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Baltic Report: October 31, 2000

31 October 2000, Volume 1, Number 34
Estonian and Latvian officials said that the victory of the Social Democrats in the 8 October parliamentary elections in Lithuania would have little or no impact on relations among the three Baltic countries, BNS, ETA, and LETA reported. Latvian Prime Minister Andris Berzins said that "we hope that Lithuania's foreign policy course will remain unchanged. Meanwhile, Trivimi Velliste, the head of Estonia's delegation to the Baltic Assembly suggested that "only the nuances will change."

Soldiers and sailors from all three Baltic militaries took part in two joint exercises, one called Amber Sea-2000 -- off the Lithuanian coast from 9 to 15 October and a second called Baltic Eagle in Latvia from 9 to 20 October, Baltic agencies reported.

Latvian President Vaira Vike-Freiberga told the Stockholm Conference on Baltic Sea Region Security and Cooperation on 19 October that integration in the Baltic Sea region does not automatically mean identical patterns of development. Vike-Freiberga said that the region remains a "checkerboard of nations at different stages of development," adding that they need not all belong to the same organizations, BNS reported. She said that "Sweden and Finland's neutrality has served these countries well," but that "Latvia, in its current geopolitical position, cannot afford the luxury of being a neutral state." Before the conference began, two prominent Swedish generals released a statement to the press in which they opposed NATO membership for Estonia, Latvia, and Lithuania on the grounds that it would destabilize the region and threaten Russian reforms and "democratization," BNS quoted "Svenska Dagbladet " on 20 October.

The three Baltic interior ministers met with their Russian counterpart in Mezotne, Latvia, on 17 October but rejected his proposal that they participate in the CIS Internal Affairs Council, BNS reported. But the four did agree to form a quadripartite working group to combat organized crime, the news service said. Estonia has also agreed to send some of its policemen to Russia for training, ETA said.

In his annual report to the parliament on Estonian foreign policy, Foreign Minister Toomas Hendrik Ilves said on 11 October that Tallinn opposes a two-speed European Union, expects an Estonian breakthrough on membership in the EU during the next year, and expressed his exasperation with "the patter concerning Baltic cooperation." At the same time, he said that Estonia's weak point was in implementing its plans to prepare the country for NATO membership. A week later on 18 October, he said in Oslo that Tallinn was very interested in developing an energy ring around the Baltic Sea region.

Opposition from local governments to plans to reduce their number make it more likely that Tallinn will move to divide the country into 15 large districts and five municipalities, "Aripaev" reported on 9 October. At present there are a total of 247 local governments. Meanwhile, Estonian military planners appear to have decided to form two military districts rather than the four that some had proposed, ETA reported. In a related move, Tallinn opened an air surveillance center at the Amari air base, ETA reported on 11 October.

The Estonian government on 11 October ordered the Social Affairs Ministry to develop new measures to curb drug abuse and limit the spread of HIV infections, BNS reported. Meanwhile, Estonian newspapers reported that the HIV epidemic in that country may have eased.

Faced with a rising tide of the plundering of metal objects to make money, the Estonian Interior Ministry has proposed introducing restrictions on the purchase and sale of scrap metals, BNS reported on 10 October. Police in Estonia recorded 1,514 cases of theft of power and telephone cables and other metal objects in the first eight months of 2000, compared with only 526 such cases in the same period in 1999.

The Estonian Democratic Party, which emerged from the union of the Blue Party and the Development Party, hopes to become a major political force, ETA reported. But neither of the constituent elements has representation in the current parliament, and Estonian analysts suggested that the new group was unlikely to be able to gain any either. In its founding document, the party came out against early membership in the European Union, arguing that that would be against Estonia's interests.

In an editorial published on 6 October, "Postimees" said that Estonia now has the Nokia-type high-tech plant that President Lennart Meri has long said is a precondition for the country's economic growth. Entitled "From a potato republic to an IT republic," the editorial suggested that the Estonian Nokia is at Lasnamae, where people and robots are assembling mobile telephones. Meanwhile, "Aripaev" reported that by the end of 2001, half of all Estonian residents will own a cellular phone. Meanwhile, "Aripaev" reported on 18 October that computer fever has broken out among the country's farmers, far more of whom want to own computers than had been projected.

