Baltic Report: January 13, 2003

NOTE TO READERS:
This issue covers events in the Baltic states from 28 December 2002 to 6 January 2003.
COALITION PARTNERS POSTPONE DECISION ON PENSION HIKE.
A governing coalition committee on 6 January dismissed a proposal by Social Affairs Minister Siiri Oviir to increase the monthly pension of 370,000 retirees by 100 kroons ($6.70) from 1 February, ETA reported. Center Party Chairman Edgar Savisaar backed the proposal, noting that such an increase -- combined with indexation on 1 April that should increase pensions by an average of 126 kroons -- would allow pensions "finally [to] start catching up with the increase in the cost of living." Finance Minister Harri Ounapuu called for postponing the pension increase until April, saying it would increase the budget deficit and clearly be regarded as a campaign move before the 2 March parliamentary elections. Prime Minister Siim Kallas also favored postponing any decision on a pension increase, arguing, "We have to understand that if we raise pensions now, as the budget revenues are good for the time being, we may discover next year that the pension fund is empty and the state's fiscal reliability is jeopardized."

BUDGET GOT REVENUES BOOST IN 2002.
Citing preliminary figures, the Finance Ministry announced on 2 January that 2002 state budget revenues totaled 36.29 billion kroons, or 5.7 percent more than planned, ETA reported. Finance Minister Harri Ounapuu said the surplus was due to a better-than-anticipated economic situation in Estonia, better tax administration, along with a reduction in value-added-tax (VAT) fraud, the black-market economy, and unrecorded wages. The surplus would have been 1.2 billion kroons higher if legislators had not adopted two supplementary budgets during the year. The surplus is transferred into a reserve fund that may be used exclusively for reducing general economic risks and financing investments that deliver long-term returns.

FINANCE MINISTRY RECOMMENDS SALE OF STATE HOLDINGS.
The Finance Ministry has urged the state to sell significant stakes in dozens of businesses, including the partial privatization of the Eesti Energia (Estonian Energy) power utility and Tallinna Sadam (Port of Tallinn), ETA reported on 3 January. The ministry recommends that the state maintain majority stakes in those two companies but float 49 percent on the stock exchange. The ministry also suggests that the state sell minority stakes in the national airline Estonian Air, the Saku Arena, the Sakala Keskus conference center, and Okosil, a company managing the hazardous-substances reserve in Sillamae. Economy and Communications Minister Liina Tonisson countered that she sees no reason to sell the utility shares until the opening of the energy market in 2008. Tonisson also opposed the port sale, arguing, "The failed privatization of rail firm Eesti Raudtee proved that the privatization of infrastructure companies does not have [a future]."

MINIMUM WAGE RAISED BY 17 PERCENT.
The country's minimum monthly wage was increased nearly 17 percent on 1 January on the basis of a tripartite agreement approved by the Estonian government in December, ETA reported on 31 December. The hike increases the wage threshold from 1,850 kroons ($124) to 2,160 kroons. The minimum hourly wage was increased from 10.95 kroons to 12.90 kroons. The government approved the increase after talks with trade unions and employer organizations. The three sides agreed late last year that the minimum wage should represent 41 percent of the average wage by 2008. The average monthly salary in the second quarter of 2002 was 6,353 kroons, translating into a minimum wage of just 29.1 percent of that figure. The government, however, rejected a proposal to raise the income-tax exemption from 1,400 kroons a month.

* A survey by the EU's PHARE program indicated that 67,000 non-Estonians living in the country need to pass an Estonian-language-proficiency exam due to their occupation, ETA reported on 2 January. It also revealed that there were about 251,000 non-Estonians, aged 15 to 59, who are or plan to enter the labor market, but were not educated in Estonian and do not have certificates on their knowledge of Estonian. The 67,000 persons are working jobs in trade and service, transport, education, medicine, and public administration where they need to speak Estonian with clients, patients, or students.

* The board of the Pro Patria Union issued a statement on 4 January calling on all political parties to conclude an agreement preserving the country's current language and citizenship policies, BNS reported. It condemned the effort of the Center and Reform parties to try to gain the support of non-Estonian speakers with promises of liberalizing the language and citizenship policies. The statement notes that existing government polices are fully in line with internationally recognized principles and criticizes the decisions of the current ruling coalition to continue Russian-language secondary education after 2007 and put off the requirement for people in jobs requiring communication to be proficient in Estonian.

* The State Examination and Qualification Center announced on 2 January that 10,689 of the 17,742 persons who took the official Estonian-language-proficiency exam in 2002 passed it, BNS reported. Of the 6,123 adults who passed the exam, 3,247 passed it at the elementary level, 2,178 at the intermediate, and 698 at the advanced level.

