The Baltic Course  

News & Views

Lithuania says “yes” to the European Union with a referendum

Photo: A.F.I.

The decision of the Lithuanian people voting overwhelmingly in favor of joining the European Union (EU) was cheered by Lithuanian President Rolandas Paksas on May 20 in the White Hall of the Presidential residence accompanied by Beethoven’s Symphony no.9 and final chorus from Schiller’s “Ode to Joy”. The turnout in the EU referendum on May 10-11 reached 63.3% of the registered voters, out of which 89.92% (nearly 1.498 million people) voted in favor of “a bright future within the EU”. The referendum gives the President the popular mandate needed to ratify country’s treaty with the EU, signed at an Athens summit meeting in April 2003.

The largest number of euro-sceptics occurred in regions where non-Lithuanians prevail among the population. Thus, 21.5% voted against Lithuania’s membership in the EU in Visaginas (the town populated by the personnel of Ignalina nuclear power plant);in Salcininkai euro-sceptics numbered 20.6% and in Vilnius area 19%.

The referendum results will carry tremendous importance both for Lithuania and for its Baltic States’ neighbors as well: in Estonia where the EU referendum is scheduled for September 13, and in Latvia where the EU vote will be held on September 20. According to the information from the Lithuanian Central Electoral Commission, the estimated price for the referendum to the budget was about 12 million litas (about EUR 3 mln). Some support from the EU funds and Lithuanian private capital helped to cover a sizable part of expenses in the event preparation and implementation.


Nordic and Baltic states in favor of a common sub-Scandinavian region in new EU

During the Baltic Assembly and the Nordic Council joint meeting in late April in Lund (Sweden) an important issue had been discussed. The aim was to find ways to use more than a decade long cooperation between Nordic countries and the Baltic states as a basis to create a political and economic “Northern Dimension” within the EU. The meeting focused on three main subjects: the combat against organized crime and drug trafficking, as well as anti-corruption efforts; management of human and civil rights’ critical issues, and further development of regional policy in the EU.


Kaliningrad’s transit problem has been solved

Russian State Duma’s International affairs committee chairman Dmitry Rogozin after talks with Lithuanian President Rolandas Paksas late April in Vilnius acknowledged “that the transit problem had definitely been solved”. “It only required additional legal guarantees, a sort of ratification procedure. We accomplish what had already been planned before”, he added. 

 Since February 1, 2003 Lithuania had already toughened passport regime for transit passengers. But starting from July 1, 2003, according to the decision reached, Russian citizens are able to travel to Kalningrad region via Lithuania, using the so-called facilitated transit travel documents. This decision had to be made so that transit of Russian citizens through Lithuanian territory would not violate Lithuania’s integration into the Schengen Treaty area into which the country would enter when joining the EU.

In May 2003 the Russian State Duma ratified bilateral agreements about Russian-Lithuanian national borders and demarcation of the exclusive economic zone and continental shelf in the Baltic Sea.


Estonia has a new Prime Minister

Photo: E. Prozes, Aripaev

The leader of Estonia’s Res Publika party Mr. Juhan Parts, has been appointed  Estonia’s new prime minister. In early April 2003 Estonian parliament confirmed Mr.J.Parts as the head of government and authorized him to form the new Cabinet of Ministers. “Our actions will be based on calm and steady continuation of the foreign policy course pursued by the previous government and aimed at Estonia’s accession to the EU and NATO,” said the new Prime Minister. “Steadiness is required in particular at present time, in view of growing tensions in the global policy”, he added.


BALTBAT has had its mission completed

Photo: The BC archives

BALTBAT, the joint armed forces battalion of the three Baltic States will be disbanded in the fall of 2003. Some new forms of military cooperation between Lithuania, Latvia and Estonia will proceed. 

The traditional meeting of Baltic States’ Defense ministers – Linas Linkevicius,  Lithuania, Girts Valdis Kristovskis, Latvia and Margus Hanson, Estonia was held on May 23, 2003 in Trakai, Lithuania in order to discuss the issue.

Lithuanian Defense minister said that three other Baltic defense cooperation projects – the air space surveillance and control system BALTNET, the Baltic navy squadron BALTRON, the Baltic Defense College or BALTDEFCOL, have not lost their meaning. They will continue to be important and be safeguarded. “All these projects must find their future within the present NATO’s structures,” said Lithuanian Defense minister.


Latvia is no longer branded an offshore territory by Russian Central bank

Russian Central Bank has removed Latvia from the list of offshore areas to which this Baltic state was included in February 1999. Latvia was put on the list because Russian security agencies were concerned about the scheme for illegal capital transactions between the two countries. One of the factors contributing to the favorably new decision was the Russian central bank delegation, headed by first vice-chairman Andrei Kozlov, visit to Riga in October 2002.

As soon as the Russian Central Bank directive takes effect, all Latvian credit institutions will again be able to open correspondent accounts in Russian banks in the national currency (i.e., rubles). Consequently, they will be able to offer their clients transactions in rubles. At the same time, both Latvian and Russian companies will no longer be obliged to settle payments through American or other foreign banks. Outside the finance sector, the above lifting of restrictions will facilitate cooperation between small and medium businesses in Latvia and Russia, notably in the border areas.

