Stenmarck on Latvia

KRISTOVSKIS INVITES U.S. TO INVEST IN LATVIAN ENERGY

2011-04-21T15:47:00.002+02:00

The availability of energy for the future is a problem that Latvia has a need to resolve. As in many other countries, the price of gas and oil has gone up sharply. It has affected many individuals. The risk of dependence on Russian energy is also a topic in Latvia.

As part of all this Foreign Minister Girts Valdis Kristovskis (Unity) a few days ago met the U.S. Secretary of State's Special Envoy for Euro-Asian Energy Richard L. Morningstar. The two discussed the current energy situation in the Baltic countries.

Kristovskis outlined the various initiatives and urged the U.S. to assist in the financing of Latvian energy projects. He also reiterated Latvia's support for the nuclear power project in Visaginas, but also stressed that lessons had to be learned from the nuclear disaster in Japan.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

GREAT INVESTMENT IN HIGHWAY RIGA-MOSCOW

2011-04-10T04:53:00.005+02:00

Latvia's Transport Minister Uldis Augulis (Union of Greens and Farmers) has according to an article in the Baltic Business News (BBN) come to an agreement with his Russian counterpart about a major investment in highway across the route Riga-Moscow.

The intention is to complete the highway by the end of 2018. Already now preparatory work is being made for parts of the route on the Latvian side. This especially applies to the route from Ventspils at the Baltic Sea coast to Riga.

This is part of the Latvian government's ambitions to make Latvia an increasingly important transit country. Much of the country’s revenues come today from this traffic. This is undoubtedly something that could be further developed.

By extension this is one of the longest road complexes in Europe, normally called the E 22. It starts in the west coast of England and stretches through the Netherlands, Germany - via ferry from Sassnitz to Trelleborg - Sweden, Latvia and Russia. E 22 stops in Siberia just north of the border with Kazakhstan. Overall, this is a stretch of way over 5000 kilometers.

Even in other parts of the route there are ongoing discussions about a rapid expansion. In Sweden the standard is still too low. Also Germany plans a faster route to the north of Hamburg and Bremen. It is not unrealistic that these different routes could be concluded around the same time as the Latvian-Russian. They would all rank to serve as an efficient transport route for thousands of companies, with an opportunity to both east and west.

The EU is supposed to be co-sponsoring the route through Latvia. This has been made possible by the rapid fiscal consolidation undertaken during the past two years. Minister of Transport Augulis estimates that 85 percent of the costs will be covered by the EU Cohesion Fund while national funding will take care of the remaining 15 percent.

For the parts of E 22 that passes through Sweden, it should be possible to obtain the status of TEN-T projects and therefore EU funding.

ABOLTINA - LATVIA GOALS ALL ABOUT THE EURO

2011-04-07T03:30:00.003+02:00

When the Latvian Parliament Speaker Solvita Aboltina (Unity) spoke at a conference in Brussels, she explained that one of the country's major goal is to meet the Maastricht criteria and to join the euro zone in 2014. It also means that Latvia supports any initiative that can contribute to the stability of cooperation and competitiveness.

"Issues related to the future of the euro-zone are important for all EU members”, Aboltina explained according to news agency LETA.

Aboltina said that hard work was the main reason that Latvia has managed to avoid bankruptcy. She also added three important principles: stability, partnership and responsibility.

"The 2011 budget clearly shows the turning-point in the growth of the Latvian economy. If the previous two budgets were described as crisis budgets, then the 2011 budget is a stabilization budget", Aboltina pointed out.

DOMBROVSKIS SUPPORTS PRESIDENT ZATLER’S RE-ELECTION

2011-03-23T22:55:00.002+01:00

Two politicians appear today as guarantors of Latvia's stability. One is Valdis Dombrovskis (Unity), who recently celebrated two years as prime minister, a very long time in Latvia. The second is President Valdis Zatlers, whose term will expire in a few months, but who recently announced that he is willing to stand for reelection.

Dombrovskis has now, in a slightly odd way, announced that he supports Zatler’s candidacy. He has done it by declaring support in a book, which he handed over to the president yesterday on his birthday.

The text is reproduced in a news telegram from the news agency LETA:

''The goals you have put forward and the time you have been in office have not
been easy. However, the decisions you have made, your political independence and
the position you have taken on many issues prove your importance. Because of
this, you have gained the trust of the people and deserve another mandate for
the next four years.''

Dombrovskis wrote this in the book, wishing the president luck and success, as well as the support of the people.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

NO HURRY TO SELL LATTELECOM AND LMT - Dombrovskis

2011-03-22T11:40:00.002+01:00

A few years ago, Latvia was in advanced negotiations to sell the state holdings in the two telecom companies Lattelecom and LMT. For a long time, I followed and commented on the speculations and developments almost every week.

It never came to an agreement that time. Latvia came in to a government crisis and then a very dramatic economic fall. For Latvia, it would have been a very bad business to sell right then.

Now the situation is different. But Prime Minister Valdis Dombrovskis (Unity) has a cool head and explains that, "we have no rush. If the price is lower than what we were offered in 2007, we will not sell our shares. In that case we'd rather wait until market conditions have improved ".

The last time it was mainly Swedish TeliaSonera, which owns the rest of the companies, who wanted to buy the remaining shares. At the same time the Latvian government also negotiated with American Blackstone Group, concerning the state share of Lattelecom. The then government was particularly reluctant to get a single foreign company owning 100 percent of the country's total telecom networks, both fixed and mobile.

"If an offer is close to what we were offered in 2007, when the then government missed a good bid, we will seriously consider it," Dombrovskis said, commenting to news agency LETA.

TeliaSonera owns 49 percent of Lattelecom and through direct and indirect ownership 60 percent of mobile operator LMT. The company has the equivalent property in Estonia and Lithuania.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

Dombrovskis – LATVIA’S SITUATION HAS IMPROVED!

2011-03-18T09:07:00.003+01:00

In what almost could be seen as a State of the Union speech Prime Minister Valdis Dombrovskis (Unity) yesterday talked to the Saeima.

His assessment was that the state of the country was much better than in 2009. The measures taken to consolidate the budget, to establish the economic stabilization program and to adopt the 2010 budget have again given the market confidence in Latvia.

Thus according to Dombrovskis the government has achieved its main task, namely the prevention of Latvia become bankrupt. The country has now passed the critical point in the economic crisis and stabilized the financial system. This was essential to improve the country’s long-term national competitiveness and to restore economic activity. All this has been achieved without any social tensions.

A year ago, the economic situation had not yet stabilized. But now the economic recovery continues and Latvia can focus on targets in the medium term prespective, the Prime Minister said in his speech.

In the same report to the Saeima in 2010, Latvia had behind themselves an 18 percent economic fall and at the same time unemployment rose dramatically. Today the picture is different. This is the result of a substantial fiscal consolidation of LVL 500 million.

Dombrovskis also stressed that Latvia's economic recovery has gained international recognition. It has been particularly apparent in recent days when several rating agencies have raised Latvia's credit rating and outlook.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

NEW UPGRADING FOR LATVIA

2011-03-16T16:27:00.003+01:00

Latvia has got its second international recognition in a few days that the economy is developing in the right direction. Last week Standard & Poor upgraded its outlook; this time credit rating agency Fitch Ratings did the same.

Fitch Ratings has raised Latvia's outlook to positive and assesses the country as "BBB-".

In a statement to news agency LETA Finance Minister Andris Vilks (Unity) says that “Fitch Rating's" decision is a highly important signal for investors and will attract more investment to Latvia's economy. It indicates that the government's policy and decisions are heading in the right direction”.

Particularly the strong signal to foreign companies that it is possible to invest again in Latvia is of tremendous importance. Latvia has also shown that the country is not as dependent on foreign lenders as it was before.

A representative for Fitch commented that "Latvia is making good progress in the country’s recovery from a serious financial crisis". The assessment from Fitch is that Latvia's growth this year will be 3 percent and next year 4 percent.

Prime Minister Valdis Dombrovskis (Unity) underlines in a comment, that this is a further confirmation of the stabilization in Latvia's financial system and the successful policies that have led to the improvement.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ZATLERS SEEKING RE-ELECTION

2011-03-16T15:46:00.002+01:00

For some time there have been speculations about whether President Valdis Zatlers would seek re-election. His term ends this summer.

At a press conference today, along with Prime Minister Valdis Dombrovskis (Unity), Zatlers announced that he is prepared to be available for a second term. He explained that he now intends to begin consultations with political parties and that he will be presenting a program on April 19.

Under the constitution, a Latvian president can be re-elected for a second term. Valdis Zatlers has been the President of Latvia for four years.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

DOMBROVKIS CELEBRATES TWO YEARS AS PRIME MINISTER

2011-03-14T13:52:00.002+01:00

Prime Minister Valdis Dombrovskis (Unity) is right now celebrating two years as prime minister. Compared to many other countries, it is not a particularly long time, but for Latvia the situation is different. Governments have come and gone over the years, which greatly contributed to the political instability that was one of the reasons for the economic crisis that struck so hard a few years ago.

Dombrovskis today says that he continues to work to live up to his promises two years ago.

The past two years have in many ways been marked by the recession, which for Latvia became very deep. Immediately after the new government assumed office in March 2009 amendments were prepared to the budget. After that the two following budgets, both 2010 and 2011, resulted in substantial downsizing.

In an interview with news agency LETA Dombrovskis says that:

"The government has performed its main task during these two years - the risk of the country's insolvency was averted, we have exited the worst part of the economic crisis, and financial and economic stabilization has been achieved. We have returned to economic growth and changed the structure of the national economy significantly, now the driving force behind the economy is production and exports. Foundations were laid for improving the country's competitiveness and sustainable economic growth. These complicated tasks were accomplished without serious social shocks, although it was impossible to avoid several hard decisions regarding the social sector.”

Dombrovskis also says that the Latvian people gave their support for the measures adopted in the Saeima elections last year. On November 3, a government of Unity and the Union of Greens and Farmers was formed.

The last year saw significant structural changes of the Latvian economy. Meanwhile, Latvia made better use of EU structural funds. The goal is to create jobs and boost foreign investments.
Dombrovskis also says that during the past two years the administrative burden on business has been reduced and reforms have been implemented in health care and education.

Highest priority today is to reduce the shadow economy. Dombrovskis stresses that further reforms are necessary for the continued development and growth.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

GROWTH DOWN 0.3 PERCENT 2010

2011-03-11T17:55:00.003+01:00

New figures from the Latvian Central Statistical Bureau are available, giving full year effect of growth. During the year there was a total decline of 0.3 percent.

But an upward swing occurred in the latter half of the year giving a rise in December of 3.6 percent, compared to the same period in 2009. A comparison between the third and fourth quarter show an increase of 1.1 percent.

In 2009 Latvia's economy declined by 18 percent. But the third quarter of 2010 marked a definitive turning point, when the economy began to grow.

News agency LETA shows with numbers, that several sectors rose significantly in 2010; trade (which accounts for more than 15 percent of GDP) increased by 10.6 percent, manufacturing (13 percent of GDP) by 17.9 percent and transportation and communications (11.5 percent of GDP) by 1.6 percent. By contrast, construction (5.4 percent of GDP) declined by 9.6 percent.

The last months of 2010 private consumption increased by 6.5 percent year-on-year. Housing maintenance rose by 6.9 percent, food by 2.9 percent and transportation by 8.1 percent.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

LATVIA’S OUTLOOK BRIGHTER - Standard & Poor

2011-03-09T16:27:00.002+01:00

All hard work in recent years by the government, the Saeima, and not least the central bank begins to bear fruit.

Standard & Poor's Ratings Services (S&P) has now raised the assessment of Latvia's future opportunities from "stable" to "positive".

Not least of importance in this context is probably the recent fiscal consolidation, which very clearly shows that Latvia is well positioned to meet its stated goal of 3% budget deficit in 2014. This reduces Latvia's dependence on funding from foreign lenders.

Meanwhile, S&P also confirmed the long-term assessment BB + and the short-term B.

Finance Minister Andris Vilks (Unity) said that the improved projection “is very important for the potential of Latvia's economic development”.

News Agency LETA writes in a comment that S&P has noted that Latvia's economy is quickly recovering. Among other things, the current account turned from deficit to surplus over the past two years and the trade deficit has fallen by two thirds.

S&P also notes that Latvia's exports in 2010 approached the level that prevailed before the crisis of 2008.

The Finance Ministry notes, that providing the economic stabilization continues and that Saeima provides rapid support for the proposed budget cuts, then Latvia's credit rating will most probably also quickly improve.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

INCREASED INFLATION!

2011-03-08T19:05:00.002+01:00

A few days ago I wrote that the Finance Ministry warned of rising inflation. Now, figures confirm this development.

The latest figures from the Latvian Central Statistical Bureau show an inflation rate of 4% in February, compared with the same month 2010. Prices of goods have risen by 5.7% and services by 0.4%. A month earlier, inflation was 3.7%, year-on-year.

A comparison with developments in the last month shows an overall increase of 0.3%.

There is a risk that inflation will be Latvia's major problem on the road to euro membership. The developments over the last year give proof that the problems with the budget deficit could be handled. In the current situation it is necessary to be very attentive, so that inflation does not soar when the economy picks up.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ESTONIAN GOVERNMENT RE-ELECTED AFTER SUCCESSFUL CRISIS MANAGEMENT

2011-03-07T20:08:00.003+01:00

Yesterday Estonia went to the polls. The result was a clear and indisputable victory for the ruling coalition between the liberal Reform Party and the conservative Pro Patria and Res Publica (IRL).

This in another example of how important it is to take the right decisions in difficult times. Estonia's economic decline was smaller than Latvia's. But an overall decrease of 17% requires a government to live up to its responsibilities. That is what the Estonian government, under Prime Minister Andrus Ansips, has done. Both Latvia’s – October last year – and Estonia’s governments have now been rewarded for carrying out responsible decisions.

The Estonian government has not only been re-elected, it has also gained a stronger mandate. A total of 56 seats - 33 for the Reform Party and 23 for the IRL under the chairmanship of two time prime minister Mart Laar - give the government a solid majority for continued reform.

The Estonian economy is very well managed. In this respect, Estonia is far ahead of the other two Baltic countries. The national debt is the lowest of all countries in the EU. As the newest euro country Estonia is also one a very few countries living up to the requirements of the stability pact.

On the political opposition side the election was a success for the Social Democrats, which increased from nine to 19 seats. In large part this went out over the previously very dominant left-wing populist Center Party, which fell from 29 to 26 seats. At the same time former President Arnold Rüütel’s old Communist Party, as well as the Green Party, lost all their seats. Thus, only four parties will be represented in the newly elected Riigikogu.

The Social Democrats have previously been essentially “social democratic” only by name. Usually, they have been classified as a center-right party. Not least was that the case when current President Toomas Hendrik Ilves was party chairman. This may be different now. The current party leader Sven Mikser was previously member of the Center Party, but broke with the former prime minister, the very controversial mayor of Tallinn, Edgar Saavisar. Now he has also taken over a lot of Saavisar’s voters.

Andrus Ansip has been prime minister longer than anyone else in Estonia’s modern history. He has now been re-elected for the second time. In the current situation, there is no indication that he could not lead the present government for another full term.

The threats that possibly could arise, is that voters will eventually want to see something else. In the present situation it is difficult to see any such options. But what could happen is some kind of alliance-building within the leftist opposition, if the Social Democrats and the Center Party would be prepared to join forces.

A side effect of the election results is that President Ilves probably can expect to get re-elected. In Estonia the president is appointed in an indirect election. With a probable support from both government parties and his own former party the re-election looks like a formality.

THE APPOINTMENT OF A NEW OMBUDSMAN GIVES A BAD AFTER TASTE

2011-03-04T15:39:00.004+01:00

Saeima has appointed a new ombudsman after Romans Apsitis, who turns 72 this year and whose term expired February 28.

There has, as always in Latvia in such contexts, been much speculation about who will be the successor.

Saeima's decisions has been to appoint Juris Jansons, attorney at law and known as the liquidator of the health insurance company Rigas slimokase (RSK).

Jansons seems to meet all formal criteria, and is obviously well qualified for the mission. Thus, no shadow to fall on him! He will from now on be judged on the work he does. However the political management, prior to the appointment, gives a bad after taste, which at worst could be a harbinger of what may come.

Juris Jansons was nominated by the opposition party, the Harmony Center. Thus, there was no majority in the Saeima. The prerequisite for him to be appointed was further parliamentary support. This proved to come from the governing party the Union of Greens and Farmers.

