Baltic Report: March 12, 2001

BALTIC STATES, BELARUS, RUSSIA SIGN ENERGY PACT.
The heads of Lithuania's Lietuvos Energija, Latvia's Latvenergo, Estonia's Eesti Energia, Belarus's Belenergo, and Russia's Unified Energy Systems signed a five-party agreement in Vilnius on 7 February on the parallel operation of a common energy system, ELTA reported. The signatories agreed to a Lithuanian request to set up a working group that would add a clause to the agreement stipulating that if one of the parties withdrew from the pact, it would not be liable for any losses that may result from this move. In 1999, Lithuania had refused to sign a similar pact signed by the other four, arguing at the time that it could hinder Lithuania's integration into the Western European energy system. The lack of such an agreement, however, has prevented Lithuania from exporting electricity to Western Europe through Belarus.

BALTIC DEFENSE MINISTERS PLAN JOINT WEAPONS PURCHASES.
Meeting in Tallinn on 13 February, Linas Linkevicius (Lithuania), Girts Valdis Kristovskis (Latvia), and Juri Luik (Estonia) agreed that the three countries should carry out joint arms and equipment purchases to save money, BNS reported. They also declared that they do not regard any one of their countries as being more prepared for NATO membership than the other two. Kristovskis added that it would be best if all three Baltic states received the invitation to join NATO simultaneously.

ROGOZIN CALLS FOR NEW RUSSIAN APPROACH TO ESTONIA.
Russian Duma International Relations Committee chairman Dmitrii Rogozin told "Postimees" that Russia needs a new and more consistent policy toward Estonia, BNS reported on 15 February. Estonia is a sovereign state which has the right to decide whether it will join NATO or not, he told the paper, but he suggested that it is more important for Estonia to join the EU than NATO. The following day, Rogozin said that Estonia's accession to NATO would ruin its relations with Russia, BNS reported. On the advice of Russia's Tallinn embassy, he dropped from his prepared speech a list of military steps Russia might take against Estonia if it did join the Western alliance. But he did list sites that might be targeted and economic penalties that might be imposed.

PRIME MINISTER REJECTS CALL TO RESIGN.
At a press conference on 12 February, Mart Laar admitted that he may have shot at the picture of Center Party Chairman Edgar Savisaar at the Nursi military base in May 1999, ETA reported. He said that he feels very ashamed about the incident but will not resign as some opposition parties have demanded. The scandal arose on 7 February when the Center Party paper "Kesknadal" published an article on the incident and former Vorumaa county Governor Robert Lepikson confirmed its accuracy. President Lennart Meri has ordered Defense Forces Commander Rear Admiral Tarmo Kouts to investigate the matter. "Postimees" and "Aripaev" have also called on Laar to resign because the scandal had been reported by international news agencies and major Finnish newspapers.

FOREIGN MINISTER VISITS GERMANY.
Toomas Hendrik Ilves was assured by his German counterpart Joschka Fischer in Berlin on 5 February that Germany supports the expansion of the European Union at as early a date as possible, BNS reported. The foreign ministers praised the results of the Nice summit on EU expansion and endorsed Estonia's plans to close several chapters of the EU membership negotiations in the first half of this year. In a speech at Humboldt University, Ilves expressed support for an EU with a two-chamber parliament which would guarantee that small states would be strongly represented in major issues. He also called for the election of an EU president who would have to be approved by at least half of the member states.

BELGIAN PRIME MINISTER SEES ESTONIA AMONG FIRST EU ENTRANTS.
On an official one-day visit to Tallinn on 14 February, Guy Verhofstadt told his Estonian counterpart Mart Laar that Estonia has made great progress and would certainly be among the first new EU entrants, BNS reported. Belgium will take over the six-month chairmanship of the EU from Sweden in the second half of this year. Verhofstadt said that he expects Estonia will close several more negotiating chapters in its EU membership talks during this chairmanship. He also had meetings with President Lennart Meri and Foreign Minister Ilves. And he told reporters that he agrees with the opinions about the future of the EU that Ilves had expressed on 5 February in a speech at Berlin's Humboldt University.

