Baltic Report: July 15, 2002

NOTE TO READERS:
This issue covers events in the Baltic states from 28 June to 4 July 2002.
BALTIC PRESIDENTS MEET U.S. SENATORS IN RIGA.
Lithuanian and Estonian Presidents Valdas Adamkus and Arnold Ruutel, respectively, traveled to Riga on 4 July for a meeting with Latvian President Vaira Vike-Freiberga, at which they confirmed their countries' readiness to help other NATO candidate countries join the alliance, BNS reported. The presidents' meeting took place on the eve of the last meeting of the "Vilnius 10" group, which represents nine candidate countries plus Croatia, before NATO's Prague summit in November. The presidents also held talks with a bipartisan delegation of five U.S. senators, led by Republican Minority Leader Trent Lott. The senators expressed satisfaction with the meeting, with Lott declaring that the Baltic states have a very good chance of being invited to join NATO. The presidents then attended a memorial service on the occasion of Holocaust Remembrance Day in Latvia. On 4 July 1941, Nazi forces burned down a synagogue in downtown Riga with 300 people locked inside.

TAXATION CHAPTER CLOSED IN TALKS WITH EU.
In Brussels on 28 June, the Estonian delegation for negotiations with the European Union successfully completed the chapter on taxation, ETA reported. This raised Estonia's number of completed chapters to 27 of 31. Prime Minister Siim Kallas said Estonia achieved better results than originally hoped for in the Taxation Chapter. Estonia was allowed to keep its corporate income-tax exemption on reinvested profits and has until 2008 to bring taxation of dividends into line with EU requirements. It was also granted transition periods until 2009 for raising the tobacco excise tax to EU levels, and until 2007 for valued-added-tax exemptions for heating. However, Estonia did not receive any transition periods for tax-free trade on ships and ferries or for wind-generated energy.

GOVERNMENT WARY OF ASKING FOR COMPENSATION FROM MOSCOW.
The cabinet meeting on 2 July decided not to support the draft law proposed by Moderate parliamentary deputy Enn Tarto by which Estonia would ask for compensation from Russia for crimes committed by the Soviet occupation regime, ETA reported. Foreign Minister Kristiina Ojuland said that the ministry "is not against raising the issue as such, yet believes that the issue deserves a more thorough discussion on the possible claims and other questions." Justice Minister Mart Rask suggested that a commission could be set up at the president's office for dealing with the issue, as the authority of the president's institution would help achieve a consensus among political parties. President Ruutel expressed doubts about this suggestion, saying it is a task for the government.

COOPERATION AGREEMENT SIGNED WITH SLOVENIA ON FIGHTING CRIME.
In Tallinn on 29 June, Interior Ministers Ain Seppik (Estonia) and Rado Bochinc (Slovenia) signed an agreement on cooperation in the fight against organized crime, illegal drug trafficking, and terrorism, BNS reported. The document provides the competent authorities of the two countries with a legal basis for cooperating directly in these fields. The ministers also discussed their countries' preparations for membership in the European Union.

HEAD OF NAUMANN FOUNDATION MEETS LEADERS.
Former German Economy Minister Count Otto Lambsdorff, chairman of the Friedrich Naumann Foundation, began a tour of the Baltic states in Tallinn on 1 July, ETA reported. President Ruutel thanked the Naumann Foundation for its contribution to the development of Estonian society and noted the need for greater direct foreign investment in rural regions. The two leaders discussed European Union and NATO enlargement and the role of small countries in Europe's future. Lambsdorff also held talks with Prime Minister Kallas, Foreign Minister Ojuland, former President Lennart Meri, and Tallinn City Council Chairwoman Maret Maripuu. He was scheduled to fly to Riga on 2 July for meetings with Latvian President Vike-Freiberga and Prime Minister Andris Berzins.