It was exactly here that the political management went wrong. In a nomination procedure like this, the government parties must hold together in order to find a common name!

It's easy to say that what happens once is nothing! And of course, if this does not happen again, it's not a major accident. But if this is a start of a bad habit it could be an extremely bad sign. In Latvia's recent history it is not uncommon that it starts like this and it ends with the resignation of a government.

Elections in October last year gave a clear mandate to the two governing parties, Unity and the Union of Greens and Farmers, to do what was necessary. That creates great demands on all involved which, from time to time, also will lead to friction. But a government must live up to these requirements. Otherwise it will in the long run not be able to fulfill its obligations.

Much work has been done - and Latvia is currently on track - but it is also much that remains. These problems also need a stable government’s attention. It is therefore important that the unfortunate handling of the Ombudsman issue will be a one-off.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

RISK FOR INFLATION - FINANCE MINISTRY!

2011-03-02T13:07:00.002+01:00

For a long time inflation was one of the real problems in the Latvian economy. During several months Latvia had Europe’s highest inflation. When all economic figures fell beginning in autumn 2008 inflation for a long time was none existent.

Now growth is back, and today Finance Ministry is warning for a new inflation. As a low inflation is a pre-requisites for a possible euro entry in 2014 it is necessary to take the issue seriously. In order to comply with the EU’s criteria the inflation level must between 1,5 and 2 percent.

The Finance Ministry is today predicting an inflation of two percent in 2012. The risk is that this could exceed the maximum inflation level according to the Maastricht Criteria.

News agency LETA is today commenting on a Saeima Budget Committee meeting where Finance Ministry State Secretary Martins Bicevskis confirmed the current inflation forecast for 2012. But worth noting is that next year’s budget consolidation measures have not been taken into account in the forecast.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

DISCUSSIONS OF CONTINUAD TRANSIT TO AFGHANISTAN AFTER THE WAR

2011-02-27T11:35:00.002+01:00

Latvia has in recent years played a major role concerning transit traffic to and from Afghanistan. It has not only been about transportation with direct involvement in the war but also goods to build up the society.

During his recently concluded three-day visit to the United States Foreign Minister Girts Valdis Kristovskis (Unity) discussed a continuation of this traffic when the war is over. These discussions were held with representatives of the U.S. State Department.

"Riga is considered to be the main transit place, with best prospects. The United States is working on documents for procurement of goods in Latvia that will be taken to Afghanistan," said Kristovskis according to news agency LETA. But he is aware that there are other countries that are keen to take over the business.

At a meeting with representatives of the U.S. Defense Logistics Agency the foreign minister got impression that the Latvian company's ability to ship not least food and timber to Afghanistan has clearly increased.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

KRISTOVSKIS ON SUMMARIZING VISIT TO THE US – EXTRACTION OF SHALE GAS POSSIBLE!

2011-02-24T18:41:00.002+01:00

At a press briefing today Foreign Minister Girts Valdis Kristovskis (Unity) commented on the results on his recent visit to the US. The visit took place February 19-23 and included several meetings with leading politicians, Secretary of State Hillary Clinton one of them.

Kristovskis informed that one of items discussed dealt with a possible extraction of shale gas in Latvia. This could take place with the support of US companies. In certain parts of the US extraction of shale gas has already started and a lot of studies have been made.

According to news agency LETA the foreign minister said that geological indicators point out that shale gas is ''located under most of Latvia's territory''.

“If detailed geological probes are successful, we will be able to extract this gas from Latvia's territory,'' Kristovskis believes.

BUDGET DEFICIT TO BE EVEN FURTHER REDUCED

2011-02-23T14:58:00.002+01:00

Latvia follows since some years a plan in order to reduce the previously very large budget deficit. According to this the 2010 deficit of 8.5 percent, relative to GDP, would go down to 6 percent this year and to 3 percent in 2012. The intention is to pave the way for euro entry about 2014.

Now the government wants to increase the speed! The budget consolidation so far undertaken takes this year's deficit down to 5.4 percent, which is a dramatic improvement. But the government is not content with this. The idea is to reach down to 5.0 percent this year.

There are clear advantages to this. It would probably make Latvia's credit rating improve. Standard & Poor's rating is still at a level which is just below a recommended level of investment. If this improves so wll the potential for foreign investments, something that Prime Minister Valdis Dombrovskis (Unity) has been discussing with several leading politicians in recent times, last week with Swedish Prime Minister Fredrik Reinfeldt.

A reduced budget deficit would also give Latvia the opportunity to borrow at a lower interest rate. At the same time the country would be seen as safe and predictable. All this is conducive to further investment climate.

This means that there are several benefits if the government can further reduce the budget deficit. Meanwhile, there are also a number of problems. The Finance Ministry has at times been opposed by lenders, when presenting various savings proposals. Thus, the government has got to start over again.

At yesterday's meeting the government agreed on a budget consolidation at LVL 50 million. This is consistent with the lenders' requirements. But the goal is now set at LVL 65 million. In addition, the government expects that the measures taken to overcome the so-called shadow economy would bring the Finance Ministry an additional LVL 12.8 million.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

UNEMPLOYMENT DOWN!

2011-02-22T14:44:00.002+01:00

Swedish daily Svenska Dagbladet today writes that unemployment is going down in Latvia.

During the last quarter of 2010 it came down to 16.9 percent, compared to 18 percent the previous quarter. And more dramatically down from the record level of 20.4 percent in early 2010. All according to figures from the Latvian Statistical Bureau.

People in search of a job in Latvia has fallen from more than 210 000 to around 194 000.

The Swedish newspaper writes about the deep recession in 2009 but also notes that the economic growth during the last quarter of 2010 was 3.7 percent.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

AGREEMENT ON LVL 50 MILLION IN BUDGET CONSOLIDATION

2011-02-21T18:52:00.002+01:00

The government coalition of Unity and the Union of Greens and Farmers has, according to news agency LETA, now agreed on a fiscal consolidation for 2011 of LVL 50 million. Thus Latvia will be able to reach the level that the international donor community has demanded.

The formal decision will be taken during an extraordinary cabinet meeting on Tuesday. Therefore, Prime Minister Valdis Dombrovskis (Unity) has so far not commented on any details.

However, Finance Minister Andris Vilks (Unity) says that the main part is about increasing tax revenues. The coalition has also discussed cuts including in the education sector.

Unity has brought forward the proposal to increase excise duty on alcohol and cigarettes. However, the party has moved away from an earlier proposal to increase the corresponding tax on diesel. Probably the gambling tax will also be increased.

Government coalition has had some difficulty reaching up to the demands for budget cuts of LVL 50 million. Until now, the savings were stopped at LVL 39 million. This is what tomorrow's cabinet meeting is intended to correct.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

SWEDISH AND LATVIAN PM AGREE ON IMPORTANCE OF NORDIC-LATVIAN COOPERATION

2011-02-19T13:42:00.005+01:00

Sweden played a major role during and after the Baltic freedom struggle. Not least, this was clear in relation to Latvia. But in recent years relations have been more strained. That was obvious during the economic crisis and in the last Latvian election campaign.

Many Latvian politicians turned their criticism against the Swedish banks. Opinion polls showed that voters were not as clear in this critique, but instead criticized several of their own politicians.

The time before the election, October 2 last year, there were many comments about Swedish investments solely focused on financial institutions, while investments in industry and enterprises have been much smaller. These investments have often gone elsewhere, not least to Estonia.

Now both the Swedish and the Latvian government have successfully passed the elections. The first initiatives have also been taken to get back to the good relations, which are normal between the two countries, whose capitals are just a little bit more than an hour's flight away from each other.

Prime Minister Fredrik Reinfeldt on Friday met his counterpart Valdis Dombrovskis (Unity) in Riga.

Reinfeldt noted the long and good cooperation between the two countries and pointed to Latvia as a serious and reliable partner. News agency LETA writes that the Swedish prime minister also expressed understanding of the economic situation that Latvia is experiencing, because Sweden was there in the early 1990s. Reinfeldt expressed his appreciation of what Latvia has done to get through the crisis.

Dombrovskis confirmed that Latvia would like to see more Swedish investments especially in export industries. He also pointed out the conditions for good cooperation between the two countries especially in areas such as woodworking, information technology, green technology, transit and logistics.

The Latvian Prime Minister also stressed that Sweden is one of Latvia's main trading partners. According to recent data from the Latvian Central Statistical Bureau Sweden is Latvia's fifth largest export market, while at the same time ninth largest in terms of imports.

The Register of Enterprises show 639 Swedish-Latvian joint ventures registered.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

MURNIECE RESIGNS AS MINISTER OF THE INTERIOR

2011-02-17T17:29:00.003+01:00

Interior Minister Linda Murniece (Unity) has today submitted her resignation. Prime Minister Valdis Dombrovskis has not yet approved it, because he first wants to speak directly with Murniece.

The Interior Minister, who has received a lot of criticism recently, is currently on vacation and will return February 28. For that reason the discussion between her and the prime minister may take a few weeks.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

LVL 39 MILLION IN BUDGET CONSOLIDATION

2011-02-16T11:31:00.002+01:00

International lenders say that Latvia is in need of further budget consolidation of around LVL 50 million. The ruling coalition agreed last week on further budget cuts of LVL 27 million.

News agency LETA writes that the government, consisting of Unity and the Union of Greens and Farmers, now has agreed on budget consolidations for 2011 of around LVL 39 million. The government is also prepared to continue discussions with the international lenders when it comes to the remaining consolidation.

Prime Minister Valdis Dombrovskis (Unity) said at a press briefing that budget revenue will be increased among other thing through efficient measures against the shadow economy, an increased gambling tax and by cutting state administration expenses.

At the same time Union of Greens and Farmers’ (ZZS) group leader Augusts Brigmanis expressed satisfaction over the increased consolidation and underlined that the ZZS had contributed to several of them.

DOMBROVSKIS – BALTIC COOPERATION BASED ON INNOVATION AND SINGLE DIGITAL MARKET!

2011-02-15T11:08:00.002+01:00

A few days ago an informal meeting of the Baltic Council was held in Vihula in Estonia. Prime Minister Valdis Dombrovskis (Unity) talked about the importance of closer cooperation between the Baltic states.

Dombrovskis is looking forward to this by strengthening the innovation potential and promoting different cooperation networks between the three countries.

He also said that Latvia has an ambition to continue cooperation with Lithuania and Estonia in the leading cross-border program "Innovation, Cluster and SME Networks of the Baltic Sea Region" implemented within the framework of the EU Strategy for the Baltic Sea Region.

The Prime Minister also talked about his country’s interest to strengthen the single EU market and develop an effective digital market.

Latvian news agency LETA writes that “the Baltic prime ministers positively assessed the agreement that was reached during the last European Council on the allocation of the European Union's co-financing to the gas terminal project. Dombrovskis pointed to the fact that the construction of the LNG terminal in Latvia would improve the security of energy supply in the Baltic region providing for diversification of gas supplies”.

CLEAR ECONOMIC TURNAROUND LAST QUARTER 2010

2011-02-13T17:53:00.002+01:00

There is a clear trend that Latvia's economy turned upwards in the last quarter of 2011. Recent figures from the Latvian Statistical Office shows that the increase, compared to the same period a year earlier, was 3.7%.

That made the overall decline 0.2 percent in 2010. This should be compared with a decline of 18% 2009.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

BANKING WORLD WINNERS AND LOSERS - WHO'S WHAT AND WHY?

2011-02-11T18:09:00.003+01:00

Swedish daily Dagens Industri wrote a commentary a few ago on the positive reports coming from the big banks on the Swedish market. The tone is a little different now compared to the two last years. All the four largest banks, Swedbank, SEB, Nordea and Handelsbanken, reported big gains. That is obviously a development that is extremely pleasant after a number of difficult years.

Three of the banks have long been present in the Baltic markets, and thereby made losses during the financial crisis. Handelsbanken alone has remained outside. Thus they were classified by DI as "the star of the class".

It could of course be expressed that way. Remaining outside has certainly given short-term gains when the others made losses as a result of the downturn in the economy both globally and in the Baltics. But on the other hand, the one who remained outside was neither present all the years when Estonia, Latvia and Lithuania were built from the ground becoming functioning democracies and market economies. So strong that they made it through the worst depression the world has seen far longer than a generation. Nor was Handelsbanken there to give support to all the companies that built the country and created jobs and prosperity. The good years, when the banks that were there also shared the profits.

Swedbank, SEB and Nordea have in recent years been much criticized for an overly generous lending policy. They have paid a high price for this. Now slowly the economy turns up again. That is clearly the case in the Baltics, and it shows in the banks' reports.

Three banks have been in place in both good and bad times. Early in the crisis, they declared that they would remain in the Baltics. That is great and it honors them and there is reason to rejoice in their good economic reports! But apart from everything associated with temporary economic ups and downs, they have for twenty years participated in creating and spreading prosperity. That is even greater! This means that it is worth considering who really is “the star of the class”!

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

100 DAYS IN POWER – DOMBROVSKIS SUMMARIZES AND LOOKS FORWARD

2011-02-10T15:57:00.005+01:00

The government of Latvia today celebrated 100 days in power. Prime Minister Valdis Dombrovskis (Unity) convened a press conference and explained that the government's plan is to continue all the way to the next election.

That is, as I see it an entirely realistic goal, though not very usual in Latvia. I wrote about this the days and weeks after the election in October. The results were so clear that it created a base likely to give the country a government for a full term.

A few months before the election, I met Dombrovskis in his government office. In the short conversation we had, I said that I thought the goal of the election should be a government lasting a full term. Dombrovskis, who is a cautious man, explained that "that has never happened in the history of Latvia".

No, that is true, but someone must be the first! I am convinced that the current government can succeed, even if the problems they are facing are many. For the political stability and for the continued economic reform process it would indeed be an advantage if Latvia could avoid time-consuming changes of governments and tempo losses in the coming years.

At the press conference today Dombrovskis explained that the tasks ahead are about overcoming the shadow economy, to continue a tough fiscal policy and at the same time make unemployment come down and needs to get better management of state enterprises.

It is also about making public administration more efficient and to upgrade the country's energy policy.

The current government was approved by the Saeima November 3, 2010, one month and one day after the election. It consists of the Unity Alliance and the Union of Greens and Farmers. It has the support of 55 of the 100 parliamentarians.

In about a month Valdis Dombrovskis will be celebrating his two-year anniversary as Prime Minister. He also led the previous government, which took office March 12, 2009.

The current government is the 35th in Latvia's history. This history is of course divided into two periods with a longer break marked by occupation. Since the total is about a period of more than 40 years all recognize that governments usually are not very persistent in Latvia.

Eight of the governments were, during the first freedom time, by the legendary Karlis Ulmanis, (photo above on a statue i central Riga) who also became president and who then disappeared, never to be found, in Soviet captivity in Siberia. Over the past more than 20 years, Latvia has had 14 governments. Three have been led by Andris Skele (People's Party) today in opposition in the Saeima.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ADDITIONAL FINANCIAL CONSOLIDATION WITH LVL 27 MILLION

2011-02-09T22:44:00.002+01:00

The Latvian government has today decided to consolidate the country's budget by an additional LVL 27 million. To achieve further additional savings, as the international lenders have pointed to as necessary, the government will seek further negotiations. The lenders talk about a need for savings on additional LVL 50 million.

Revenues will be boosted by efforts to overcome the so-called shadow economy. This government hopes for financial reinforcements in the order of LVL 12.8 million.

The number of jobs in key ministries will be cut by 10%. It is expected to generate savings in of around LVL 2 million. Meanwhile, the number of employees in areas such as police, border guards, fire and rescue service and probation is proposed to decrease by one percent.

The Ministry of finance also proposes that the reduced VAT on natural gas should be raised from 12 to the standard level of 22%. It would provide additional revenues of LVL 1.6 million.

Government is also proposing the introduction of a separate fee for non-banking companies that provide consumer credit. An initial registration fee for those of LVL 50,000 and then an annual fee of LVL 10 000 would provide the state another LVL 8.3 million per year.

The Ministry has also proposed to raise the gambling tax. However, without mentioning any specific level.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

”EARLY, FAST AND SURGICALLY!”

2011-02-07T19:33:00.003+01:00

Professor Anders Åslund is probably one of the world’s leading experts when it comes to the economic situation in Eastern Europe. Having followed the development for many years professor Åslund, who is a senior fellow at the Peterson Institute for Economic Development in Washington, is commenting on the crises management in an article to the Center for European Policy Analysis.

He is pointing at seven lessons to be learned from the experiences of the Baltic Countries. I will further comment on these in my coming newsletter.

