Baltic Report: February 10, 2004

NOTE TO READERS:
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FRANCE RATIFIES NATO ACCESSION PROTOCOLS; ENLARGEMENT CAN PROCEED.
The French parliament's lower chamber, the National Assembly, ratified the NATO accession protocols of seven Eastern and Central European countries, including the three Baltic states, on 30 January, BNS reported. Representatives of the Communist Party ignored the parliamentary debates and did not participate in the ballot. The upper chamber, the Senate, ratified the protocols on 5 February, AP and BNS reported the following day. France was the last of the NATO members to finish the ratification process. This clears the way for the candidates themselves to ratify the accession protocols. The seven candidates -- Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia -- may become full members by early April when the foreign ministers of the NATO members meet in Brussels. The original schedule had called for admission during the NATO summit scheduled for Istanbul on 26-28 June.

REPRESENTATIVES OF BALTIC PARLIAMENTARY FOREIGN-AFFAIRS COMMITTEES MEET IN TALLINN.
Delegations from the Latvian and Lithuanian parliamentary foreign-affairs committees, headed by Inese Vaidere and Gediminas Kirkilas, respectively, held talks with their Estonian counterparts in Tallinn on 19 January, BNS reported. The lawmakers primarily discussed the elections to the European Parliament, Baltic cooperation following the three states' accession to the EU in May, and relations with Russia. The Latvian and Lithuanian deputies asked Estonian European Commission candidate Siim Kallas (see "RFE/RL Newsline," 16 January 2004) how he foresees his work in the commission. They also met with Estonian parliament speaker Ene Ergma, Foreign Minister Kristiina Ojuland, and members of the parliament's National Defense Committee.

* The Foreign Committee of the European Parliament (EP) approved on 21 January the final draft of a resolution demanding that Russia immediately ratify border treaties with Latvia and Estonia, BNS reported the next day. The resolution, which should be adopted by the EP in Strasbourg in February, also urges the EP members to dismiss as unacceptable Russia's wish to set its own conditions for extending the EU-Russia partnership and cooperation agreement to new members of the EU. The Russians have proposed 14 conditions which the new EU members must meet before accession.

* The Baltic Assembly agreed on the need to join the EU's new neighbor policy and promote the development of democracy in neighboring countries to the east at a discussion in Riga on 23 January, BNS reported. They also discussed cooperation of the Baltic states in the EU, noting that the parliaments, governments, and the public of the three countries should coordinate their basic positions in the EU talks.

ESTONIAN PARLIAMENT RATIFIES EU-ACCESSION TREATY.
Parliament on 21 January ratified the EU's Treaty of Accession by a unanimous vote of 77 deputies, BNS reported. President Arnold Ruutel and Foreign Minister Kristiina Ojuland signed the treaty in Athens last April. All current EU members and the 10 candidate countries must ratify the treaty by 30 April. Prime Minister Juhan Parts told a 21 January meeting of ministers and parliamentary deputies from coalition parties that parliament must still pass some 20 laws before the country can join the EU on 1 May, LETA reported on 22 January.

REFORM PARTY CALLS FOR NEW ESTONIAN CONSTITUTION.
The full board of the Reform Party decided at its meeting in the southwestern city of Parnu on 24 January to urge its parliament deputies to initiate a bill on establishing a national body for drafting a new constitution, BNS reported. Mart Rask, the head of the constitutional working group in the party's program committee, noted that Estonia's entry into the EU will require some changes to the constitution. For example, the constitution states that the Bank of Estonia is the issuer of the national currency, the kroon, but Estonia is planning to adopt the common currency of the European Union, the euro. Rask said it would take several years to prepare a new constitution, which would have to be approved in a referendum. Parliament Constitutional Committee Deputy Chairwoman Siiri Oviir of the opposition Center Party said there is no need for a new constitution, adding that the Reform Party is only making such a proposal to attract attention.

RUSSIAN CITIZENS IN ESTONIA SEEK MORE POLLING STATIONS FOR RUSSIAN PRESIDENTIAL ELECTION.
Narva Union of Russian Citizens Chairman Yurii Mishin said on 22 January that he has delivered a letter to the office of Russian President Vladimir Putin requesting his assistance in opening more polling stations in Estonia for the Russian presidential elections in March, BNS reported. Mishin criticized the Estonian authorities for not providing alternative premises for Russian polling stations for the Duma elections in December 2003, thus limiting them to the Russian Embassy and consulates. The letter, signed by 300 residents of the northeastern cities of Narva and Sillamae, claimed that hundreds of Russian citizens were forced to stand in line in freezing temperatures while waiting to vote in the elections. The turnout in Estonia for the Russian Duma elections was low, with only 15.5 percent of the 105,000 eligible voters participating (see "RFE/RL Newsline," 9 December 2003).

PRIME MINISTER SAYS FINLAND'S POSITION ON FREE MOVEMENT OF LABOR IS UNDERSTANDABLE.
Juhan Parts told his Finnish counterpart Matti Vanhanen in Helsinki on 26 January that Finland's position that the 10 EU candidate countries should only be allowed free movement of labor two years after admission is understandable, BNS reported. Parts also said it would not be advantageous for Finnish firms to transfer their operations to Estonia because labor costs in Estonia are also increasing. Vanhanen told a press conference following the meeting that Finland supports Estonia joining the eurozone as soon as possible. Parts was scheduled to meet on 27 January with President Tarja Halonen and parliament speaker and former Prime Minister Paavo Lipponen before returning home.

