FREE GEOPOLITICAL NEWSLETTER

latvia  

For current reports go to EASY FINDER

LATVIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 9,671 8,406 7,500 94
         
GNI per capita
 US $ 4,070 3,480 3,230 79
Ranking is given out of 208 nations - (data from the World Bank)

Books on Latvia

REPUBLICAN REFERENCE

Area (sq.km) 
64,589

Population
2,306,306

Principal 
ethnic groups 
Latvians 52.0%
Russians 34%
Belarusians 4.5%

Capital 
Riga

Currency 
Lats

President
Mrs Vaira 
Vike-Freiberga



  

Update No: 291- (29/03/05)

Vike-Freiberga goes to Moscow in her own way
Latvian President Vaira Vike-Freiberga is one of the strong women on the world stage, along with Condi Rice and a few others. She was for long living in the US, during communist times, and the Latvians chose her as a leader with savoir-faire about the West. She has decidedly Republican views in American terms, like Rice.
The one subject where these two women would acknowledge a difference of opinion is Russia. Ms Rice famously said about opposition by 'old Europe' to the Iraq war: "punish the French, forgive the Germans and forget the Russians." Vike-Freiberga is hardly likely to forget why she became a refugee, nor is she likely totally to forgive the Russians for the successive rapes of her country.
Unlike the Estonians and the Lithuanians, the Latvians are sending a delegation to Moscow to attend the 60th anniversary of Victory Day, 1945, namely May 9th. She naturally will lead it.
But, like all the Balts, she disputes that the Soviet victory in 1945 brought 'liberation' to the Baltic states, rather than just subjection to another totalitarian tyranny. "On May 9th," she recently said, "Russian people will place a Caspian roach on a newspaper, drink vodka, sing folk songs and recall how they heroically conquered the Baltics." The tinge of contempt there is unmistakable.
Ten years ago, it is unlikely that a Latvian leader would have been so frank. But now Latvia is a member of both NATO and the EU. It can stand tall on the global scene. It has joined the West. 

Bulgarian leader ends Latvia visit, cites lessons for EU bid
Vike-Freiberga is very well disposed to other countries that have been under the Russian yoke and aspire to join the West. She is playing a high-profile role in this regard. Vike-Freiberga visited Bulgaria in December 2003. She obviously feels a certain solidarity with the Bulgarians and is glad to give them a helping hand.
Bulgarian President Georgi Parvanov, who ended a first reciprocal state visit to Latvia on March 22nd, has said his Balkan state has much to learn from Latvia as it makes its way towards European Union (EU) membership. "Bulgaria can learn from the Latvian experience on its way to the EU," said Parvanov after holding talks with Vike-Freiberga, whom he thanked for backing Bulgaria's accession bid.
"We have already placed a lot of effort in the reform of the judicial system," he said. Latvia joined the EU last May. Bulgaria wants to join the bloc in 2007, but has been warned that its accession could be delayed if it fails to make enough progress on areas such as tackling corruption and reforming the judicial system. 
"Bulgaria serves as a stabilising factor in the Balkans and we will continue to stress the EU perspective here", Parvanov said. 
Bulgaria can also learn from regional cooperation between the Nordic countries and the Baltics, said Parvanov, adding that regional cooperation was a crucial first step to EU integration. 
Vike-Freiberga said Latvia "has no qualms about Bulgaria's rapid move toward the EU, in fact Latvia has always supported it." The two leaders also attended the Latvian-Bulgarian business forum, where Vike-Freiberga again backed Bulgaria's aspirations to join the EU. "Since Latvia and Bulgaria both became members of the NATO alliance last year, the stability and security of our countries has reached a new level, with a most beneficial effect on our business climate," she said. "I am confident that Bulgaria will soon join the EU as well. Both our countries will then share the EU common market, with additional benefits for economic cooperation," she said. 

Latvia facing scandal over bribery at municipal elections
The results of municipal elections, held on March 12th, have been cancelled on a court ruling because of the bribing of electors in the city of Rezekne, one of the largest cities of Latvia. Another round of the elections will be held. Seven political parties - from the extreme-right-wing Latvian nationalists to the Russian-speaking associations - jointly brought an action against the outcome of the elections. This is the first time in the history of Latvia that the election results have been cancelled in such a big administrative area. 
According to witnesses, only one party - the recently created New Centre Party - bribed the electors. It won the elections in Rezekne after getting about one third of the votes. From ten to twenty dollars were given for a vote. This is quite a sum for a city where the unemployment rate is the highest in the country. Prior to the elections the security police arrested several people in Rezekne on suspicion that they bribed the electors. 
Another complaint and the demand to cancel the election results were lodged in the resort city of Jurmala on Wednesday. The police also suspects the New Centre Party there of bribing not only ordinary electors, but also members of parliament. 
The New Centre Party was created last year by Sergei Dolgopolov, a popular Russian-speaking politician, then deputy mayor of Riga. The March 12th municipal elections became the debut of the party. Dolgopolov is now going to conduct a thorough investigation in the party and to find out what really happened. 

