ARRANGEMENT AMONG THE MINISTRY OF DEFENCE OF THE REPUBLIC OF ESTONIA, THE MINISTRY OF DEFENCE OF THE REPUBLIC OF LATVIA AND THE MINISTRY OF NATIONAL DEFENCE OF THE REPUBLIC OF LITHUANIA CONCERNING THE FINANCING AND COST SHARING OF THE EXPENDITURES FOR THE NATO AIR POLICING

The Ministry of Defence of the Republic of Estonia as represented by the Estonian Air Force (Estonian Participant), the Minis­try of Defence of the Republic of Latvia as represented by the Latvian Air Force (Latvian Participant), and the Ministry of National Defence of the Republic of Lithuania as represented by the Lithuanian Air Force (Lithuanian Participant), hereinafter jointly referred to as the Participants,

Recognising that the performance of NATO air policing (hereinafter - Operation) in their respective states requires sharing the associated expenditures among them,

Having regard to the statement of the Ministers of Defence, done on March 26, 2004, determining the need to work out the necessary cost sharing arrangements for the Operation,

Have agreed:

Section 1

Definitions

1.1 Host Nation - the State of the Participant on whose territory the activities connected with the Operation are performed (including but not limited to location, operation and transition of NATO forces and materials).

1.2 NATO force - all components of NATO forces, including civilian personnel and material as defined in the Agreement between the Parties to the North Atlantic Treaty regarding the Status of their Forces, done in London on 19 June 1951, except that Host Nation, in which territory NATO forces and material in connection with Operation are located.

1.3 Rotation - the period when one state, whose Ministry of (National) Defence is not a Participant to the Arrangement, is conducting the Operation.

Section 2

General provisions

2.1 The aim of the Arrangement is to establish financing and cost sharing principles among the Participants during the performance of Operation.

2.2 The Participants will co-operate with each other in order to meet the national requirements for accounting and auditing.

Section 3

Financial provisions

3.1 Expenditures, listed in Annex, will be shared among the Participants on an equal basis (1/3 each), unless otherwise agreed.

3.2 The Lithuanian Participant will provide the budget based on foreseeable expenditures of one Rotation to the Estonian Participant and the Latvian Participant at least 60 (sixty) days before the beginning of the Rotation. The first budget will be provided together with the foreseeable expenditures of the current Rotation starting from the entry into force of the Arrangement.

3.3 The Estonian Participant and the Latvian Participant will each pre-fund 1/3 of the shared costs after approving the budget prior to the beginning of the Rotation. In case of delay of pre-funding, the Participants will make the transfer as soon as possible regard­less to the start of Rotation.

3.4 Payments will be made to the designated account of the Lithuanian Participant.

3.5 The Lithuanian Participant will present a report on the actual cost of the Rotation to the Estonian Participant and the Latvian Participant within 60 (sixty) days after the end of each Rotation.

3.6 The expenditure savings of one Rotation will be transferred to the budget of the next Rotation.

3.7 Sharing any other expenditures that might arise due to the Operation and are not included in the budget will be decided on case-by-case basis by the Participants.

Section 4

Final provisions

4.1 The Arrangement will enter into force upon the date of the last signature.

4.2 The Arrangement may be amended or terminated by written consent of all the Participants.

4.3 Any Participant may withdraw from the Arrangement by giving a three months written notice in advance to the other Participants.

4.4 In the event of withdrawal from or termination of the Arrangement the provisions of the Arrangement will be applied until all outstanding payments, claims and disputes are settled.

4.5 Any dispute between the Participants regarding the interpretation or application of the Arrangement will be settled by negotiations and shall not be referred to an individual, national or international tribunal or to any other forum of settlement.

4.6 Annex to the present Arrangement shall be integral part of the Arrangement.

Done in 3 (three) original copies in the English language, each of these copies having an equally binding legal effect.

Annex

LIST OF EXPENDITURES FOR NATO FORCES:

1. Expenditures on rent of vehicles (buses, minibuses, cars, etc.) entirely assigned for the use only for the NATO force that have been provided in accordance with rent contracts awarded following the public procurement regulations of the Republic of Lithuania in accordance with a Table of Equipment (TOE) preliminary approved by the Participants.

2. Expenditures on petroleum, oil and lubricants for vehicles mentioned in the paragraph 1 of the Annex.

3. Expenditures on goods and services provided to NATO force in designated areas related to:

a. provisioning with drinking-water;

b. collection and utilization of waste;

c. sewerage;

d. biotoilets services;

e. laundry and change of bedclothes;

f. electricity supply;

g. communication services;

h. household goods (detergents, toilet paper, instruments, etc.).

4. Expenditures on the runways de-icing, which will be shared among the Participants as follows - Lithuanian Participant covers 50 (fifty) per cent and Latvian Participant and Estonian Participant covers 25 (twenty five) per cent each.