Baltic Report: June 27, 2001

PRODI SEES ESTONIA AS FRONT-RUNNER AMONG EU CANDIDATES.
Upon completion of the EU summit in Gothenburg, European Commission (EC) President Romano Prodi and EU Commissioner for Enlargement Guenter Verheugen flew to Estonia, where they held talks on 18 June with the parliament's European affairs and foreign affairs committees, BNS reported. Prodi expressed his satisfaction with the Gothenburg summit, which fixed the end of 2002 as the target date for completing the EU accession talks with front-running candidates so they can take part in the European Parliament elections in 2004. He said that there is no reason why Estonia should not be among the front-runners in the upcoming round of EU expansion. Prodi mentioned that the EC has approved Estonia's SAPARD (Special Accession Program for Agriculture and Rural Development) program allocating 12 million euros ($10.7 million) for its farmers.

DALAI LAMA VISITS TALLINN AND TARTU.
The spiritual leader of Tibet, the Dalai Lama, arrived in Tallinn on 19 June and met with parliament Deputy Chairman Tunne Kelam and deputies from the parliament's Tibet support group, BNS reported. Prime Minister Mart Laar also met unofficially with the Dalai Lama. Center Union deputy Kalev Kallo, the head of the parliament's group for promoting ties with China, condemned Laar's decision to meet with the Tibetan leader as politically incorrect: "Estonia has good relations with China, we should always consider what we stand to gain, rather than bark at an elephant like a small dog." The Dalai Lama conducted a service at Tallinn's Niguliste Church, met with Tallinn Mayor Tonis Palts, and delivered a speech in Town Hall Square. He traveled to Tartu the next day to deliver a lecture at the university there.

OSCE MISSION IN ESTONIA MAY CLOSE SOON.
Doris Hertrampf, the head of the Organization for Security and Cooperation in Europe (OSCE) mission in Estonia, told Prime Minister Mart Laar during talks in Tallinn on 20 June that in view of Estonia's successful development it may soon be possible to end the work of the OSCE mission there, BNS reported. The talks discussed the implementation of the state integration program and recently approved regulations for the enforcement of the language law, which concern language proficiency requirements in the private sector. Education Minister Tonis Lukas, who attended the meeting, presented the language law implementation regulations. Hertrampf is scheduled to report soon to the permanent council of the OSCE in Vienna regarding her work in Estonia.

THREE-WAY TALKS SETTLE PRINCIPLES FOR RAISING MINIMUM WAGE.
During talks between the Estonian government, trade unions, and employers in Tallinn on 21 June, it was agreed that the three parties would sign by the beginning of July an agreement on the computation of minimum wages that will bring minimum pay to 40 percent of average wages over the next five years, BNS reported. The meeting agreed that the Finance Ministry will make an analysis of the methods of minimum wage changes and present conclusions by 26 June. At present, the minimum is about 30 percent of the average wage and should increase to 32 percent next year and climb another 2 percent each successive year. The agreement will in effect mean the acceptance of the trade union proposal to raise the minimum monthly wage from the current 1,600 kroons ($87.60) to 1,850 kroons next year.

IDENTIFICATION CARD TO REPLACE PASSPORT NEXT YEAR.
Interior Minister Tarmo Loodus announced that beginning in 2002 Estonia's passport will be replaced by an electronic plastic ID card, which will cost 150 kroons ($8), ETA reported on 15 June. Loodus said the actual production costs of the card, which will be valid for 10 years, will be about 250 kroons. Noting that only 10,000 people have applied for ID cards in Finland, where they are not compulsory, Loodus said Estonia's new ID cards will be compulsory. The government's financial losses for the IDs will be partially compensated by charging 350 kroons for a new international passport, which cost 80-85 kroons each to produce. The Citizenship and Migration Department has planned a five-year transition period for issuing the new documents and signed contracts with the Swiss company Trueb for the production of 1.34 million ID cards and with the British firm De La Rue on printing 1 million passports.

