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: 278- (01/03/04)
Riga was host to a big conference on "The Future of Democracy" in early February. It was attended by a very wide range of representatives from different European countries and by opposition figures from Belarus and Ukraine. It certainly helped to put Latvia on Western and other radar screens as a new democratic power.
As it so happened the conference coincided with a government crisis, democracy in action as it were.
The Latvians are experiencing a sea-change in their politics. The coalition that was ruling for over a year has broken up. It assumed office on October 5th 2002. The Latvia First Party has now defected from the government.
The party made the move after Premier Einars Repse sacked the deputy premier, the leader of Latvia First, Ainars
Slesers, in January after months of dissension. Repse was the Latvian central banker for years and responsible for the economic vitality of the 1990s, on which the Latvians have built their new private economy.
Repse had dedicated himself to continuing on a free-market path, leading a minority government under his For Fatherland and Freedom movement, which he founded. In fact it will carry on with the Greens and the Farmers' Union, which champions the agrarian interest, but under the premiership of the latter's chief, Indulis
Together the three parties will have just 45 seats in the 100-member parliament. That might prove just sufficient to retain power and on February 20th President Vaira Vike-Freiberga invited Emsis to form a government. If so, the government will be right-wing in character and continue Repse's policies.
May Day is D Day
Latvia is to join the EU on May 1st. Europe beckons. Air Baltic is starting up flights from Riga to Milan on May Day, as tourism mounts. Many Latvians are leaving to work in the EU already. There are fears that an exodus could commence on May Day.
Latvia is regaining its European identity, lost in 1940 by being engulfed in the Soviet Union. But the fact that one third of the population are Russian is a constant reminder of the Soviet heritage.
Vike-Freiberga met with President Roman Prodi of the European Commission (EC) in Brussels on October 10th. Previously the EU had objected to Latvia's policy on citizenship, denying it in effect to the large Russian minority, which predominates in the six largest conurbations, including the capital. Riga. The requirement of fluency in Latvian has been too daunting for Russian Latvians of a certain age. The EC, however, supports Latvia's society integration policy, says the commission president, which is on the right track, he avers.
Such is not the view of the Council of Europe; whose head on human rights, Alvaro Gil-Robles, told a Latvian parliamentary delegation recently that the naturalisation process in the country is too complicated. The language politics in the republic is aimed more at assimilation than integration, he said. "Even if someone were just thinking about assimilation, it would be a big mistake; it is more important to convince the society than it is to coerce them. Otherwise you could have problems in the future."
The problems are already present in Russia's view, which cancelled a planned meeting of the Latvian-Russian Intergovernmental Commission for October 27th. The commission has never met at the highest level since its formation in 1997. The Russians are taking revenge on Latvia by cutting their supplies to
Ventspils, the oil terminal and port on the Baltic. Oil transhipment by pipeline has been halted and is now only by rail from Russia. This has risen by 143% year-on-year, not enough to offset a 22.9% drop in total from 11.8 million tonnes in the first nine months of 2002 to 9.1 million tonnes in the same period of 2003.
Actually the problem of integrating the Russian minority is likely to disappear in the future, as young Russians take to learning Latvian at school as well as even marrying into the Latvian population. The future lies with harmony.
This is for largely economic reasons. Latvia is doing well economically in a way that is not captured by statistics. Some 40% of economic activity is in the unreported black economy. Even on this the economy is vibrant, GDP growing by over 5% annually in this decade. Russian Latvians want to be part of the success story and members of the EU to boot.
The Latvians are doing well, with growth of GDP of over 6% this year, coming after years of around 5% growth annually. There has been a lot of help from abroad, notably from Germany and Scandinavia, particularly Sweden.
Sweden to the rescue
The Swedes and Latvians are akin in spirit and share a Protestant faith, not just the Baltic Sea. The parenting pattern is repeated throughout the region, Lithuania having ties with Norway and Estonia with Finland.
The Swedes have set up a business school in Riga, which is training up a new generation of managers in Western business practices. The Stockholm School of Economics is having a big impact. MBAs are flourishing and student numbers are rising. Never has it been a better time to be a young businessperson in Latvia, and many of the best students are women.
The phenomenon resembles the Marshall Plan after the Second World war in Germany and elsewhere, whose managers were trained in the US in their terns of thousands. This time it is on the spot, with Latvians from the Diaspora playing an important role, some from Sweden, others from the US and Canada.
The process is still in its early stages. There is great scope for catching up. But there is every reason to suppose that in a generation or two Latvia will become a prosperous Western nation.
The existence of highly educated personnel lower down the hierarchy also greatly helps. The combination of a still very cheap work force of a high quality and well-trained managers is attracting abundant foreign investment to Latvia. The auspices are excellent.
Bank of Latvia posts 5.7% increase in assets
The Bank of Latvia increased its assets 5.7% in 2003 to 1.1bn lats, with a rise of 1.4%, or 21m lats, in December alone New Europe reported.
Gold and foreign convertible currency assets increased 1.4%, or by 13.3m lats, in December to 937.53m lats, said Vilnis Purvins, the head of the bank's macroeconomic analysis department. Foreign liabilities grew 2.1%, or by 2.4m lats, to 113.54m. Assets in lats rose 5.0%, or by 7.7m lats, in December to 162.72m, while liabilities in lats fell 8.4%, or by 20.4m, to 221.38m lats. Bank of Latvia's capital and reserves increased by 3.2m lats in December to 83.17m
Ministry to place 400m Euro in Eurobonds
Latvia will place €400m in Eurobonds and 157.4m lats in government bonds in 2004, the ministry of finance said recently, Interfax News Agency reported.
The country will issue 10-year Eurobonds in March to refinance a first, five-year issue, and for other purposes. The government will hold 16 local-currency bond auctions. It will hold five auctions for a total of 24.6m lats in six-month bonds, redeeming 18.2m lats in 12-month bonds, redeeming 44.4m lats in 12-month bonds. The government will hold five auctions for a total of 75m lats in 10-year bonds. The treasury said a total of 375.926m lats in local-currency bonds were in circulation at the end of December. These included 8.526m lats in six-month bonds, 45.859m lats in 12-month bonds, 15.994m lats in three-year bonds, 208.297m lats in five-year bonds and 97.151m lats in 10-year bonds.
Oil, product transhipment at Ventspils Nafta drops
Latvian oil terminal Ventspils Nafta transhipped 10.7m tonnes of oil and oil products in 2003, down 22.5% from 2002, company Press Secretary, Gunned Varpa, said recently, Interfax News Agency reported.
Oil and oil products were supplied to the terminal by rail only in 2003, while in 2002 supplies were mainly carried out by pipeline.
The terminal transhipped 5.5m tonnes of diesel in 2003, in addition to 3.3m tonnes of oil and 1.9m tonnes of other oil products.
Varpa said that operations at the terminal last year were stable as the company used its technological possibilities and the favourable geographical location of the ice-free Ventspils port, despite the fact that Russia has stopped exporting oil by pipeline through Ventspils.
She said that technical and technological support in 2003 allowed Ventspils Nafta to expand the range of the products being transhipped, by starting transhipment of oil and diesel with low sulphur content.
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