OSLO, Oct 26 (Reuters) -- The five Nordic countries invited the three Baltic states on Sunday to become shareholding members of the Nordic Investment Bank in a new sign of closer ties between the regions.
      The Nordic Investment Bank (NIB) is owned by the Nordic governments and charged with promoting economic growth by financing long-term projects in the public and private sectors.
      The Helsinki-based bank also finances projects in emerging markets outside the Nordic area, especially environmental investments around the Baltic and Barents Seas.
      The Baltic countries -- Latvia, Lithuania and Estonia -- have been significant recipients of NIB loans since winning independence amid the collapse of the former Soviet Union more than a decade ago.
      In the past few years, the bank has been an important lender to investment projects in the Baltic energy sector, including a 60 million euro ($70.60 million) loan to Estonia's Eesti Energi and a 40 million euro loan to Latvia's Latvenergo last year.
      "The Nordic prime ministers have invited the Baltic countries to become members in the Nordic Investment Bank on equal footing with the Nordic countries," Norway's Prime Minister Kjell Magne Bondevik told a news conference.
      The announcement came after a meeting of the premiers of Norway, Sweden, Finland, Denmark, Iceland, Estonia, Latvia and Lithuania in the Norwegian capital.
      The Baltic governments, which are poised to lead their countries into the European Union next year drawing them even closer politically an economically to their Nordic neighbours, signalled that they are likely to accept the invitation.
      "I think this is a historical day because we remember the time when the Nordic Investment Bank was one of the most important financial institutions supporting our economies in the 1990s," Estonian Prime Minister Juhan Parts.
      "This shows that we share the responsibilities of developing this region ... Estonia intends to do this very seriously."
      Lithuanian Prime Minister Algirdas Brazauskas said: "Indeed Lithuania is also willing to join." He said that there still may be some problems concerning the terms of membership.
      "But I'm sure all the problems can be resolved," he said.
      Latvian Prime Minister Einars Repse said that his country was treating the invitation "very seriously," and that it was in the hands of officials to work out the details of cooperation.
      Sweden has about 38 percent of the bank's share capital, Denmark 22 percent, Norway 20 percent, Finland 19 percent and Iceland one percent. It was not immediately clear how much of the bank the Baltic countries would be invited to own.

      RIGA, Oct 27 (Reuters) -- Latvia's central bank chief said on Monday the small Baltic economy would adopt the euro in 2008, and that a race between neighbouring Estonia and Lithuania to do so first would only cause trouble.
      Ilmars Rimsevics said Latvia already met Maastricht criteria for euro zone membership, and reiterated a strategy to join the ERM-2 waiting room for the euro in 2005 and swap the Latvian lats with the single currency in 2008.
      "The euro could be introduced on January 1, 2008, gradually replacing the lats," he told a banking and finance conference, noting Latvia's strong performance in terms of inflation, fiscal balance, long-term interest rates and exchange rate stability.
      He said Latvia should keep its peg to the SDR, the IMF's currency basket, until ERM-2 entry on January 1, 2005, when the national currency would be re-pegged to the euro at the going market rate, keeping the current narrow +/- one-percent fluctuation.
      Baltic neighbours Estonia and Lithuania aim for immediate ERM-2 entry when joining the EU next May among 10 mostly East European countries invited to the wealthy bloc, and likely swap their national currencies with the euro in 2007.
      Estonia's central bank is even considering introducing the euro in the middle of 2006 in order to be first.
      But Rimsevics told Reuters after his speech that his Baltic neighbours' fast-track approach would cause an awkward split in the closely integrated region, and leave too little time for any last-minute adjustments.
      "It looks like a competition of who'll join first and get all the newspaper attention," he said.
      "We'd love to coordinate, but I think our neighbours are ready to join as soon as possible at any cost."
      Analysts say the European Central Bank would likely insist on the trio joining the euro zone together to avoid a split, but that it is not clear yet whether Latvia would be told to speed up or its neighbours to slow down.
      "Both the timing of Latvia's ERM-2 participation and the introduction of the euro, obviously, need to be coordinated with the ECB and the euro-area finance ministers," Rimsevics said.
      EURO-BOOST
      The Baltics have made sweeping free-market reforms since quitting the Soviet Union in 1991, and the region is now the fastest-growing in Europe. Sweden's SEB bank recently forecast growth to reach an annual 5.5-7.0 percent through 2005.
      Rimsevics said euro adoption would help economic growth by eliminating the currency risk and reduce transaction costs with the EU, boost exports, lower risk premiums and interest rates and give increased access to liquid capital markets.
      He said Latvia's EU trade -- already accounting for 55 percent of imports and 63 percent of exports -- could reach 80 percent after enlargement, and eyed a five-percent rise in EU exports in the short term and up to 30 percent in the long term.