* Graham Watson, leader of the European Liberal, Democratic, and Reform Party faction in the European Parliament, asserted in Tallinn on 28 June that he expected the EU to reach an agreement with its candidate states on the Agriculture Chapter before the end of the year, BNS reported. He also said that the Irish referendum on the Treaty of Nice could be a big threat to EU enlargement, but he hoped the results would be favorable.

* Wanja Lundby-Bodin, leader of the Swedish Trade Union Confederation, told Kadi Parnits, leader of the Estonian Central Trade Unions Association, in Tallinn on 3 July that Swedish trade unions support the free movement of labor without any periods of transition for new EU member countries, BNS reported. The leaders discussed greater cooperation between their organizations, particularly on behalf of workers employed in firms based on Swedish capital in Estonia.

* "Eesti Paevaleht" reported on 3 July that the Finance Ministry has asked the government to decide whether it should redeem bonds that were issued in 1927 and were to be redeemed in 1967. The ministry is of the opinion that as the legal successor of the pre-war Republic of Estonia, the state should redeem the bonds, though their redemption deadline expired in 1997 as the state was unable to perform its duties during 50 years of Soviet occupation. There is no information of how many of the 9,900 bonds have survived, but experts estimate that the state may have to pay the bondholders about 200 million kroons ($12 million).

* Education Minister Mailis Rand and French Ambassador to Estonia Jean-Jacques Subrenat signed a program of cooperation between the two countries in science and technology on 2 July, BNS reported. Its aim is to promote and develop high-level cooperation between scientific institutions in the countries. All scientific laboratories and research groups belonging to universities, scientific institutions, or private companies will be eligible to participate in a public competition for projects.

* Tallinn Mayor Edgar Savisaar, Deputy Mayor Toomas Vitsut, and City Council Chairwoman Maripuu visited Paris on 3-4 July, BNS reported. The delegation had a meeting with French Urban Affairs Minister Jean-Louis Borloo and attended a luncheon in their honor organized by President of the Paris Employers' Association Remy Robinet-Duffo during which they held talks with senior Paris officials and managers of several French firms represented in Tallinn, such as Dalkia, Accor Group, and Unicom.

* The Agriculture Ministry announced on 2 July that the European Union had substantially increased the quotas of dairy products from Estonia, BNS reported. From 1 July until 30 June 2003, Estonian dairies will be allowed to export 4,000 tons of milk powder, 800 tons of milk and cream, 800 tons of yogurt, 4,800 tons of butter, and 5,120 tons of cheese to the EU without paying additional duties. The previous quotas for butter and cheese had been 3,900 and 3,510 tons, respectively.

* The government approved the formation of a group of experts to deal with issues related to the Estonian-Russian border on 2 July, BNS reported. The commission will be chaired by Border Guard Board Chief of Staff Aare Evisalu and will include officials from the Border Guard Board, the Foreign, Interior, and Justice ministries, as well as from the Estonian-Russian water-boundary commission, the Land Board, and the Map Center. It will work under the supervision of Interior Minister Ain Seppik and draft various relevant legal acts.

* The government approved on 2 July the European Small Businesses Charter, which the EU member states had adopted in June 2000, ETA reported. It also empowered Ambassador to the EU Priit Kolbre to sign a memorandum of reciprocal understanding with the EU, which will enable Estonia's participation in an EU program for simplifying the operating environment of small and medium-sized businesses.

* In line with a new broadcasting act, Estonia's public television ETV ended broadcasts of commercials from 1 July, ETA reported. The loss in revenue is expected to be offset by the 15 million-kroon ($900,000) broadcasting license fees the two national commercial television stations will be required to pay. ETV had been earning more than 50 million kroons a year from advertising, so its budget will have to be cut severely. Two channels of Estonia's public radio will be allowed to air commercials until 2005.

* Prime Minister Kallas, Defense Minister Sven Mikser, and defense forces commander Tarmo Kouts visited the Estonian Army's Scout Battalion near the northwestern town of Paldiski on 28 June, BNS reported. Mikser said that the formation of the Scout Battalion and the First Infantry Brigade were a top priority for the Estonian defense forces. The officials also inspected the air-traffic-control center at the Amari Air Base.