A Tallinn city court fined the owners of the Alhambra tanker 100,000 kroons ($5,530), the maximum punishment for an administrative offense, BNS reported on 13 October. But Estonian newspapers suggested that actual damages from the oil leaks from the ship were tens of millions of kroons.

A Tallinn city court on 18 October acquitted Finance Minister and Reform Party chairman Siim Kallas of giving false information to auditors, BNS reported. The day before, the court convicted two former Finance Ministry officials, Agu Lellep and Peep Lass, of corruption and misappropriation, the news service said.

"Maaleht" reported on 12 October that as a result of environmental and political concerns, Latvia rather than Saaremaa may get a deep-water port. Many in Estonia had hoped that such a port on Estonia's largest island would attract cruise ships and thus open the region to tourism.
* 8,000 Estonian nurses on 16 October staged a one-hour warning strike at 58 medical institutions to demand that their pay be raised to 25 kroons ($1.38) an hour, BNS reported. The nurses said that they hoped the strike would force managers to negotiate with them. The strike is part of a broader effort by Estonian trade unions to bring pressure on the Employers' Council in the tripartite negotiations on increasing the minimum wage in the country. The trade unions are threatening to block trains carrying oil for heating and export, BNS reported on 21 October.
* The Estonian Interior Ministry has appointed Harry Hein, former director-general of rescue services, to be the country's new border guards chief, ETA reported on 18 October. He fills the post that became vacant when his predecessor, Tarmo Kauts, was formally appointed to the command of Estonia's defense forces.
* The Bank of Estonia plans to withdraw all one-kroon notes from circulation within two years and has not ruled out replacing the existing two-kroon notes with coins, ETA reported on 9 October.
* Estonian prosecutors on 11 October indicted six people for their involvement in the May 2000 bombing of the Stockmann department store in Tallinn, ETA reported.
* Mary Robertson, the UN high commissioner for human rights, told Estonian Population Minister Katrin Saks on 12 October in Strasbourg that she was pleased with the amendment to the Estonian language law adopted by Tallinn last summer, BNS reported.
* Population Affairs Minister Katrin Saks presented a new integration report on 10 October showing that 84 percent of non-ethnic Estonians living in Estonia considers it their home and 79.3 percent say their loyalty is to the Estonian state. Among ethnic Estonians, 86 percent of respondents say that people of many nationalities can work and live together in one country and 75 percent say that different languages and cultures enrich society, BNS reported.
* The Tallinn city government terminated a lease held by the Russian Cultural Center at the request of that body's organizers, BNS reported on 10 October. The RCC had been unable to attract sufficient funds to renovate the facility, the news service said.
* No-confidence motions were filed on 19 October against Tallinn Mayor Juri Mois, and City Council Chairman Rein Voog. The opposition, led by the Center Party, sponsored the motions against Mois of the Pro Patria Union and Voog of the Reform Party, ETA reported. The opposition claims to have enough votes to topple Mois and Voog because of defections from the ruling coalition. The motions will be voted upon on 2 November.
* Estonian inspectors visited a Russian airborne division in Pskov on 11 October to check on the reliability of Russian data presented to the OSCE, BNS reported. This is the second time Estonian inspectors have been allowed to make such a visit under the confidence building regime; the first was in 1998.
* The Estonian broadcasting center said on 19 October that it would launch bankruptcy proceedings against Estonian public television to recover a debt of 5.5 million kroons ($300,000), ETA reported.
* Prices rose 0.4 percent in Estonia in September, BNS reported. Meanwhile, they increased 0.1 percent in Latvia and remained unchanged in Lithuania.
* Germany has given Estonia two minesweepers which have been renamed "Vambola" and "Sulev," BNS reported on 9 October.

