Baltic Report: February 3, 2004

NOTE TO READERS:
This issue covers events in the Baltic states from 3 to 16 January 2004.
ESTONIA RANKED SIXTH IN ECONOMIC-FREEDOM INDEX.
Estonia retained its ranking of sixth in the 2004 Index of Economic Freedom compiled by the Heritage Foundation and "The Wall Street Journal," while Lithuania jumped from 29th place to 22nd and Latvia improved from 33rd to 29th. The annual index ranked 155 countries according to 50 economic variables such as trade restrictions, tax policies, government intervention in the economy, trade and fiscal policies, foreign investment, banking and finance, price and wage regulations, real estate, and the scale of the black market (see "RFE/RL Newsline," 13 November 2002).

* Russian First Deputy Foreign Minister Eleonora Mitrofanova told Interfax on 5 January that Moscow links the protection of the rights of ethnic Russians living in Latvia and Estonia to their future affiliation to the Russia-EU Partnership and Cooperation Agreement. She said that Russians there and in other CIS countries should have the official right to study, communicate with the authorities, and obtain information in their mother tongue. Mitrofanova noted that this request "fully meets international standards and Russia is not demanding anything special for its fellow countrymen." She claimed that more than 850,000 of the 2.3 million people living in Latvia consider Russian as their mother tongue.

* The London-based International Center for Prison Studies (ICPS) announced that the prisons in the Baltic states are among the most overcrowded in Europe, LETA reported on 13 January, citing AFP. The number of persons in prisons in Central Europe is between 160 and 200 people per 100,000 population, or about twice the rate in the 15 EU member countries. These figures for Lithuania, Latvia, and Estonia are 226, 351, and 362 prisoners per 100,000 residents, putting them in the top 30 countries with the highest rates of incarceration, according to ICPS. The report also warned that such overcrowding encourages the spread of tuberculosis and AIDS.

KALLAS NAMED AS EUROPEAN COMMISSION CANDIDATE.
The government agreed in a unanimous decision on 15 January to select former Prime Minister and current Reform Party Chairman Siim Kallas as the country's candidate for the European Commission, BNS reported. The choice was not unexpected, as during a 12 January telephone conversation with Prime Minister Juhan Parts, European Commission Chairman Romano Prodi expressed his approval for Kallas's nomination. Former Foreign Minister and Moderates Party Chairman Toomas Hendrik Ilves expressed dissatisfaction that opposition parties were not consulted on the matter, while Center Party Chairman Edgar Savisaar said Kallas's transfer to Brussels "will probably give more room of play to the opposition" because he was the main force keeping the coalition together.

2003 STATE-BUDGET REVENUES HIGHER THAN EXPECTED.
The Finance Ministry announced on 14 January that 41.25 billion kroons ($3 billion) in state-budget revenues were collected in 2003, which exceeded forecasts by 4.28 percent, LETA reported. Social-security tax receipts totaled 14.26 billion kroons (1.57 percent higher than forecasts); value-added-tax (VAT) revenues totaled 11.2 billion kroons (2.44 percent higher than projections); personal income taxes were 6.06 billion kroons (18 percent higher); and excise taxes were 4.16 billion kroons (1.62 percent higher). The collection of 2.2 billion kroons in corporate-income taxes exceeded expectations by 59 percent, primarily due to higher-than-anticipated tax income from dividends. Lower-than-projected receipts were received from non-tax resources such as foreign assistance, including EU structural funds, which amounted to 1.39 billion kroons, or just 73.79 percent of that expected.

CASTIGATION OF RUSSIAN POLICY BY EUROPARLIAMENT SOUGHT.
Estonia's observer in the European Parliament, the ruling Res Publica party's Eiki Berg, has proposed amendments to reports on the EU's relations with Russia and the Transcaucasus, BNS reported on 7 January. He said the report on Russia must draw attention to Moscow's reluctance to apply its Partnership and Cooperation Agreement with the EU to acceding member states, thus contradicting the underlying principles of the accord. Russia should also be urged to ratify border agreements with Estonia and Latvia, Berg said. Noting the need "for developing closer contractual ties with Transcaucasus states that suffer from crises typical of transition societies and may thus become a threat to European stability," Berg said that "the European Union must provide those states with strong incentives to carry out democratization processes and economic reforms." His amendments will be put to a vote in the European Parliament's Foreign Affairs Committee during the last week of January and then at the February session.