“Russian bankers have been long working with Latvian companies through funds organized in the Scandinavian states, therefore removing Latvia from the list of offshore zones will not affect them seriously,” wrote the Russian newspaper Коммерсантъ.


Lithuania adopted a law on Ignalina nuclear plant

Photo: A.F.I.

The Lithuanian Parliament in April 2003 approved a bill on social guarantees and additional employment benefits for the staff of Ignalina nuclear power plant - INPP . The issues on benefits’ provisions have been drafted over the period of two years and aimed to support those employed at INPP. The main purpose is to help people make decisions as to whether they are going to stay in Lithuania and find a new job in the country or try their luck abroad, said Algirdas Sysas, the chairman of the Parliamentary committee for social affairs and labor. The law provides for payment of about 5 million litas in various allowances; another 12 million litas will be spent on support to the families of the INPP’s   personnel to be laid off.

Lithuania has pledged to the EU to shut down the first INPP’s reactor by 2005 and close the second one by 2009 upon adequate assistance from the EU in shutting down the facility, including required subsequent actions. 


Underwater cable to link the Baltic States and Northern Europe

Energy companies Latvenergo, Eesti Energia, Pohjolan Voima and Helsinkin Energia have signed a letter of intent concerning stretching the Estlink underwater cable between Estonia and Finland to allow for electric power transmission. The energy transit would proceed in both directions at estimated direct current of 350 MgW. The project will cost about 110 million €; half of the needed resources will be provided by Finland, and the rest by Latvia and Estonia.

The cable between Estonia and Finland will be the first of its kind to link the Baltic States with the Northern European’s electric power system. The completion of the project is planned for the end of 2005.

Eesti Energia’s board chairman Gunnar Okk said that the project was aimed at mainly exporting electric power produced in the Baltic States for the market in Northern Europe. “The underwater cable between Estonia and Finland will also help to improve safety of electric power transmission,” he said.


Latvia n Saving Bank’s sell-off triggers public scandal

Photo: NRA

The sale of Latvijas Krajbanka’s (Latvian Savings Bank) 25% shares was the biggest fraud in Latvia’s history, claims Aivars Lembergs, the mayor of north-western Latvian port city Ventspils and the holder of 3% shares in Latvijas Krajbanka. Mr. A. Lembergs believes that several millions of lats slipped past the Latvian State Treasury as a result of this inside trading deal. Parex Bank’s president Valery Kargin supports his opinion; he acknowledged that “dirty offshore money must not be allowed to enter Latvian economy.”

The auction on May 17, 2003 drew only one bidder, an offshore company Doxa Fund Limited registered in the British Virgin Isles and believed by many to be linked to Macasyng Holding BV that holds 1% in Latvijas Krajbanka (with another 26.29% pledged to by other shareholders of the bank). Doxa Fund Limited bought from the Latvian state 2.28 million shares in Latvijas Krajbanka (25.01% of the capital) for the minimum price of 1.81 lats per share. As a result, the state received 4.12 million lats from the sale. Interesting enough, both above-mentioned companies denied any relationship between themselves.

The Latvian public and mass media expressed deep surprise both on the sale of the oldest Latvian bank to an offshore company with unknown owners and “rather strange” deal in absence of any competition. Mr. Lembergs said he had information about alleged ties of Latvian vice-premier Ainars Slesers, MP Arnolds Laksa and other high-ranking officials with Doxa Fund Limited. Latvian Prime Minister Einars Repse meanwhile expressed his full support for the deal.

The scandal also involves a number of Ventspils-based companies -- Kalija Parks, Ventamonjaks and Ventbunkers which together hold 26.01% in Latvijas Krajbanka and wanted for themselves pre-emptive rights at the auction. Nevertheless, they were not able to use these rights, even though the court ruled in their favor on the eve of the auction.


Russia’s Noil  builds terminal in Sillamae 

Russian oil and gas corporation Noil founded in May 2001 launched construction of a gas terminal construction and gas refinery facilities in Sillamae, Estonia this May. The undertaking’s estimated expenses are within 10 million US dollars. Noil’s board of directors chairman Mikhail Petrov said the construction will be completed in January 2004. This fall Noil also plans to start building two gas processing facilities on the territory of the Sillamae’s free economic zone.

Noil believes that construction of gas processing facilities and the terminal in the coastal town of Sillamae just 29 kilometers from the Russian border will allow for considerable reduction of costs for delivery of its products to Europe. Noil wishes not only to invest in gas processing industry but also to become a co-owner in the port to be built in Sillamae, said Mr. M. Petrov.


Klaipeda has won 2003 European Prize

Photo: A. Cepulinskaite

This decision was taken unanimously by the Committee on the Environment and Agriculture of the Council of Europe's Parliamentary Assembly during its April parliamentary session in Strasbourg.