      PARIS -- Russia ranked an unimpressive 18 steps from the bottom of Reporters Without Borders' annual listing of how free the press is around the world, as the 148th of 166 countries studied.
      The study indicates that Russian journalists are less free to report the news than their counterparts in Nigeria (103), Azerbaijan (113) and Ukraine (132), which are not known for the liberty they grant to the fourth estate.
      Of former Soviet countries, only Belarus (151), Uzbekistan (154) and Turkmenistan (158) rank lower.
      In relative terms, Russia's ranking has changed little from last year, when it was 121st on a list of 139 countries.
      Reporters Without Borders cited difficulty getting information about the war in Chechnya and numerous murders of Russian journalists as reasons for the country's low placement. The Center for Journalism in Extreme Situations says 28 journalists were killed last year.
      Finland and Iceland topped the rankings. Latvia, in 11th place, was the highest-ranked former Soviet republic.

      BRUSSELS, Oct 29 (Reuters) -- Economic growth in the 10 states joining the European Union next May will accelerate to an average 3.8 percent next year and 4.2 percent in 2005, from 3.1 percent this year, the European Commission said on Wednesday.
      The Commission's Autumn Economic Forecasts cited an expected recovery in the 15 current EU states "and the prospect of enlargement" as the factors driving growth.
      But six of the 10 will have budget deficits this year above three percent of Gross Domestic Product -- the level governments must achieve to qualify for membership of the euro. The average deficit of the acceding countries will be five percent.
      The deficit in Poland, by far the largest accession state, accounting for nearly 40 million of the 75 million who will become EU citizens next year, will grow to 5.9 percent of GDP in 2004 from 4.3 percent this year.
      But by 2005, the Commission said, "the general government balance improves in all acceding countries," and the average deficit across the 10 is set to drop to 4.1 percent. Poland's should fall back to 4.9 percent in 2005.
      This year's already high growth figures in the accession states are due to rising exports and a pick-up in industrial output, the report said, while private conmsumption was robust, receiving support from lower interest rates.
      The average figures disguise wide discrepancies across the 10 countries -- eight of which are Eastern European former Soviet satellites, while two, Cyprus and Malta, are Mediterranean islands.
      BALTICS AHEAD
      The Baltic states of Latvia and Lithuania are far ahead in terms of current and projected GDP growth. Lithuania is set to post 6.6 percent growth this year, dipping to 5.7 percent in 2004 before recovering to 6.0 percent in 2005.
      Latvia will record 6.0 percent GDP growth this year. At the other end of the scale, Malta's economy will grow by just 0.8 percent in 2003, although growth will pick up to 2.9 percent in 2005, the report said.
      But economic growth will not necessarily translate into growth in employment.
      The report said that restructuring to transform the central European states from communist command economies meant employment was still contracting in the Czech Republic, Poland and Slovenia.
      The employment situation is set to improve, but average job creation will remain at a sluggish 0.6 percent across the 10 countries next year, rising to 1.1 percent in 2005, and leaving average unemployment high at 15 percent in 2005.
      Inflation across the region is set to rise in 2004, to 3.5 percent from a projected 2.4 percent this year and 2.5 percent in 2002.
      Slovakia is the poorest performer in terms of inflation, with the Commission forecasting a rate of 7.5 percent in 2004 from 6.8 percent this year, while Latvia is expected to post deflation of 0.9 percent this year.
      But the Commission sees these differences gradually disappearing, and expects inflation across the 10 to slip to 3.1 percent in 2005, by which time the rates will vary in a narrower band from 1.9 percent in Malta to 4.3 percent in Slovenia.