* The Russian Foreign Ministry informed Estonia on 18 June that the planned plenary session of the Estonian-Russian intergovernmental commission headed by Estonian Prime Minister Mart Laar and Russia's Deputy Prime Minister Valentina Matviyenko was being postponed, BNS reported. The planned signing of a package of bilateral economic agreements at the planned 29 June session was delayed because Moscow had failed to prepare sufficiently for it. Estonia had expected that the meeting would abolish the double customs duties that Russia is levying on imports.

* The government on 19 June approved the administrative-territorial reform plan worked out at the Interior Ministry to reduce the number of local government districts from the existing 247 to 108, BNS reported. Ministers Siim Kallas (Finance) and Heiki Kranich (Environment) of the Reform Party and Eiki Nestor of the Moderate Party, however, voted against the plan with Kallas stressing that the merger of the units must be voluntary.

* Newly elected Tallinn Mayor Tonis Palts wishes to introduce a 10 Finnish markka ($1.4) tax on foreign tourists arriving at the capital's airport and passenger depot, BNS reported on 16 June. Palts expects that the tax would raise 75 million kroons ($4 million) a year that would be used for refurbishing the Old Town's tourist attractions and ensuring greater safety.

* Austrian and Estonian Interior Ministers Ernst Strasser and Tarmo Loodus signed a bilateral agreement on readmission of persons in Tallinn on 20 June, BNS reported. Strasser praised the development of the Estonian border service and affirmed that Estonia had met the requirements of the Schengen agreement concerning border and visa questions. He also met with Prime Minister Mart Laar and the deputy director of the police, Ralf Palo.

* President Lennart Meri, accepting the credentials of Finland's new Ambassador to Estonia Jaakko-Pekka Blomberg on 21 June, thanked Finland for helping Estonia prepare for EU membership, BNS reported.

* An Israeli delegation in Tallinn on 21 June agreed that experts from both countries would meet soon to prepare a free trade agreement and later an air transport agreement, BNS reported.

* In May Estonia imported goods worth 9.359 billion kroons ($503 million) and exported goods worth 8.398 billion kroons, resulting in a trade deficit of 960.5 million kroons, which is significantly lower than the 1.7 billion kroons deficit recorded in April, BNS reported on 21 June.

* In the first quarter of the year there was a record amount of 3.3 billion kroons ($177 million) of foreign investments, ETA reported on 19 June. The major deals were the sale of the Tallinn water works to the British firm International Water UU for 1.34 billion kroons and of the Parnu heating network to the Swedish Wattenfall for 106 million kroons.

MOSCOW WELCOMES NEW LATVIAN APPROACH ON CITIZENSHIP.
Foreign Ministry spokesman Aleksandr Yakovenko said on 16 June that Moscow considers the Latvian government decisions to lower fees for naturalization and to allow school examinations in the Latvian language to serve in place of state examinations as "steps that will make possible the acceleration of the tempos of naturalization."

GREATER COOPERATION BETWEEN RIGA AND MOSCOW.
Riga Mayor Gundars Bojars asserted on 20 June that the first day of talks between a Riga City Council delegation he headed and Moscow city government officials exceeded all expectations in terms of favorable attitude and readiness to cooperate, BNS reported. The two sides agreed, at a lunch hosted by Moscow Deputy Mayor Valerii Shantsev, to set up a working group for cooperation between Riga and Moscow and to sign a cooperation protocol between the capitals soon in the areas of tourism, economy, trade, education, and culture. Noting that "meetings of Moscow and Riga [officials] of such ranks have not taken place for the last 10 years, may be even longer," Bojars said that the delegation unexpectedly received many proposals to work with Moscow. Bojars also held talks with Russian State Duma International Affairs Committee chairman Konstantin Kosachev, Moscow City Council chairman Vladimir Platonov and Duma Speaker Gennadii Seleznev.

