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Latvia 2015 A Year of Fright

Another year is brought to conclusion and new year will be born. Time again to sum up the main events that took place in Latvia during 2015. Last year 2014 I called the “Year of peril”. It was the peril of war coming from our eastern neighbor. That peril remained for rest of the 2015. However, a new trend showed up in Latvian public discourse. It was fear from terrorism, refugees and homosexuals that was stirred up by populist nationalist forces and forces with close ties to Kremlin. The last two months brought a another political crisis that is currently developing and it may have highly undesirable outcome. That’s why 2015 was the year of fright. In this post the main themes selected by me will be discussed in detail. This analysis entitles my personal opinion.

Major Malfunction in the Latvian Politics

The origins of this major malfunction can be traced in November 2013. After the tragic Maxima supermarket roof collapse that took away lives of 54 people the government of Valdis Dombrovskis resigned. Valdis Dombr0vskis from Vienotība (Unity) party had been Prime Minister of four governments since 2009. He resigned to take the “political responsibility” for Zolitūde disaster. Immediately, after his resignation a discussions begun of new PM from Vienotība who would replace him.   Solvita Āboltiņa a parliamentary speaker  and leader of the ruling party refused to take the PM seat. Vienotība placed bets on Artis Pabriks then a Minister of Defense to become a PM. However, president Andris Bērziņš  refused to appoint him for some personal dislikes. So as its happens in Latvian politics when top political players refuse to take a front position a person from the back door is placed forward. Laimdota Straujuma for many years served as secretary at the Ministry of Agriculture and as non party member was issued for Minister of Agriculture by Vienotība. She was not a public person and had less attention from the media. Now from January 22 2014 she suddenly became the first woman in Latvian history to lead the government. It was a result of a long practice of salon politics in Latvia.

Laimdota Straujuma first said that she intends to lead the government until 2014 elections. When election campaign came she was placed forward as PM candidate to lead the government for next four years. A brave words since never in Latvian history there was a government that lasted full parliamentary therm. Likewise when she formed the government with three parties – Vienotība, Green Farmers Union and National Alliance (NA) many predicted that her government will not last long. However, there was a reason her government was politically stable during first half of 2015 – from January to June Latvia was a presiding state over the  Council of the European Union. It was first time Latvia had such an important task in EU and it was done without much problems and without major strides. Thankfully, for Straujuma the conflict in Ukraine had gone to stalemate and  there was not much of pressure from Russia as some expected.

The troubles for Straujuma started after the end of EU presidency. First major issue for Latvian government was the refugee crisis. The war in Middle East and North Africa had caused a sharp influx of refugees coming to EU countries. Greece, Malta, Cyprus and Italy could no longer sustain hundreds of thousands refugees who are stranded in refugee camps akin to to go more wealthier Germany, France of Sweden that would offer work, living place in education. To maintain this ongoing crisis the EU leadership made plan that all EU countries must settle a number of refugees. Latvia as many other Eastern European nations resisted assigning quotas, but agreed to host a fixed number of people. At first the number was 250 people, few months later the number rose to 534 people. The coalition party National Alliance begun stiff opposition and objected to hosting any refugees at all. A large anti-refugee protest supported by the NA was hosted near the governmental building, causing tensions among the government. At one moment the Green Farmers also started to object the government decision and   insisted on parliamentary vote. Then the President Raimonds Vējonis came forward with ultimatum to government to stop quarreling and make a joint decision. In the end despite NA continued protests Latvia will have to host above 500 refugees from Middle East and North Africa next year. With them Latvia already has its own problem of illegal immigrants coming from Russian and Belarusian border. The Vietnamese, Afghans and others. The challenge of the future government is how to properly host and integrate these newcomers strangers to our country.

Straujuma also managed to sell the Citadele bank to Ripplewood foreign investors despite controversy, scandals caused by eccentric Minister of Healthcare GuntisBelēvičs with his reform plans and problems with law and teacher strike caused my mismanagement by Minister of Education MārīteSeile.

