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Baltic Report: May 15, 2000

15 May 2000, Volume 1, Number 17
WWII Victory Day Marked In Baltic Countries
Leftist organizations and Soviet war veterans commemorated the end of World War II with Victory Day events in the Baltic countries, BNS reported 9 May. In Estonia, Red Army veterans met at a memorial to the fallen in central Tallinn where some 1,000, mostly pensioners, assembled peacefully. In Riga, Latvia, over 1,000 people, mostly war veterans, gathered near the "Victory" monument carrying red flags and distributing leaflets adorned with a picture of Soviet dictator Joseph Stalin. The Russian ambassador and a Belarusian diplomat participated in wreath-laying ceremonies. Latvian deputy Janis Jurkans and leftist leader Alfreds Rubiks also attended. In Vilnius, Lithuania, about 3,000 Soviet veterans gathered at the Antakalnis cemetery near the graves of their comrades and lit an eternal flame. The Russian and Belarusian ambassadors and the Charge d'Affaires of Ukraine joined Democratic Labor Party leader and deputy Ceslovas Jursenas and Socialist Party leader Mindaugas Stakvilevicius in wreath-laying ceremonies. ELTA reported that 10 pro-Chechen demonstrators scuffled with the veterans in a parking lot adjacent to the cemetery.

Estonia, Latvia Increase Security At Moscow Embassies
Estonian and Latvian officials are taking steps to strengthen security at their embassies and consulates in Russia, BNS reported 10 May. Both countries requested enhanced security through the Russian Foreign Ministry after Molotov cocktails were thrown at the Estonian Embassy and the Latvian Consulate in St. Petersburg was doused with black paint this past weekend. Earlier in the year, the Latvian Embassy in Moscow was smeared with black paint and some windows were broken. ITAR-TASS reported 10 May that the Russian Embassy in Tallinn has not asked for any enhanced security and there were no incidents against Russian diplomats during the recent VE-Day celebrations.

U.S. Cautions Latvia, Lithuania On Intellectual Piracy
The U.S. Trade Representative has included Latvia and Lithuania on a list of 39 countries which provide weak intellectual property rights protection, BNS, LETA, and ELTA reported 12 May. The list is drawn up annually to warn governments who are U.S. trade partners about copyright problems that might trigger countermeasures from the U.S. The report accompanying the list said that the U.S. is planning sanctions against Ukraine already and that the problem is pervasive across the former Soviet bloc. Maris Graudins of the Baltic States Copyright Coalition told BNS that the inclusion of Latvia is not a surprise. However, Edmundas Vaitiekunas, general-director of the Lithuanian Author's Rights Defense Association, told Lietuvos Rytas that "the Americans acted prematurely to list Lithuania because the country has already adopted laws to protect authors," and that Lithuanian officials are fighting piracy much more aggressively than they were a few years ago.
* The managers of energy companies in Estonia, Latvia, and Lithuania met on 12 May in Tallinn and agreed that the energy market in all three countries should be opened up together in a "balanced way." Despite being in different stages of privatization, the three seek to increase cooperation between themselves to find economies of scale and prepare for the EU energy market. Lietuvos Energija has a major foreign stockholder, Swedish Vattenfall, which owns 10 percent; Latvenergo is still fully state-controlled, and Eesti Energia hopes to organize an initial public offering (IPO) of stock within two years.
* The Council of Baltic Sea States (CBSS) committee on smuggling interdiction concluded a two-day meeting in Klaipeda and decided to stage joint operations this summer to curtail the spread of smuggled goods subject to high import duties, such as cigarettes and alcohol. The CBSS includes: Norway, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Germany, and Denmark. Russia's Kaliningrad region and the City of St. Petersburg have also participated in specific CBSS projects.

Estonian Budget Priorities Are NATO, EU
The Estonian government's budget strategy document for 2001 through 2004 strongly reflects the country's key foreign policy priorities, entry into NATO and the EU, BNS reported 9 May. The long-term strategy paper assumes that Estonia will be ready to join the EU by 2003 and plans for a steady increase in "defense expenditures to 2 percent of GDP as a precondition for entry into the North Atlantic alliance." The government document says that this rate of spending will bolster national security, and the increased defense capacity will make Estonia an acceptable partner to other countries.