* Res Publica and the Center Party were the most successful political parties in gaining new members in 2002, BNS reported on 2 January. The number of members of Res Publica grew from 1,150 last year to 3,715 at the end of 2002 while Center Party rolls increased from 5,232 to 7,368. The People's Union retained its position as the largest party with membership rising from 6,170 to 7,614, not including the nearly 1,200 members of the New Estonia Party which merged into it last year. The Moderates and Pro Patria increased their membership by about 100 each to 3,400 and 2,881, respectively, while the Reform Party increased more slowly to 3,003 members.

* The extended board of the Moderates endorsed on 28 December a list of 125 candidates for the parliamentary elections on 2 March, ETA reported. The list is led by party Chairman Ivari Padar, Central Association of Estonian Trade Unions (EAKL) Chairwoman Kadi Parnits, and former party leader Toomas Hendrik Ilves.

* The Statistics Office announced on 6 January that in November exports and imports amounted to 5.32 billion kroons ($340 million) and 7.28 billion kroons, respectively, BNS reported. Compared to November 2001, exports increased by 6.6 percent and imports by 13.6 percent and the trade deficit grew from 1.41 billion kroons to 1,95 billion kroons.

* Estonian Railway earned a record profit of 325 million kroons ($21 million) in 2002, ETA reported on 6 January. The unexpected profit was due to increasing the amount of cargo carried by 14 percent to 42.07 million tons.

PRESIDENT ACCUSES RUSSIA OF ENTRENCHED ATTITUDES.
In an interview in the daily "Biznes & Baltiya" on 3 January, Vaira Vike-Freiberga claimed that Russian-Latvian relations have not improved due to the conservative attitude toward Latvia held by the Russian Foreign Ministry, BNS reported. She said she has the impression the ministry is inadequately informed on the situation in Latvia. "The whole planet, all other countries, are our friends," she said. "If 199 countries are on a positive note and one is not, I think the problem is in this single country." Vike-Freiberga noted that while OSCE missions ended their activities in Latvia and Estonia more than a year ago, declaring that there is no reason to continue closely monitoring human rights there, the Russian Foreign Ministry continues to accuse those countries of ignoring the rights of the Russian-speaking minorities.

VENTSPILS PORT POSTS RECORD DECLINE IN TURNOVER.
Ventspils Port Deputy Administrator Guntis Tirmanis announced on 6 January that the facilities handled 28.7 million tons of cargo in 2002, or about 24.3 percent less than in 2001, LETA reported. The decline was blamed on a 7.5 million-ton decrease in exports of crude oil and a 1.1 million-ton drop in exports of oil products. The worst months for the port last year were November and December. Future volumes of oil transit are unclear, since Russian pipeline operator Transneft has not scheduled any crude-oil exports through the port in the first quarter of the year, even though Ventspils Port does not freeze over like the more northern Baltic ports.

CABINET HIKES MINIMUM WAGE AT YEAR-END SESSION.
The minimum monthly wage in Latvia rose from 60 lats ($102) to 70 lats on 1 January, LETA reported. The minimum hourly wage is 0.419 lats for full-time employees and 0.479 lats for adolescents and part-time employees. The increase was approved by the government at its last cabinet meeting of the year on 27 December. The minimum wage has steadily increased in the eight years since a hike to 28 lats was announced in October 1994.

* Prime Minister Einars Repse addressed the nation on New Year's Eve over Latvian Television and Radio channels urging the people to approve the EU membership referendum in September and highlighting the country's poor demographic situation, BNS reported on 2 January. He stated that NATO security and access to the EU market will "promote Latvian economic development, improve welfare, and lower unemployment." But Repse expressed regret that the nation is dying, literally and unstoppably, as couples, according to the statistical average, are having barely over one child.

* Foreign Ministry Press Secretary Rets Plesums said that the ministry plans to carry out structural changes in its administration in the near future, so that more staff members concentrate on dealing with matters that concern Latvia's integration into the European Union and NATO, LETA reported on 2 January. He noted that the ministry will definitely need more people for work in EU organizations in Brussels.

* Vladimirs Lindermans, the chairman of the Latvian civic group Uzvara (Victory) -- which serves as a front for the Russian National Bolsheviks -- has submitted all required documents to the Russian Interior Ministry necessary to ask for political asylum in Russia, LETA reported on 28 December. The processing of the documents was on hold due to the holidays in Russia, but will resume after the New Year's celebrations when Lindermans visits the Russian ministry's Migration Service to discuss his application. Latvian Prosecutor-General Janis Maizitis signed a request on 12 December for Lindermans' extradition for illegal possession of explosives and preparing appeals calling for the overthrow of the Latvian government.