However Åslund is, with reference to Estonia, Latvia and Lithuania, pointing at three key-words for solving a financial crisis: early, fast and surgically! Also writing that for Euro-zone members, where devaluation is no option, the internal devaluation shown by the three Baltic countries could be successful. He is also quoting Walter Bagehot, the founding editor of The Economist: “The greatest pleasure in life is doing what people say you cannot do”.

If you want a free subscription of my newsletter please write to me at per.stenmarck@hotmail.com

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

SUDRABA: THE PRESIDENT SHOULD BE DIRECTELY ELECTED!

2011-02-07T10:37:00.002+01:00

Latvia’s highly respected Auditor General Inguna Sudraba wants the country’s constitution to be amended in order to allow direct presidential elections.

Election of the president will come up later this year. The four-year term for the incumbent president Valdis Zatlers expires in July. According to the constitution the president will be elected by the Latvian parliament, the Saeima.

Sudraba says that "we need a president, elected by the society, by the people. We need to change the constitution. I don't see any other way for the changes to come."

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

LATVIA’S INDUSTRIAL PRODUCTION GREW BY 13.9 % IN 2010

2011-02-04T19:52:00.002+01:00

From a bottom figure the last months of 2009 Latvia’s industrial production started to grow rapidly in 2010. According to data from Latvian Central Statistical Bureau the industrial production grew by 13.9 % during the year.

The Baltic Course writes about this.

This is another figure showing that Latvia is on track again. Seasonally adjusted figures show that Latvia now is close to the same level as during the last months in 2008, when the fall accelerated dramatically.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

HARMONY CENTER STILL MOST POPULAR PARTY

2011-02-03T09:08:00.002+01:00

In a number of polls conducted after the election in October last year, the Harmony Center has resumed the role of Latvia's largest party.

This is also the result in a poll by "Latvijas fakti" published in Diena on Wednesday.

But Harmony Center's support has fallen dramatically since a similar survey in November. At that the figure was 26.6%. Today, the party is down to 19.8%. The reason for the decline is rather unclear.

Meanwhile, the leading government party Unity is almost equal at 19.4 percent. Unity is followed by the other governing coalition party the Union of Greens and Farmers by 14.5%.

The same study showed that the nationalist alliance with All for Latvia-For Fatherland and Freedom/LNNK would get 6% of the votes at an election today. The most significant decline is represented by For a Good Latvia, with the support of just 2.2%.

17% of the respondents said that they had not decided how to vote and 16.5% said they would not vote if there would be an election today. It is worth noting that, contrary to opinion polls in many other countries, these undecided voters are not included in the figures of the parties. For that reason all parties receive lower rates than they could have received at an election.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

DANSKE BANK: RAISED FORECASTS FOR LATVIA

2011-02-02T08:51:00.003+01:00

As Lithuania registered a much higher quarterly year-on-year growth than expected Danske Bank immediately raised the forecasts also for Latvia and Estonia.

The figures for Lithuania were published Friday last week covering the fourth quarter of 2010. They were expected to be around 3 %, but in reality became 4.6 %. Up from only 1.2 % the previous quarter. The figures for Estonia and Latvia, also covering the last three months of 2010, will be published later on this week, but Danske Bank expects the same positive development as in neighboring Lithuania.

“The Baltic economies are recovering from the recession relatively rapidly”, the bank writes in an analysis, and also notes that the Baltic trio are now beating other nations out of the crises.

Danske Bank also notes that the recovery so far has been driven mainly by exports. But it now also expects an increasing domestic demand to play a more crucial role in the further recovery.

However all three countries face plenty of future challenges. Both Latvia and Lithuania have to look forward to a painful fiscal tightening in order to take down the budget deficits. All three countries also have some of the highest unemployment rates within the EU.

But the conclusion from Danske Bank is that, contrary to many other European countries, the Baltic trio can say “with a reasonable degree of confidence that things are looking up”.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

KARINA PETERSONE NEW DIRECTOR OF THE LATVIAN INSTITUTE

2011-01-31T17:32:00.003+01:00

Since a week Ms. Karina Pētersone is the new director of the Latvian Institute. Thus she succeeds longtime Director Ojars Kalnins, who in the autumn elections last year became a member of the Saeima.

Ms. Karina Pētersone is an experienced and since many years well-known and respected politician in Latvia. From 1998 to 2002 she was Minister of Culture. She was also Deputy Speaker of the 9th Saeima. Ms Pētersone belongs to the current opposition party, Latvia's First Party/Latvian Way (LPP/LC).

The Latvian Institute was founded by the Latvian government to give a broad picture of Latvia, when it comes to social issues, culture and history. I have earlier written about the importance of the institute. Not least has Latvian Institute played a significant role in recent years, as a balancing force when the international media image has not always been particularly positive. In recent years it has also been struggling with limited financial resources, as a result of the necessary cuts in the Latvian budget. But after some tough years the business seems to be secured.

An important step for Ms. Pētersone was to be supported by Foreign Minister Girts Valdis Kristovskis. In an comment to the Baltic Review, he says that “Pētersone among all other candidates undoubtedly was the most appropriate one for the position, taking into account the criteria for the position, the strategic vision for the institute submitted by her for the tender, and her experience”.

The new head of the Latvian Institute, believes that it is now the right time to give a new image of Latvia: “Latvia is a success story of how we managed to cope with the deepest crisis. This has to be told to others, even though people in Latvia will not feel stabilization and the end of the downturn for another 1.5 – 2 years. Besides, we also tend to trust more what others are telling us than our own confidence in our professionalism, talent and ability to work hard.”

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

THE NUMBER OF FOREIGN CITIZENS INCREASED IN LATVIA

2011-01-27T17:23:00.002+01:00

As I have previously written about Latvia's population continued to decrease in 2010. However, the number of foreign nationals, residing in the country, increased with 10%.

News agency LETA writes about this refering to recent figures from the Citizenship and Migration Affairs Office.

In total just over 50,000 people with temporary or permanent residence, lived in Latvia last year.

Of these, the largest group were Russian citizens, 36 700. Second largest were the Lithuanians 3.700. After that came Ukrainians, 3.200, Belarusians 2.000 and Germans 1.200.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

FROM BANKRUPTCY TO EUROPEAN ROLE MODEL

2011-01-26T20:25:00.002+01:00

Just over two years ago, Latvia was on the verge of bankruptcy. An international bailout became a necessary resort. But at the same time the lenders, the IMF, the EU and a number of individual countries, demanded widespread budget cuts. Latvia has since then fulfilled this policy. Until today, the budget cuts amounts to 16% of GDP.

This is probably more than any single country has conducted in such a short time. In a Europe where the crisis now has spread from Eastern Europe to the so-called PIIGS countries, more and more look at Latvia as a role model.

BBC News' Lesley Curwen interviewed Valdis Dombrovskis (Unity), the principal architect behind the economic restructuring policies. The entire interview can be heard at this link.

This clean-up policy is continuing. The interview shows that the budget deficit is now down to 5.4%. It has been a deliberate policy to move forward quickly. Dombrosvskis says in the interview that ”one of the lessons we learned during this fiscal adjustment that it's better doing fiscal adjustment quickly”. This means that the remaining deficit is lower than the level agreed. It also means that Dombrovskis can say in the interview that ”the worst is over”.

This puts Latvia well in line with a possible euro entry on 2014th

Meanwhile, unemployment is a major problem. With an unemployment rate of 16% Latvia has second highest in Europe. Only Spain has a higher figure.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

UNIVERSITIES HIT HARD BY THE CRISIS

2011-01-24T11:17:00.002+01:00

A report from the European University Association(EUA) shows that universities across Europe have been hit hard by the cuts made during the economic crisis. The risk is obvious that a number of countries will make losses by teachers and researchers moving to universities with better economic conditions. That will in a further step involve the students also looking at universities in other countries. Not least, by taking advantage of the various EU-students programs.

Latvia is the country that in general terms had the most extensive cuts. It has also affected the academic world. 2009 the reduction in funding for state universities was 48%. It was followed by a further cut of 18% in 2010. Of course, this does not go unnoticed.

The Latvian figure is clearly the highest among all EU member countries. But the vast majority of all 27 countries have been forced to make cuts.

For Latvia, a major reorganization of the universities is necessary. The many, often very small, universities must be merged to achieve a higher academic standard.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

BUDGET DEFICIT TO BE FURTHER REDUCED!

2011-01-21T18:35:00.002+01:00

There is a long-term goal to reduce Latvia's budget deficit. The plan has so far been followed very carefully. The budget for 2011, adopted a week before Christmas, give a deficit for the current year of 6% of GDP. This is completely according to the plan drawn up in cooperation with the major lenders, particularly the IMF.

Now, however, Finance Minister Andris Vilks (Unity) is prepared to go a step further. By the end of the current year, Latvia’s budget deficit will come down to 5%. He announced during a speech at "the Euromoney Central and Eastern Europe Conference" in Vienna.

Vilks said that Latvia will continue to take further measures in order to strengthen the country's fiscal discipline. This is not only about direct budget cuts, but also to implement the necessary structural reforms. By forcing the consolidation process, the intention is to make Latvia member of the euro system in 2014.

The stringent fiscal discipline and the emphasis of structural changes were the key features of Vilks’ speech. Economic analysts are now very happy with the Latvian government's fiscal consolidation. But at the same time there is also increasing criticism that too few long-term changes are being implemented. Recently, this has been heard both from the IMF and the Latvian employers' organizations. With his speech Andris Vilks wants to show that he has understood the message.

But in his keynote address the Finance Minister underlined that Latvia is rapidly recovering from the financial crisis and that this depends on a number of important decisions taken in recent years. He stressed that "Latvia is back on the road".

At the same conference Central Bank Governor Ilmars Rimsevics underlined, that the export sector is driving the positive development. The manufacturing industry has regained its competitiveness and increased its market share in international markets. He argues that this shows that Latvia took the right path out of the crisis. It is worth emphasizing that Rimsevics always opposed a devaluation of the Latvian currency, and also, from his position in the Central Bank, was prepared to take the necessary measures.

font size="1">(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

CITADELE BANKA MAKING REPAYMENT TO THE STATE

2011-01-20T11:13:00.003+01:00

When the Latvian bank Parex Banka went bankrupt in autumn 2008 the government was forced to take over, thereby saving the banking system. This made the financial crisis acute and Latvia was forced into a comprehensive international loan.

Thereafter, the bank has been reconstructed. Most of the assets have been transferred to a new bank called Citadele Banka.

The bank is now making repayments to the Latvian state. In September 2010 was one such. It amounted to € 17.3 million. Two days ago a new repayment was made to the Finance Ministry. Thus, the second within five months. This time, it amounted to € 46.6million.

The fact that the repayment was made six months ahead of schedule shows that the reconstructed bank is developing well.

Juris Jākobsons, Chairman of the Board, said to The Baltic Course: “One of our main goals is to repay the funds invested by the State at the earliest convenience and we are approaching this goal purposefully”.

He refers to a professional work of all employees in the bank and the loyalty of customers during a very difficult time. That has made it possible for the bank to attract significantly more deposits than was planned.

Citadele Banka is today the largest bank in Latvian ownership. It has also offices in other countries. After the last repayment € 139.8 million remain for the bank to pay to the Latvian state.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

NO RESIDENCE PERMIT TO LUZHKOV

2011-01-18T21:17:00.003+01:00

Yuri Luzhkov was dismissed as Moscow's powerful mayor in September 2010. He had during several years served many masters and always made himself known for his blunt style and his categorical statements. During Soviet times, he belonged to the Supreme Soviet. He was appointed mayor already by Boris Yeltsin in 1992 and has subsequently been re-elected several times.

Now however, he has fallen out of favor with the current Russian leadership. The allegations are many and among them – which is not too unusual for Russia – also including corruption. Luzhkov knows that in Russia the step from power to a dungeon in Siberia is not far. There are numerous examples of that in the country's long history. Therefore, it is a natural self-preservation when the former mayor prepares to move away from his own country.

Among Yuri Luzhkov’s many categorical statements have been some very disparaging about Latvia, which always seemed to be his very best peeve. In spite of that he is now trying to exploit a loophole in the Latvian law, which may lead to residence ship for those who are willing to make financial investments in the country. That is about as absurd as if Fidel Castro would seek political asylum in the United States.

Latvian Interior Minister Linda Murniece (Unity) has decided to put a stop to this. That she can do by bringing up Luzhkov on the list of persona non grata. Such persons have no right to enter Latvia. Being on that list it does not matter that Yuri Luzhkov has invested LVL 200,000 (€ 285,000) in Rietumu banka. It is obvious that Murnieces, and thus the governments, measures are entirely logical.

However it is still entirely possible that the last word has not yet been said. Luzhkov could still travel within the EU, since he is not on the corresponding Schengen blacklist.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

INCREASED TOURISM TO EASTERN EUROPE

2011-01-17T15:25:00.003+01:00

There are many indications that travel to Eastern Europe will increase dramatically in coming years. Many of the countries are still perceived as relatively cheap to visit, while there are also more and more interesting destinations.

As an example the web-page PR-USA.net writes about Ukraine and the fact that the completely destroyed nuclear reactor at Chernobyl now is a possible tourist attraction, 25 years after the accident, in a situation where it is considered safe to travel in the area.

For many the Eastern European countries are still unexplored. Others have been there once or several times, but still believe that there is much left to visit.

Latvia and other Baltic countries probably belong to this category. The three countries were among the first where tourism was opened up in quite a large scale. Riga is the big Baltic city with a varied selection that appeals to many different categories of visitors. Many tourists, both from Europe, the US and parts of Asia have now visited the capital of Latvia. Now it might be interesting to see some of the other towns or the beautiful countryside. Or how about a trip to Latvia's many castles?

52 percent more were searching for trips to Eastern Europe in 2010 than in 2009. It is a figure that is expected to grow over the next few years, probably as a result of the fact that the economic crisis is beginning to slow down in this part of Europe. Not least in Latvia where the recovery has gained momentum.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

INCREASED SURPLUS IN CURRENT ACCOUNTS

2011-01-14T18:24:00.003+01:00

The current account, which roughly is the difference between what a country produces itself and what it uses, has long been one of Latvia's biggest problems. The deficits have been very large and greatly contributed to the country's economic problems.

The government is now implementing structural changes in the Latvian economy. The clear intention is to boost employment, increase foreign investments in the country and thus produce more goods and services. Not least, this will help to increase the exports.

November is the last month where it is possible to see reliable statistics. And during that month it is obvious that the current account surplus, which started to develop earlier in the year, has further increased. Current statistics from the Bank of Latvia show a surplus of LVL 36.1 million. This compares to LVL 28.7 million in October.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

VILKS: QUICK RECOVERY IN ALL THREE BALTIC COUNTRIES

2011-01-13T11:21:00.003+01:00

The finance ministers of the three Baltic countries meet regularly. The last meeting was in Riga Tuesday this week. It was mutually noted that the economic recovery is progressing rapidly in all three countries. All three have laid a solid foundation for further development, not least by a responsible financial management.

The Baltic Course, writes about the meeting that Andris Vilks (Unity) hosted and where also the Lithuanian and Estonian finance ministers, Ingrida Simonyte and Jurgen Ligi were present.

All three stressed the importance of further reforms and to always think and plan in the long-term perspective, not least in order to maintain fiscal discipline.

Estonia has a balanced budget and the EU's lowest national debt. This means that Estonia is in a Baltic division by themselves. That created the opportunity for euro membership January 1, this year.

Latvia and Lithuania are both in a period of substantial fiscal consolidation. For both it is about preparing the 2012 budget with a deficit of not more than three percent. In the best case scenario that could lead to euro entry in 2014.

Andris Vilks stressed that the three ministers discussed issues of common interest, in addition to budget also tax policies and EU structural funds.

The finance ministers meet regularly. Next time it will be in Lithuania. Vilks was satisfied with the common positive development and hoped that this would be even clearer at the next meeting.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

BIG DIFFERENCES BUT ALSO SIMILARITIES BETWEEN PORTUGAL AND LATVIA

2011-01-12T14:13:00.002+01:00

Today, the Portuguese are under fire. And it seems that the country has passed the first test. Today Portugal has sold government bonds to what is estimated as high but still acceptable interest rates. The market seems to be positive, at least temporarily. We can be confident that it will require more.

The crisis has spread like wildfire across Europe. It has almost the character of a grass fire, which seems inevitable and it is extremely difficult to stop the spread. What began in some of the EU's new eastern member countries, such as Latvia and Hungary, spread to neighboring countries but is now, essentially, most active in other parts of Europe.

