Baltic Report: August 17, 2001

CHIRAC: ESTONIA WILL BE IN EU IN 2004.
Estonian President Lennart Meri thanked French President Jacques Chirac on 28 July in Tallinn for backing his country's membership in NATO and the EU and asserted that this would also help Russia's democratic development, BNS reported on 30 July. Chirac declared that Estonia is the closest among the candidates for EU membership and will be an EU member in 2004. In a meeting with Prime Minister Mart Laar and the defense, finance, and foreign affairs ministers, he regretted that French business has shown too little interest in Northern Europe, but expressed hope that this will change. Estonia intends to purchase a new building for its Paris embassy with the funds France is providing as compensation for its former embassy which had been handed over to the USSR in 1940 and which Russia seems unready to return.

PRESIDENTIAL ELECTIONS SET FOR 27 AUGUST.
Parliament Chairman Toomas Savi announced on 2 August that, at the suggestion of President Meri, an extraordinary session of the parliament will be held on 27 August to elect the next president of Estonia, ETA reported. To be nominated as a candidate for president, an individual needs to obtain the backing of at least one-fifth of the parliament, or 21 deputies. To be elected, candidates must gain the support of 67 of the 101 deputies. If no candidate is successful that day, two additional rounds of voting will be held the following day with the field in the third round reduced to the two candidates receiving the most votes in the second round. If the third round fails, the election will be delegated to an electoral college, consisting of the 101 members of parliament and 266 representatives of local governments, which is supposed to meet on 21 September. Estonia's next president will then be elected by a simple majority of the members of the electoral college taking part in that ballot.

UN GENERAL ASSEMBLY PRESIDENT VISITS ESTONIA.
UN General Assembly President Harri Holkeri, a former prime minister of Finland, began a two-day visit to Estonia on 6 August by meeting with parliament Chairman Toomas Savi and Foreign Affairs Committee Chairman Andres Tarand, ETA reported. Holkeri spoke about his efforts to introduce efficiency, transparency, openness, and cost-reduction to the assembly's work. Holkeri expressed regret that Estonia will not become a member of the Western European group of countries in the UN before the end of his term on 11 September, as he had hoped. He said he is certain that it will definitely occur in the future, but it has taken time to gain the necessary unanimous approval. The next day Holkeri traveled to Saaremaa to give a lecture at a UN summer university there.

TALLINN TO EXTEND GRAIN WHARF RATHER THAN BUILD SEPARATE OIL TERMINAL.
The Port of Tallinn supervisory council decided unanimously on 31 July to authorize funds to build a deep-water oil terminal as an extension of the grain wharf at Muuga Port, BNS reported. The new wharf, with an 18-meter depth clearance, will allow the port to receive tankers of up to 125,000 tons displacement. The leading oil transit firm, Pakterminal, was unhappy with the decision, arguing that it would be wiser to build a new, separate oil terminal that it estimated would cost about $9.4 million. Pakterminal board Chairman Raivo Vare said he hopes to sit down with Port of Tallinn officials to discuss the oil terminal issue.

EDELARAUDTEE PRIVATIZATION COMPLETED.
The sale of passenger railway Edelaraudtee (Southwest Railways) to the British company GB Railways was finally completed on 31 July, ETA reported on 1 August. The Estonian Privatization Agency approved the sale last year, but financial difficulties resulted in GB Railways having direct ownership of only 20 percent of the company that controls Edelaraudtee, as it sold the other 80 percent to local Estonians Henn Ruubel -- the Edelaraudtee board chairman -- and lawyer Marcel Vichmann. Ruubel said that his first priority would be to restore passenger routes that the government discontinued at the beginning of the year due to a lack of funding.

MAJOR LOAN FOR ROAD REPAIR SIGNED.
Finance Minister Siim Kallas and Nordic Investment Bank President Jon Sigurdsson on 30 July signed a 15-year loan agreement for 45 million euros ($38.6 million) for four road reconstruction projects, BNS reported. The funds will be available by the fall, while the repair work is likely to begin in 2002 and be completed by July 2005. The funds will be used to rebuild the Maardu-Aaspere section of the Tallinn-Narva highway, upgrade 50 separate stretches of roadway totaling 391 kilometers, and pave 167 kilometers of gravel roads.

