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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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

Update No: 319 - (26/07/07)

Vike-Freiberga bows out in referendum row
Latvia's president ended her eight years in office on July 7th by overseeing a referendum aimed at rebuking the government for trying to pass legislation she says would have threatened national security. After casting her ballot, President Vaira Vike-Freiberga urged Latvians to vote and send a signal to the centre-right government that it went too far with the draft amendments.

The reforms would have given lawmakers and their assistants access to information on criminal investigations, including sensitive national security cases. Vike-Freiberga argued the proposed changes violated norms of NATO member nations and could have hurt the country's standing in the alliance and in the EU.

The government passed the amendments in March, overriding a presidential veto in February. But instead of signing the measures into law, Vike-Freiberga used a little-known clause in the constitution that allows the head of state to put legislation to a referendum. No other Latvian president had used the power.

Prime Minister Aigars Kalvitis argued that the amendments were necessary to improve coordination among national security institutions. Confronted with the president's opposition, parliament recalled the amendments in late March, though it was too late to stop the referendum. Still, Vike-Freiberga and others fear the government might try to resurrect the legislation under the new president.

Vike-Freiberga's second four year term ended at midnight July 7th. She was replaced the next day by Valdis Zatlers, a surgeon with no political experience who was elected by parliament in May.

Zatlers names his man
Incoming Latvian President Valdis Zatlers made his first major move on the political scene by appointing the head of his private office before actually taking over. He knows that Vike-Freiberga is a hard act to follow. She was a great success in the job and has a high reputation in the West. A top international appointment could be hers if she wants it. She has hinted that she might even return to the domestic political scene (see end-interview below).

The new president's right-hand man is Eduards Stiprais, currently serving in Brussels as Latvian ambassador to the European Union, a post he has held since December 2004, though he has been mainly based in the Belgian capital since March 1995.

The appointment emerged during the course of a TV interview with the president-elect, who revealed: "I have reached agreement with Eduards Stiprais that he will be head of the chancery. He is a very good candidate, he has diplomatic experience from the beginning of the restoration of Latvia's independence... and has excellent knowledge of Europe. But most important of all - he is politically neutral."

The media was quick to pick up on that last phrase, speculating that it signals Zatlers' intention to re-assert the independence of the presidency. Though never straying into overt party politics, the final months of Vaira Vike-Freiberga's presidency have been notable for an increasingly tense stand-off between parliament and president over a number of issues.

Stiprais is 38 years old, married, and originally from Riga. Educated at Riga Secondary School No 84 and the University of Latvia faculty of economics, he is fluent in Russian and English as well as his mother tongue, he began his diplomatic career in May 1991 as a trainee at the Ministry of Social Maintenance, rapidly working his way up through the ranks.

To the neighbours
Latvian President Valdis Zatlers has continued his whirlwind introduction to international statesmanship with state visits to Estonia and Lithuania on consecutive days. This was a very logical move to consolidate the Baltic states' relationship, of which Latvia as the middle one is the lynchpin. Estonia looks north-west to Finland, with which it has close linguistic and cultural ties, and to Scandinavia beyond, while Lithuania looks to Poland, with which it was once united in a Catholic Commonwealth, until the three partitions of Poland put an end to it, Russia being the main villain of the piece. 

Latvia is the vital meat in the Baltic sandwich, therefore. First on his meet-and-greet list July 12 were Estonian President Toomas Hendrik Ilves and Prime Minister Andrus Ansip. All was emollience and light. "We had an excellent meeting," Ilves told journalists afterwards. "This proves that relations are becoming stronger. We both agree that Latvian-Estonian relations are very special," said Ilves. 

Zatlers responded by confirming that that Latvian and Estonian presidents will meet more often in future, which means a great deal more hot air being spoken. 

In like vein: "The impression [we gained] was very good," Ansips told journalists after the meeting with Latvian president. "I am sure the Latvian people have a very good president. He knows how people live, what their problems are. It seems that he is in the right place," said the Estonian prime minister. 