MANY QUESTIONS UNANSWERED IN CUSTOMS MURDER.
The Riga Criminal Police on 21 June detained reputed contraband cigarette and liquor dealer Raitis Kononovs and questioned several others on suspicion of involvement in the brutal murder of Vyacheslavs Liscovs, the director of the State Revenue Service's Ludza District (see "Baltic States Report," 20 June 2001). Kononovs is said to have threatened Liscovs because of the latter's growing effectiveness in rooting out corruption among customs agents at the Ludza District's four border posts, which include the two busiest Latvia-Russia border crossings at Grebneva and Terehova. Questions continue to arise about irregularities in the investigation and possible high-level political involvement. Latvian media gave unconfirmed reports on 18 June that important documents relating to contraband activity had been removed from a file of documents relating to the Liscovs murder investigation that police were transporting from Ludza to Riga. In addition, Latvian media reported that parliament deputy Juris Dobelis (TB/LNNK) had in late January asked State Revenue Director Andrejs Sonciks to investigate Liscovs because of accusations by the trade union representing Ludza District customs agents that Liscovs was not fit to serve as district director. Criminal Police chief Valdis Pumpurs refused to answer a question posed by a reporter for "Neatkariga Rita Avize" whether Dobelis was not serving as "some sort of underworld courier in relations with the state."

CATALONIAN PRESIDENT VISITS RIGA.
During a one-day official visit to Latvia on 21 June, the president of Spain's autonomous district of Catalonia, Jordi Pujol, discussed with Prime Minister Andris Berzins issues related to European Union enlargement and mutual relations, BNS reported. Pujol outlined the process by which Catalonian autonomy has been established, emphasizing the status of the Catalan language, which was earlier excluded from use in any official capacity in Spain. Both the Spanish and Catalan languages are considered state languages in Catalonia today. Berzins stated that, should Latvia enter NATO and the EU, the Latvian government would make sure additional guarantees were in place to defend the Latvian language and ensure state security. While meeting separately with Pujol, Latvian President Vaira Vike-Freiberga said that a state does not lose its sovereignty and identity when it joins the EU, but receives opportunities for modern advancement.

PRESIDENT VISITS AUSTRIA.
Vaira Vike-Freiberga met with Austrian Foreign Minister Benita Ferrero-Waldner on 18 June, the second day of her four-day visit to Austria. BNS reported that they discussed Latvian-Austrian relations and Latvia's successful efforts to catch up with the first group of EU candidates. Vike-Freiberga also met with Simon Wiesenthal, the 92-year-old author after whom the Jewish human rights organization is named. She gave him a recently published Latvian-language edition of his book, "The Sunflower." On 19 June, Vike-Freiberga met with the Austrian government's commissioner for European Union enlargement Erhard Busek and gave an interview to the newspaper "Die Presse."

TAX CONVENTION WITH PORTUGAL SIGNED.
Latvian and Portuguese foreign ministers Indulis Berzins and Jaime da Gama signed a convention on averting double taxation and preventing income tax evasion in Riga on 19 June, BNS reported. Da Gama said that "Portugal supports a broad EU expansion dimension" and that the recent Gothenburg EU summit should have a positive effect on this process. The foreign ministers noted the good bilateral relations that exist between Latvia and Portugal, as well as their cooperation within organizations like the EU and the Council of Europe. Da Gama also met with Prime Minister Andris Berzins, parliament Chairman Janis Straume, and other Latvian officials during his one-day visit.

* Vaira Vike-Freiberga traveled to Vilnius on 15 June to give a keynote address at the opening session of the three-day "Equal Opportunities for Women and Men in Democratic Society" conference, BNS reported. The conference, attended by 600 delegates from 12 countries, discussed gender issues ranging from the sale of women into prostitution to female initiatives in the business sector. At a subsequent meeting, she discussed NATO and EU expansion as well as domestic political events with Lithuanian President Valdas Adamkus. Adamkus accepted Vike-Freiberga's invitation to visit Riga in August for the celebrations of the 800th anniversary of Riga.

