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: 271 - (24/07/03)
The incumbent president of Latvia, Vaira Vike-Freiburg, has been re-elected easily in elections for the presidency held on June 20. There was never much doubt about this. She received a 88-6 vote in favour from the 100-seat Saemia, or parliament. Two of the ballots were disqualified and four lawmakers were absent.
She was supported by all parties and was, indeed, the only candidate. The 65-year old made 85 official trips in her first term, far more than her predecessor, and speaks fluent English, French, German and Spanish. Her native language is Latvian.
She has been instrumental in successfully lobbying for Latvian entry into NATO and the EU. In the former case she established excellent relations with President Bush, which expedited Latvia's entry, never seriously in doubt.
Premier sets the tone
The presidency is an honorary office by and large, with more clout in foreign than domestic affairs. The real focus of power is the premiership.
Latvian Prime Minister, Einars Repse, the former chairman of the central bank, said the government's make-up could be changed if a minister does not perform well. "Ministers will be asked to account for their work, and if a minister is incapable of producing the results expected from him/her, then the government's make-up could change. Nevertheless, the hearsay that such decisions have already been adopted is incorrect. I do not have a schedule for replacing ministers yet," said Repse.
Several politicians from the opposition People's Party (TP) have said they would not propose a vote of no confidence against the government again. "The government will start wobbling itself when the premier starts dismissing ministers in the fall," a TP politician said, mentioning Minister of Finance, Valdis Dombrovskis, as the number one candidate for dismissal.
Repse could dismiss both Dombrovskis and Minister of Interior, Maris Gulbis, or some other minister if they fail to attain their respective sector's goals. This might split the JL party, TP politicians believe.
Repse's conduct at government meetings has prompted the suspicion that ministers could be replaced - the premier, in the presence of journalists, often puts members of his party to shame, although he could discuss such matters with ministers privately.
Repse is deliberately aloof from his cabinet. "My goal is developing people's independence, creative potential and decision-making based on the results - it is the best way for setting up a team," Repse said. Whether it is really the best way remains to be seen.
Fitch revises support rating for Latvijas Krajbanka
Fitch Ratings has changed the support rating of Latvijas Krajbanka to five from four following its privatisation, and the resultant private sector ownership structure. Fitch believes that support for the bank in case of need, either from the Latvian authorities or from its shareholders, is possible but can no longer be relied upon. The five support rating is the lowest level on the Fitch scale.
The rating agency did not undertake a full analysis of the bank and only a support rating is assigned. Krajbanka was established in 1924 as the Latvijas Pasta Krajbanka and took its current form in 1992 as a Latvian state-owned commercial bank. It is a universal bank serving mainly small- and medium-sized companies and individuals. Interfax News Agency reported that Latvijas Krajbanka was in ninth place among Latvia's 23 commercial banks in terms of assets at the end of 2002.
Latvian NGOs encouraged to apply for EU money
To get EU funding, NGOs should draft projects. Two million euros, or 1.3m lats for integration - social and ethnic - and at the same time, strengthening non-government organizations (NGOs) - this is the money that Latvia has received for the first time to promote the unity of society from the European Union (EU), and for which the Social Integration Fund (SIF) has announced competitions. The sum is tempting, and the question is only whether Latvian NGOs and local authorities will be able to get it within a year. Diena web site poses the question: "Will they draft high-quality projects and administer the finance as the complex bureaucracy of Brussels requires?"
In the pilot Phare project commenced last year, Latvian NGOs fought with projects, and acknowledge that although they have experience with international projects, the acquisition and management of EU funding demands a special effort and calls for extra bookkeeping and planning skill. The SIF believes that EU finances leave nothing open to chance and effective use can only be made by working together, so it is urging NGOs, local authorities, educational and cultural institutions to make a joint
appraisal of a region's needs and to draft and implement projects together.
On 9th July the SIF started seminars to explain the preparation procedure to potential submitters of projects.
"It sounds nice that you can get finance, but taking the Phare conditions into account, the mountain of papers is huge and people have to wear themselves out to get hold of that money," says the director of the SIF, Nils Sakss. He predicts that Latvian NGOs will get funding for the development of civic society, because the NGOs working with social integration are experienced and knowledgeable. There may be some concerns whether the NGOs will be able to find cooperation partners abroad for micro-projects. There is big finance for promoting social integration, but the experience with the Phare pilot projects is minimal, so Sakss declines to predict how much of that money Latvia will get.
"It would be worthwhile if local authorities were to take on project implementation on an urban scale," says the SIF director. He would be pleased to receive as many projects as possible where the financing is around 100,000 Euros and involved about 10 partners, who would agree what they want to do, and the local authority or a powerful NGO would take on a coordinating role. The question is only whether local authorities want to invest energy in writing projects, because at present the SIF is getting isolated projects for local financing from NGOs.
Response from local authorities is also dependent on the NGOs - if there has been previous cooperation, the NGO is familiar and trusted, so has greater hopes of cooperation, thinks the director of the NGO Centre, Kaija Gertnere. She has noticed that the small local authorities are more responsive, but there are difficulties in large towns, where the local authority has greater opportunities to choose its cooperation partners. She predicts that the initiative for writing projects will come from the councils, but they alone can do nothing without a third sector, because the target audience is a civic society.
Compared with previous years, the ability to write projects has grown considerably, so the quality of the projects is only one of the concerns. The hardest thing is project administration, because, if the money is incorrectly administered, the EU may demand the return of the allocated money. So project applicants are required to have experience of administering at least 50 per cent of the project's finances
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