Open Estonia Foundation Restructures
Philanthropist George Soros's Open Estonia Foundation (OEF), which has provided millions of kroons to non-profit organizations, will be restructured into an institute for political and social research, ETA and BNS reported 10 May. The announcement was made by Soros during his visit to Estonia on the occasion of the foundation's 10th anniversary. Soros said that the goal of the new Open Policy Institute would be to promote Euro-integration. OEF's activities, helping Estonian non-profit organizations that promote Estonia's integration into Europe, will continue with the help of the Baltic-American Partnership Foundation which was funded both by Soros and the U.S. government.

Tallinn Stock Exchange Celebrates 1,000 Days
To celebrate its first 1,000 days of operation, the Tallinn Stock Exchange (TSE) suspended all fees for trading on 12 May, ETA reported. In addition, most Estonian banks and brokerage firms registered with the TSE opened trading accounts for free to new investors hoping to encourage people to buy stocks. Trading volume doubled during the celebratory business day, and most stock prices rose.

Estonia's Extremists Use Russia As Model
Estonian Security Police commissioner Hannes Kont told "Eesti Paevaleht" on 12 May that there are fewer than 100 political extremists in Estonia, adding that they model themselves after Russian extreme nationalists, Nordic skinheads, and neo-Nazis. Kont said that the paramilitary Russian National Unity, which is openly anti-Semitic and is based on great Russian nationalism, has several dozen known members. Another group, the Russian National Bolshevik Party headed by writer Eduard Limonov, is active mostly in Latvia, but lately it has been distributing leaflets calling for armed resistance in Estonia. Estonian skinheads get together at concerts of their favorite bands in Estonia and the Nordic countries. Kont said that the movement is in its early stages and it is not clear if they will take the path of neo-Nazi views or leftist "Red" skins.
* Estonia has set 2002 as the revised date to meet all the requirements for NATO membership, four years earlier than a target mentioned in a recent Partnership Goals document given to the alliance.
* Seventeen Estonian parliamentarians formed a NATO support group to help promote Estonia's candidacy in the alliance. They plan not only to meet with visiting NATO officials, but also to mount a public campaign to keep Estonians informed about NATO.
* The Estonian Defense Ministry is seeking an appropriation of 1.8 billion kroon ($103.4 million) for 2001, an increase of 26 percent over this year's defense budget. Estonia's defense spending this year forms 1.6 percent of GDP, will be 1.8 percent in 2001 and meet the target of 2 percent of GDP in 2002.
* Siim Kallas, the finance minister, announced on 11 May that the state will start investing the stabilization reserve to help finance the reform of the pension system. Currently 25 percent of the income from privatization of state industry goes into the stabilization reserve. The pension reform plan also calls for the creation of private pension plans.
* The Moderates have raised objections to the plans of their coalition partners to reduce taxes. The Reform Party and Pro Patria Union are urging a reduction of the current 33.6 percent tax rate to improve the growth of the economy.
* The government has rejected a proposal to tax newspaper subscriptions. Newspapers bought over the counter will continue being hit with an 18 percent sales tax. The Estonian Newspapers Union had opposed the new tax proposal because it says the tax would undermine small regional newspapers.
* The Estonian government on 9 May decided that the land under the railway infrastructure and buildings, as well as the land needed to service the railroads, would remain in state ownership, even after Eesti Raudtee (Estonian Railways) is sold.
* On 9 May the Estonian parliament adopted an amendment to the wage law making the salaries of high-ranking state officials transparent. The changes in the law are part of an anti-corruption effort initiated by the Center Party faction.
* Visiting Finnish Deputy Paavo Lipponen lauded Estonian police cooperation with Finnish law enforcement structures in fighting international drug trafficking. He also praised the Estonian border guards, BNS reported 9 May. Lipponen stressed the importance of the police and border efforts because "organized crime and drug trafficking are a threat to the security of all the region's countries."
* The Veterinary and Food Inspectorate service has banned meat imports from Hungary because listeria bacteria was found at meat processing plants around Estonia. The authorities have also tightened controls on meat imported from Poland and Denmark for the same reason. Listeria Monotsytogenes can cause infections and meningitis and is especially dangerous for children, the elderly, and others with low immune levels.
* Visiting financier George Soros said on 11 May that he sees Estonia as a country with good economic potential and suitable to join the European Union. He added that "Estonia can be compared with Ireland, which started to bloom after it joined the European Union, but was a very poor country before."
* Estonia's largest bank, Hansapank, on 12 May opened a new version of its Internet bank at to make banking services faster and easier. It now has 124,887 Internet clients, up from 35,741 in 1998. Some services, such as loans and credit cards, are cheaper if applied for over the Internet rather than in the bank's offices.
* The Head of the Estonian Apostolic Orthodox Church, Metropolitan Stephanos, recently visited the island of Hiiumaa and wants to set up a nunnery in the Kaina district in the eastern part of the island, according to the weekly "Maaleht" on 11 May.
* The average rate of occupancy for the new Tallinn-Helsinki helicopter service during its first week of operation was 70 percent.