New political party - New Democrats
More than halfway through the current parliamentary term, and with local elections in a few months, Latvia is seeing the emergence of yet another "new" political party. The mooted party will not really be "new" in any substantive way. It is rumoured that the public faces of the party (so important in a political system where voters support individual politicians rather than ideologically-rooted party organizations) will come from the existing political establishment - ranging from the youthful and jaunty ex-Minister of the Interior Maris Gulbis (a recent defector from the New Era fraction in Parliament), to the rather older figure of Andrejs Pantelejevs, long-time kingmaker of Latvia's Way. And the some of the same old shadowy figures from the incestuous Latvian business community are likely to sponsor this new undertaking - New Democrats.
Naturally, the use of "new" in the name of a party is hardly original. Many recently founded political parties in Latvia have used this trick - New Centre Party, New Era, New Politics, and so on - hoping to tap into the large and continually growing group of disaffected voters. Politicians and grey cardinals (as party sponsors are known in the Latvian media) are well aware of the fact that all parliamentary elections have heretofore been won by parties founded less than 12 months before the ballot. Even though the next general election is still nearly two years away, it already seems clear that this pattern is to continue.

New Politics - to unite Latvians and Russians?
Indeed, another "new" party (although it has not yet been legally registered) was founded in mid-September - New Politics. Intending to unite Latvians and Russian-speakers, the party contains both Latvian and Russian-speaking politicians of various political creeds. However, in the Latvian psyche it is already firmly linked with Russian voters, largely because the media has focused on the exceptionally uncharismatic Sergey Dolgopolov, deputy mayor of Riga, as the party's leading light. 
While this has frustrated party leadership, there is nothing that they can do about it. This is not, therefore, likely to be the party that attracts - and integrates - the country's ethnic communities.
This means that things look rather problematic for Mr. Dolgopolov, who will have to fight for the Russian vote in an already overcrowded marketplace. Survey polls have shown over and over again that ethnic Latvians will only vote for parties that obviously and directly represent their interests. Indeed, there are actually two party systems in Latvia: a Russian one, which had 25 percent of the electorate at the last election and will have about 30 percent at the next, and a Latvian one contesting the balance. Governments are always formed from Latvian parties (although minority governments - such as the current Emsis government - do occasionally rely on the Russian parties for support), so New Politics is likely to play a marginal role in national politics - presuming, of course, that it even manages to hold itself together until the 2006 poll.
Thus we potentially already have two "new" parties entering the political sphere to add to the 60 already officially registered at the Ministry of Justice. The political arena is becoming increasingly crowded. Is there really room for these newcomers?
The great majority of the 60 registered parties do not actually function in any qualitative organisational sense. Many even fail to submit their annual accounts, as the law requires. Moreover, several of the political parties in the current government are effectively lame ducks, with little or no chance at being re-elected in the next parliamentary election. It will be surprising if Latvia's First Party (led by Deputy Prime Minister and maverick oligarch Ainars Slesers) even contests the next election. The leaders of these parties are unlikely to give up politics entirely. Rather, at some point they will jump ship and hitch onto a "new" political party. And their existing sponsors will happily shift their support to the new but potentially winning team, thus maintaining an influence in the legislature and the government.
So it is business as usual in Latvia's political community. New parties come, and new parties go. However, it is the electorate that suffers, being forced to choose between shallow, unpredictable, personality-driven political parties that often operate according to the dictum of their sponsors rather than their conscience or constituency. This appears to be a never-ending circle that can only be fixed by major tinkering of the legislation governing party activity. Most importantly, restrictions on party advertising in the media during election campaigns should be introduced (following the lead of the majority of the EU-25) and state-financing of parties considered (an increasing trend in postcommunist states). This would mean that both party income and expenditure could be controlled. Of course, this would not immediately lead to the disappearance of party-business linkages, nor to the eradication of "hidden" advertising. But it would complicate both and ultimately lead to increased transparency. It may even disrupt the constant cycle of party formation, election and fragmentation. That really would be something "new." 