NATIONAL GENETIC DATA BANK PROJECT DELAYED.
A pilot project by the Estonian Genome Project Foundation, to collect genetic data from 10,000 Estonians, will not begin this fall as previously planned, but will be delayed until at least February 2002 due to red tape and difficulties in obtaining necessary funding, BNS reported on 3 August. The parliament last December passed a law allowing for the creation of a gene bank covering the entire population of Estonia. The state was to provide about one-third of the costs associated with creating the gene bank, with the remainder coming from private capital, mostly foreign. The state has so far granted 1 million kroons ($56,800) to begin the pilot project, which is expected to cost about $2.5 million. Project manager Krista Kruuv noted that organizers expect to find foreign investors at an international genetic research conference to be held in Tartu in September.

BUSINESSMEN FEAR REMOVAL OF TAX-FREE TRADE FROM EU TALKS.
Shipping and tourism firm officials have expressed concern that Estonia's EU accession negotiators are not interested in gaining the requested transition period of 6 1/2 years before tax-free shopping on passenger ships on the Baltic Sea is abolished, "Aripaev" reported on 8 August. They were reacting to comments by the head of the Estonian delegation at the EU talks, Alar Streimann, that other taxation and energy issues will be the focus of the fall EU negotiating session. Streimann said, however, that his remarks were misinterpreted, and that he had not mentioned tax-free trade because he doubts that opposition by some EU member countries to a transition period can be overcome before the final phase of the talks. Nevertheless, Streimann told BNS that Estonia may hold seminars and conferences to strengthen its appeal, and predicted that the transition period would eventually be granted.

NARVA CITY COUNCIL DEPUTIES SEEK EQUAL RIGHTS FOR RUSSIAN.
Four Narva City Council deputies proposed that the use of the Russian language be allowed in the city as an official language of public administration, BNS reported on 9 August. Noting that 86 percent of Narva's population speak Russian as their native language, they cite Article 52 of the Estonian Constitution, which states that in localities where the language of the majority of the residents is not Estonian, local governments may use the language of the majority of the permanent residents as an internal working language. Population Minister Katrin Saks, however, commented that she had not heard of any problems related to speaking Russian in Narva, but had personally experienced difficulty in being understood in Estonian there. Therefore, she said, the Estonian government must first ensure the fulfillment of the language law requirement that officials be fluent in Estonian at the required level before the Narva proposal can be considered. The Narva City Council chairman sent a similar proposal to that of the four deputies to the Estonian government in 1995, but never received a response.

* Coalition Party Chairman Mart Kubo stated on 5 August at a political seminar that there was a good possibility that the party, which was the senior member in the 1995-1999 governing coalition in Estonia, would be dissolved after its annual convention in November, BNS reported the next day. Former party Chairman Tiit Vahi suggested that members who wanted to remain politically active could join another party with similar goals, such as the Reform Party. Former Premier Mart Siimann, the party's only representative in the current parliament, is advocating the creation of a new party.

* Economy Ministry Chancellor Marika Priske and Belarus Deputy Prime Minister and Foreign Minister Mikhail Hvostov signed an agreement in Minsk on 31 July on trade and economic cooperation that will lead to the abolition of the present double customs tariffs on Estonian exports to Belarus, BNS reported.

* The fourth session of a joint Sino-Estonian economic committee on 31 July featured talks on trade, economic relations, and investment climate, BNS reported. Relations with international organizations were also discussed, mainly due to China's efforts to join the World Trade Organization. The previous day the delegation visited the Business Development Foundation and toured Elcoteq, Maseko, and the Port of Tallinn.

* Estonian diplomats in Washington have rented offices in the center of the city starting on 1 August to serve as temporary quarters while the embassy building, which was heavily damaged by a fire in early July, is repaired, BNS reported on 31 July.

* Guido Sammelselg, deputy board chairman of Baltic Rail Services, said on 1 August that the company would pay from its own funds the full 1 billion kroons ($56.8 million) to purchase a 66 percent share of Eesti Raudtee (Estonian Railway) by 31 August, as efforts to secure a 360 million-kroon loan are unlikely to be successful, BNS reported.

* Major General Ants Laaneots will take over as the head of the Integrated War College of the Estonian defense forces from 27 August, replacing Lieutenant Colonel Ants Kiviselg, who has been appointed the head of General Staff personnel department, ETA reported on 2 August.

