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latvia

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  LATVIA

REPUBLICAN REFERENCE

Area (sq.km)
64,589

Population
2,529,500

Principal
ethnic groups

Latvians 52.0%
Russians 34%
Belarusians 4.5%

Capital
Riga

Currency
Lats

President
Mrs Vaira Vike-Freiberga

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Background:
After a brief period of independence between the two World Wars, Latvia was annexed by the USSR in 1940. It reestablished its independence in 1991 following the breakup of the Soviet Union. Although the last Russian troops left in 1994, the status of the Russian minority (some 30% of the population) remains of concern to Moscow. Latvia continues to revamp its economy for eventual integration into various Western European political and economic institutions.

Update No: 254

The Latvian republic has been doing remarkably well of late. It is doing so from a very low base, its GDP per capita being 6,600 Euros or 29% of the EU average. But that very fact is luring foreign investors, attracted by low wages for highly educated workers (the one solid achievement of communism was excellent education).
The stock of direct foreign investment (FDI) to date is US$4.2bn, a high figure for a nation of two and a half million. The investment has been across the board, taking advantage of Latvia's superb location as the natural Baltic gateway to and from Russia.
The local Russians comprise one third of the population and predominate in the main six towns, including the capital, Riga. Hence the main internal problem is inter-ethnic relations. Latvia has far more Russians than neighbouring Estonia or Lithuania, precisely because of its excellent location and ports for trade.
Putin has tried to stir up trouble here in an irresponsible address (cum question-and-answer session) given on TV on Christmas Eve. He clearly hopes to slow down Latvia's adhesion to NATO by making out that there is still discrimination against the Russians. The Latvians were indeed engaging in that throughout the 1990s. But their Western friends have persuaded them subsequently to take a more accommodating line. It is, therefore, inappropriate for Putin to be making an issue of the matter now, especially given his own dicey record on human rights.
Growth of GDP is set for 4.5% in 2002, after 7.9% in 2001, according to the EU, but the IMF puts growth at 6% for both 2001 and 2002, which shows how the figures should be treated warily.
The IMF regards Latvia as a model performer among transition economies and it is now in a leading position among the EU candidate countries. Inflation is estimated at 2.5% for 2001 and 3% for 2002, well within acceptable limits. The prospects look excellent for this small, but strategically-placed Baltic republic.

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ENERGY

Latvia, Kazakstan to build oil pipeline to Ventspils


Latvia and Kazakstan will in April discuss the construction of an oil pipeline to Ventspils Port in Latvia, Interfax News Agency reported Andris Maldups, the director of Transit Policy at the Latvian Transport Ministry, as saying.
The task force for the Kazak-Latvian oil transit corridor held a meeting in Riga, which was chaired by Latvian Transport Minister, Anatolijis Gorbunovs.
The meeting was attended by representatives from Ventspils Nafta, the Western Pipeline System, Ventspils Port and Latvijas Naftas Tranzits.
The oil pipeline will run through Kazakstan, Russia, Belarus and Latvia and aims to bring additional Russian and Kazak oil to Ventspils.
The Ventspils Port terminal has the capacity to transfer up to 50-55 million tonnes of oil a year; however in 2001 the port transferred just 14,981 million tonnes of oil and 13,693 million tonnes of oil products. To increase oil volumes it is necessary to considerably raise the capacity of the pipeline to Venspils, the news agency quoted Maldups as saying. A feasibility study is currently being carried out on the pipeline and the position of interested parties, including international companies, possible financing and operational costs are being clarified.
The project was approved on June 1st, 2001, as part of the EU-funded Interstate Oil and Gas Transport to Europe (INOGATE) programme. The European Union founded the Tacis INOGATE programme in 1995. It aims to resolve various issues relating to the transport of oil and gas from the Caspian Sea region. Participating countries include 21 Commonwealth of Independent (CIS) states.

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FOREIGN LOANS

Latvia signs memorandum for two ISPA projects with EU


Latvian Finance Ministry deputy state secretary, Inguna Sudraba, has signed financial memorandums on implementation of two projects of the European Union pre-accession fund, ISPA, in Latvia for the total value of 55.266m euro.
The Finance Ministry told BNS News Agency that the project will be signed on behalf of the European Commission by regional policy commissioner Michael Barnier.
One of the projects that will be partly financed from ISPA funds is the repair of Via Baltica highway in a 6.3 kilometre-long section from Riga to Adazi. The expected ISPA financing for the project is 10.65m euro. The repair will involve widening the road, renovation of two overpasses, making a new road surface and various other matters.
The other project involves the water supply system developing in river basins in eastern Latvia. The planned EU funds for the project are 44.616m euro. The project's aim is to improve the water supply system in the areas of 18 local authorities located near rivers Daugava, Gauja and Salaca.
It is planned to build 12 new drinking water purification facilities, reconstruct the existing facilities, renovate water reservoirs and do other works as part of the project.
So far 19 ISPA projects for Latvia have been signed on behalf of the European Commission with a total value of 314.25m euro, of which ISPA financing is nearly 160m euro. 
Of all projects one has already been implemented. The project involved the repair of the Via Baltica highway in the section between Gauja and Lilaste. It was the first project implemented in the EU candidate countries where ISPA funds are financing transport and environment projects.

First EU rural development project in Latvia signed

The first EU pre-accession structural fund SAPARD [Special Accession Programme for Agriculture and Rural Development] project in Latvia was signed in a ceremony on 31st January, BNS News Agency has reported.
Under the project, some 100,000 euros will be granted to Madaras farm as part of the SAPARD sub-programme on diversification of the rural economy. By promoting alternative income sources to the farm, it can improve a hotel in Kurzeme beach, western Latvia. After the project implementation 45 per cent of the costs will be covered from SAPARD funds.
Rural support service director Irina Pilvere told reporters the first approved project was prepared perfectly.
The SAPARD financial memorandum for the last year envisages that Latvia will be able to get 22.7m euros from this year's programme. SAPARD funds are allocated to promote rural development in the EU candidate countries.

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