The event that triggered her demise was emerging scandal over Latvian national airline Air Baltic. Air Baltic survived the economic crisis and still stands as the biggest airline in the Baltic States. However, it needed an investor and investment advisory company Prudentia recommended a  German businessman  Ralph Dieter Montag-Girmes who promised to invest 52 million Euros with government adding further 80 million. The investor has connections with Russian Aviation industry and the deal could involve the purchase of Sukhoi Superjet planes for Air Baltic fleet. At first the Minister of Transportation Anrijs Matīss denounced this proposal and broke agreement with Prudentia. Then at the last hours before governmental meeting over Air Baltic funding he placed forward this proposal ” as the best of the worst decisions”. In midnight November 4 government approved this decision.

Then in the morning Laimdota Straujuma fired Matīss “for failing to inform the government about the Air Baltic funding deal”. The deal was approved not just by Matīss but by whole Laimdota Straujuma government – in that moment she missed her rightful moment of admitting a mutual mistake and resign. However, the show started and lasted till December 7. Straujuma was defiant and supported by president, however criticized by Solvita Āboltiņa and some other members of Vienotība. On December 6 Vienotība held congress that some hoped would bring change to decaying party popularity and some statement would be issued over Straujuma governments future. No such thing happened and the congress turned out to be parody of boredom. Nothing was changed, no new statements. Straujuma was still defiant. Monday came and on 11:00 Laimdota Straujuma visited president Vējonis and announced of her resignation. A salon politics had again made their score.

What happened afterwards is turning in to major political malfunction. Solvita Āboltiņa who possibly played leading role in this coup is the best of the worst candidates for Prime Minister. She was not elected in last parliamentary elections and only entered parliament when his party member Jānis Junkurs who came above her in voting results immediately resigned from MP seat in favor of Āboltiņa. Āboltiņa disgraced herself when she walked past protesting pensioners and booed them. All the apologizes could not save her fading grace and despite that all she was placed forward as the Vienotība top PM. But, NA took a strict stance that they will not enter government formed by Āboltiņa. A small group of Vienotība members in parliament the so-called “liberal group” also stood against Āboltiņa. So if Āboltiņa does not came up with some clever combinations to force her opponents to accept her she will be unable to form a long-lasting government without NA and facing a possible party split up. Vienotība has been framed by Dzintars Zaķis election fraud scandal, had suffered from misdeeds of Āboltiņa and lost its many stronger members. Valdis Dombrovskis now works in EU government,   Artis Pabriks is in EU parliament. Veiko Spolītis a popular leading anti-Kremlin policy advocate was fired from the party for drunk driving incident. Vienotība ratings has come to rock bottom to 5%.

So that may lead to government lead by two more popular former coalition parties. Green Farmers and NA. While their party leaders refuse to stand up to PM candidacy they have their own candidates from the salon. Green Farmers may propose Māris Kučinskis a political veteran who was top leader of now defunct Peoples Party.  NA may came up with Roberts Zīle – another veteran from the nationalist right specter who now serves as MP in EU parliament. The chances of Green Party lead government would mean a rising prominence of mayor of Ventspils city Aivars Lembergs – a leader of the Green Farmers who is also accused  of state forgery and corruption on the highest levels. Its also means a greater influence of Latvia nationalist conservative right who has become ill famous for its purity laws, anti-refugee policy and corruption on justice sector. Aivars Lembergs has been known as the opponent of NATO and sympathizer of Vladimir Putin. NA while being anti-Kremlin on paper is known for sympathizing Kremlin conservative policies and being outright EU skeptic. A new populist anti EU government like one in Poland and Hungary is on the rise and its also up to our new president Raimonds Vējonis to choose if he wants such government. He was also member of the Green Farmers Alliance.

“Ok, I must take a drink first!” 