* The Fitch IBCA rating agency announced on 30 July that it placed Estonia's long-term foreign currency rating BBB+, short-term foreign currency rating F2, and long-term local currency rating A on Rating Watch Positive, an action that may, but need not result in a higher rating after a review that is expected to be completed by early September, ETA reported.

* In the first half of the year Estonia imported goods worth 52.667 billion kroons and exported goods worth 42.624 billion kroons, resulting in a trade deficit of 10.043 billion kroons or 188 million kroons greater than in same period last year, BNS reported on 30 July.

* The Statistics Office announced on 7 August that Estonia's consumer price index increased by 0.3 percent in July compared to June, and 6.3 percent compared to July 2000, ETA reported.

* The Education Ministry Supervision Department head Kadri Peterson told BNS on 20 July that the ministry couldn't close the illegal branches of Russian higher educational institutions operating in Kohtla-Jarve because it never issued them operating licenses.

FRENCH PRESIDENT SUPPORTS LATVIA'S MEMBERSHIP IN EU AND NATO.
During talks on 27 July with President Vaira Vike-Freiberga and Prime Minister Andris Berzins, as well as in discussions in the parliament, Jacques Chirac expressed his support for Latvian membership in the EU, BNS reported. The French president asserted that "with admission of Latvia to the EU, not only will Latvia return to Europe but Europe will also regain its own people." Regarding NATO, Chirac said that while France supports the admission of the Baltic states into the organization, the decision of the U.S. would be decisive for NATO enlargement.

ECONOMIC FORECAST IMPROVES.
The Latvian Economy Ministry is predicting that the country's main economic results this year will be better than previously forecast, BNS reported on 30 July. The growth in the GDP was raised from 6 to 7 percent, while the rate of inflation was reduced from 3 to 2.5 percent. Latvia's current account deficit, which was 6.9 percent of GDP in 2000, is expected to fall to 6.2 percent of GDP in 2001. The ministry also forecasts that the national budget deficit, which was 2.8 percent of GDP last year, should drop to 1.8 percent of GDP this year. The head of the ministry's National Economy and Structural Policy Department, Olegs Baranovs, told a press conference on 30 July that Latvia's economic development has not been overly affected by the downturn in the U.S. and EU markets, in part because exports to the CIS countries, Estonia, and Lithuania in the first five months of the year increased by 30 percent compared to the same period last year.

GOVERNMENT APPROVES EUROPEAN INTEGRATION PROGRAM.
The government on 31 July approved Latvia's national program for European Union integration and ordered the European Integration Office to present the program to the European Commission for assessment, BNS reported. This was the third review of the national EU integration plan and took into account the recommendations in the European Commission's progress report for 2000. The program's priority topics include ensuring that Latvia is in compliance with the requirements of the Copenhagen and Madrid conferences and preparing the state administration, society, and economy for EU membership. The plan includes projects that are co-financed by the EU as well as those undertaken as part of bilateral agreements and projects funded by international financial institutions.

GOVERNMENT APPROVES CHANGES IN ITS EU ENVIRONMENT CHAPTER PROPOSAL.
The cabinet on 7 August approved a number of changes in its position concerning the environment chapter of its membership negotiations with the European Union, LETA reported. The changes were prompted by requests for more information by European Commission experts. Latvia altered its proposals concerning hazardous waste, household and automotive batteries, packaging, waste-disposal sites, and the quality of gasoline and diesel fuel, and decided that it will specify the level of investment for water maintenance in the annual national budget. Andris Kesteris, the head of the EU accession negotiations, was tasked with presenting the amended Latvian position to the EU.

STATE SUPPORT FOR ENVIRONMENTAL SECTOR SHRINKING.
Environmental Protection and Regional Development Minister Vladimirs Makarovs told a press conference on 2 August that state support for the environmental sector is decreasing rapidly, LETA reported. In 2000 the state spent 7.4 million lats ($11.8 million) on the environmental sector. This support declined to 5 million lats this year and is envisioned to fall to only 3.7 million lats in 2002. Makarovs, however, mentioned that in some instances local governments have become more active in implementing environment projects with significant EU funding. He said that 1.15 billion lats must be invested by 2015 in order to fulfill all EU requirements for the environment.