Today one might say that the acute fire is over in Eastern Europe. As I wrote yesterday, the growth will start to gain momentum in countries where the downturn hit the hardest; in Latvia and Lithuania.

It does not mean that the danger is over. The burning could come back and strike at both old and new crisis countries. Therefore, politicians and central banks have to act in both the short- and long term perspective. The deficit must be reduced to manageable levels; in this respect Latvia is seen as a role model for other countries affected by the crises. Structural changes are prerequisites in order to build new export and thus improve the current account balances. In this perspective, it is also about the next generation, who must be motivated to stay or come back.

There are obvious differences between the various crisis countries. Portugal has not, like Greece, cheated with the bookkeeping. Neither has the country had a trigger effect of a bank gone overboard, such was the case with Latvia. But there are also similarities, and related problems, that have to be tackled either individually or jointly.

Latvia and Portugal, for example, have both been hit particularly hard by "brain drain" over the last years. The two countries have lost many well-educated, young and motivated people.

In the short time this may be useful for both countries and for young people. The countries need to think about what went wrong, and what could be changed. That is an important process. Young people grow and develop in a new and inspiring environment. And indeed - very clear, this applies to Latvia - they often earn more money than they would have done back home. In many cases this is the income the family home in the Latvian countryside are living from in these difficult times.

But it is important that this period does not last too long. In my latest newsletter I developed that “brain drain” eventually must turn into a "brain gain". Young people, at least most of them, must get the incentives to return back home.

It will require a lot, and this is one of the most important steps to take when the acute part of the crisis is over.

One of the most important measures is about changing university education in Latvia. The result of the diversity that the many small universities are giving provide an academic level that is, by international standards, much too low. Nevertheless, any government that sought to implement a change has encountered much resistance. It may not prevent the present government from doing what is necessary. In the same way as they do the economic changes that are necessary.

There are international rankings of universities. If you want to find a Latvian one you must do two things. Make sure that you have plenty of time! If not start looking from the bottom!

There are great young people in Latvia. They must be given the opportunity to grow and develop in their own country. And those who have moved in recent years must get much better incentives to come back. To lift the academic standard to a significantly higher level must be one of the major tasks in the near future.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

FIRST SIGNS OF SLOWLY RISING INFLATION

2011-01-11T20:54:00.002+01:00

Consumer prices in Latvia fell by just over one percent in 2010. However there is now evidence to suggest that prices may begin to rise again, despite the fact that domestic demand remains weak.

The latest economic figures from the Latvian Statistics Office show a decline in 2010 by 1.1 percent compared to 2009.

What makes analysts now beginning to see an upturn in inflation is the fact that the figures in December, year-on-year, were 2.5 percent. The upturn is visible when compared with the same figures for November, when they were 1.9 percent also seen on an annual basis.

Another reason why inflation is now likely to start increasing is the raise of the VAT from 21 to 22 percent, which took effect from January 1.

A comparison with neighboring Lithuania show that the two countries are developing in a similar way. Also Lithuania had a significant increase of consumer prices when comparing figures from November with the corresponding figures for December.

In many ways the two countries are following each other. No other countries in the EU fell, in economical terms as sharply as Latvia and Lithuania in 2009; 18 respectively 15 percent. Both are now also showing clear signs of a recovery, despite high unemployment rates.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

LATVIA EARN MONEY ON NON-MILITARY TRANSPORTATION TO AFGHANISTAN

2011-01-08T20:14:00.002+01:00

Latvia is a leading country when it comes to transit traffic of goods. For some time now it's about non-military transport to Afghanistan. In 2010, there was a threefold increase over the Port of Riga to a total of 15 000 TEU containers.

According to reports in The Baltic Course the total revenue was around LVL 5.25 million in 2010.

News agency LETA writes that Latvia has been earning € 500 for each container that was transited through the country. Most were transported by rail to the U.S. troops in Afghanistan. A small amount went by road.

This business has been running for some years. The first non-military transport to Afghanistan began in February 2009. In 2010 the business has increased now that other countries, UK, Belgium, Spain, Sweden and Norway, also started to ship products the same way.

In the near future there are plans also to start shipping in the reverse direction, meaning from Afghanistan to Latvia, and from there to various destinations.

To serve as a transit country, and make money on this, is an old tradition in Latvian. The business has in recent decades not been at a very high level. Latvia's position, as a bridge between East and West in Europe, and with a fairly well developed infrastructure, is making the country well suited for developing these activities even more. It requires a continued investment in road and rail network across the country. Improved relations with Russia would in the context also be of great importance.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ZATLERS NOT YET PREPARED TO SAY WHETHER HE SEEKS RE-ELECTION

2011-01-05T18:29:00.004+01:00

Latvian President Valdis Zatlers has a successful state visit to Russia behind him. Relations between the two countries can probably be said to be better than in many years.

Zatlers term ends in July this year. At that time he has been president for four years and may, if he so wishes, seek re-election for a new four-year period. At a meeting with journalists today, he received questions about his readiness to stand for re-election.

"Everything will be done in accordance with the law, and when candidates have been nominated, I will answer the question," Zatlers said to news agency LETA. "Follow the events and you will get answers to your questions".

Prime Minister Valdis Dombrovskis (Unity) said that he believes that Zatlers opportunities are fairly good. He also says that the issue will be discussed in the near future both in Unity and in the ruling coalition.

It is probably a fairly general assessment that the president has strengthened his position in the latter part of the term. Zatlers had relatively little experience of political work when he took office, which was obvious. He also got a difficult start. But Valdis Zatlers has since grown with the task and seen from the perspective of an outside observer the President is today doing a very good job.

He has acted in an impressive way in connection with changes of government. During the financial crisis, he made clear demands on the government to act. The recent state visit to Russia must also be seen as a success.

The presidential mandate expires July 7 this year. Latvia has indirect presidential election. This means that it is the Saeima, which appoints the president. In accordance with the Presidential Election Law any citizen who is over 40 years is eligible. However, Latvians with dual citizenship could not be appointed. In Latvia, it is quite a few who have citizenship also in another country. A president is appointed for a term of four years and cannot be president more than eight consecutive years.

Saeima must hold a separate election session at least 30 days before the end of the term of office. This means that the last day to elect the president will be June 8. The decision is made in a secret ballot. To be elected a person must have the support of a majority of the votes and at least 51 of the Saeima 100 members.

At the next session the president swears an oath in which he or she promises to dedicate all his work to the welfare of the Latvian people. The president must also pledge that in everything he does comply with the Constitution of Latvia and the Laws of the State.

As stated on several occasions during the term of office, the president has substantial powers at the time of a government resignation and a new prime minister will be appointed.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

PM DOMBROVSKIS IN NEW YEAR ADDRESS: "LATVIA CAN!"

2011-01-03T14:05:00.002+01:00

In his televised New Year address to the Latvian people, as reflected by the news agency LETA, Prime Minister Valdis Dombrovskis (Unity), tried both to explain that the difficult economic measures are not over, but also to show what actually could be achieved, speaking in almost Obama stile emphasizing the words "Latvia can!".

"We know full well that there are more challenges up ahead. The new year will require much patience not only for the government but each individual”.

And he continued by saying:

"I urge you at this moment to keep and hold in your mind two important, powerful and magical words - "Latvia can!".

"Latvia can!" is our inspirational success stories, a project launched in 2008 when the first painful tumbles occurred, which brought a flood of pessimism. Nevertheless even then many businessmen, scientists, artists and specialists showed that they can carry Latvia's name in the world with pride."

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ESTONIA'S SUCCESS PAVES THE WAY FOR LATVIA

2010-12-31T14:49:00.006+01:00

On January 1, Estonia will join the euro system as its 17th member. It is well deserved and no coincidence. There is every reason to congratulate them. Estonia has for years managed their finances with great care. They were also much better prepared to tackle the financial crisis than the other two Baltic states.

At the New Year's Eve celebrations in the Estonia Concert Hall in Tallinn Latvian Prime Minister Valdis Dombrovskis (Unity) will attend by invitation of his Estonian counterpart Andrus Ansip. The economic policy of the Dombrovskis' government, during his nearly two years as Prime Minister, has to a large extent the economic policies of Estonia as a model.

Latvian Finance Minister Andris Vilks (Unity) gives the same picture in an interview. He says that “the introduction of the euro in Estonia will foster long-term economic development in the entire region”.

The budget just adopted by the Latvian Saeima could be seen as step number two. The first step was taken by limiting the 2010 budget deficit to 8.5 percent of GDP. The second by further reducing the deficit to 6 percent in the 2011 budget. The third step is supposed to come one year later by reaching down to a deficit of 3 percent. If it succeeds Latvia will be well in order to reach the Euro around two years later, in 2014.

Andris Vilks said in his comment to news agency LETA: "The introduction of euro in Estonia is an important event to the whole Baltic region. It will provide a good basis for the long-term economic development, and also stimulate Latvia to balance its expenditures with revenue in order to join the eurozone in the near future. At the moment it is necessary to remember that it is only possible to join the eurozone if certain criteria are met, and Latvia is on its way to accomplish it by 2014. Therefore clear progress towards balanced budget, price stability and reasonable state borrowing is a prerequisite for long-term stability and the development of Latvian economy.”

According to the Minister of Finance, Latvia could benefit from Estonia's euro entry for two reasons:

1st It's about learning from Estonia, which has shown that clear and long-term goals provide macroeconomic stability. This has paved the way to the EU's common currency and could do the same for Latvia. Estonia has shown that this can be achieved even in a time when others are suffering from the financial crisis. Thus, Estonia is a good example to follow.

2nd Latvia can also benefit from the Estonia’s practical experiences of introducing a new currency.

Latvia's National Euro Changeover Plan has been approved by the government. It assumes that everyday life in Latvia will not be affected.

ZATLERS VISIT TO RUSSIA CLEAR SUCCESS

2010-12-30T12:59:00.004+01:00

When afterwards trying to summarize the results of the state visit to Russia by President Valdis Zatlers, together with Foreign Minister Girts Valdis Kristovskis (Unity), it appears as a clear success.

First of all because it actually became a reality! It is certainly not very often that the relationship between a Baltic country and Russia are such, that even conversations are normal at this level. President Zatlers' visit may also open up opportunities of improved relations for Estonia and Lithuania. Apparently there is now a mutual interest between Russia and the Baltic countries. The current Russian president Dmitry Medvedev has shown a new kind of willingness to find solutions to common problems than his predecessor.

But it is also important to note, that the visit created a realization that the two countries have common problems, which they could only manage together. It's easy as an outsider to say that history is history and should therefore not be allowed to affect relations. But reality is not that simple! Decades of occupation - I find no other useful words to describe the Soviet Union's assault against the Baltic peoples - cannot be ignored. The unresolved issue has been a major obstacle to the two people’s relations, since the regained independence some twenty years ago. When the two presidents now agree to allow historians to go through all the material, and try to come to some kind of scientific conclusion, this is a breakthrough and an important step in the right direction.

The two presidents also had the opportunity to discuss business exchanges. For Latvia, this is of paramount importance. Although more and more of the country's business relationships go west contacts with Russia still play an important role. The opportunities to develop Latvia as a transit country, and thus as a bridge between East and West, are also important to focus on.

Both Zatlers and Kristovskis mention in their comments that they see the trip as a success. They agree that both countries will benefit from improved relations.

On January 16, Foreign Minister Kristovskis will present a foreign policy report to the Saeima. This will further develop the state visit. Mr. Kristovsiks will then initiate a foreign policy debate in the Saeima on January 27.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

DOMBROVSKIS: LATVIAN ECONOMY JUST OUT OF THE RED IN 2010

2010-12-29T10:45:00.002+01:00

Latvia's economy seems to have made it just out of the red in 2010. Prime Minister Valdis Dombrovskis (Unity) was commenting about this in an interview with the Baltic News Service.

"The economy has largely remained flat”, he says but also rejoices about the fact that Latvia is now out of the deepest recession that the world has seen in many decades.

Latvia began to slowly get out of the recession during the first quarter of this year, after two consecutive quarters of growth. The first three months of 2010 yielded a growth of 0.3 percent, compared to the same period a year earlier. During the period April-June growth was 0.8 percent and in the third quarter 0.9 percent.

No country fell as dramatically as Latvia during the recession. From the autumn of 2008 and through 2009, it was a total of 25 percent. That makes the recovery in 2010 so impressive. In the light of the economic crisis, it was a very impressive victory that the Dombrovskis coalition won in the elections in early October.

"In 2011 we expect a growth of three percent. That means that we will gradually begin to recover from the crisis”, Dombrovskis said.

"What is important is not just that we have returned to growth but also the changes we have made in the economic structure. It is now based much more on production and exports".

The budget was adopted by the Saeima just before Christmas. However it has to be monitored and slightly revised. IMF talks of further cuts at LVL 50 million. It is a job that starts in early 2011.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

THE NUMBER OF LATVIANS CONTINUES TO DECREASE

2010-12-28T20:24:00.003+01:00

For many years, the number of inhabitants of Latvia decreases. The total number of inhabitants in the country in 2009 amounted to just under 2.3 million. Of these, 59 percent, or around 1.3 million were Latvians, while 28 percent were ethnic Russians.

Recent figures from the Latvian Central Statistical Bureau, reported in Latvians Online, show a continuing downward spiral. The population has declined by a further 19 000 in 2010. That is an even more pronounced decrease than a year earlier. The reason is a combination of continued emigration and lower birth rates. Preliminary figures indicate a total population of 2 229 000.

According to figures from the Office of Citizenship and Migration Affairs (OCMA), the number of emigrants in 2010 may be as high as 10 000. It is thus much more than the 7400, which left Latvia in 2009. At the same time immigration has largely subsided, probably mainly as a result of the economic crisis.

Birth rates increased slightly during the years 2004-2008, but have now fallen for two consecutive years. Probably the figure for 2010 will be just under 20 000. The number of deaths is approximately the same as last year, around 29 000.

In a longer perspective, the figures are worrying. As a percentage of the population, the number of ethnic Latvians has increased since freedom was regained. Twenty years ago, Latvians were close to becoming a minority in their own country. This trend has reversed. But in real terms, the number of Latvians has been going down for many years. Today’s figure is more than 150 000 less than the number of Latvians living in Latvia in 1935. Together with Estonia, Latvia is likely one of the few European countries with lower population today than before the Second World War.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

2011-BUDGET ADOPTED BY SAEIMA

2010-12-22T19:20:00.003+01:00

The budget for 2011 has now been adopted by the Saeima, according to the time table. The decision was taken by the Latvian Parliament by a 54 votes to 38. The votes followed party lines. That is to say it was the government parties' representatives, from Unity and the Union of Greens & Farmers, who voted in favor of the budget.

Prime Minister Valdis Dombrovskis (Unity) commented by saying that it is a great advantage that there is a workable budget already from January 1. He expressed gratitude to the Saeima members following the necessary timetable.

The international lender’s community have, as I've previously written about, presented its views on the changes, and thus expressed support for further consolidation of the budget. Dombrovskis says that talks on this are ongoing and that this is a high priority for the government right after New Year. The Finance Ministry is already working on a number of proposals.

Dombrovskis admits that it is necessary to take into account the lenders' views of both the size of budget cuts and where they should take place. He now seeks a consensus on these issues within the government.

At the same time Finance Minister Andris Vilks (Unity) says that further cuts must be accompanied by structural reforms in health, education and in the social sector.

He also says that the decision on this must come as early as the first quarter of 2011. However, some measures could come into force only during the second half of the year. However, it is too early to say how much of the fiscal consolidation that could occur through savings and how much that must be implemented by revenue increases. This is something that the government coalition will have to decide in a consensus, Vilks said.

The budgeted deficit for 2011 is 4.5 percent, lower than earlier estimates. Revenues amount to approximately LVL 4.2 billion and the expenditure to almost LVL 4.8 billion. This puts Latvia well placed to cope with the next budget target, at three percent of GDP in 2012. This in turn will lead towards a possible entry into the euro around 2014.

Inflation is forecasted at 1.1 percent for 2011.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

MEDVEDEV & ZATLERS AGREE ON JOINT COMMITTEE OF HISTORIANS

2010-12-20T22:26:00.003+01:00

When the two presidents Dmitry Medvedev and Valdis Zatlers met today in Moscow once again historical issues that so long have divided Russia and Latvia was on the agenda.

“There are complicated pages of history in relations between Latvia and Russia, however, their discussion belongs to the academic level and not between politicians”, Russian President Dmitri Medvedev declared at a press conference according to Latvian news agency LETA.