COALITION PARTIES DIVIDED OVER EDUCATION REFORM.
Education Minister Toivo Maimets of Res Publica on 27 January presented a new scheme to parliament for financing schools, LETA reported on 28 January. He proposed using a school-voucher scheme to improve the quality of education in schools. Under Maimets' plan, state funding would be allocated for individual pupils through vouchers that could be used at the school of their choice. The current system largely bases state and municipal funding for schools on their total enrollment, with individual municipalities providing additional funding on their own. The Reform Party expressed support for the reform, but the People's Union opposed it, arguing that it would lead to the closure of rural schools.

RUSSIA ANNOUNCES TEMPORARY CLOSURE OF BORDER CROSSING.
A Russian border representative on 20 January informed the Estonian Border Guard that the border checkpoint on the Ivangorod side of the Narva-Ivangorod pedestrian bridge will be closed temporarily as of 23 January, BNS reported. The Russian Military Prosecutor's Office ordered the checkpoint closed because it does not conform to Russian law. Estonian border officials called for a postponement of the decision, arguing that it will place an extra burden on its own checkpoint on the Narva highway, resulting in delays for the thousands of inhabitants who travel between the two cities every day.

CENTER PARTY SEEKS TO EASE NATURALIZATION REQUIREMENTS.
The opposition Center Party parliament faction on 29 January presented amendments to the citizenship law proposing that applicants for citizenship who were born prior to 1939 be exempted from requirements that they exhibit proficiency in the Estonian language, BNS reported. The faction argued that teachers and psychologists have determined that it is much more difficult for elderly people to learn a foreign language. The proposals also call for requirements that applicants pass tests on their knowledge of the Estonian Constitution and citizenship law be dropped for persons born prior to 1939. Center Party deputy Mikhail Stalnukhin said the elimination of the requirements would benefit more than 17,000 elderly people. The proposed amendments also call for people who settled in Estonia prior to 1 July 1990 to be allowed to take a simplified Estonian-language course whose requirements the government would determine separately. The amendments, if passed, will go into effect on 1 January 2005.

JUSTICE MINISTRY'S PRIORITIES OUTLINED.
Justice Minister Ken-Marti Vaher on 30 January presented the ministry's main priorities for the next three years, BNS reported. The ministry's primary goal will be to step up efforts to seize illegal drugs and to apprehend and convict dealers. Vaher said the ministry will focus on arresting the leaders of criminal groups and seeking to punish them under harsher penalties established late last year, including confiscation of property. According to the second priority, efforts to combat corruption will be aided through the use of specialized teams comprising prosecutors and police officers that will work with district prosecutor's offices beginning this year. In addition, the ministry will establish a corruption hotline and a website to raise public awareness of the problem. The third priority will be a campaign intended to prevent violence against children, domestic violence in general, and juvenile crime.

* Education and Science Minister Toivo Maimets and Dutch Ambassador to Estonia Joanna van Vliet signed an education-cooperation agreement on 27 January in Tallinn, BNS reported. The agreement provides for the organization of joint seminars on information and communication technology and on higher and vocational education. The specific topics of the seminars were chosen jointly by Estonian experts and the agency Cross, attached to the Dutch Education, Culture, and Science Ministry, which coordinates the Netherlands' educational cooperation with Central and East European states. The seminars will also discuss how Estonia will be able to take advantage of information and communication technology as an EU member.

* Austrian Interior Minister Ernst Strasser met with his Estonian counterpart Margus Leivo in Tallinn on 19 January, BNS reported. They discussed matters related to EU regional cooperation and the accession of the Baltic states to the EU and the Schengen space as well as cooperation between their ministries. The delegation, headed by Strasser, also visited the border checkpoint of Tallinn's passenger port, the Border Guard's maritime surveillance center, the police museum, and took a short trip on a border guard vessel.

* Foreign Minister Kristiina Ojuland met in Strasbourg with new Georgian President Mikheil Saakashvili on 28 January, BNS reported the next day. She conveyed to him President Arnold Ruutel's congratulations and an invitation to visit Estonia at the first opportunity. Ojuland stated after the meeting, in which Georgian Foreign Minister Tedo Djaparidze also took part, that Georgia's new government has taken prompt and efficient action to resolve the country's problems and ensure development.

* Foreign Minister Kristiina Ojuland is one of the leading candidates for the post of Council of Europe secretary-general, LETA reported on 23 January, citing the daily "Eesti Paevaleht." The five-year term of office of the current Council of Europe Secretary-General Walter Schwimmer expires this spring. Ojuland has been active in the Parliamentary Assembly of the Council of European (PACE), having served as one of its vice presidents, and has also attracted considerable favorable attention as foreign minister.

* The government allocated 4 million kroons ($320,000) to the Estonian Genome Reserve foundation to help pay its operating costs, BNS reported. The Estonian Genome Foundation and the U.S.-registered EGeen International Corporation (EGI) had signed agreements on 31 December 2001 on the financing of a genetic database pilot project. The EGI, however, ended its funding and urged the foundation to shift its focus from creating a genome database covering the whole Estonian population to collecting data on concrete groups of diseases.

