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RIGA, Latvia-As Western businesses in Eastern Europe face increasing pressure from organized crime, the underworld here is shifting its strongarm tactics to a new venue-by demanding free ad space.

In early March, three pistol-toting thugs approached Juris Paiders, editor-in-chief of Latvian business daily Dienas Bizness, offering "protection" in exchange for free ad space and positive coverage of a company reputed to have organized crime links. It's an offer the newspaper has managed to refuse, or at least avoid, so far.

"They asked for free advertising over a one-year period," said Hasse Olsson, chairman of the newspaper, half-owned by Swedish publisher Bonnier. The gangsters, who didn't go into detail about everything they wanted to advertise, also wanted Dienas Bizness to run fawning articles about a furniture company, called Amstrig, said to be a front owned by several ex-convicts.

Despite the openness of the request, the enterprise is shadowy enough that it's not clear what businesses in Latvia have organized crime links.

But it's also not all that unusual (see story above).

Similar tactics are often used in Russia, where organized crime entrepreneurs commonly ask for a cut of the profits of western companies in exchange for protection. And in markets such as St. Petersburg, companies are careful about advertising because it often draws attention to their presence-and their pocketbooks.

Ad space is a valuable commodity in Latvia. A Dienas Bizness b&w spread costs $3,870.

More importantly, organized crime is trying to attain influence.

Pauls Raudseps, managing editor of sister daily Diena, said, "It's a little like giving the devil your little finger so then he can take all of you." After yielding, Diena would always be vulnerable to bribery, he said. "You just don't want to get involved with these guys. The moment you agree to the slightest thing, they've got you."

When the gangsters first approached him in his office, newspaper executives referred them to its board members. One returned and "offered to do some marketing for us, and then said, `It's really like security, but we don't like to call it that,'*" Mr. Raudseps said.

The newspaper's management told the visitor they would consider his offer-and called the police when he left. That was the last Dienas Bizness heard from the men.

"If you're in business in this country," said Mr. Raudseps, "you have to decide whether to knuckle under and face them or not, because you can't avoid them."

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