When asked why he chose Estonia as the destination for his first foreign visit, Zatlers said that it is an old tradition of Estonia's president to visit Latvia first. "This demonstrates that we are the closest neighbours and we have common interests," he explained. 

One of the main topics of the talks was of a more substantial kind, the construction of the new power plant in Ignalina, Lithuania. Questions of energy supply are never frivolous. The old nuclear plant there is of the Chernobyl type and is being decommissioned in 2009.

A new modern type one is to replace it. 

"Both parties stated that their positions coincide," spokespeople for the Estonian government said. "For instance, both consider it important to move ahead with the project as quickly as possible, settle questions relating to the construction of the nuclear power plant by consensus, and protect the interests of minority stakeholders." 

Speaking about the Latvian president's visit in general, Ansip said it is not only a sign of the good relations between two neighbours, but a significant signal of the importance attached to Baltic cooperation. 

On to Lithuania
Then it was time for Zatlers to head south to pick up a change of clothes before continuing his shuttle diplomacy July 13th in Lithuania with his counterpart there, Valdas Adamkus. "It is important to develop a dynamic policy, and good relations are the basis of such a policy. They have been defined today," Zatlers told journalists after meeting with Adamkus in Vilnius. 

Adamkus voiced confidence that the two presidents had managed to establish close ties. "We had a very warm and pleasant meeting," he said at a news conference, adding that his new Latvian colleague left an impression of being an expert in Latvian affairs. 

However, there was one note of not so minor discord, Zatlers admitted, concerning the issue of a definitive Latvian-Lithuanian marine border treaty. "I believe that the issue is at an impasse. It is a high time to resolve it. It seems a bit archaic that problems remain unsolved for years on end," Zatlers said. 

Adamkus also voiced hope that the issue would "move from deadlock." But "Lithuania, for its part, has done everything it could. I hope we will find a solution," Adamkus speculated, notably giving no ground whatsoever. 

Lithuania ratified the marine border treaty with Latvia that was signed in 1999, but in Latvia it has remained in a state of suspended animation, largely as a result of geological reports suggesting that undiscovered oilfields may lie within the proposed border zone. Latvian fishermen have also voiced concern that they may lose access to their traditional fishing grounds. 

The border treaty isn't the only thing to remain unresolved as a result of Zatlers' visit to Lithuania - debate also continues to rage over the Lithuanian spelling of his name. One group favours 'Zatleras' while another prefers 'Zatleris'. A straw poll of Lithuanian media outlets showed that the latter was currently the favourite - though by no means universal - choice. 

Comeback for Vike-Freiberga?
Vaira Vike-Freiberga will remain on call even after she departs. During a series of press interviews to round off her tenure as Latvia's president on July 5th, Vaira Vike-Freiberga hinted that her departure may not be as complete as her opponents would wish. Asked in what circumstances she would consider a return to the political scene, Vike-Freiberga refused to rule out a comeback. 

"If a disastrous deviation [from current progress] were to occur at once, I would feel it my duty to get involved. I am not sure if I would do it by establishing a political party, but I would not deny such a possibility," she said. 

"The challenge of establishing a political party is getting yourself a team, selecting people you can fully trust and being different from the ones already in existence… I would not willingly do something like that. It is not my idea of an easy old age," she added with a laugh. 

The president also signalled that she would remain on call, presumably in case her successor Valdis Zatlers has any questions during his early days in the job: "I am someone who can be woken in the middle of the night at the push of a button and asked any question. They can be sure to receive an answer," Vike-Freiberga said. 

Earlier in the day, Foreign Ministry official Normunds Penke admitted that his department would like to use the popularity of Vike-Freiberga to promote Latvia abroad even after the expiry of her term of office. 

Outlining what she views as the current priorities of government, Vike-Freiberga said: "The government must take action to reduce inflation and we have to continue reducing the current account deficit. These two are the most important tasks." 