      THE HAGUE, Netherlands (AP) -- Latvia and Lithuania will sign agreements this week with Europol to jointly fight organized crime, the European police force said Wednesday.
      Under the deals, Lithuania and Latvia will post liaison officers in the Netherlands, formalizing cooperation with Europol, based in The Hague, Netherlands.
      Estonia, the third Baltic state, signed a similar agreement in October 2001.
      The deals enable the exchange of intelligence on serious international crimes such as people smuggling, counterfeiting and drug smuggling under the authority of Europol.
      After regaining independence from the Soviet Union in 1991, the Baltics saw a sharp rise in organized crime, including narcotics and prostitution -- much of the illicit activity spilling across borders into Western Europe.
      All three are scheduled to join the European Union in May, 2004.
      "Structured police co-operation with (European Union) accession states is essential to combat organized crime and to keep internal security," Europol chief Jurgen Storbeck said in a statement.
      Lithuania's Interior Minister Virgilijus Vladislovas Bulovas will sign the agreement Thursday and his Latvian counterpart, Maris Gulbis, will do the same Friday.

      TALLINN, Oct 30 (Reuters) -- Baltic banking group Hansabank said on Thursday central banks in the region were too eager to swap their national currencies with the euro, expecting the trio would stumble in their race to introduce the single currency.
      Estonia and Lithuania aim to join the ERM-2 waiting room for the euro when the countries join the EU next May and enter the euro zone in January 2007, while Latvia wants to enter the ERM-2 in 2005 and introduce the euro at the beginning of 2008.
      But Hansabank (HPA1T.TL) said Estonia and Lithuania would not be ready to introduce the euro before summer 2007 at the earliest, while Latvia would struggle with its 2008 target.
      "No way Estonia will be ready before summer 2007," Hansabank analyst Maris Lauri said during a presentation of macro-economic forecasts, adding Lithuania would probably see a similar delay to its euro introduction target.
      Estonia and Lithuania say their tight fiscal policies and simple currency boards would make euro zone membership no more than a technicality, with their national currencies already firmly pegged to the euro.
      But Lauri said the duo would probably need extra time to ensure their fast-growing economies kept within all euro-zone convergence criteria, warning against a race to be first.
      She said Estonia could face inflation problems, while Lithuania might find it difficult to keep its budget deficit below 3.0 percent of gross domestic product as next year's elections would probably prompt politicians to boost spending.
      Latvia's central bank says it already complies with all euro-zone criteria, but wants to wait until January 2005 before re-pegging the Latvian lats to euro from the IMF's basket of world currencies and enter the ERM-2 waiting room.
      But even Latvia might prove too eager despite its more cautious approach as it too might find it hard to keep its budget deficit in check, Lauri said.
      "Latvia is ready in 2008 at the very earliest," she said.
      Hansabank expected the three Baltic economies to continue as Europe's fastest growing region in the years ahead, but cautioned about high current account deficits as growth came mainly on the back of high domestic spending.
      It forecast Lithuania's GDP to jump at least 7.2 percent this year, dipping to 6.9 percent in 2004, while Latvian growth would reach 6.9 percent this year and 6.4 percent in 2004.
      Estonia was expected to see economic growth of 4.2 percent this year and 4.8 percent next year.
      The region would see average growth of about six percent in the period 2005-8, Lauri said.

      RIGA, Oct. 30 (Xinhua) -- Parliament of Latvia on Friday passed the European Union (EU) Accession Treaty in the final reading. As reported, Latvia signed the treaty on behalf of Latvia in Athens on April 16 this year. The accession treaty includes the basic accession treaty text, 18 addenda, 10 protocols and a number of declarations.
      The accession treaty includes general conditions for Latvia and other candidate countries' entry into the EU. The first addendum deals with Latvia's accession to the Schengen space, the second includes technical matters regarding EU regulations.
      The third addendum describes the results of the accession negotiations and amendments to the EU legislation required by EU enlargement.
      The fourth includes amendments to EU directives and regulations. Other addenda deal with candidate countries' various transition periods. The ten protocols include issues which do not directly result from the EU legal enactments. Latvia will become a full-fledged EU member state on May 1, 2004, as Latvia's citizens decided during the September 20 referendum.

