MOSCOW — With European Union expansion planned in less than six months, the domestic steel industry is fighting to retain its markets in Eastern Europe.
      When seven countries formerly in the Warsaw Pact join the EU next spring, Russia stands to lose a significant share of its steel exports.
      As a precaution, some Russian steelmakers have gone as far as buying factories in countries that soon will be located in Europe's expanded market.
      According to a 2002 agreement, Russia will be allowed to sell 1.3 million tons of steel roll to the EU next year.
      But this figure does not include the 500,000 tons of steel roll Russia currently exports to Eastern Europe.
      Moscow is trying to persuade Brussels to modify the agreement and increase the volume of steel that Russia will be able to export to the enlarged EU.
      A delegation from the Economic Development and Trade Ministry took the Russian case to Brussels last week. But officials are refraining from commenting on the results of the talks, citing the illness of the head of the delegation.
      Interfax quoted an unnamed ministry official as saying only that the EU promised to "consider Russia's interests."
      There have already been signs that EU quotas will be adjusted.
      "Quotas will be adjusted to take into account traditional trade flows between new European members and countries such as Russia," said Arancha Gonzalez, spokeswoman for European Trade Commissioner Pascal Lamy.
      High-level talks in May resulted in the EU saying it would consider raising quotas by 495,000 tons, almost as much as the Russian side requested, said Vasily Varyonov, head of the department for the protection of foreign markets at Magnitogorsk metal works, the country's largest steelmaker.
      "If things continue moving in this direction, I don't foresee any problems for us," he said.
      Not all steelmakers are so certain, and some industry players are preparing for the worst.
      The Novolipetsky metals factory has purchased Dansteel in Denmark, an EU member, and Severstal has bought a stake in SeverstalLat in Latvia, a candidate country.
      Foreign holdings serve as a sort of insurance, giving Russian companies the option of skirting quotas altogether.
      In the future, domestic steelmakers could export steel slabs - which unlike steel roll are unregulated - to their EU plants for further processing.
      Severstal is currently bidding for the purchase of Hungarian steelmaker Dunaferr.
      "You've seen a move 1/8by Russian companies3/8 to buy Eastern European steel assets," said Renaissance Capital's Rob Edwards.
      "They are trying to hedge themselves out of marginalization on the market."
      But there are also drawbacks for Russian companies, analysts warn.
      Domestic companies have little experience working the European market from the inside.
      "The managers of Russian companies are not familiar with these markets. They will have to learn to work with more stringent regulation and higher costs then they are used to," said Vladimir Savov, a senior analyst at NIKoil.
      "1/8Buying companies in Eastern Europe3/8 doesn't guarantee instant and easy market shares."
      Since the United States lifted tariffs on steel earlier this month, the global market for the metal is in flux.
      Part of the EU's rationale for keeping trade barriers was to stem the flow of imports redirected to Europe after being blocked from America, said Vladimir Pechik, executive director of the Russian Union of Metals Producers.
      Russian producers, he said, hope EU regulations will be softened now that the U.S. market has opened.
      Nevertheless, domestic steelmakers are not overly optimistic. Some believe that even with adjustments, the EU will try to keep Russian steel off its markets.
      "There is a difference between getting quotas and fulfilling them," said Andrei Selenyuk, executive director of one of the country's largest steel producers, Yevrazholding, which reported $2 billion in sales last year.
      "Just as the United States did, 1/8the EU3/8 will use anti-dumping laws to block as many imports as possible. And even if those cases are unfounded, they drag on for a long time."

      SACRAMENTO (Reuters) — Calpers, the biggest U.S. pension fund, Monday approved a staff recommendation to invest 7.5 million euros, or about $9 million, in Latvia, Estonia and Lithuania, three countries not on its list of previously approved nations.
      The California Public Employees Retirement System, known as Calpers, noted that each Baltic country has met the stringent criteria to join the European Union, including reviews of political, economic, and human rights policies.
      The investments would be made through the NIAM Nordic Investment Fund III, Calpers said.
      Calpers' staff last week recommended that the pension invest 50 million euros in a Nordic investment fund that includes the three Baltic countries.
      Calpers last year began to consider civil liberties, press freedom and political risk in making investment decisions after board members argued that investing in more stable countries with liberal practices would yield better long-term returns.
      Estonia, Latvia and Lithuania have not been considered for the so-called permissible country list, however, because their equity markets are so small, staff have said. The recommendation was posted on the some $150 billion pension fund's Web site as part of a monthly meeting agenda.
      Calpers' staff also said the investment in the three Baltic markets would be a maximum 7.5 million euros taken together.
      The Nordic fund will primarily target investments in the Nordic countries of Sweden, Denmark, Finland and Norway as well as the Baltic countries, Calpers' staff said.

