Privatization row further strains Lithuanian-Latvian relationship

VILNIUS - Ostensibly, Lithuania and Latvia are close Baltic neighbors with good relations, but a series of disagreements recently are starting to cast relations between the two countries in a new light.

The row over the privatization of the Lithuanian Vakaru Laiva Remontas (Western Ship Repair), ostensibly won by a Latvian company, have added to the tension.

Although Latvian ship repair company Rigas Kugu Buvetava (RKB) was believed to have the tender for a 92 percent stake in the Lithuanian company wrapped up, the Lithuanian government has yet to officially announce the winner and explained the delay by saying that it is conducting research into the reliability of the Latvian company.

RKB representatives, who feel the Lithuanians are unnecessarily dragging their feet, have howled in frustration. They have not taken to the street outside the Lithuanian Embassy in Riga, as Latvian greens did recently to protest what they perceive to be the environmental hazards of the Butinge Oil terminal being built near the two countries' border, but RKB representatives have criticized the Lithuanian government and press for tarring their good name.

Arturs Mucenieks, public relations representative for RKB, recently spoke to the media at the Latvian embassy in Vilnius and reiterated what RKB board members said earlier: mistrust in the Latvian company is being encouraged by some in the government and the Lithuanian press, which has reported that RKB is only interested in liquidating Vakaru Laivu Remontas (VLRI) after privatization to eliminate it as a competitor.

"We didn't come here to criticize your government or our competitors," Mucenieks told reporters. "However, as doubts about our reliability surfaced only when the privatization competition finished shows that political powers appeared, and that disturbs us. Someone doesn't seem to be receptive to Latvian capital being invested."

Even the Latvian government has become involved. On July 23, Latvian Minister of Transportation Vilis Kristopans sent a letter to his Lithuanian counterpart, Algis Zvaliauskas, asking for an explanation. The Latvian minister said that the Lithuanian administration's "offensive activity" contradicted international competition principles.

TBT contacted Zvaliauskas, who was in the coastal city of Klaipeda, but he stated that he preferred to delay comment until he has returned to the Lithuanian capital and can update himself on the situation.

Stasys Overlingas of the Lithuanian State Assets Fund told TBT that such concerns should be directed to the administration. However, he did say that the government is not making an effort to single out the Latvian company for scrutiny. The two other companies, Azovlitas, a Lithuanian-Ukrainian company and Balti Laevaremondithase, an Estonian ship repair company, were the other two competitors for the privatization tender.

"(Financial verifications) of all three companies that participated in the tender are being carried out by the administration," Overlingas said. "So now the process has stopped and there has been no formal announcement because an official decision has not been determined. When the government makes that decision, they will let us know."

Shortly after Mucenieks' visit, a press representative at the Latvian Embassy in Vilnius described RKB as "one of Latvia's strongest companies and one that has a history of working in a fair way."

However, he would not comment on the way in which the Lithuanian administration is handling the situation.