* Estonia will have four regional tax centers, located in Tallinn, Tartu, Parnu, and Johvi, in place of the current division into 16 county tax board offices, LETA reported on 26 January. From 1 February the central tax and customs board administration will also undergo some changes, including merger of departments with similar functions of the Tax Board and Customs Board which were merged from the beginning of the year.

* Family doctors are considering a protest against the amendments to the health-insurance law, which the government is now considering, LETA reported on 26 January. The proposed amendments would not allow doctors to receive payment for making house visits to pregnant women from the 12th week of pregnancy and children under the age of 19 anymore. The doctors argue that the amendments would deprive them of needed income and lead to a drastic increase in unjustified house calls.

* Finance Minister Taavi Veskimagi signed agreements in Tallinn on 22 January on two projects to be co-financed with 507 million kroons ($40.6 million) by the EU's ISPA fund, BNS reported. The projects are for the reconstruction of a 62.7 kilometer section of the Tallinn-Narva highway and technical assistance to the environmental sector. The highway project will cost 396 million kroons. The technical assistance involves the preparation in 2004 and 2005 of documentation for 14 Cohesion Fund project applications, including feasibility studies and assessment of environmental impact. It is expected to cost 111 million kroons. The ISPA fund will pay 75 percent of the costs of the projects.

* Finance Minister Taavi Veskimagi told the Chamber of Commerce and Industry business breakfast on 27 January that the key words of the 2005 Estonian state budget are education and development investments, LETA reported the next day. Veskimagi said that municipalities must be motivated somehow to merge as there are too many parishes in Estonia at present. He mentioned the organization of joint investments of parishes in infrastructure or schools as a possible incentive to increase the number of voluntary mergers.

LATVIAN PRIME MINISTER DISMISSES DEPUTY.
Einars Repse on 26 January signed a decree dismissing Deputy Prime Minister Ainars Slesers (Latvia's First Party [LPP]), LETA reported the next day. Repse said earlier in the day that he planned to ask Slesers to resign because he had failed to fulfill his primary task of being an intermediary between the cabinet and parliament, and was not organizing the 2006 world ice-hockey championship in Riga successfully. Repse told reporters he has no complaints about other LPP ministers and will accept another candidate for deputy prime minister from the LLP if the party confirms it will remain in the ruling coalition. Repse has been accused of violating government ethics standards and a conflict of interest for accepting preferential loans from banks which had benefited from his policies when he served as the head of Latvia's central bank. Slesers said he was dismissed because three LPP deputies expressed support for the opposition's initiative to set up a parliamentary investigative commission to probe Repse's financial affairs.

LATVIA'S FIRST PARTY WITHDRAWS FROM RULING COALITION.
The board of Latvia's First Party (LPP) responded to Ainars Slesers' dismissal as deputy prime minister by withdrawing on 28 January from the ruling coalition, BNS reported (see "RFE/RL Newsline," 17 January 2004). The ruling coalition shrunk from 55 to 45 parliamentary seats -- representing New Era (26), Union of Greens and Farmers (12), and For the Fatherland and Freedom/LNNK (7). There are 100 members of parliament. The LPP board also recalled its three remaining ministers in the cabinet: Juris Lujans (economy), Ainars Bastiks (children and family affairs), and Nils Muiznieks (society integration), but did not insist on the resignation of the entire cabinet. Prime Minister Einars Repse, who dismissed Slesers, expressed regret over the departure of the three LPP ministers.

PARLIAMENT ADOPTS EUROPARLIAMENT ELECTION BILL.
The parliament on 29 January approved in its final reading a bill on elections to the European Parliament, BNS reported. The final version of the bill did not include the provision included in the first two readings that would have barred former KGB agents and persons who continued to be members of the Communist Party after January 1991 from running for the European Parliament (see "RFE/RL Newsline," 15 January 2004). Deputies from Latvia's First Party, which quit the ruling coalition the previous day, New Era, and leftist opposition parties voted for the removal of the provision, while the Union of Greens and Farmers coalition, and For the Fatherland and Freedom/LNNK, along with the rightist opposition People's Party sought to retain it. President Vaira Vike-Freiberga praised the deletion of the provision as a move in accordance with internationally accepted human rights requirements.

FOREIGN MINISTER PRESENTS NEW POLICY PRIORITIES.
Sandra Kalniete on 21 January presented the draft of Latvia's new foreign policy concept to the parliament's Foreign Affairs Committee, BNS reported. The draft identifies the values on which Latvia's foreign policy will be based and defines the country's foreign policy priorities until 2009. The new priorities, which were drawn up by the Foreign Ministry in consultation with parliamentary deputies and leading foreign-policy experts, include pursuing Latvia's national interests in the European Union, economic development, strengthening national security as part of NATO, increasing cooperation in the Baltic Sea region, and strengthening ties with Latvians residing abroad.

LATVIA POSTS LOWER-THAN-EXPECTED PUBLIC SECTOR BUDGET DEFICIT.
The State Treasury announced on 19 January that the 2003 public sector budget, consisting of the state and municipal budgets, had a deficit of 103.1 million lats ($190 million), or 1.8 percent of gross domestic product (GDP), the news agencies BNS and LETA reported. Finance Minister Valdis Dombrovskis expressed satisfaction with the results, as the planned deficit was 169 million lats. He said the lower deficit is primarily due to the improved tax collection of 2.11 billion lats, commenting that "revenues from the fuel excise tax have grown 27 percent and we all know that it was not due to people taking 20 percent longer car rides." The collection of value added taxes (VAT) increased by nearly 20 percent to 459 million lats compared to 2002, and social security tax receipts rose by 7 percent to 574 million lats. Revenues from corporate income taxes fell because the tax rate was lowered from 22 to 19 percent, as did the tax on natural resources due to tax breaks for recycling.