      ALEXANDRIA, Va., Dec. 15 /PRNewswire/ — Dimensions International, Inc. (DI), a leading information technology company supporting the nation's top corporations and government agencies, today announced its award of a contract to provide technical support to the Ministry of Defense for the Republic of Latvia. Latvia is one of the Baltic States that won its freedom from the Soviet Union in 1991 and, in 2002, received invitations to join NATO and the European Union. Earlier this year, the U.S. Department of State granted DI approval to work directly with foreign governments, including Latvia and other NATO coalition countries.
      Russell Wright, chairman and CEO of Dimensions International, announced that since June 2003, the DI staff has been assisting the Latvian Government and the Ministry of Defense in restructuring its military forces and related national security infrastructure systems to enable them to meet requirements to join NATO and the European Union. "We at DI are excited to be working as technical advisors to the Ministry of Defense on projects of this importance to the national security and economic growth and stability of their nation. This is a strong vote of confidence in Dimensions International and its team of 600 people. We look forward to the work ahead."
      His Excellency Aivis Ronis, Latvian Ambassador to the United States, said, "Latvia is just a few months away from officially joining NATO and it is crucial that Latvia continues to improve its NATO compliance standards. This will allow our military to be more effective in working together with our NATO allies and help shape NATO to meet the challenges of the new century. Involvement of U.S. companies experienced in this area is essential for this task to proceed smoothly and effectively and we are happy to welcome DI aboard."
      Among the many projects that DI is helping the Latvia Ministry of Defense to accomplish include:
      * Restructuring and modernization of its existing military force structure
      to meet NATO and their National security requirements.
      * Development of a comprehensive logistic support system capable of
      interoperating with NATO doctrine and operational requirements.
      * Design and development of secure communications facilities and
      operational systems for handling classified voice and data traffic.
      * Design and development of a coastal surveillance system to meet its
      national security, NATO and EU requirements.
      /CONTACT: Robert Deigh of RDC Communication, +1-703-401-6339, rdeigh1@@aol.com, for Dimensions International, Inc./
      /Web site: http://www.dimensionsinternational.com/

      RIGA, Latvia (Reuters) — Latvian police said a drunk picked up with around twice the blood-alcohol level considered deadly had probably set a world record but would wake with a hangover to match.
      The unidentified middle-aged man was unconscious but stable after a blood test showed 7.22 parts per million of alcohol, police spokeswoman Ieva Zvidre said.
      An average person would vomit at around 1.2, lose consciousness at 3.0 and stop breathing at a level of about 4.0 parts per million, Zvidre said, adding: "This is one for the Guinness Book of Records."
      The hospital's emergency ward head Martins Sics told reporters there was no record of anybody having survived such a dose, even in neighboring Russia which takes pride in its vodka-guzzling traditions.
      "He won't remember a thing when he comes to," Sics said.

      RIGA, Latvia (AP) — A Latvian court convicted Stalinist-era agent Nikolai Tess Tuesday of deporting scores of people to Siberia in 1949, handing him a two-year suspended jail sentence.
      Prosecutors said the 82-year-old signed the deportation orders for 138 people, 11 of whom died. He had been charged with genocide and crimes against humanity.
      Tess admitted helping to carrying out the deportations, but maintained his innocence. His lawyers argued that his actions were legal according to existing Soviet laws at the time.
      He could appeal the verdict, though there was no immediate decision if he would.
      The trial took place in the seaside town of Liepaja, 230 kilometers (140 miles) west of Riga, the capital of this former Soviet Baltic republic.
      Prosecutors sought a six-year prison term, but in handing down their lenient sentence, a judge cited his age, poor health and the fact that he was following orders.
      After the Baltic states regained independence in 1991 after five decades of Soviet occupation, they vowed to prosecute those who took part in Stalin-era repression, which included the deportation of more than 100,000 Latvians.
      About half a dozen ex-agents have been convicted in Latvia and more than a dozen in neighboring Estonia and Lithuania. The Baltics are the only former Soviet republics that have pursued Soviet-era officials for crimes against humanity.
      Most of those convicted have been given suspended sentences.
      Moscow has condemned the trials as witch-hunts that target the sick and elderly. It has covered the legal costs of some accused, hailing them as heroes of World War II.

