CER | Latvia assesses the risk of Mad Cow Disease

Baltic defense cooperation reaches new levels

Latvia, Lithuania and Estonia, at a meeting of their defense ministers, moved one step closer to defense integration by agreeing to a joint weapons procurement policy, as well as to the establishment of a joint inventory and accounting system and a joint maintenance facility for naval mine-hunter fleets. The three Baltic countries are establishing a task force at the working level to craft this effort in more concrete terms.

In a communiqué issued at the end of the meeting in Tallinn, the defense ministers agreed to study joint procurement of weapons systems, establish a joint military base where Lindau-class mine-hunter ships will be maintained and introduce a joint accounting and inventory system to track equipment, supplies and personnel.

Purchases of air defense systems could be one area where Latvia, Estonia and Lithuania could engage in joint procurement, in an effort to save money by buying larger amounts of equipment. The defense ministers also agreed to cooperate closely in preparation for NATO membership, stating that all three countries are equally ready to join the North Atlantic alliance.

Russian concessions unlikely

The Latvian mass media have been misinterpreting the meeting between the Latvian and Russian presidents, Russian Deputy Foreign Minister Aleksandr Avdeyev told a delegation of Latvian left-wing lawmakers, saying that Russia has no intention of making concessions on issues it regards as principle. The Latvian opposition quoted Avdeyev as saying that several Latvian politicians and analysts "decided that Russia will concede, but it is not going to be so."

Russian diplomats have made new statements now to stress that Russia has not changed its position regarding the situation of Russian-language speakers in Latvia. The delegation sent to Moscow by the left-wing alliance For Human Rights in an Integrated Latvia included faction chairman Jānis Jurkāns and several MPs. The Latvian lawmakers visited Russia at the invitation of Duma Deputy Speaker Vladimir Lukin. But they were met at the highest level by the Russian Premier and Moscow Mayor Yuri Luzhkov. It is widely believed that Jurkāns's party is financed by Russian government sources.

Fighting mad cows

Latvia may face the risk of Mad Cow Disease (BSE), due to past imports of milk substitutes used to feed to calves, the German federal veterinary service warned during a visit to Latvia. "If we take into account that this milk substitute was imported into the Baltic countries since about 1997, and the incubation period of the disease is from four to six years, you can calculate yourself when you could see first cases of the disease," he said.

Latvia has imported milk substitutes from Denmark and the Netherlands in the past. Latvia has not currently banned the import of milk substitutes but will watch closely how other European countries handle this issue.

Latvian Agriculture Minister Atis Slakteris told journalists he thought it was not clear whether milk substitutes meant increased risks. Latvia has, however, halted beef imports from Italy, Britain, Germany, Luxembourg, Liechtenstein, Belgium, Denmark, Switzerland, Portugal, France, Ireland, Spain and the Netherlands.

Latvian gas up for sale?

The Latvian Privatization Agency (LPA) said that it has considered splitting the state's remaining eight percent stake in Latvijas Gaze (Latvian Gas) between Russia's Gazprom and two large German strategic holders. The Latvian natural gas utility is 25.6 percent owned by Germany's Ruhrgas and another German company, E ON Energie, which holds 17.1 percent of the company.

Russian gas giant Gazprom owns 25 percent of LG. "We discussed several approaches. One theoretical possibility mentioned was to maintain proportionality between Germans and Russians and sell four percent to each," LPA head Jānis Naglis said, after discussions with the Germans. "Given that it is a strategic investor transaction ... they would not be prepared to pay the current bourse price," Naglis added.

The agency was expected to start talks with German and Russian shareholders in February but arranged the meeting following a request made by the Germans.

Shipping privatization on track

The Latvian government approved three bidders in the process to buy a 68 percent stake in Latvijas Kuģniecība (Latvian Shipping Company, LASCO). "Six companies had applied, and we approved the 'long-list' of three companies," Economics Minister Aigars Kalvītis told journalists after the cabinet meeting, though he did not name the bidders.

The three approved companies will have to place their bids in early April, and the cabinet will evaluate the bids and shortlist the companies. The cabinet will also name the minimum price for the majority stake in the company. Delna, a local arm of Transparency International that observes the privatization process, said it found no violations in the first stage of the privatisation of LASCO. The auction is expected to take place in May.

Via Baltica to be extended

Baltic and Polish transport authorities have agreed on a six-year, USD 607.3 million investment plan for a key regional highway and its access roads. The committee said in a statement that euro 553 million will be invested into upgrading Via Baltica, the road connecting Warsaw and Helsinki through Tallinn, Riga and Kaunas. The rest of the money will be used for access roads in Estonia and Latvia.

This is the second stage of the Via Baltica project. During the first stage, which ran from 1996 to 2000, euro 214 million was invested into upgrading the road. The Second Investment Program, which will focus on new town and village bypasses, will be financed by the European Union's ISPA fund, the national governments and international financial institutions. Investments in Latvia are estimated at euro 271 million, followed by Poland with euro 219 million. Estonian and Lithuanian investments total euro 35 million and euro 28 million respectively. The traffic on Via Baltica is estimated to grow by 30 to 50 percent in the coming six years.

In economic news...

Economics Minister Aigars Kalvītis said in an interview that the government sees supporting high-tech industries, such as IT and pharmaceuticals, as a priority to ensure the country reaches the same welfare level as the rest of Europe in coming years.
Latvia, unlike neighboring Lithuania, will not widen its ban on beef imports to include more countries. Latvia has banned beef imports from 13 countries, while Lithuania has banned imports from 60 states.
The Latvian leasing market grew 48 percent year-on-year in 2000, with the total leasing portfolio growing to LVL 179 million (about USD 289.2 million).
Cargo turnover at three key Latvian ports rose 2.5 percent year-on-year in January to 4.167 million tons.
Mortgage lending by Latvia's commercial banks almost doubled in 2000, rising 91 percent and accounting for 11 percent of total bank lending of LVL 1.09 billion.
Latvian retail sales in 2000 amounted to LVL 1.763 billion (about USD 2.84 billion), a nine percent rise from 1999.
Latvia's foreign debt fell LVL 11.88 million year-on-year to LVL 347.1 million (USD 560.7 million) in 2000.

Daria Kulagina, 16 February 2001

Moving on:

Sources:

Diena
Reuters
Neatkarīgā Rīta Avīze
LETA
BNS
Dienas Bizness
Bizness Baltija