Those were the first words of newly elected president Raimonds Vējonis when he came to speak after being elected as the President of Latvia. These words were probably spoken in emotional reaction to his election after four exhausting voting runs by the parliament. Surely a leader of the Green Party would like a refreshing still water. But, such slack attitude became signature of the new president. He took part in Latvian version of “Saturday Night Live” where he drove a bobsleigh, he took part in basketball game and many other public activities. His predecessor Andris Bērziņš who became 70 years old last year in these therms was a sharp contrast. Andris Bērziņš who had become annoyance of his mindlessness,  lack of fast decision-making and bad English skills was forced to abstain from placing his candidacy for second therm. Raimonds Vējonis was a long running Minister of Environment and then unexpectedly became Minister of Defense. When war in Ukraine started he took a tough stance  on Russia, called the events in Ukraine as the “Russian aggression”, laid out the plans for increasing militarization and helped to increase the NATO presence in Latvia. He condemned Aivars Lembergs outlandish criticism of NATO presence in Latvia and as president still takes a tough stance in defense issues. Will Raimonds Vējonis will  be responsible enough to avoid a Russia leaning EU skeptic government to came to power next year? That will be first major responsibility of the new president.

Latvia – one of the most pro-Kremlin member of NATO and EU?

The above statement may sound provocative. Greece, Hungary, Czech Republic all have state leaders who had leaned towards Kremlin or praised the Putin’s policy. Latvian leaders always have spoken out their support towards NATO and EU and called for support for Ukraine and Georgia. But, if we move from words to actions we may see a surprising scene-  Latvian politics in many ways are very pro-Kremlin. And that posses a danger to our state and society. Lets see what are the main points of Latvian pro-Kremlin policy.

One of the leading themes of Kremlin anti-western propaganda is that western liberal democracies have corroded the family values, has institutionalized perversion and that has led to complete degradation of the European civilization. And there are supporters of this thesis among members of the Latvian government. This year Latvia held annual Europride that was met with rapid homophobia within Latvian social nets, but did not lead to any violent protests as in Ukraine at the same time. However, the conservative “family support groups” gained support of the pro-Kremlin party Harmony who made proposal for “purity teaching” in the Latvian schools. The proposal aimed for censorship of learning content to limit mentioning things like homosexuality, transsexualism, and instead pushed on promoting on heterosexual relationships as only preferred choice of life. Harmony the opposition party gained support from NA who also thinks that liberals in Europe and especially in Scandinavia are degrading family values. In Estonia a gay unions are allowed while Latvian constitution only defines marriage between man and woman. After a load discussions between “purity law” supporters and opponents the amendments that opened doors for censorship in education  and beyond. Latvian politics had fallen prey for Russian anti-western propaganda and it was supported by most Russophobic party. Currently there are many active organizations in the country that are promoting Kremlin family values that will seek to affect the state laws even more next year.

Latvian resistance to Russian propaganda was also weakened by the Latvian coalition parties. The legislators made amendments to  radio broadcasting laws that insisted that radio stations that has 50% of its content in Latvian must broadcast fully in the state language. There are many Russian language radio stations in Latvia, some of them like “Russia Hit Radio” that has frequency in Latvia and its tied to Kremlin propaganda was the target for this law. Radio station “Russia Hit Radio” owner Uģis Polis started to protest and gained support from Green Farmers MP Armands Krauze who introduced now amendment that raised the Latvian language cap to 51%, meaning Uģis Polis station would avoid the full move to Latvian language. Such changes only would prevent Russian radio stations from broadcasting in Latvian and continue to relay Kremlin propaganda. And again this was supported by leading NA politicians. President Vējonis turned down the changes and sent back for review, however after “minor” corrections the amendment was voted in again. And that came after many speeches promising to limit Kremlin propaganda. Not only that also the NA and other party members managed to fire the chairman of National Electronic Media Council Ainārs Dimants who was considered in informal conversations as too liberal and allowing “homosexual propaganda” in the state media.

Latvian politicians also like to speak of increasing the security and gain energy source independence from Russia. Lithuania in therms of energy independence has taken a huge steps. Lithuania and Estonia have vastly boosted their defense and security over the years. Latvia has only begun boosting the long neglected defense budget after March 2014. Latvian Armed forces have bought first armed vehicles in 25 years which were used before by British army. Latvia has managed to rebuild its only military airfield in Lielvārde so US jets may land there.  Latvian Interior Affairs Ministry has issued plans for fence among the completely unprotected Russian border. With 100 meter gap in every 1000 meters to sustain “animal migration”. Bears, wolves, illegal immigrants and Green men rejoice! Luckily after journalists discovered this the idea of animal migration holes were dropped. But, that just shows how shortsighted is the Latvian defense planing.