Vaira Vike-Freiberga on 16 October opened an international conference on Holocaust studies in Riga by reaffirming her commitment to finding out the truth about the past, BNS reported. She said that "Latvia feels shame and pain" over the Holocaust, some of whose horrible events took place on Latvian territory and with the participation of Latvians. Meanwhile, the Latvian Foreign Ministry sharply criticized Russian suggestions that consideration of a possible Latvian ban on wearing foreign decorations issued by foreign governments was an effort to deny the past, BNS reported on 13 October.

Fans of Latvian President Vaira Vike-Freiberga have set up an Internet magazine at, LETA reported on 17 October. But plans for an Internet chat by Vike-Freiberga on 19 October were put off for technical reasons, the Latvian news agency reported.

Speaking in Prague on 17 October, Foreign Minister Indulis Berzins said that talking about the Baltic states is both inevitable and useful and that they cannot be separated easily, BNS reported. He was commenting on recent statements by his Estonian counterpart, Toomas Hendrik Ilves, that the term is detrimental to Estonia and that Estonia sees itself as the only post-Soviet Scandinavian state. Earlier, on 10 October, Berzins said that the three Baltic countries currently seek to boost their cooperation in the fields of culture, education, and information technology development, BNS reported.

The Riga regional court on 13 October overturned a lower court's decision against issuing a warrant for Latvian-born Australian Konrad Kalejs, who has been charged with war crimes, BNS reported.

The Latvian parliament on 12 October, with 14 yeas, 13 nays, and 56 abstentions voted against adoption of a FF/LNNK (ruling coalition) bill calling on the Latvian government to seek compensation from Moscow for damages inflicted on Latvia as a result of the Soviet occupation. The People's Party, also part of the ruling coalition with FF/LNNK, supports a joint bid by all three Baltic states for compensation from Moscow and Berlin.

The number of people living in poverty in Latvia's rural areas has gone up threefold since 1997, the UNDP coordinator, Jan San Sorensen, told BNS on 17 October. He told LETA that Latvian politicians have shown little interest in tackling the problem of poverty.

More than four Latvians in five -- some 84.4 percent -- doubt that the population can control the activities of elected officials, according to the results of an SKDS poll reported by LETA on 17 October. The greatest distrust of politicians came in predominantly ethnic-Latvian rural areas.
* Greek President Constantinos Stephanopoulos said in Riga on 9 October that Athens supports Latvia's drive to become a member of the European Union and NATO. "Latvia belongs and will belong with the European family," he told reporters. Stephanopoulos echoed these themes when he subsequently visited Tallinn, adding that Greece will open an embassy in the Baltic region soon.
* Latvian Prime Minister Andris Berzins said on 16 October that the ratification of the maritime border deal between Latvia and Lithuania should be delayed because of the current fishing rights dispute, BNS reported. Guntars Krasts, head of the parliamentary Foreign Affairs Committee, said the treaty will not be ratified until an agreement is reached. Latvian fishermen have threatened to blockade ports if the treaty is ratified without supplemental agreements protecting their rights, LETA added.
* Latvian and Russian Foreign Ministry and Interior Ministry officials have agreed to a temporary simplified border crossing procedure for residents of border areas, BNS and LETA reported on 20 October. The new system replaces the border crossing procedures which were originally adopted by treaty in 1994, for a six-year term. The two sides are hoping to reach a permanent agreement no later than 10 January 2001.
* Two Latvian policemen were detained for extorting money from the population, LETA reported on 9 October. Meanwhile, the Latvian parliament approved on first reading a bill that would have Latvia accede to the Council of Europe's criminal law anti-corruption convention, BNS reported on 12 October.
* Officials reported that 55 students at the Latvian police academy have taken ill and the first-year students have been placed under quarantine, LETA reported on 20 October. Some 50 National Defense Academy students and officers are still receiving treatment for diphtheria, LETA reported on 18 October.
* The Riga Regional Court on 11 October dismissed charges against the former commander of the Latvian military, Juris Eihmanis, for misappropriation of funds from the Zemessardze (National Guard) budget to renovate an apartment. The court said that he cannot be held responsible since he was overseas and not in fact in command of the armed services when the renovations were done, BNS reported. Prosecutors said they would consider appealing the case. Eihmanis is currently a lecturer at the Baltic Defense College in Tartu, Estonia.
* The Riga Regional Court on 19 October declared the state-owned joint stock company Latvijas nafta (Latvian Oil) insolvent, LETA reported. Some of its assets had been frozen earlier; the new court ruling will force either its reorganization, sale, or liquidation
* Former Latvian President Guntis Ulmanis has set up an investment consulting firm, Rigas Investicijas, LETA reported on 11 October. Meanwhile, he also announced plans to spend a month on a private visit to Australia.
* Latvia's "Rigas Alus" beer will be exported to the United States beginning later this year, LETA reported on 20 October.