Latvia Commemorates War's Victims
Newly confirmed Latvian Prime Minister Andris Berzins and Parliament Speaker Janis Straume marked the victory over Nazism and remembered the victims of World War II by laying flowers at the Freedom Monument in Riga, BNS and ITAR-TASS reported 8 May. There were also ceremonies at the graves of Red Army soldiers, German prisoners of war, and at the Jewish cemetery. Latvian officials were joined by Ukrainian Ambassador Victor Mikhailovsky and Russian Ambassador Aleksandr Udaltsev. President Vaira Vike-Freiberga, who left on a working visit to the U.S. and Canada, noted the "historic contribution of the Allied forces."

New Riga Mayor Fights Corruption
Former Riga Deputy Mayor Andris Argalis, a member of the For Fatherland and Freedom (LNNK) party, was elected the city's mayor on 9 May after his predecessor became prime minister. The following day, Argalis announced on Latvian State Radio that a number of matters concerning the Riga Municipal Housing Privatization Commission will be turned over to the Prosecutor General's Office. Argalis said, "In my view, there are examples of top-level corruption and various financial violations that cannot be neglected." He also told LETA he intends to change the leaders of the commission as soon as they return from their "business trip" to Tunisia. Argalis is a graduate of the Latvian Agricultural University and worked in the Trade Ministry system. From 1985 to 1994 he was in private business, mostly in the catering sector. He was born in 1944, is married and has a son and daughter.