* The U.S. rating agency Standard & Poor's granted the energy utility Eesti Energia a credit rating of A minus, the same rating as the Estonian state, and an outlook of stable, BNS reported on 2 July. This is the highest rating given to any energy company in Central and Eastern Europe and will allow the utility to pay lower interest rates on the 150 million-euro ($148.7 million) loans it signed last week, and on the planned future bond issue of up to 200 million euros.

CONTROVERSY GROWS IN LASCO SHARE SALE.
Public debate raged in Riga over the controversial cash sale at auction of 51 percent of outstanding shares in Latvijas kugnieciba (Latvian Shipping Company, LASCO) (see "Baltic States Report", 9 July 2002). On 27 June, Latvian media reported that the partially state-owned joint-stock company Ventspils Nafta (Ventspils Oil, VN) had purchased on 25 June an additional 19.7 percent of LASCO shares in the secondary market, making VN the largest stockholder in one of Latvia's largest companies, with 49.94 percent of all shares. On 28 June, a rival suitor for the shares, Cyprus-based Beacon Shipping, gained a court injunction against trading in the LASCO shares that were sold in the disputed auction, asserting that it was cheated out of an opportunity to bid for the shares. On 3 July, the For Fatherland and Freedom/LNNK party called on the government either to suspend the privatization process or fire Economy Minister Kalvitis (a member of the People's Party), BNS reported. It stated that Kalvitis' implementation of the government's privatization policy was a failure, as indicated by the controversial LASCO share auction, and had resulted in a complete loss of public trust. The newspaper "Biznes i Baltiya" speculated on 4 July that the LASCO share controversy may be the result of a falling out among Latvia's business and political elite.

NEW CAMPAIGN TO PROMOTE NATURALIZATION LAUNCHED.
On 28 June, Naturalization Board head Eizenija Aldermane announced the start of a second campaign in cooperation with the British embassy in Riga to convince noncitizens to become naturalized, BNS reported the next day. More than 50,000 people have received Latvian citizenship through naturalization since 1995, but there are still 534,000 noncitizens living in Latvia, the majority of whom are Russians. The council of For Fatherland and Freedom/LNNK passed a resolution on 29 June criticizing the campaign and calling on Prime Minister Andris Berzins to put an end to these "activities that discredit Latvia," LETA reported. Berzins responded that his government's policy is to develop an integrated society in Latvia and not a state with two communities.

LIECHTENSTEIN FOREIGN MINISTER VISITS LATVIA.
Ernst Walch began a two-day visit to Latvia on 1 July with talks with his Latvian counterpart Indulis Berzins, LETA reported. Berzins expressed Latvia's interest in learning from Liechtenstein's experience in modern finance and high technology and called for greater bilateral economic cooperation and investment. In talks with Prime Minister Andris Berzins, Walch praised Latvia's rapid development since independence and the ability of its people to adapt to major changes in such a short period of time. Walch noted that, although it is not a member of the EU, Liechtenstein has adopted more EU directives than many EU member countries and intends to adopt the Schengen agreement in the near future. Walch also said that cooperation between the two states will increase once Latvia joins the EU.

RIGA ADOPTS RESTRICTIONS ON ALCOHOL SALES.
The Riga City Council at an evening session on 2 July approved greater restrictions on the sale of alcoholic beverages in the city by a vote of 36 to six, with six abstentions, LETA reported the next day. The regulations ban selling alcohol at public events specifically marketed to persons 18 years old and younger, at Internet cafes, and on the premises and territory of educational, state, and municipal administrative institutions. In the center of the city, retail alcohol sales are banned within 50 meters of educational institutions and within 100 meters in other parts of the city except in restaurants, bars, and cafes. The regulations will go into effect at the beginning of 2003.