Both presidents have agreed to establish a joint Committee of Historians, whose task is to discover what actually happened, not least during and after the Second World War.

This is an interesting development of the issue. When I had the opportunity in February to discuss the matter with the then Foreign Minister Maris Riekstins , he had come to the same conclusion of having “a group of Russian-Latvian historians” trying to get around the issue. Riekstins said he had proposed such a solution when he first met with his Russian counterpart Sergei Lavrov. The Russian Foreign Minister had seemed to favor the idea, but then had nothing further happened.

Medvedev is clearly a different politician than his predecessor, current Prime Minister Vladimir Putin. Therefore, it is positive that the question of history can be taken forward before the next Russian presidential elections.

The press conference today demonstrated a new Russian openness. Medvedev used conciliatory words saying that “there will always be historical events that will be complicated, but this refers to many other countries as well”.

At the meeting between the two presidents Dmitri Medvedev was invited to visit Latvia, a country which he admitted that he had never visited. When asked under what conditions he would accept the invitation, the Russian president said that the new tone between the two countries "would be enough for the visit to take place. Especially because there is much to talk about and see."

Valdis Zatlers comment after the meeting was in the same direction when he stated that ”Russia's tone has changed”.

President Valdis Zatlers state visit to Russia will last until 22 December. As I have mentioned earlier it has three key priorities; political dialogue with Russia on various matters, the development of economic relations and strengthening the basis of intergovernmental agreements.

LATVIA HAS EU’S SECOND HIGHEST EXPORT GROWTH

2010-12-18T18:41:00.002+01:00

After the first nine months of this year, Latvia has the second highest export growth in the EU. According to EU statistics agency Eurostat, exports increased by 29 percent during this period. On the whole it was an extremely successful period for the Baltic countries. Estonia and Lithuania were only marginally worse. Both increased during the same period with 28 percent.
This can be read about in The Baltic Course .

The only European country which grew more was Bulgaria with 33 percent. One country registered a decrease, Luxembourg by 4 percent.

During the same period Latvia's imports increased by 18 percent, only the thirteenth fastest growth in the EU. Thus the trade balance has improved most significantly during this time. The total trade deficit narrowed to € 1 billion from € 1.2 billion a year earlier.

During the same period, Lithuania's imports increased by 29 percent and Estonia's by 23 percent.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

LENDERS WANT TO SEE FURTHER LVL 50 MILLION IN STRUCTURAL CHANGES

2010-12-16T16:52:00.003+01:00

The major lenders, representing the IMF and the EU Commission, have been in Riga and held talks with representatives of the government. Both sides afterward said that they held constructive talks.

The lenders, however, believe that further budgetary reinforcements are necessary in order to achieve the goal set forward for the 2011 budget. For that reason they want to see additional structural measures of around LVL 50 million.

News agency LETA reproduces an extract from the joint declaration:

"Program partners, including the EC and the IMF, agreed with the Latvian
authorities in November that the 2011 budget should include LVL 280 million
high-quality measures that will deliver lasting deficit reduction, sufficient to
bring the general government deficit below the program's 2011 ceiling of 6
percent of GDP. The agreed adjustment would also keep Latvia on track to meet
its medium-term goals of stabilizing public debt and reducing the 2012 general
government deficit significantly below 3 percent of GDP, in line with the
government ambition to adopt the euro by 2014 while promoting balanced growth”.

"The draft budget as approved by the Latvian government and submitted to
the Saeima has made clear progress towards this goal. However, a few key issues
remain open. The Fund and EC teams estimate that additional high-quality
structural measures of at least LVL 50 million will still be needed to achieve
the agreed adjustment in 2011," the statement reads.

IMF and EU Commission also reiterates what they have previously stated about maintainin sufficient social resources and money for public works jobs and job training, especially in a situation of high unemployment.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

THE PRESIDENT CONDEMNS THE VANDALISM OF THE LIPKE MONUMENT

2010-12-14T21:03:00.004+01:00

Vandalism has been committed against the monument dedicated to Zanis Lipke. News agency LETA reports in this.

The smearing was done with white paint. A criminal investigation has been initiated. This is the second time in only a few weeks that vandalism of a similar kind has been committed. On December 8 vandals desecrated 89 tombstones at the New Jewish Cemetery in Riga, painting white swastikas on them.

"Zanis Lipke is a person who deserves people's admiration, affection and respect. The act of vandalism is completely contradictory to all these values and therefore must be strongly condemned”, President Valdis Zatlers said in a comment.

Also Minister of Foreign Affairs Girts Valdis Kristovskis (Unity) strongly condemned the vandalism.

Zanis Lipke was a Latvian who saved many Jews during the Second World War. The monument commemorate the entire Lipke family; Zanis, who was born in 1900 and passed away May 14, 1987, his wife Johanna and their sons Zigfrids and Alfreds. Together they rescued several dozens of Jewish people during the war.

On a plaque outside of their house the following words could be read:

"In this building lived righteous of the world Zanis Lipke, his wife Johanna, their sons Zigfrids and Alfreds. Illumined by divine light, they extended a hand of rescue. 1941–1944."

For his heroic deed Zanis Lipke was granted the status of “the Righteous among Nations”.

On a medal granted to him by the state of Israel the following words are mentioned:

“He who saved the life of a man, has saved the whole world”.

The documentary film "Zanis and Others" is the first part of a trilogy. All three are devoted to various Latvian people who had extended the hand of rescue to Jewish people during the Holocaust.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ZATLERS WILL BE ACCOMPANIED BY MANY BUSINESS PEOPLE WHEN VISITING RUSSIA

2010-12-14T20:58:00.004+01:00

As earlier mentioned president Valdis Zatlers will visit Russia December 19-22. There are at least three purposes of the visit;

1st Starting up a political dialog with the Russian government,
2nd Strengthening the basis of Latvian-Russian agreements, and
3rd Develop economic relations.

Not least in order to promote the latter president Zatlers will be accompanied by more than 100 business people. According to a spokesperson for the Latvian Investment and Development Agency (LIIA) this is the largest business delegation that has ever followed a president at a foreign visit.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

GAS PRICES GOING DOWN

2010-12-14T20:50:00.004+01:00

As a relief to many households in Latvia natural gas tariffs will be reduced in January. The information comes from Latvijas Gaze.

It will probably not be very much, could be only a few santims, but still of some significance to many people.

What will happen is that by January 1 gas tariffs for households that use gas for heating will go down 7 percent. At the same time tariffs for households that use gas for cooking will decrease 4 percent. For large gas consumers the decrease could be 5 percent in January and remain on that level through February.

Internal reserves is one of the reasons behind the reduction.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

A HAPPY DAY IN LATVIA - KIDNAPPED PILOTS ARE HOME

2010-12-12T17:51:00.003+01:00

In many ways this is a happy day in Latvia, not only in the affected families but in the entire country. News agency LETA writes today that the three helicopter pilots, who had been kidnapped in Sudan, have returned home giving them a possibility to celebrate Christmas with their loved ones.

The Foreign Ministry announced at the same time, that given the circumstances, and all that the three had gone through, their conditions were satisfactory. The assessment has varied somewhat. From the beginning it was said that their conditions were good. It has now been changed to "stable and satisfactory".

A spokesman for Foreign Minister announced at the same time that further information and details about the kidnapping will be given next week. The government announced early on that it would not pay any ransom. Now it has been confirmed that the government has not paid anything.

The three Latvians, who were released last Wednesday, were captured in the war-torn province of Darfur November 4, and has thus been in captivity for more than a month.

The three pilots are working for the Latvian helicopter company GM Helicopters, which has a mission in Sudan as part of the UN World Food Program. The UN agencies have worked day and night to get the three free. They express satisfaction that the question now has come to a happy ending. However, they are not yet prepared to go into more detail on how the release occurred. However, they confirm the Ministry's information that no ransom has been paid.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

WSJ - LATVIA ON THE MEND BUT UNCLEAR HOW FAST AND HOW MUCH!

2010-12-10T14:25:00.007+01:00

Currently more and more international media comment on Latvia. They note and commend the actions behind the economic recovery. The so-called internal devaluation, through wage cuts and severe budget cuts, have become a model for others, like Greece and Ireland. All this is positive. The government and central bank have been clear that the devaluation would have made much of Latvia's euro-denominated debt unbearable, while possibly triggering currency crises across Eastern Europe.

At the same time there are also analysts who question how fast this will go. Influential Wall Street Journal today has an article on this. The background is recent development; the government has submitted the 2011 budget to the Saeima, which is on track and even reduces the budget deficit more than previously planned, the economy has grown over the last three quarters, and a few days ago Standard & Poor's gave Latvia higher credit rating.

Yet there is, according to the author of the article, Mathew Dalton , still question marks about the path and speed of the recovery. Dalton has done thorough research and interviewed several leading economic forecasters.

What worries today, and that is a basic theme in the WSJ's article, is that while the wages are almost 12 percent below the level that prevailed a few years ago, and the trade deficit has decreased dramatically, so has still not exports risen significantly since before the crisis. The trade deficit, which in 2006 amounted to 22 percent of GDP, is now completely gone. But it has largely taken place through a reduction in imports and not because exports have increased. Instead, a combination of low wages and high - albeit slowly declining - unemployment have locked the consumption at a low level.

Vyacheslav Dombrovsky, who is an economist at the Baltic International Centre for Economic Policy Studies in Riga, says that "we have so far not seen substantial changes in relative prices”.

Many argue that wage cuts should be given more power. Government cutbacks in the public sector have created the overall reduction of wages is 11.7 percent between October 2008 and July 2010.

But many indicate that the reduction is significantly less in the private sector. These have only declined 5.3 percent during the same time. And many say the decrease has to be much more significant to make exports cheaper. Not least as wages in the private sector grew with 16 percent annually from 2001 through 2008. If Latvia is to recover the 25 percent, as it lost during the crisis, the country must grow through an export-led upturn.

WSJ's conclusion is that if an internal devaluation will work anywhere it is in Latvia with a flexible labor market, hardly any trade unions and a population that accepts even hard-line measures. In contrast to the riots in Greece, Spain and Ireland, there were just completely peaceful protests and demonstrations in Latvia. Therefore it should be possible with further reductions in wages in the private sector to boost exports.

Yet wages are likely to rise next year. Finance Minister Andris Vilks (Unity) believe that these will be three per cent in some sectors, and he estimates "that is still very moderate – it wouldn’t be painful or crucial for the productivity level."

Lars Christensen, an economist at Danske Bank, says that "the improvement we've seen in Latvia's international position is 90% due to a collapse in domestic demand, rather than an improvement in competitiveness”.

Mark Griffith, who is responsible for the IMF Mission to Latvia, is somewhat more cautious. He says that "what is clear is that competitiveness has improved compared to two years ago-and what's also clear is that the estimates of the competiveness improvement are very uncertain”. In its latest report the IMF pointed to further pay cuts and structural changes to reduce the competitive disadvantage. The IMF also criticized the government for cuts to the so-called "100-lat work program", referring to a still high unemployment.

The clearest, brightest and the very earliest opposition to devaluation was the Latvian Central Bank Governor Ilmars Rimsevics. He points today on the results of the policies conducted in 2009 and 2010: "For the third consecutive quarter, Latvia has experienced positive growth", so far this year 2.2 percent, "which really proves that the chosen polices have been the right ones”.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

STANDARD & POOR UPGRADING LATVIA

2010-12-08T22:26:00.003+01:00

One of the companies assessing the economic development yesterday upgraded Latvia. Standard & Poor Tuesday upgraded Latvia's credit rating to BB +. At the same time the expected outlook is considered stable.

This could be read in the Wall Street Journal. The newspaper refers to the S&P's credit analyst Frank Gill, justifying the decision saying that

"in the face of a 35% contraction in domestic demand between 2009 and 2007, the
Latvian economy has demonstrated exceptional flexibility. Confronted with
sharply tighter credit conditions, past imbalance have rapidly unwound."

The report shows that the policy has meant that Latvia's current account has gone from a deficit of 22 percent of GDP in 2007 to an expected surplus of five percent in 2010.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

PRESIDENT AND PM IN JOINT ACTION AGAIST VANDALISM OF JEWISH CEMETERY

2010-12-08T14:29:00.002+01:00

Vandals have desecrated more than 100 gravestones at Riga’s New Jewish Cemetery and painted the nazi swastika on them.

President Valdis Zatlers and Prime Minister Valdis Dombrovskis have according to news agency LETA in a joint statement condemned the action.

The president declared that everything must be done to find the perpetrators. He explained that "such actions, cannot and will not be permitted.”

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

BUDGET FINALLY APPROVED BY GOVERNMENT

2010-12-06T13:59:00.003+01:00

At a special meeting this morning, the Latvian government finally approved the 2011 budget. It will now be submitted to the Saeima. Finance Minister Andris Vilks (Unity) will personally hand in the proposal tomorrow at 11 a.m. The intention is to have the budget finally adopted before the Christmas break. In addition, the Government presents a framework for macroeconomic and fiscal developments for the years 2011-2013.

News agency LETA comments on this today.

The revenue side of the budget amounts to LVL 5.1 billion, while expenditure amounts to LVL 5.7 billion. That gives, according to Vilks, a budgeted deficit of 5.5 percent.

Thus it can be stated that the budget deficit is slightly less than the plan that Latvia is following, as part of the deal with the international lenders. According to this, the ceiling for the deficit in 2011 is set to 6 percent.

According to Prime Minister Valdis Dombrovskis (Unity) some changes can still be done. Discussions with lenders continue. A few days ago, the IMF made a few critical remarks on the budget proposal.

The budget proposal includes increases in VAT and a rising of the minimum wage. The total reduction of the budget is LVL 290.67 million. That means more than five percent of the total budget.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

CURRENT ACCOUNT SURPLUS GOING DOWN

2010-12-04T11:29:00.003+01:00

Latvia's current account surplus has decreased to just one percent of GDP in the third quarter of this year. At the same time a year ago, it stood at 9 percent and in the second quarter of this year it was 5.8 percent. The figures come from the Latvian Central Bank.

During the years before the financial crisis, Latvia had huge problems with current account deficits. Fourth quarter 2006 it was as high as 27.1 percent of GDP. After that it decreased rapidly as imports fell sharply. Since early 2009, Latvia has had current account surplus.

Now the economy has turned. Third quarter reported a rise of 2.7 percent, compared with same period last year. It is the first increase in two years. Meanwhile, Latvia has had a total decline of around 25 percent. The increase that we see now is also a contributing factor till why the current account surplus is decreasing.

Martins Gravitis, who is spokesman of the Latvian Central Bank, said in a statement to Bloomberg:

“With the economic activity in Latvia expanding -- production and exports growing -- the need for imports of intermediate goods and capital goods, particularly so of metals, minerals and transport vehicles, also increased.”

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

Andris Vilks: FEWER CUTS IN THE 2012 BUDGET

2010-12-02T22:47:00.003+01:00

Budget cuts for the 2011 budget will be smaller than previously estimated. One reason is new calculations from the European Commission published today, indicating a lower budget deficit than previously expected.

Earlier estimates pointed to a deficit in 2010 of 8.6 percent, relative to GDP. The new estimates suggest that the deficit will be 7.7 percent. Also the 2011 figure is revised downwards in relation to the assessments made earlier.

Thus, also budget cuts have become smaller. The requirements imposed by the EU Commission and the IMF amounted to LVL 280 million. It is substantially less than the LVL 400 million as was believed at the starting position.

Also the figures for the 2012 budget are now adjusted down. Finance Minister Andris Vilks says that the previously estimated figure amounted to LVL 310 million. Now he believes that it could be approximately LVL 200 million.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

Boris Nemtsov - IMPROVED RELATIONS WITH LATVIA NOT MOSCOW’S PRIORITY

2010-12-01T22:19:00.003+01:00

Boris Nemtsov was in the late 1990s, Deputy Prime Minister under the reformist President Boris Yeltsin. Opinion polls pointed him out as a likely future president. However in connection with the crash of the Russian stock market in August 1998 he was forced to resign. Today Nemtsov is one of the leaders of the opposition party Union of Right Forces and an outspoken critic of Vladimir Putin.

In an interview with a Latvian radio station Nemtsov said on Wednesday that relations between Russia and Latvia are not good. The reason for this is that Russia's policy towards the Baltic countries have failed.

He also said that improved relations are at the moment not a priority for Moscow and that this will not be changed by the upcoming visit by Latvian President Valdis Zatlers. But, as he put it, "it is always better to speak than to shoot".