In terms of energy independence the Russian Gazprom again gained victory in Latvia. Despite EU directive to cancel gas monopoly in Latvia that belongs to Latvijas Gāze company, half of its stocks belonging to Russia Gazprom and importing the gas only from Russia still kept its sole position. Formerly Economics sector was led by Vienotība who delayed the liberalization of the gas market. When the Ministry of Economics were taken over by Daiga Reizniece- Ozola from the Green Party she finally begun steps to remove Latvijas Gāze monopoly. And the former chess champion met stiff resistance from Latvijas Gāze leadership and was outplayed. Latvijas Gāze new president was former Prime Minister Aigars Kalvītis. His right hand woman was former chief of state chancellery Elita Dreimane who before was leading documentation against the Latvijas Gāze now went renegade and used all her knowledge against the state. Latvijas Gāze recruited many other former politicians and former state employees. So the liberalization failed and Latvia will be still solely dependent on the Russian gas supplies.

  Lastly its the growing notion of anti-EU sentiment boosted by refugee phobia. The refugee issue caused a outburst of racism in Latvian society. Racism, homophobia and antisemitism has always been present in the society but this time it was boosted by Latvian politicians. The anti-refugee protests and marches supported by NA were dominated by openly racist slogans. While pro-refugee activists raised arguments that Latvians were once a refugees after Word War II and were granted refuge in Europe and America, their received response that since Latvia refugees where white that does not count as an argument. Refugee phobiac’s blamed EU for forcing Latvia to accept “blacks” while forgetting that Latvia is committed to EU not just EU to Latvia.  Echos of Kremlin propaganda was clearly visible as protesters blamed Latvian Foreign Minister Edgars Rinkēvičs open homosexuality for such pro-refugee policy. When Latvian public choose young Latvian singer Aminata for Eurovision song contest many complained that a black singer was sent to represent Latvia. After she gained highest results in five years there was disappointment that Latvia has no white singer to gain such results. Racism and homophobia was not created by Kremlin. Yet Putin’s Russia openly promotes racism and homophobia and its good it has not begun openly promoting antisemitism. If Latvian politics and society are choosing to support Kremlin values there is no need to relay on support on defense from Kremlin tanks. Its our own choice if we want to create insecurity or security for us and our children.

Challenges for 2016

The main challenge of 2016 is withstood ever-growing Kremlin influence. Eiroskeptick government influenced by oligarch accused of criminal charges is a danger to our country. Our inability and unwillingness to host and integrate a small number of refugees is also an obstacle to our security. The dangers from two terrorist supporting forces the Islamic State and Russia’s Kremlin will grew stronger in 2016. There is possibility that after cease of the Mensk (Minsk) agreements the war may again erupt in Ukraine. While Russia is bombing Syria, lets not forget Russia is merely testing its weapons and gadgets for conflict in Ukraine, Belarus and the Baltic States. The falling oil prices and rapid decline of the Russian economy may increase the possibility of Russian involvement in more military conflicts. As war is one of the ways to avoid domestic failure. Latvia must sustain itself in the face of this threats. Have truly liberal pro-EU and pro-NATO government. We must resist the rogue influence and strengthen our security. This is our responsibility to generations ahead. Will we celebrate 100 years of Latvia and will we celebrate 200 years that is decided by our actions right here and now.

In the end of this long post that I hope the readers have taken note of many of the issues and warnings written here, I wish everyone a happy and safe 2016. 2016 is the year of the Monkey. Smart and versatile creature, also very cunning and manipulative and we are heard of the monkey with grenade in his hand. Lets be smart and versatile and  cunning to defeat our foes. To talk with you again in 2016!

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Latvia 2014 The Year or Peril

Another year is heading for an end. The last post of this year will be review of events that took place in Latvia during 2014.  In past I called the 2011 as the year or troubles, the 2012 the year of quarrels, the 2013 the year of struggles. What I choose for this year will be the Year of Peril. It was the peril of the aggression coming from our eastern borders, it was the peril of the new economic backslide and peril of perpetual troubles and struggles that started on 2009. Yet to start reviewing this year we must go back to November 21 2013. First it was the start of the protests in Kyiv, Ukraine that later affected our country and the Maxima supermarket roof collapse that took away 54 people’s lives  and lead to the collapse of the long-standing Valdis Dombrovskis government. Both these events that took place on the same time affected the Latvian inter and foreign policy. Around these two events the story of the perilous 2014 year will  be told.