      TALLINN, Estonia (AP) — Nearly six decades after World War II ended, Russia has given Estonia a map detailing the locations of all the mines it laid along the Baltic state's coast, officials said Wednesday. The information will be used to clear the aging, sometimes explosive, ordnance as a safety precaution.
      Approximately 100,000 mines were deployed by Soviet and Nazi forces in the Baltic Sea during the war, with 50,000 laid near Estonia and the other Baltic states, Latvia and Lithuania -- all three of which were annexed by the Soviet Union in 1940.
      Shipping lanes have long since been cleared of mines and most of the leftover explosives, numbering in the thousands, have rusted and become duds. They are not thought to pose a major threat.
      "The existing danger is maybe one in a million," said Estonian Defense Ministry spokesman Madis Mikko. He added, however, that Estonians have carried out intensive mine clearing operations since it regained independence amid the 1991 Soviet collapse -- "just to be safe."
      Estonian requests over the years for details on the sea mines had always been turned down and Russia's delivery of the long-sought papers Tuesday came out of the blue, Mikko said.
      "Their initiative was a nice surprise," he said. "Germany opened all its documents (about war-era mines) a long time ago. Now Russians are a part of that process. We welcome that."
      The documents include precise coordinates of hundreds of sea mines placed along 3,794 kilometers (2,280 miles) of Estonia's winding coastline, he said. He added that it would take time for the Estonians to determine whether the Russian information is accurate and complete.

      VILNIUS, Lithuania (AP) — Impeachment proceedings began Thursday against Lithuanian President Rolandas Paksas amid allegations his office has close links to the Russian mafia.
      In an event shown on live television across the country, a petition with 86 signatures from deputies in the 141-seat Seimas parliament was delivered to the body, launching a process that appears likely to result in Paksas' ouster.
      The claims against Paksas that emerged in October have jolted this Western-oriented ex-Soviet Baltic republic, where many people fear the scandal could spoil Lithuania's reputation just months before it joins the European Union and NATO.
      Only 36 deputies were required to initiate the process, but that so many signed the petition suggested that the 47-year-old Paksas has little chance of surviving the proceedings that could last six months.
      "The Paksas presidency is doomed," said Rimvydas Valatka, a leading political analyst in the country. "Everyone in politics sees this -- except the president himself."
      Paksas has dug in his heels, staunchly denying the claims and ignoring a torrent of calls to resign.
      The former champion stunt pilot won a surprise victory in presidential elections in January against the heavily favored incumbent, Valdas Adamkus.
      The impeachment articles handed in Thursday accuse the president of violating the Baltic state's constitution and his presidential oath, including by disclosing state secrets.
      Parliament was expected to set up a 12-member committee, comprised of deputies and lawyers, to decide if the charges are justified. If they agree, then the proceedings would start in earnest.
      "We have no other way to find the truth that everybody wants to know," said Raimundas Sukys, a lawmaker who said he favors impeaching Paksas.
      For Paksas to be impeached, 85 lawmakers must vote in favor. If he is impeached, parliament speaker Arturas Paulauskas would become the acting president and new elections would be held within 60 days.
      No top politicians have said if they would seek the office, but speculation has centered on Adamkus, Paulauskas and lawmaker Aloyzas Sakalas, who is leading the impeachment push.
      The affair unfolded when a leaked state security report said several presidential staffers had ties to organized crime. Parliamentary investigators said later they verified the claims and concluded that the organized-crime ties threaten Lithuania's security.
      The allegations have focused on businessman Yuri Borisov, a native of Russia who authorities allege has ties to the Russian mafia. Borisov denies the allegations.
      Investigators said Paksas was "influenced" by Borisov, who donated 1.2 million litas (US$400,000) to his campaign, citing his involvement in arranging Lithuanian citizenship for Borisov.
      A separate criminal investigation was launched against Borisov after police suspected of him of blackmailing Paksas for political and economical favors.
      Borisov, a Russian and Lithuanian citizen, has denied the accusations.