Boris Nemtsov said that relations between the two countries are neither good nor bad at the moment. But, as he says "there are many complications". On the one hand, the Russian leadership is still, by both Prime Minister Putin and President Medvedev, imperialist mindset. On the other hand, Latvians still believe that Russia is looking for the next opportunity to take over the Baltic. Nemtsov believes that both sides need to free themselves from such thinking.

"Our side should have been put off with all the imperialist thinking, because otherwise we are entirely surrounded by enemies. Latvia is a member of both NATO and the EU. This means that no one will attack you. Latvia has successfully survived its most difficult part of the story, when the country was not included in any of these but was completely alone. Precisely because of this, it is now time to forget the past and look ahead rather than backwards”, said Nemtsov.

Nemtsov believes that Putin has failed to build good bilateral relations with the Baltic countries. "The politicians have torn down these relationships, and I do not understand how they can be normalized again. I believe that this is not a Russian priority".

Relations between Russia and Latvia will only be enhanced as part of the fact that relations between Russia and NATO have improved. "They have clearly gotten better. It's part of what happened in Lisbon and which meant significant improvements”, concluded Boris Nemtsov.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

THE ECONOMIC STABILIZATION WORK HAS COME FAR

2010-11-29T16:45:00.003+01:00

Much remains when it comes to tackling Latvia’s economic problems. But what a year ago seemed impossible appears today to be entirely feasible. The government has come a long way towards the aim of meeting the euro criteria, making it possible for a Latvian euro entry in 2014.

So far the government it following the predetermined way. For 2011 a further budget consolidation of LVL 290 million will be presented. That is a smaller figure than previously estimated, but sufficient to take the step from a budget deficit of 8.5 percent in 2010 to a deficit of 6 percent in 2011. The remaining third step, with the aim of reaching a deficit of three percent, shall be taken in the 2012 budget.

Prime Minister Valdis Dombrovskis (Unity) said in a comment that "we are moving forward technically, to be able to turn in the budget at the scheduled time." The scheduled time is December 7, that is Tuesday of next week when the budget shall be submitted to the Saeima. That will give the parliamentarians a possibility to make all decisions in order to have the budget fully implemented before the Christmas break.

After two years of constant reduced wages and salaries the first figures now show that they are slowly rising. According to Latvia's Central Statistical Agency wages and salaries rose between the second and third quarter by 0.8 percent. Within the public sector the growth was 0.1 percent and in the private 1.6 percent.

Year on year, wages have continued to fall. During the third quarter they were down 1.9 percent. In the private sector as little as 0.1 percent while the decline y-o-y in the public sector was 4.5 percent.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

CAN IRELAND LEARN FROM LATVIA?

2010-11-24T12:44:00.001+01:00

The people of Ireland will occupy the streets of Dublin today. People are disappointed and put pressure on the government to step down. Media around the world follow the developments minute by minute.

Newspapers rarely writes about the positive news. However journalists love to convey the doomsday prophecies. Latvia is an example of this. Beginning in the fall of 2008, largely in connection with Parex Banka’s fall, and until sometime in the spring of 2010, there was hardly a positive headline about Latvia in any international media. Then all of us daily following developments in Latvia began to see the first positive signs; the country was, against all odds and against all journalists and economists "who knew better" out of the crisis.

What happened then? We could imagine that the positive news would be spread like wildfire across the world. Well, yes, a few have done so. A good example is Bloomberg. They follow Latvia regularly and have also noted the positive developments. But from the majority - silence!

Today, the Wall Street Journal breaks the silence and write about the financial crisis that not so long ago torn in Latvia. In light of what then happened the title of the article “Latvia's Lessons for Ireland”.

Already in the introduction the question is asked: "Whatever Happened to Latvia?" The question is relevant to anyone who does not daily follow the development in the country.

The financial crisis has now left Latvia and Eastern Europe. To begin with, it went to the south, seemed to culminate in Greece. Is still a major threat to the Greek, but also in Italy, Spain and Portugal. Right now, it has taken hold in the British Isles and has taken Ireland the full force.

The more it escalates the greater the financial rescue is about. In the still small economy of Latvia it took a bail-out package of € 7.5 billion. It was seen as enormously in early 2009. Today, less than two years later, it's about more than ten times that in Greece and Ireland. And in the current situation not much suggest that this will be the end of it.

There are similarities between Ireland and Latvia, which makes the title relevant. There are historical similarities; both have been intimidated by great powers. But there are also similarities in that both for a long time were described as soaring "tiger economies". A few years ago Ireland was considered one of Europe's richest countries. Until not so long ago, there was no country in Europe where the economy was growing as fast as in Latvia. There are common lessons to learn from this. One of them is trying to learn how to make development sustainable over a longer period of time.

In response to the question of what really happened in Latvia WSJ gives a background in three steps:

1st A weak currency pegged to the euro.
2nd Comprehensive demands from the EU and the IMF to take strong action.
3rd A private sector that borrowed large financial sums in foreign currencies.

But Latvia managed to avert doomsday scenario. The newspaper notes that Latvia to a large extent has reversed the trend. There was no devaluation, although "all" predicted this. Despite an economic decline of 25 percent in 2008 and 2009, unemployment at near 20 percent and wage cuts of 19 percent, Latvia lifted itself out of the crisis.

Today, the WSJ notes that the economy grew by 2.7 percent y-o-y in the third quarter, exports are rising sharply and the unemployment rate, albeit slowly, is coming down. Meanwhile, the current account has swung to a plus although the country had a huge deficit at the beginning of the crisis.

WSJ notes, quite rightly, that much remains, not least to continue to bring down the budget deficit. There are also risks, the paper writes, in the future. Although it notes that the IMF believes that Latvia next year will have an economic growth of 3.3 percent.

WSJ concludes by noting that "Latvia is showing there is life after austerity". It should be encouraging not least for all those who are demonstrating today in Ireland.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

VILKS: CONSOLIDATION WELL BALANCED

2010-11-22T16:49:00.002+01:00

Finance Minister Andris Vilks (Unity) today said that the draft budget for 2011 is "a well-balanced option". It should therefore not have any negative impact on economic growth next year.

The limitations of the budget growth will be very small. Latvia's economy will grow by at least 3.3 percent, as planned. Vilks sees also a possibility that it could be as high as 4 percent.

In light of the draft budget for 2011 the Finance Minister also looked ahead and said that the necessary consolidation in the 2012 budget will probably be minimal.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

LATVIA ADVANCES IN WORLD BANK’S DOING BUSINESS RANKING

2010-11-20T16:03:00.003+01:00

As shown by President Valdis Zatlers statement, as I referred to in a previous article, Latvia has improved its position in the World Bank's latest "Doing Business" rankings. It is a broad yearly survey of the world's 183 countries. Singapore, Hong Kong and New Zealand represent, just like last year, top three.

Latvia has advanced to number 24, a clear step up from the 27th spot which it had taken one year earlier.

There is a wide range of areas being compared. Latvia’s by far best category is "getting credits", where they have a tied 6th place. Too generous lending was considered as a problem a few years ago, and stated at the time as one of the reasons for Latvia's economic problems. During the election campaign, many politicians were talking about that now existed the opposite problem; difficulties to borrow money, even if a company could point to a good business idea. The current figure indicates that credit is not a problem, when compared with other countries.

Latvia is also well placed in categories such as "enforcing contracts" (14) and "trading across borders" (16). However, it is worse when it comes to “dealing with construction permits"(79) and "closing a business"(80).

It is interesting to compare countries in the category of Eastern Europe & Central Asia. Among 25 countries Latvia is number four. Three Baltic countries are among the first four, only after Georgia, which in recent years has developed very rapidly when it comes to business climate.

In another sense, Latvia belongs to the category of "upper middle income”. Among 46 countries, Latvia is also here at number four.

Latvia is among 61 countries in the group "small nations" and here in 6th place.

Overall, it is clear that Latvia is doing well in this competition and from last year developing well when business climate is compared. However, there is much that can and must be improved. Among the less good are both "low-hanging fruits", which should be resolved quickly, and things that must begin to be tackled now but that will take a little longer.

Obviously, the President's goal to reach the top-ten-list is definitely not impossible for Latvia.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

ZATLERS: "LATVIA MUST BE ONE OF THE WORLD'S TEN BEST DOING BUSINESS COUNTRIES!"

2010-11-20T13:54:00.003+01:00

Latvia must be among the world’s top ten concerning business environment. That was said by President Valdis Zatlers in an interview to the Latvian state radio. Baltic Business News, and The Baltic Course are commenting on the interview.

The president was clearly pleased with a development, which shows that Latvia has improved its position by three places, finishing at number 24, in the World Bank's latest "Doing Business" ranking. But he believes that this work must continue and that he will not be fully satisfied until Latvia is among the top ten. That would mean a major improvement in the country's competitive climate.

It is vital that President Zatlers has that attitude. It is shared by many both inside and outside Latvia. However, it requires action on a variety of areas and over many years, on targets to be reached.

1st It will require clearer structural changes in the economy. The tax on labor must be reduced.
2nd Latvia’s many small universities must be fewer, but with a high academic level. This is largely lacking today.
3rd Better management of public enterprises.
4th Latvia must be seen as attractive for its own young people. Not least of all those who have left the country in recent years. To make "brain-gain" of today's "brain drain" must be a clear objective.
5th Last but not least; Latvia needs to take measures to reduce the country's corruption. Few things are more important when it comes to increasing foreign investment.

President Zatlers also commented on the work on the 2011budget. He noted with satisfaction that the government shall submit the budget to the Saeima December 7. It is important for Latvia’s economic development that the budget is approved before the end of the year.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

VAT AND PROPERTY TAX WILL RAISE REVENUES; LVL 75 MILLION

2010-11-20T13:05:00.003+01:00

I wrote yesterday about the increases in VAT and property tax, which the Latvian government has decided, as part of the work on the 2011 budget.

Latvia has several different levels of VAT. Standard VAT will be increased by one percent to 22 percent. At the same time the reduced VAT rate will increase from 10 to 12 percent. However the reduced VAT on electricity will be abolished. The last will mean some compensation for the many hard-hit households.

According to the assessments which the Finance Ministry has made VAT would bring in additional LVL 68 million while the increased property tax provides nearly LVL 7 million. That will give a total LVL 75 million. Thus, the government has made some progress against the LVL 280 million as the total budget consolidation means.

The government will continue the work on the budget on Sunday. News agency LETA writes that the Finance Ministry will then present calculations on two different proposals, which the Cabinet of Ministers will have to consider.

One is to reduce the personal income tax by one percent, increase the tax-exempt minimum income to LVL 40, also increase the tax-free minimum assistance for dependant persons to LVL 70 while at the same time increase the level of social contributions by two percent.

Another proposal, submitted by the Union of Greens and Farmers, is that 76percent of the revenues from income tax shall be transferred to municipalities. It would then mean a reduction from the 80 percent level, which applies today.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

INCREASED VAT AND PROPERTY TAX IN BUDGET

2010-11-19T22:43:00.003+01:00

Latvia's government will raise VAT by one percent to 22 percent and double the property tax, as two measures to reduce the deficit in next year's budget. Bloomberg today writes about this.

Overall, the budget will be reduced by 280 million lats, which is significantly less than the 400 million that was previously considered necessary in order to achieve the target for 2011.

To raise these taxes is in line with a number of international recommendations. There are many reasons for this:

1st It is a fairly safe way to raise money for the state; everyone is buying goods and services every day, which means that tax money is constantly flowing in. And properties will not move abroad, as companies could do if the government would choose to raise those taxes instead.

2nd These taxes are fairly easy to control. This means that such measures can be combined with continuing to reduce the state’s own administration. This has also been pointed out by various international organizations.

So obviously the measures are accurate. There have been a number of international organizations recommending doing so. Among others they are in line with proposals put forward in a report from Swedbank a few weeks ago. It is there pointed out that many budget cuts so far have been based on tax increases and temporary savings. The important thing for coming budgets will be to focus on structural changes in the economy.

Budget cuts have to create long-term prospects for growth. One such measure would be to reduce taxes on labor with the same amount as property taxes have been raised.

On the negative side the increase of VAT does have a serious impact on economically weak groups in society, if not compensated by other means. The prospects of doing so are probably fairly small. That will mean that not least many seniors will get an even more difficult situation.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

FIRST QUATERLY YEAR-ON-YEAR INCREASE SINCE 2008

2010-11-19T21:44:00.002+01:00

For the first time since 2008 Latvia's quarterly GDP grew year-on-year. The third quarter of 2010 the country's economy increased by 2.7 percent compared with the corresponding quarter a year earlier.

At a seasonally adjusted comparison the increase during the third quarter was 0.8 percent compared with the second quarter. The figure is slightly higher than economists calculated.

The information comes from the Baltic Times, which in turn refers to Latvia's Central Statistical Bureau.

This means an end to nine consecutive quarters of economic decline. In total Latvia's economy went down during this period by about 25 percent, more than any other country, according to the IMF.

Industrial output rose by 19.4 percent in the third quarter, according to the Statistical Bureau.

What is clearly driving the growth is an increasing demand for wood products and metal products from Latvia.

The increased growth is positive, not least in the context of the government's ongoing work with the 2011 budget. It leads to increased tax revenues, making it somewhat easier to reach the target of six percent budget deficit.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

Congratulations from President Obama

2010-11-18T14:27:00.005+01:00

On Latvia's Independence Day US Secretary of State Hillary Rodham Clinton writes:

"On behalf of President Obama and the people of the United States, I congratulate the people of Latvia on the anniversary of your independence this November 18. The Latvian people have cherished the ideals of freedom and independence since 1918, despite decades of war and occupation. The United States joins in celebrating Latvia’s flourishing democracy and the inspiration it provides to countries around the world.

We are proud of our long history of unbroken friendship with Latvia and our cooperation on many of today’s pressing challenges. As allies in NATO, we are joined by our commitment to defend individual freedoms, democracy, and human rights around the world. Latvia has made invaluable contributions to the international mission in Afghanistan, and we honor the commitment and sacrifice of the Latvian people as they help Afghanistan secure its future.

I wish all Latvians a happy independence day. We look forward to expanding the cooperation between our countries as we strive to build a future defined by peace, prosperity, and freedom for all people".

LATVIA CELEBRATES INDEPENDENCE DAY

2010-11-18T11:20:00.002+01:00

Today Latvia celebrates Independence Day. In his greetings to the Latvian people Prime Minister Valdis Dombrovskis (Unity) said that:

''It is easy to blame someone else for the country's problems, but I encourage people to ask themselves what they have done for the good of the country.''

And he continued:

''In this time of crisis, we have already proven we can be an example to others. However, if we truly do wish to see Latvia grow and prosper, and be a country from which people do not leave to find a better life elsewhere, we must believe in ourselves.''

After centuries of constant occupation from almost all countries in their environment Latvia for the first time became a free country November 18, 1918. At the same time the free countries of Estonia and Lithuania were also established.

It has now been 92 years since the days when freedom was proclaimed from the Russian empire, as part of a trend in which European empires collapsed like houses of cards at the end of the First World War. Latvia had at that time experienced a period of nationalism. The language had been put forward, literature and art played a major role. Everything was done to pave the way for a small country assuming freedom and playing an important role in a Europe of nation states.

The future looked bright, but storm clouds piling up quickly in the sky. Latvia's freedom lasted just more than two decades. The Soviet-German division of Europe by the Molotov-Ribbentrop Pact, and especially its secret protocol, led to three Baltic countries had to live through almost half a century of Nazi German and Soviet occupation.

This means that when Independence Day is celebrated today as Latvia's National Day it does not mean 92 years of freedom. Instead, it is a time totally of about forty years.

Despite the short time, twenty years between the World Wars and the approximately twenty years since "the singing revolution", Latvia has achieved much. During the first period of independence the three Baltic countries became respected names within the European family. Since the early 1990s freedom has been restored. Democracy is a matter of course. Governments have come and gone. Today Latvia plays an important role in ongoing integration efforts within the EU.

All of us who are Latvia's friends join in the chorus of praise! Despite all the problems and difficulties, not least by the economic crisis in recent years, Latvia has come a long way in recent decades. Longer than many in Latvia probably realize themselves and beyond what anyone could ask for!

92 years is a long time for a nation and a people! It is an eternity in a life of a human being! For Latvia, it is just the beginning!

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

PROPOSALS FROM IMF AND WORLD BANK MADE PUBLIC

2010-11-15T15:21:00.003+01:00

The various proposals on budget consolidation from the World Bank and the IMF have now been made public.