ASMUS URGES LATVIA TO MAINTAIN PROGRESS UNTIL NATO SUMMIT.
Former U.S. NATO enlargement coordinator Ronald Asmus told President Vaira Vike-Freiberga in Riga on 6 August that Latvia must continue its reform efforts in the lead-up to the NATO summit in Prague in November 2002, as even the best lobbying will not be able to overcome a failure to do so, BNS reported. Asmus was on a private visit to Latvia from 3 to 8 August, during which he also met with other high-ranking Latvian officials, including Foreign Ministry State Secretary Maris Riekstins. Asmus interpreted President George W. Bush's speech in Warsaw in June as an indication of the U.S. leader's desire to expand NATO from the Baltic to the Black seas. Both officials agreed that the membership of the Baltic states in NATO would contribute to European safety and stability and would not result in drawing new dividing lines in Europe.

CHINESE DELEGATION ENDS VISIT.
A Chinese delegation, headed by Communist Party Central Committee International Department head Cai Wu, ended a four-day trip to Latvia on 28 July with visits to the Latvian Occupation Museum and the Ethnographic Open-Air Museum, LETA reported. On 26 July the delegation met with representatives of parliament factions, the Latvian-Chinese parliamentary cooperation group and Foreign Ministry Deputy State Secretary Martins Virsis. The next day, Latvian Social Democratic Workers Party (LSDSP) Chairman Juris Bojars accepted Wu's invitation to visit China in order to launch cooperation between the parties. The Chinese guests also discussed increasing economic cooperation with Latvia's ports, especially in Riga, where the LSDSP is in power.

RIGA, TAIPEI TO SIGN SISTER-CITY AGREEMENT.
Riga Mayor Gundars Bojars announced on 1 August that Riga would accept the sister-city agreement offered by the Taiwanese capital of Taipei prior to the March city elections and subsequently repeated, BNS reported. He said that neither the Foreign Ministry nor any of the factions in the Riga City Council have expressed any opposition to the agreement. No date has been set for signing the agreement. The agreement may become a sensitive issue, since Riga has a sister-city agreement with the People's Republic of China city of Suzhou and Beijing has protested Latvia's establishment of consular relations with Taiwan.

CARGO TURNOVER IN VENTSPILS PORT INCREASING.
The Ventspils port administration announced on 3 August that through July of this year the port reloaded 23.45 million tons of cargo, or 10.4 percent more than in the same period last year, BNS reported. In July, 3.44 million tons of cargo was handled, or 300,000 tons more than in July 2000. Almost 80 percent of the cargo, 2.72 million tons, was liquid cargo -- primarily 1.3 million tons of crude oil and 1.37 million tons of oil products. Experts predict that Ventspils this year will reach a record new annual cargo turnover of 38.4 million tons, exceeding the current record of 38.2 million tons set in 1983

* President Vaira Vike-Freiberga declared, during opening ceremonies at the new border crossing station with Russia at Aizgarsa on 8 August, that Latvia wants to sign a border agreement with Russia, BNS reported. She noted that this border would in time become the EU's border with Russia and that it would be useful for the two countries to cooperate more in stopping contraband and fighting international crime. Vike-Freiberga asserted that she expected relations with Russia to improve after Latvia joined the EU.

* Bank of Latvia President Einars Repse told a press conference on 8 August that he was considering the possibility of playing an active role in politics, BNS reported. He criticized the existing situation, stating that the "cowardice and corruption of the state power has now reached catastrophic levels." Recent polls indicate that only President Vike-Freiberga is more popular than Repse, and he could be one of the leaders of a new still-to-be founded right-wing party.

* The credit rating agency Standard & Poor's announced that it was raising Latvia's outlook for long-term loans in foreign currencies from stable to positive, BNS reported on 9 August. Fitch IBCA raised its rating of Latvia from stable to positive in mid-July.

* The parliament passed a law on 27 July granting equal tax breaks to the Liepaja and Riga Special Economic Zones as well as the Riga Free Port and Ventspils Free Port, LETA reported the next day. The law states that goods imported and exported to the areas are not subject to value added taxes and no excise duties will be levied on oil products as long as they do not leave the areas.

* Assistant Secretary of Commerce and Director General of the U.S. Commercial Service Maria Cino met with government officials in Riga on 30 July and visited the recently opened the U.S. Commercial Service office located in the Riga embassy, LETA reported.

* Latvian Ambassador to Estonia Gints Jegermanis will be transferred to New York in November to take over the post of Latvia's ambassador to the United Nations, BNS reported on 30 July.

