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LATVIA

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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

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Update No: 284- (27/08/04)

Latvia's equivalent of Mandelson
The post of being a country's EU Commissioner is becoming more important than ever, nowhere more so than in the UK, where EU membership itself is a very sensitive issue. The appointment of Peter Mandelson to the job for the UK recently has caused an immense brou-haha that some think could be Blair's fatal last mistake, finishing off his premiership. Mandelson, Blair's closest ally and the creator of New Labour, is detested by Old Labour and an internal revolt to topple the prime minister in favour of Chancellor of the Exchequer Brown has become just that bit less unlikely, although don't bet on it, given the survival skills of Blair.
Something not wholly dissimilar is happening in Latvia. Latvia's Green Prime Minister Indulis Emsis proposed on August 3rd parliamentary speaker and party colleague Ingrida Udre to replace former foreign minister Sandra Kalniete as the Baltic country's European Commissioner. "I used my right to name Ingrida Udre," Emsis told reporters after a meeting with parties in the governing coalition.
The announcement followed a battle within the three-party minority coalition over who should represent Latvia at the executive of the European Union, which it joined on May 1 with nine other countries. Emsis used his right to choose Latvia's commissioner after the three parties failed to agree on a candidate at a meeting on August 3rd after several days of talks. 
Udre, aged 45, entered politics in 1998. She entered parliament for the Greens and Farmers party in 2002, being elected parliamentary speaker in the same year. She has been awarded the portfolio of the Taxation and Customs Union in the European Commission.
A coalition partner, the People's Party, had strongly backed Kalniete, aged 51, who was Latvia's ambassador to France before becoming foreign minister in 2002. 
Emsis' move prompted an angry reaction from members of the People's Party, saying it would consider pulling out of the shaky coalition. "It is a very serious situation and we will consider it," Defence Minister Atis Slakteris of the Peoples Party said. "We cannot rule out a situation where we could leave the coalition in the future," he said. He said the centre-right party had started negotiations with the biggest opposition party New Era.
Emsis told reporters he doubted the appointment could destabilise government. "It is not serious to talk now of some coalition partners leaving the coalition," he said. 
Short-lived coalition governments are common in Latvia, a Baltic former republic which joined the European Union on May 1 and NATO on March 29. 
The EU's 10 new members nominated an interim commissioner to serve in the last few months of life of the current Commission. But since then Latvia has had a change of government. Kalniete, who has no party affiliation, was nominated by the former government of New Era prime minister Einars Repse. 
The next commission takes over in November. 
Udre speaks Latvian, English and Russian. She has an economics degree and as a student was a passionate basketball player. 

Right-wingers hold talks 
The appointment of Udre had immediate repercussions right across the political spectrum.
The People's Party, the largest partner in Latvia's three-party ruling coalition, announced after talks with the opposition New Era party that it did not rule out forming a new government, if New Era proposed better ideas than those of Premier Emsis. New Era leader and former Prime Minister Einars Repse told reporters that his party had offered the People's Party to form a new right-wing government together with the nationalist Fatherland and Freedom/LNNK at a meeting on Aug 3, the very day of the Udre appointment.
The two parties - the strongest in terms of number of seats in Parliament - will form several expert working groups to find solutions to problems in several spheres vital to the national interest - e.g., health care, finance and budget policy. "It is important for the people that the government and Parliament yield specific results and drive to improve the living standard and economic growth," said Repse. The former prime minister said New Era would not join Emsis' "cabinet of left-wing and pro-Moscow forces." 
Atis Slakteris, leader of the People's Party, said his party has always stressed that the best government for this Parliament would be a cabinet composed of the People's Party and New Era. He said the People's Party would be ready to work in a new cabinet together with New Era, if the problem solutions proposed would be better than those proposed by Emsis' cabinet. He said the People's Party would assess the situation.
He voiced a hope New Era might support the budget, while Repse said that, since it was in opposition, New Era would not support the budget but would prepare its own proposals.
It was not clear how Emsis' choice to back Udre for the country's European commissioner post, despite the People's Party support of Sandra Kalniete, would affect the People's Party decision. Repse said that forming a new government would make sense, if it could do things better. New Era, he claimed, was capable of doing exactly that. Nevertheless, Slakteris described the work of the current Emsis government as very good and said the People's Party would only be ready to form a new government if it was sure it would work better. Slakteris said the People's Party was not set to pull out of Emsis' Cabinet at this point, but he said a minority Cabinet had shortcomings that might make it difficult to adopt budgetary amendments. 

