Latvia, Lithuania and Estonia hoped the end of communism meant the beginning of a wonderful life, but now many people are COLD AND FED UP

By JAMES CARNEY RIGA

It seems incomprehensible. Less than three years after declaring independence from Moscow and igniting the breakup of the Soviet Union, Lithuanians voted their former communist leaders back into power. But the victory of the freshly named Democratic Labor Party does not presume a return to orthodox communism. It testifies instead to the disappointment of the great expectations in the three Baltic republics of Lithuania, Latvia and Estonia that the end of Soviet rule would mean the beginning of a wonderful life.

But reality has betrayed expectations, and independence has provoked new conflicts. On a cold afternoon in Riga's Freedom Square, an old man holds a banner listing Russia's crimes against the tiny nation of Latvia: OCCUPATION, GENOCIDE, TERROR. A young Russian woman approaches him. She talks, he shouts. His words vent the suppressed anger of a life spent under Moscow's thumb. Russians, who make up nearly half the population, must go, he says, or Latvia's culture will perish. The young woman walks away crying. A Russian man born in Latvia and determined to stay tries to argue. "You can't blame all Russians," he says, his hands shaking. Then a Latvian woman, her body bent from age, leans into the crowd to answer. "Take your factories," she shouts, "take your tanks, take yourselves and leave!"

It is one measure of how much the world has changed that Russians, who were masters of the Baltic republics for 50 years, now complain bitterly of discrimination at the hands of the new governments. In Latvia and Estonia, where Russians make up sizable minorities, the debate over where and how to grant them citizenship rights has soured relations with Moscow and strained ties with Western nations that long supported Baltic resistance. The struggle for independence has been replaced by the more complex and often divisive task of building democratic states from the communist debris. In all three countries, the promise of a bright future that seemed so near has, in the past 12 months, been tempered by steep economic decline, social polarization and political bickering.

It was supposed to be better in the Baltics. No one doubted the difficulty of exchanging Soviet authoritarianism for market capitalism and democracy, but because of their European heritage and compact size, Latvia, Lithuania and Estonia were expected to make the transition with greater speed and less hardship. Many Balts welcome an abundance of consumer goods and the establishment of national airlines as signs of their success. Estonia has even abolished the dual economy that split society between the elite few with access to Western currencies and the masses who could shop only with rubles. But consider:

-- Political infighting and discontent over a deteriorating economy catapulted Lithuania's former communist leaders back into office on promises of restoring order and slowing the painful process of reform. The government of President Vytautas Landsbergis, who courageously led the resistance to the bloody Soviet army crackdown in January 1990, was unable to translate the skills of revolt into running a country. Politics has shifted in the opposite direction in Estonia, where the nationalist Fatherland coalition has taken power with a pledge to "clean house" -- code words for removing all former communists from office.

-- All three countries are suffering a sharp drop in industrial production, as well as chronic shortages of gas and oil once provided cheaply and plentifully ! by Russia. In Lithuania and Latvia, the energy crisis has forced many to go without heat and hot water; in Lithuania, gasoline for private cars is strictly rationed. In Estonia, where the introduction of a new convertible currency has helped eliminate shortages of consumer goods, inflation has made all but the most basic items unaffordable for the average person.

-- Soldiers of the former Soviet army remain in all three countries, despite sporadic negotiations for withdrawal. Russian President Boris Yeltsin, faced with nationalist and economic pressures of his own, halted troop departures to punish Latvia and Estonia for what he termed "blatant discrimination" against ethnic Russians. Watching the political turmoil in Moscow, Baltic leaders are plagued by the fear that a coup could lead hard-liners to use the troops to retake the former republics by force.