EDUCATION REFORM PASSES SECOND READING DESPITE PROTESTS.
Parliament on 22 January approved the second reading of amendments to the Education Law despite ethnic Russian students' protests, LETA reported. The amendments stipulate that as of 1 September, secondary students in minority schools must take at least five classes in Latvian a year, in addition to Latvian language and literature classes. The current law requires that 60 percent of subjects be taught in the Latvian language as of September. The new amendments, which face a third reading, will allow schools to teach in minority languages on subjects pertaining to minority identities, culture, and language. Ethnic Russian students would be most affected by the reforms. Prior to the reading, For Human Rights in a United Latvia (PCTVL) staged a rally in front of the parliament building, in which about 200 protesters, most of them students, demanded the resignation of Education and Science Minister Karlis Sadurskis. On the morning of 23 January, about 800 students from Russian-language schools refused to attend school and began an unauthorized protest in front of the Education and Science Ministry building.

PRESIDENT URGES LARGE CORPORATIONS TO ACT RESPONSIBLY.
Vaira Vike-Freiberga was an active participant in the World Economic Forum in Davos, Switzerland, on 21-25 January, LETA reported. During the discussion "Riding the Next Democratic Wave" on 23 January, she urged the world's largest corporations to act responsibly, to not endanger democracy in countries where they operate by offering bribes, and not to support countries ruled by totalitarian or occupation regimes. On 22 January, Vike-Freiberga held talks with NATO Secretary-General Jaap de Hoop Scheffer on NATO-Latvian cooperation and discussed with Canadian Prime Minister Paul Martin an exchange of visits by top officials. She also met the same day with Council of Women World Leaders President Mary Robinson. On 25 January, Vike-Freiberga spoke at the plenary session "Why the Advancement of Women is Strategically -- Not Politically -- Correct."

FORMER U.S. SECRETARY OF STATE LAUDS LATVIA'S PROGRESS.
Former U.S. Secretary of State Madeleine Albright on 27 January praised Latvia's upcoming accession to NATO and said she hopes it will help improve regional stability, BNS reported. At a press conference following her meeting with President Vaira Vike-Freiberga, Albright stressed the importance of NATO having a constructive dialogue with Russia. Albright's discussions with Vike-Freiberga centered on the role of the World's Women Leaders Council and the role of women in politics and the economy. In earlier talks with Prime Minister Einars Repse, Albright noted Latvia's progress in EU and NATO integration. As part of her two-day visit, Albright on 27 January received an honorary doctor's degree from the University of Latvia for her achievements in politics and contribution to Latvia's independence through her promotion of Latvian-U.S. relations. She also attended a book signing on 26 January to promote her book, "Madam Secretary," during which she stressed the need for Latvia to improve its policies toward minorities.

NEW ERA PARTY RE-ELECTS CHAIRMAN.
Prime Minister Einars Repse was overwhelmingly elected to another two-year term as New Era's chairman during the party's annual general meeting in Riga on 31 January, BNS reported. Repse was approved by a vote of 251 in favor to five against, with two abstentions. Repse told the meeting before the vote that the current government crisis was spurred by his "not letting oligarchs to the trough and cutting short the shady deals they began." He spoke in favor of amending the Latvian Constitution to empower the prime minister, not just the president, to dissolve parliament and call new parliamentary elections. Repse also called for restructuring campaign-finance regulations "so the parties are not financed by certain oligarchs but compete [on the basis of] their election programs." Foreign Minister Sandra Kalniete said at the meeting that one of the tasks of New Era deputies elected to the European Parliament in June will be to ensure that it officially condemns the crimes of Communism, as it did the crimes of Nazism.

* The parliament approved the final reading of the voters register bill on 22 January, BNS reported. As a consequence citizens will not be able to vote at any voting station, but only at the voting station at which they have registered. The passports of the voters will no longer have to be stamped to prevent multiple voting. The newer system will also ease postal voting and end the need to have election stations abroad.

* The People's Party (TP) gathered the needed signatures of 34 parliament deputies to establish a parliamentary investigative commission to probe the financial affairs of Prime Minister Einars Repse, LETA reported on 23 January. The signatures came from 20 TP deputies, six deputies from For Human Rights in a United Latvia, five deputies from the Latvian Socialist Party, and three deputies from Latvia's First Party (LPP). The commission will investigate whether two banks gave loans to Repse at particularly favorable conditions. Eriks Jekabsons, parliament deputy and chairman of Latvia's First Party, has been named the chairman of this investigative panel, BNS reported on 5 February.

* NATO Military Committee Chairman General Harald Kujat visited Latvia on 22 and 23 January, BNS reported. The first day he met with Prime Minister Einars Repse, National Armed Forces (NAF) Commander Rear-Admiral Gaidis Andrejs Zeibots, Foreign Ministry State Secretary Maris Riekstins, and visited the National Defense Academy and the Training and Doctrine Command. Repse said Latvia was ready to fulfill its obligations to NATO, but expected the alliance's support in security matters. On 23 January, Kujat held talks with parliament Defense and Internal Affairs Committee Chairman Eriks Jekabsons, Defense Minister Girts Valdis Kristovskis, the command of the NAF Headquarters and inspected the air surveillance center at the Riga International Airport which is part of the BALTNET.