CALL FOR SPEEDY REFERENDUM ON EU MEMBERSHIP.
The board of the Pro Patria Union on 17 February decided to call for holding the referendum on Estonia's joining the European Union before and not after the signing of the accession agreement, ETA reported on 19 February. The proposal's author, Mart Nutt, explained that since the Estonian Constitution does not foresee referenda concerning international agreements, the government should learn the public's opinion before signing it. The board suggested that the referendum be held on 28 June 2002, the 10th anniversary of the referendum on the constitution. Prime Minister Mart Laar met with members of the parliament's European Affairs Committee on 19 February who agreed that the committee should be responsible for initiating the referendum.

NATO OFFICIALS VISIT ESTONIA.
NATO Assistant Secretary-General Klaus-Peter Klaiber led a delegation of NATO officials that on 8 and 9 February checked the implementation of Estonia's annual national plan and individual partnership program, BNS reported. Klaiber held talks with Foreign Minister Ilves, Defense Minister Juri Luik, Defense Forces Commander Rear Admiral Tarmo Kouts, and Bank of Estonia representatives. Klaiber praised Estonia's plans to raise defense spending to 2 percent of gross domestic product and its endorsement of a security concept last year, but noted the need to promote good relations with Russia and invest more in human resources.

RENOVATION BIDS FOR POWER STATIONS REJECTED.
A joint committee of Narva power stations decided on 6 February to reject the three bids submitted for the renovation of the stations' two 200 megawatt energy blocks because they were considerably more expensive than originally planned in the budget and urged the companies in question to submit new bids, ETA reported. The cost of the renovation was estimated at 3.9 billion kroons ($230 million), but the bids by interested Finnish, U.S., and German companies ranged between 4.6-5.6 billion kroons. The Narva power stations, operated by the energy monopoly Eesti Energia, will be sold later this year to the U.S. energy firm NRG Energy. The renovation should make the oil shale-based power stations more environment-friendly and more effective, reducing oil shale requirements by 800,000 tons or 8 percent a year. The renovation will also cut the expulsion of sulfur into the atmosphere to nearly zero. On 16 February a new round of bidding was declared with the deadline for submitting bids set for 21 March, ETA reported. The three bidders in the first round said that they also would consider participating in the new bidding.

HARSHER PENALTIES INTRODUCED FOR DRUG CRIMES.
By a unanimous vote of 75 votes, the Estonian Parliament on 8 February introduced significantly harsher punishments for drug crimes with special emphasis on drug dealers rather than users in an attempt to cut down on the import of and trade in narcotics, ETA reported the next day. Prison sentences for the production of narcotics were more than doubled in some cases (from two to five years and from three to seven) and a totally new article concerning the smuggling of drugs into prisons was passed. Police now detain only 5 percent of drug dealers and addicts, while the number of drug-related crimes is growing fast. The number of drug-related crimes in Narva grew from 32 in 1999 to 665 in 2000 while in Tallinn their number in the same period grew by more than five times.

PRESIDENT NAMES LEGAL CHANCELLOR CANDIDATE.
Lennart Meri on 13 February sent a letter to parliament chairman Toomas Savi informing him that he is officially nominating Tallinn district judge Allar Joks as his candidate for the post of legal chancellor, ETA reported. Meri made the decision after consultations with representatives of all the parties in the parliament indicated that Joks would receive the necessary support. The post of legal chancellor, Estonia's highest independent authority, who judges whether laws passed by the parliament or local municipalities conform with the constitution, has been vacant since June, when Eerik-Juhan Truuvali ended his seven-year term. The parliament has rejected a number of candidates whom Meri has proposed.