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AVIATION

Ryanair ready to stretch wings, take off for Riga

The UK-based budget airline Ryanair recently announced it would launch daily flights to Riga from London, Frankfurt and Tampere as of October as part of its long-term plan to win a part of the lucrative East European air industry, The Baltic Times reported.
Ryanair CEO Michael O'Leary told reporters gathered at Riga International Airport that the discount airline chose the Latvian capital over Tallinn and Vilnius due to the government's willingness to cooperate. If the three routes to Riga are successful, the company will schedule more to cities such as Brussels, Rome, Barcelona, Stockholm and others.
Ticket prices for one-way travel to Riga will cost €4.99 from Tampere, £3.99 from London and €7.99 from Frankfurt plus airport taxes - though the price may change depending on time of flight and other factors. The prices will also depend on whether the carrier handles at least 300,000 passengers at RIA, which is part of the government's new scheme to entice airlines to bring in more passengers to the Latvian capital.
O'Leary said he realised the airline would not earn a profit from the routes but for now was more interested in getting established for the long term in Eastern Europe. Also, tickets will be sold only on the Internet by credit card and will remain in effect until spring, after which the fares will likely increase.
Deputy Prime Minister and Transport Minister, Ainars Slesers, said Ryanair would not receive any special discounts at RIA but that the airline's presence would increase competition. He said he was happy that Latvia was ahead of Lithuania and Estonia in this industry and hoped that in next five years the Riga airport would serve 5-6m passengers annually. Slesers said the next discount airline to start flying to Riga would be Britain's EasyJet. The government has significantly cut airport fees and passenger taxes at RIA in an effort to entice more airlines and boost passenger turnover.

Riga airport welcomes results

Riga International Airport registered the biggest passenger turnover in the Baltics in the past seven months - 538,894 passengers, according to statistics from Riga, Vilnius and Tallinn airports, New Europe reported.
Tallinn Airport's passenger turnover was 537,166 from January to July, and Vilnius Airport's was 533,835. Riga Airport also registered the biggest increase in passenger turnover over the respective period in 2003 - a 38.5% increase. The figure in Tallinn was 37.8% and 32.5% in Vilnius. 15,036 flights to/from Riga were registered in the first seven months of the year, 41.2% more than in the respective period in 2003. The respective figures in Tallinn were 14,773 flights (0.8% fall) and in Vilnius - 12,349 flights (16.3% increase). Riga Airport's cargo turnover, 6,268 tonnes, has also been the biggest in the Baltics so far this year (almost double from the respective period in 2003). Tallinn Airport's cargo turnover has increased 6.4%, up to 3,005 tonnes, and Vilnius Airport's - 2.3%, totalling 2,994 tonnes.

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CREDIT RATINGS

S&P rates Latvia foreign currency A-

Standard & Poor's Ratings Services said recently it raised its long-term foreign currency sovereign credit rating on Latvia to A- from BBB+, New Europe reported. 
The A- long-term local currency and A-2 short-term foreign and local currency sovereign credit ratings on Latvia were affirmed. The outlook is stable. Standard & Poor's credit analyst, Remy Salters, said the upgrade reflects sustained improvements to Latvia's economic structure in the context of EU accession, as well as solid medium-term growth prospects.

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ENERGY

Latvijas Gaze to increase investment, build reservoir

Latvian gas concern Latvijas Gaze plans to invest 25.4m lats in 2004, which is 58.8 per cent more than in 2003, company CEO, Adrians Davis, said recently, New Europe reported.
A priority area for investment this year will be the construction of a new compressor station and a reserve compressor unit at the Incukalns underground gas reservoir (24.4 per cent of planned investment), the construction of gas distribution pipelines and also the gasification of towns and villages, he said. Company investment in 2003 amounted to 16m lats. Davis said that Latvijas Gaze investment in the first half amounted to over 6m lats. The company invested in modernising the Incukalns reservoir and in developing the pipeline system.
The company's audited net profit in 2003 increased 6.8 per cent to 13.015m lats, with turnover up 13.3 per cent to 112.9m lats. Shareholders have approved the 2003 dividend plan that will pay 0.25 lats per share, with a par value of one lat.
Dividend payments will total 9.975m lats or 76.6 per cent of the net profit earned by the company last year.
The remainder of last year's net profits, or 3.04m lats, will be put into the reserve fund, in addition to 6,138 lats in undistributed profit from the previous period. 
The company paid 0.2 lats for 2002 and earlier dividends fluctuated between 0.06 and 0.17 lats. The company sold 1.63 billion cubic metres of natural gas in 2003, 3.8 per cent more than in 2002.
Itera Latvija and Gazprom each own 25 per cent of Latvijas Gaze, Ruhrgas owns 28.66 per cent and E.ON Energie owns 18.06 per cent. Charter capital is 39.9m lats, split into 39.9m shares, par value one lat each.

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