* Foreign Minister Sandra Kalniete made a working visit to Georgia on 17 January to discuss Latvian-Georgian cooperation in defense and other sectors with high-ranking Georgian officials, BNS reported. She held talks with acting President Nino Burdzhanadze, President-elect Mikheil Saakashvili, Foreign Affairs Minister Tedo Djaparidze, and State Minister Zurab Zhvania during which she expressed Latvia's willingness to share its Euro-Atlantic integration experience with Georgia.

* Parliament Speaker Ingrida Udre, head of the Latvian national group of the Inter-Parliamentary Union (IPU), visited Geneva on 27 January to take part in a session of the committee preparing the second conference of national parliaments' speakers, LETA reported. The speakers of the parliaments of Germany, Hungary, Italy, Russia, Sweden, Bolivia, Gabon, Jordan, Mali, Mexico, Morocco, Namibia, South Korea, and Sri Lanka also participated in the conference. The next day Udre discussed internal audit issues with IPU Secretary-General Anders Johnsson.

* Foreign Minister Sandra Kalniete made an official visit to Slovenia on 18-20 January, BNS reported. On 19 January, Slovenian Prime Minister Anton Rop expressed an interest in visiting Latvia with a business delegation suggesting that an appropriate time would be in June after the European Parliament elections. She also had an unplanned meeting with President Janez Drnovsek who voiced satisfaction over the development of bilateral relations between their countries. In the evening she attended a premier of the opera "Aida" at the Ljubljana Opera and Ballet Theater, which was staged in cooperation with the Latvian National Opera. Kalniete also had talks with Foreign Minister Dimitrij Rupel and National Assembly President Borut Pahor.

* A parliamentary delegation from Great Britain and Ireland, including some members of the British-Irish Interparliamentary Body European Affairs Committee, visited Latvia on 19 and 20 January, LETA reported. They discussed with Latvian lawmakers cooperation within EU institutions and regional cooperation with the Baltic and Nordic countries. The delegation also held talks with the secretariat of the Baltic Assembly.

* An Austrian delegation, headed by Interior Minister Ernst Strasser, visited Riga on 20 January, BNS reported. He and his Latvian counterpart Maris Gulbis signed an agreement about cooperation between the police forces of the two countries. The delegation included Austrian Federal Criminal Police Director Herwig Haidinger and Austrian Foreigner Police, Civil Defense, and Airport Police head Peter Widermann.

* Society Integration Affairs Minister Nils Muiznieks (Latvia's First Party) visited Great Britain on 20-23 January at the invitation of the British government, LETA reported. He had meetings with British politicians interested in social integration issues and attended the conference "The Baltic States: New Europe or Old?" at the University of Glasgow on 22-23 January, which was devoted to the Baltic countries' accession to the EU and NATO.

* Former Prime Minister Andris Berzins told a discussion on the consequences of the infamous Molotov-Ribbentrop Pact held in Riga on 21 January that authoritarianism should be abated in order to prevent any such events ever happening again, BNS reported. The discussion was organized by the Baltijas Forums organization and attended by many ambassadors residing in Riga as well as leftist parliamentary deputies.

* The Riga International Court of Arbitration ruled on 26 January that the Finnish-owned fuel company "Neste Latvija" should pay a little more than 1 million lats ($1.7 million) to Riga Free Port's Administration for port fees and payments, LETA reported. The court ruling cannot be contested or appealed and took effect the moment it was announced even though Neste's lawyers did not attend the court session.

* Two members of the Latvian Socialist Party filed a claim at the Latvian Constitutional Court on 28 January challenging the legitimacy of the EU referendum in September 2003, arguing that it was illegal since the country's noncitizen population could not participate in the vote, BNS reported. The claim noted that the 1922 Latvian Constitution Party stated that the Latvian people are the whole population and not just citizens. Party chairman Alfreds Rubiks said that he will appeal to the European Court of Human Rights in Strasbourg if the Constitutional Court rejects the claim.

* The parliament passed amendments to the law on the sale of tobacco products, which will ban the retail sale of cigarettes and tobacco products, by a vote of 49 to 41 on 22 January, LETA reported. No licenses to sell tobacco products at markets will be issued or re-registered after 1 February 2004, but retailers who received licenses before that date will be allowed to continue retailing tobacco products at markets until their licenses expire, but not after 31 January 2005.

* The board of the Latvian Shipping Company (LASCO) decided to drop its plans to sell three new Panamax tankers it bought a few years ago, because it considers the market situation to be currently unfavorable, BNS reported on 23 January. Since the decision to sell the tankers was made, the construction costs of new vessels has soared and the value of the U.S. dollar fell by more than 7 percent, thus reducing the price of the tankers.