* The Statistical Office announced that the consumer price index increased by 1.3 percent last month and by 5.8 percent compared to January 2000, BNS reported. In January, the price of goods rose by 0.4 percent (the cost of food increased by 1 percent while that of manufactured goods fell by 0.3 percent) and of services by 3 percent. Beginning in January 2001, the Statistical Office changed how it calculates the price index by adding 39 new goods and services to the list of items in the price index, thereby raising their number from 470 to 509.

* The Tallinn administrative court on 14 February rejected the appeal by the Estonian Privatization Agency to annul its decree suspending the privatization of the state owned railway Eesti Raudtee (Estonian Railway), ETA reported. The court let stand its January decision suspending the privatization until it can rule on the protest by the Railway Privatization People's Company against the sale of the 66 percent share of the railroad to Rail Estonia.

* The Environmental Inspectorate has launched a satellite monitoring system to keep track of Estonian vessels fishing in foreign waters, BNS reported on 5 February. The new system allows Estonia to comply with EU and North Atlantic Fishing Organization demands to enable the gathering information on possible violations of fishing regulations by Estonian vessels in their waters. The equipment needed to ensure cooperation with the system has been installed so far in 16 of the estimated 40 ships that will be required to have it.

* Andrus Viirg, the head of the World Bank office in Tallinn, said on 7 February that there are plans to close the office by 1 July when the loan for reconstructing the Tallinn-Tartu-Luhamaa highway will be the only uncompleted project supported by the bank, BNS reported. As part of its program to concentrate more on developing countries in Africa and Asia, the World Bank is reducing its activities in Eastern Europe and the Estonian office will be the one to be closed.

* The Labor Market Department announced on 14 February that 57,500 jobless or 6.6 percent of the population from 16 to pension age were looking for work through state employment agencies in January, BNS reported. This was 11.9 percent greater than in December and 22 percent more than in January 2000. Women made up 56.6 percent, young people up to age 25 -- 17.0 percent, and people aged 50 and above -- 18.4 percent of all the registered job seekers.

* The police in Tallinn registered 2,427 crimes in January, 702 more than in January 2000, ETA reported on 14 February. The greatest increase was in drug-related crimes which increased by 20.3 times. Vandalism grew by 124 percent, street crime by 26 percent, and thefts by 23.8 percent.

* On 12 February Estonia and Belarus signed a railroad transport agreement in Minsk which will coordinate direct cargo and passenger transport connections and joint usage of rolling stock between the two states, ETA reported. It will reduce formalities in railway border crossing procedures and speed up the movement of goods.

NATO OFFICIAL SAYS RUSSIAN OPPOSITION WILL NOT AFFECT EXPANSION.
Concluding a three-day visit to Riga to assess Latvia's preparations for joining the alliance, the NATO secretary-general's second assistant for security issues, Holger Pfeiffer, said on 16 February that Russia's critical position toward NATO enlargement would not affect the admission of new members, BNS reported. He asserted that NATO member countries will make the decision on expansion using objective criteria and Russia's attitude will not play a crucial role. This was clearly shown by the admission of the Czech Republic, Poland, and Hungary into NATO despite Russia's expressed opposition.

BALTIC PRIME MINISTERS MEET IN RIGA.
Prime Ministers Andris Berzins (Latvia), Rolandas Paksas (Lithuania), and Mart Laar (Estonia) attended the Baltic Council of Ministers meeting in Riga on 9 February, BNS reported. Talks centered on the Baltic states' progress in joining the EU and NATO and reiterated the need for Baltic unity in these efforts, The premiers also talked about the common interests in the spheres of energy, transport, environmental protection, and the free movement of people. In separate talks, Berzins told Paksas that the Latvian parliament's delay in ratifying the sea border treaty between their states could be overcome by the signing an agreement that will allow Latvian fishermen to continue fishing in accustomed fishing sites.