The prize was given to Lithuania’s Klaipeda port for active international cooperation with foreign cities. Klaipeda has a total of 16 very active twinned towns, most of them in Europe - in particular with port cities such as Liepaja (Latvia), Gdynia (Poland), Kotka (Finland), Karlskrona (Sweden) and Kaliningrad (Russia) - but also in the United States (Cleveland) and Japan (Kuji).


From Riga to St.Petersburg

Photo: S. Kulikov, MPC

A copy of the monument to the Russian tzar Peter the Great designed in Riga was in May 28th put up in St. Petersburg in front of the northern facade of the Konstantinovsky Palace in Strelnya region. The international Konstantinovsky Art Foundation covered all the expenses concerning the casting and transportation. Denis Gochiyaev performed the casting in St. Petersburg.

Yevgeny Gomberg, an art patron, paid the costs for restoration of the horseback statue of Peter the Great in Riga. Riga City Council decided that the sculpture should be put on display in the Viesturdarzs Park in the Latvian capital, as in the old days the park was called after the Russian tzar.

The monument to Peter the Great was erected in Riga in the beginning of the 20th century. During World War One it was decided that the statute should be melted to make artillery guns, but the ship that was carrying the monument sunk near the Estonian coast. The sculpture was later recovered from the sea and Latvia bought it back from Estonia.


Estonian contemplates nationalizing railway   

Photo: E. Prozes, Aripaev

The Estonian government is considering possible nationalization of railway infrastructure in order to get access to the EU funds. The Postimees newspaper reported that the local passenger transportation operator Edelaraudtee might sell back to the state the Tallinn-Tartu and Tallinn-Parnu lines; although no official proposal has been received from the government yet.

The largest operator of international cargo transportation and the owner of the respective infrastructure, Eesti Raudtee company, are skeptical about the nationalization idea and would prefer to speak about cooperation with the state. The debate about possible nationalization of railway infrastructure initiated mainly because local passengers’ railway service in Estonia is completely unprofitable and needs subsidies from the state.

Experts believe that the service could survive only if existing trains were replaced by fast trains but this will require enormous investments in the infrastructure. It is quite possible to obtain some EU funds but only on the condition that the infrastructure is state-owned.


VP Market moves to Poland

Top executive officers in the largest Baltic food retail chain VP Market – president Nerijus Numavicius and  vice-president Zilvinas Marcinkevicius with their families are moving to Poland for work and residence in Warsaw. About 15-20 company experts will also go to Warsaw together with VP Market owners. In next few years the company plans to open up to 1,000 stores and take 5-7% percent of the Polish retail market. The shops in neighboring Poland will be supplied also with products made in Lithuania.

In the Baltic states VP Market owns a retail chain of 217 shopping centers, including 166 stores in Lithuania, 50 in Latvia and 1 in Estonia. This year VP Market plans to open another 31 stores in Latvia. Annual turnover from Baltic operations in 2003 is expected to rise to one billion Euro.


No need to invent a bank

Photo: NORD/LB

Latvian Pirma banka changed its name to NORD/LB Latvija as of  May 5, 2003. The bank has been the subsidiary of NORD/LB and part of the German bank’s regional network around the Baltic Sea since June 2000.

The new name is a clear signs that quality of NORD/LB Latvija services has risen to the level of an internationally recognized and influential bank. In last three years NORD/LB Latvija has shown one of the most dynamic growths among Latvian banks. In 2002 its assets increased by 50% to 143 million lats, credit portfolio soared 80% to 88 million lats and total deposits grew by 60% to 63 million lats.

NORD/LB Latvija as a universal bank offering wide range of both corporate and retail banking services has been the first project by NORD/LB in the Baltic States. NORD/LB Latvija’s success in the country encouraged the German bank NORD/LB to expand further on its Baltic States operations.


Russians ready to invest in Lithuania’s Snoras bank  

Russia’s Konversbank, the largest shareholder in Lithuanian bank Snoras, intends to invest additional 50 million US dollars in the fourth largest bank in Lithuania. The Russian bank plans to buy 25 million litas worth of Snoras shares. Recently Кonversbank acquired 49.9% in the largest of Snoras shareholders, a Luxembourg-registered  offshore Incorion Investment Holding Company. After the purchase of the new issue Кonversbank   will hold 57.6% in Snoras shares.

Snoras group consists of Snoras bank and its subsidiaries -- Snoro lizingas, Snoro garantas and Vilniaus kapitalo vystymo projektai. The bank’s assets totalled 1.10 billion litas at the end of 2002, rising more than 1.2 times from the year before.


Photo: J. Staselis, Lietuvos rytas

“Star of Creation” medal goes to Donatas Banionis

Prominent Lithuanian movie and theater actor Donatas Banionis received the award in St. Petersburg during the city’s 300th anniversary official celebration. “The Star of Creation” issued by a public organization was an award in acknowledgement of the  Lithuanian actor’s devotion to art, much loved by the Russian audience, and for his contribution to the motion pictures development.