PRESIDENT HEADS DELEGATION TO CYPRUS.
Arnold Ruutel held talks on 8 January with his counterpart Tassos Papadopoulos, which primarily focused on their common interests in joining the EU, BNS reported. He also had meetings that day with acting chairman of the Cypriot parliament, Vassos Lyssarides, and Nicosia Mayor Michalakis Zampelas, who has served as Estonia's honorary consul for several years. The Estonian delegation Ruutel is heading during his four-day visit includes Culture Minister Urmas Paet, who signed a cultural and education cooperation agreement, Economy and Communications Minister Meelis Atonen, and Interior Minister Margus Leivo, who inked an agreement on fighting organized crime. The delegation also included defense forces commander Vice Admiral Tarmo Kouts, Bank of Estonia President Vahur Kraft, and Foreign Ministry Deputy Chancellor Tiina Intelmann, who signed a cooperation protocol between the countries' foreign ministries.

VISIT BY EUROPEAN BROADCASTING UNION PRESIDENT.
Arne Wessberg, who is also the director-general of the Finnish public broadcasting corporation YLE, made a one-day visit to Tallinn on 12 January, BNS reported the next day. He told Prime Minister Parts that it was important to ensure a strong and firm income base for national broadcasting. Both agreed that an independent financing model clearly different from that of private channels had to be found. Wessberg said that it was necessary to ensure effective and transparent use of the national broadcasting company money, but noted that the financing models now being used in other EU member countries should not be automatically adopted. He approved of the potential merger of the state-owned Estonian Television (ETV) and Radio Estonia (ER) and inquired about when Estonia could transfer to digital television, which Finland is planning to do in the period 2007-08.

THE NETHERLANDS SUPPORT PROTECTION OF BALTIC SEA.
Melanie Schultz van Haegen, the Netherlands' vice minister of transport, public works, and water management, told Estonian Environment Minister Villu Reiljan on 12 January that her country supports designating the Baltic Sea as a particularly sensitive marine area, BNS reported. Estonia has at various levels called for establishing such a designation, including in the Council of Baltic Sea States, and has received support from many international organizations, including the World Wildlife Fund, which regards the Baltic Sea as one of the world's most valuable ecosystems. The officials also spoke about flood prevention, with van Haegen stressing Dutch efforts to initiate common EU action for anticipating floods while Reiljan inquired about the Netherlands' experience in providing compensation to flood victims.

DETENTION OF FORMER RUSSIAN MILITARY OFFICER EXTENDED.
A Tallinn administrative court has extended by two months the detention in a deportation center of Nikolai Mikolenko, a 49-year-old Russian military retiree who has waged a lengthy battle to avoid expulsion, BNS reported on 5 January. Mikolenko had obtained $25,000 in aid from a U.S. program to assist the withdrawal of former Soviet troops from the Baltics, which he used to purchase an apartment in St. Petersburg in 1995, but he did not leave Estonia when his residence permit expired on 1 January 2000. Mikolenko subsequently lost three court cases in Estonia and has appealed to the European Court of Human Rights to prevent his deportation from the country. He was arrested and placed in a detention center at the end of October (see "RFE/RL Newsline," 31 October 2003) but has refused to apply for a certificate of return from the Russian Embassy in Tallinn. A spokesman for the Citizenship and Migration Board, Heikki Kirotar, said deportees' detentions have been extended in the past, with one Russian citizen having spent three years in detention.

LAW ALLOWS USE OF EURO ALONG WITH KROON.
Although the Estonian currency law lists the kroon as the only legal tender in Estonia, it provides for sanctions only in cases of refusing to accept the kroon, thus in effect permitting the use of euros if both parties agree to the transaction, LETA reported on 6 January. Responding to an inquiry from the Tallinn Zoo on whether it could start using euro-coin vending machines alongside those accepting Estonian kroons from 1 May, Bank of Estonia spokesman Janno Toots replied that it could, but warned that this could be risky. If the kroon-coin vending machine became inoperative while the euro-coin machine still worked, the zoo could be charged with refusing to accept the kroon and be fined up to 30,000 kroons ($2,400).

* The Russian Foreign Ministry issued another statement on 5 January expressing dissatisfaction with amendments to the Estonian Aliens Law approved late last year, which ruled out the issuing of permanent residence permits to retired Russian military personnel, BNS reported. Ministry spokesman Aleksandr Yakovenko said the amendments indicated "Tallinn's unpreparedness to meet its commitments in full" and warned that Moscow will bear that in mind when drafting and signing other bilateral agreements with Estonia.

* Czech Defense Minister Miroslav Kostelka did not fly to Tallinn from Riga in the evening of 15 January as planned due to poor flying conditions, but arrived the following morning, BNS reported. He held talks with Estonian Defense Minister Margus Hanson, Foreign Minister Kristiina Ojuland, and parliament National Defense Committee Chairman Sven Mikser. The scheduled signing of an Estonian-Czech defense-cooperation agreement by the two defense ministers was postponed for technical, not substantive problems.