LATVIA, IMF AGREE ON BUDGET DEFICIT.
During talks with Finance Minister Gundars Berzins in Riga on 7 February, an IMF mission agreed that the maximum deficit in Latvia's state budget will be 1.75 percent, BNS reported. The IMF agreed that funds raised from the sale of the third mobile communications operator's license would not have to be used to cover the national debt and reduce the budget deficit as it had initially wanted, but could be used for investment projects which have clear and transparent plans. No agreement was reached on pension law amendments. The IMF had proposed that Latvia lift the restrictions limiting the monthly pensions received by employed pensioners to 60 lats ($97), raise the retirement age, and make some other changes, but Berzins opposed making any more amendments, noting that the public has already lost confidence in pension reforms. After meeting with Prime Minister Andris Berzins on 8 February, the mission said that no more problems remained and Latvia and the IMF could approve a new cooperation memorandum in April.

FINNISH PRIME MINISTER VISITS LATVIA.
Paavo Lipponen and his Latvian counterpart Andris Berzins discussed bilateral relations, international affairs, and Latvia's efforts to gain membership in the EU, while in Riga on 5 February, LETA reported. The prime ministers also talked about cooperation in internal affairs, justice, language instruction, and in the investments of Finnish companies in Latvia. Lipponen said that Finland believes that every country has the right to choose its own security solutions and supports "the open door" principle adopted by NATO. In a subsequent meeting with President Vaira Vike-Freiberga, he discussed these topics and inquired about the ongoing historical research. Vike-Freiberga noted that in June, on the 60th anniversary of the mass deportations of Latvians to Siberia, a commission of Latvian historians intends to hold a conference on the consequences of the Soviet regime.

LAWMAKERS MEET POLISH COUNTERPARTS.
In talks in Riga on 12 February with the Latvian parliament's Foreign Affairs and European Affairs committees, Polish parliament Vice Marshal Jan Krul said that the two countries should take a strong joint position in regard to the EU's requirements that free economic zones be liquidated, BNS reported. Because the abolition of the zones will have a negative effect on investments, the two countries should ask for transition periods that would give them a chance to strengthen their economies. Krul also discussed possibilities for the further development of bilateral relations between Latvia and Poland, the need for a joint policy in EU membership talks, as well as relations with Russia in the context of NATO enlargement. European Affairs Committee Chairman Edvins Inkens noted that Poland's admission to NATO to a certain extent paved the way for the Baltic states to also join the organization.

CLOSER COOPERATION WITH KAZAKHSTAN SET.
Kazakh Parliament Chairman Zharmakhan Tuyaqbaev told the Latvian parliament on 15 February that he supported Latvia's drive for EU membership as it would further increase the potential for intergovernmental cooperation, LETA reported. He called for greater cooperation in the fields of transit and transport and the signing of a bilateral agreement on protection of investments, a convention on prevention of double taxation, and documents on cooperation in the humanitarian field. President Vaira Vike-Freiberga told Tuyaqbaev that the "restoration of the historical Silk Road" by forming trade relations between the Far East and Baltic countries would be advantageous to both countries. Foreign Minister Indulis Berzins informed him about Latvia's current presidency of the Council of Europe as well as Latvia's experience in joining the World Trade Organization.

RIGA TO DONATE PETER THE GREAT MONUMENT TO ST. PETERSBURG.
Riga Mayor Andris Argalis said on 14 February that he believes that St. Petersburg will accept the restored monument of Czar Peter the Great that the Riga city council had decided the previous day to donate to it, BNS and LETA reported. The monument had been originally unveiled in Riga in 1910 but was dismantled in 1915. The ship which was transporting it to St. Petersburg was sunk by a German submarine and it spent almost 20 years at the bottom of the sea before being retrieved by Estonian divers in 1934 and bought by the Riga City Council. Last year the private firm "Teikas nami Ltd." agreed to finance the monument's restoration, which was carried out by restorers from St. Petersburg's Russian Museum. Argalis said that during public discussion about where in Riga the monument should be placed, the responsible committee had received "stacks of letters" saying Riga does not need such a monument. The city council's decision to donate the monument was a gesture of good will from one city to another prompted by the recent meeting of the Latvian and Russian presidents in Austria.