Malaise and exhaustion have settled over much of the Baltics. Prices are prohibitive, economic reform is achingly slow and political development has stalled. "Life hasn't suddenly become bright and easy," says Kaupo Pollisinski, spokesman for the Bank of Estonia. The struggle for independence has left many Balts politically apathetic. "For two years I went to every demonstration," says Lauri Sillak, a 23-year-old Estonian artist. "I like independence, but I'm tired of politics now." The republics expected a disproportionate amount of attention from the West, but that has waned, and some Baltic leaders are worried that Europe and the U.S. may neglect the very countries in which economic and political reform has the best chance. "It will be a long time," says Latvian journalist Valdis Berzins, "before we live on a par with the rest of Europe."

The protracted debate over local Russians has distracted Baltic leaders' attention from other issues. A majority of the 1.8 million ethnic Russians are faced with the prospect of becoming unwelcome foreigners. In Lithuania, where the alien population of 20% poses little threat, all inhabitants received instant citizenship. But in Estonia and Latvia, where non-natives make up 40% and 50% of the population respectively, the citizenship issue is highly charged.

Last spring the Estonian government granted citizenship only to those inhabitants, and their descendants, who had lived in the republic during its brief period of independence between the two World Wars. All others, most of them Russians who immigrated during Soviet rule, were left out and could not vote in recent elections. Estonia's naturalization rules are relatively lenient, however -- just three years' residency, knowledge of Estonian and an oath of loyalty. In Latvia, where fears of Russian political and cultural dominance are justifiably greater, parliament is considering a draconian 16- year residency period.

These moves have drawn criticism not only from Moscow but also from the West -- an ominous sign for nations pinning their hopes for the future upon integration with Europe. "What they are doing is a form of civilized ethnic cleansing," says a senior British diplomat. "It's a repugnant form of nationalism."

The Balts view the issue differently: Russian migration was the means by which the Kremlin subjugated them. "Is making Latvian the official language a deprivation of human rights?" asks Viesturs Karnups, director of the Latvian Department of Citizenship. Argues Estonian journalist Tarmu Tammerk: "There is a misperception in the West. Most Russians here have come to terms with the fact that this is a foreign country."

So far, the Russian communities have not organized any broad-based resistance movement to protest the alleged discrimination. The main reason is economic: for all the hardship in the Baltics, most Russians know that life across the border is far worse. "We're between two fires," says Dmitri Klenski, an Estonian-born Russian. "There is nothing for us in Russia, and no one wants us in Estonia."

If the Baltic governments manage to reform their economies without incurring dire levels of poverty and unemployment, the citizenship conflict may wane. Estonia, aided by its close cultural ties to Finland, has moved the most swiftly, issuing its own hard currency, the kroon, backed by gold reserves. That has complicated exchanges with Russia but helped increase foreign investment and trade.

Even so, a harsh winter could force the government to raise home-heating prices beyond the means of many Estonians. Already the country's new poor line up outside soup kitchens in the capital of Tallinn for what may be their only meal of the day. "There is real poverty here," says Yevgeni Urbanus, a director at one of the kitchens, as he surveys the elderly people who have brought their own jars for the soup.

Energy shortages have hit hardest in Lithuania, where sparring between nationalists and the conservative Democratic Labor Party has often paralyzed economic reform. Because Russia cut off fuel supplies for much of the summer, reserves in Lithuania have run alarmingly low. The country also relies on the dangerously designed Ignalina nuclear-power plant for virtually all its electrical energy; several minor accidents have sparked fears of another Chernobyl. Angered by rising prices and political gridlock, voters were ready to give another chance to Algirdas Brazauskas, the Communist Party chief who broke with Moscow in 1989 and supported independence.

Despite their small size, the Baltic nations have loomed large as bellwethers in both the Soviet and the post-Soviet eras. Now the world looks to them for clues about the potential for reform in all the other former Soviet republics.

What the world sees is not always reassuring. The Lithuanian elections serve as a warning that there is a limit to the burdens people will endure for the sake of political and economic reform. But even though hardship and turmoil have plagued their first 12 months of freedom, the Baltic states sacrificed too much in the struggle for independence to forfeit their dreams of a better life. Few Balts, after all, would trade their nation's future -- however uncertain -- for its past.

With reporting by William Mader/London