to take responsibility for the damage inflicted on the Baltic states and their populations from 1940 to 1991. Outgoing presidium Chairman Romualds Razuks declared that the resolution is unnecessary, as it has no specific purpose and would only hinder cooperation with seven border areas in northwest Russia. The assembly approved Estonian Trivimi Velliste as the new chairman of the Baltic Assembly's Presidium for six months and resolved that the next session will be held in Tallinn on 13-15 December 2002.

MEETING OF ARMY COMMANDERS OF NINE NATO CANDIDATE COUNTRIES.
Defense Minister Girts Valdis Kristovskis and army commander Raimonds Graube opened a two-day meeting of army commanders from eight other NATO candidate countries -- Lithuania, Estonia, Romania, Slovenia, Albania, Slovakia, Bulgaria, and Croatia -- in Riga on 5 June, BNS reported. Army representatives from several NATO countries, including Belgium, Hungary, the Czech Republic, Poland, and France, were attending the meeting while Canada, England, Italy, Spain, and the U.S. were represented by their military attaches. Graube called the meeting "very, very successful and useful." He emphasized the importance of the NATO membership action plan, stating that it is the main means by which preparation for NATO accession is carried out. The army commanders also had a meeting with President Vaira Vike-Freiberga and the following day visited the Adazi military training center.

WORLD BANK PROJECT FOR DEVELOPING LATVIA'S HOUSING SYSTEM SIGNED.
The World Bank director for the Baltic states and Poland, Michael Carter, and Minister for International Financial Affairs Roberts Zile on 7 June in Riga signed a Japanese grant agreement worth $495,000 for covering the expenses of preparing Latvia's World Bank housing development project, LETA reported. The total costs of the project are estimated at $5.3-6.3 million, of which $2-3 million will be donated by the Danish government, $2 million will be a World Bank loan, and $800,000 will be provided by the Latvian government. The goal of the project is to support the Latvian government's efforts to improve operations in the housing market by lessening the role of the state. The project should facilitate private initiative in apartment management, improve energy conservation by uniting owners in associations, and liquidate obstacles that hamper financing for people with low and medium incomes.

TOP OFFICIALS PARTICIPATE IN JEWISH EVENT.
During the opening of a Jewish community library in Riga on 4 June, President Vaira Vike-Freiberga participated in the presentation of Elie Wiesel's book "Night," and the opening of the third reunion of Latvian Jews residing outside Latvia, BNS reported. She expressed the hope that the library would help provide a deeper understanding of Judaism and the dramatic fate of its people. She told the reunion members who had come from the U.S., Canada, Kuwait, Israel, Germany, Sweden, and other countries that "Latvia is your homeland." Prime Minister Andris Berzins expressed condolences over the deaths in last week's terrorist blast at a disco in Tel Aviv. He affirmed that Latvia will provide assistance to countries to bring war criminals to justice.

SENTENCED NATIONAL BOLSHEVIKS TO BE DEPORTED.
The Rezekne Court on 6 June sentenced four Russian National Bolsheviks who entered Latvia illegally by jumping from the St. Petersburg-Kaliningrad train last November to seven-months imprisonment, LETA reported. The Russians, who were arrested in the Daugavpils district as suspected terrorists, pleaded guilty to the crime. According to the law, persons who enter Latvia illegally can be sentenced to prison terms of six months to three years, or be deported from the country. The prosecutor asked for a sentence of 14-months imprisonment, but the judge, taking their detention since November into consideration, ruled that the four should be deported back to Russia.

* The chairman of the National People's Congress of China, Li Peng, told Latvian Parliament Chairman Janis Straume on 4 June that China wishes to continue the cooperation begun 10 years ago with the re-establishment of diplomatic relations, LETA reported the next day. Straume headed a 12-member official delegation which arrived in China on 28 May and visited five Chinese cities, including Shanghai, Peking, and Sudzhou. In Sudzhou, a city with which Riga had a friendship relationship, he opened a photo exhibition in commemoration of Riga's 800th anniversary.

* The Riga City Council, by a vote of 34 votes in the 60-member council, elected Inese Vaidere of For Fatherland and Freedom/LNNK as the city's second deputy mayor on 5 June, BNS reported. She will be responsible for social, utility, and economic issues.

* On the recommendation of Defense Minister Girts Valdis Kristovskis, the government on 5 June appointed armed forces chief of staff Vitalijs Viesins as air force commander, BNS reported. Viesins had been serving as acting air force commander after the government fired Ojars Ivanovs due to irregularities found during a probe.

* Latvian and Estonian interior ministers Mareks Seglins and Tarmo Loodus signed an agreement on mutual assistance in cases of natural disasters or other widespread emergencies on 4 June, BNS reported. The signing occurred at a meeting in Riga of Baltic interior ministers who discussed the activities of the Baltic Council of Ministers' Justice and Interior Committee, whose leadership Lithuania had taken over from Latvia on 1 June.

* The delegation of businessmen from the Confederation of German Industry, led by its head Ludolf von Wartenberg, had separate meetings on 6 June with Prime Minister Andris Berzins and Foreign Minister Indulis Berzins, LETA reported. The discussions focused on Latvia's foreign policy and efforts to join the EU and NATO as well as the plans of the entrepreneurs to invest in the Baltic states.

