THE BALTIC STATES : ESTONIA, LATVIA & LITHUANIA   The Baltic states of Estonia, Latvia and Lithuania are located in North-eastern Europe on the eastern shores of the Baltic Sea. Throughout their long histories, the peoples of these three countries have been controlled by various European empires.   In 1918, the three Republics gained their independence for the first time, and established themselves as modern democratic economies. Their independence, however, was short-lived as all three countries were annexed by the Soviet Union in 1940, then occupied by Nazi Germany before reverting to Soviet control from the end of 1944.   Many people from all three countries fled to the west, establishing communities to preserve and promote their language, culture and traditions in Canada, the USA, Australia and elsewhere. Estonia, Latvia and Lithuania formally regained their independence in August 1991 after crash of Soviet Union.   Since the restoration of independence, Estonia, Latvia and Lithuania have made remarkable progress in transforming their societies and in building dynamic democracies and market-based economies. The Baltic states have wasted no time in re-establishing their western-European links, especially with their Nordic neighbours. With a combined population of only 7.2 million people, Estonia, Latvia, and Lithuania have achieved greater presence in the international community by joining forces in a number of political and economic arenas. In November 2002, Estonia, Latvia, and Lithuania received invitations to join the North Atlantic Treaty Organization (NATO) in 2004. In addition, efforts to integrate with European institutions will soon pay off as the Baltic states are expected to join the European Union (EU) in mid-2004. Membership in NATO and the EU has been a stated foreign policy goal in each of the three countries since they became independent.   Latvia, Lithuania, and Estonia each have important ports for Russian crude oil and petroleum product exports. Transit fees for these oil and petroleum products that are destined for export are an important source of revenue in the Baltic states. Until recently, Latvia's Ventspils port was Russia's primary northern crude oil export terminal. However, in an effort to avoid these transit fees, Russia constructed its own oil export terminal at Primorsk, part of the country's new Baltic Pipeline System (BPS). The Primorsk terminal, with an initial capacity of 240,000 barrels per day (bbl/d), opened in December 2001. According to various estimates, ports in the Baltic states could lose between 10% and 50% of their current Russian oil export volumes. Nevertheless, projected increases in Russian oil exports, along with increased oil exports from the Caspian Sea region, especially Kazakhstan, appear to ensure that the ports in Estonia, Latvia, and Lithuania will remain important oil export terminals in the future.   Estonia, Latvia and Lithuania present a very prospective region due to their integration into the world society, their stable political system, their closeness to Scandinavian countries, their excellent transportation system, and their highly qualified labor force. Anything that is manufactured in this region is initially supplied to the European Union.