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latvia

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  LATVIA

REPUBLICAN REFERENCE

Area (sq.km)
64,589

Population
2,385,231

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: 261 - (26/09/02)

Latvia is due to have parliamentary elections on October 5th. A key aspect of Latvian politics is the presence of so many Russians, 34% of the population and predominant in the six largest towns or cities, including Riga, the capital.
This is always affecting how people vote. In anticipation of the elections Moscow mayor, Yuri Luzkhov, came to town on September 27th-28th. Earlier it had been suggested that he might be refused a visa because he had compared the lot of the local Russians and their treatment by the Latvians to Pol Pot's Cambodia.
His visit might boost the electoral fortunes of the Latvian Social Democratic Workers' Party and the Latvian Socialist Party. That is among the Russian population, not all of whom can vote since they have not acquired sufficient knowledge of Latvian to qualify for citizenship. The issue is vexed and has incurred criticism of Latvia from the European Court of Human Rights. 
The Latvians are glad to be included in the first wave of entrants to the EU and NATO. Despite growth in GDP of around five per cent in the 2000s, the population feel unhappy with their lot and compare it unfavourably with that of Estonians and Lithuanians. 

EU and NATO entry looms 
The Latvians are in deep negotiations to enter both NATO and the EU, with profound repercussions for their polity and economy. A summit of would-be NATO members, among which the Baltic states are frontrunners, was held in Riga, the Latvian capital on July 5th.
Present was Senator Trent Lott, the Republican leader in the US's upper chamber. He offered the candidate countries optimistic words but also a caution. Since 9:11 the US had realised the need to find allies, great and small, in the fight against terrorism. But he also told the 10 candidate states that they needed to address certain problems inherited from the past, such as corruption, anti-Semitism and suppression of the press. "For the promise to be fulfilled, the ancient maladies need to be eliminated."
Latvia might not seem such a great prize for NATO, with barely 5,000 military personnel. But it has a new radar station next to Riga Airport, whose screens display a growing panorama of the region's airspace. It will become NATO's new eyes on the entire Baltic region and Northern Russia.
The entry into the EU is billed for 2004 and is also likely to have a profound impact. The government has negotiated completion of nearly all the chapters of l'acquis communitaire with Brussels. But it is baulking at the low quotas and subsidies for the first ten years of membership on which the EU is insistent. If there is to be any easing here it will have to be negotiated by Poland.

New political parties
The prospect of EU entry is having one unfortunate consequence. Latvia is now saddled with a new right-wing political force, both Eurosceptic and alarmed at a possible influx of immigrants. Freedom Party is in the tradition of movements such as the Danish People's Party and the Dutch Fortuyn List.
State TV has banned a party commercial that gives a portrayal of a black man in the uniform of the pre-war Latvian military, standing in front of Riga's Freedom Monument and kissing a local girl. "Today he is guarding Latvia," the caption goes. "Tomorrow he could be your son-in-law."
The political establishment has rounded on the campaign, dismissing the party as racist and fringe fanatics with no hope. But this is not so certain. A small country, Latvia is understandably nervous about foreign interlopers, given its history. There is another party founded earlier this year by Einars Repse, for long central bank chief, the architect of Latvian reform, which has brought annual growth of over 5% of GDP of late. The respective fates of the two parties will provide a good measure of Latvia's destiny itself.

