TALLINN, Estonia (AP) — The entry of the three Baltic countries into the European Union, planned for next year, could improve what have often been severely strained diplomatic and trade relations with neighboring Russia, officials in the former Soviet Baltic republics said Wednesday.
      Just days before a Sept. 14 referendum on EU membership, Estonian Prime Minister Juhan Parts told The Associated Press that his country's entry into the bloc could help consign historical anxieties -- dating back centuries -- to the past.
      "It'll make us feel more secure, and it'll give us more stature," said Parts, speaking at his office in Tallinn, Estonia's capital, near a large Orthodox cathedral that once symbolized Russian power here. "And Russia will see we're not a bad country -- just a normal European state."
      Atis Lejins, of Latvia's Institute of International Affairs, agreed. He said Russia "will have to realize they have lost us forever. Then we will be part of bigger EU-Russia relations, and since the EU is bigger and more powerful (than Russia), it is a different story all of a sudden."
      The EU referendum in Estonia and the one in Latvia on Sept. 20 were likely to pass, though not by nearly the 90-percent "yes" margin of the May referendum in the third Baltic state, Lithuania. The Baltics, along with seven other candidates, are to enter the EU in May, 2004.
      Since the Soviet collapse restored their independence in 1991, the Baltic states have complained at times about what they've described as Russian bullying. Moscow, in turn, has often accused Estonia and Latvia of discriminating against their large Russian-speaking minorities.
      Former Estonian Foreign Minister Toomas Ilves said Russia won't want to jeopardize its all-important trade and diplomatic relationship with the EU, so could be expected to avoid direct confrontations with the Baltic states in the future.
      "For 12 years, Russia has constantly exerted political and economic pressure on the Baltic states, especially Latvia," he was quoted as telling Estonia's Postimees daily. "I presume that after Estonia joins the EU, Russia will abandon its harsh, arrogant policies ... it will soften."
      Age-old trepidation about Russia among Balts is also likely to wane.
      Lingering fears are illustrated by one pro-membership advertisement in Estonia, trying to convey that EU accession will offer protection from Russia: It lists the half-dozen times neighboring Russia has waged war on Estonia, starting with Ivan the Terrible's invasion in 1558.
      "Before, we were too weak to deal with Russia directly on our own," said Marko Mihkelson, chair of the Estonian parliament's foreign affairs committee. "In EU and NATO, we're not alone anymore. That'll make our politicians less emotional in dealing with Russia. That helps."
      Changing mindsets could also boost trade.
      Before the Soviet Union unraveled, the vast majority of Baltic exports went to Russia. Today, less than 10 percent do, with EU states now accounting for more than 80 percent of Baltic trade.
      Legislators have complained for years about double tariffs imposed by Moscow on Estonian exports to Russia, saying they've stifled trade. Mihkelson said they would be dropped automatically when Estonia enters the EU -- according to EU-Russian trade pacts.
      Even doubling the Baltics' now relatively modest trade with their giant neighbor could prove a boon to the small but already economically dynamic Baltic states. They have seen growth near or above 5 percent for several years straight and have aspirations to become so called "Baltic Tigers."
      Russia could also profit.
      "I recently talked to Russian officials in towns near Estonia," said Mihkelson. "They're definitely eager to see Estonia in the EU, to see the EU border so close. They know this will create great business opportunities for them."
      Russian investors, already present here, are likely to be further enticed by the prospect that the nearby Baltics can provide seamless, duty-free access to the whole EU.
      "Russian investment has already poured in" with anticipated Baltic EU entry in mind, said Lejins, especially into the Baltic energy and oil-transport sectors.
      Ilves, the former foreign minister, said EU membership for the Baltics, with their long if troubled history with Russia, could also mean displacing a nearby Nordic nation as the acknowledged authority on the East: Finland.
      Ilves said that after the Baltic states join, Finland "will no longer be the Russian expert to which the EU turns."
       — -
      AP reporter Tim Jacobs in Riga, Latvia, contributed to this report.

      STRESA, Italy, Sept 13 (Reuters) — Latvia's central bank governor on Saturday warned his government not to loosen the budget strings and overheat a booming economy, and the finance minister said he would hold fire next year.
      The officials spoke to Reuters on the sidelines of meetings of European Union finance ministers and central bankers in the northern Italy resort of Stresa that were attended by the 10 countries joining the EU next May.
      Bank of Latvia President Ilmars Rimsevics said in an interview he is satisfied that the official refinancing rate can stay at three percent for the foreseeable future -- as long as the fiscal situation remains in check.
