Baltic Report: May 16, 2002

NOTE TO READERS:
This issue covers events in the Baltic states from 3 to 9 May 2002.
PRESIDENT REJECTS AMENDMENTS TO STATE BUDGET LAW.
President Arnold Ruutel refused on 6 May to sign amendments to the State Budget Act, which the parliament had passed on 17 April, declaring that they contradicted the constitution, BNS reported. Article 115 of the constitution states that the parliament shall pass as a law the budget of all state revenues and expenditures for each year, but the vetoed amendments attempt to circumvent this requirement. Most significant is the attempt to permit the government to reallocate a greater part of the state budget through the government's budget, which does not need the parliament's consent. Ruutel noted that the amendments also do not require the state budget to come in force at the beginning of the fiscal year as the constitution obliges. He suggested that the parliament again discuss the amendments to the law and several other laws to bring them into conformity with the constitution.

RUSSIAN BUDGET CUTS TO FORCE ESTONIA TO REINFORCE BORDER.
Estonian Border Guard Chief of Staff Colonel Aare Evisalu said that Russian border officials have informed Estonia that financial reductions will force Russia to give up its maintenance of the wire fence built in 1994-96 and of the cleared stretch of land along the border, and to cut personnel, "Postimees" reported on 10 May. He said that this will require Estonia to deploy 200 more Border Guards along its border with Russia, acquire additional sensors and infrared cameras, and improve the mobility of its guards. Evisalu noted that according to Finnish standards, equipping one kilometer of border with modern equipment will cost 3.1 million kroons ($180,000) and the Estonian-Russian border is 130 kilometers long. He also mentioned that some of the border stations have clearly inadequate living facilities.

IMF ASSESSES 2002 OUTLOOK AS POSITIVE.
A preliminary report issued by an International Monetary Fund mission that visited Estonia on 18-30 April said the country's economic outlook for this year is positive and its gross domestic product should grow by 4.5 percent, ETA reported. It noted that the Estonian economy has shown remarkable resilience in recent months, despite the economic slowdown being experienced by its Western European trading partners. Many Estonian exporters adapted rapidly to the situation by taking advantage of the relatively strong growth in Central, East European and Russian markets. Inflation, however, is unlikely to fall significantly due to the strength of domestic demand, higher oil prices, and planned hikes in state-regulated prices. The report praised the Bank of Estonia for implementing a reduction of the cash-reserve requirement, but warned that further reductions could boost inflation.

KING AND QUEEN OF SWEDEN VISIT.
King Carl XVI Gustaf and Queen Silvia paid an informal visit to Estonia on 5 May to attend the re-inauguration of the Swedish community's church of St. Michael in Tallinn, ETA reported. The church was consecrated in 1733, but was converted into a sports hall during the Soviet era. It was returned to the congregation in 1992 and restored using Swedish state funds and private donations. The royal couple later walked in the Old Town of Tallinn, lunched in the Swedish Embassy, and held a reception for 300 guests in the Kadriorg Palace Art Museum, which has also been restored with financial help from Sweden. They then flew by helicopter to the opening of the Estonian-Swedish Aiboland Museum in Haapsalu. President Ruutel and his wife Ingrid accompanied the royal couple during their entire stay.

* Defense Minister Sven Mikser lead a delegation which visited Canada on 4-8 May, BNS reported. The delegation first traveled to the Canadian defense forces' language school in Borden where eight Estonian officers and Defense Ministry officials are receiving training. Defense Minister Art Eggleton told Mikser in Ottawa on 6 May that he does not see any problems for the Baltic states with Russia and expressed support for their membership in NATO.

* Interior Minister Ain Seppik attended the first meeting of Council of the Baltic Sea States ministers responsible for police matters in Lubeck, Germany, on 6-7 May, BNS reported. The main topic of the meeting was on fighting organized crime and Seppik suggested that the anti-organized-crime working group pay more attention to Internet crime. Ministers from Denmark, Estonia, Finland, Germany, Iceland, Latvia, Lithuania, Norway, Poland, Russia, and Sweden, as well as representatives of the European Commission were present.