* The government on 19 June revised its position on the free movement of labor in its negotiations with the EU by adopting parity as the underlying principle, BNS reported. Latvia will establish the same transition period for countries as they establish for Latvia in respect to the free movement of labor, including no restrictions on countries that choose not to restrict free movement of labor from Latvia. The EU has adopted this position in its talks with Hungary. Parliament European Affairs Committee chairman Edvins Inkens said that the EU is likely to accept this position, since there should only be minimal labor movement from Latvia.

* The parliament failed to pass a law to fund the construction of a new Latvian National Library building on 21 June, because deputies from the ruling coalition's For the Fatherland and Freedom/LNNK party did not attend the session, keeping it from achieving the needed quorum, BNS reported. Funds for the new library were to be taken from the privatization of the Latvian Shipping Company and the sale of a third UMTS mobile telephone operator license. If the allotted funds proved insufficient, more would be allocated from higher electricity taxes, additional revenue duties on cars with customs value above 10,000 lats ($16,000), and revenues from the national lottery. The next review of the National Library bill will occur no sooner than the fall session.

* The Dalai Lama arrived from Estonia on 21 June and was greeted by President Vaira Vike-Freiberga, her husband, Imants Freibergs and several parliament deputies at the Riga Stock Exchange Building, where monks from Nepal have created a sand mandala, LETA reported. The Tibetan spiritual leader blessed the mandala and told a crowd outside the building that he was happy to see people smiling because the "smile is the language of depths standing above languages and cultures." He also spoke to the parliament deputies from the Tibet support group and thanked Latvia for its support.

* Austrian and Latvian Interior Ministers Ernst Strasser and Mareks Seglins agreed to set up a joint working group to combat the drug trade and illegal immigration, BNS reported on 19 June.

* Norwegian Foreign Ministry state secretary Espen Eide told his Latvia counterpart Maris Riekstins on 20 June in Riga that Norway supports the admission of the three Baltic states to NATO at the Prague summit in 2002, BNS reported. Eide had come to Latvia for regular consultations at the level of state secretaries. The consultations focused on NATO and European Union enlargement as well as Latvian-Norwegian relations.

* The government on 19 June approved amendments to the law "On State Pensions" that remove restrictions as of 1 January 2002 on how much pensioners can work and still receive their full pensions, LETA reported. In addition, the government decided to simultaneously remove the option of early retirement.

* The number of new HIV infection cases in Latvia has more than doubled in 2001 over the previous year, with 395 new cases registered to 15 June, LETA reported on 18 June. Iveta Dievberna from the AIDS Prevention Center said 1,353 people are HIV-positive in Latvia, of whom 88 suffer from AIDS. The majority of HIV infections were the result of intravenous drug use, according to Dievberna.

* The Statistics Office announced on 15 June that the country's gross domestic product (GDP) increased by 8.2 percent in the first quarter of the year, BNS reported. The GDP grew as a result of a 10.3 percent jump in the value of trade activities, 10.6 percent rise in transportation, communications, and warehousing, 11.3 percent growth in processing industry and 13.3 percent growth in commercial services.

* The Latvian Health and Social Care Employees Union's council decided on 19 June to call off a planned strike by nurses on 5 July, because the government agreed to raise monthly salaries by 25 lats ($40) from 1 July, LETA reported.

PRIME MINISTER PAKSAS RESIGNS.
In perhaps the shortest Lithuanian government meeting ever -- less than five minutes -- Rolandas Paksas on 20 June read a short statement declaring his resignation as prime minister, ELTA report. It had been expected that the meeting would approve the agreement between the Russian oil company YUKOS and "Mazeikiu Nafta" (Mazeikiai Oil) as well as select a model for privatizing the state-owned utility "Lietuvos Dujos" (Lithuanian Gas). Paksas proposed that Finance Minister Jonas Lionginas be appointed acting prime minister, but President Valdas Adamkus decided to appoint Economy Minister Eugenijus Gentvilas, the deputy chairman of the Liberal Union. Adamkus accepted Paksas' resignation in the Vilnius hospital he had been rushed that morning with suspected appendicitis. The president's appendix was successfully removed later that evening. The future of the next government remains uncertain. The New Union (Social Liberals), the other major party in the ruling coalition, which created the crisis by demanding that Paksas resign, has not decided whether it will continue with the current coalition or form a new one with the Social Democrats.