* President Vike-Freiberga told visiting Friedrich Naumann Foundation Chairman and former German Economy Minister Count Otto Lambsdorf in Riga on 3 July that Germany should speed up payment of compensations to people whom the Nazis used as slave labor in World War II, BNS reported. The Latvian National Social Insurance Agency has received 15,509 applications from people claiming compensation as former Nazi slave laborers; monthly payments to several hundred Latvian residents began earlier this year.

* Greek Minister for European Affairs Anastassios Giannitsis discussed on 1 July with Prime Minister Andris Berzins Greece's presidency of the EU in the first half of 2003, BNS reported. He expressed the hope that Latvia would succeed in completing the Agriculture Chapter this year. Berzins noted that Latvia intends to open its embassy in Greece in the near future. Giannitsis also met with Foreign Minister Indulis Berzins.

* Latvia took over the presidency of the Baltic Sea Environmental Protection Committee, known as the Helsinki Commission (HELCOM), from Germany on 1 July for a two-year term, BNS reported. Former Environment Minister Inese Vaidere became its chairperson and said that she will pay particular attention to cleaning up the Gulf of Riga.

* At a ceremony attended by some 200 people, including leftist leaders Janis Jurkans and Alfreds Rubiks, Riga City Council Monument Board head Ojars Sparitis unveiled a restored statue of Russian military leader Barclay de Tolly in Esplanade Park in central Riga on 1 July, BNS reported. The statue of the former Russian war minister from 1810-1812 had been erected in 1913 but was lost while being evacuated in 1915. The next day in an interview over Latvian state radio, President Vike-Freiberga criticized the council's decision to erect the statue.

* Economy Minister Aigars Kalvitis said on 2 July that he will soon propose that the validity of privatization vouchers be extended beyond the current date of 31 December 2002, BNS reported. His statement was prompted by the fall in the price of the vouchers the previous day after the announcement that shares of Ventspils Nafta, which had recently purchased 49.94 percent of the shares of the Latvian Shipping Co. would only be sold for cash and not for the vouchers. In early May, there were still 10.9 million unused privatization vouchers, of which 5.9 million were held by individuals.

* Fifteen shareholders of the Riga Stock Exchange (RSE) accepted the proposal by the HEX Group, the owner of Helsinki Stock Exchange, and signed an agreement on 28 June under which the HEX Group will become the owner of 92.98 percent of RSE, BNS reported. Last year the Tallinn Stock Exchange signed a similar agreement with the HEX Group and was integrated into the HEX trading system in February.

* Two local African musicians from the band Los Amigos turned to the Riga district court and the prosecutor's office on 3 July requesting that a criminal case be opened against officials of the Freedom Party over defamation of character, BNS reported. The two agreed to be filmed in front of the Freedom Monument while one wore a Latvian military uniform and the other traditional African clothing for what they believed was to be a video promoting membership in the EU. The video turned out to be an anti-EU election campaign ad for the Freedom Party, which Latvian state television refused to broadcast in June because it could kindle ethnic hatred (see "Baltic States Report" 9 July 2002).

* American Jewish Committee International Affairs Director Rabbi Andrew Baker talked about Holocaust research and education with Foreign Minister Indulis Berzins in Riga on 4 July, BNS reported. He praised the work done in Latvia in teaching about the Holocaust as well as the revival of Latvia's Jewish community. They also discussed NATO enlargement with Baker expressing support for Latvia's membership.

* The Ventspils port administrator announced on 3 July that the cargo turnover in the first half of the year was 17.18 million tons, a decline of 2.8 million tons or 14 percent compared to the same period last year, LETA reported. The decrease was primarily due to lower exports of crude oil (1.8 million tons) and oil products (0.7 million tons).

* After consultations with her advisers and requests from many local governments, President Vike-Freiberga decided not to sign amendments to the law on municipal budgets and returned them to the parliament for reconsideration, LETA reported on 3 July. She said the amendments have too many sections that can be interpreted in more than one way and would place too many restrictions on local governments' developing international cooperation and obtaining loans.