MOSCOW CRITICIZES WAR CRIME SENTENCE.
The Russian Foreign Ministry released a statement to Interfax on 12 February saying that Moscow is displeased that a Latvian court had reconfirmed the conviction of Yevgenii Savenko, 87, for genocide during World War II even though a Riga court had released him. "Such an approach," the Foreign Ministry said, "creates obstacles on the path to improving Russian-Latvian relations." Meanwhile, Latvian President Vaira Vike-Freiberga said in response to questioning on ORT television that Latvia seeks "to have an open democratic society where the rule of law is equal for all and where there are no privileged citizens."

'NEW FACTION' QUITS GOVERNMENT.
Ingrida Udre, the head of the New Faction, announced on 5 February that the faction will no longer participate in the ruling coalition because the government is not observing its earlier commitment, LETA reported. Udre pointed out that restrictions to the pension law have not been revoked and promises pertaining to real estate taxes remain unfulfilled. She said that the faction was dissatisfied with the work of the finance, education, and state administration reform ministers. Even after the departure of the New Faction, the ruling coalition will still have the support of 64 of the 100 members in parliament.

* The Central Statistics Office announced on 17 February that last year both imports and exports rose by 12.2 percent over 1999, BNS reported. Exports increased by 123 million lats ($198 million) to 1.131 billion lats and imports by 210 million lats to 1.934 billion lats. The leading export products were timber and timber products (37.4 percent), textiles (14 percent), metals and metalwork (13.4 percent), and chemical products (6.4 percent). The major import products were machinery and electric equipment (20.7 percent), mineral products (12.9 percent), chemical industry products (10.6 percent), and metals and metalwork (8.4 percent). Exports of food and agricultural products rose by 1.4 million lats or 2.1 percent, while imports fell by 0.5 million lats or 0.4 percent.

* The Central Statistics Office announced that the consumer price index increased by 0.6 percent last month and by 1.3 percent compared to January 2000, BNS reported on 8 February. In January the price of goods rose by 0.6 percent and of services by 0.7 percent. Food prices increased by 1.7 percent with the costs of vegetables, fruits, meat, and dairy products rising by 9.8, 5.3, 2.4, and 1.2 percent, respectively. The costs of water supply, sewerage, and postal services increased by 4.9, 5.3, and 25 percent, respectively. The prices of garments and footwear, fuel, and used automobiles fell by 0.9, 1.5, and 1.9 percent, respectively.

* Iveta Dievberna from the AIDS Prevention Center announced on 6 February that in January 64 new cases of HIV infection were registered, raising the official count of HIV infected persons in Latvia to 1,022, BNS and LETA reported. Of the new registrations, about 10 of them are underaged and two are intravenous drug addicts under 15. Experts estimate that the true number of HIV infected persons is at least three times higher than the officially registered total. Statistics from the AIDS center indicate that about 70 percent of the HIV carriers are intravenous drug addicts and about 10 percent were infected through homosexual contacts. More than three-fourths (788) of the HIV infected were registered in Riga with smaller numbers in Ventspils (53 cases), Jurmala (43), and Kuldiga (23).

* Concluding a three-day visit to Moscow, a delegation of parliament deputies of the For Human Rights in a United Latvia, headed by its chairman, Janis Jurkans, on 16 February discussed with Russian Prime Minister Mikhail Kasyanov relations between their countries, the situation of the Russian-speaking minority in Latvia, and the importance of trade and economic cooperation, LETA reported. During the visit the delegation also met with Russian Duma deputies, Deputy Foreign Minister Aleksandr Avdeyev, and Moscow city officials.