      LATVIA (formerly) -- The weather in the Baltic States may be miserable -- especially in October --- but it makes a good Halloween costume.
      When we lived in Latvia, my husband-to-be and I were fortunate to have a genuine professional make-up artist as a next-door neighbor. She had worked in opera houses in several countries and consulted at the Riga Opera. When Halloween came, she was eager to demonstrate her artistic talent and chose my husband as her canvas.
      Her theme: Baltic Weather. She painted my husband's face the dreary gray of a stormy cloudbank. She spiked his hair into the dark grays, blues and greens of the Baltic Sea. His eyes were sunk into black circles of despair. Just one look at his face and you could feel Seasonal Affective Disorder Syndrome setting in.
      Despite -- or because of -- his gloomy appearance, her handiwork won the first prize in a costume contest. I think it was a bottle of champagne, although it should have been a visit to a tanning salon.
      Good luck with your make-up this Halloween. If you can't win a prize for your costume, take along these pumpkin turnovers and win a prize for your cooking. Their warm orange filling is like the sunshine you've been craving.

      For filling:
      500g (just over 1/2 lb) pumpkin flesh, coarsely grated
      4 small onions, peeled and chopped
      vegetable oil for frying
      salt and pepper to taste
      For pastry:
      500ml (2 cups) kefir
      1 level teaspoon baking soda
      1 rounded teaspoon sugar
      1 level teaspoon salt
      250g (1 cup + 1 tablespoon) butter
      approx 675g (just under 4 cups) flour
      1 large egg yolk, mixed with 1 teaspoon water and 1/2 teaspoon oil

      Place kefir in a large bowl and sprinkle with soda, sugar and salt (do not stir). Let rest at room temperature. Meanwhile, fry onions in vegetable oil until soft, combine with grated pumpkin, season with salt and pepper and set aside. Gently melt the butter in a bowl over hot water until almost melted, then remove from heat and let stand until melted completely. Whisk kefir mixture until foamy, then whisk in melted butter. Now begin gradually stirring in flour, first with a spoon and then mixing vigorously with your hands until dough is no longer sticky. Cover dough with plastic wrap and refrigerate for at least 20 minutes and up to 2 days. Roll out dough until thin on a well-floured surface and cut into 8cm (3in) circles with the rim of a glass. Fill each circle with a generous heaping tablespoon of pumpkin mixture and fold dough over, crimping edges shut. Brush turnovers with yolk mixture and bake in a preheated 180C (350F) oven for 25 minutes, or until golden brown. Makes about 3 1/2 dozen turnovers, with dough left over for another use.

      MOSCOW (AP) -- Russian Jewish leaders said Monday that they have appealed to visiting Israeli Prime Minister Ariel Sharon to oppose what they called "the rehabilitation of Nazi criminals" in the former Soviet republics of Estonia and Latvia.
      In an open letter to Sharon, the Jewish leaders urged him to join them in sharp criticism of what they said was a decision by the Estonian authorities to build a monument to those who fought to free Estonia and died in World War II.
      "In effect, it is a monument to Estonians who fought on the side of Hitler's Germany, including in SS units," said the letter, whose prominent signatories included the Chief Rabbi of Russia, Berl Lazar.
      "We cannot consider this anything other that an attempt to rehabilitate Nazism and make it heroic -- an attempt that is by no means the first in Estonia and Latvia," the letter said.
      The Estonian government last year objected to a monument specifically to the Waffen SS -- the SS fighting force -- saying it would be seen as insensitive to those who died at Nazi hands. The monument now planned in Estonia is reportedly to bear the inscription: "To fighters for the restoration of Estonia's independent statehood in World War II."
      Thousands who were drafted into the Red Army said they were fighting for Estonia against the Nazis -- so the broader wording would be a concession to them as well.
      Latvia and Estonia were independent before being annexed by the Soviet Union in 1940. After the 1941-44 Nazi occupation -- during which a large majority of the nations' Jews were killed -- Soviet troops returned and remained until the Baltic states gained independence in the 1991 Soviet collapse.
      Tensions between Russia and Baltic states over the World War II era are still high, and Russian officials have repeatedly accused Estonia and Latvia of persecuting former Soviet officials while lionizing the Nazis.
      "The governments want to show that Latvians and Estonians fought together against the Soviet Army, but one must not forget with whom they fought together in doing so," the Interfax news agency quoted Lazar as saying.
      The signatories of the letter urged Sharon, in Moscow for a summit with President Vladimir Putin, to "give your assessment of what is going on in the Baltics and stop the process of the rehabilitation of Nazi criminals."
      They criticized European nations, saying "it seems they have made peace with the fact that countries that are seeking to forget the most important lessons of the second world war -- primarily of all the Holocaust -- are joining the European Union and NATO."
      Estonia and Latvia are set to join the EU and NATO next year.
      Russia and Israel last month angrily criticized a new memorial to Latvians who died fighting in Germany's Waffen SS during World War II, saying the state-sanctioned marble monument is an affront to millions of victims of the Nazis. The Estonian monument is to be smaller and is not expected to make specific mention of the Waffen SS.

