The Baltic Course

Winter 2002

COVER STORY

Sports
Sandis Ozolins has spent the last ten years in United States. During this time he has managed to not only to play in hockey teams like San Jose, Colorado and Carolina, but has also participated in All-Star Games which is a great honour for any ice hockey player. Sandis invests his millions in building an elite golf club in Latvia. For the second year running, an ice hockey team he founded, named Vilki or the Wolves, plays in the supreme championship league of Latvia

IN THIS ISSUE:
ECONOMICS
POLITICS
FREE ZONES
ENERGY
ENVIRONMENT
OIL TRANSIT
AIRLINES
POLITICAL ECONOMICS
ALCOHOL MARKET
CRIME
TECHNOLOGIES
CONTACTS
LEGISLATION
PRESS
HISTORY
GOLD & DIAMONDS
FINANCES
SPORTS
ECONOMICS

Fiesta in misfortune?
The misfortune may not be all too close to home for the Baltics, but anti-terrorist alliances and the global anthrax scare has nevertheless lulled the fiesta that has still trickled into rejoice over the enduring economic growth of the Baltic states. Figures for the second quarter of 2001 show that the Latvian GDP has increased by 9.2 %, while the GDP of neighboring Lithuania and Estonia grew a respective 5.7% and 5%


POLITICS

NATO - yes, no or - already?!
The undefendable Baltic region and ever-cautious Finland
The question of a tricky bond between Finland and the Baltic states in relation to NATO already surfaced a decade ago. In the atmosphere of the mid-Nineties, both the Finnish public and political leadership felt and practiced an overwhelming support to the Baltic states. There had been a clear psychological element in the Finnish-Baltic romance: being quite a small and largely isolated country (until its recent EU-membership), living morally and politically in the shadow of its big Soviet brother, Finland was all but happy to adopt the new and tempting role of playing patron and benefactor. Supporting the Baltics on their way to restored independence was quite important for the Finns. It was a substantial part of their own way of self-liberation after 50 years of depressing and humiliating dependability from the moods and needs of Moscow.


FREE ZONES

Free zones on the fence
Free zones are a good way to attract investments, and Baltic ports are well aware of it. Yet it's not easy to solve all contradictions arising in the establishment of duty-free zones while keeping in view aspirations to European Union membership


ENERGY

Gas price cuts - a spoof
The president of Itera Latvija gas company, Juris Savickis, told the BC that gas market liberalization in the Baltics will not lead to a price reduction as expected by the public, but on the contrary - to a price hike.

Political liberalization
Natural gas consumption in Europe may double over the next ten years. The Baltic states keep returning to the question of gas market liberalization with ever increasing frequency, as well as to projects on importing gas from Nordic countries, a move that would rid the Baltics from excessive dependence on Russia. The topic was brought back to the foreground again recently by the agreement of the century signed in July 2001 between Denmark and Poland on a two-year construction project for a 320 km long underwater gas pipeline.


ENVIRONMENT

The Baltic Sea: hot-spots, problems and promises
The BC asked leading experts to comment the basic ideas of the Baltic Marine Environment Protection Commission, also known as the Helsinki Commission, or HELCOM.

Making oil exports safer.
The BC asked Bengt Soholm Jepsen, an expert with Denmark's Carl Bro environmental consultants, to give his assessment of the current environmental situation in the Baltic Sea region and the way oil terminals affect this situation


OIL TRANSIT

A matter of economic reasoning
This past October Russia's oil giant LUKoil marked ten years of operations in Latvia, and the company's president, Yury Storozhev, came to Riga for the occasion. The anniversary reception was hosted by LUKoil's subsidiary, LUKoil Baltija R, in posh surroundings Old Riga at the Blackheads House, a recently completed duplicate of a medieval building that used to stand opposite the old town hall (also being rebuilt) until it was destroyed in World War II. In an interview to the BC Mr. Storozhev assured the magazine of LUKoil's intention to increase its presence in
the Baltics


AIRLINES

As we tighten the belt.
British Airways foresees a global crisis and switches to increased economical regime. The Baltic Course interviewed Tom Anderson, commercial manager of British Airways in the Baltic States, who shared his opinions and visions concerning development of the air carrier market within this particular region


POLITICAL ECONOMICS

Council of former leaders
Among a host of international organizations and top end clubs, there is one unique council that gathers former prime ministers and presidents of countries from around the world. The Baltic states are represented in this prestigious gathering by Mr. Valdis Birkavs - the first Prime Minister of Latvia after the restoration of the pre-war constitution, one of the long-standing ministers of foreign affairs, Dr. Jur., vice president of the Liberal International etc., etc.


