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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: 260 - (29/08/02)

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.

Russian presence
The Russian presence is far greater in Latvia, one third of the population and a majority in the six main towns, including Riga. This is still resented by many, although less so among the young.
More Russians means more gangsters, crime and smuggling. A novel form of the latter was revealed by Latvian police recently. It was discovered that a consignment of 24,000 Russian dolls contained not smaller dolls inside, but a bottle of vodka apiece. A big scam, complete with forged documents was uncovered.
This sort of event does not improve relations. But the younger Russians are proving better citizens than their elders and a merging of the populations, with intermarriage now more common, seems merely a matter of time.

EU and NATO entry booms 
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, opened 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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EU ACCESSION

Latvian government approves economic programme needed for EU accession

The Latvian government on 6th August accepted the pre-accession economic programme that has to be developed by each country applying for EU membership, BNS News Agency has reported.
The programme which will be submitted to the European Commission by 15th August says that in recent years the Latvian economy had been characterized by rapid growth, increasing activity in all important branches, growing investments and low inflation, while the relatively large current account deficit and high unemployment in separate regions still remain the key problems. Economic growth in coming years will be due to developing exports and growing investments, and GDP growth is expected at 5-6 per cent a year.
The authors of the programme said that with increasing economic activity, more jobs will be created but improvement as regards employment will be restricted as production efficiency will also increase. With exports growing faster than imports in the medium term, the current account deficit is likely to decrease. Medium-term objectives regarding fiscal policy as set by the government, are a foreseeable and stable tax system, lesser tax burden on businesses, and gradual decrease of the fiscal deficit in the national budget which will help to keep national debt low.

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FOREIGN LOANS

EU funding programme for 2002 confirmed

The European Commission has confirmed the EU PHARE programme for Latvia for 2002, under which 18 projects and cross-border cooperation aims will receive 35.36 million euros, the Latvian Finance Ministry has reported, BNS News Agency has reported.
The most valuable project this year from the PHARE programme in Latvia will be one for participation in EU programmes, totalling 7.5m euros, 2.7m euros of which is to be covered by PHARE and the rest by the State of Latvia.
This is followed by a customs operations improvement project introducing a customs operations strategy and EU-compatible data bases with 5.4m euros in funding, 4.8m of which is to come from PHARE funding.
Another 5.07m euros will be granted for developing an integrated maritime safety system, 3.9m euros of which is to come from PHARE.
Latvia's Minister with Special Responsibility for Cooperation with International Financial Institutions Roberts Zile said that while he was pleased about the projects approved, the lack of efforts by some ministries has led to a situation where Latvia did not get as much funding as it was eligible for from the additional available funds announced by the European Commission last December.
Zile said that the additional projects were not prepared mainly due to a lack of incentive in legislative amendments and the inability of certain institutions to prepare projects to quality standards. Poor cooperation between state institutions was also another reason mentioned by Zile.
These problems saw Latvia miss out on around 12m euros of additional PHARE co-funding for projects in Latvia. The PHARE projects are to be carried out within three years of being signed.

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PRIVATISATION

Over 88 per cent of privatisation vouchers used in Latvia

As of 1st July, 98.1m privatisation vouchers have been utilised or 88.2 per cent of all vouchers issued, according to the Economics Ministry's data. A total of 33.4m vouchers were used for privatisation of apartments and homes, 7m for privatisation of enterprises and other private property, 44.4m for purchase of shares, including 37.1m through public auctions, 13.3m vouchers were used for privatisation of land, LETA News Agency has reported.
A total of 93.6 per cent of the vouchers issued have been utilised by individuals of which 67.1 per cent have utilised all of the vouchers they had. The accounts of legal entities held 5.3m vouchers as of 1st July.
A total of 111.28m privatisation vouchers have been issued to Latvia's residents as of 1st July. A total of 2.381m individuals opened voucher accounts at the joint-stock companies Latvijas Krajbanka (Latvian Savings Bank) and Latvijas Hipoteku un Zemes Banka (Latvian Mortgage and Land Bank), and transferred 109.8m vouchers to these accounts.

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