* The exceptionally cold weather has closed activities at the small ports of Salacgriva, Mersrags, and Skulte, which are frozen over, BNS reported on 6 January. Although ships were scheduled to visit the ports this month, it appears likely that they will be closed at least for the month of January. The port of Riga is operating only with the help of an icebreaker, which is escorting ships to and from the port and out of the frozen Gulf of Riga.

* Latvia's current account deficit in the third quarter of 2002 totaled 109.4 million lats ($175 million) or 8.5 percent of GDP, BNS reported on 30 December. This significant improvement over the 10.3 percent current account deficit in the third quarter of 2001 was primarily due to a lower foreign-trade deficit, higher current transfer surpluses, and a greater inflow of foreign direct investment.

* The Public Services Regulatory Commission's Council decided to issue a fixed-telephone operator's license to Lattelekom on 28 December, LETA reported. The license is for operations from 1 January 2003, when Lattelekom loses its previously held monopoly, to 31 December 2017. The license authorizes the company to provide six types of services: public domestic voice telephone, public international voice telephone, public pay phone, public data and electronic messages transmission, lease of telecommunications lines, and access to the Internet.

ROLANDAS PAKSAS WINS PRESIDENTIAL VOTE...
Provisional results indicate that former Prime Minister and Liberal Democratic Party leader Rolandas Paksas soundly defeated incumbent Valdas Adamkus in the presidential elections on 5 January, ELTA reported the next day. Paksas received 54.9 percent of votes and Adamkus 45.1 percent. Paksas won all administrative areas except the cities of Vilnius, Kaunas, Palanga, and Birstonas, as well as the Kaunas Region (Kauno Rajonas). He is expected to be sworn in as president on 26 February. The voter turnout of 52.56 percent was about one percentage point lower than in the first round two weeks ago, when Adamkus received 35.1 percent of the votes cast and Paksas 19.4 percent (see "RFE/RL Newsline," 23 December 2002). Many expected Adamkus to win handily, particularly since he received the public endorsement of all major political parties (see "RFE/RL Newsline," 3 January 2003). The 46-year-old right-winger's surprise victory over Adamkus, 76, appears to have been well-funded. Lithuanian political analysts speculated that the election results signal widespread dissatisfaction with political parties and a desire for change.

...AND SEEKS TO HEAD OFF FOREIGN CRITICS...
Paksas immediately sought to disarm critics who view him as a potential obstacle to a May referendum on EU membership and early accession, stressing on 5 January that he wants to "send off a signal to the world that foreign policy will not change," Reuters reported. But the former mayor of Vilnius and avid stunt flier added, "My first visit [will] be to Brussels to meet EU leaders and clarify the situation on certain points that do not satisfy me." Rejecting frequent comparisons to the French far-right leader Jean-Marie Le Pen, Paksas noted that "some people call me Le Pen -- others call me a populist, demagogue, fascist, or radical." He said he fully supports Lithuania's entry to the EU next year, the news agency added. Paksas ran with the slogan "Vote for Change," while incumbent Adamkus built his re-election bid on the country's recent invitations to join the EU and NATO -- with membership expected as soon as 2004. In conceding defeat early on 6 January, Adamkus said he expects Paksas to lead the country "on the same track," according to AFP.

...BUT CARPS AT LEFTIST GOVERNMENT.
Paksas also "set himself on a collision course with center-left Prime Minister Algirdas Brazauskas's coalition" on 5 January, according to Reuters, which quoted him as saying, "I see that several of the current [government] ministers are not suitable." Much of his support seems to have come from voters weary of economic and social hardships in the country, the news agency added. A domestic rift could upset plans for a May plebiscite on EU membership, according to analysts quoted by Reuters citing the fact that Paksas accused the government of selling out to Brussels in membership negotiations concluded in mid-December in Copenhagen. "Most interesting is how his relations with the ruling coalition will develop, and if he wants a conflict to what degree will he take it," one capital-markets analyst said.

PRESIDENT-ELECT BRACES FOR CHANGE.
Before assuming office, President-elect Paksas will have to give up both his parliamentary seat and the leadership of the Liberal Democratic Party, "Kauno diena" reported on 7 January. The presidency requires that a person be above party matters, the paper added in the wake of Paksas's runoff victory. The plebiscite on EU membership is expected in May. Although nothing has been announced, sources close to the president-elect say it appears likely that Paksas will also replace State Security Department Director Mecys Laurinkus, Police Commissioner General Vytautas Grigaravicius, and Special Investigations Service Director Valentinas Junokas -- all of whom are presidential appointments -- according to "Kauno diena."