      RIGA, Latvia (AP) -- A small group of Latvian officials, including Defense Minister Girts Kristovskis and Admiral Gaidis Zeibots, have left for a five-day trip to Iraq to meet with the Baltic state's troops stationed there as part of the American-led peacekeeping coalition.
      The delegation from the ex-Soviet republic of 2.4 million residents left Sunday and plans to meet with American and Polish officials in Iraq, including L. Paul Bremer, head of the occupation in Iraq, Defense Ministry spokesman Uldis Davidovs said Monday.
      Davidovs said the delegation would be visiting the 142 troops in part to boost morale and bring them gifts from home.
      Most of the Latvian troops in Iraq have been there since August patrolling the southern Iraqi city of Ashimiya alongside Polish troops. Another 35 have been in the northern city of Kirkuk.
      None of the Latvian soldiers have been killed or injured in combat, although two soldiers returned to Latvia after suffering non-combat injuries.
      Peteris Elferts, Latvia's ambassador-at-large to Iraq, said Latvia hopes to bring some Iraqis to Latvia to train them in banking, finance and government, but didn't say when that would happen.

      VILNIUS, Nov 3 (Reuters) -- Lithuania's President Rolandas Paksas moved to reassure the EU and NATO on Monday in the face of accusations the country was a tool for Russian organised crime, but lawmakers agreed to probe the claims.
      Paksas, a former Soviet-trained stunt pilot, is at the eye of a storm after a report by security services identified the president's office and one of his aides as having links to Russian mobsters.
      "I don't deny the possibility that this is all an effort to harm Lithuania's steady and rapid movement towards NATO and the European Union," Paksas said in a televised address to the nation, repeating that he had done nothing wrong.
      He said his efforts to stamp out corruption and graft was a main reason behind the attack by those who felt threatened by his drive to clean up the small Baltic nation of 3.5 million.
      "Our young state is facing a difficult exam of democracy and statehood," Paksas said.
      The security report will heighten fears that Russian mobsters plan to use the Baltic states as a launchpad for spreading their network across the European Union.
      Pressure against Paksas mounted in a heated emergency session in parliament as the head of the secret services said the report was not news to the president -- as Paksas has claimed -- but only a summary of earlier reports.
      "As far as I know, the president has not been influenced by international criminal organisations, but attempts have certainly been made," Mecys Laurinkus said.
      Parliament agreed to form a nine-member committee to investigate the accusations, due to report on December 1.
      A spokesman told Reuters Paksas would stick to a planned European tour beginning on Tuesday with stops in Brussels, Frankfurt and Berlin and top-level meetings with EU and NATO officials, despite calls for Paksas to cancel the trip.
      The president has little formal power over domestic affairs, but oversees foreign policy.
      PROXY FOR ARMS TRADE
      Fragments of the security report leaked to the media last week, causing one of the biggest political storms in the nation of 3.5 million since independence in 1991, and local media have already dubbed it a "Lithuanian Watergate."
      The report says Lithuania is used as a third party for the trade and distribution of arms and arms-manufacturing equipment as well as for money laundering and the financing of international terrorism.
      Lithuania and its Baltic neighbours Latvia and Estonia are all struggling to combat Russian organised crime, which takes advantage of the easy access from Russia to the three former Soviet republics.
      Prime Minister Algirdas Brazauskas, a political foe of the embattled president, has tried to calm the situation, saying he saw no grounds for impeaching Paksas.
      Paksas has suspended the aide named in the report as a link between his office and Russian mobsters, but that may not satisfy public opinion and parliament.
      "We have to cleanse ourselves before joining NATO and the EU, and we are just in time to do so," parliament speaker Arturas Paulauskas said at the start of the emergency session.