      "We feel we are very comfortable with what we have" for monetary policy, Rimsevics said.
      "The only thing we are now concerned about is that the government, with revenue better than expected, will not distribute extra revenue, which will prompt unnecessary and additional consumption," he said. The International Monetary Fund has also urged the government to tighten its belt.
      The Latvian economy was in danger of overheating earlier this year with growth spurting ahead at an 8.8 percent rate in the first quarter, prompting warning signals from the central bank in July. But growth has cooled since then and is expected to be between six and seven percent this year and next.
      "The risk of overheating now seems to be coming down, because growth is more in line with what we would like to see, six to seven percent, and we are starting to see inflation pressures from the strong euro fully contained," said Rimsevics, reinforcing the message he delivered after a meeting earlier this week with the central bank's board of governors.
      MAYBE LATER
      Latvian Finance Minister Valdis Dombrovskis in a separate interview with Reuters said the government would stick to its plans to reduce its budget deficit next year to 2.0 percent, and would not entertain the idea of new tax cuts for a while. "It is our intention to stick with two percent in the period of rapid economic growth," he said. This year's budget deficit is seen coming in just below 3.0 percent.
      "I would oppose new tax cuts because we are lowering corporate taxes from 19 percent to 15 percent. There could be some changes in taxes, but not next year," Dombrovskis said.
      "The next step could be increasing the personal exemption on individual taxes" possibly increasing the exemption for dependents, he said.
      Latvia votes next week on joining the European Union. Dombrovskis said ahead of that -- and as an observer at the Ecofin meetings in Italy -- he would not comment on proceedings where France is under pressure to bring its budget deficit into line with EU rules.
      But Dombrovskis did say that the fact that France and Germany were breaching breaking EU budget rules to keep deficits below three percent of gross domestic product was giving ammunition in Latvia to proponents of fiscal laxity.
      "Some experts are claiming, 'Why should we care about Maastricht criteria?,' he said. "They use this as an argument for higher spending and say 'Why should we bother?."'
      Despite that, Dombrovskis said he has every intention of sticking to his budget restraint plans.
      ERM II
      Rimsevics said the dispute over terms for new EU members entering the Exchange Rate Mechanism II ahead of adopting the euro currency was not discussed so far at Ecofin. But European Central Bank governors at the General Council meeting on September 18 probably would take it up.
      Latvia plans to apply for ERM II entry for January 1, 2005, with a view to adopting the currency several years later.
      Some ECB policymakers and EU officials have argued new members should delay ERM entry until their economies are more closely aligned to current euro zone members and their currencies can trade in a narrow band, plus or minus 2.25 percent from parity with the euro.
      Rimsevics said Latvia expects to hold bilateral discussions with ECB officials in the next few months over its progress toward getting its economy and markets ready to join the euro currency.

      OMAHA, Nebraska (AP) — Lithuanian Ambassador to the United States Vygaudas Usackas has been visiting the Omaha area on a mission seeking to encourage more Midwestern trade.
      "Businesses will find Lithuania to be a very suitable, conducive and flexible springboard into the European market, and also the eastern market," Usackas said Friday.
      He is visiting Omaha-area businesses and meeting civic and political leaders this weekend while attending the annual meeting of the 70-member board of the Lithuanian-American Community Inc. in Omaha.
      Lithuania, which borders Russia, Poland, Belarus and Latvia, is a small market with about 3.5 million people, but it has one of the fastest-growing economies of the former Soviet countries.
      Omaha is home to about 2,000 people of Lithuanian heritage. About 300 of them have been active in the organization playing host the national board meeting.
      Usackas hopes to attract investments by U.S. capitalists and to forge connections with U.S. traders.

      TIRASPOL, Moldova, Sept 14 (Reuters) — Looking out at the soldiers goose-stepping to another Soviet march, Vadim Shevtsov, KGB head, puffs out his medal-covered chest to espouse the virtues of a strong and regimented state on its main holiday.
      The hammers and sickles have been polished. A statue of Lenin looks on as hundreds of soldiers march up and down the street and generals zoom by in army cars. Speeches listing the country's achievements boom over dozens of loud speakers.
      But don't turn the clock back. This is not the old Soviet Union but a sliver of land called Dnestr in the now independent republic of Moldova, which is soon to border the European Union when neighbouring Romania joins in 2007.
      Dnestr, a country which not one government recognises as an independent state and one often blamed for selling arms, people and drugs to Europe and beyond, is out in force to celebrate 13 years of "freedom" from Moldova.