* Commander of the Estonian Defense Forces Vice Admiral Tarmo Kouts attended a meeting of the military committee of the Euro-Atlantic Partnership Council in Brussels on 7 May, BNS reported. The meeting discussed issues related to combating terrorism, the military dimension of NATO's Partnership for Peace program, and the situation in the Balkans.

* A group of 11 servicemen who will serve in the Enduring Freedom operation in Kyrgyzstan flew to Karup air force base in Denmark on 6 May for two-weeks of pre-mission training, BNS reported. They will serve at Manas airport in Kyrgyzstan as part of a Danish air force support contingent primarily servicing Denmark's C-130 transport aircraft.

* Foreign Minister Kristiina Ojuland stated on 8 May that Estonia has been pursuing a more active foreign policy with regard to Russia in the last three months, BNS reported. She noted that more meetings are scheduled in May and June to further develop bilateral relations. Ojuland said the two countries have prepared half a dozen agreements for signing.

* The Interior Ministry registered 27 of the 32 congregations of the Estonian Orthodox Church of the Moscow Patriarchate (EOCMP) by 3 May, BNS reported. Tonis Ruutel, the head of the Estonian Apostolic Orthodox Church delegation at property negotiations, said on 9 April that his church was ready to give to the state part of its property currently used by the EOCMP, but only on condition that it not be sold to the EOCMP.

* The Veterinary and Food Board has banned the import of pork and pork products from France and Bulgaria following the discovery of cases of swine fever in the countries, BNS reported on 6 May. The following day it banned the import of cattle and beef from Poland after a case of mad cow fever was confirmed on a small farm near Tarnow in southern Poland.

* Tartu University celebrated the 370th anniversary of its founding and the 200th anniversary of its re-opening on 3-5 May, ETA reported. The anniversary meeting was opened by Tartu University Rector Jaak Aaviksoo and President Ruutel noted in his address that it very important that the university should educate Estonian intellectuals who could at the same time be part of the European educational system. On 4 May the celebrations continued with the conference "National University - International University."

* The congress of the Young Moderates in Tallinn on 4 May re-elected Jarno Laur as its president, BNS reported. It passed a political manifesto which focused primarily on the revision of the present tax policy. It called for the reintroduction of the corporate income tax, a progressive income tax for individuals, as well as increasing the tax-free minimum income to the minimum wage.

* The government approved on 7 May principles for the state's long-term budget strategy on which next year's budget will be based, BNS reported. The Finance Ministry has drawn up a detailed state budget strategy through 2006, which contains an analysis of Estonia's economic situation, budget policy aims and priorities, and a forecast of economic development, including government revenues. The document assumes that the country's GDP will grow 4 percent this year, 5.5 percent in 2003, and 6 percent in the following three years. Annual inflation is predicted to be 3.8 percent this year and at 3.5 percent in the next four years.

* The parliament by a vote of 40 to three rejected on 8 May the proposal of the United People's Party that pension-age persons who had been born in Estonia or had lived in the country for at least 10 years would not be required to pass a language test to gain citizenship, BNS reported. It would also have given citizenship to persons who had served in foreign armed forces and are married to an Estonian citizen, not necessarily by birth as required by the current laws.

* Population Minister Eldar Efendiyev stated on 6 May that the total cost of a three-year foreign aid program to promote multiculturalism in Estonia is 33.4 million kroons ($4 million), BNS reported. The Estonian state budget will allocate 16.2 million kroons for the program which is directed at young people and supports the learning of Estonian through language immersion at pre-school and elementary-school levels.

* Representatives of the New Estonia Party (formerly the Estonian Democratic Party) and the People's Union signed an agreement on cooperation in the fall local elections on 8 May in Tallinn, BNS reported. The two parties are expected to merge in the future, keeping the name of the People's Union.

* The Statistical Office announced 8 May that in April the consumer price index (CPI) increased by 0.9 percent compared to March and by 4.6 percent compared to April 2001, BNS reported. Goods became 0.1 more expensive as costs of food products fell by 0.3 percent and non-food rose by 0.7 percent. The price of services increased by 2.4 percent mainly due to higher costs of electricity and motor fuel.