SIX MINISTERS SUBMIT RESIGNATIONS.
During a meeting of the ruling coalition's Political Coordinating Committee on 18 June, New Union (Social Liberals) Chairman Arturas Paulauskas called on Prime Minister Rolandas Paksas to resign, ELTA reported. A week earlier the coalition had established five working groups to resolve their differences on important issues, but the group dealing with the privatization of Lithuanian Gas failed to reach an agreement. After Paksas refused to resign, the six ministers -- Antanas Valionis (Foreign Affairs), Vilija Blinkeviciute (Social Security and Labor), Romualdas Dobrovolskis (Health), Kestutis Kristinaitis (Agriculture), Algirdas Monkevicius (Education and Culture), and Vytautas Markevicius (Interior) -- who had been delegated by the New Union submitted their resignations. According to the constitution, the government needs to receive the approval of the parliament if more than half of the cabinet is changed. President Valdas Adamkus accepted the ministers' resignations, who had all been nominated by the New Union. Before doing so, Adamkus asked them on 19 June to remain in their posts--a clear rejection of Paksas' written proposal that their duties be temporarily delegated to the remaining ministers

PARLIAMENT REJECTS RESOLUTION CRITICIZING GOVERNMENT.
The parliament failed on 19 June to pass an evaluation of the government's annual report by Prime Minister Rolandas Paksas, ELTA reported. The vote on the resolution drafted by the Social Democrats and giving a negative evaluation of the work of the government, was 46 to 45 with eight abstentions. Because of parliamentary rules that deny passage to legislation that does not receive a majority of the votes cast, the evaluation was not approved. Although New Union (Social Liberals) Chairman Arturas Paulauskas called the previous day for Paksas' resignation, all but two of the New Union deputies left the session before the vote. Voting on evaluations offered by the Liberal Union and the Conservatives was postponed until the next parliament session on 21 June, at which time the Conservative resolution was defeated by a vote of 6 to 54 and the Liberal one was withdrawn, since Paksas had already resigned.

OIL SUPPLY AGREEMENT SIGNED WITH RUSSIAN YUKOS.
Williams International, the operator of Mazeikiai Nafta (Mazeikiai Oil), announced on 15 June that it has signed a 10-year supply agreement with the oil company YUKOS, Russia's second-largest crude oil supplier, BNS reported. According to the agreement, which must still be ratified by the Lithuanian government, YUKOS will supply some 4.8 million tons of oil per year to the Mazeikiai refinery and export 4 million tons of crude oil annually via the Butinge terminal. It will pay $75 million and grant another $75 million in loans for a 26.85 percent share in Mazeikiu Nafta. The current 33 percent share held by Williams would be reduced to the same 26.85 percent, but the company would retain its rights as the company's operator. Mazeikiu Nafta Board Chairman Randy Majors told a press conference that the European Bank for Reconstruction and Development informed him that it will begin negotiations for loans to modernize the oil refinery after the government approves the agreement.

NEARLY TWO-THIRDS SUPPORT NATO BID.
A poll of 1,056 persons, conducted by the Vilmorus public opinion firm on 7-11 June, indicated that 64 percent of the respondents support Lithuania's membership in NATO, ELTA reported on 21 June. The share of supporters in the previous poll in March had been 51.2 percent. Deputy Foreign Minister Giedrius Cekuolis asserted that the greater support was due to the successful session of the NATO Parliamentary Assembly held in Vilnius in May, positive statements made by U.S. President George W. Bush in Brussels and Warsaw, and intensive diplomatic activity by Lithuanian officials. An additional 17.4 percent of respondents said they would back the NATO cause if they could be convinced that it is impossible to guarantee state security for a lower cost. Only 5.5 percent of the respondents denied the need to apply for NATO membership, and 4.8 percent said that they do not care either about the NATO bid or security prospects in general.