* The Baltic subsidiary of the Russian oil concern LUKoil signed an agreement with the oil transit company "Latvijas naftas tranzits" providing for the shipment of 2.5 million tons of crude oil in 2001 through the Ventspils oil terminal, LETA reported on 12 February. The agreement does not bar LUKoil from shipping more oil through the terminal and the export of oil and oil products from the port in January was 1.7 million tons or 0.2 million tons more than in January 2000.

* Ambassador Georgs Andrejevs handed Latvia's ratification of the Criminal Law Convention on Corruption to Council of Europe Secretary-General Walter Schwimmer on 9 February, BNS reported. The convention covers a wide range of corrupt activities in both domestic and international sectors and provides for enhanced international cooperation (mutual assistance, extradition, and the provision of information) in the investigation and prosecution of corruption offenses.

* The National Administration in January granted citizenship through naturalization to 1,049 persons, LETA reported on 13 February. Some 68 percent of the applicants in January were Russians, 10 percent Belarusians, and 8 percent Ukrainians. Since 1995 the office has received 41,728 applications and granted Latvian citizenship to 39,808, including 5,298 children.

* The Transport Ministry announced on 15 February that the cargo turnover in the republic's 10 ports in January was 4.26 million tons, 4 percent greater than in the same period in 2001, BNS reported.

* The Foreign Ministry announced on 15 February that the republic had concluded paying the annual membership fees of slightly more than $600,000 for the United Nations this year and settled its debt for $440,000 to the peacekeeping forces budget, BNS reported.

ECONOMY MINISTER REPLACED.
At a meeting of the board of the Liberal Union on 5 February, Eugenijus Maldeikis declared that he was resigning in order to ensure the stability of the cabinet's activities and for personal reasons, "Lietuvos Rytas" reported the next day. The announcement was unexpected as earlier that day, Prime Minister Rolandas Paksas, without waiting for the State Security Department report on Maldeikis's visit to Moscow in January, had declared that he would not ask him to resign. Maldeikis took an unpaid vacation until President Valdas Adamkus returned from holiday in Mexico and accepted his resignation. On 15 February, Adamkus signed a decree appointing Klaipeda Mayor Eugenijus Gentvilas as the new economy minister, ELTA reported. Gentvilas, who is the deputy chairman of the Liberal Union, will take over the ministry only on 2 March since the Klaipeda City Council, which has to accept his resignation as mayor, has its next scheduled meeting on 1 March.

COURT FINDS GIMZAUSKAS GUILTY OF GENOCIDE.
The Vilnius District Court on 14 February found Kazys Gimzauskas guilty of genocide against Jews during the Nazi occupation, but taking into account that the 93-year-old, terminally-ill defendant suffers from incurable mental disorders, released him into the care of family and medics, BNS reported. Gimzauskas, who had served as the deputy director of the Security Police in Vilnius, had been charged with collaboration with the Nazis in executing five Jews, but the court found him guilty of signing orders to hand over three of them to the Nazi security police. Israel's director of the Simon Wiesenthal Center, Efraim Zuroff, said that the conviction "while a positive step, clearly underscores Lithuania's reluctance to prosecute Lithuanian Nazi war criminals who could actually be punished for their crimes."