Manufacturing companies come to Latvia 
The European Union's 10 new member countries are attracting new manufacturing companies from across Europe. Latvia, which has seen its fair share of foreign investment since EU membership in May, has ambitions to become one of the most appealing destinations for producers-exporters. 
The Cabinet of Ministers has approved an export development plan for 2005 - 2009. The main thrust of the plan is to give a boost to Latvian manufacturers' competitive edge and to help them find new markets for their products. To demonstrate the seriousness of the government's intentions, Prime Minister Indulis Emsis has toured Lavijas Finieris, one of Latvia's leading wood-processing plants.
In one of the biggest manufacturing-related investments this year, the US fibreboard company Jeld-Wen announced it would build a 40 million Euro wood- treatment facility in Latvia, which management ultimately chose over Spain. The factory will produce fibreboard skins, 95 percent of which will be exported for use in Jeld-Wen factories across Europe.
Latvia's membership in the EU significantly influenced the company's decision to stay in the Baltic country, says Ralfs Dakters, a client executive in the Latvian Investment and Development Agency's investment and trade promotion division.
"The first attraction for Jeld-Wen was EU criteria. They needed to build in the EU, as they will be exporting to the other Jeld-Wen factories in Europe," says Dakters. "The second attraction was the low corporate income tax, which is only 15 percent in Latvia. The third attraction was the natural resources. The type of wood fiber here suited their needs, plus it was of a high quality and quantity."
Jeld-Wen, which was established in Latvia in 1994, is also aware of the country's cost-effective labour benefits. The average gross monthly wage in Latvia is approximately 200 lats (300 Euros).
In another high-profile project, Germany's AKG, a manufacturer of vehicle radiators, teamed up with Russian automotive producer ZIL, to invest 20 million Euros into a new factory that will create 250 jobs in Jelgava over the next three years.
As Dakters explains, "With accession to the EU - coupled with Latvia's geography of having the European market on the left and the CIS market on the right - Latvia has become a 'one-stop shop' for foreign investors." Indeed, Latvia ranks among the top 10 countries internationally in terms of business start-up time and length of bankruptcy procedures. According to a World Bank report, one can register a business in Latvia within two business days. "We now have a good quality of projects coming into Latvia from across the globe," says Dakters.
Latvia has access to a consumer market of over 660 million, and its abundance of sea and road transport links provides easy accessibility to surrounding countries - hence, the importance of the government's manufacturing development programme. "The government is now showing their intention to be an investment-friendly country. Not just saying it, but actually doing it," says Dakters. 
Through LIDA, the government has proved its commitment to foreign investors, offering not only start-up help, but also support after the investment's implementation. Foreign representatives of LIDA situated in France, Germany, Russia, Kazakhstan, the Netherlands, U.K. and Sweden - with offices in Norway and Denmark - testify to Latvia's intention of attracting foreign manufacturers.
Investors also have the opportunity to enter the state support programme, which offers grants for entrepreneurship, participation in international exhibitions, modernization, the development of new products, and for increasing the qualifications of employees. LIDA is currently accepting applications for EU grants. "The grants which are being offered at the moment are an additional incentive for foreign investors," Dakters says. "Many grants are geared specifically for manufacturing companies. We definitely hope to attract more manufacturers from abroad."

 « Top  

AVIATION

AirBaltic to fly to Paris

Latvia's national carrier airBaltic will begin direct flights to Paris in May, Latvia's Transport Ministry announced on February 4th, Agence France Presse (AFP) reported.
"An agreement has been reached for airBaltic to launch direct flights to Paris from May this year," said Transport Ministry spokesman, Aldis Bite. The agreement was signed by Transport Minister, Ainars Slesers, and, Bertold Flick, president of airBaltic. "This is an agreement between airBaltic and the transport ministry under which we will start to work on a direct flight project. We don't know yet which airport airBaltic will fly to in Paris," Vija Dzerve, spokeswoman of airBaltic, said. "Direct flights to Paris will improve business and cultural contacts between Latvia and France and will help to attract tourists and investment," Slesers said. AirBaltic, in which the Latvian state holds a 52.6% stake and Scandinavian airline SAS 47.2%, operates flights from Riga and Vilnius to over 20 cities in Europe. Last year the carrier saw passenger numbers soar to 589,300 customers last year, up 75% compared with 2003.