* The state's four largest press publishers -- the joint stocks Preses nams, "Diena," and Santa Ltd., and the publishing house Petits signed an agreement on 5 June to merger as equal partners in the company Preses agentura Santa Ltd., LETA reported. The merger was prompted by the purchase of the kiosk chain Preses apvieniba by the retailer Narvesen Baltija Ltd.

WORLD BANK SET TO SUSPEND LOAN PAYMENT.
Mantas Nocius, head of the representative office of the World Bank (WB) in Vilnius, announced on 1 June that the bank intends to temporarily suspend the payment of a $50 million loan to Lithuania, which was to have been granted in July, BNS reported. The reasons are Lithuania's failure to carry out its obligations on restructuring the power utility Lietuvos Energija, delays in the privatization of the state-owned gas company Lietuvos Dujos, as well as problems in the agricultural sector. Deputy Finance Minister Mindaugas Jonikas, however, noted that the suspension of the loan will not affect Lithuania financially because the financing of the budget is guaranteed and interest rates on loans in both domestic and foreign markets are low and decreasing even further. The WB director for the Baltic states and Poland, Michael Carter, during talks in Vilnius on 5-6 June, said that the WB would decide at the end of the summer whether it will support the reform of Lithuania's pension system, ELTA reported.

PARLIAMENT POSTPONES DEBATE OF GOVERNMENT REPORT.
The parliament on 5 June passed a resolution that postponed until 14 June the discussion and evaluation of the government's annual report by Prime Minister Rolandas Paksas, ELTA reported. Deputies of the ruling Liberal Union had proposed the postponement, noting that the report had not been discussed in parliament committees as stipulated in the parliament's statutes. The Social Democrats presented a draft resolution severely criticizing the report while the Liberals offered one that praised the government's performance. Paksas later the same day visited President Valdas Adamkus at a Vilnius hospital where he is recuperating from eye surgery, which he underwent on 3 June. Adamkus expressed concern that the implementation of needed reforms has stalled and the World Bank is planning to suspend the granting of a $50 million loan to Lithuania.

MILITARY COOPERATION TREATY SIGNED WITH BELGIUM.
Lithuanian and Belgian defense ministers Linas Linkevicius and Andre Flahaut signed a bilateral military cooperation agreement in Brussels on 6 June, BNS reported. Under the agreement, both countries pledged to expand activities in NATO's Partnership for Peace program; to hold meetings of experts; and to hold joint training, military peacekeeping, and humanitarian operation exercises. Lithuania has so far signed military cooperation treaties with 19 states, of which 13 are NATO members.

PARLIAMENT FORMS JEWISH HOLOCAUST COMMEMORATION COMMISSION.
The parliament on 7 June formed a state commission for the commemoration of the 60th anniversary of the Jewish Holocaust in Lithuania, ELTA reported. The chairman of the parliament's Human Rights Committee, Gediminas Dalinkevicius, was appointed the head of the new commission, which will embrace representatives from the parliament, government, presidential office, and the Jewish community in Lithuania. The parliament also adopted a resolution denouncing genocide and highlighting the "duty of the Lithuanian state to remind the country of its painful historical moments in order to avert recurrence of the bloodshed of Holocaust victims." Lithuania will again mark the Jewish Holocaust Day on 23 September with a series of events throughout the country.

* At the 10th meeting of the Council of Baltic Sea States in Hamburg on 7 June, Foreign Minister Antanas Valionis stated that there was more than enough time to come to an agreement with Russia for the new visa requirements which will be necessary for Kaliningrad residents after Lithuania joins the EU, BNS reported. He said that Russia could improve the lot of Kaliningrad people traveling abroad by speeding up border crossings and issuing appropriate travel documents.

* An extraordinary meeting of the parliament deputies belonging to the ruling New Union (Social Liberals) on 2 June elected Alvydas Ramanauskas as the new head of the party's faction in the parliament, replacing Gediminas Jakavonis, "Lietuvos rytas" reported two days later. The meeting, which was held at a resort 50 kilometers from Vilnius, elected Jakavonis as the deputy chairman for contacts with other institutions, but replaced four other members of the faction's executive committee.

* Lithuanian Energy resumed the export of electricity to Belarus on 4 June after the Russian Inter RAO JES company paid in advance for 50 million kilowatt-hours (kWh), which will be sent in June, ELTA reported. In April the two companies along with Belarusian Belenergo agreed that Lithuania would send 5 billion kWh of power to Belarus in a 12-month period.

* Deputy Foreign Minister Oskaras Jusys and Kuwaiti Ambassador to Lithuania Faisal Rashed Ghais signed an investment promotion and protection agreement in Vilnius on 5 June, BNS reported. This is the first investment agreement that Lithuania has signed with an Arab state.

* In its annual review of the Top 100 Sites, the British magazine Corporate Location ranked the website of the Lithuanian Development Agency (LDA) as No. 1 among investment promotion agencies (IPA), BNS reported on 6 June. In 1998 the LDA website was ranked 34th, but it rose to 4th in 1999, and was 2nd only behind South Korea's in 2000. In the 2000 IPA website rankings, Poland was 23rd, Estonia was 40th, and Latvia was 44th.

* President Valdas Adamkus on 1 June appointed Foreign Ministry official Darius Degutis as ambassador to Poland, ELTA reported. Foreign Minister Antanas Valionis had been the previous ambassador.