* New Polish Ambassador to Latvia Tadeusz Fiszbach took up his post in Riga on 1 August, and is scheduled to present his credentials to President Vike-Freiberga on 14 August, LETA reported.

* The Economy Ministry announced on 7 August that by 1 July 92.5 million or 83.3 percent of issued privatization vouchers had been utilized in Latvia, LETA reported. The largest share (41.4 million) were used for acquiring capital shares in companies, 32.1 million for privatizing apartments, 12 million for privatizing plots of land, and 7 million for purchasing companies and other properties.

* The Latvian Central Statistics Bureau announced on 8 August that the consumer price index decreased by 0.5 percent in July compared to June, but increased by 3.1 percent compared to July 2000, BNS reported.

PARLIAMENT APPROVES WILLIAMS, YUKOS AGREEMENT.
The parliament on 2 August, by a vote of 98 to none with nine abstentions, passed amendments to laws necessary for implementation of an agreement between Mazeikiai Nafta (Mazeikiai Oil) strategic investor Williams International and Russian oil company YUKOS, ELTA reported. According to the agreement, YUKOS will supply some 4.8 million tons of oil per year to the refinery and export 4 million tons of oil annually via the Butinge terminal for the next 10 years. It will pay $75 million and grant another $75 million in loans to acquire a 26.85 percent share of Mazeikiai Nafta. An extraordinary meeting of Mazeikiai Nafta shareholders to approve the agreement scheduled for 6 August was postponed to 21 August.

DEFENSE AGREEMENT WITH POLAND RATIFIED.
The parliament on 30 July ratified, by a vote of 107 to one with one abstention, the defense cooperation agreement with Poland that was signed in Vilnius in February, BNS reported. The agreement replaces a 1993 agreement between the two defense ministries and reflects the new situation of Poland being a member of NATO. The agreement reaffirms Poland's support for Lithuania's NATO membership and provides for cooperation in defense policy and strategy formation, the periodic holding of bilateral military exercises and training, as well as military and political consultations. The joint LITPOLBAT battalion will remain the major Lithuanian-Polish defense cooperation project for service in international peace- and security-keeping operations.

POLISH, LITHUANIAN PREMIERS DISCUSS EU, NATO ENLARGEMENT.
Polish Prime Minister Jerzy Buzek and Algirdas Brazauskas discussed problems associated with EU integration, bilateral trade, and economic cooperation on 2 August at the Lithuanian seaside resort of Palanga, BNS reported. Buzek voiced his support for Lithuanian integration into NATO, adding that even after the upcoming parliamentary elections in Poland, the government will advocate Lithuania's early entry into the Western military alliance. Brazauskas said the two countries are eager to carry out an "energy bridge" project that would link their power grids, thereby opening up opportunities for exporting Lithuanian electricity to the West. The premiers also discussed bilateral relations and expressed the hope that an agreement on the writing of Polish surnames in Lithuania could be signed on 5 September in Warsaw during celebrations of the 10th anniversary of the restoration of diplomatic relations.

PARLIAMENT APPROVES DRAFT CONSTITUTIONAL AMENDMENTS.
The parliament on 3 August by a vote of 77 to one, with four abstentions, gave preliminary approval to amendments to Article 119 of the constitution, granting all permanent residents the right to run for and vote in local government elections, ELTA reported. The terms of office for those posts were also extended from three to four years. The parliament also agreed to prepare by 1 October, when the bill will be next considered, the necessary laws to define what constitutes permanent residency. The amendment was prompted by the need to comply with the European Union's demand that EU citizens permanently residing in candidate countries be allowed to participate in local elections. The amendment will grant this right not only to EU citizens, but all permanent residents.

PRESIDENT, PREMIER DISCUSS ECONOMIC SITUATION.
Prime Minister Brazauskas held an unscheduled hour-long meeting on 7 August with President Valdas Adamkus, to discuss the state budgets for 2001 and 2002 as well as economic reform, ELTA reported. Brazauskas complained that the previous government of Rolandas Paksas had approved a 2001 budget with clearly over-optimistic anticipated revenues. It had planned to finance state investments from several sources: the budget, loans, and the privatization fund, but funds from these sources were insufficient and the current government will be required to cut expenditures or look for other sources of funding. Brazauskas said his priorities are preparing a realistic 2002 budget and realistic estimates of privatization funds. They also discussed pension reform, the establishment of a credit system to provide loans to students, and the privatization of Lietuvos Dujos (Lithuanian Gas), the Lithuanian Agriculture Bank (see below), and Lithuanian Airlines.