The respective figures vary but an interesting reflection is that neither reaches the level previously mention; budget cuts of LVL 400 million in order to reach the 6 percent budget deficit level in 2011.

The World Bank’s figures for the 2011 budget have a total of LVL 245 – 345 million and for the 2012 budget another LVL 193 – 199 million. The last figures are in order to reach the 3percent level, which is necessary to qualify for a coming euro entry.

The recommendation from the IMF is on the same level: LVL 303 – 332 million for 2011.

As I wrote a few days ago the ambition of the government is to come to an agreement tomorrow, Tuesday, on the level for the 2011 budget consolidation.

Quated in Reuters Finance Minister Andris Vilks said: "Considering the faster recovery of the Latvian economy we convinced our partners that the budget consolidation next year will be worth 280 million lats, not more."

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

APPARENT SHIFT IN FOCUS IN EUROPE

2010-11-14T17:08:00.005+01:00

It is clear how quickly the focus has shifted in Europe when it comes to the economic crisis. 12-18 months ago focus was on Eastern Europe, with Latvia as the largest problem. Today everyone is talking about the so-called PIIGS countries.

Swedish E24 has over the weekend a review of these countries. Describing the economic problems of the countries in Europe without even mentioning Eastern Europe.

The crisis in PIIGS culminated in May 2010 when Greece could not pay their loans, but it is still far from over.

Portugal is facing a severe fiscal consolidation, including lower wages for public employees and frozen pensions.

Ireland has a budget deficit of 32 percent of GDP. This leads to new cuts in the benefit systems. Criticism is increasing against the Anglo Irish Bank. The government has already put up € 32 billion to keep the bank afloat.

Italy has a national debt of 116 percent of GDP, the highest in Europe. But only in PIIGS is the average of 90 percent, which is almost twice as high as in Latvia.

Greece received € 110 billion support from the IMF this summer. The condition was an extensive budget and pay cuts for civil servants and tightening of the welfare system. It has led to widespread demonstrations, riots and strikes.

Spain had to borrow € 192 billion to meet next year's budget. Thus, rising interest costs by further cuts as a result.

What could be seen in a wider perspective is that in Eastern Europe there is still much to do although the acute phase of crisis is over. But in southern Europe many things are still undone.

Two differences are obvious in this context:

One is political: Eastern European countries changed governments at the beginning of the crisis. Some even made it twice. Each time they got a new government that was willing to go forward with fiscal consolidation harder than the former. And in large part they also received public support for this. In southern Europe, governments have been largely stable, but are still struggling to gain support for what must be done.

The second is economic: At any moment, as PIIGS implemented cutbacks in the budget, governments have been met with widespread protests, riots and strikes. Eastern European governments showed early on what needed to be done, communicating it to the people, took hold of the problems and implemented what had to be done. This led to tough measures to deal with all the problems, but really no major demonstrations and certainly no riots.

There is a significant difference between east and south of Europe. To a large extent this has to do with history. The southern European countries, albeit in slightly different pace and with EU support, early got the opportunity to develop economically. Eastern Europe had to focus on other problems. People's lives have been about constant hardships. They are used to constant diffculties of various nature. It can also here differ considerably from one country to another, but the image of this difference between east and south is still clear.

PIIGS should now study the good example beam power. It can for example be made in Latvia. No country was hit harder by the financial crisis. In no country was the economic fall as great as in Latvia. Much remains to be done for the re-elected Dombrovskis government - who is currently in the midst of the necessary cuts in the 2011 budget - but the crisis that less than two years ago almost led to national bankruptcy is averted. That example should other countries in Europe, spoiled by continuous good times, take to heart.

AGREEMENT ON BUDGET CUTS ON TUESDAY

2010-11-13T21:31:00.002+01:00

The work on the 2011 budget is now running forward in a rapid pace. The government has held several meetings on the issue during the week. Prime Minister Valdis Dombrovskis (Unity) is very clear that on Tuesday, November 16, there must be an agreement on the amount of the fiscal consolidation.

The government's review will continue until then, but Tuesday is the last day that the international lenders will be present in Riga.

At its last meeting the government made assessments related to the proposals from both the IMF and World Bank. These reports will now be made public along with the various ministries' estimates.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

GDP DEFICIT LESS THAN ESTIMATED

2010-11-13T21:05:00.003+01:00

According to figures from the third quarter this year's reduction of GDP looks set to be smaller than previously estimated. According to new figures from the Latvian Ministry of Finance this year's decline is expected to be 0.4 percent. The previous assessment indicated a decrease of one percent.

Next year, everything indicates that Latvia may return to growth in the economy. During one of the extra meetings that the Latvian Government had during the week, in order to kick-start work on the 2011 budget, the latest assessment was presented. It suggests an economic growth in 2011 at 3.3 percent. At the same time inflation is expected to be 1.1 percent.

These figures are obviously an important background to the IMF representative Mark Griffith's statement that budget cuts may be smaller than previously estimated (see my previous article).

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

IMF: FISCAL CONSOLIDATION LESS THAN EXPECTED!

2010-11-13T20:40:00.002+01:00

The cuts in the 2011 budget may be smaller than previously estimated. That has been mentioned by the IMF representative in Latvia Mark Griffiths.

He was not prepared to say more in detail how much smaller the budget cuts may be, but he mentioned that the total budget consolidation could be significantly less than LVL 400 million as previously discussed.

Griffiths and the government will meet further to agree on a number of technical details. He had many words of praise for Latvia's economic success in recent times.

He was, however, just as Prime Minister Valdis Dombrovskis (Unity) clear that much remains to be done within the coming two years, in order to get down to a budget deficit of three percent, which is a prerequisite for entry into the euro a few years later.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

THE DOCTOR EXCLUDED FROM CIVIC UNION

2010-11-11T20:17:00.004+01:00

The Latvian-American doctor who in an email correspondence with Foreign Minister Girts Valdis Kristovskis explained that he had a clear preference for the processing of Latvians in front of Russians, has reportedly been expelled from the Civic Union.

The doctor, named Aivar Slutsis, is residing in the United States. According to reports the decision has been taken by the Civic Union's ethics committee. The information comes from The Voice of Russia and I have so far not been able to have it confirmed from other sources.

I assume that the information is correct. This is obviously the only reasonable decision. A doctor who divide people by their ethnicity can not be a member of a democratic party.

According to Latvians Online the debate has resulted in “professional repercussions” at the hospital where Dr. Slutsis works. A representative of the Minnesota-based Mayo Health System, said in a statement that the clinic has “taken appropriate actions” in the case.

The debate on this issue has been negative not only for Foreign Minister Kristovskis but for the newly appointed government. Not least within the EU, it is important that Latvia is represented by a non-disputed foreign minister.

Kristovskis himself has said that his own statements have been misinterpreted and taken out of its context. He has also added a clarification saying that it is obvious that all people should be treated equally regardless of nationality.

It can be noted that the issue has so far received relatively little attention in western media. It remains to be seen if the case now is closed or it further activities will appear.

GDP GREW THE THIRD QUARTER IN A ROW

2010-11-11T04:55:00.003+01:00

According to the Latvian Statistical Agency, GDP rose by 0.8 percent between July and September.

It is thus the third consecutive quarter that the economy is growing, although it is still about very small growth rates.

This is a clear improvement compared to 2009. During the last year, Latvia's GDP declined by 18 percent. Probably there will be a small drop also in 2010, seen on an annual basis. In 2011, Latvia more definitely will return to growth.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

UNEMPLOYMENT CONTINUES TO DECLINE!

2010-11-11T04:38:00.002+01:00

Unemployment in Latvia is still high, but continues to decline. At the end of October it stood at 14.3 percent of the total work force. That means a decrease of 0.3 percent since the same time in September.

All according to figures from the Latvian State Employment Agency (SEA).

In numbers this means that 2.889 more were employed at the end of the month than a month earlier. A decline from 165.386 to162.497.

Unemployment rates vary greatly across the country. The lowest is in Riga Region with 11.2 percent, while it is almost twice as high in Latgale Province in eastern Latvia, with 21.9 percent.

Among the cities the figure of capital is the lowest at 10.3 percent and highest in the east Latvian city of Rezekne with a figure of 22.6 percent.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

UNFORTUNATE START FOR NEW LATVIAN GOVERNMENT

2010-11-09T16:31:00.002+01:00

The newly appointed Latvian Foreign Minister Girts Valdis Kristovskis (Civic Union/Unity) has immediately after taking office, ended up in the spotlight. This after an alleged e-mail conversation with a Latvian-American doctor in which he gives his support to give preference to Latvian patients to Russian

The issue sailed up the days after the Government was approved by the Saeima. For a Good Latvia called for the censure of Kristovskis. This has subsequently received further support, not least of Aivars Lembergs and his local Ventspils party.

At today's no confidence debate Kristovskis survived by 51 votes to 36. The question could thus be completed, but it will certainly not be there. The reason is that the issue is unfortunate in many ways:

1st First of all, because the setting shows a completely wrong outlook. This, of course, first and foremost on the physician’s side, but if the correspondence shows that Girts Valdis Kristovskis has given his support it becomes much more serious. A physician shall make the medical assessment, regardless of ethnic or other backgrounds. Everything else is totally unacceptable.

2nd When an issue like this comes up it is immediately ripping up old wounds in the Latvian society. For most people in Latvia relations between Latvians and ethnic Russians function smoothly, despite the history that was. The vast majority want it to be history and to heal the wounds of the past.

3rd There is among many Latvians a very sensible approach to the relationship with the ethnic Russian population in the country. When the question of history is mentioned criticism is not directed against the Russians who came to the country in connection with the Soviet occupation at the end of World War II. It is instead directed against the Soviet Union and communism. During the communist system everyone suffered; Latvians, Estonians, Lithuanians, Russians and all others who were forced to live under communism oppression.

4rd When the question in this way will be torn up history in some respect returns. This can have very serious consequences for the Latvian society unless the issue is handled with the utmost seriousness. It also risks upsetting the always delicate relations with Russia.

5th It is now twenty years since Latvia, along with the other Baltic countries, regained independence. It is a time to heal the wounds, not to tear up the old. Prime Minister Valdis Dombrovskis’ ambition is clearly to overcome the contradictions that still exist in the Latvian society. His invitation to the mainly ethnic-Russian Harmony Center to participate in government was a clear step in that direction. Unfortunately, he got no positive response to the invitation.

6th There has always been a Latvian nationalism represented in the Latvian debate. The party For Fatherland and Freedom/LNNK has long put forward Latvian traditions and also in periods played an important political role. In recent years, a much more aggressive nationalism has emerged in the party All of Latvia (I wrote about this development a few days ago). Today it seems very wise not to invite the nationalists into the government. Today's debate in the Saeima is proof of this.

7th Girts Valdis Kristovskis has to a large extent his political roots in For Fatherland and Freedom. He left, however, this party to form the Civic Union. When he left he took with him a number of other members from his old party. Many of these also brought the ideas they had in their previous party.

8th Political reality is that the issue is difficult to handle because Girts Valdis Kristovskis is not just anyone. He is leader of both his own party and the government formation Unity, which he is also a member of.

9th The government has certainly another things to deal with at the moment. I wrote yesterday on an extremely tight timetable to meet the budget for 2011 with three extra government sessions only this week. The government should have the opportunity to concentrate on this. That is not possible any longer!

10th And the reason is that issue surrounding the newly-appointed foreign minister must be handled properly. The fact that he survived a confidence vote does not make it automatically disappear from the agenda. My assessment is that the government will have to devote much time to this issue.

Valdis Dombrovskis could have hoped for a better start for the new government.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

STRICT TIMETABLE FOR ADOPTING THE 2011 BUDGET!

2010-11-09T00:58:00.003+01:00

It will require intensive work for both government offices and the Saeima in order to make sure that the 2011 budget could be decided in time.

The government will current week, in addition to regular session, have three extra sessions, in which the budget will be discussed.

According to the timetable presented today by the news agency LETA a proposal will be sent to the Saeima December 7. Thereafter, members and political groups will have an opportunity to submit their proposals at first reading on December 9. The final decision is to be taken in connection with the second reading on December 17.

It is an extremely short period of time. However, the Finance Ministry has worked a long time with various proposals. It has been necessary. The ambition is that this year’s budget deficit will decrease from 8.5 percent to 6 percent in 2011. That will probably mean a budget consolidation of almost 400 million lats.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

STRUCTURAL CHANGES NEEDED IN LATVIA'S ECONOMY

2010-11-07T22:26:00.004+01:00

Latvia got a new government a few days ago. Despite a period of major economic downturn, a total of well over 20 percent, and very dramatic cuts in the budget, the election was a major victory for Prime Minister Valdis Dombrovskis (New Era/Unity) and a success also for his coalition.

At the same time as the crisis in Eastern Europe subside Latvia now appears as a model to study and emulate, not least for Greece, Spain and Portugal.

What is happening in the near future is of paramount importance. The new government must immediately pick up where the old one ended. The Government Statement, introduced to the Saeima by the Prime Minister a few days ago, states, inter alia, that "government spending must be strictly limited so that we can return in 2012 to a prosperous economy and achieve the three percent budget deficit as required by the Maastricht criteria".

The goal for the 2011 budget is about reducing this year's budget deficit from 8.5 percent to six percent for. A year later Latvia must reach the three percent required, in order to succeed to qualify for euro entry in 2014.

The 2010-budget meant budget cuts of almost 500 million lats, representing 4% of GDP. But -and this is of importance in the context - it's not just the amount of savings that is important but also that they will have a sustained impact. A recent report from Swedbank shows that much so far have been based on tax increases and temporary savings. The IMF has previously made a similar assessment. That means that some of the economic problems could come back. Important for the coming years, therefore, is to make structural changes in the economy.

Swedbank economists suggest that in the 2011 budget another 400 million lats have to allocated in fiscal consolidation, if the objective is to be achieved. But they also point to the need of such budget cuts that enhance the long-term prospects for growth. Examples of this, according to the report, could be better management of state enterprises, make savings in the extremely inefficient higher education, reduce taxes on work in order to stimulate new jobs, and instead raise property taxes.

The authors of the report make the assessment that if these measures are implemented, the government has at the same time created the best conditions for the improvement of Latvia's credit rating.

Valdis Dombrovskis’ goal must be to hold together the government for a full term. Something similar has never happened in Latvia's recent history. Only then will the country have the political stability that will lay the basis for long-term return to economic growth.

With sufficient parliamentary support the Government is well placed to lay the foundation for something new. It requires new decisions, which in the short term will be unpopular but in the long term crucial. The new government has four years ahead, and is thus well placed to reap the benefits of initially unpopular measures.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

A DODDLE FOR MR. DOMBROVSKIS

2010-11-06T20:45:00.003+01:00

The new Latvian government has been fairly well received in international media. The Economist writes that “Mr Dombrovskis has already pushed through a fiscal adjustment worth 8.5% of GDP in 2009 and 4% in 2010. Some wages shrank by a third. GDP last year fell by 18%. Yet nobody rioted. Mr Dombrovskis’s Unity party won last month’s election with a promise of even more cuts to meet the conditions of an IMF-led €7.5 billion ($10.9 billion) bail-out in 2008”. The magazine is also saying that “few would be surprised were the newly reappointed Latvian prime minister to reveal that his hobbies included fire-walking”.

The Economist comments about the re-elected PM’s choice of coalition partner between Harmony Center, where “some of its new deputies find speaking Latvian hard”, and All for Latvia/For Fatherland and Freedom/LNNK. Even the latter meant problems, as they have become more radical in their nationalist approach.

So it came down to a smaller government, together with the Greens & Farmers. But in The Economists view not even this is easy, as this party’s “main backer is a controversial tycoon, Aivars Lembergs, who is under investigation for bribery and money laundering.”

The magazine predicts that the government will not serve a full term, meaning at some point a coalition with Harmony Center “is on the cards”. This could happen when “the austerity era is over”.

But before then there are many challenges, according to the Economist; to reform public service, improve business environment, make migrants come home again only to mention a few. But as the article concludes “after what he has already endured, this should be a doddle”.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

OJARS KALNINS CHAIRMAN OF SAEIMA’S FOREIGN AFFAIRS COMMITTEE

2010-11-06T16:18:00.005+01:00

I wrote during the campaign about the former Latvian ambassador to the United States, Ojars Kalnins (Civic Union/Unity), who for the first time stood as a candidate to the Saeima. Kalnins was at that time since several years Director of the Latvian Institute.

Ojars Kalnins was one of those who watched with concern the development of Latvia and "felt responsible for his country". For that reason he was among respected citizens who started the Umbrella Group. The initiative came from the former editor of Diena Sarmite Elerte, who after the election has become Latvia's Minister of Culture.