      VIENNA, Nov 3 (Reuters) -- Countries joining the European Union next year won no support from the European Central Bank on Monday for their pleas that EU policymakers reconsider the rules for adopting the euro currency.
      ECB Executive Board Member Gertrude Tumpel-Gugerell said there will be no change to euro entry criteria, despite criticism from many of the 10 countries at a conference here that the rules will create uncertainty and harm their economies.
      Tumpel-Gugerell told central bankers from the eight former communist states of central Europe and the Baltics, plus two Mediterranean islands, that new applicants will be judged by the same standards that existing euro zone members have met.
      "The equal treatment criteria will continue to govern the application of the convergence criteria. There will be no additional criteria, nor will there be relaxation of the existing criteria," she said.
      Her stance is in line with ECB and EU policymakers, who have consistently said euro applicants must link their currencies for at least two years to the euro within the Exchange Rate Mechanism (ERM-2) without severe tensions -- meaning their currencies fluctuate in a narrow band of roughly plus or minus 2.25 percent around a central rate against the euro.
      They also must bring down their inflation rates, reduce their budget deficits and get their economies and interest rates closely in line with those of the euro zone nations.
      While the future EU members all agree they must speed up reforms and get their economies into shape, they disagree over how best to do that. Poland, for instance, vigourously argues it will be best be able to improve its economy by adopting the the euro quickly.
      SHOCK THERAPY
      Six out of the 10 accession countries at the East-West conference on European expansion here said they fear speculative currency attacks if they enter ERM-2. Most countries said they would prefer quick entry into the euro currency, even bypassing the ERM-2 process altogether.
      "ERM-2 is not the best way to introduce deep reforms. You can be subject to a lot of shocks," said Elana Kohutikova, deputy governor of the National Bank of Slovakia at a panel discussion on ERM-2.
      "For Poland, it doesn't seem to be a useful framework," said Adam Czyzewski, director of macroeconomic analysis at National Bank of Poland, whose country would like early euro adoption.
      "Why complicate a currency regime by imposing this framework?" agreed Czech National Bank Vice Governor Oldrich Dedeck, whose nation is waiting several years to see how ERM-2 operates before applying for entry.
      Lithuania, which already fixes its currency to the euro and meets many of the euro entry criteria, said shifting to a floating exchange rate system based on a central rate to the euro would introduce uncertainty and "would not be sensible."
      "It is a public relations disaster," said Ramune Vilija
      Zabuliene, deputy board chairperson at the Bank of Lithuania.
      Their position won powerful backing from international economist Barry Eichengreen, a former Clinton administration official who teaches at the University of California, Berkeley.
      He said that ERM-2 was a "perverse" criterion, unfitted to the current situation. It would be better for EU policymakers to focus on budgetary issues and inflation levels in judging euro entrants than to require them to trade in narrow currencies bands that will face attack by foreign exchange traders -- just as happened in the the early 1990s to the United Kingdom and Italy.
      "It is a recipe for disaster," he said.
      While countries are highly critical of the system for euro adoption and argue for changes, the Island of Malta summed up well their overall attitude.
      "The flaming hoops are there and we will jump through them. We have no option really," said Michael Bonello, Governor of the Central Bank of Malta.

      BRUSSELS, Nov 5 (Reuters) -- The European Union's executive Commission gave its final green light on Wednesday to 10 countries due to enter the bloc next year, saying all would be ready to join on schedule on May 1, 2004.
      But in its last report on their progress towards membership, it warned of serious shortcomings in all the states which, unless resolved, will deny them the full benefits of membership.
      It reserved its strongest criticism for Poland, the biggest enlargement country, singling out nine areas for urgent action to avoid forfeiting money and market access from Day One.
      "The Commission is confident that enlargement will take place on 1 May 2004 under good conditions," the Comprehensive Monitoring Report said.
      Despite saying it had not encountered any major surprises, the Commission will still send warning letters to all 10 countries -- Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Cyprus and Malta -- highlighting specific shortcomings.
      "Without immediate and decisive action, the countries in question will most likely not be able to fulfil their obligations of membership in those specific areas and their citizens and economic operators will not enjoy the full benefits of EU membership," it said.
      The report, which could have judged that some of the 10 were not yet ready, removes the last obstacle to EU enlargement, and caps more than a decade of astonishing political and economic change in Eastern Europe since the 1989 collapse of communism.
      Eight of the 10 are former Soviet satellites, including three Baltic states which were integral parts of the Soviet Union. The other two are Mediterranean islands.
      WARNINGS
      The report praised the extent to which acceding countries had aligned themselves with EU law, but made clear it could apply safeguard measures to protect the EU market where the new member states did not meet Brussels' standards.
      The Commission noted 39 "gaps" in preparation for membership involving all countries which it said were of serious concern. Nine of these involved Poland, the most for any state.
      They fell broadly into two categories, those affecting the internal market and those affecting the distribution of EU funds to beneficiaries in the new members.
      The report made clear that those countries which failed to meet entry requirements would suffer, rather than the EU as a whole, if the gaps were not plugged by May 1.
      Citing a raft of shortcomings in food safety in Poland, Hungary, the Czech Republic, Slovakia, Malta and Latvia it warned that non-compliant products might meet restrictions.
      It also said that if systems for paying farmers under the EU's common agricultural policy were not in place by accession day new member states risked not being reimbursed by the EU.
      CORRUPTION
      The Commission praised the 10 for sustained economic growth, noting that this had slowed in 2003 as a result of global uncertainty, "but in general far less than in the EU."
      But it had harsh words over failures to implement administrative reform and fight corruption.
      "The perception remains that the level of corruption in the acceding countries is still high, and very high in some cases, and can affect confidence in the public administration and the judiciary," it said.
      While the 10 accession states had cause for relief, three countries seeking membership later received more mixed reviews.
      Romania, seeking entry with Bulgaria in 2007, failed to win outright recognition as a "functioning market economy," leaving it as the only candidate negotiating membership without it.
      Turkey, which hopes to be given a date late next year when membership talks may start, failed in a last-minute bid to prevent the Commission making a link between its candidacy and the Cyprus problem.
      The report said the absence of a deal to reunite Cyprus, of which Turkey has occupied the northern third since 1974, could become a "serious obstacle" to Ankara's EU aspirations.