Saeima Approves A New Prosecutor General
On a vote of 79 to 1 with 15 abstentions, the Latvian parliament approved Cesis District Chief Prosecutor Janis Maizitis as Latvia's new Prosecutor-General, LETA reported 11 May. Maizitis, 39, is a graduate of the University of Latvia's law school. He served as an inspector in the prosecutor's office from 1991 to 1994, and since then has been the chief prosecutor in the Cesis district. Maizitis said that he believes that investigation of economic crimes is one of the major duties of the prosecutor's office. Maizitis replaces Janis Skratins, who retired as Prosecutor-General on 3 April. Maizitis is the second candidate to be considered for this post. The candidacy of Ilgars Zigfrids Septeris was rejected by the Saeima on 30 March.
* Foreign Minister Indulis Berzins told the Council of Europe's ministers on 11 May that Latvia rejects claims by the Russian government that there are human rights violations in Latvia. Berzins noted that this latest attack by Russian Foreign Minister Igor Ivanov did not give any specific instances or examples of discrimination, nor does it correspond to the "assessment of the international community."
* Prime Minister Andris Berzins said on 11 May that he hopes to secure NATO membership for Latvia by 2003, the same year the country plans to be ready for the EU.
* Defense Minister Girts Valdis Kristovskis reported on 11 May that although the level of education and the state of health of new recruits in the defense forces has improved considerably improved, this year's draftees have very decayed teeth and "our dentists have much to do."
* New Party chairman and composer Raimonds Pauls resigned as party leader on 8 May saying he was "tired" and did not want to bear responsibility for the party anymore. He will continue as a party member and keep his seat in parliament, but three other parliamentary members of the party quit, saying the New Party joined the governing coalition without regard for the party's program.
* The three New Party parliament members--Ingrida Udre, Silvija Dreimane, and Imants Stirans--who quit the party on 8 May, have not left the party's parliamentary faction. If they leave the faction, the party will no longer have the minimum number of members needed to function as a Saeima faction.
* The Latvian Privatization Agency council on 12 May revoked its previous tender to sell 7 percent of Ventspil Oil stock for cash on the international market. Instead, LPA will soon offer 38.62 percent or 40,345,556 shares of the state-owned company on international financial markets.
* LETA reported on 9 May that several Latvian newspapers have acquired copies of a document issued by the Russian Ministry of Foreign Affairs that calls on Russian businessmen to boycott the Baltic Business Council scheduled for Riga 19-22 May. The statement, authored by the Foreign Ministry and endorsed by the Russian Fuel and Energy Ministry, recommended that Russian businessmen "refrain from participation in the conference due to strained Russian-Latvian relations."
* The former Red partisan, Vasilijs Kononovs, was admitted to a convalescent home named "Belarus" while awaiting further investigation of the charges that he murdered nine civilians in Latvia during World War II. The Latvian Supreme Court overturned the previous conviction, but ordered the prosecutor to reexamine the case. According to the "Belarus" manager, the Russian Embassy in Riga arranged for Kononov's stay at the facility.
* Latvian police on 6 May arrested Juris Recs, a leader of the extremist organization Perkonkrusts, who had been on a wanted list for nearly two years. Police investigators believe that Recs masterminded the attempt to blow up the Victory Monument in Riga in December 1998. The trial of nine other Perkonkrusts members is in its final stage--the court is expected to sentence those convicted next week.
* The Latvian Embassy in Moscow will repair the facade of its building, damaged in a March protest, on its own and submit the repair bill to the Russian Foreign Ministry. One of the suspects detained by St. Petersburg police in connection with the defacing of the Latvian Consulate 7 May is identified as Andrey Dmitriyev, a student at the Pedagogical Academy, who also carries an identification card stating that he is an assistant to a St. Petersburg city council member.
* On 11 May, the Latvian Saeima lifted the import quotas protecting the domestic pork market--a measure which had been demanded repeatedly by the EU. The government is expected to compensate the farmers by providing additional subsidies of about one million lats ($1.65 million). The Hog Breeders Association estimates that the sector needs 2.5 mllion lats in subsidies.
* The Bauska District Council on 9 May declared a state of emergency in the forests and peat marshes in Barbele, Code, Davini, Iecava, Skaistkalne, Stelpe, Vecsaule, and Vecumnieki counties. The prolonged drought this spring has increased the fire hazard in Latvia and Lithuania. No public or recreation events can be held in the districts' forests, and hunting and fishing are also banned.
* The joint-stock company "Radio SWH" hosted a welcome back party for the Latvian national hockey team on 13 May. The team was greeted at the Central Railroad Station by supporters and heard congratulations from Prime Minister Berzins, Riga Mayor Argalis, and celebrities from "Radio SWH." A motorcade took the team to the Freedom Monument along Merkela Street and the team placed flowers in a ceremony at the monument. Celebratory events were organized in conjunction with the Riga City Council, the Latvian Ice Hockey Federation, the Municipal Police, and Police Headquarters.

Poland Names Lithuania A Leading Nato Candidate
Polish Foreign Minister Bronislaw Geremek told the Polish parliament on 9 May that Poland will support Lithuania and Slovakia as the next new entrants to NATO, BNS reported 10 May. Geremek added that "We believe that European security would benefit if the other countries of our region gained the rights and assumed the obligations resulting from the Washington agreement," adding that Poland "first of all supports Lithuanian and Slovak NATO membership."

Lithuania May Present Bill For Foreign Occupation
Lithuanian parliament speaker Vytautas Landsbergis has introduced legislation calling on Russia to compensate Lithuania for five decades of occupation by the Soviet Union, AP and BNS reported on 8 May. The draft law would oblige the government to seek financial compensation from Russia for repressions and environmental damage caused by the 1940-91 Soviet occupation, and would be used to help resettle deportees back into Lithuania. A national referendum passed in 1992 called on Russia to make restitution payments, and a government commission in 1997 caluclated $276 billion in damages. Ex-president Algirdas Brazauskas told ITAR-TASS on 12 May that he disagreed with the proposal because "the Ignalina nuclear power plant, the Mazeikiai oil refinery, now sold dirt-cheap to the Americans, the Klaipeda sea port infrastructure, and the electronic and machine tool industries were created by republics of the whole Soviet Union with money from the Soviet budget." He added, "The budget of Lithuania did not spend a kopeck on that."

Lithuanian Constitutional Court Affirms President's Immunity
The Lithuanian Constitutional Court ruled on 8 May that sting operations can be conducted by police against all citizens except the country's president, ELTA and BNS reported. The court said that the regulation of the Operational Activities Law allowing such operations against the president is unconstitutional. However, the court did affirm that sting operations can be conducted against members of parliament because "the legislators enjoy a more limited immunity than the president." Defense lawyers had argued before the lower courts that the defendants, such as convicted MP Audrius Butkevicius, would have "never broken the law if they were not provoked" to do so.