KALININGRAD CONSULAR STALEMATE WITH RUSSIA BROKEN.
Kaliningrad Oblast Deputy Governor Mikhail Tsikel informed Vilnius that the Russian Foreign Ministry has granted Lithuania permission to expand the facilities of its consulate in Kaliningrad and to open another consulate in the town of Sovetsk in Kaliningrad Oblast, "Kauno diena" reported on 28 December. Lithuanian Consul General in Kaliningrad Vytautas Zalys expressed regret that it took Russia more than a year to grant the permission, as the necessary construction work will have to be hurried. He said the number of visas granted will expand greatly after 1 July 2003, when visa-free travel for Kaliningrad residents will end. Earlier this month, Lithuania gave Russia permission to open a consulate in Kaunas and a branch office in the town of Taurage (see "RFE/RL Newsline," 19 December 2002).

ADAMKUS VISITS WARSAW.
President Adamkus met with his Polish counterpart Aleksander Kwasniewski in Warsaw on 3 January during a half-day working visit, PAP reported. The presidents said at a news conference after the meeting that their countries will cooperate in implementing joint infrastructure projects, including fast Vilnius-Warsaw rail and road connections. They also pledged that Poland and Lithuania will coordinate activities on the path to the European Union, particularly regarding referendums on EU membership.

* Accompanied by his wife and daughter, former Russian Prime Minister Yevgenii Primakov traveled to Vilnius to celebrate the coming of the New Year with Russian Ambassador to Lithuania Yurii Zubakov, BNS reported on 3 January. Along with his duties as a deputy of the Russian Duma, Primakov is also the president of the Russian Chamber of Commerce. On 3 January he held talks with leaders of the Lithuanian Chamber of Trade, Industry, and Crafts. He said that Lithuania's membership in the EU does not cause worries for Russia and he would be very happy if Russia also became a member of the organization.

* Accompanied by his wife Joan and aides, U.S. Senator Arlen Specter (Republican, Pennsylvania) made a three-day visit to Lithuania on 27-29 December, BNS reported. On 28 December he held talks with Foreign Minister Antanas Valionis and President Adamkus.

* Foreign Ministry State Secretary Evaldas Ignatavicius and Russian Deputy Foreign Minister Vladimir Chizhov signed an agreement on travel between Lithuania and Russia in Moscow on 30 December, ELTA reported. It provided that no visas would be required for Lithuanian residents to visit Kaliningrad Oblast or for Kaliningrad residents to Lithuania until 1 July 2003. After that date these persons would be issued multiple travel visas for visiting the other state for one year free of charge. Truck drivers of Lithuania and the Russian Federation will be issued annual visas without letters of invitation, but only through the national carriers associations.

* Foreign Minister Valionis and Belarusian Ambassador to Lithuania Vladimir Harkun exchanged notes in Vilnius on 31 December signifying that an interim agreement on mutual travel of their citizens would go into effect the next day, ELTA reported. The agreement eliminated the previous visa-free entry which had been valid for certain groups of Lithuanian and Belarusian nationals and replaced with a system which permits haulers, persons more than 70 years old, residents of border areas, persons visiting graves of their relatives, tourists going to health facilities, and participants of cultural and sports events to cross the border without payment for their visas.

* A new institution, the Environment Protection Agency, formed through the reorganization of the Environment Ministry's United Research Center and the Water Resource Department began working on 2 January, ELTA reported. It will employ 102 persons and be headed by Liutauras Stoskus, who won an open competition for the director's position. That day the Forest Sanitary Protection Service, the Forest Seed and Seedling Quality Inspectorate, and the State Forest Management Service began operations as new public institutions.

* The State Property Fund announced on 2 January that state and municipal bodies had raised a total of 348.6 million litas ($105 million) by privatizing 963 objects in 2002, ELTA reported. The largest transactions were the sales of a 76 percent share in the Lithuanian Agricultural Bank to the German bank Nord/LB for 71 million litas and of a 34 percent share in the natural-gas utility Lietuvos Dujos to the German energy companies Ruhrgas and E.ON Energie for 116 million litas. In 2001 Lithuania privatized 842 objects for 467.95 million litas.

* The National Labor Office announced on 6 January that the number of officially registered unemployed people at the beginning of the month was 191,200, an unemployment rate of 10.9 percent or 0.2 percentage points higher than a month earlier, ELTA reported. The rate, however, was two percentage points lower than in the same period in 2001.

* The nuclear-power plant at Ignalina produced a total of 14.14 billion kilowatt-hours (kWh) of electricity in 2002 or 25 percent more than in 2001, BNS reported on 6 January. The state-run power-transmission company Lithuanian Energy exported a total of 6.8 billion kWh of electricity in 2002, a 63.4 percent increase over the previous year. The electricity was sent to Belarus (3.06 billion kWh), the Kaliningrad Oblast (2.31 billion kWh), Latvia (977 million kWh), Poland (318 million kWh), and Estonia (127 million kWh).