      UNITED NATIONS (AP) -- A U.N. Security Council committee named 58 countries Wednesday that missed an Oct. 31 deadline to submit reports on measures they are taking to stop supporting, financing and providing sanctuary to terrorists.
      Almost all are developing nations in Africa, Asia and the Pacific islands, but countries such as Sweden, Latvia, Ukraine and Jordan were also among the 58.
      The committee is monitoring how all 191 U.N. member states are implementing a Security Council resolution adopted less than three weeks after the Sept. 11, 2001, terrorist attacks on the United States. The resolution required U.N. members to adopt legislation and take administrative measures and other steps to halt all support for terrorists.
      The Counter-Terrorism Committee received initial reports from all member states. These were analyzed with the assistance of outside experts who could use terrorism-related intelligence from governments in their assessment of compliance.
      Every country received follow-up letters spelling out gaps identified by the experts and making recommendations about action needed to improve implementation of the resolution.

      Latvia -- Cesis' 13th-century castle is not for the faint of heart. Below the ruins is a dank prison cell, and more adventurous travelers may explore the tower by lantern light.
      Riga is only 16 hours by train from Moscow, but it might as well be on the other side of the world. With its clean, evenly paved streets, well-restored buildings and smiling, helpful residents, Latvia's capital is a piece of European heaven energized by newfound sovereignty, and it's right around the corner.
      Rich in history, Latvia is a relative baby beside the other European Union members. After the failed coup of 1991, the feisty Latvians declared independence and have since been trying to reclaim their country, which is only half-populated by ethnic Latvians after 40 years of Soviet rule. Though the government's attitude toward Russians is less than friendly, Russian is often heard on Riga's streets, and most restaurants have bilingual menus and wait-staff. You may win points for starting a conversation in English, but most Latvians still speak Russian better. The national currency--the lat--is one of the strongest in the world. Grab this new currency while you can, because Latvia will be adopting the euro in the next few years.
      Riga boasts a delightful old town, and a weekend trip could easily be filled by wandering its winding streets, visiting museums and stopping for melt-in-your-mouth pastries at its many cafes. Appreciation for the charming old town only grows when you remember that large swaths of it were destroyed during World War II, when Riga was caught between the Soviets and Germans.
      The first stop for most visitors, the tourist information center, is housed at 6 Ratslaukums in the House of Blackheads, with its decadent Dutch Renaissance facade. The building, built in 1334 but destroyed by German shelling during World War II, was used by a medieval guild of unmarried merchants (Riga being part of the Hanseatic League). The reconstructed building's upper rooms can also be visited by way of the souvenir shop next door to the info center.
      Towering above the guildhall is the green copper spire of St. Peter's, one of the city's many Catholic-built churches that have since switched to Lutheran. Also destroyed in World War II, the present-day church is a reconstruction of the 15th-century original. Its spire was the highest in Europe at the time of its construction, but its fame was short-lived--rebuilt after collapsing in 1666, the spire burned down the next year. For those who have confidence in its 1973 replica, $3 will take you up 72 meters for a view of the old town and the Soviet monument to the Latvian riflemen by the waterfront.
      For a chilling reminder of the inhumanity of man, head over to the Museum of the Occupation of Latvia. Inside the hunkering black building, you'll find sobering exhibits on the Nazi and Soviet occupations ending with Latvia's independence in 1991. The museum is free, supported largely by donations from Latvians living abroad. Take a look at the thick comment book for Russian visitors' takes on the museum.