Pabriks and Sezer focus on better bilateral relations

Latvia's Minister of Foreign Affairs, Artis Pabriks, recently met with the President of Turkey, Ahmet Necdet Sezer, as part of his visit to Turkey. During the meeting, the officials expressed their satisfaction with the friendly relations between both countries and noted the large potential for cooperation in the future, New Europe reported.
The president expressed his satisfaction with Latvia's decision to open its embassy in Riga in the second half of the this year. He also stressed that the opening of diplomatic missions was evidence of the successful cooperation and the wish to deepen cooperation in various fields in the future. Sezer congratulated Latvia with its progress over the recent years, which has resulted in a full-fledged membership of Latvia in the EU and NATO. He pointed out that Turkey has always supported Latvia's independence and fight for freedom. Pabriks thanked Turkey for its support to Latvia in not recognising the incorporation of the Latvian State into the Soviet Union. Pabriks confirmed that with Latvia's joining the EU and NATO, a new dimension was also opened up in the relations among countries.

 « Top  

TELECOMMUNICATIONS

Lattelekom to cut interconnection tariffs by 45%

Latvian fixed-line company, Lattelekom, has decided to reduce its interconnection tariffs by 45%, the group announced in a recent statement, New Europe reported.
The decision will not affect the ongoing dispute with the Commission of Public Utilities (PUC) about reducing interconnection tariffs by 80%. Lattelekom in the past tried to present new tariffs to PUC who said they were still too high. PUC wants Lattelekom to reduce its interconnection tariffs by 80% and wants to see base price 0.008 lats per minute for all kinds of interconnection services.
Lattelekom offers different tariffs, for outside Riga connection will be reduced by 45% from 0.038 lats per minute at present. In a statement, Lattelekom said that within two years the interconnection tariffs will be reduced to the average EU level, which if looked at with 2004 statistics are 0.0041 lats per minute. On December 15th, 2004 PUC ordered Lattelekom to reduce its interconnection tariffs by 80% as from January 1st 2005. Lattelekom then appealed to the administrative court saying that the deadline was too short and was allowed to keep the existing tariffs charges until the court will make its final decision on the case

 « Top  

TRANSPORT

Latvia unveils plan to split Railways into 3

Latvian Transport Minister, Ainars Slesers, announced he wants to split the state-owned Latvijas Dzelzcels (Latvian Railway) into 3 independent companies and that he has already ordered company management to draft a restructuring plan within a month, The Baltic Times reported recently. 
Slesers said 3 independent companies were envisioned after the split-up: one will handle infrastructure, the other cargo transportation, and the third passenger transportation.
Each company would have its core function and would remain in state hands, the minister said. Slesers explained that this was the best solution to avoid the continuing cross-subsidisation of passenger transportation at the expense of cargo. It would also sever infrastructure maintenance, as required by European Union directives, as well as raise subsidies from state and local authorities, investment from EU funds and credit resources for the development of passenger traffic.
Each company would have its core function and would remain in state hands, the minister said. Slesers explained that this was the best solution to avoid the continuing cross-subsidisation of passenger transportation at the expense of cargo. It would also sever infrastructure maintenance, as required by European Union directives, as well as raise subsidies from state and local authorities, investment from EU funds and credit resources for the development of passenger traffic.
He said that the government would consider the restructuring plan in April and that restructuring itself could be completed before the end of the year. Andris Zorgevics, Latvian Railway's board chairman, saluted the decision, saying he had been waiting for such a moment when the railway problem was tackled "professionally and with state responsibility" since passenger traffic.
He said that the government would consider the restructuring plan in April and that restructuring itself could be completed before the end of the year. Andris Zorgevics, Latvian Railway's board chairman, saluted the decision, saying he had been waiting for such a moment when the railway problem was tackled "professionally and with state responsibility" since passenger transportation had remained "the only throwback from the Bloshevik economy."
"It is hard to plan things if there is no clarity in business," he said. With the split, he predicted that the rail business had better perspective and passenger handling would become more efficient. Slesers did not rule out that the cargo and infrastructure companies could retain the Latvijas Dzelzcels brand. The transport minister, who took over the ministry in March last year, is a member of the Latvia's First Party, is largely credited with attracting discount airlines to Riga International Airport last year and thereby changing the face of Baltic air travel.
All the 3 companies are expected to be headed by the current management of the railway company. Latvian Railway posted sales of 131m lats (186.4m Euro) in 2003, up 16.9% on 2002, with earnings of 5.6m lats, down 33%. Last year the company carried 51m tonnes of cargo, up 5.6% on 2003.

 « Top  

« Back

 


 
Published by 
Newnations (a not-for-profit company)
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com