ALCOHOL MARKET

In vino veritas
All three Baltic states exceed the norms of alcohol consumption per capita set by the World Health Organization (WHO). Latvia - as a tradition - is the leader in terms of imported alcoholic beverages. Lithuania is in no hurry to hand over the production of spirits to private hands, while Estonian distilleries join forces in an attempt to combat the shady black market

Latvian cocktails with Russian vodka
Latvijas Balzams is the largest producer of alcoholic beverages in the Baltic countries. This is probably one of the reasons why Russia's Soyuzplodimport bought 49% of the company's shares six months ago, thus becoming the company's biggest shareholder and strategic investor. The BC met with the new managing director of Latvijas Balzams, Juris Gulbis, holding office after the latest change in management

 


CRIME

It's not the vodka that kills
After restructuring the spirits market, conflicts and murders in Latvia seem to be tailing off. The fight against smuggling in Lithuania continues with varying success, while Estonia has sharply increased consumption of legal spirits after the Parnu moonshine tragedy


TECHNOLOGIES

Forum of digital dreams
The Baltic Sea Region e-Business Forum held at the end of September in Riga will no doubt be included on the list of the most remarkable events of the outgoing year, assembling delegations representing some of the most distinguished corporations and banks, which shared their opinions and visions on the development of the e-business market over the world wide web. Some of the reports were noteworthy not only from an IT businessman's point of view, but also from the position of economists, financiers and even ordinary computer operators

Riding the waves of franchising
Mid-October in Riga was marked by the first Franchising 2001 international conference. As was expected, more questions were left unanswered than not after the event - nevertheless, it was still the first such conference held, and the fact that it was arranged is praiseworthy alone. The overall assessment received from participants showed that they generally were pleased to attend the forum, since there are good future prospects in the Baltics for doing business along the line of franchising

 


CONTACTS

Third capital hosts EU ambassadors
Surprisingly or not, a trip by EU ambassadors to the Russian city of Nizhni Novgorod turned out to be the first case of such a working visit to the region which is traditionally passed as the third capital of Russia. The body of delegates to Nizhni Novgorod was headed by Mr Andre Mernier, the Belgian ambassador to Russia, as a representative of the country now holding the rotating EU presidency and Mr Richard Wright, a well known figure on the stage of global diplomacy and the head of the Delegation of the European Commission in Russia


LEGISLATION

Creditor protection
Development of business activity is entering a new phase in the Baltic countries. The time when businesses could avoid responsibility for liabilities to their creditors by reorganizing the company or declaring bankruptcy at ease is gradually falling into oblivion, as new legislation in Latvia, Lithuania and Estonia provides for stricter measures on legal aspects regulating business activities


PRESS

Three countries - three destinies
Despite the similarities in history and geographical location of the three Baltic states, the situation and role of the Russian language press published in Latvia, Lithuania and Estonia, significantly differs


HISTORY

A baron in battle
In the troubled times of today, the Great Caucasus remain in the center of the world's attention. Two wars in Chechnya, conflicts between Azerbaijan and Nagorno-Karabakh, Georgia and Abkhazia, and nests of international terrorism throughout these regions, all bring back memories of the Caucasian War, traditionally dated 1817-64, and the heroes and tyrants of this war - some of which had lived on Baltic soil


GOLD & DIAMONDS

Precious pricing
Gold is the first metal humans learned to handle. Gold was, is and will be a symbol of riches, power and might. Three quarters of all the gold mined in the past 5,000 years was extracted from the bowels of the earth only in the past 500 years. Even so, with demand on the rise there is still a shortage of gold, set to boost prices high, while quite the opposite can be said for diamonds


FINANCES

Home sweet loan
The real-estate market remains a morsel for Baltic markets. The average price for land or a house in Estonia, Latvia or Lithuania is still much lower than that in European countries. Nevertheless, EU accession seems no longer so distant any more and consequently the prices of commodities, services and of course real-estate, are all set to blast off into a big bang. Those who are aware of this fact today try to invest in apartments, houses and land. But if you don't have enough money, you take a banking loan. The BC took a closer look at the situation in crediting the purchase of real-estate in the Baltic states


SPORTS

Ozolins - a patron on ice
Sandis Ozolins has spent the last ten years in United States. During this time he has managed to not only to play in hockey teams like San Jose, Colorado and Carolina, but has also participated in All-Star Games which is a great honour for any ice hockey player. Sandis invests his millions in building an elite golf club in Latvia. For the second year running, an ice hockey team he founded, named Vilki or the Wolves, plays in the supreme championship league of Latvia

Marciulionis - commissioner of the court
The famous Lithuanian NBA basketball player and one time European champion, Sarunas Marciulionis, could spend his days by now kicking back without a worry, yet he keeps going - and not on the court

Budilin - a fighter on the mat
Aleksey Budilin, Estonia, judo, weight category under 81 kilos. Bronze medal winner at the Sydney Olympics in 2000, silver medallist at the world championships in Munich 2001, European champion in Paris 2001, bronze medallist at the European championships in Wroclaw 2000, silver medallist at the European championships in Bratislava 1999, Grand Prix winner at the Moscow tournament in 2001, winner of countless other judo tournaments and events