* Parliament deputies Andres Herkel and Peeter Tulviste, who acted as observers of the Council of Europe Parliamentary Assembly and the Organization for Security and Cooperation in Europe Parliamentary Assembly, respectively, at the Georgian presidential elections, stated that Estonia should actively share its reform experiences with Georgia and support the positive developments there, LETA reported on 5 January. They said that it was easier for Estonia to help Georgia integrate into the West because it had shared the same Soviet experience.

* Population Minister Paul-Eerik Rummo delivered a speech about Estonia's most important population policy steps at the European population forum in Geneva on 13 January, LETA reported. He mentioned parent's benefits, the write-off of student loans, and infertility treatments as some of the measures undertaken to increase the birthrate, which is currently far below the replacement level.

* Public Prosecutor Juri Pihl launched a criminal investigation in December to find out whether Estonian citizen Mikhail Gorshkov was linked to the genocide of Jews in Belarus during World War II, BNS reported on 9 January. The U.S. Attorney General's office has sent information to Estonia, alleging that Gorshkov worked as an interpreter for the Nazi Gestapo secret police in Minsk in 1943. He is linked to the killing of 3,000 Jews in the town of Slutsk and burning down the ghetto where they lived. Gorshkov later settled in the United States but returned to Estonia in 2002 after he was stripped of his U.S. citizenship for presenting false data about his past.

* Prime Minister Parts announced on 8 January that Environment Minister Villu Reiljan and Culture Minister Urmas Paet would pay back the wages they had been unlawfully paid as chairmen of councils of state-owned foundations, BNS reported the next day. Reiljan had received 42,286 kroons ($3,395) from the Environmental Investment Center and Paet 11,100 kroons ($892) from the Estonian Film Foundation and 23,125 kroons ($1,858) from the Art Museum Construction Foundation. On 9 January Social Affairs Minister Marko Pomerants declared that he would return the slightly more than 6,000 kroons paid by the Viru County Museums Foundation and former Finance Minister Tonis Palts the 27,286 kroons received from the Guarantee Fund and the Financial Supervisory Authority.

* The government approved on 15 January the creation of a joint national broadcasting company, but postponed the decision about its financing until the spring, BNS reported. It called for the merger of state-owned Eesti Raadio (Radio Estonia) and Eesti Televisioon (Estonian Television) under one leadership. The merger has been discussed for a long time and was specifically mentioned in the coalition agreement signed by the three ruling parties.

* Economy Minister Meelis Atonen annulled on 15 January the state tender for the operation of subsidized ferry lines between the mainland and the large western islands of Saaremaa and Hiiumaa because none of the four bids received fully complied with the conditions of the tender, BNS reported. The current operator of the lines, the Saaremaa Shipping Company, which has a contract until the fall of 2004, did not file a bid, citing too stringent conditions of the tender, but may participate in a future tender.

* The Statistics Office announced on 8 January that the consumer price index (CPI) in December was 0.2 percent lower than in November, but 1.1 percent higher than in December 2002, BNS reported. In December, the price of all goods remained steady as food prices rose by 0.4 percent while those of non-food items fell by 0.4 percent. The prices of services declined by 0.3 percent. The CPI for 2003 was 1.3 percent higher than for 2002 as prices of goods fell by 0.2 percent, but those of services grew by 4.3 percent.

* The Statistics Office announced on 8 January that the foreign-trade deficit in November was 1.77 billion kroons ($142 million) or significantly lower than the 2.65 billion-kroon deficit in October, BNS reported. In November compared to October exports fell by 4.0 percent to 5.91 billion kroons and imports by 13 percent to 7.68 billion kroons. Trade with EU countries had the greatest role accounting for 69 percent of exports and 52 percent of imports.

GOVERNMENT APPROVES NOMINEE FOR EUROPEAN COMMISSION.
The cabinet on 13 January unanimously approved Prime Minister Einars Repse's recommendation of Foreign Minister Sandra Kalniete as Latvia's nominee for a seat on the European Commission, BNS reported. The European Parliament is expected to approve in May the candidates submitted by the 10 new EU member states. The representatives from those states will not have any specific portfolios, but will act as an "apprentice" or "shadow" of a current commissioner. Kalniete told the media that she is scheduled to meet with European Commission President Romano Prodi on 26 January to discuss a broad spectrum of issues for her possible activities.

DECISION ON BANNING COMMUNISTS FROM EUROPEAN PARLIAMENT ELECTIONS POSTPONED.
The parliament's Legal Committee on 14 January postponed a decision on whether to recommend that former KGB agents and persons who continued to be members of the Communist Party after January 1991 be banned from running for the European Parliament, BNS reported. Justice Minister Aivars Aksenoks suggested the decision be delayed following criticism by three human rights experts -- including National Human Rights Office head Olafs Bruvers -- of the initiative contained in the country's Europarliament election bill. The parliament's Legal Office has stated that such restrictions are "constitutionally disputable" and could be contradictory to both EU laws and the Latvian Constitution. Parliament is to vote on 22 January on the final reading of the Europarliament election bill, whose second reading it approved last year. Two Latvian citizens -- Tatyana Zhdanoka and Janis Adamsons -- have already complained to the European Court of Human Rights over similar restrictions in Latvia's parliament and local-election laws.

