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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
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Update No: 303 - (27/03/06)
More than a ceremonial post
The death of Lennart Meri, former president of neighbouring Estonia, in March is
a reminder that being president of a Baltic state is a job unlike any ceremonial
presidency in the West. Meri embodied his nation and the world saw him as its
greatest representative, as with Havel in the Czech Republic.
The President of Latvia, Vaira Vike-Freiberga, did not have the long record of
resistance to communism that Meri and Havel did. She lived in the US throughout
the Cold War, only returning to her homeland after independence in 1991.
She was elected in 1999 as a non-party candidate in the second round. She has
since become the embodiment of her country as a whole and of its aspirations to
join the West, which under her presidency it has definitively done, now a member
of both NATO and the EU.
Above the fray
She has handled tricky situations with aplomb, as in March when police in the
Latvian capital of Riga stopped the unsanctioned demonstration of SS veterans.
About 300 people took part in the march. This has previously been a massive
provocation - and intended as such - against the large Russian ethnic minority
in the country, and the capital. It has also, in previous years, been cause for
scandal in western Europe in those nations that fought against the Nazis in WWII
A group of antifascists attempted to stop the march. Some of them were detained.
On March 13, Riga parliament declined the request to hold the veterans' march,
as well as protests against the former Nazi collaborators, but nationalists and
radicals announced they would go ahead with the event despite official notices.
Vike-Freiberga had earlier slammed the planned marches saying the country
"has set a special date, November 11, for commemorating soldiers, whereas
March 16 is a kind of holiday that we really do not need."
Last year, 20 people were arrested in Latvia during clashes between nationalists
and leftist protesters on March 16.
The new Latvian woman
One of the exciting things about the newly emergent Baltic states is that they
are prepared to try out new ideas. Estonia has its flat tax. Latvia has its
feisty women in politics.
Former Foreign Minister and independence activist Sandra Kalniete joined the New
Era political party January 30th, where party colleagues greeted her with calls
to succeed Vike-Freiberga when her term expires next year.
It is generally agreed on all sides that Vike-Freiberga has been an outstanding
success. Her second term expires in mid-2007. She has been named among the
leading candidates for the post of UN secretary-general, which will become
vacant after present Kofi Annan steps down at the end of this year.
The decision to join New Era, Parliament's largest political party, came after
months of periodic speculation in the media whether Kalniete would put an end to
her independent status and join a political party. It was widely believed that
she would only join a political party if she could not find a position in the
country's diplomatic corps.
Kalniete has not revealed whether she would agree to be the party's candidate
for head of state. However, she admitted to journalists that it would be very
difficult to follow such a powerful personality as Vaira Vike-Freiberga.
"Kalniete would make a splendid presidential candidate, but this question
isn't yet on the agenda," New Era secretary Edgars Jaunups told the daily
Diena.
Latvia has bang-up year in 2005
Latvia exceeded itself last year in terms of economic expansion, as GDP grew
10.2 per cent, the highest level since the country gained independence. In the
fourth quarter alone, the economy expanded 10.5 per cent, according to the
Latvian Statistics Bureau.
The stellar growth was fostered by a 17.4 per cent increase in trade, 16.2 per
cent in the transport and communications industry, 15.5 per cent in construction
and 6.3 per cent in manufacturing.
Trade accounted for approximately one-third (3.8 per cent) of the overall GDP
growth. It now accounts for almost one-fifth of GDP, while transport and
communications almost 16 per cent.
"I think it will be no surprise to anybody that trade is the fastest
growing among Latvia's key industries," said Zigurds Vaikulis, head of
market analysis at Parex Asset Management.
"Both industry and trade showed growth in the fourth quarter of 2005, and
the development of other branches of the economy has also been rapid," said
Liene Kule, a senior analyst at Hansabanka. She added that trade and
construction would remain Latvia's key industries in the future, as their growth
is ensured by domestic demand.
Glancing across the Baltics, Estonians also had reason to cheer. GDP there grew
10.5 per cent in the fourth quarter of 2005, putting it on par with Latvia.
During the previous three quarters of the year, Latvia had the hottest economy.
Lithuania saw its economy grow 8.8 per cent last year.
In Latvia, GDP per capita in 2005 was 3,046 lats (4,334 euros) in constant
prices, which is 10.8 per cent, or 297 lats, more than in 2004, according to
bureau statistics.