Latvia and the Ukrainian Conflict

Last September I had chance to listen to the famous journalist and author Anne Apelbaum. The author of Gulag A History  and The Iron Curtain was no rushing to finish the book about the Golodomor the Great Ukrainian famine on 1932-1933. The book was delayed for many years because the publisher considered Ukraine as unimportant topic as nothing ever happens there that would boost the sales. So it seems that suddenly 2014 became actually the year of Ukraine. But, what started in Ukraine was no coincidence nor it was unexpected. The signs of brewing revolution and conflict were visible on summer 2013 when nation was discussing the coming EU Association agreement that the pro-Moscow president Viktor Yanukovych had promised to sign. At same time some publications were suggesting of possible conflict between Russia and Ukraine in case of moving towards west. One publication was called “Russia could blow up the situation in Crimea”.

The initial protests in Ukraine echoed in Latvian media and social circles. First support actions took place on December near the Ukrainian embassy. They were attended by 20-30 people, mostly the members of the Latvian Ukrainian Congress and the members of the National Alliance that expressed the support to the Ukrainian revolution. Yet the National Alliance  is pro-EU only for geopolitical reasons and their members like to play hockey with the Belarusian dictator Alexander Lukashenko. Yet, every further Ukrainian support action gathered more people from all kinds of political parties and social circles. For the starting slogans of the Euromaidan were for joining EU, saying no to corruption and adapting the western values of democracy were appealing to Latvia. We had our barricades on 1991 were we stood against communism and destroyed the communist symbols. While Kyiv was celebrating the demolition of the Lenin monument in Kyiv we are wondering what happened to most Lenin monuments that were taken down on 1991. Yet it was not just about monuments and agreement signing it was a fight for independence and sovereignty. What the 2004 Orange revolution failed to achieve the Euromaidan struggled with blood – full freedom from the yoke of Moscow. Something that every Russian neighbor strives for and for Ukrainians it is matter of historical honor the original Kievan Rus against the Grand Duchy of Moscow – the remnant of the Golden Horde.

The Latvian official policy towards the Ukrainian revolution was supportive and it welcomed the new government that formed in the outcome of February 24 events. Yet what followed next – the Russian invasion and annexation of Crimea and further invasion in Eastern Ukraine started the year of Peril. Many call this ongoing situation as the “New Cold War”, originally this therm was coined by British journalist Edward Lucas on 2008. When Russia provoked Georgia in to war and occupied two of its regions. Later both Russian leaders Vladimir Putin and Dmitri Medvedev   later admitted that they planned this war to prevent Georgia from joining EU and NATO. Yet back then the Western leaders swallowed this event with shame. Soon the worldwide economic crisis shadowed the events that took place during summer. Yet the warning was given but not heard – Russia is always in for confrontation towards west no matter the costs. For the Cold War thinking was never given up for the Kremlin rulers.

To explain why Russia in confronting the west right now and has did for last 20 years is to tell the metaphor or the bear and octopus.  Russia likes to portray herself as angry bear. Yet, the bear mostly sticks to own territory and himself. He only goes outside his territory when  he runs out of food. Otherwise he is mostly peaceful if not attacked or disturbed. That is not Russia. Russia is an octopus. Its head and main body is within Moscow but its testicles stretches all around the Eastern Europe and Asia. It tries to hold all its neighboring countries within its grasp. Any attempt of trying to break free is met with hostility and anger. The octopus is also afraid of others trying to cut of his testicles and reach for its head. Without all of its captured assets the Moscow would be powerless and left to decay. And that’s why Russian propaganda is  telling tales of encircled fortress, the hunted bear and struggle to prevent aggression. But, from the history we know that all foreign invasions in Russia from the western side started as response to Russian aggressive policy towards the west. Since the octopus is trying to hold all whats around him this the reason why Russia did not respect the sovereign independent policy of Georgia and Ukraine, while open intervention in neighboring country is “brotherly help”, the involvement of the western countries in the Russia’s neighbors is viewed as aggression against Russia itself.   Therefore Russia views all its border states as their sphere of interest that no other country can mingle. And it’s not like EU and NATO really wants the Ukraine, Belarus and Georgia for their sphere of interest. Ukraine needs west more than west needs Ukraine. And the reason is the claws coming from Moscow.