      After a dose of recent history, take a step back in time to the Dome Cathedral, the largest place of worship in the Baltics. Radiating from the square are a plethora of restaurants, and you can also head up Amatu Street for a glimpse of the guildhalls that were Riga's glory at the time of the Hanseatic League. As you pass a large yellow house on the corner of Maza Smilsu and Meistaru streets, look up at the roof for the statues of hissing cats. Reputedly, the house belonged to a businessman who, after being refused entrance to the guild, installed the cats with their backs arching in the guildhall's direction. The irked organization forced him to move the cats to their present position.
      Though Riga's charms are enough for an entire weekend, there are several easy day trips from the city for those with more time. A delight under winter snows is Sigulda, a small town that is the administrative center of Gauja National Park. Skirt the duck pond in the center and wander along the path until the New Castle, which is actually a 19th-century manor. The grounds are open to the public, but the building is not. Further up the hill are the crumbling ruins of the Knight's Castle, which was first built in 1207 only to be destroyed several times as wars swept through the region. It last fell in the 18th century and was never rebuilt.
      Another half-hour train ride to the east brings you to Cesis, which is billed as one of Latvia's most charming towns. Cesis' pint-sized center takes just a few hours to explore. The town's pride and joy is a stone castle that was built around 1207 by the Livonian Order. Among the many armies that ransacked it were the forces of Ivan the Terrible in 1577.
      Just under $2 gains you entrance to the museum and permission to explore the castle. The castle staff lets more adventurous travelers wander the grounds and clamber over the ruins. Climb down a ladder to the lower part of the tower to see a dank prison cell lit by a tiny circle of light. Watch your head climbing out and be thankful that you're not a prisoner--they got thrown straight down. The groundskeeper will then hand you a lantern, which throws its feeble light on the tower's winding stairs. Access goes up to the third floor and offers views of the half-restored interior and the sprawling park outside the castle walls. Aside from the castle, Cesis has one well-kept main street, but turn down a twisting alley and the wooden buildings tell a story of neglect.
      Not all of Latvia's attractions are older than the country itself--pop over to Jurmala, which was one of the most popular vacation spots in the Soviet Union. Caught on a strip of land between the Bay of Riga and the Lielupe River, water is never out of sight for long. The beach is deserted in the winter except for a few benches that are perfect for sitting, bundled up against the ferocious wind, to watch the waves beating against the shore. And though it is rare for amber to wash up at the bay (this being more common on beaches along the open sea), one never knows. Many restaurants and guesthouses are closed for the winter, but there is a charm in having the whole town of pre-Revolutionary wooden houses to yourself, with a view straight out to the Baltic Sea.
      Where to stay
      Next to Riga's freedom monument at 28 Kalku is the Hotel de Rome (Tel. 371-708-7600), with doubles for $178 with breakfast.
      Sigulda boasts a more welcoming room in a guesthouse than you could find in most hotels at Livonija (Tel. 797-3066), located at 55 Pulkv Brieza. Doubles cost $36, and the house is less than ten minutes by foot from the train station.
      Cesis' most centrally located hotel is Hotel Cesis (Tel. 412-0122), at 1 Vienibas Laukums. Doubles go for $75, with breakfast.
      Where to eat
      For hearty Latvian cuisine at bargain prices, try Staburags at 55 Caka. Sit at a heavy, wood-planked table and wash your meal down with some of the best beer in the Baltics.
      To satisfy your sweet tooth, snag a table at Smilsu Pulkstenis, a tiny cafe at 8 Meistaru, just around the corner from the house with the hissing cats. Their delicious pastries are all under a dollar.
      How to get there
      Trains leave Moscow's Rizhsky Station every evening, arriving in Riga the next day.
      Aeroflot (Tel. 753-5555) flies to Riga every Wednesday, Friday and Sunday.