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AGRICULTURE

Latvian president asks EU for higher farm quotas

Latvian President Vaira Vike-Freiberga, in a letter to European Commission President Romano Prodi, has called on the European Union to offer Latvia agricultural output quotas conforming to Latvia's present farm output, BNS News Agency reported, quoting the president's press office.
Vike-Freiberga said in the letter that the agricultural output quotas offered by the EU to Latvia at present are much lower thatnLatvia's present agricultural output.
"If no appropriate modifications are introduced, Latvia, in line with the presently offered quotas, will have to import products like milk, which traditionally has been a local product and whose shortage has never been experienced here," she wrote.
Vike-Freiberga said such a scenario could increase risks that Latvia's farmers and society in general might develop an unfavourable attitude towards the EU which would "differ sharply from that positive experience Latvia has so far gained in the membership talks during which the European Commission has always found satisfactory solutions to problems."
The president explained that talks between Latvia and the EU have insufficiently highlighted factors like the Russian crisis of 1998, which pulled down Latvia's farm production sharply, as well as incomplete reflection in the official statistics of output produced by subsistence farms, which was further increased by the government policy of tax alleviation and application of simplified book-keeping procedures to small farms.
The president voiced the conviction that the interests of Latvia as a small country will not be ignored in this crucial stage of talks and that the EU will by November work out a common position on agriculture as well as budget issues.
Vike-Freiberga will go on a working visit to Brussels on 3rd October to meet Prodi, EU Enlargement Commissioner, Guenter Verheugen, and other officials.

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ENERGY

Latvian oil a long shot 

The Norwegian-U.S. firm that won rights to investigate the oil potential of Latvia's Baltic Sea shelf, warned that it could take time before oil companies are ready to invest in excavation, Steven C. Johnson wrote in the Baltic Times.
Jorn Christansen, vice president for marketing at TGS-Nopec, said interest in applying for oil exploration and extraction licenses may remain low because the company has yet to begin new exploratory works in Latvia's territorial waters.
The Economy Ministry has set October 18th as a deadline for a applications to take part in a tender for extraction licences. An earlier tender in 2001 failed to attract any interest.
"Not much has happened (since the last tender), so I wouldn't be surprised if interest is not great," he said. "It's a very early stage and we haven't done any of our own data acquisitions yet. There's potential, but there's a lot of work to do before we get a better understanding."
TGS-Nopec, which specializes in compiling seismic data and determining for oil drilling companies the feasibility of extraction, won a tender in April to investigate some 20,000 square kilometres of Latvia's territorial waters. The licence is only good for geological study and does not permit drilling.
Some 2,675 square kilometres of this area have been set aside for exploration and production.
Licences will be offered for 70,000 lats (125,000 euros) apiece and will give exploration and production rights for up to 30 years.
The state would take anywhere from 2 per cent to 12 per cent in royalties depending on the rate at which oil is to be extracted.
The main tender evaluation criteria will be the previous experience of bidders as well as their technical capabilities and environmental credentials.
Latvia's State Geological Survey estimates that Latvia's Baltic Sea shelf may contain about 200 million barrels of oil.
But officials have said the relatively small amount may also limit interest. "Over the course of 30 years, 200 million barrels is not really that much," said Leonids Kvaskovs, head of the petroleum resources centre at the Latvian Development Agency. "This is not Norway here. This is not even Denmark."
But Kvaskovs said a recent decision to cut the corporate income tax rate to 22 per cent may be a draw for companies.
Latvia does not produce or refine oil but is a major transit corridor, mostly for Russian oil headed to Western European markets.
Oil deposits in the Baltic Sea were initially discovered in 1963, but while pre-investigations were conducted in the 70s and 80s, no drilling was carried out.
"In those days, it was so small compared to what was coming out of Siberia, so there was very little attention paid to it," Kvaskovs said.
TGS Nopec has said it intends to begin advertising extraction possibilities among oil companies worldwide. The company, the result of a 1998 merger of Houston-based TGS Calibre and Norway's Nopec International, has contracts with more than 200 oil companies worldwide. 

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FISHING INDUSTRY

Latvian-US agreement reached on fishing off US coasts

The Cabinet of Ministers has extended a Latvian-US intergovernmental agreement on the operations of Latvian trawlers off the coasts of the United States. The agreement was signed in Washington on 8th April 1993, and was due to expire on 31st December 2002, LETA News Agency reported. The US Embassy in Latvia proposed extending the agreement for three years, until 31st December 2005. The Foreign Ministry previously notified the US Embassy that the Republic of Latvia agreed to extend the agreement to 31st December 2005, and that all required legal procedures had been observed to do so.
Latvian trawlers are not fishing near US coasts; however, the agreement had to be extended, if Latvian fishermen could no longer do business off Morocco and Canada's coasts where they currently operate, the Latvian Fisheries Association President, Inarijs Voits, told LETA. According to Voits, three large Latvian ships are now actively working off Canada's coasts catching shrimp, and one more is catching perch. Four large trawlers operate near Morocco pulling in sardines, mackerel, and other fish. If Latvian fishermen are no longer able to catch fish off Canada and Morocco, they could initially catch the fish "left over" in the US - herring and mackerel, Voits said.