Four parties which ran together under the "New Policy" campaign slogan on 12 October signed a coalition agreement, thereby paving the way for the formation of a minority government in Vilnius. The signers included the leaders of the Liberal Union (34 seats), New Alliance (29 seats), Center Union (3 seats), and Modern Christian Democrats (1 seat). The ruling coalition also has the support of several other small groups, including the Peasants Party (4 seats) and the Polish Electoral Action (2 seats), BNS and ELTA reported. The coalition has agreed that Liberal Union leader Rolandas Paksas will serve as prime minister, New Union/Social Liberals leader Arturas Paulauskas will serve as parliament speaker, and the two biggest vote-getters of the coalition will split the 13 cabinet posts seven to six -- although the assignments have not been confirmed. President Valdas Adamkus, who gave "moral support" to the bloc before the 8 October elections, praised the coalition deal at a meeting on 13 October. Adamkus said that the new government cannot just exist to "extinguish fires" but must pursue policies "with responsibility" for the "future of the country."

The newly-elected parliament met for its first session on 19 October and elected Arturas Paulauskas as its new chairman. Paulauskas received 76 votes to 53 for his challenger -- Ceslovas Jursenas of the Social Democracy bloc, ELTA reported. Ten deputies voted against both candidates. Of the 141 deputies elected to the parliament, 103 have no legislative experience, and many have not held previous political office, the daily "Lietuvos Rytas" reported. Five "frakcijos" (caucuses) were organized in the newly-elected parliament. The largest is the Social Democratic coalition with only 48 members, after former Premier Kazimiera Prunskiene deserted her election partners to attempt to form her own caucus. The Social Democratic caucus will be led by Social Democratic Party leader Vytenis Andriukaitis, and his two vice chairs are Democratic Labor Party (LDDP) leader Ceslovas Jursenas and Sergei Dmitrijevas of the SDs. The Liberal caucus, with 33 members, will be headed by Dalia Kutraite-Giedraitiene, with vice chairs Alvydas Medalinskas, Klemensas Rimselis, and Eligijus Masiulis. The New Union caucus, with 27 members, will be headed by Gediminas Jakavonis and his deputies are Dangute Mikutiene and Rimas Valciukas. Local oligarch Viktoras Uspaskich, elected from the Kedainiai district, joined the New Union caucus. The nine-member Conservative caucus elected Andrius Kubilius, the outgoing prime minister, as its leader, with Arvydas Vidziunas as vice chairman. The smallest caucus -- the United caucus -- was formed by deputies from the Center Union, Modern Christian Democrats, and the Polish Electoral Action. More than a dozen deputies have not yet joined a caucus. Committee assignments are expected to be made next week, as will the election of the speaker's four vice chairmen.

Prime Minister Andrius Kubilius formally resigned on 19 October with the convening of the new parliament, and President Valdas Adamkus asked the cabinet to stay in place until the new government is confirmed. Speaking in front of the outgoing parliament on 18 October, Kubilius said: "History will judge our work. We ourselves must evaluate our mistakes in order to avoid them in the future." A presidential spokesperson said "the president will not delay the government formation process, since the cabinet is in for hard work, primarily redrafting and approving next year's budget," ELTA reported. Adamkus has 15 days to appoint a new premier and the parliament has 15 days to approve the candidate.