*****
Meanwhile, the statistics office announced on March 8 that consumer prices rose
0.4 per cent this February month-on-month, while annual inflation slowed to 6.9
per cent. Prices were influenced mainly by fluctuations in vegetable, alcohol
and clothing prices, bureau experts said.
In February, prices of goods rose by 0.4 per cent, while those of services
increased 0.3 per cent. On a year-on-year basis, prices of goods increased 6.9
per cent year-on-year and of services 6.8 per cent.
Hansabanka's Kule commented on the inflation data by saying, "These results
are not sufficient to speak about full price stability as prices kept growing in
large enough number of areas."
SEB Unibanka analyst Andris Vilks echoed the sentiment, saying there was little
cause for celebration. "The same factors that were, and will be here, won't
permit inflation to come down seriously in the coming months. Those are first of
all food prices, housing costs, health care, education, restaurant and hotel
services," he said.
Nevertheless, the balance-sheet on economic performance is highly positive.
Austere financial economists, such as Vilks, may be worried about inflation. But
those finding new jobs or their pay packets soaring cannot forbear to cheer.
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EURO ADOPTION
Riga approves plan for adopting Euro in 2008
The Latvian government recently approved a national strategy for adopting the
Euro on January 1, 2008 despite worries that the plan might be jeopardised by
high inflation. "The plan should be introduced whether we adopt the Euro on
January 1, 2008, or not, New Europe reported.
"For the time being the date set by the government has not been
changed," Latvian Finance Minister, Oskars Spurdzins, said. Latvia's
ambitions to switch to the single currency in 2008 are threatened by an
inflation rate last year of seven per cent, the highest in the 25-member
European Union. The national plan said the Euro should be introduced "in a
way that would affect the daily life of Latvian residents as little as
possible." The government aims to introduce the Euro in cash and clearing
transactions simultaneously. But cash payments in both Euro and the national
currency, the lat, would be possible for a month after the single currency is
adopted. Latvians would also be able to exchange lats for Euro without
commission for six months after Eurozone entry in commercial banks, the
country's postal company and other commercial institutions that have a licence
for selling and buying foreign currencies. And retailers would have to display
prices in lats and Euro three months before and one year after the switch to the
Euro. Latvian year-on-year inflation was seven per cent in 2005, according to
the Baltic country's central statistics bureau. Seasonally adjusted inflation,
which is important for Euro adoption, was 6.67 per cent. The Latvian central
bank has forecast that inflation in 2006 would be between 5.5-six per cent.
Under the EU's Maastricht criteria, inflation should not be more than 1.5 per
cent higher than the average of the three lowest rates in the Eurozone.
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EUROBONDS
Parex Banka plans Eurobond issue in 2006
Latvia's Parex Bank recently unveiled plans to issue five-year Eurobonds in
2006. Viktors Zakis, the bank's CEO, made the formal announcement. Parex Banka
selected Deutsche Bank and HSBC at a meeting as the organisers of the Eurobond
issue, according to the CEO, New Europe reported.
"The issue is planned for the second quarter and there will be a road show
before that in Europe and Asia," Zakis said. The volume of the planned
issue was kept undisclosed, however "it will be much more than the previous
issue," asserted the CEO. Parex Banka "is planning to strengthen its
business relations with international investors from Europe and Asia" with
the new Eurobond issue, a bank release cited Yevgenia Zolotareva, an executive
at Parex Banka, as saying.
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FOREIGN COOPERATION
Japan, Latvia to cooperate on UNSC reforms
Japan foreign Minister, Taro Aso, agreed with his Latvian counterpart, Artis
Pabrikls, recently at a meeting in Tokyo to cooperate on United Nations (UN)
reforms and other issues and spoke about Japan's new plan for reforming the UN
Security Council (UNSC), the Japanese Foreign Ministry said, reported by Japan
Economic Newswire, New Europe reported.
Latvia, along with Germany, India and Brazil co-sponsored Japan's resolution to
reform the UNSC last year. Since then, Japan has come up with a new plan.
Meanwhile, Pabriks told Aso that Latvian Prime Minister, Aigars Kalvitis, is
planning to visit Japan in the spring for the opening of the Latvian Embassy in
Tokyo, Japan Economic Newswire reported. Aso said he will welcome the visit, the
ministry officials said.
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