* The government approved the economic policy memorandum to be signed with the International Monetary Fund on 19 June, ELTA reported. The memorandum will be sent to the IMF along with a letter from Prime Minister Rolandas Paksas and Bank of Lithuania Governor Reinoldijus Sarkinas. The memorandum stipulates the retention of the currency board model until the end of 2002, low inflation (approximately 1 percent in 2001 and about 3 percent in 2002), the reduction of the fiscal deficit of 2001 to 1.4 percent of GDP and the fiscal deficit of 2002 - to 1.3 percent of GDP.

* The parliament ratified a long-term and annual (2000) funding accord for SAPARD (Special Accession Program for Agriculture and Rural Development) on 21 June, ELTA reported. For 2000 Lithuania is eligible to receive 30.339 million euros ($27.5 million) that have to be used by the end of 2002. Agriculture Minister Kestutis Kristinaitis said that the funds would be available only after accreditation of a Lithuanian National Payment Agency, which is likely in late September or October. Lithuania will also be eligible for similar funding for 2001, but he doubted that the 60.6 million euros available would be used up, since projects worth only 15 million litas have been proposed so far.

* German Bundestag Vice President Anke Fuchs told a news conference in Vilnius on 15 June that Germany backs the Lithuania's efforts to join the European Union and NATO, ELTA reported. However, she stressed the need for the Baltic States to strengthen good relations with Russia. In talks with her Lithuanian counterpart Arturas Skardzius Fuchs said that Germany might agree with a shorter workforce transition period, perhaps as low as two years, for Lithuania.

* Lithuanian and Austrian Interior Ministers Vytautas Markevicius and Ernst Strasser signed an agreement on cooperation in combating international organized crime and illegal drug trafficking on 21 June in Vilnius, BNS reported. The agreement regulates information exchange on arms, ammunition and explosives' trafficking, trade in stolen cars, economic crimes, trafficking in people and facilitation of illegal border crossing.

* The parliament Foreign Affairs Committee on 21 June approved the proposal of the Foreign Ministry to restructure its diplomatic representation in South America and Middle East, BNS reported. The Foreign Ministry suggested closing the present diplomatic missions in Venezuela and Dubai, and opening new embassies in Argentina and Egypt.

* Russian Foreign Minister Igor Ivanov said on 21 June that Moscow believes that Polish and Lithuanian representatives should participate in Russia-European Union talks about Kaliningrad, ITAR-TASS reported.

* A delegation led by Polish Defense Minister Bronislaw Komorowski took part in the commemoration in Vilnius on 17 June of the 1831 Polish-Lithuanian Uprising against Tsarist Russia, BNS reported. Soldiers from the joint battalion LITPOLBAT marched from the President's Office to the parliament building and then traveled to Auksieti Paneriai where a statue commemorating the 1831 Uprising, constructed by order of the Lithuanian Defense Ministry, was unveiled.

* President Valdas Adamkus presented to the parliament for ratification the agreement, signed in London in April, between Lithuania and the European Bank for Reconstruction and Development for funding the closure of the Ignalina Nuclear Power Plant, BNS reported.

* The Congress of Lithuania's Polish Elections Action on 16 June in Vilnius reelected parliament deputy Valdemaras Tomasevskis to a second three-year term as the party's chairman by a vote of 90 to 3, "Lietuvos rytas" reported on 18 June. Leokadija Janusauskiene, the mayor of the Vilnius rajonas, was elected as his deputy.

* The Council of Lithuanian Television and Radio (LRT) appointed on 19 June the two deputies picked by Valentinas Milaknis, the director general of the state-owned national radio and television, ELTA reported. Rita Miliute, a former correspondent of the Voice of America and news editor of the commercial television station LNK, will head the television division and Kestutis Petrauskis, a former deputy editor of the weekly magazine "Veidas" (Face), will head the radio division.