* The Statistical Office announced on 6 May that imports in March totaled 6.59 billion kroons ($383 million) and exports 4.72 billion kroons resulting in a trade deficit of 187 million kroons, BNS reported Compared with March 2001, exports decreased by 16.2 percent and imports by 9.9 percent.

* Having won increases in the previous two years, the Estonian Central Trade Unions Association is demanding that the monthly tax-free minimum be raised from 1,000 kroons ($58.1) to 1,400 kroons by next year. BNS reported on 3 May. It is also calling for increasing the minimum monthly wage from 1,850 kroons to 2,200 kroons and monthly unemployment benefits to at least 700 kroons.

FINLAND TO BACK REQUESTS FOR GREATER EU AGRICULTURAL SUPPORT.
Finnish European Affairs and Foreign Trade Minister Jari Vilen assured Foreign Minister Indulis Berzins in Riga on 8 May that his country will back Latvia's efforts to gain greater agricultural support from the European Union once it joins the union, LETA reported. Vilen told reporters after the meeting that Latvia needs to increase its administrative capacity, particularly pertaining to the allocation of EU structural funds, saying those funds helped Finland develop its economy when it was trying to gain EU membership. The ministers also discussed the European Commission's proposal that EU member countries establish joint border guards to ensure more efficient control over the union's external borders. Vilen also met with Latvian Development Agency General Director Maris Elerts and deputies from the parliament's European Affairs Committee.

LANGUAGE REQUIREMENTS FOR CANDIDATES ABOLISHED.
The parliament approved on 9 May by a vote of 67 to 13, with four abstentions, amendments to the parliamentary election law abolishing the requirement that candidates must have the highest level of Latvian-language proficiency, BNS reported. Similar amendments to the local council election law were passed by a vote of 71 to 13, with three abstentions. The negative votes were cast by deputies of the conservative party For Fatherland and Freedom/LNNK and the Union of Social Democrats. The amendments were proposed by President Vaira Vike-Freiberga and had been mentioned as a condition for Latvia's membership in NATO. OSCE High Commissioner on National Minorities Rolf Ekeus and the U.S. government immediately welcomed the passage of the amendments.

NEW HEAD OF STATE TELEVISION APPOINTED.
The Latvian National Radio and Television Council (NRTC) by a vote of eight to one appointed Uldis Grava, RFE/RL's director of marketing and affiliate development, as the director-general of public Latvian Television (LTV) on 3 May, LETA reported. The NRTC dismissed Rolands Tjarve as LTV head on 14 February for allegedly signing advertisement agreements that NRTC considered illegal and disadvantageous to the company. Grava, who was born in Latvia in 1938, moved to the United States in 1950 and returned to Europe in 1992 as the director of RFE/RL's Latvian Service. After learning of his appointment, Grava said that his first task will be to set up a team of five to six loyal people and thoroughly examine the "poor financial situation" of LTV.

DELEGATION FROM TATARSTAN VISIT.
A delegation from the Republic of Tatarstan began a four-day visit to Latvia on 6 May by meeting with representatives of the construction department at the Environmental Protection and Regional Development Ministry, LETA reported. Zufar Zainullin, the director of the retail center "Tatarstan-Baltija," noted that the historical centers of Riga and Kazan are included on the UNESCO cultural heritage list and that officials of the two cities share the problem of how to reconcile the renovation of historical buildings with the requirements of modern architecture. The delegation is scheduled to travel to Ventspils on 8 May to become acquainted with the development and architecture of the city.

* On 3 May in Prague President Vike-Freiberga discussed with Czech Prime Minister Milos Zeman the need for cooperation in seeking EU membership, LETA reported. Zeman spoke about the preparations for the Prague NATO summit in November while Vike-Freiberga invited him to attend the meeting of NATO candidate states in Riga on 5-6 July .

* The head of the European Commission delegation in Latvia, Andrew Rasbash, told a press conference devoted to the opening of European Week on 3 May that Latvians have four reasons to vote for EU membership, BNS reported. They include increased national and European security, economic benefits, guarantees for development, and the opportunity to participate in decision making in European matters. He urged Prime Minister Andris Berzins to convince Latvia's residents to vote in support of accession to the European Union in a referendum.

