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LATVIA


 

 

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: 309 - (26/09/06)

NATO Summit in Riga in November
The NATO summit will be hosted by Latvia this year in Riga on November 28-29th. It is an important step for the Baltic state, solidifying its new-found Western identity. On the agenda for delegates at the summit are plans to discuss the incorporation of other former Soviet states in NATO as well as the defence alliance's role.
NATO's Military Committee grouping top officers opened a two-day meeting in Warsaw on September 8th focusing on the alliance's ISAF operations in Afghanistan and preparations for the November NATO summit in Riga. 
The gathering of NATO top brass also focused on developments relating to the NATO Response Force (NRF) and military transformation initiatives within the alliance. The planned NRF is set to be a kind of rapid reaction force numbering some 25,000 troops for deployment in cases of collective defence, crisis management and stabilization. 
The Military Committee is NATO's top military authority, which meets three times a year, including two meetings at NATO headquarters in Brussels and one meeting in a NATO member state. The alliance groups 25 member states from North America and Europe and includes Turkey.
In August 2003, NATO began its first-ever mission outside Europe when took command of the International Security Assistance Force (ISAF) in Afghanistan. The discussions in Warsaw concentrated on expansion of the operations in Afghanistan. Poland is ready to send over a thousand soldiers, though the final decision has not yet been made. Poland chief of staff general Franciszek Gagor said that Polish soldiers will probably be stationed in the eastern region of Afghanistan. The NATO mission is to comprise around 20 thousand soldiers from over 30 countries.

Bush to visit Latvia to attend NATO summit
President Bush plans to travel to Riga to attend the NATO Summit, the White House announced on September 7th. The president's itinerary also includes a visit to Estonia.
The purpose of the president's visit to Estonia and Latvia is to "underscore the importance of the alliance in fostering a Europe whole and free by highlighting new allies that have successfully transitioned to free-market democracies, contributed to the War on Terror, and offer lessons learned and expertise to others pursuing liberty," the White House said in a September 7th statement on the trip.
Scheduled to be in Estonia on November 28th, Bush plans to meet with Estonian President, Arnold Ruutel, and Prime Minister, Andrus Ansip. He then will travel to Riga where, in addition to participating in the NATO Summit, he will meet with Vaira Vike-Freiberga, the president of Latvia, and NATO Secretary-General Jaap de Hoop Scheffer.
During the NATO Summit, Bush plans to discuss with NATO leaders "how to improve Alliance capabilities to ensure it can meet the challenges of the 21st century," the White House said. 
The White House concluded its statement by casting the trip as "part of a series of presidential trips to Europe which underscore the common commitment of the United States and our European allies to work together to advance democracy, security, and prosperity in Europe, its neighbourhood, and beyond."
President Bush last met with the presidents of Latvia and Estonia on May 7, 2005, in Riga, during a trip that also included stops in the Netherlands, Russia and Georgia for ceremonies commemorating the 60th anniversary of the end of World War II in Europe.

Latvian half-year gross domestic product growth hits 12 per cent 
The Latvian economy grew at an annual rate of 12 per cent in the first half of 2006, confirming its status as a "Baltic tiger," figures released on September 8th revealed. Growth nonetheless slowed in the second quarter of 2006, hitting 11.1 per cent year-on-year. Growth in the first quarter was 13.1 per cent, the highest rate in Latvia's recent history and one of the highest ever recorded in the European Union. 
The main drivers for growth were the retail and communications sectors, the Latvian Central Statistics Bureau announced. The retail trade grew by 18.7 per cent year-on-year in the second quarter, while communications jumped 10.9 per cent. The retail trade has been the mainstay of Latvia's growth ever since the country joined the EU, fuelled in part by a consumer lending boom and a buoyant property market. 
However, consumer demand has far outstripped supply, leading to a spiralling trade deficit and soaring inflation. Latvia's annual inflation stood at 6.8 per cent in July, the highest in the EU, and has been above 6 per cent for the last two years. 
The Bank of Latvia has warned that failure to treat these problems could seriously damage the country's long-term competitiveness and its attempts to join the euro - originally planned for 2008, but now expected to be delayed until at least 2010. 
The Latvian government has remained wary of pre-emptive action, however, suggesting that inflation is a necessary part of catching up with the EU's richer members. Parliamentary elections are due in October, making lawmakers reluctant to take drastic steps yet. 
Despite having had the fastest gross domestic product (GDP) growth in the EU in 2004 and 2005, Latvia remains the poorest country in the enlarged union, which it joined in 2004. 
Its Baltic neighbours, fellow-EU members Estonia and Lithuania, have also seen rapid growth. Preliminary figures put Lithuania's second-quarter growth at 8.4 per cent, and Estonia's at 12 per cent.

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BANKING

HVB to transfer its 77.53% of Bank Austria to Unicredito 

HVB Group AG said on September 13th in an e-mailed statement that they will transfer the 77.53 per cent stake it has in Bank Austria Creditanstalt to its parent Unicredito Italiano SpA, for 12.5 billion Euro, or 109.81 Euro per share, New Europe reported.
HVB will sell 100 per cent of HVB Latvia to Bank Austria for 35 million Euro, plus 40 million Euro will be returned to HVB from HVB Latvia's capital increase, which HVB subscribed to in August. Unicredito said HVB will use the proceeds stemming from these sales to strengthen its balance sheet and expand its business via organic growth and acquisitions. HVB will also manage the investment banking activities of the Unicredito group for at least the next seven years, it said. Unicredito was advised by Merrill Lynch for the Bank Austria deal.

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ENERGY

Austrians aim at controlling stake in Latvian oil industry 

A group of Austrian investors recently started negotiations on the purchase of a controlling packet in Latvia's oil-transit industry, a spokesman said in an interview published on September 6th. "We and our partners have been negotiating the purchase of a controlling stake in (oil-holding company) Ventbunkers (VB). And we will be able to get it soon," Herbert Kordt, business partner of billionaire investor Martin Schlaff, told the Telegraf newspaper, cited by Deutsche Presse-Agentur (dpa). 
The announcement came at an eventful time for Latvia's oil-transit industry. The Latvian Government recently finalised plans to auction its minority stake in oil-transit company Ventspils Nafta (VN) in a series of small packages, the so-called "Dutch model." 
If the Schlaff group does buy VB, it would thereby gain a controlling stake in Ventspils firm Latvijas Naftas Tranzits (LNT), which in turn owns almost 48 per cent of VN - potentially changing the significance of the state's shareholding for other investors. 
"My partners and I will become majority shareholders of Ventbunkers in the near future. So there is no point in holding the auction according to the Dutch model," said Kordt. "In the future we will have control of LNT, which already owns a major stake in VN," he added. 
The purchase would also have serious strategic implications. VB and its subsidiaries control Latvia's oil-transit industry - two pipelines from Russia, and storage and transshipment facilities in the oil port of Ventspils. 
One of the two pipelines was closed in 2002 after a long-running dispute with Russian suppliers. Latvian analysts meanwhile came out with the opinion that the Schlaff group's plan might be to negotiate the reopening of the pipeline, and then sell the oil-transit complex to an international investor. "The most important thing will be to renew oil deliveries to Ventspils through the pipeline," Kordt said.

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