* The People's Party accepted the membership application of parliament deputy Raimonds Pauls on 3 July, thus raising its parliament faction to 25 members, BNS reported. He had been a member of Latvia's Way in 1993 and worked as minister of culture in the government of Valdis Birkavs, but later resigned. Pauls later was one of the founders of the New Party, serving as the party's chairman before withdrawing from the party in 2000.

* In compliance with the law on state pensions, the retirement age for women was raised by six months from 58 years and six months to 59 years on 1 July, LETA reported. The option of early retirement for women was also increased by six months to 57 years. The law calls for an increase in the retirement age for women by six months every 1 July and set a new retirement age of 62 that will be met on 1 July 2008. The new retirement age for men, also 62 years, will go into effect on 1 January 2003.

WAS THIS VERHEUGEN'S LAST VISIT TO LITHUANIA AS EU APPLICANT?
Following talks with President Adamkus in Vilnius on 4 July, EU Commissioner for Enlargement Gunter Verheugen told a press conference that Lithuania has solved the major issues unique to its preaccession talks with the EU and now only has to address issues relevant to all candidates, ELTA reported. He said that he expected Lithuania to be a new EU entrant during his next visit. While visiting parliament, Verheugen rejected the Russian proposal of establishing a nonvisa corridor through Lithuania for travel between the Kaliningrad exclave and Russia. He expressed doubt that Lithuania would gain a transition period for the sale of farmland already provided to some other EU candidates if it was to reopen for negotiation the already closed chapter on the free movement of capital. Verheugen suggested that Lithuania's farmers will succeed in obtaining higher agricultural quotas than those currently proposed and that the future EU benefits will actually boost their incomes by 50-60 percent. He also stressed that the EU accepts its shared responsibility to finance the shutdown of the Ignalina nuclear-power plant.

PARLIAMENT URGES DELAY IN ALLOWING LAND SALES TO FOREIGNERS.
An extraordinary session of parliament on 1 July adopted by a vote of 74 to 28, with 10 abstentions, a resolution calling on the government to reopen negotiations with the EU on the previously closed chapter on the free movement of capital, ELTA reported. Lithuania had earlier agreed that it would amend its constitution to allow EU citizens to purchase agricultural land before it was admitted to the EU. Yielding to pressure from farmers' organizations, the parliament approved the resolution calling for the introduction of a transition period of seven to 10 years before the land sales to foreigners would be allowed. It grants an exemption to farmers of EU member states who have lived uninterruptedly in Lithuania for at least three years, have registered a farm, and have been engaged in farming activities. Parliament leaders have also decided to postpone until the fall the second vote on the amendments to Article 47 of the constitution to allow the sale of land to foreigners

FORUM DISCUSSES KALININGRAD ISSUES.
In Vilnius on 28 June, parliamentary Chairman Arturas Paulauskas opened a two-day forum of deputies from the parliaments of Lithuania and Russia's Kaliningrad Oblast by noting, "Kaliningrad's future largely depends on the political, economic, and diplomatic decisions Russia will make and its readiness to give Kaliningrad freedom of action in developing economic ties, especially with the EU, in the fields of transport, energy, border-infrastructure modernization, environmental protection, tourism, and the efficiency of a Special Economic Zone," BNS reported. Parliamentary Deputy Chairman Vytenis Andriukaitis urged Russia to give more attention to solving problems that result from delays in border crossing. Kaliningrad Duma Chairman Vladimir Nikitin expressed his hopes that visa-free travel for Kaliningrad residents transiting Lithuania will be retained, but noted that the greatest problem for Kaliningrad is not the visa question, but how "to find a place in the economy of the expanded EU."