PRESIDENT FORMS NEW TEAM OF SENIOR ADVISERS.
Rolandas Paksas presented advisers to the presidential office at a press conference on 19 January -- more than two months after asking their predecessors to resign (see "RFE/RL Newsline," 13 November 2003), "Kauno diena" reported the next day. Former Ambassador to Latvia Petras Vaitiekunas, who was delegated to the post by the Lithuanian Foreign Ministry, replaced Alvydas Medalinskas as foreign-policy adviser. Romualdas Senovaitis, a deputy police chief, will replace Remigijus Acas as national-security adviser and Milda Vainiute will serve as the president's legal-affairs adviser, replacing Ona Buisiene. Jonas Ragauskas, who resigned but later returned as economic adviser, was assigned the additional tasks of covering domestic affairs. Paksas called on politicians and the media not to use the term "diplomatic isolation" to describe the situation resulting from the postponement of foreign dignitaries' visits to Lithuania and Paksas's visits overseas while the impeachment process proceeds. Paksas said the term "does not reflect the real situation" and could be used to describe the situations in North Korea or Libya, but not a country that will join the EU and NATO this year.

FOREIGN MINISTER CLAIMS WASHINGTON EXPECTING PRESIDENT'S RESIGNATION...
Antanas Valionis told journalists on 26 January that he received indications during informal discussions he held on his recent visit to Washington that President Paksas should resign, BNS reported. During his five-day trip, Valionis met with U.S. Secretary of State Colin Powell and several senators and representatives (see "RFE/RL Newsline," 26 January 2004). Valionis told "Kauno diena" of 27 January that "in unofficial conversations it was said that the Constitutional Court's ruling that the president violated the constitution and broke his oath" by granting Lithuanian citizenship to Russian businessman Yurii Borisov (see "RFE/RL Newsline," 30 December 2003) "is a very serious argument" for him to resign.

...PROMPTING HARSH RESPONSE FROM PAKSAS, DENIAL BY U.S. OFFICIAL.
Paksas later said that "one country should not interfere with another country's affairs" and that he will ask Valionis to explain why he publicized unofficial information and to specify its sources. After meeting with Valionis, U.S. Ambassador to Lithuania Stephen Mull said the U.S. government does not take positions on Lithuania's domestic affairs and "will respect any outcome of the democratic process," ELTA reported on 27 January.

PREMIER SLAMS FOREIGN MINISTER FOR PUBLICIZING UNOFFICIAL INFORMATION.
Algirdas Brazauskas told the media after meeting with President Paksas on 28 January that Foreign Minister Antanas Valionis should not have relayed the contents of unofficial discussions he recently had in Washington concerning the political scandal involving Paksas (see "RFE/RL Newsline," 27 January 2004), BNS reported. Brazauskas said Paksas did not request Valionis's dismissal, but will consult with his coalition partners, the Social Liberals, on possible sanctions against the minister. Valionis refused to change his position following a half-hour meeting with Brazauskas later that day, saying, "Lithuania's foreign policy now is like a table with three legs, we can not bury our heads in the sand like ostriches," "Lietuvos rytas" reported on 29 January. Parliament speaker and chairman of the Social Liberal Party Arturas Paulauskas said Valionis was correct in announcing both the official and unofficial results of his trip.

FOREIGN MINISTER MEETS WITH U.S. SECRETARY OF STATE.
U.S. Secretary of State Colin Powell told Antanas Valionis in Washington on 23 January that the United States is keeping a close watch on the impeachment process involving President Rolandas Paksas, ELTA reported. Powell said he hopes Lithuania's current political crisis will be settled in keeping with democratic principles. The same day, Valionis met with Senator John McCain (R-AZ), and high-ranking officials of the State and Defense Departments. On 21 January, he held talks with Representative John Shimkus (R-IL), a co-chairman of the Baltic Caucus comprising representatives interested in Baltic affairs. Valionis also met at the Lithuanian Embassy with Senator Carl Levin (D-MI) at the opening of an exhibition by Lithuanian painter Solomon Titelbaum. On 22 January, Valionis spoke with Senator Richard Durbin (D-IL), co-chairman of the Senate's Baltic Caucus, about U.S.-Lithuanian relations upon Lithuania's accession to the EU and NATO, and met with the ambassadors in Washington of the Vilnius-10 group.

IMPEACHMENT COMMITTEE OFFICIAL SAYS ACCUSATIONS AGAINST LITHUANIAN PRESIDENT MIGHT BE CHANGED.
Julius Sabatauskas, deputy chairman of the parliamentary commission formed to investigate the possibility of impeaching President Paksas (see "RFE/RL Newsline," 23 December 2003), told journalists on 20 January that the formulations of the accusations against the president might be changed, BNS reported. Sabatauskas said that parliament's Legal Department had advised the commission that this can be done under the law, but he is awaiting other legal opinions. Sabatauskas said the commission hopes to complete the questioning of witnesses by the end of January, as it still has a large amount of written material to study before presenting its conclusions to parliament by the 13 February deadline. Without mentioning sources, the daily "Lietuvos zinios" reported on 21 January that the number of accusations against Paksas will be reduced to two: violating his presidential oath and illegally using his power to influence the decisions of private companies.