PRESIDENT CALLS FOR UNIVERSAL HUMAN VALUES TO SHAPE NEW WORLD ORDER.
Vaira Vike-Freiberga told the international Bertelsman Forum titled "Europe -- Moving Toward a New Era" in Berlin on 10 January that the new European constitution and world order should be based on universal human values and principles, not narrow economic and geopolitical interests, BNS reported. She said that close international cooperation between Europe and North America is vital to successfully deal with environmental issues, poverty, epidemics, international terrorism, and organized crime. Vike-Freiberga arrived in Berlin on 8 January and had meetings the following day with German President Johannes Rau, opposition Christian Democratic Union head Angela Merkel, and Turkish Prime Minister Recep Tayyip Erdogan.

CZECH REPUBLIC OFFERS HELP ON AIR-TRAFFIC-CONTROL SYSTEM.
Czech Defense Minister Miroslav Kostelka held talks with his Latvian counterpart Girts Valdis Kristovskis in Riga on 15 January, BNS reported. They discussed international security and NATO-enlargement issues, including the development of NATO-standard air-traffic-control systems in the two countries. The ministers also spoke about the possible transfer of Latvian officers and military police to reinforce a Czech unit serving in Kosova that is being downsized. Kostelka also met with armed forces commander Rear Admiral Gaidis Zeibots and parliament Defense and Internal Affairs Committee Chairman Eriks Jekabsons.

RULING COALITION MEMBERS WANT EQUAL SAY IN NAMING NEXT FOREIGN MINISTER.
For the Fatherland and Freedom/LNNK parliamentary faction head Maris Grinblats and Deputy Prime Minister Ainars Slesers, the chairman of Latvia's First Party, on 8 January said the decision on who will take Sandra Kalniete's place as the next foreign minister should be made by all four coalition partners and not just New Era, LETA reported. Kalniete is vacating the post to become the European commissioner representing Latvia. However, New Era faction head Krisjanis Karins said no changes have occurred in the coalition agreement, which outlines for which ministries each of the four coalition partners is responsible, and his party sees no need to give up its right to choose the foreign minister. Karins has been mentioned as the top candidate to replace Kalniete. The rift in the ruling coalition opened up after New Era nominated Kalniete for the European commissioner post, a decision its coalition partners believed should have been made jointly.

ELECTRONIC DOCUMENTS GRANTED LEGAL FORCE.
Latvia's new law on electronic documents went into force on 1 January, granting legal recognition to electronic signatures, BNS reported on 5 January. As a result, an electronic document acquires legal force when it is connected to a safe electronic signature available only to the signatory and certified by a qualified certification institution; however, no such institutions currently exist in Latvia, according to the news agency. Nearly three of four Latvian municipalities surveyed by government portal eparvalde.lv indicated that they were not prepared to accept electronic documents, with only 22 percent saying that they have received sufficient information about such documents. The law does not apply to contracts relating to real-estate transactions, except for rent, or to transactions related to family and hereditary law.

COMMERCIAL LENDING UP BY ONE-THIRD.
Latvia's Financial and Capital Market Commission released data on 6 January indicating that the value of loans issued by the country's 22 commercial banks and one foreign-bank branch rose by 35 percent year-on-year in the first 11 months of 2003, to 2.87 billion lats ($5.0 billion), LETA reported. Loans to the private sector rose 31 percent to 1.62 billion lats, while retail loans increased 66 percent to 712 million lats. Central and local governments borrowed nearly 78 percent (76 million lats) more than in the same period the previous year. Loans to nonprofit organizations and to financial institutions rose by 32 percent and 17 percent, respectively, but lending to state-owned companies fell by 7.7 percent.

RIGA MAKES GAINS ON FELLOW BALTIC PORTS.
The port of Riga handled 21.73 million tons of goods in 2003, a 20 percent gain on the 18.11 million tons it handled in 2002, BNS reported on 12 January. Meanwhile, the amount of freight passing through Estonia's main port of Tallinn fell 0.5 percent to 37.7 million tons while Latvia's Ventspils handled 27.4 million tons of goods, down 4.5 percent from 2002. Freight traffic through the Lithuanian port of Klaipeda rose 7.4 percent, from 19.73 to 21.29 million tons. The export of oil played a very important role in Baltic Sea trade, accounting for 63 percent of cargoes in Tallinn, 39 percent in Ventspils, 31 percent in Klaipeda, and 23 percent in Riga.