PARLIAMENT REVISES 2002 BUDGET.
The parliament revised the 2002 state budget on 4 July by reducing projected national-debt-servicing costs by 65 million litas ($18 million) and raising anticipated budget revenues by 57 million litas, BNS reported the next day. The new budget foresees expenditures of 10.06 billion litas, revenues of 8.93 billion litas, and the same budget deficit of 1.13 billion litas. Some 30 percent of the additional expenditures of 122 million litas will go to finance Euro-integration projects. The parliament also ratified the agreement signed by Prime Minister Algirdas Brazauskas and his Latvian counterpart Andris Berzins in March on the activity of border commissioners. It requires each country to assign border commissioners who will analyze the border situation, harmonize and coordinate the activity of border-defense officers, and tackle other issues concerning border-crossing posts.

LAW ON PERSONAL INCOME TAX PASSED.
By a vote of 68 to 18, with 21 abstentions and 34 not voting, the parliament on 2 July adopted the law on personal income tax, which will go into effect on 1 January 2003, BNS reported. The law introduces a compulsory general declaration of income, with all residents required to declare their incomes for the year 2003 in early 2004. It reduces the number of tax rates applied to personal income from eight to two: 15 percent and 33 percent. The law also raises the monthly tax exemption from the current 250 litas ($71) to 290 litas for all employees. Tax exemptions for families with children will also be increased. Budget and Finance Committee Chairman Algirdas Butkevicius estimates that exemption hikes will result in a loss of 280 million litas to the state budget.

* Defense Minister Linas Linkevicius completed his four-day visit to Georgia by meeting with President Eduard Shevardnadze on 29 June, ELTA reported. They discussed the idea of holding an international conference in Vilnius on security in the Caucasus as a way to inform the Caucasian states about the Baltic experience in defense cooperation. The previous day, Linkevicius participated in the closing of the international military exercise Cooperative Best Effort 2002 not far from Tbilisi, which was attended by servicemen from 15 countries, including a team of doctors and dentists from Lithuania who provided medical care to hundreds of refugees.

* In talks in Moscow with his Russian counterpart Sergei Ivanov on 1 July, Defense Minister Linkevicius invited Russian soldiers to participate in the international exercise Amber Hope in Lithuania next year, BNS reported. This is now possible since the Lithuanian law on international military operations was recently amended to allow the country's troops to participate in military exercises on the territory of the former Soviet Union. At a subsequent press conference, Linkevicius said that Lithuania's plans to join NATO were not aimed against Russia and that he hoped that Kaliningrad Oblast would not be isolated, but would participate in regional cooperation.

* Greek Minister for European Affairs Giannitsis discussed the major issues of EU enlargement with President Adamkus in Vilnius on 2 July, ELTA reported. He also spoke about Greece's priorities when it presides over the EU in the first half of 2002. After talks with Foreign Ministry Secretary Rytis Martikonis, Giannitsis told a press conference that he expects Lithuania to sign its EU accession treaty in Athens in March or April next year. He said that Greece or Spain would serve as better examples of integration into the EU than Ireland, which differed by being English-speaking and having long historical relations with Great Britain.

* Danish Ambassador to Vilnius Eva Janson told Prime Minister Brazauskas on 2 July that her country's key priority in heading the EU for the rest of the year will be EU enlargement, ELTA reported. She expressed the hope that all 10 candidate countries would be able to complete their accession negotiations before the EU summit in Copenhagen in December. Janson praised Lithuania's decision in June to agree to the closure of the nuclear-power plant at Ignalina and urged Vilnius to seek a prompt deal on technical issues, leaving only basic political matters for the final phase of talks.

* Finance Ministry and European Commission officials signed a memorandum on 2 July by which the EU agreed to grant 9.4 million euros ($9.1 million) in aid under the ISPA program to finance the closure of the Kairiai landfill and other old waste-disposal sites in the northern region of Siauliai and their replacement with a new landfill, ELTA reported. Lithuania will contribute 5.26 million euros to the project.