      MINSK (Reuters) — President Alexander Lukashenko, isolated by the West for his lack of political and economic reforms, said on Friday Belarus must be prepared to defend itself against U.S. attack.
      Lukashenko, once called Europe's last dictator by U.S. officials, has criticized Washington's military campaign against Iraq, saying it had created a precedent whereby undesirable leaders could be unseated with military force.
      "Belarus has to be vigilant and pay particular attention to strengthening its fighting efficiency. The world has returned to times when war and brute force were real instruments of foreign policy," Official news agency BelTA quoted him as saying.
      "The United States declared its particular right to use military force toward countries that dare to implement independent foreign and internal policies," he said.
      Washington and the European Union, which will share a border with Belarus when it absorbs Poland, Latvia and Lithuania next year, have criticized Lukashenko for breaching human rights, cracking down on the opposition, suppressing demonstrations and having a poor record on press freedom.
      Belarus, an impoverished former Soviet country of 10 million, had achieved considerable progress in reforming its armed forces, Lukashenko said, pledging to increase state financing for the military next year.
      "We are not going to do any saber-rattling. We are not going to threaten anybody. We are talking only about defending our motherland," he said.

      VILNIUS, Dec 22 (Reuters) — Residents of a Lithuanian resort received an early Christmas present when 50 tonnes of bananas washed up on the Baltic coast.
      "The current came from the southwest, where storm winds probably knocked a container of unripe bananas off a ship," said Jonas Vigelis, head of the area's Sea Patrol and Rescue unit.
      People turned out in droves to gather the tropical fruit, which was strewn over about seven km (four miles) of frosty shoreline around the resort town of Sventoji.
      "This sort of thing happens now and then. One time we got oranges, another time some good lumber," Vigelis said.

      MOSCOW (AP) — Thousands of copies of a book implicating the KGB's main successor agency in a series of fatal apartment explosions were seized by authorities after being brought into the country from a printing house in Latvia, the book's distributor said Monday.
      Alexander Podrabinek, a human rights activist who heads the Prima news agency that planned to distribute the book, said about 4,000 copies of "The FSB Blows Up Russia" were seized after the truck carrying them was stopped by road police on Sunday en route to Moscow.
      The book, co-authored by a former agent of the FSB — the Federal Security Service -- has been published abroad and excerpts have appeared in the Russian newspaper Novaya Gazeta, but the book has not been sold in Russia, Podrabinek told The Associated Press.
      The former agent, Alexander Litvinenko, has accused his superiors of ordering him to kill tycoon Boris Berezovsky and of carrying out a series of apartment-house bombings blamed on Chechen rebels that killed more than 300 in 1999. He has received political asylum in Britain.
      Podrabinek said the books were brought into Russia from Latvia with all necessary customs clearance. But the truck was stopped by police on Sunday and the driver reported that the police reported the incident to the FSB and then seized the books as "anti-state propaganda," Podrabinek said.
      The FSB's press office said it had no information on the incident.

      DUBLIN, Ireland (AP) — The European Union's major goals this year must be to welcome 10 new countries and repair diplomatic relations with the United States, Prime Minister Bertie Ahern said Thursday as Ireland assumed the EU's six-month rotating presidency.
      Ireland is planning a big street party in Dublin on May 1, when 10 nations -- Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Cyprus and Malta -- are scheduled to join the 15-member union in its biggest expansion in history.
      Ahern said the European Union must resolve its own internal power struggle and repair frayed relations with the administration of President George W. Bush, largely over the U.S.-led occupation of Iraq.
      "We intend to engage with our partners and ensure all interests and concerns are taken into account. We will emphasize trans-Atlantic relations in particular," Ahern said.
      "In relation to Iraq, the international community as a whole must pull together to ensure that the people of Iraq are able to live in a peaceful and secure society, under a representative government, as soon as possible," he added.
      But Ahern said he didn't expect the EU to reach agreement soon on how to reform its own democratic structures.
      An 18-month effort to draft a new EU constitution ended in failure last month, when the two largest members, Germany and France, clashed with smaller states, led by Spain and Poland, about their future share of posts and voting powers in the expanding union.
      French Prime Minister Jacque Chirac suggested after the Dec. 13 summit collapse that France and Germany might forge a "pioneer group" within the EU that would leave Spain, Poland and other opponents out of the loop.
      "After the breakdown it is a time for reflection," Ahern said. He forecast that EU members would eventually agree on a constitution but that it would be "quite a long task" that could stretch beyond 2004.
      Ahern warned that, until then, France and Germany should do nothing to undermine EU unity.
      Chirac's suggested pioneer group, Ahern said, "would create many disparities and divergences that certainly would not be good for the overall European population."
      The EU's internal split roughly mirrors its divided attitude to the U.S.-led invasion of Iraq. Spain and Poland are two of the biggest European backers of the intervention, while France and Germany are the biggest critics.
      Ireland, an officially neutral nation, has maintained an ambiguous position on Iraq that reflects its strong cultural and economic ties with the United States. Ahern's government offered only muted criticism of the U.S.-British invasion and has allowed Iraq-bound American forces to refuel at Shannon airport in southwest Ireland.