* Russian Foreign Ministry official Aleksandr Yakovenko distributed a statement on 6 May which condemned the adoption of amendments to the Latvian Constitution strengthening the status of Latvian as the state language as a "serious obstacle for improving bilateral relations" between the two countries, LETA reported the next day. It stated that the amendments block any opportunity for one-third of Latvia's residents to use their native language at legislative and executive institutions, even in locations where the Russian-speaking population is a majority. The Latvian Foreign Ministry responded by noting that these Russian claims radically differ from the opinions of the Council of Europe, OSCE, and other international organizations which have stated that the situation in Latvia regarding human rights meets international standards.

* An IMF mission visited Latvia from 29 April to 8 May to evaluate the political and economic situation in the country and the implementation of the Latvian-IMF economic cooperation memorandum, LETA reported. On 6 May it held separate meetings with International Financial Affairs Minister Roberts Zile and Finance Minister Gundars Berzins. It noted that Latvia had one of the best economic performances among EU candidate countries last year and the first quarter of this year, but consider the planned 2002 budget deficit of 2.45 percent of gross domestic product (GDP) too high. Prime Minister Andris Berzins met with the mission on 8 May.

* Prime Minister Andris Berzins stated on 6 May that even though the costs of joining the EU and NATO are high the cabinet will not seek to increase the planned budget deficit of 140 million lats ($226 million) or 2.45 percent of GDP, BNS reported. He noted that about two-thirds of the deficit results from investments and spending for infrastructure, and not consumption.

* Foreign Minister Indulis Berzins noted in a discussion in an Internet portal on 6 May that EU member countries pay 1.27 percent of their (GDP) a year into the EU budget, BNS reported. After Latvia joins the EU, it would have to contribute about 60 million lats ($97 million) a year, he estimated.

* Prime Minister Andris Berzins said that the validity of the country's privatization certificates or vouchers may have to be extended beyond the current expiration date of 31 December if all of the certificates are not used up, BNS reported on 7 May. He noted that even though he had always opposed the issuance of the vouchers, the state must keep its promise to allow the people having them to participate in the privatization process.

* Latvia's food and veterinary service banned the import of beef from Poland on 7 May after a case of mad cow disease was confirmed, BNS reported. It also forbade the import of sheep, goats, and cattle as well as their carcasses along with fodder containing animal protein. During the first four months of the year Latvia had imported 173 tons of beef from Poland.

* President Vaira Vike-Freiberga signed an order on 6 May establishing the Presidential Military Council to advise her on defense matters. BNS reported. The council will consist of the National Armed Forces commander, the commanders of its branches, and the Defense Ministry state secretary. The council's by-laws have been submitted to its members for review and the council will have its first meeting in late May.

* The parliament held a special session on 4 May, marking the 12th anniversary of Latvia's Declaration Restoring Independence, LETA reported. Parliament Chairman Janis Straume gave the main speech in which he analyzed the problems in strengthening Latvian as the official state language and in achieving the foreign policy goals of EU and NATO membership.

* U.S. Peace Corps Director for the Baltic states Coralie Turbitt announced on 3 May that the corps will end its mission in Latvia in August after 10 years of operations, LETA reported. In 10 years, 198 volunteers taught English to 22,000 school children, and gave elementary business courses to almost 5,000 people in 67 Latvian cities and towns.

* The Statistics Office announced on 9 May that in April the consumer price index increased by 0.1 percent compared to March and by 2.9 percent compared to April 2001, LETA reported. In April the price for garments, footwear, and medicines rose by 1, 1.4, and 1.6 percent, respectively while the price of food fell by 0.6 percent.

GERMAN CHANCELLOR EXPRESSES HOPE THAT LITHUANIA WILL ACHIEVE NATO GOAL IN PRAGUE.
Gerhard Schroeder told visiting Lithuanian President Valdas Adamkus in Berlin on 3 May that he expects Lithuania to receive an invitation to join NATO at the alliance's summit in Prague in November, BNS reported. He also said Lithuania should be among the countries to receive encouragement from the EU in Copenhagen later this year regarding its candidacy to the union, as "this would be fair and economically grounded." At the 19th International Workshop on Global Security and War on Terrorism the next day, Adamkus said that by bidding to join NATO, Lithuania seeks to recover what it lost because of the partition of Europe almost 60 years ago.

