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LATVIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 8,406 7,500 7,200 93
         
GNI per capita
 US $ 3,480 3,230 2,920 86
Ranking is given out of 208 nations - (data from the World Bank)

Books on Latvia

REPUBLICAN REFERENCE

Area (sq.km) 
64,589

Population
2,348,784

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

Capital 
Riga

Currency 
Lats

President
Mrs Vaira 
Vike-Freiberga


  

Update No: 288- (01/01/05)

Latvia in the EU
The European Parliament has approved the reshuffled 24-member European Union executive, ending a political showdown with incoming EU chief Jose Manuel Barroso over objections to his team. Barroso revamped his executive, dropping Buttiglione, as well as Latvia's much-criticized in the EU nominee Ingrida Udre, replacing her with Andris Piebalgs, who was picked to become energy commissioner.
The Parliament, meeting in Strasbourg, France, voted 449 to 149, with 82 abstentions, giving Barroso a simple majority to take the helm at the EU head office in Brussels. The incident shows the teething problems of the new enlarged EU, in which Latvia played a role.
Several European countries have criticized Brussels for failing to offer any incentives to Ukraine and even called on the European Union to hold out the prospect of full membership to this large Slav country regardless of who won the presidential race. The mix of Nordic, Slav and Baltic countries, which included Sweden, Poland, Lithuania and Latvia, showed how governments in this part of Europe were becoming increasingly worried over the stability of the region and frustrated over the lack of any long-term EU policy for Ukraine. 
But it also demonstrated how countries whose eastern borders flank Russia, Ukraine and Belarus have a completely different perspective than those EU member states that are geographically far removed from the region. Artis Pabriks, the Latvian foreign minister, said in an interview that the EU had "no common or foreign policy toward Ukraine." Latvia, under the thumb of the former Soviet Union until 1990, has become more confident in criticizing the EU and Russia since joining the NATO military alliance last April and the EU in May. Pabriks said the countries in the region should speak out and form a group that could apply pressure on the EU to change course. 

Political crisis at home
Latvia is going through one of its periodic crises, in which a new coalition government is being formed. This time there are unusual features to the crisis. 
In an unprecedented move, the nationalist, For Fatherland and Freedom party, pulled out of government negotiations on Dec. 1, a day after it had agreed to a large ministerial portfolio and just hours after its close ally, New Era, also decided to join.
While the party, which has seven seats in Parliament, had repeatedly stated that it would follow alongside New Era either in the opposition or the next cabinet, it suddenly changed its stance and decided to go its own way after Aigars Kalvitis, the prime minister designate, offered the party three ministerial posts. New Era had just walked out of the bitter negotiations, and Kalvitis needed to entice For Fatherland and Freedom on board so that his cabinet would have majority support in Parliament. 
However, as soon as For Fatherland and Freedom leaders learned that New Era had changed its mind and would join the coalition after all, the right-wing party pulled out of the deal. "The government car will move along on four wheels, while we would be the fifth wheel," Chairman Janis Straume explained at the party's congress on Dec. 4. "Our one minister would have fallen victim to the strong hand of the premier." 
Negotiations on the new, four-party government were finalized on Dec. 1, and Parliament confirmed it by a vote of 75 to 23 the following morning. The coalition - comprised of Latvia First Party, Greens and Farmers Union, New Era and the People's Party - will have 70 votes in Parliament.
Yet after a month of tense negotiations that were marred by name-calling, acidic accusations and even an unexpected cameo by former Prime Minister Andris Skele, the Cabinet is widely perceived to be vulnerable. Kalvitis, who is a member of the People's Party, said at the party's congress on Dec. 4 that he could have left New Era out of the government based on "how they treated us, what words they used, and what lines they crossed."
New Era, which was created in 2002, earned its reputation by attacking the allegedly corrupt practices of traditional political forces such as the People's Party, and the two parties' presence in the same Cabinet has been seen as an inherent contradiction. Indeed, some observers did not shy away from speculation that this coalition could prove ephemeral, lasting only until the local government elections in four months time. 
Should such a pessimistic scenario bear itself out, For Fatherland and Freedom could be in the most beneficial position. The party is already branding itself as "the only national party in the Saeima" (Latvia's parliament). 
"The decision [to pull out of a coalition agreement] was most likely a calculation of net gains and net losses. They would have had only one post, and it would have been difficult to position themselves as a nationalistic force," said Arnis Kaktins, director of the market and public opinion research centre SKDS.
The Framework Convention on National Minorities, which has recently found support from the president and the foreign minister, was cited as another reason the party For Fatherland decided to stay out of the coalition. Party leaders can now woo voters in the heartland by claiming they did not sacrifice their nationalist credentials for the sake of an "unnecessary convention."
Nevertheless, For Fatherland and Freedom's seven votes are unlikely to be missed, and the party has agreed to cooperate with the government on many issues. Parliament faction head Maris Grinblats told party representatives that the new government was better than the previous one in that it did not have to rely on leftist support and Latvia's First Party, a centrist force, would have less influence.

Composition of new cabinet
As far as the cabinet itself, a number of personalities have caused widespread concern. Education Minister Ina Druviete was immediately decried by minority NGOs - particularly Shtab, the unregistered organization that opposes the school reform. Immediately after her appointment Druviete said she would answer questions addressed only in the state language, even if they were posed by minority school children and their parents.
Other ministers, such as Defence Minister Einars Repse, whose post initially caused New Era to pull out of coalition talks, said they would not answer questions in any language. Coming from an individual who preached transparency and televised all Cabinet meetings, this reversal indicated the degree of fatigue that has beset Latvian politics at the end of 2004. 
Other notable appointees include Ainars Latkovskis, who formerly worked in Parliament's anticorruption committee. Latkovskis took over for Nils Muiznieks as special task minister for integration while Janis Reirs of New Era was appointed to head the new Ministry of Electronic Affairs, a post created to accommodate the number of seats each party demanded during negotiations. 
Krisjanis Karins, who the president had considered as a prime minister candidate, will head the Economy Ministry.
The previous minority government saw all parties - including the People's Party - suffer from declining approval ratings, and the People's Party, which is not at the helm, will try to redeem itself in the eyes of patriotic Latvians.

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FOREIGN DIRECT INVESTMENT

FDI and the business climate in Latvia


The news agency LETA has reported that foreign direct investment (FDI) in Latvia exhibited an abnormal growth of 92.5 per cent and reached US$3.2 billion in the first nine months of 2004. A majority of the investment came from EU countries - Sweden, Germany, Denmark and the UK, though other large investors such as Russia and the US figured prominently as well. Foreigners are interested in transportation, communications, finance and trade.

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TIMBER 

Incuklans Timber to sell sawmill

One of the largest sawmill operators in Latvia, Incukalns Timber, is selling its Gulbene sawmill and focusing on forest exploitation. Swedwood and Merex (now Rettenmeier Baltic Timber) together purchased Incuklana in 2001. It was supplying Merex with pine timber. Swedwood formed a new sawmill for itself. Board Chairman of Incukals Timber, Janis Vuguls, reported that this would complete reorganisation and specialisation of the company. Vuguls reported that the decision to sell Gulbene sawmill was taken because it was specialising in processing hardwood, while owners were interested in softwood, the distance between Gulbene and Incuklans did not allow successful control of the structural unit and the long-term felling contract ended in 2004.

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