Vladimir Putin may have prevented Georgia from fully joining NATO and made the same harder for Ukraine. However, his most crucial failure was to prevent the Baltic States from joining the Western block. The Baltic States joined NATO and EU on 2004 leaving Russia frustrated and trying to bring their claws back ever since. The Russian aggression in Ukraine suddenly raised the question of the Latvian security. The Latvian political games had managed to remove the influential minister of defense Artis Pabriks from the main political scene. The often hawkish politician for years called for boosting up the neglected Latvian defense budget. It never reached the NATO 2% of the state budget standard.  After collapse of the Valdis Dombrovskis Pabriks was called as one of the potential candidates for the Prime Minister. However, the President of Latvia Andris Bērziņš rejected him. Later he was elected as member of EU parliament.  The current minister of defense Raimonds Vējonis is a leader of the Green Party. A seemingly unusual choice for such post yet nothing is its seems in the Latvian politics. Vējonis has taken his job seriously and taken steps to boost our military budget. He has brought more NATO troops in Latvia, even tanks from US. However, the army itself needs capable army. The lack of armed vehicles is compensated by buying used ones from UK. The army needs new anti air radars to intercept low flying Russian KA-50 attack helicopters that were stationed near the Latvian borders. Even more crucial is the training of the new servicemen, the support for the National Guard and so on. As Latvia just cannot relay on Estonia that has barely reached 2% defense budget requirement and  slightly more equipped Lithuanian army. Furthest neighbor Poland is boosting up military while Sweden is just waking from confusion of the Russian submarine within its waters. Russia is constantly testing the Baltic security by doing almost daily air force flights near the Latvian air space. With their transponders off they force the NATO Baltic patrol planes to take off to intercept them. Recently even the old but majestic TU-95 strategic bombers took flights within the Baltic Sea. Recently Russia has brought Iskander missiles to its Kaliningrad enclave for “drills”. All this has made opposite effect – NATO is bringing even more resources to ensure the Baltic security.

The Latvian inner security is also under question. The underfunded police force and seemingly slow and invisible special services raised doubts. The Security Police had change in leadership – the ongoing general Jānis Reiniks was replaced by Normunds Mežveits. Trough out the year there were various attempts by locals to support terrorists in Eastern Ukraine.  From raising donations to sending actual recruits. While Estonian security service had exposed many Russian agents, the Security Service and Constitutional Defense Bureau had found none. The other important question was the Residence Permits in exchange for real state property program for Russian citizens. By buying real estate in Latvia the Russian, Chinese or other non-EU citizen could gain residence permit within EU countries. The National Alliance had campaigned to close it down for years, sparking concerns of danger to the state security. The defenders of this policy says its helps the crisis hurt real estate to survive and that some of the residents from Russia are opponents of the Putin’s policy. True that small portion of Russian dissidents has left Russia for Latvia, for it’s a country with high use of Russian language and that the former Lenta.ru banned by Putin is now working in Riga as Meduza.ru. But its only a small number. One part of the Russian investors only buy the real estate but is not living there, renting or selling to others and giving no other investments to Latvian economy. Russia a country with official anti-western policy but with tons of investments and property within EU and US is a danger to Latvian economic and inner security. So far this residence permit security has not fully abolished.