PRESIDENT SETS CONDITIONS FOR APPEARING BEFORE IMPEACHMENT PANEL.
The parliamentary commission formed to investigate the possibility of impeaching President Paksas (see "RFE/RL Newsline," 23 December 2003) sent a letter to the president on 22 January asking for an appropriate time for him to answer their questions and expressing their willingness to meet at the president's office if he did not wish to come to parliament, BNS reported. Paksas responded in a press release that he will "give his answer on participation in the commission's meeting" only having received the complete "results of [the] investigation" and after his "lawyers are granted access to classified information." The commission has stated several times that it is sending all its material to the president and that access to classified information Paksas seeks for his legal team is an issue to be decided by the State Security Department. Department officials said the process of granting access to requested classified material usually takes two to three months and the president's lawyers asked for it only recently. Paksas told News Radio on 22 January that he sent a letter to parliament that day "inviting them -- be they factions, committees, or individual members of parliament -- to come to talk about the current situation and in what way it might be changed."

RUSSIAN BUSINESSMAN BOWS OUT OF PRESIDENTIAL RACE.
Anzori Aksentev-Kikalishvili informed the TsIK in writing on 27 January that he is withdrawing from the presidential campaign, Russian media reported. According to ITAR-TASS, the letter did not specify the reason for his decision. Speaking to Ekho Moskvy on 27 January, Aksentev-Kikalishvili noted that Lithuania denied him entry on 23 January when he was en route to Kaliningrad Oblast by train. The Russian Foreign Ministry did not protest Lithuania's action, and the Russian media largely ignored the incident. "How could I participate further as a presidential candidate in this campaign if all of this is being blocked by some kind of orders from above?" Aksentev-Kikalishvili asked. Aksentev-Kikalishvili headed the obscure All-Russian Political Party of the People in the 1999 State Duma elections, and failed to qualify for the presidential ballot in 2000. His business activities have aroused controversy in Lithuania (see "RFE/RL Newsline," 6 January 2004).

SOCIAL LIBERALS EXPEL TWO FROM PARLIAMENTARY FACTION.
The parliamentary faction of the New Union (Social Liberals) on 26 January voted to expel Rolandas Pavilionis and Egidijus Klumbys from its ranks by votes of 19 to two with two abstentions, and 18 to two with three abstentions, respectively, "Lietuvos rytas" reported on 27 January. Both deputies were not members of the party, but were elected in 2000 on the New Union's list. Pavilionis, a former rector of the University of Vilnius, and Klumbys, the chairman of the marginal National Progress Party, are among the more outspoken parliament deputies and have vehemently expressed their opposition to the possible impeachment of President Rolandas Paksas. Pavilionis will lose his position as chairman of the parliament's Education, Science, and Culture Committee as a result of his expulsion from the faction. The number of members in the parliamentary faction thus fell to 23, as Viktor Uspaskich, the chairman of the recently founded Labor Party, withdrew voluntarily last week.

PRIME MINISTER DISMISSES SPECULATION OVER MAZEIKIAI OIL.
Algirdas Brazauskas told parliament on 29 January that rumors that Lithuania is considering purchasing shares of Mazeikiu Nafta (Mazeikiai Oil) from the Russian oil giant Yukos to offset fears the Russian government might take control of the shares is completely groundless, BNS reported. The speculation was in great part prompted by the recent warrant issued by Russia for the arrest of Yukos Vice President and Mazeikiai Oil Chairman Mikhail Brudno. Brazauskas explained that the 53.7 percent shares of Mazeikiai Oil in question are registered to the Netherlands-based Yukos Finance B.V., so there is no danger of them being confiscated by Russia. Meanwhile, Mazeikiai Oil on 29 January released favorable performance results for 2003. Its refinery processed 7.16 million tons of crude oil in 2003, up 9.3 percent from 2002; and its Butinge oil terminal exported 10.72 million tons of crude oil last year, a 76 percent increase from 2002. However, the volume of oil pumped through the company's Birzai pipeline dropped by 12 percent to 20.56 million tons due to Russia's stoppage of oil shipments to the Latvian port of Ventspils.

LITHUANIA'S REPORTS 8.9 PERCENT GDP GROWTH.
Statistics Department Director Algirdas Semeta announced on 28 January that preliminary data indicates that the country's GDP increased by 8.9 percent in 2003 to 54.85 billion litas ($17.1 billion), BNS reported. It was the highest growth recorded since the country regained its independence in 1990. The international credit-rating agency Fitch Ratings announced on 28 January that it has increased Lithuania's local-currency rating from A- to A and its long-term foreign-currency rating from BBB to BBB+. Finance Minister Dalia Grybauskaite said the improved ratings should help lower the borrowing and debt servicing costs on the 600 million-euro ($750 million) long-term Eurobond that Lithuania is planning to issue on international markets in the first quarter of this year.

UNION OF POLITICAL PRISONERS AND EXILES JOINS HOMELAND.
The 10th congress of the Lithuanian Union of Political Prisoners and Deportees (LPKTS) party decided in Kaunas on 31 January to merge with the Homeland Union, BNS reported. The decision was passed with the approval of 395 of the 467 delegates in attendance. Under the agreement, at least three members of the LPKTS will be included on the Homeland Union's list of candidates for the European Parliament elections in June, and 20 percent of the Homeland Union's candidates in this fall's parliamentary elections will be taken from the ranks of the LPKTS, which has 61 chapters and approximately 46,000 members. Although Homeland Union will be the accepted shorthand, the name of the merged organization will officially be changed at a 7 February joint congress to Homeland Union -- Conservatives, Political Prisoners and Deportees, and Christian Democrats.