LITHUANIAN TRUCKERS REQUEST INTERNATIONAL HELP AGAINST RUSSIAN SANCTIONS.
Algimantas Kondrusevicius, the president of the Lithuanian National Motor Carriers Association (LINAVA), appealed on 9 May to the Secretary-General of the International Road Union (IRU) Martin Marmy for help in resolving a dispute with Russian customs authorities, ELTA reported. Noting that Russia on 15 May is planning to renew the requirement that all Lithuanian cargo-hauling trucks traveling through Russia have a police escort, he asked Marmy to be a mediator by convening a meeting of Russian and Lithuanian customs officials with representatives of LINAVA, IRU, and the Russian trucking association ASMAP. Kondrusevicius wrote that his organization has done everything in its power to ensure that compensations for violations of international transit-system regulations be paid as quickly as possible when such claims were substantiated by documentation. He also stated that the promises given to Russia by a group of Lithuanian truckers that all Russian claims will be paid were not discussed with LINAVA and have no legal basis.

IMF URGES LITHUANIA TO INTRODUCE REAL ESTATE TAX.
In concluding the work of an International Monetary Fund (IMF) assessment mission that arrived in Lithuania on 25 April, its head, Patricia Alonso-Gamo, held separate talks on 6 May with President Adamkus, Finance Minister Dalia Grybauskaite, and Prime Minister Algirdas Brazauskas, ELTA reported. The IMF officials gave a positive evaluation of the country's macroeconomic performance in the first quarter of the year, the successful transfer of the pegging of the litas from the U.S. dollar to the euro, and other ongoing reforms of the tax system. They recommended that Lithuania should strengthen control over municipal finances and suggested introducing a real estate tax to increase municipal budgets.

VOTE ON CONSTITUTIONAL AMENDMENT POSTPONED.
A meeting of parliamentary faction heads decided on 7 May to postpone the vote on the amendment to Article 119 of the constitution until 21 May, BNS reported. The amendment, which the parliament approved for the first time in January (see "RFE/RL Newsline," 28 January 2002), would extend the term of local council deputies from three to four years and allow noncitizens permanently residing in Lithuania to elect and be elected to local councils. The delay was proposed by the Conservatives and Liberals, who are trying to block the plans of the ruling coalition of Social Democrats and Social Liberals to move up the date of the local elections from March 2003 to December 2002. Some deputies questioned the "rationality" of granting the right to vote not only to EU citizens but all foreigners permanently residing in Lithuania. The parliament also ratified an agreement with Germany, signed in February 2001, on cooperation between their interior ministries in fighting organized crime, terrorism, and other serious crime.

RUSSIA TAKES UP ISSUE OF KALININGRAD VISAS WITH EU DIRECTLY.
Speaking in Vilnius on 3 May, Russian Deputy Foreign Minister Yevgenii Gusarov spoke against the introduction of a visa regime for residents of Kaliningrad Oblast to travel to Lithuania, Interfax reported. Earlier, the Lithuanian government said that, as of mid-2003, it will have to stop granting Kaliningrad residents the right to visa-free travel because of the country's impending membership in the European Union. According to Gusarov, Moscow has sent to Brussels some specific suggestions for resolving this problem, and it still waiting for a reply. "This question depends on the political will of the leadership of the European Union," Gusarov declared.

EU SPONSORS BELARUSIAN-LITHUANIAN BORDER DEMARCATION.
The EU will provide 1.15 million euros ($1.05 million) to Belarus for the demarcation of its border with Lithuania, RFE/RL's Belarusian Service reported on 3 May. The demarcation of the 650-kilometer border is to be completed by September. Lithuania demarcated its side of the mutual border several years ago.

* European Parliament Chairman Patrick Cox told Prime Minister Brazauskas on 3 May that the EU agrees with Lithuania in opposing Russia's proposal to establish a special visa-free transit corridor to Kaliningrad via Lithuania, BNS reported. He said that Lithuania should begin applying Schengen requirements from next year and that the EU and Lithuania will have to find a flexible solution for the visa problem.