      RIGA, Dec 30 (Reuters) — Latvia's third-quarter current account deficit widened 39 percent year-on-year to 152.7 million lats ($282 million) or 10.3 percent of gross domestic product, the central bank said on Tuesday.
      The gap was 109.6 million lats or 8.3 percent of GDP in the third quarter of 2002, and a revised 149.7 million lats or 10.6 percent of GDP in the second quarter of this year, the bank said in a statement.
      The small Baltic state, due to join the EU in 2004, has struggled with high external deficits since breaking free from Moscow's rule in 1991. Radical reforms have brought massive imports of capital goods.
      The Bank of Latvia has forecast a current account deficit this year of 9.5 percent of GDP, up from 7.6 percent last year.
      The central bank insists there is no cause for serious concern about external stability given its adequate reserve assets and foreign direct investment in the country.
      It expects GDP growth of about 7.0 percent this year.

      VILNIUS, Dec 30 (Reuters) — Lithuania's highest court delivered a blow to embattled President Rolandas Paksas on Tuesday by ruling he violated the constitution when he granted citizenship to a controversial Russian businessman.
      The constitutional court's ruling gives legal ammunition to Lithuania's parliament which seeks to remove Paksas after a probe accused his office of dealings with shady firms and Russian organised crime.
      The case focuses on Paksas' ties to Russian-born businessman Yuri Borisov who financed his election campaign last year and whom Lithuanian secret services suspect of taking part in illicit arms trade.
      They also say Borisov, whom Paksas made a Lithuanian citizen soon after becoming president in January this year, has blackmailed his benefactor.
      "The Constitutional Court...rules that the president's decree granting citizenship to Yuri Borisov violated the constitution and the law on citizenship," the court said.
      The court's decision cannot be appealed and means Borisov's Lithuanian citizenship will be revoked.
      The impeachment proceedings are under way in parliament and Tuesday's verdict is set to form part of evidence against the president, a former Soviet-trained stunt pilot.
      Paksas has stubbornly refused to step down since allegations against him surfaced in a secret service report in October, plunging Lithuania into political turmoil just months before it joins the European Union.
      Speaking to reporters before the court's ruling, Paksas again vowed to stay in office even if the verdict went against him.
      The furore over Paksas coincides with Western intelligence reports suggesting Russian organised crime may be using some of the new ex-communist EU members as springboards for illegal activities across the enlarged bloc.
      Ten countries, mostly from eastern Europe, join the EU on May 1 next year, including three former Soviet republics with sizeable Russian minorities -- Lithuania, Estonia and Latvia.

      RIGA, Jan 5 (Reuters) — Latvia is to lower its corporate income tax to 15 percent from 19 percent in 2004 to boost business development and attract investments despite opposition from the International Monetary Fund.
      The finance ministry said on Monday the government decided to press on with the tax cut as a last step in a corporate tax reform agreed three years ago when the tax stood at 25 percent.
      "Three years ago, the government promised to protect business investments in the country," Daina Robezniece, head of the finance ministry's tax policy department, told Reuters.
      "We had a mission here from the IMF and our politicians were warned about lowering the corporate income tax, but they decided to keep their promise and went ahead with the cut," she added.
      Latvia's corporate income tax rate was cut to 19 percent last year from 22 percent in 2002 and 25 percent in 2001.
      Latvia is one of 10 mostly East European countries due to join the European Union in May, culminating more than a decade of reforms towards democracy and free-market economy.
      Latvia, along with Baltic neighbours Lithuania and Estonia, has enjoyed several years of rapid economic growth. It posted a 6.1 percent rise in gross domestic product (GDP) in 2002 and is seen by the central bank to reach 7.0 percent growth in 2003.
      Robezniece said the finance ministry estimated the tax cut would cost around 10 million lats ($18.79 million), but added that the loss in state revenues would be compensated by increases in several indirect taxes.