      A Russian-speaking enclave in the Romanian-speaking country of Moldova, Dnestr broke away before the fall of the Soviet Union amid concerns that it would be forced one day to rejoin Moldova and then could be swallowed whole by Romania.
      Both sides fought a bloody, brief war in 1992, killing hundreds in battles on the two banks of the Dnestr river which now forms a kind of natural border, patrolled by peacekeepers from the Russian army.
      Dnestr now fiercely defends its autonomy in a style which harks back to the "good, old days" of the Soviet Union by offering its subjects and enemies a show of military force, Soviet music and propaganda every year since 1990.
      And for first-star General Vadim Shevtsov, aka Vladimir Antyufeyev who is wanted in Latvia for his role in the killing of several people during Latvia's fight against Soviet rule, the celebrations instil pride in the country's difference.
      "This is the biggest holiday for our republic. The day of the creation of a republic which became guarantor of tranquillity, of peace on our territory and gave those born in this country the chance to live wealthily and in peace," Shevtsov, a towering bear of a man, told Reuters.
      "Dnestr was created on historical grounds and its creation is more about the people. Moldova was created on the grounds of a political game played by the heads of various countries during the destruction of the Soviet Union. It is artificial."
      PROPAGANDA
      Such rhetoric often boils over into hatred between Dnestr and Moldova. That scares many in Western Europe, hopeful that the conflict between the two can be resolved before Moldova becomes the border between the east and the European Union.
      Western leaders have said poverty-stricken Dnestr could benefit from reaching agreement with the Moldovan authorities and find access to new markets for its produce.
      In the Dnestrian capital Tiraspol, old women bent double buy half loaves of bread with kopecks collected from well-wishers in the street. In the countryside, families in horse-drawn carts stop to pick fruit from trees lining the roads.
      But despite the poverty, the phrase "our republic — our pride" displayed on banners around Dnestr is oft-repeated and respect for the region's attempt to be self-sufficient much talked about. The differences between Moldovans and Dnestrians are always stressed.
      Dnestr was once part of the Russian empire. Parts of Moldova were in the Ottoman empire.
      After the fall of the Soviet Union, Dnestr held on to much of the republic's industrial might whereas Moldova relied mainly on agriculture. Dnestrians speak Russian. Moldovans, while not against speaking Russian, speak Moldovan -- a language almost identical to Romanian.
      Moldova hopes to get rid of the Soviet yoke, while many of Dnestr's leaders were highly placed Soviet officials who fought to keep the union alive. Dnestr looks to Moscow for help, while Moldova looks increasingly to the West.
      The two sides seem simply not to like each other, with propaganda and name-calling common on both sides.
      "Again the solution to the Dnestrian and Moldovan conflict has got into the hands of Western leaders who want to get a hold on Dnestr," said Dnestrian Defence Minister Stanislav Khadzhayev. "The Moldovan nationalists have also strengthened the economic blockade against us...But we have faith in the future."
      EUROPEAN INTEREST
      The conflict between Moldova and Dnestr has finally turned the heads of leaders in the West, with a Dutch proposal to send European Union peacekeepers to watch over any future settlement.
      And over a year ago, the Organisation for Security and Cooperation in Europe, which has long had a regional presence, started moves for reintegration. It proposed creating a federation -- something many consider overdue.
      "The sides have never been separated since the 1992 ceasefire," said William Hill, head of the OSCE mission to Moldova. "So they remain sort of frozen in the positions that they were in 1992 with considerable distrust and considerable military capabilities."
      Distrust means that the negotiation process has often been slow and that there is a large gap between the two sides' positions. Dnestrians want a union between two equal independent states, while the Moldovans want reunification and see Dnestr as a smaller part of a Moldovan whole.
      The West does not want to lose the chance of sorting out one of many territorial disputes in the former Soviet Union.
      "This year we really have the best chance since Moldova became independent at getting a resolution," Hill said.
      Moldova also agrees that the time is ripe for agreement. But sticking to its position, the country of four million says Europe and other negotiating partners, which include Russia and Ukraine, must put more pressure on Dnestr.
      But with Russia seen as keen to keep its influence over Moldova, with Ukraine happy with the status quo, with many businesses pleased with the shadowy status of Dnestr to keep up profitable legal and illegal trade, the resolution of the more than decade problem looks a long way off.
      And that pleases many in Dnestr.
      "This is not the last celebration of its kind," said Valery Ivanov, a 76-year-old war veteran. "We have always lived independently, we have (our) own lives and that should stay the same. The Moldovans have nothing to offer us."