I had the opportunity to follow Kalnins one day during the election campaign. He told me that he was at 16th place on the Unity list in Riga. My immediate reaction was that he would probably not get elected.

But he himself was optimistic, and reckoned that chances were good. It turned out to be right. Ojars Kalnins got many crosses on the ballot papers and eventually ended up in fourth place.

Now Ojars Kalnins has according to an article in Latvians Online appointed Chairman of the Saeima’s Foreign Affairs Committee a committee of extraordinary importance when it comes to Latvia’s relations to other countries. It is extremely positive that the Saeima in this way makes the most of skills and expertise.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

BUDGET DEFICIT AND STATE DEBT

2010-11-04T18:32:00.002+01:00

The following table is a comparison concerning budget deficit and state debt with a couple of other EU-member states.

VILKS: WE HAVE TO SEND OUT UNAMBIGUOUS SIGNALS

2010-11-04T17:43:00.004+01:00

Latvia's new Finance Minister is Andris Vilks (Unity/Civic Union). He is completely newly elected as member of the Saeima, and joined the Civic Union, as late as this year, but is highly experienced as an economist. He has been chief economist at SEB Banka and also served as economic adviser to the Prime Ministers Ivars Godmanis and Valdis Dombrovskis.

So without doubt Andris Vilks has already had a major impact on the policy to overcome the problems that arose in the context of the economic downturn in autumn 2008.

Vilks has always been very clear to avoid devaluation. I had the opportunity to talk with him over a cup of coffee this summer. At that time he moved freely around in Riga. I suspect that his situation will be completely different now. The reason I asked to meet him was the rumor that he was the most likely finance minister if Unity would remain in government.

Even when the crisis struck, it was important to give clear signals that "there will be no devaluation", Vilks said. And during our conversation he explained that a Latvian devaluation would probably have spread to both the Lithuanian and Estonian currencies. And in his words: "then no one could know what might have happened."

Today we see that the policy was proven successful.

Immediately after the government was approved by the Saeima the new finance minister said that it is of vital importance to send out ”unambiguous signals” to market participants regarding the 2001-year budget, as soon as possible. He is very aware that foreign investors are waiting for such signals.

Vilks was not prepared to giving more details of how much the budget has to be reduced. Though he says that increased property tax is a measure to balance the budget.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

STABILIZING THE ECONOMY MOST IMPORTANT ISSUE

2010-11-04T15:42:00.003+01:00

The government statement presented to the Saeime is clear that efforts to rehabilitate the economy still are Latvia's most important challenges. The ambition is to stabilize the economy and to get through the huge economic downturn.

In connection with the Saeima’s approval of the government Prime Minister Valdis Dombrovskis said: “Our team will be able to continue the economic stabilization program and to fulfill other tasks set in the declaration”.

In connection with a first cabinet meeting, he was also clear that this work starts immediately and will be on the government’s agenda next week.

Dombrovskis also stressed, that together Unity and the Union of Greens & Farmers in government cooperation can ”get the nation on the road to stable growth”.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

SECOND DOMBROVSKIS GOVERNMENT APPROVED

2010-11-03T19:15:00.003+01:00

Latvia's new government has today been approved by the Saeima. All members of the governing parties Unity and Green's & Farmers' Union voted in favor, like the National Alliance (All for Latvia-For Fatherland and Freedom/LNNK). This gives the new government, led by Prime Minister Valdis Dombrovskis (Unity/New Era), a significant parliamentary support.

From a European perspective, where many governments are now forced to seek support outside the government majority, it is a large majority. It should be quite adequate to provide stability for the entire four-year term.

For a while it looked as if a new government would be supported by 92 of the 100 seats in the Saeima. From a democratic perspective, it makes sense that the early plans for a government with such a broad parliamentary support were not implemented. A democracy needs a functioning opposition.

There has been some criticism over the fact that the government negotiations have taken a long time. It has been almost exactly one month after the election October 2. But this is the way democracy works. The election results must be interpreted. The conditions for different possible prime ministers have to be examined. At a time when not only one party, or alliance, has received a majority, several different options must be investigated. Then the work begins with the policy to be implemented during the mandate period. And finally, the various parties in the coalition must agree on the various ministerial posts.

Time has also been used to lay the foundation for much of what is to come during the term of office. There could still be occasionally be cooperation with the National Alliance (All for Latvia-For Fatherland and Freedom/LNNK) in the Saeima. Today's support for the Government gives an indication of this.

Similarly, Valdis Dombrovskis will certainly turn to the leading opposition party, the Harmony Center, in a number of questions. Especially when it comes to seeking solutions to the ethnic problems that still exist.

The only party that seems completely banished to opposition is the coalition For a Good Latvia, with eight seats in the Saeima. Behind the alliance are the previously dominant parties Latvia's People's Party and Latvia's First Party/Latvia's Way. Together they went back very strongly in elections and will likely need time to carefully review their possible future role.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

DOMBROVSKIS FORMALLY NOMINATED AT FIRST SESSION

2010-11-02T15:36:00.003+01:00

At the beginning of the newly elected Saeima’s first plenary Valdis Dombrovskis (New Era-Unity) was formally by President Valdis Zatlers. The president declared that it will take a lot of work over the coming years and that focus is on the 2011 budget and to meet the government's plan for growth in its economy.

In the government declaration, which Dombrovskis yesterday submitted to the president, the government promises to work for national unity and growth. The goal is a well-trained people with a secure future. Latvia's role as a national, European and democratic state must be strengthened, built on good leadership, respect for human rights, rule of law and social responsibility.

The Government’s statement says that: "Our duty is to strengthen the Latvian language, Latvian culturalal space and national identity, while at the same time being tolerant and ensuring the acceptance of all peoples living in Latvia, as diversity is a treasure”.

What the government wants to achieve is a sustainable Latvia, who is leading among the Baltic countries when it comes to quality of life, national development and global competitiveness.

With regard to the financial crisis, which Latvia slowly made it through, it is said that: "We have recovered somewhat from the heavy blow of the economy crisis. However, we will have to continue to take into account that the nation's financial resources are limited and that state spending should be tightly controlled, so by 2012 we can return to a successful economy and the three percent budget deficit required by the Maastricht criteria”.

Finally in this part the Government declaration says that: "We are ready to take difficult but necessary decisions so that life in our country can become secure and prosperous as quickly as possible ". There is talk in the context of the need that "great value will be attached to hard and honest work. "

At the same session, Solvita Abolitina (New Era-Unity) was appointed the new Speaker of the Saeima. She was elected by 77 votes to 19. She has until now been the Vice Speaker.

The newly elected Saeima has many new members. 60 percent have not been members before, which is a very high figure by international standards.

All members were sworn in during Tuesday's session.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

GOVERNMENT WITHOUT NATIONALISTS IMPORTANT STEP

2010-11-02T04:32:00.004+01:00

I mentioned in an article yesterday that I intend to come back with a series of analysis this week, the same week as the new Dombrovskis government will be appointed. A number of these will be about Latvia's political parties. I wrote yesterday about the Harmony Center. My intention today is to concentrate on the nationalist alliance, All for Latvia-For Fatherland and Freedom/LNNK.

Nationalism as a phenomenon has always been obvious in Latvia and in the other Baltic countries. It is a part of the countrie's history. The nationalist parties emerged during the independence and were important parts of the resistance struggle against the Soviet Union and also former occupiers.

Their task was to protect the typical Latvian; folksongs, dances, folklore, national costumes, in a broader sense history and above all the language. From 19th century Latvian history well-known people like Krisjanis Valdemar and Krisjanis Barons were crucial.

For a long time also future seemed to be built on the nationalism. For Fatherland and Freedom has been part of many governments of the past twenty years and also at some time held the post of Prime Minister. At a time when threats from Russia have been clear the party has grown. At other times it has gone back. In recent years, much indicated that the party would disappear from the Saeima.

At the same time as the old nationalist party started to fade away another, All for Latvia, with young faces, turned up. When none of the parties seemed to clear the latch to the Saeima the two parties joined forces and formed an alliance short before the elections. Together they took 8.55% of the vote, which gave eight seats in the Latvian parliament.

Harmony Center and All for Latvia-For Fatherland and Freedom/LNNK are clearly each other's antithesis. Where one is based on a Russian-ethnic tradition the other is Latvian-nationalist. Yet Prime Minister Valdis Dombrovskis’ original plan was to include both in the government. It was a benign but still badly thought idea. Such a government would have been possible for a short time, but it had hardly been together very long. If there is one thing that Latvia is in more need of today than anything else, it's political stability.

Dombrovskis had a series of demands on both parties. Contrary to Harmony Center All for Latvia-For Fatherland and Freedom/LNNK accepted. Thus Dombrovskis was prepared to include the nationalists in the government. It would have given the government 63 of the 100 seats in the Saeima. Probably it would have been a government that had greater ability to reign for a long time, although hardly a full four-year term.

But in this respect the Prime Minister did not receive support from his own alliance. Society for Different Politics used its veto power, which above all was to stop the All for Latvia. The newly appointed Defence Minister Artis Pabriks was very clear when he declared that All for Latvia had very little in common with Valdis Dombrovskis. That is probably a correct assessment.

To my opinion this was a wise decision! Although the nationalist alliance was ready to give up their special requirements, they still have, by the new nationalist’s entry, repatriation of ethnic Russians in their program. In spite of the fact that this is intended to be voluntary, a position like this is both absurd and wrong. It also gives another image than the one Latvia would like to show to the outside world. Obviously such ideas fit better in opposition than in government.

In this situation it will be easier for the new government to focus on bridge-building across the ethnic boundary. Harmony Centre will not be included in the government, but Valdis Dombrovskis keeps the door open for other forms of cooperation, not least in the Saeima. Efforts to find consensus across ethnic lines would very clearly have been hampered had All for Latvia-For Fatherland and Freedom/LNNK been included in the government.

For obvious reasons it is clearly better that the party remains in opposition. It also gives an opportunity to screen out the alliance’s most extreme views and modernize its nationalism in time for the next election.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

GREENS & FARMERS MINISTERS CONFIRMED

2010-11-02T01:45:00.003+01:00

Today, in principle, the next Latvian government is appointed. A few days ago Unity announced its ministers and today it became clear who will be ministers representing the Union of Greens & Farmers (ZZS).

Before it was clear there was obviously some dissatisfaction from ZZS. It depends on the distribution of the various ministerial posts. The criticism is about the fact that Unity had seized all the "power ministries", Defence, Interior and Justice. ZZS would have liked to have had any of these.

Greens & Farmers have re-nominated Janis Duklavs as Minister for Agriculture. In addition, the Environment Minister Raimonds Vêjonis will be responsible for the combined Environmental- and Regional Development ministry. Welfare Minister Uldis Augulis becomes the new Minister of Transport.

Roland Brok is the new Education and Science Minister Ilona Jursevska becomes Minister of Welfare and Juris Barzin Health Minister.

(Andra intressanta bloggar om politik, Lettland, Baltikum, Europa)

(Andra intressanta bloggar om politics, Latvia, Baltcs, Europe)

MUCH TO LEARN FOR HARMONY CENTER FOR COMING YEARS

2010-11-01T01:23:00.004+01:00

In a few days a new government will take over in Latvia. My ambition is to cover this in a couple of analysis, of which this is the first.

The new government will consist of Unity Alliance and the Union of Greens and Farmers. It was soon clear that these blocs would form the base of the government. However, it was not clear that they would be alone.

It is quite clear that the incoming Prime Minister Valdis Dombrovskis would have liked to include the mainly Russian-ethnic party Harmony Center in the government. He was obviously also under pressure from a number of EU states to do so. HC also reacted positively to the initial contact from Dombrovskis. But a few days later they backed off. It is also clear that there existed an internal resistance within Unity against taking this step.

My assessment is that the main reason why the Harmony Center is not included in the government neither has to do with ethnicity or that the party is considered to be a left of center party. Twenty years after the regained independence many people see the importance of healing the society by stretching over the ethnic boundary. Not least was Valdis Dombrovskis prepared to take that step. And politically the HC is not more left leaning than that the party has been reigning the City of Riga together with such a distinctly right-wing politician as Ainars Slesers, and apparently successfully.

No, the main reason is that the party does not act in the responsible way that a party in government has to do. And as long as it does not it cannot be seen as mature enough to take government responsibility.

And these are several reasons for that:

There are some things you cannot deny in Latvia, if you want to be taken seriously. One is that Latvia actually was occupied by the Soviet Union for decades. The correct term of international law can be discussed, but Latvians rightly look upon their own history in this way. When Harmony Center refuses to accept this fact, they deserve not to be taken seriously. The hundreds of thousands of people who were persecuted in their own country, exiled to prison camps in Siberia or forced into exile are living testimonies of the abuse that occurred. To deny this is in itself such stupidity, that the party makes itself impossible as a credible government party.

Neither is it possible to deny the Latvian language’s status as the only official. In a country with a history of Latvia the safeguarding of its language is an issue of paramount importance.

Added to this is the hypocrisy, which has occurred in several elections. Harmony Center’s ambition has been said to reach across the ethnic boundary. For that reason they have had alternating lists. But they have also put in system the opportunity, provided for by the Latvian electoral law, to systematically remove almost all Latvian candidates. The party has also run with mixed messages, depending on whether they have been interviewed in the Russian-speaking and Latvian-language media. Many who read both languages have testified to this.

When it came down to it Harmony Center was probably not prepared to take responsibility for the financial cuts that will be needed in the coming years. This means that there are many reasons to question whether the party is ready to take responsibility in government.

It depends very much on the party itself if the image of Harmony Center will be another in the future. A first symbolic step in a maturation process could be to terminate the cooperation agreement the party has with Prime Minister Putin's Russian party. That would clarify that the party does not have dual loyalties. Meanwhile it is reasonable that Harmony Center remains in opposition.

SEVEN MINISTERS FROM UNITY ANNOUNCED

2010-10-28T19:53:00.004+02:00

The Unity Alliance has today, after a board meeting, announced its list of the party’s seven ministers in the new government, lead by Prime Minister Valdis Dombrovskis (New Era).

New Finance Minister will be former SEB Bank economist, and also advisor of Prime Ministers Godmanis and Dombrovskis, Andris Vilks. This could be said is in line with speculations that the well merited Vilks will succeed Einars Repse, who has announced that he will step down.

As Minister of Economy Artis Kampars (New Era) will continue.

Civic Union leader Girts Valdis Kristovskis will be new Minister of Foreign Affairs. I think to most people this is more of a surprise. Most speculations have been in the direction that Artis Pabriks (Society for Different Politics) would return to this portfolio. Instead Pabriks will become the new Minister of Defence. At the same time the other party leader from Society for Different Politics, who together with Pabriks left both the government and the People's Party a couple of years ago,Aigars Stokenbergs, will make a comeback in the government, but now as Justice Minister.

As Minister of the Interior Linda Murniece (New Era) will continue. As Minister for Culture has been nominated Sarmite Elerte (Civic Union). Elerte is new in politics, as newly elected to the Saeima, but a very well known person in Latvia as former chief editor of Diena. Earlier this year she took the initiative of crating the Umbrella Group, which played an important role during the election campaign.

GOVERNMENT DECLARATION ALMOST READY

2010-10-28T19:49:00.001+02:00

There has been a rapid development over the last days. All ministers will soon be presented. Unity has been doing so today by announcing seven ministers. Union of Greens & Farmers is obviously planning their announcing of six ministers on Monday.

The new government declaration is almost ready. But all new ministers have to go through it before presentation.

For that reason we can still only speculate about what will come out of the declaration. The economy will of course have the highest priority. The budget 2011, which the Ministry of Finance right now is preparing, has to take down the budget deficit to six percent, and the budget 2012 to three percent, in order to be in line with the agreement with the IMF. Reaching that level it would be possible for Latvia to join the euro zone in 2014, which has been the ambition all the time.

But apart from that other items will also be crucial. In order to get more foreign investments the new government will have to take important steps to tackle corruption. Transparency International came up with new figures a few days ago showing that there is a long way to go. But steps have to be taken during the first part of the government’s four year term in order to show future investors that the government takes the problem seriously.

Prime Minister Dombrovskis’ ambition from the beginning was a wide government also including mainly ethnic Russian Harmony Center. That was not possible. However the ethnic tensions, that still are obvious in the Latvian society, have to be tackled. Dombrovskis has mentioned that there could be some kind of cooperation with the HC, also outside of the government. I think it is of important that these issues also will be raised in the coming government declaration.