* A contract to supply the instrumentation and control elements of the Diverse Shutdown System for the second reactor of the nuclear-power plant at Ignalina was signed in Vilnius on 1 July with the British company Data Systems & Solutions, BNS reported the next day. The project is valued at about 13.2 million euros ($12.5 million), is funded under the EU PHARE program, and will take two years to implement.

* Lithuanian Energy exported a total of 3.46 billion kilowatt-hours (kWh) of electricity in the first half of this year compared to 730 million kWh in the same period in 2001, ELTA reported on 3 July. The electricity went to Belarus (1.69 billion kWh), Kaliningrad Oblast (1.22 billion kWh), Latvia (426 million kWh), Estonia (93 million kWh), and Poland (23 million kWh). The company made a profit of about 155 million litas ($42 million) from the sales.

* Chairman of the Seimas' Education and Culture Committee Rolandas Pavilionis announced on 3 July that he was one of a group of 17 persons, including two other parliamentary deputies, a priest, a well-known feminist, and a former political prisoner, who are launching a campaign to hold a referendum on Lithuania's membership in NATO, ELTA reported. To hold the referendum, the group has to obtain either the backing of at least 36 parliamentary deputies or collect signatures from at least 300,000 eligible voters. Neither prospect seems very likely.

* The parliament adopted amendments to the health-care-insurance law on 3 July that will require substantially larger state contributions to the Compulsory Health-Insurance Fund (PSDF), ELTA reported. Health-Care Committee Chairwoman Dangute Mikutiene said that the state contribution per state-insured person had decreased from 242 litas ($60.5) in 1998 to 187 litas this year and that without state support the PSDF would be bankrupt next year. Although the Social Democrats opposed the amendments, they were passed by the votes of the Social Liberals together with the opposition parties.

* The cabinet approved amendments to the foreign-currency and money laws on 3 July that would allow the use of noncash payments using foreign currencies if both parties to a transaction agree, ELTA reported. This is intended to create more-favorable conditions for credit institutions and to ease services and mutual payments to clients of banks. The amendments also abolish the requirement that Lithuanian commercial banks obtain permission from the Bank of Lithuania to open accounts or deposits with foreign banks. The amendments will be submitted to the parliament for approval.

* The government decided on 3 July to give all the remaining state-owned shares in Lietuvos Telekomas (10.03 percent) and the shipping company Lietuvos Juru Laivininkyste (6.58 percent) as payments to the owners of land and other property who should receive compensation, BNS reported the next day. The transfer of shares will be carried out in three stages from October 2002 until the end of March 2004. The shares, whose current value is about 91.6 million litas ($26.3 million), will only be able to settle a small share of the compensation that may amount to 430-500 million litas.

* The Labor Office announced on 3 July that the number of registered unemployed in the country at the beginning of the month was 187,500, an unemployment rate of 10.7 percent or 0.4 percent lower than a month earlier, ELTA reported. This was the sixth consecutive month that the unemployment rate had decreased.

* The Statistics Department announced on 28 June that the gross domestic product (GDP) grew by 4.5 percent in the first quarter of this year compared to same period last year, BNS reported. The GDP totaled 11.2 billion litas ($3.1 billion) or 3,216 litas per capita. The growth is greater than the previous estimate of 4.1 percent, which did not include data on the construction, trade, or transportation sectors.

* Chamber of Agriculture head Jonas Ramonas told reporters on 2 July that farmers were calling off their planned protests in front of the parliament later in the week because the parliament the previous day had postponed the adoption of the amendments to the constitution allowing the sale of land to foreigners until the fall, BNS reported. He also approved the parliament's resolution calling for a reopening of the chapter on the free movement of capital in EU negotiations to seek a seven-10 year transition period for the sale of land.

* President Adamkus received the credentials of the new ambassadors of New Zealand and South Korea, David Payton and Sang-duk Choi, respectively, on 2 July, BNS reported. Payton will reside in The Hague and Choi in Copenhagen.