      TALLINN, Sept 14 (Reuters) — Estonians voted overwhelmingly to join the European Union in a referendum on Sunday, crowning this small Baltic nation's break with its Soviet past.
      With all votes counted, the "Yes" camp had 66.9 percent of the vote, with the "No" camp trailing at 33.1 percent, the election commission said. Total turnout was 63 percent.
      "Spring has arrived in Estonia — we're back in Europe," Prime Minister Juhan Parts told a news conference.
      The vote was seen by many as crowning more than a decade of painful reforms to return to mainstream Europe, despite some fears that Estonia's dynamic and liberal economy might get bogged down in EU red tape.
      Beer was in free flow at a packed party held by Parts' Res Publica and some gathered in Tallinn's historic Old Town to toast the result. But celebrations were largely muted in the reserved nation widely expecting a "Yes."
      Estonia will be a minnow in the enlarged EU, but politicians say joining the bloc will give more influence to the tiny country of just 1.4 million than standing on the outside.
      Supporters and the right-wing ruling coalition argued that membership would not only boost the economy, but also seal Estonia's place in the European mainstream and safeguard its independence regained in 1991.
      Estonia is the last but one to hold an EU referendum of eight east European countries invited to join the European Union next May in a historic enlargement to 25 members from 15.
      Slovenia, Hungary, Lithuania, Slovakia, Poland and the Czech Republic and Malta have already held ballots to join the EU. Cyprus will also join but is not holding a referendum.
      RELUCTANT LATVIA NEXT
      Neighbouring Latvia, also an ex-Soviet republic, votes next week. Analysts say an Estonian "Yes" should boost the pro-EU campaign in Latvia in what looks like a close race.
      "I think the Estonian vote will influence the Latvians to vote 'Yes'," Latvian President Vaira Vike-Freiberga told Reuters. "Now it's Latvia's time to conclude the Baltic way that started already 12 years ago with our independence," she added.
      The Estonian vote was also good news for Brussels after Swedes in a Sunday plebiscite voted against joining the euro currency.
      Along with other East European states, Estonia proclaimed independence at the end of World War One when the region's three empires -- Russia, Germany and Austria -- crumbled.
      World War Two put Estonia and Baltic neighbours Latvia and Lithuania at the mercy of the victorious Soviet Union.
      The trio ended up as Soviet republics and memories of Moscow's often cruel rule have boosted the EU campaign.
      After starting from scratch in 1991, Estonia is now seen as a showpiece of successful free-market reforms.
      GDP per capita almost doubled in the last three years to around $6,000. This is still just one fifth of the EU average, but the economy is one of the fastest growing in Europe and analysts say Estonia will likely catch up in just 15-20 years.
      Although ethnicity is no longer a sensitive issue, almost half of the large Russian minority of about a quarter of the population have yet to seek citizenship and are prevented from voting. They will need visas to work and travel inside the EU.

      RIGA, Sept 15 (Reuters) — Latvia faces a cliffhanger vote on Saturday when it becomes the last of 10 countries to decide whether to join the 15-nation European Union, analysts said on Monday.
      Attention turned to wary Latvia after its Baltic neighbour Estonia voted overwhelmingly to join the wealthy bloc in a weekend referendum, prompting some commentators to predict a domino effect in Saturday's ballot.
      "Latvian support for the EU is barely over the 50-percent mark at the moment, so we could be heading for a very close race," Baltic political expert Artis Pabriks said.
      "I think the Estonian 'Yes' will give the Latvian pro-EU campaign a boost," he added.
      The latest opinion poll has shown a quarter of voters in the small ex-Soviet republic are still undecided, with 51.3 percent in favour of EU membership and 23.8 percent against.
      Latvia is the last of 10 countries invited to join the EU next May to hold a membership referendum. The nine other countries have said yes to joining. A "No" would end the bloc's historic enlargement from 15 to 25 members on a sour note.
      Sunday's resounding Estonian "Yes" was good news for Brussels after Swedes voted against joining the single European currency in a referendum on the same day.
      With all votes counted from Estonia's ballot, the "Yes" camp had 66.9 percent with the "No" camp trailing at 33.1 percent. Turnout was 63 percent.
      "Welcome and congratulations Estonia," European Commission President Romano Prodi said in a statement on Monday.
      "In the dark days of its history, Estonia experienced firsthand what the Iron Curtain did to Europe. Now it can harvest the fruits of a united Europe," he said.
      ESTONIAN INFLUENCE
      Even before the Estonian pro-EU camp had declared victory — crowing the country's break with its Soviet past -- Latvian President Vaira Vike-Freiberga was urging voters to say "Yes."