Outgoing Lithuanian Prime Minister Andrius Kubilius voiced disapproval and concern over public comments by his Latvian counterpart, Andris Berzins, that the ratification of the maritime border treaty between the two countries should be delayed until the demands of Latvian fishermen are met in a corollary agreement. Berzins said the fisheries issue is an "exceptional domestic policy issue" for Latvia, acknowledging that the establishment of borders with neighboring states is an "international commitment of every nation" that respects "democratic" forms of communications, ELTA reported. A spokesman for Kubilius added later, "let's hope for the best and expect that soon the Latvian Saeima will ratify the sea border treaty."

The Lithuanian Constitutional Court ruled on 18 October that the government did not have the right to accept the liabilities and agree to cover losses in the sale of a minority stake of the oil company Mazeikiu Nafta (Mazeikiai Oil). The court decision also annulled the laws which were passed by the parliament to allow the sale of shares to U.S.-based Williams International, ELTA reported. The case was initiated by the outgoing parliamentary opposition, which challenged the validity of the restructuring of Mazeikiu Nafta that allowed for the sale, BNS reported. Vytenis Andriukaitis, head of the Social Democrats and an initiator of the challenge, told ELTA that "the incoming Lithuanian government will have to revise the obligations of their predecessors." Former Finance Minister Jonas Lionginas, who was against the sale, predicted that the incoming government would attempt to amend the contract with Williams International through new negotiations.