Retaining a level of popular support most politicians can only dream of and with a reputation at home and abroad as a first class stateswoman, any move by Vike-Freiberga into the party political system would have opponents quaking in their boots. 

They'll be hoping that no "disastrous deviations" crop up in the near future to lure Vike-Freiberga back from writing her memoirs. 

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First oil production in Latvia's Kuldiga District may start this autumn

The first oil wells could start functioning this autumn in Latvia's Kuldiga District where geological prospecting had already been initiated in early 2007, a Latvian newspaper reported on May 16th, cited by Rian. 
According to research conducted long ago in the Soviet Union, there could be oil reserves in the western Latvian province. The Russian-language Chas newspaper said Latvian company Alina would deal with geological prospecting and installation of drilling equipment, which would enable the production of a mere 1.5 tonnes of crude a month. The next step in developing Latvian oil deposits could be drilling and geological prospecting on the Baltic Sea shelf. The small ex-Soviet state, which joined the European Union three years ago, has estimated crude reserves of 100 million barrels onshore and 360 million barrels offshore. This volume would satisfy the world's oil needs for only five days, but it could provide for Latvia's daily 40,000-bbl demands for 30 years, it was reported. Experts assess the capacity of ground and sea-based wells at 10,000-15,000 bbl/d.

Baltics need investment to avoid electricity crisis

The Baltic states need to make additional investments to avoid a looming energy crisis. "In 2010, if we don't make additional investments, the Baltic states will become an energy-deficit region," Deutsche-Presse-Agentur (dpa) quoted Anicetas Ignotas, undersecretary of state at Lithuania's economics ministry, as saying. 
The heart of the problem is the Soviet-era nuclear power station at Ignalina in eastern Lithuania. According to official figures, in 2005 the 1500-megawatt plant supplied almost three-quarters of Lithuania's total electricity output, with enough left over to export some to Latvia. 
But under the terms of Lithuania's EU accession treaty, the plant, which was built to the same design as the ill-fated Chernobyl reactor, must be closed down by the end of 2009 - almost a decade ahead of the date which its builders had envisaged. 
In February 2006, the governments of the three Baltic states agreed to jointly construct a new nuclear power plant at Ignalina. 
The decision was one of "huge strategic importance for the whole region," Lithuanian Prime Minister Gediminas Kirkilas said. 
But such a plant is not expected to open before 2015 - leaving the Baltics facing a potentially critical shortfall. "The shutdown will destroy the current balance of energy supply in the Baltic states," admitted Ugis Sarma, head of the energy department at the Latvian economy ministry. 
In the last year, each country separately, and all three together, have sought ways to bridge the energy gap. 
Much of the attention has focused on linking the Baltics' energy grids into European networks. Until recently, the trio formed an energy island within the EU, with no physical links to the West. 
In December 2006, that isolation was broken as a 350-megawatt cable, Estlink, was opened between Finland and Estonia. 
The move proved the value of Baltic cooperation, but it should be followed by a link between Sweden's national grid and either Latvia or Lithuania, dpa quoted Latvian Prime Minister Aigars Kalvitis as saying. 
Also in December, the Polish and Lithuanian governments agreed to construct a bridge between their power grids - paving the way to Polish participation in the new Ignalina project. But cross-border linkages are seen as, at best, a partial solution. All three countries are now planning new conventional power stations in an effort to boost their energy independence. 
Estonia is planning to build two oil-shale power stations, to replace two which will be closed in 2015, while Lithuania plans to increase its capacity for gas-powered heat and power generation. And Latvia is debating the construction of a coal- or gas-fired plant, with coal at present apparently the more likely choice. 
But these plans are still in their infancy. The Polish-Lithuanian energy bridge is not expected before 2011, while the Swedish-Baltic link and the Latvian and Estonian power stations exist only on paper. 
And with Ignalina due to close down in 2009, the Baltics may find it hard to stop their tumble into the energy black hole.

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