- The Washington Times - Sunday, August 4, 2002

VILNIUS, Lithuania - In August 1989, 2 million Lithuanians, Latvians and Estonians held hands in a 360-mile chain across the Baltic region to mark the 50th anniversary of the infamous Molotov-Ribbentrop pact between the Soviet Union and Nazi Germany that forced the three states under Moscow's influence. In 1940, the Soviet Union annexed the Baltics, and they did not regain independence until 1991.

Foreign oppression has often prompted the three peoples to join efforts in fighting it, but they are finding that formula a winning one even in peacetime.

Their common bid to become NATO members is proving successful, and they are poised to receive invitations at the alliance's Prague summit in November - less than two years after their candidacies were considered long shots.

Russia's objections to enlarging NATO to its doorstep have subsided significantly, in part because of Moscow's improved relationship with Washington. Strategic U.S. interests, particularly the war on terrorism, have caused the Bush administration to seek what it calls "robust expansion."

But what the Baltic states have achieved in their political, economic and social development in just over a decade of independence has played no smaller role in the West's positive attitude, Baltic officials and foreign diplomats say.Even though they have a combined population of only 7 million people, the three nations "stand as examples of self-determination, democracy and openness, human rights, domestic tolerance and reconciliation, and free market economy," the U.S. ambassador to Latvia, Brian E. Carlson, said last month.

Of the three countries, which were jewels in the Soviet crown even during the Cold War, Estonia is usually touted as best off economically, followed by Latvia and Lithuania.

"There are some things that underpinned Estonia's economic success," said Jason Grenfell-Gardner, president of the American Chamber of Commerce in Estonia. "Monetary and fiscal restraint kept the government in check, but it's easier for a small country to refocus. A small motor boat turns quicker than an oil tanker."

Michael Tarm, editor of the City Paper in Tallinn, the Estonian capital, said, "it doesn't hurt to have Finland, a high-tech and wealthy cousin," nearby, but Estonia has done "the fundamentals right - the economy makes sense and the currency is stable."

Latvia's location between the other two states has helped it to land more investors looking for a regional hub. Coupled with a highly educated work force, as in Estonia and Lithuania, it should continue to benefit as its transport infrastructure improves and it becomes an easier place to do business, observers say.

"In general, Latvia's politicians are sure that additional investment will come with European Union and NATO membership," said Dace Akule of Radio Free Europe's Riga Bureau.

Lithuania has slowly recovered from the 1998 global financial crisis and has recently announced some impressive economic indicators. Second-quarter gross domestic product grew by 6.9 percent and, according to the Ministry of Finance, the economy will grow by 4.7 percent this year. Average monthly wages were about $270 in 2001, compared with $250 in Latvia and $330 in Estonia.The three capitals are the best examples of the Baltics' speedy recovery from five decades of Soviet rule.

"If you left Vilnius two [or] three years ago and returned, you would see a difference - in streets, buildings, a service-oriented culture," said Al Kris, director of AON Consulting in Vilnius, who has lived here since 1994.Baroque churches and windy Old Town streets have been restored in Vilnius, while more shops and restaurants opened. Once called the "Jerusalem of the North," Vilnius is now slowly rediscovering its rich Jewish heritage, with the municipality planning to rebuild sections of the Jewish Quarter.

Just 48 miles across the bay from Finland, Tallinn's fortified Old Town is a mix of "old historical medieval atmosphere with a high-tech edge that doesn't seem to clash," said Steve Roman, editor of "Tallinn in Your Pocket" guidebook. "You can buy a tram ticket by sending a text message on a mobile phone and visit the 11-screen multiplex cinema," all within walking distance of the castle walls.

Riga is the largest Baltic capital and a port city. Bustling with lively streets and city atmosphere, it is attracting more tourists, although it is unlikely to match last summer's 800th anniversary weekend when more than a million people celebrated in Old Town and watched a massive fireworks display.However, "progress is mainly seen in the big cities, where city councils have big budgets and have attracted foreign investors," said Ms. Akule. "In the countryside, the situation is a bit different". In all three countries, the countryside is lagging behind because of high joblessness and little development, she said.Latvia and, to some extent, Estonia have been praised for their handling of the large Russian population that immigrated during the Soviet era and remained there.

"The predictions about major ethnic conflict in the Baltic states haven't come true, which is not to say there haven't been mistakes made. Integrating people is still a challenge," said Mr. Tarm.

Latvia has been given the stamp of approval from international organizations such as the European Union and the United Nations for its citizenship laws that require knowledge of the Latvian language but point out that a large group of noncitizens exists.

About 22 percent of the 2.3 million Latvian residents are noncitizens, and approximately 344,000 of them are Russian.

Ojars Kalnins of the Latvian Institute, who is a former ambassador to the United States, said that the Russian language is available in bookstores and on the radio and is by no means forbidden.

But Ms. Akule noted that Latvia would be a stronger and "healthier" society with a smaller division between Latvians and noncitizens. She said the language laws have not created a "feeling of home" for Russians, who nonetheless find the economic situation better in Latvia than in Russia.

Mr. Akule said that "Baltic unity is a nice expression and philosophy because of their common history and future goals." But Cameron Greaves, senior partner of PriceWatherhouseCoopers in Vilnius, who works in all three Baltic states, said they should be looked at individually because of their distinct cultural heritages.

Since they all share space on the Baltic Sea, the classification is more "convenient," he said. "The term is more of a geographic nicety."

Mr. Greaves warned that despite the clear success the three nations have achieved, serious work remains to be done. In Lithuania, for example, the tax codes do not encourage foreign investment and could result in a sluggish economy in the future.Other business people say that Lithuania could benefit from harnessing the skills of its population, many of whom, especially young people, often seek work abroad.

"There is a brain drain of sorts here," said Mr. Kris, who added that despite the many "help wanted" ads that fill the newspapers, there are not many opportunities for young college graduates.

The plight of pensioners and the people in the countryside, whose living standards are much lower than those in the capitals, is also a concern. In addition, "the main obstacle for new businesses remains corruption," said Ms. Akule.

Fighting corruption effectively is important for the United States in its consideration of NATO applicants, Elizabeth Jones, assistant secretary of state for European and Eurasian affairs said during a recent trip to the region.Although invitations for the Baltics in Prague are now all but certain, just over a year ago no one was betting they would get in.

"Our politicians and diplomats were not sure of the U.S. position toward enlargement two years ago," said Aurimas Perednis, chairman of the Lithuanian Atlantic Treaty Association. "President Bush's statements [in June 2001] that NATO will be [expanded] from the Baltic to Black Sea was an important signal for us."In his Warsaw speech, Mr. Bush said, "we should not calculate how little we can get away with, but how much we can do to advance the cause of freedom."

Congress demonstrated its support for enlargement in May when it passed the Freedom Consolidation Act providing $55 million in military aid to seven aspirant countries, including the Baltic states.

"We do have, deep inside, a real sense of needing the security to secure our position in the West and not to be in a gray area," said Mari-Ann Kelman, a member of the Estonian parliament.

All three states have sent peacekeepers to Bosnia and Kosovo, and have offered to deploy servicemen to Central Asia as part of the anti-terrorism coalition. They also have established a joint battalion, radar network and an officer-training college, among other cooperative initiatives.

Left with little military equipment or facilities after the Red Army left, the Baltic states started modeling their new forces and structures to NATO standards.

"We've been building our military from scratch. We are looking for niche roles," Mr. Ojars said. "We can contribute to peacekeeping and [have] specialized roles to supplement NATO forces. We are not just consumers of security."

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