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UPDATE January 2002

Latvia has been doing very well of late. EU accession negotiations have proceeded at a fast pace. Although Latvia started EU accession negotiations only in March 2000, by June 2001 it had opened all chapters for negotiation and had provisionally closed 16 of the 30, including the chapter on the free movement of persons and on competition.
The latest crisis is in favour of Latvia. That Putin should have swung Russia so behind the post-9:11 coalition is positive for all the Baltic states, but especially for Latvia.
That is because it has the largest local Russian population, one third of its total. Russians predominate in the six largest towns, including the capital, Riga. The anti-terrorist campaign is bringing people together. It is not of course that Latvia is likely to be high on any terrorist's hit list. It is obviously not. But as a conduit for dangerous materials out of Russia, it is very high among possible routes. The Russian mafia have their tentacles in its Baltic ports. But the vast bulk of the Russians are law-abiding and will welcome a new drive against the criminal elements amongst themselves. 
The Russians are not the only non-Latvians around. Latvia is benefiting from a huge inflow of foreign investments, bringing Westerners to town. The accumulated stock of such investment was US$4.2bn at the last count, which in a population of two and a half million is a lot. The economy is being given a huge fillip as a consequence, GDP growing by 6.9% in 2000.
There is a long way for Latvia to go before it reaches EU levels of prosperity. GDP per capita at 6,600 Euros is only 29% of the EU average. But then ten years ago at independence, Latvia was one of the ten poorest European countries. That is no longer true and things are definitely looking up.
One sign of the busy times is what is happening in Ventspils, the main port. There are plans to expand operations there extensively. Ventspils plans to launch two major investment projects as soon as the new law about free economic zones and free ports takes effect next year. Ventspils free port board Chairman and Ventspils city Mayor, Aivars Lambergs, told a news conference on November 12th that one of the projects provides for investment of US$100m and the other was for US$30m.

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BANKING

Hansabanka to acquire Hanza Lizings Leasing

Hansabanka, the third largest bank in Latvia, has signed an agreement about purchasing 100 per cent of shares in Hanza Lizings leasing company. 
Hansabanka will buy Hanza Lizsings from Hansa Capital, a company from Estonia's Hansabank Group that also includes Hansabanka. As a result of this transaction, Hansabanka and Hanza Lizings, which were legally two separate companies of Hansabank Group, will be merged together, BNS News Agency quoted a Hansabanka spokesman as saying. The change of legal status of Hanza Lizings will substantially improve the possibilities for customer service at Hanza Lizings and Hansabanka and will make it possible to have a more efficient placement of assets within Hansabank group. 
Hansabanka board chairwoman, Ingrida Bluma, said that changes of legal structure would make it possible to improve the service offered for customers of Hansabanka and Hanza Lizings. "After change of legal status, the integration of services and customers service will be more simple to implement."

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FOOD & DRINK

Kaija to invest in Russian plant

Latvian fish cannery Kaija will invest some US$3m in the production facility it intends to open in Russia's Pskov region. The Russian facility is going to be small and employ a staff of 300, said Kaija President, Imants Kalnins, who also holds the controlling stake in the company. "We arrived at the conclusion that it does not make sense to use any existing buildings since they fail to meet any standards. It will cost less to build new premises, Chas quoted Kalnins in an interview.
"A facility of this standard will cost around US$3m give or take half a million. It depends on what we will be producing. The idea is to use basically fresh-water fish as there's plenty of it in the Pskov region," the Russian-language daily quoted him as saying. Part of the funds required for the project will be provided by Russian banks and loans are already being negotiated.

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RETAIL INDUSTRY

Hansapank: Investor keen on SPAR chain

A potential investor in the SPAR chain of stores of Baltic Food Holding that is being liquidated has turned up, 'Aripaev' reported. The business daily quoted Heino Lemsalu, head of corporate risk management division at Hansapank, as saying the bank is working together with other creditors towards a common goal.
"An investor has submitted to us a business plan for preserving the value of the stores owned by Baltic Food Eesti and is analysing the possibility and expediency of investing the necessary sum in them himself," he said. The liquidator of Baltic Food Holding, Peter Sepper, said he had no information about possible investments in and take-over of the SPAR chain.

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SHIPPING 

Latvian Shipping blames privatisation council members for causing losses

The Latvian Shipping Company (LK) blames two Latvian Privatisation Agency council members, Eizens Cepurnieks and Normunds Lakucs, for causing losses of around 59m lats (under US$100m) to the national shipping company and the state of Latvia, and has suggested launching criminal procedures against the two, BNS News Agency has reported.
A Latvian Prosecutor General spokesperson reported that LK submitted a request to the prosecution asking that it start criminal procedures against Lakucs, a prominent businessman, and Cepurnieks, formerly both a state trustee and council member at LK, accusing them of spreading false information, causing ill fame and considerable harm to the company and the state.
LK believes that the two had illegally prevented the start of renewing the shipping company's fleet, causing LK and the state losses of 59m lats.
The LK request has been submitted to the Prosecutor General and will be looked into.
Both Cepurnieks and Lakucs have previously been involved in considerable controversy especially around the privatisation of the Latvian Shipping Company.

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