DEPUTY FOREIGN MINISTER HOLDS TALKS WITH KALININGRAD AND MOSCOW.
During talks in Vilnius on 6 February, Evaldas Ignatavicius and Kaliningrad Vice Governor Mikhail Tsikel discussed bilateral cooperation plans in the areas of energy production, economics, transport, and environmental protection, BNS reported. They also talked about implementing joint projects with Poland. Tsikel noted that the tax privileges enjoyed by the special economic zone in the Kaliningrad region, which had been abrogated by the Russian High Customs Committee, have been restored following a visit to Moscow by Kaliningrad Governor Vladimir Yegorov at the end of January. On 8 February, Ignatavicius traveled to Moscow and discussed with his Russian counterpart Aleksandr Avdeyev bilateral relations and how to retain mutual trade and economic relations after Lithuania enters the European Union. They also talked about the planned visit to the Kremlin of President Adamkus, which had originally been planned for 1999, but had been postponed due to President Boris Yeltsin's health. Avdeyev said that the government would urge the Duma to ratify the signed -- but not yet ratified -- border treaty before the visit. The deputy ministers also spoke about agreements on rail transportation, navigation on the shared Kuronian Lagoon, the exchanges of prisoners, and other matters which could be agreed to during the visit. Ignatavicius also delivered an invitation from Foreign Minister Antanas Valionis to his Russian counterpart, Igor Ivanov, to visit Lithuania. The next day Ignatavicius flew to Kaliningrad where he addressed the conference "Russia, the Kaliningrad Region, and the Baltic Sea Region: an Invitation to Closer Cooperation." He also met with Kaliningrad Governor Vladimir Yegorov, Kaliningrad Mayor Yuri Savenko, foreign diplomats, and representatives of the Lithuanian community in Kaliningrad.

DEFENSE COOPERATION AGREEMENT WITH GEORGIA SIGNED.
Defense Ministers David Tevzadze and Linas Linkevicius signed a cooperation agreement between their ministries on 8 February in Vilnius, ELTA reported. The two ministries will exchange information on defense budget planning, the training of peacekeepers, and relations between civilians and the armed forces. Lithuania will help Tbilisi speed up the withdrawal of Russian troops from four military bases in Georgia by providing information accumulated during the withdrawal of Russian troops from Lithuania by September 1993. In the agreement, Georgia expressed support for Lithuania's efforts to gain NATO membership. The ministers noted that this was the first agreement between their defense ministries and expressed the hope for closer cooperation in the future.

PROBLEMS IN IMPORTING OIL FROM KAZAKHSTAN.
Ambassador Virgilijus Bulovas said in Almaty on 15 February that Lithuania is encountering unspecified problems in importing oil from Kazakhstan via Russia, Interfax reported. He said Vilnius hopes to resolve those problems by means of a trilateral accord currently under discussion. Bulovas repeated that Lithuania wants to import a total of 1 million tons of Kazakh crude in 2001. Under a three-year agreement signed last summer, Lithuania's Mazeikiai Oil was to receive 70,000 tons of crude per month, beginning in September 2000 , but virtually no oil was shipped last year. Bulovas said he hopes shipments will begin in March 2001.

KAUNAS CITY COUNCIL ELECTS NEW MAYOR.
The Kaunas City Council on 9 February, by a vote of 25 to 14, elected Social Liberal Erikas Tamasauskas over Conservative Ramunas Garbaravicius as the city's mayor, ELTA reported. Tamasauskas is the third mayor since the municipal elections in March 2000. The first mayor, Freedom Union Chairman Vytautas Sustauskas, resigned after being elected to the Lithuanian parliament. He was succeeded by fellow party member Gediminas Budnikas, who had formed an alliance with the Conservatives. The coalition, however, was not successful and Budnikas resigned as mayor. He has now been elected first deputy mayor.

CONSUMER PRICES FALL IN JANUARY.
The Statistics Department announced on 12 February that the consumer price index declined by 0.2 percent last month and by 0.3 percent compared to January 2000, BNS reported. This was mostly influenced by falls in the price of diesel fuel (10.8 percent), gasoline (10 percent), liquified gas (6.7 percent), and the reduction of the value added tax on residential heating from 18 to 9 percent. Prices of beverages and tobacco declined in January by 0.4 percent, clothing and footwear by 0.3 percent, while the costs of communications rose by 6.3 percent, and foodstuffs and soft drinks by 0.5 percent.