* President Paksas was essentially boycotted by Kaunas city leaders upon his 21 January arrival in Lithuania's second-largest city, "Kauno diena" reported the next day. He traveled there to spend a day working in the presidential office that was based there during the interwar period. Paksas expected to be greeted by Kaunas Mayor Arvydas Garbaravicius at the city's Unity Square, but was met by only a city department head and a group of youths holding candles and posters urging him to step down. Mayor Garbaravicius and his three deputy mayors, who later failed to show up for a meeting to discuss the city's development plans with Paksas, explained that their work schedules were determined six days in advance and the president had informed them about his visit only on 19 January. Garbaravicius was in Vilnius on 21 January for a meeting with Mayor Arturas Zuokas who is a political opponent of Paksas.

* Vilnius Mayor Arturas Zuokas went to the headquarters of the Special Investigation Service (STT) in Vilnius on 22 January to answer questions as a suspect concerning the Vilnius mayoral elections in April 2003, BNS reported. He told reporters after the questioning that it did not take long because he and his lawyer requested the pre-trial materials and pledged to testify only after receiving the data with sufficient time to study it. He said that the STT investigation might have been started as part of a counterattack by Paksas against people he views as "plotters" against him.

* Prime Minister Algirdas Brazauskas flew to Stockholm on 26 January to make a speech at an international conference "Genocide Prevention: Threats and Responsibility," BNS reported. Noting the recent upsurge of anti-Semitic and racist attacks, he emphasized the need to get rid of intolerance with the help of educational and political tools because otherwise it would flourish supported by new problems dealing with refugees, economic recession, social contrasts, and even the restitution of ownership rights to the Jewish people. Brazauskas also discussed with his Swedish counterpart, Goran Persson, the prospects of cooperation among the Nordic and Baltic states and important matters in the EU.

* Austrian Interior Minister Ernst Strasser completed a tour of the Baltic states in Lithuania on 21 January, ELTA reported. His Lithuanian counterpart Virgilijus Bulovas and State Border Guard Service (VSAT) Deputy Chairman Rustamas Liubajevas took him to the Medininkai international border-crossing post with Belarus and the Kena border station where the documents of people traveling in transit via Lithuania to the Kaliningrad Oblast are checked. Strasser praised the level of the Lithuanian border guard and its preparations to defend the EU's exterior border.

* Armed forces commander Major General Jonas Kronkaitis made his second trip to Iraq in the last half year on 19-21 January to visit the Lithuanian troops serving in peacekeeping operations there, BNS reported on 21 January. As in an earlier trip in August 2003 he flew via Denmark and Kuwait together with his Danish counterpart General Hans Jesper Helso. Lithuanian troops are serving with a Danish battalion near Al-Basrah and in the Polish-controlled sector near Al-Hila. Kronkaitis told a press conference in Vilnius on 23 January that the number of attacks by former supporters of deposed President Saddam Hussein in southeastern Iraq has decreased considerably and that criminal elements and bandits pose the greatest threat to the Lithuanian troops.

* President Paksas sent a letter to his Polish counterpart Aleksandr Kwasniewski on 26 January inviting him to make an official visit to Lithuania in April on the 10th anniversary of the signing of an agreement on friendly relations and cooperation between their states, ELTA reported. On 29 January, Kwasniewski noted that he had not yet decided whether to accept the invitation as it "will be contingent on developments in Lithuania." The visit is clearly hindered by the possibility that Paksas may be facing an impeachment vote at that time.

* The cabinet passed a resolution on 28 January applying a 30 percent duty on pork imports from Poland to counter these cheap pork imports that are subsidized by the Polish government, BNS reported. The import duty should not be lower than the 1.48 litas ($0.49) per kilogram, which is the subsidy that Poland is granting for exported pork. The duty will end on 1 May when both countries become members of the EU.

* During the 20th anniversary celebrations for one of its units, President Paksas told the staff of the Ignalina Atomic Energy Plant on 23 January that Lithuania should continue to be a state with a safe nuclear industry, BNS reported. He said that a third reactor should be built after the current two are closed no later than 2009 as already agreed with the EU. Prime Minister Brazauskas spoke more cautiously at the ceremonies, noting that the question of financing the building of a new nuclear plant was still not clear.

* State Property Fund head Povilas Milasauskas and Deputy Board Chairman of Gazprom Aleksandr Ryazanov signed an agreement on Gazprom's purchase of a 34 percent stake in Lietuvos Dujos for 100 million litas ($36 million) on 23 January, ELTA reported. Ryazanov told a subsequent press conference that the payment would be made in February when an agreement over the supply of natural gas until 2015 would be signed.

* The parliament approved by a vote of 50 to three with 10 abstentions on 29 January a special law aimed at rescuing the financially troubled textile company Alytus Textile from bankruptcy, BNS reported. The law grants the company a deferral of personal income taxes and social insurance contributions until May 2005, but it goes into effect only after the government has taken over a majority stake in the company. The Hong Kong company Asean Interests Limited had purchased 47 percent of the textile firm, but never fulfilled its commitment to invest 240 million litas ($89 million) in the company.

* The Statistics Department announced on 22 January that the number of foreign visitors to Lithuania in 2003 was 3.64 million or about 9.1 percent lower than in 2002, BNS reported. The number of visitors from the bordering countries of Russia, Belarus, and Latvia fell by 24.4 percent, 20.8 percent, and 8.4 percent, respectively. The number of foreign visitors from other countries rose by 14.7 percent to 1.2 million last year.