Representatives of the Lithuanian government and Netherlands-based consortium B.B. Bredo on 19 October signed an agreement on the privatization of the Lithuanian Shipping Company (LISCO). The agreement finalizes the sale of 75.16 percent of LISCO for $47.6 million; however, the par value of LISCO stocks is significantly higher than the price of the deal, which previously resulted in complaints by the former parliamentary opposition of a cheap selloff of the country's shipping fleet, ELTA reported. The Dutch consortium is also obliged to invest $76 million by 2003, a majority of it within one year of purchase. However, the daily "Lietuvos Rytas" reported on 21 October that B.B. Bredo has a side agreement with Danish-based DFDS to sell off LISCO's ferry service for $100 million, giving DFDS valuable Lithuanian ferry routes to Sweden and Germany that it would service with Danish ferries and crews. President Valdas Adamkus has ordered an investigation to determine if Lithuania's national security interests have been violated by the LISCO privatization contract.
* "Lietuvos Rytas" reported on 20 October that the Italian Foreign Ministry has threatened to scale down or to close its embassies in Vilnius and Tallinn, respectively, if Lithuania and Estonia do not support Italy's candidacy for one of the rotating seats on the UN Security Council. The paper claimed the threat was sent in a letter to the Lithuanian Foreign Ministry at the start of October. A similar letter was received by the Estonian Foreign Ministry, ETA reported on 20 October.
* The U.S. Senate ratified the U.S.-Lithuania treaty on bilateral investment protection and promotion on 19 October, ELTA and BNS reported. The treaty protects U.S. investments from illegal nationalization or expropriation by compensating the investor at fair market value. The Lithuanian parliament ratified the 10-year treaty earlier this year.
* Since the beginning of the land reform in 1990, the property rights of landowners of up to 2.8 million hectares of land have been restored in Lithuania, ELTA reported on 16 October. Property was returned to 75 percent of citizens who submitted documents. In total, the government has received applications from 648,500 citizens to an estimated 4 million hectares of land and other capital property. The state has also paid 136.2 million litas ($34.05 million) for land it repurchased between 1997-2000.
* Another recount of the razor-close Plunge-Rietavas parliamentary district resulted in a rare election draw (each candidate with 5,311 votes). Under electoral law, the Chief Election Commission awarded the seat to the older candidate -- Visvaldas Nekrasas of the Social Democrats, BNS reported. Recounts in two other disputed districts did not change the initial results -- in Taurage district the New Union/Social Liberal candidate Vaclovas Karbauskis won, and in the Varena-Eisiskes district Modern Christian Democrat Algis Kaseta retained his seat in parliament.
* Ex-President Algirdas Brazauskas, who led the Social Democratic bloc of four left-wing parties, reacted with disappointment to the election results and said he may again retire from politics, ELTA reported on 12 October. Brazauskas voiced anger at the outcome, saying, "This looks very strange when we, the group that grabs the biggest share of the vote, are forced into the opposition," AP added.
* Ten of the 19 Seimas deputies elected from the greater metropolitan area of Kaunas, at a formal meeting in the city hall, signed a declaration to fight for the interests of the city in the parliament, the daily "Lietuvos Rytas" reported on 18 October. The outgoing mayor of Kaunas, Vytautas Sustauskas, who has been elected to the parliament, called for the formation of a Kaunas caucus among the elected deputies.
* The state electricity monopoly Lietuvos Energija signed a contract with German firm Giro Energy to supply Lithuanian electricity to Belarus starting the week of 23 October, the daily "Lietuvos Rytas" reported on 17 October. The company plans to sell 400 million kilowatt hours to Belarus through the end of the year. The Russian firm Energija stopped purchasing Lithuanian electricity for Belarus recently because it can no longer barter nuclear fuel for the electricity it purchases. Belarus still owes Lithuania over $56 million for electricity it purchased in 1997 and 1998.
* The Swedish energy company Vattenfall, which withdrew its proposal to renovate the Kaunas city heating grid earlier this year, said it will divest itself of the 10.07 percent shares it owns in the Lithuanian state's energy monopoly, Lietuvos Energija, ELTA reported on 19 October. Vattenfall officials said they hope to sell the shares of stock to the German utility Preussen-Elektra.
* The state-owned Lithuanian Savings Bank, which is being prepared for privatization, posted losses of 41.4 million litas ($10.3 million) for the first nine months of 2000, ELTA reported on 11 October. The bank also has 11.7 million litas ($2.9 million) in debt carried over from the previous year. During the same period, state-owned Agriculture Bank, which is also awaiting privatization, earned a net profit of 7.11 million litas ($1.77 million). The smallest of Lithuania's state-owned banks, Development Bank, which was a joint project of the Lithuanian government, the Scandinavian Investment Fund, and the German Development Agency, has issued a tender for privatization. The Siauliai-based Snoras Bank announced its intention to bid on 100 percent of the shares of the Development Bank.
* Snoras Bank on 6 October elected Juozas Kabasinskas, a partner in the Vilnius-based accounting firm J. Kabasinskas ir Partneriai (Kabasinskas and Partners), and Cyprus citizen Dinos Constantinou, chief executive of Cyprus Investment Fund & Financial Services, to its five-member board of directors, ELTA reported on 19 October. At that same meeting, the former deputy chairman of the board, Yafim Borodulin, was elected the chairman of the board. At the shareholders meeting which followed the vote, Borodulin represented the interests of the Luxembourg-based Incorian Investment Holding Company, which controls almost a 50 percent share in the bank.
* The European Court of Human Rights has ordered Lithuanian authorities to pay the sum of 80,000 litas ($20,000) to three appellants whose convictions were reviewed by the human rights court, ELTA reported on 11 October. Reputed crime boss Henrikas Daktaras, who is serving a 7.5 year sentence for racketeering and assault and battery, will receive 10,350 litas ($2,587) in compensation for his legal costs. The European Court found that the chairman of the Lithuanian Supreme Court violated the principle of impartiality by assuming the role of prosecutor in the Daktaras case, but dismissed the defendant's claim that the court had violated his right to a presumption of innocence. Algis Grauslys, another defendant, was awarded 40,000 litas ($10,000) for moral damage and 20,000 litas ($5,000) for legal costs because the European Court found that he had been held in custody for an unreasonable period of time when prosecutors were investigating fraud charges against him. The third defendant, Arminas Grauzinis, who has already completed his prison term, was awarded 8,000 litas ($2,000) in compensation for the time his right to movement was restricted during the investigatory stage of his prosecution.
* Russian customs officials in Kaliningrad reported the seizure of a 3,700-ton Lithuanian tanker carrying contraband oil products from the port of Klaipeda, ELTA reported on 13 October. Alvydas Dirvonas, marketing director of Lithuania's stevedoring firm KLASCO, said that the firm's tanker Nasta-3 was leased to a foreign company, Globo Trans, and that it should be held responsible if the Russian authorities establish that the oil was in fact being smuggled.