* Russian Deputy Foreign Minister Gusarov told reporters in Vilnius on 3 May that Moscow will have no veto right over Lithuania's membership in NATO, BNS reported. He said that the alliance's enlargement is a "mistake" and absolutely unnecessary for combating the most dangerous security challenges including terrorism, organized crime, drugs, arms smuggling, and illegal migration.

* Belgian Deputy Prime Minister and Foreign Minister Louis Michel told Foreign Minister Antanas Valionis in Brussels on 3 May that his country supports Lithuania's membership in the EU and NATO, BNS reported. He noted the active and constructive participation of all candidate countries, including Lithuania, in the work of the Convention on the Future of Europe. Valionis mentioned the need for greater EU assistance to close the nuclear power plant at Ignalina.

* Finnish European Affairs and Foreign Trade Minister Jari Vilen during a one-day working visit to Vilnius on 7 April held talks with Foreign Minister Antanas Valionis, Economy Minister Petras Cesna, and chief EU negotiator Petras Austrevicius, ELTA reported. Responding to complaints that EU proposed agricultural production quotas were too low, he advised stepping up preparations for the use of EU structural funds. Vilen also stressed that the nuclear power plant at Ignalina should be closed by 2009.

* Agriculture Ministers Jaanus Marrandi (Estonia), Atis Slakteris (Latvia), and Jeronimas Kraujelis (Lithuania) after a meeting in Vilnius sent a joint letter to their counterparts in EU member countries on 8 May asking for higher agricultural quotas, BNS reported. The ministers noted that if the proposed quotas are not increased, about one-third of the arable land in their countries would not be cultivated while only about 10 percent of land in EU member countries is left fallow.

* Some 500 enterprises and organizations from 24 countries displayed their products at the 11th agricultural, food, and packaging exhibition AgroBalt-2002, which opened in Vilnius on 7 May, ETA reported.

* Modern Christian Democratic Party Chairman Vytautas Bogusis and Conservatives Deputy Chairman Andrius Kubilius signed an agreement on 6 May on forming a standing cooperation commission, BNS reported. They will cooperate in the upcoming presidential and local elections, but there are no plans now for their merger.

* Lithuanian Energy Marketing Director Edvardas Vazgela, announced on 6 May that the company had exported 324 million kilowatts (kWh) of electricity in April, ELTA reported. More than two-thirds (220 million kWh) was shipped to Russia's Kaliningrad Oblast. The other recipients were Belarus (80 million kWh), Estonia (14.5 million kWh), and Latvia (9.5 million kWh).

* The State Food and Veterinary Service imposed a ban on the import of pork and pork products from France on 3 May, BNS reported. Three days later it imposed a ban on beef from Poland. after a case of mad cow disease was confirmed in a small slaughterhouse in Krinica, located near the Polish-Slovakian border.

* Fredy Opsomer, the head of the Belgian consortium AOI NV, which won a tender for taking over the management of the Kaunas free economic zone three years ago, said on 7 May that construction there should start in the spring of 2003, BNS reported. Lack of land plots was mentioned as the main reason for the delay in construction.

* Parliament European Affairs Committee Chairman Social Democrat Vytenis Andriukaitis told a news conference on 6 April that the parliament should give the government a mandate to negotiate with the European Commission over the closure of the nuclear power plant at Ignalina in the period between 2009 and 2015, ELTA reported. The EU Commission has been demanding that the reactor be closed by 2009.

* Social Liberal parliament deputy Kestutis Kuzmickas resigned on 6 May as the chairman of the Health Affairs Committee because the repeated "attacks by the opposition and the media" made it impossible for him to head the committee, BNS reported. He had been accused of a possible conflict of interest, not returning a large private debt, and hiring his father-in-law as his assistant.

* The Statistics Department reported on 9 May that in April the consumer price index remained unchanged, but was 1.3 percent higher compared to April 2001, ELTA reported. In April transportation and clothing costs increased by 2.6 and 1.2 percent, respectively, but food priced decreased by 1.0 percent.

* The Labor Office announced on 6 May that the unemployment rate in April decreased by 0.8 percent to 11.8 percent, ELTA reported. The unemployment rate in January had increased to 13.1 percent, but subsequently fell for three consecutive months. The office had 206,100 unemployed persons registered on 1 May.