* A unit of 101 soldiers departed for service in Iraq on 13 January, replacing other Latvian soldiers who have been serving there since last summer, BNS reported. Defense Minister Girts Valdis Kristovskis and armed forces commander Rear Admiral Gaidis Andrejs Zeibots spoke at the official farewell ceremony in Adazi. The troops first traveled by bus to Poland from where they were flown to Iraq.

* Transportation Minister Roberts Zile (representing For the Fatherland and Freedom/LNNK in the cabinet) met with Dutch Minister of Transport, Public Works, and Water Management Karla Peijs in Riga on 12 January, LETA reported They discussed freight and passenger transport by land, sea, and air as well as safety in ports and on the sea. Dutch interest in the transport situation in Latvia is increased because the Netherlands will head the EU in the second half of the year.

* Agriculture Minister Martins Roze (representing the Union of Greens and Farmers in the cabinet) attended the 69th International Green Week fair and met with German officials in Berlin on January 15, LETA reported. In talks with German Agriculture, Food, and Consumer Protection Minister Renata Kunas, he discussed her upcoming visit to Latvia and the agenda of the second East-West forum on biological agriculture in Nuremberg on 18 February.

* Supporters of the Russian extremist National Bolshevik Party set fire to the outer door of the Education and Science Ministry early in the morning of 9 January, BNS reported. Shortly afterwards an e-mail message was sent to the ministry explaining the action was a protest against the planned educational reform which will increase the number of subjects taught in the Latvian language at minority schools. It also stated: "We demand that this discriminatory reform should be canceled. Russian children won't learn Latvian." The Moscow office of the National Bolsheviks confirmed that their representatives in Latvia were responsible for the act, also expressing regret that "the ministry should have been burned down long ago. The Russian language is needed in schools. What the Latvian government is doing and the Education Ministry is genocide against the Russian population."

* The Russian Prosecutor-General's Office rejected the repeated request by its Latvian counterpart to extradite the leader of the Latvian branch of Russia's radical National Bolshevik Party, Vladimir Linderman, to Latvia. After Russia refused to extradite Linderman in October because it believes "Linderman is being persecuted in Latvia for his political activity and political convictions" (see "RFE/RL Newsline," 14 October 2003), Latvian Prosecutor General Janis Maizitis rejected the statement affirming that Linderman is sought for criminal and not political charges.

* Latvian Socialist Party Chairman Alfreds Rubiks plans to ask the Constitutional Court to rule that the referendum on Latvia's accession to the European Union on 20 September 2003 was not legitimate, LETA reported on 7 January. Rubiks, the former first secretary of the Latvian Communist Party had been imprisoned for attempting to overthrow the government in 1991. He declared that the referendum was not legitimate since 22 percent of the nation, meaning residents and not just citizens of Latvia, were barred from participating in it. Rubiks said that he will appeal to the European Court of Human Rights in Strasbourg if the Constitutional Court rejects his petition.

* Former Latvian KGB official Nikolai Tess, who is a citizen of Russia, appealed on 16 January the verdict of the Kurzeme Regional Court in December which found him guilty of genocide and gave him a two-year suspended prison sentence (see "RFE/RL Newsline," 17 December 2003), LETA reported. The 82-year-old Tess said that he was not guilty of the charges of deporting 138 Latvians to Siberia in March 1949.

* President Vike-Freiberga said in an interview over Latvian State Radio on 16 January that she supported the proposal of the Education and Science Ministry to make the headmasters of all schools civil servants and thus require them to be citizens of Latvia, BNS reported. She noted, "Citizens should be more loyal than non-citizens, but, of course, it is no guarantee." Out of slightly over 1,000 school headmasters, some 20 are not Latvian citizens.

* The cabinet approved the recommendation of the Justice Ministry to name Egils Levits and Ingrida Labucka as Latvia's representatives to the European Court of Justice on 13 January, BNS reported. Levits is a judge at the European Court of Human Rights and Labucka is a former justice minister now serving in the parliament.

* The National Radio and Television Council selected Edgars Kots as the acting director-general of Latvian State Television (LTV) on 15 January, LETA reported. The vote for the appointment was three in favor and three against, but determined by the positive vote of council Chairman Imants Rakins. Kots was recommended by outgoing LTV Director-General Uldis Grava, whose previously announced retirement will go into effect from 16 January.

* The parliament approved by a vote of 92 to none with one abstention the appointment of Justice Ministry State Secretary Gunars Kutris as a judge of the Constitutional Court on 15 January, LETA reported. The 42-year-old Kutris was appointed for a 10-year term, replacing Anita Usacka, who resigned after being elected to the International Criminal Court.