Lithuania's Hunt For Oil
Lithuanian President Valdas Adamkus and a 45-member business delegation flew to Kazakhstan for a two day working visit, BNS and ELTA reported 10 May. Among the businessmen was Williams Lithuania General-Manager Randy Majors. The Lithuanian oil company is seeking at least 4 million tons of oil deliveries from Kazakhstan for its refinery at Mazeikiai. Last year, Lithuania imported only 600,000 tons of Kazakh oil. Kazakh President Nursultan Nazarbaev agreed to sell an additional 1 million tons of oil to Williams Lithuania, and hopes to increase that amount if the Russian Ministry of Transport will allow more oil to flow to Lithuania through its pipelines. Currently the Russian oil transport quota allows Kazakhstan only 1 million additional tons of oil per year.

Embattled SoDra Fund Manager Offers Resignation
Vincas Kunca, the manager of the State social insurance fund, SoDra, submitted his resignation to Minister of Social Welfare Irena Degutiene, effective 14 May, ELTA and BNS reported on 11 May. She is expected to accept the resignation. The government has been worried about the fund's surging deficit which reached 159 million litas ($39.75 million) at the end of the first quarter of this fiscal year. Fund director since 1994, Kunca had been ordered to submit a new plan for the fund's solvency by 22 May, but submitted his resignation instead. Kunca offered to resign last September when he and Degutiene traded recriminations over who was responsible for the fund's growing insolvency.
* Lithuanian President Valdas Adamkus said that his country could join NATO several years before achieving European Union membership, Reuters reported 8 May. Noting that it might take seven years for Lithuania to become a "full-fledged member of the EU," Adamkus said, "With NATO we are in a better position."
* Environment Minister Danius Lygis, in a meeting with visiting NATO officials, said that the Soviet army had left behind 473 hazardous waste dumps at 164 former military bases. Ten of the bases have ground water contaminated with rocket fuel, and 3,298 hectares of forest have been destroyed. The former military airfields at Siauliai and Kedainiai have huge pools of oil which have contaminated the ground water--at Siauliai the seepage extends over a five square kilometer area.
* Officials of Lietuvos Energija (Lithuanian Energy) and the Russian firm Energija failed to sign an agreement this week which would have renewed the export of Lithuanian electricity to Belarus. The Russians were offering to take 2.2 billion kWh of electricity during 2000 and pay for that energy by providing the Ignalina Nuclear Plant with nuclear fuel. Electricity exports to Belarus were cut off in 1999 because the country owed nearly $100 million to Lithuania--a debt Minsk still has not settled in its entirety.
* Lietuvos Energija posted a first quarter net profit of 38 million litas ($9.5 million), and has repaid 151 million litas ($37.75 million) in loans that were outstanding during this same period. However, the debt-ridden company owes 339 million litas ($84.75 million) to the Ignalina nuclear power plant.
* Kauno Energija (Kaunas Energy) on 12 May reported 1999 losses of 56.99 million litas ($14.247 million), while the authorized capital of the company is 190 million litas ($47.5 million). The majority stockholder of the company with 85 percent of the stock is the City of Kaunas. The auditors, PriceWaterhouseCoopers, recommended that the 1999 financial statement include all bad debts which would have increased the losses to 110 million litas ($27.5 million).
* President Adamkus proposed that the constitution be amended to allow foreign nationals to own agricultural land and to have the right to change the use of the land within certain limits. Foreigners have been able to purchase non-agricultural land for several years.
* Prime Minister Andrius Kubilius expressed his disappointment with the "Sunrise Commission" which is supposed to be engaged in promoting business development in Lithuania. Kubilius said that he regretted that the commission had failed to offer any changes to the "highly cumbersome bureaucracy."
* Teachers at 11 schools in the Rokiskis rural district in Central Lithuania staged a two-hour warning strike on 9 May because the government hasn't paid them since mid-March. Teachers in Lithuania's western district of Telsiai held a week-long strike in April over late wages.
* Mayor-elect of Lithuania's western Silute district, Algirdas Balcytis, a member of the New Union-Social Liberal Party, agreed to resign after it was revealed that he had diverted 84,500 litas ($21,120) to his own company from funds allocated by the central government for compensation to farmers and residents for storm damage caused last winter by "hurricane Anatoly."