LITHUANIAN RAILWAYS NEAR BANKRUPTCY.
A meeting of representatives of the transport and finance ministries and the state-run company Lietuvos Gelezinkeliai (Lithuanian Railways) concluded that the company might have to file for bankruptcy as it is unable to repay loans of 320 million litas ($80 million) taken from international financial institutions for infrastructure and development, BNS reported on 13 February. The meeting concluded that the loans should be acknowledged as a state debt and be repaid from the state budget. Lithuanian Railways suffered a loss of 95 million litas last year because the state did not grant sufficient subsidies for passenger transportation. The company also lost 12 million litas due to an unprofitable agreement -- which was imposed on it -- with the refinery Mazeikiai Oil, currently run by the U.S. company Williams International.

* Defense Minister Linas Linkevicius and his Polish counterpart Bronislaw Komorowski signed a defense cooperation treaty in Vilnius on 5 February, BNS reported. The treaty replaces the 1993 interjurisdictional agreement between the two defense ministries and reflects the new situation of Poland being a member of NATO, which continues to actively support Lithuania's efforts to join the alliance. Poland will continue to train Lithuanian army specialists at its bases. The joint LITPOLBAT battalion remains the major project in defense cooperation serving in international peace and security-keeping operations.

* In talks in Vilnius with his Lithuanian counterpart Rolandas Paksas and with President Valdas Adamkus on 15 February, Belgian Premier Guy Verhofstadt praised Lithuania's progress in the negotiations for EU membership, asserting that he is confident that it would catch up with other candidates, BNS reported. He noted, however, that Lithuania will have to introduce mandatory driver liability insurance and change the article in the Lithuanian Constitution forbidding foreigners to buy land.

* Kaliningrad and Kaunas mayors Yuri Savenko and Gediminas Budnikas signed a cooperation agreement between their cities on 8 February in Kaliningrad which could act as a springboard for a new phase of mutual contacts, ELTA reported. The cities plan to strengthen business ties, exchange experience in social and environmental spheres, develop science and culture, as well as establish joint ventures, and exchange information on customs and tax issues.

* Swedish Supreme Court Chairman and Judge Torkel Gregow and Severin Blomstrand on 9 February informed Parliament Chairman Arturas Paulauskas about Swedish experience in harmonizing national laws with EU legislation, ELTA reported. Gregow claimed that Sweden was in a similar situation some 5-7 years ago and thus could provide help in the formulation of laws which will be important for the national economy and EU entrance talks.

* Education and Science Deputy Minister Vaiva Vebraite told the Lithuanian-Polish governmental cooperation council meeting in Vilnius on 5 February that good conditions for Polish-language education had been created, BNS reported. She noted that new textbooks of Polish language for grades 1 to 12 had been published and that the boards of the individual Polish-language schools will decide if their pupils will have to take a compulsory examination of Polish as a native language. Moreover, Polish is described as a foreign language in this year's education plans and can be chosen as an elective subject in Lithuanian-language schools.

* Aided by Credit Suisse First Boston and ABN Amro, the Finance Ministry on 13 February successfully distributed a 200 million euros ($185 million) seven-year issue of eurobonds on international capital markets, BNS reported the next day. Finance Minister Jonas Lionginas noted that the annual yield on the bonds was 6.625 percent, or 1.125 percent lower than on the five-year eurobonds distributed last year and was the lowest rate the state had ever paid on international markets. Western investors confidence in Lithuania was shown by demand for the bonds -- which exceeded supply by 2.5 times.

* Mazeikiai Oil refined 554,400 tons of crude oil and other raw materials in January or 25.5 percent more than in same period last year, BNS reported on 6 February. In the same period its Birzai-based pipeline branch transported 2.293 million tons of oil to the export terminals at Ventspils, Latvia and Butinge as well as the refinery in Mazeikiai, or 11.5 percent more than in January 2000.

* The Finance Ministry announced on 13 February that the national budget (state and municipal) in January collected 696.1 million litas ($174.025 million) in revenues, or 14.7 percent more than forecast, BNS reported. The revenues from income, real estate, excise, and value added taxes exceeded plans and were also greater than those collected in January 2000.