* The parliament rejected on 15 January a proposal by the opposition People's Party (TP) to reduce the value-added tax (VAT) on audio recordings from 18 percent to 5 percent, LETA reported. TP deputy Gundars Berzins said that the lower VAT would reduce prices of legal audio recordings and raise turnover by 15 percent so that VAT revenues would not be reduced much. Finance Ministry Parliamentary Secretary Eriks Skapars said that the proposal was against EU directives.

* The Latvian Shipping Co. (LASCO) has signed agreements with the Croatian shipbuilding company Treci Maj for the construction of eight tankers, LETA reported on 16 January. The contract for the first ice-class tanker of 51,800 tons was signed on 13 January and contracts for the others on 16 January. The ships are meant for the transportation of oil and chemical products. The first tanker is to be delivered in 2006 and the others by 2008. LASCO did not reveal how much the ships will cost, but there are estimates that it will be about $300 million.

* The Central Statistics Bureau announced on 13 January that in January-November 2003 the country's imports were 2.71 billion lats ($4.9 billion) or 19.4 percent greater than in same period in 2002, while exports were 1.51 billion lats or 16.3 percent greater, LETA and BNS reported. Trade with EU countries had the greatest role, accounting for 50.8 percent of imports and 62.3 percent of exports. Similar figures for trade with CIS countries were 14.6 percent and 9.6 percent, respectively.

* The Central Statistics Bureau declared on 10 January that the consumer price index in December was 0.2 percent higher than in November and 3.6 percent higher than in December 2002, BNS reported. In December there was a 0.2 percent growth for goods and an 0.1 percent increase for services.

PREMIER TO NOMINATE FINANCE MINISTER FOR EUROPEAN COMMISSION POST.
Prime Minister Algirdas Brazauskas confirmed on 6 January that he intends to appoint Finance Minister Dalia Grybauskaite as Lithuania's representative to the European Commission, BNS reported. In an interview over state radio, Brazauskas noted that he has already coordinated the appointment with President Rolandas Paksas and parliamentary speaker Arturas Paulauskas. Commission Chairman Romano Prodi has asked the 10 countries scheduled to join the EU in May to identify their candidates for commission posts, with at least three women among them, by the end of January. The current chairman of parliament's Budget and Finance Committee, Social Democrat Algirdas Butkevicius, has been mentioned as a candidate to replace Grybauskaite at the Finance Ministry; Brazauskas did not rule out Butkevicius's possible appointment to that post, according to BNS.

IMPEACHMENT COMMISSION CALLS ALLEGATION AGAINST PRESIDENT 'REASONABLE'...
The parliamentary commission on the possible impeachment of President Rolandas Paksas decided unanimously on 7 January that there is no need to investigate further the charges that Paksas improperly intervened to grant Lithuanian citizenship to Russian businessman Yurii Borisov, since the Lithuanian Constitutional Court has already gathered enough evidence, BNS reported. The court ruled that Paksas violated three articles of the constitution (see "RFE/RL Newsline," 30 December 2003). The parliamentary commission thus rejected proposals by the president's lawyers to call further witnesses. "Whether or not the allegation is well-founded is not something that we will conclude at the time being. But we have enough facts to ascertain that the allegation is reasonable," commission Deputy Chairman Julius Sabatauskas said. The commission has been asked to present its conclusions to the parliament by 13 February.

...AS PRESIDENT SNUBS COMMISSION.
Neither Rolandas Paksas nor any of his defense lawyers attended a meeting on 5 January of the parliamentary commission considering his impeachment despite an invitation to attend the proceedings, "Kauno diena" reported the next day. Paksas issued a press release declaring that he would not attend the session because he had not yet received complete information about the charges against him, including a statement confirming that all such information had been delivered to him. Commission Deputy Chairman Sabatauskas dismissed Paksas's reasoning as incorrect, noting that the president was asked by the commission to present his views on the impeachment charges that were signed by 86 parliament deputies (see "RFE/RL Newsline," 19 December 2003). Sabatauskas accused the president's lawyers of trying to delay the impeachment process, saying they have not requested access to the classified data on which some of the charges are based. In the two-hour session, four of the commission's 12 members presented the conclusions of its investigations, expanding the list of charges against the president from six to 11.

PRESIDENT HIRES NEW NATIONAL SECURITY ADVISER...
Rolandas Paksas announced on 6 January that Deputy Police Commissioner General Romualdas Algirdas Senovaitis has accepted a presidential advisory post for national security issues, ELTA reported. The post has been vacant since Remigijus Acas resigned in October over alleged links to Russian criminal groups; Paksas is facing possible impeachment over allegations that include compromising national security (see "RFE/RL Newsline," 3 November and 19 December 2003 and 6 January 2004). The 45-year-old Senovaitis, who has degrees in history and law, has been deputy commissioner since 1996, aside from a two-year stint as the chief police commissioner of Lithuania's second-largest city, Kaunas. Senovaitis was to assume the adviser's post on 12 January.