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FOREIGN LOANS

World Bank authorizes US$20m loan for Latvia

The World Bank (WB) has authorized a US$20m loan for implementation of the Programmatic Structural Adjustment Loan (PSAL II), Minister for International Financial Affairs Roberts Zile's consultant, Iveta Bojare, told LETA News Agency. The purpose of the loan is to provide support for sustainable economic reform in Latvia.
Progress in providing the second-stage reform in pension legislation is included in the political reform programme for the second year, as well as corruption prevention, launching operations of the Public Services Regulatory Commission, transparency of state agencies and court reform. Latvia was one of the first countries to utilize such WB loans and the first country to utilize deferred loans. Zile admitted that a decision of the WB executive director board on granting the loan for Latvia was made in favour of reforms in Latvia. Zile pointed out that the purpose of the government was to continue reforms, in public administration, corruption prevention, liberalization of the domestic market, regulation of monopoly despite approaching elections. Drawing up the PSAL II draft was launched in 2000 and the first one signed and allotted in March of 2000 - US$400m. In total, US$100m could be received in three rounds, including US$40m in the third round.

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INFORMATION TECHNOLOGY

Microsoft subsidiary to coordinate e-Riga project

The development of the e-Riga project will be coordinated by Microsoft Latvia, after they won the tender from Riga city council, BNS News Agency reported. Microsoft Latvia will set up the coordinating basis and work out plans for all e-city sub-projects. 
A plan of work with specific schedules and terms is needed for the large project to develop gradually and logically. All in all, the e-city project has nine sub-projects designed to provide a full cycle of service to residents, including an Internet portal, client service centre, computer networks, data centre uniting all computer systems, Riga city council resource planning system and accounting system, a geographical information system with a digital map and others. Three candidates had applied for the city council tender. The financing of the project involves some 1.8m litas (3.04m Euro) over a four-year period. E-Riga foresees the setting up of a new home page for Riga's local authority, the introduction of electronic documents at local authority level, and running business support projects.

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SHIPPING

8-month cargo turnover down 19.9% at Ventspils port

In eight months of this year, 21.215m tonnes of cargo were loaded at Ventspils Port, which is about 19.9% less than last year with 26.475m tonnes of cargo loaded over the respective period. This year so far, less cargo was loaded than in 2000 and 1999. In eight months of 2000, 23.979m tonnes of cargo were loaded at the port but in 1999 - 24.3m tonnes, New Europe reported.
In August, 1,925,300 tonnes of cargo were loaded at Ventspils port Deputy CEO, Guntis Tirmanis, said this "unfortunately is an anti-record" for the port since less than two million tonnes were loaded only in 1994.
In August 535,800 tonnes of loose freight were handled at the port, of which 322,200 tonnes were mineral fertilisers, as well as 152,300 tonnes of coal, 50,800 tonnes of imported sugar, 4,300 tonnes of wood shavings and 2,600 tonnes of various metals.
A drop was seen also in the volume of liquid freights with only 1,346,900 tonnes handled of which 866,800 tonnes were oil products including diesel fuel - 729,900 tonnes. According to the latest data, 445,000 tonnes of crude oil were handled at the port, 20,200 tonnes of condensed gas and 14,900 tonnes of chemicals.
Tirmanis said the volume of general cargo remains scanty. In August, 42,600 tonnes have been loaded of which a majority was lumber - 34,200 tonnes. The data showed that 3,800 tonnes of sugar were handled at the port, as well as 3,300 tonnes of black metals and 1,300 tonnes of various general cargo. Overall 94 ships were handled at Ventspils port in August.

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