GOVERNMENT APPROVES PROGRAM FOR SALE OF AGRICULTURE BANK.
The cabinet on 8 August approved the conditions for the sale of a 76.2 percent share of the state-owned Zemes Ukio Bankas (Agriculture Bank, LZUB) to a foreign strategic investor, BNS reported. The program stipulates that the investor has to have a minimum long-term foreign currency rating of BBB by the credit rating agency Fitch IBCA or its equivalent from the Standard & Poor's or Moody agencies, and have a minimum equity requirement of $150 million. The first requirement excludes all Lithuanian banks, since no domestic bank has a higher rating than the BBB- Fitch has given Lithuania as a whole. In terms of assets (1.7 billion litas [$425 million]), LZUB is the republic's third-largest bank and had an unaudited net profit of 7.3 million litas in the first half of 2001. In 2000, LZUB held 11.5 percent of all deposits and 15 percent of all loans in Lithuania. Povilas Milasauskas, the managing director of the State Property Fund, said that there are four to five potential investors in the bank, including Poland's Bank Handlowy and France's Societe Generale.

MAZEIKIAI OIL POSTS GREATER LOSSES IN FIRST HALF OF YEAR.
Mazeikiai Oil announced on 31 July that it had an unaudited loss of 71.65 million litas ($17.91 million) in the first half of 2001, or almost four times greater than the company's loss of 18.33 million litas in the same period last year, BNS reported. After significant losses in the first quarter, the company had profits of 34 and 39 million litas in April and May, respectively. In June, Mazeikiai Oil lost 56 million litas, which managing director Jim Scheel attributed to a 20 percent drop in gasoline prices while crude oil prices remained almost unchanged. From January-June, the company refined 3.29 million tons of oil, a 41.5 percent increase from the same period in 2000, while its Birzai oil pipeline transported 20.9 percent more oil and oil products and its Butinge oil terminal increased export and import flows by 34.7 percent.

STATE TO CONTINUE BANK DEPOSIT RESTORATION.
Finance Minister Dalia Grybauskaite told a press conference on 6 August that the government will adhere to commitments made by previous cabinets to restore lost bank deposits to private citizens, "Lietuvos rytas" reported the next day. She said that deposits would be restored to the first of four groups -- persons above the age of 85, disabled persons and families with disabled children, and former political prisoners and deportees -- in 2002. Payments to a second group -- persons above the age of 70, families with four or more children, and second-category disabled persons -- will begin in 2003, but it is unclear whether the necessary funds will be available. It is estimated that 40-45 million litas ($10-11.25 million) will be needed for the first group and 122.5 million litas for the second group.

ELECTRICITY EXPORT DEALS DISCUSSED.
Andrei Rappoport, the first vice chairman of the board of the Russian energy company RAO JES Rossii, assured Prime Minister Brazauskas in Vilnius on 9 August that an agreement signed in Minsk in April for the sale and export of 5 billion kilowatt-hours (kWh) of Lithuanian electricity to Belarus will be fulfilled, BNS reported. Brazauskas, however, expressed doubts about that pledge, as electricity exports to Belarus were only 50 million kWh in June and 75 million kWh in July. Rappoport and Lithuanian Energy officials agreed that the export of electricity from Lithuania to Kaliningrad and Poland would begin on 1 September.

LITHUANIAN, CZECH INTERIOR MINISTRIES TO PROMOTE COOPERATION.
In a meeting on 1 August, Czech envoy to Vilnius Stanislav Hlavacek and Interior Minister Juozas Bernatonis discussed the most urgent law-enforcement problems of both countries and the need to draft a bilateral treaty on cooperation in combating organized crime, drug trafficking, and other serious crimes, ELTA reported. The Czech Republic is interested in learning more about Lithuania's experience in fighting illegal migration, and is willing to advise Lithuania about the transition to internationally approved citizenship and driver's license documentation. The officials also talked about the signing of a cooperation program between their police forces and a mutual assistance memorandum regarding civil security and fire protection issues.