...QUESTIONS LEGALITY OF STATE-SECURITY ACTIONS...
Paksas on 8 January sent a request to the parliament's Operative Activities Control Commission to investigate whether the State Security Department violated the law by submitting evidence to the parliamentary ad hoc commission formed to investigate a potential threat to national security (see "RFE/RL Newsline," 4 November 2003), "Lietuvos zinios" reported on 9 January. The commission previously rejected objections Paksas voiced over the department's recording of telephone conversations he had participated in with people whose phones had been tapped, ruling that the department had followed all legal requirements. Commission Chairman Nikolai Medvedev said that the results of the requested investigation should be completed by the end of next week.

...AND VOWS NOT TO RESIGN.
Paksas told a press conference on 12 January that he will not resign under any circumstances, "Lietuvos zinios" reported the next day. "My stance is unambiguous and final," Paksas said. "I will not [resign] for many reasons. The main reason is that I do not feel guilty. Any kind of resignation would stress my guilt." The Constitutional Court recently ruled that Paksas violated the constitution when he granted Lithuanian citizenship to Russian national Yurii Borisov, who contributed to Paksas's election campaign. A special commission of parliament is currently examining the possibility of impeaching Paksas. Meanwhile, Paksas said on 12 January he was unaware of the whereabouts of former Ambassador to Latvia Petras Vaitiekunas, whom the president had tapped to serve as his foreign-policy adviser. Vaitiekunas announced last week that "I do not want to and cannot work as a politician in the president's office," and said he was leaving, but would be willing to return if detailed by the Foreign Ministry to serve as the foreign-policy adviser, BNS reported on 9 January. LNK television on 12 January quoted unidentified sources as saying Vaitiekunas's decision came as the result of the Constitutional Court's ruling against the president.

PROTESTS MAR COMMEMORATION OF FREEDOM DEFENDERS' DAY.
Dissatisfaction with President Paksas, who is facing impeachment proceedings, was clearly expressed on 13 January during commemoration ceremonies of Freedom Defenders' Day held by parliament and the presidential office, "Lietuvos rytas" reported the next day. The day marks the anniversary of the 13 January 1991 attack by Soviet troops on an unarmed crowd defending Vilnius's television tower. Fifteen were killed in the attack, which steeled Lithuania's determination to regain independence. Parliamentary deputies from the opposition Conservative and Liberal-Center factions, along with several Social Democrats, walked out of the hall when Paksas was invited to address the parliamentary session. Later the same day, during the awarding of medals commemorating 13 January, one of the recipients, a 63-year-old engineer from Kaunas, said, "The events of 13 January are too important, and this award is too significant that I could accept it from the hands of a president who is lying and has lied to us and all Lithuania." Of the 127 people who were to receive the awards, 26 did not attend the ceremonies.

IMPEACHMENT COMMISSION QUESTIONS PRESIDENT'S MAIN SPONSOR.
The parliamentary impeachment commission formed under the constitution to investigate Paksas on 14 January spent nearly six hours questioning Yurii Borisov, the largest identified financial backer of Paksas's election campaign, "Lietuvos rytas" reported the next day. The Constitutional Court recently ruled that Paksas violated the constitution by granting Lithuanian citizenship to Borisov, and the Migration Department has requested his deportation from the country. While one of the president's lawyers, Gediminas Baublys, said that Borisov's testimony helped refute the charges against Paksas, commission Deputy Chairman Sabatauskas said Borisov refused to answer some questions on the grounds that he already provided testimony to the Prosecutor-General's Office. Borisov told reporters that he will appeal the decision to deport him. Meanwhile, Foreign Minister Antanas Valionis told Paksas on 14 January that the Foreign Ministry will delegate former Ambassador to Latvia Petras Vaitiekunas to work as the president's main foreign-policy adviser. Vaitiekunas previously refused to serve in that capacity as a presidential appointee.

PARLIAMENT PASSES NEW VAT BILL.
Parliament on 15 January approved a value-added tax (VAT) bill that will comply with EU regulations, "Lietuvos rytas" reported the next day. The bill, which passed by a vote of 56 to nine, with 10 abstentions, will result in price increases for some goods and services as of 1 May 2004, when Lithuania is scheduled to join the union. One of the most significant increases will be seen in heating costs, with the current 9 percent VAT rising to 18 percent. A 5 percent VAT will be imposed on some imported medicines and on publications whose paid advertising accounts for less than 80 percent of total content.