      "I think the Estonian vote will influence the Latvians to vote 'Yes'," she told Reuters. "Now it's Latvia's time to conclude the Baltic way that started 12 years ago with our independence."
      Malta, Slovenia, Hungary, Lithuania, Slovakia, Poland, the Czech Republic and Estonia have all held ballots to join the EU. Cyprus will also join but is not holding a referendum.
      Latvia, one of the poorest of the 10 accession counties, has seen a step rise in economic growth over the last years and posted a 6.1 percent rise in GDP last year.
      But huge differences between rich and poor remains a problem in the country and ethnicity continues to be a sensitive issue due to the large Russian minority of almost one-third of the population, who settled in Soviet times.
      Latvia's political and economic elite is united in the pro-EU drive, arguing that EU entry would boost the economy, create jobs and raise living standards in the country, which regained independence in 1991.
      But many people are suspicious of entering the EU little more than a decade after quitting the Soviet Union, saying Brussels is too remote to care for the interests of a small nation of 2.4 million people.
      Analysts say a limp campaign focusing on the wallet rather than values has failed to stir any enthusiasm.
      They say a government brawl over next year's state budget has also harmed the "Yes" campaign and voters could say "No" in protest at the staunchly pro-EU ruling coalition.
      Pabriks said the pro-EU camp will likely play the emotional card in the last days of campaigning, highlighting Latvia's break with Moscow's harsh rule and arguing that EU entry would guarantee independence.
      "It's a question of whether we pass the exam of the university we entered in 1991," he said.
      (Additional reporting by Marie Louise Moller in Brussels)

      HELSINKI, Sept 16 (Reuters) — A Latvian vote against joining the European Union in a referendum on Saturday would hit investment and stability in the Baltic region, the country's defence minister said on Tuesday.
      Analysts say the small ex-Soviet state faces a cliffhanger vote when it becomes the last of 10 candidate countries to decide whether to join the wealthy 15-nation bloc, with its Baltic neighbours Estonia and Lithuania already voting to join.
      The latest opinion poll showed a quarter of Latvians were still undecided, with 51.3 percent in favour of EU entry and 23.8 percent against. But the overhwelming "Yes" in Estonia's weekend referendum led some commentators to predict a domino effect.
      Latvian Defence Minister Girts Valdis Kristovskis told reporters in Finland he was confident the "Yes" side would win, and said a "No" would hurt the country and the region.
      "Such a result can bring instability and pessimism to those people who want to develop our state and region in the fastest way. This will be very difficult to overcome or will even destroy future opportunities (of Latvia)," Kristovskis said.
      "(A "No") would be a signal of the revanchist policy of some groups which may be still seeking... to recover that territory which the Russian Empire had hundred of years ago," he added.
      Latvia's political and economic elite is united in the pro-EU drive, arguing that EU entry would boost the economy, create jobs and raise living standards in the country -- one of the poorest of the 10 EU candidate countries.
      Many in the Baltic region see EU entry as the region's final break with its Soviet past.
      All three Baltic states, which won independence when the Soviet Union collapsed in 1991, are to join NATO next year.

      RIGA, Sept 17 (Reuters) — Latvian support for joining the European Union edged up to 53.1 percent, a weekly poll showed on Wednesday ahead of Saturday's referendum -- the last in the bloc's enlargement from 15 to 25 nations.
      But the large number of undecided voters, standing at 22.3 percent in the poll, could tip the balance.
      The survey by independent pollster InMind showed the pro-EU camp gained 1.8 percentage points last week, with "No" voters trailing at 24.6 percent, up 0.8 percentage points.
      Some analysts are predicting a close race as many of those yet to make up their minds could end up on the "No" side after a limp campaign has failed to stir much enthusiasm over the vote.
      Turnout was seen at around 90 percent, way above a 50 percent threshold to make the vote binding.
      The ex-Soviet republic is the last to vote on EU membership in the enlargement after ten mostly East European countries were invited last year to join the bloc next May.
      The political and economic elite support the pro-EU campaign, arguing EU entry will boost the economy, create more jobs and raise living standards in the small Baltic country, which regained independence in 1991.
      But many are suspicious of joining the EU little more than a decade after leaving the Soviet Union, saying Brussels is too remote to bother about a nation of just 2.3 million people.
      The survey was conducted before Baltic neighbour Estonia gave an overwhelming "Yes" to EU membership last weekend, which was expected to boost Latvian EU support.