POLISH, LITHUANIAN BOURSES SIGN COOPERATION AGREEMENT.
Representatives of the Warsaw Stock Exchange on 9 August agreed to closer cooperation with their counterparts from the Lithuanian National Stock Exchange, dpa reported. The deal should foster convergence and eventual cross-border securities trading in "an era of globalization and international alliances," the bourses were quoted as saying in a joint statement. The Lithuanian bourse had aggressively pursued a strategic alliance with Warsaw since scrapping plans to join the Nordic stock-exchange alliance NOREX in May.

SCOTTISH EXECUTIVE ORDERS ARREST OF SUSPECTED WAR CRIMINAL.
The Scottish Executive ordered on 27 July the arrest of 85-year-old Antanas Gecevicius (Gecas), a resident of Edinburgh whose extradition Lithuania requested in March for suspected complicity in Nazi atrocities during World War II, BNS reported. During the war, Gecas commanded a squad in the Lithuanian Auxiliary Police Battalion. However, Gecas' attorney, Nigel Duncan, said that his client is currently hospitalized and unable to attend any extradition court hearing.

* Finance Minister Dalia Grybauskaite told a news conference on 6 August that state revenues for the first seven months of 2001 were 94 million litas ($23.5 million) below expectations, BNS reported. She said that it was likely that the state could not fulfill its commitment to the IMF to keep Lithuania's fiscal deficit at 1.4 percent of GDP and that she would try to convince the IMF mission, which is scheduled to come to Lithuania in September, to allow a greater deficit.

* Prime Minister Brazauskas and World Bank Director for the Baltic Countries Michael Carter discussed in Vilnius on 27 July the disbursement of a loan which had been delayed due to insufficient progress in carrying out energy and agriculture reform, ELTA reported. Carter agreed that it was more important to prepare for the privatization of Lithuanian Gas and Lithuanian Energy and secure a better price for the state utilities, than to carry out a hasty sell-off.

* The parliament on 2 August postponed until the fall session the presentation of amendments to Article 47 of the constitution to allow the sale of agricultural land to foreigners when it became clear that the parliamentary commission for preparing constitutional amendments would not be able to present a draft text.

* The coordination council of five minor rightist political parties -- Democrat, Independence and Homeland People's Parties, Freedom League, and Nationalist Union -- announced on 8 August that they would hold a merging congress in Vilnius on 6 October, ELTA reported. The Union of Political Prisoners and Deportees, which has more members than the five parties combined, has participated in the merger talks, but has not yet made a final decision on whether to join the new party.

* Parliament Deputy Chairman Social Democrat Vytenis Andriukaitis was appointed chairman of the parliament's European Affairs Committee on 31 July, ELTA reported. The parliament has 13 committees, but the European Affairs Committee is the only one that parliament statutes require be headed by a member of the parliament's executive board.

* The Lithuanian transportation association LINAVA will begin ferry service between Klaipeda and Wismar, Germany in early September using two high-speed ferries leased from Sweden, BNS reported on 1 August. The length of the trip will be 12 hours shorter than that of a competing ferry between Klaipeda and Kiel run by the recently privatized Lisco Baltic Service, and the fares will be about 20 percent cheaper.

* Vilnius Mayor Arturas Zuokas traveled to Krakow on 4 August to present Nobel Prize-winning poet Czeslaw Milosz with the regalia associated with being an honorary citizen of Vilnius, BNS reported on 6 August. The Vilnius City Council granted him the title on 26 July, but Milosz, who celebrated his 90th birthday in June, was too weak to travel to Vilnius to accept the honor.

* Director of State Food and Veterinary Service Kazimieras Lukauskas announced on 6 August a temporary ban on the import of pigs, pork, and pork products from Poland, BNS reported. The decision was based on information from the Polish chief veterinary inspector that it expected an outbreak of pig fever due to the recent floods.

* The Statistics Department announced that the consumer price index fell by 0.8 percent in July compared to June, but increased by 1.1 percent compared to July 2000.

* The Statistics Department announced preliminary data on 30 July indicating that, in the first half of 2001, gross domestic product reached 22.8 billion litas ($5.7 billion), an increase of 5.1 percent compared to the same period last year, ELTA reported.

* The Finance Ministry announced on 30 July that the total state debt declined by 121.7 million litas ($30.425 million) in June to 12.99 billion litas as of 30 June, ELTA reported. Direct loans by the state accounted for 83.1 percent of the debt with the remainder being state guarantees on other loans.