* Parliament speaker Arturas Paulauskas raised the yet unsolved problem of the pre-World War II Lithuanian Embassy building in Rome, which the Soviet Union seized and Russia continues to use, with Fiorello Provera, the visiting head of the Italian Senate's Foreign Affairs Committee, in Vilnius on 15 January, BNS reported. Provera mentioned that Italy would follow the example of France, which paid compensation to the Baltic states for their former embassies in Paris that had suffered the same fate. Paulauskas also asked Provera to pass an invitation to Italian Senate Chairman Marcello Pera to come to Vilnius for an official visit.

* Dutch Minister of Transport, Public Works, and Water Management Karla Peijs told Transportation Minister Zigmantas Balcytis that the Netherlands will support the integration of the Lithuanian transportation sector into the trans-European transportation network in Vilnius on 13 January, ELTA reported. In other talks that day, her deputy minister, Melanie Schultz van Haegen, and Environment Minister Arunas Kundrotas discussed the construction of rational and cost-effective residential housing, reduction of air pollution, and flood prevention. The Netherlands is also spending 6.7 million litas ($2.5 million) on four large environmental projects concerning land-use planning, information systems for assessing air quality and noise, and water management in the Zuvintas Lake basin.

* Foreign Ministry Information and Culture Department Director Violeta Motulaite said on 13 January that Lithuania will not participate in a large international accident-management exercise planned at the D-6 oil platform in the Baltic Sea in June if Russia has not signed legal agreements on warning about sea pollution, elimination and compensation of damages with it, BNS reported. The platform, located 22 kilometers off the ecologically-sensitive Curonian Spit, which is listed in the UNESCO World Heritage List, is only 7 kilometers from the Lithuanian border.

* Nearly 73,000 residents of Russia's Kaliningrad Oblast obtained annual multiple-entry visas for Lithuania in 2003, ETA reported on 5 January citing ITAR-TASS. The consulate general in Kaliningrad issued about 53,500 visas and the consulate in Sovetsk 19,000. More than 120,000 residents traveling from Kaliningrad to the Russian mainland via Lithuania by train received facilitated rail-transit documents with another 2,000 getting them for travel via private automobile.

* Russian businessman Yurii Borisov, who was the main financial supporter of the Paksas's presidential campaign, presented an application for permanent residence in Lithuania to the Migration Department in Vilnius on 2 January, BNS reported on 5 January. The Constitutional Court had ruled on 30 December that Paksas had violated the constitution in April by restoring Lithuanian citizenship to Borisov with a presidential decree. The court also ruled that Borisov should not have received citizenship in 1990 since he was a Soviet military officer. The Migration Department announced on 9 January that it rejected Borisov's application and he should be deported to Russia.

* VP Market head Ignas Staskevicius and European Bank for Reconstruction and Development Director for the Baltic States Salvatore Candido signed an agreement for a 35 million-euro ($44 million) loan in Vilnius on 8 January, ELTA reported. The loan is for a nine-year period and has a variable interest rate. It was obtained to finance the expansion of the company, which has 266 stores in the Baltic states, 185 in Lithuania, 80 in Latvia, and one in Estonia.

* Rubikon, one of Lithuania's largest holding companies, bought the regional television station Vilniaus Televizija from parliament deputy Vytautas Kvietkauskas for 2.3 million litas ($600,000) on 5 January, ELTA reported the next day. The new owners pledged to invest 1 million litas within the first year for upgrading the technical equipment of the TV station and developing a new format, capable of attracting a greater audience.

* The Statistics Department announced on 9 January that in December the consumer price index remained the same as in November, but was 1.3 percent lower than in December 2002, BNS reported. The price of food and nonalcoholic beverages rose by 0.5 percent in December, but prices of clothing and footwear decreased by 14 percent and those of services by 0.1 percent.

* The Labor Exchange announced on 7 January the number of registered unemployed persons on 1 January was 158,800 or 32,300 fewer than on the same day in 2002, BNS reported. The unemployment rate is 9.8 percent or 1.1 percentage points lower than last year, but 0.1 percentage points higher than in the previous month. The highest levels of unemployment were 22.2 percent in Druskininkai, 20.3 percent in Mazeikiai, and 18.8 percent in Pasvalys.

* Lietuvos Gelezinkeliai (Lithuanian Railways) announced on 8 January that it transported 43.5 million tons of cargo in 2003, or 18.5 percent more than in 2002, ELTA reported. International cargo accounted for the major portion -- almost 38 million tons or 26 percent more. The volume of domestic freight decreased by 16 percent from 6.5 million to 5.4 million tons.

* The Klaipeda Port Authority announced on 12 January that the amount of cargo passing through the port of Klaipeda in 2003 amounted to 21.19 million tons or 7.4 percent more than the 19.74 million tons in 2002, BNS reported. A total of 6,805 ships were serviced at the port in 2003 or 4.7 percent more than the 6,502 vessels serviced in 2002.