Latvia joined the EU and US joint sanctions against Russia. The Russian response – to ban the import of EU food products, meat, fish and dairy products affected some of the Latvian companies. Not only that the Lithuanian and Polish apple importers were forced to send their production to Latvia alarming the local apple sellers. But, the local apple harvest was poor this year anyway.  While most Latvian traders accepted this and tried to compensate the losses others openly protested therefore boosting the Russian propaganda. One of the most prominent complainers was Major of Riga Nils Ušakovs. Leader of the mainly Russian speaking voters party left unreasonable rants about the sanctions in twitter and said that he is going to Moscow to “beg” to allow at least some of the Latvian products. His main concern was his special Rishij Dvorik Latvian food stand that grew empty after sanctions. Despite his visit to Moscow were he met Dmitri Medvedev and Grand Patriarch of the Moscow Orthodox Church   Kirill his Rizhkij Dvorik remained empty and went to rock bottom after Russian currency crisis.

Ušakovs also sent apologies to the blacklisted Russian singers and actors who expressed support for the Russian aggression. Among them Josif Kobzon, Valeria and others. In the end International Music festival “New Wave” hosted by the Russian television decided to leave Jurmala resort and move somewhere else presumably Crimea. The Ušakovs rants about sanctions and blacklists raised another issue- the issue of the pro-Moscow parties within Latvia. The Harmony Center now known simply as socialdemocratic party “Harmony” found itself unconformable with the Ukrainian issue. While confirming they support the Ukrainian territorial integrity, they were reluctant to denounce the Russian invasion and broke the association agreement with the United Russia party – the leading party in Russia. While Harmony balanced as usual the other one the Latvian Russian Union openly supported the Crimean annexation. Their leader Tatjana Ždanoka – the communist orthodox from the 1989-1991 came to Crimean “referendum” as EU observer. Despite the condemnations Ždanoka was re-elected as member of EU parliament openly pushing the Kremlin interests within Brussels. Her party however failed to reach any success in the parliament elections. The other more radical forces the movement “Zarya” (The Awakening) run by far right Ilarions Girss and Jevgēņijs Osipovs were preaching that Latvia should become another Donbass. Throughout the year   various Russian ideologues entered Latvia as part of the organization Media club “A-3” and expressed the ideas of Russian world and Euroasian state. Also the newly elected member of the parliament Ingūna Sudraba raised doubts about her connections with the Russian secret service and Kremlin elite. More bizarre was here connections with bogus religious group “Urantia” that believes in reptilian conspiracy against Russia and Putin as the holy savior. The invisible yet so visible reach of the Moscow octopus takes many passages to be described but this is a short glimpse.

The Collapsed Roof of the Latvian politics

The Maxima disaster left great shock to the Latvian society. The radicals wanted heads to roll immediately. However, the Latvian old saying of responsibility – Everyone is responsible, therefore no one is responsible again worked. The president Andris Bērziņš who called disaster as major mass murder had to approve his rhetoric.  After harsh talk with prime minister Valdis Dombrovskis, the latter resigned. Dombrovskis who had been Prime minister of several governments since 2008, lead the country trough the crisis and pawed Latvia to Eurozone had to resign ending an era. A question yet remains who stands behind his resignation that seemed unintended, – the president, parliamentary speaker Solvita Āboltiņa or the oligarch Aivars Lenmbergs   or all of them together will not be answered now. It will take time to answer what happened on late  November 2013. Right now Dombrovskis serves as European Commissioner for the Euro and Social Dialogue.

What was left after  Dombrovskis was political vacuum before 2014 October general election. As mentioned Artis Pabriks was turned down by the president or he was let down by his own party. The leader of the Unity party Solvita Aboltiņa refused to take PM office. The grey cardinal was growing unpopular within the voters so placed forward a compromise figure – the non party minister of Agriculture Laimdota Straujuma. A discrete careful woman the Straujuma became the first female PM in Latvia.  As the anti-lemberg Reform Party went into decay, the Lembergs lead Green Party Union returned to coalition and took over many important sectors such as Defense. Straujuma firstly considered herself only as temporarily Prime Minister until elections in October.

However, the power gap in Unity party was clearly visible. Two most prominent leaders Dombrovskis and Pabriks were elected to Brussels. The other members were not strong and influential to lead the country. So Straujuma remained as PM candidate for the elections and now serves her second therm.  The elections became nightmare for the party leadership. The party chairman also the chairman of the parliament (Saeima) Solvita Āboltiņa was not elected. The ongoing red-haired speaker has grown infamous for here arrogance and schemes. However, let’s be honest – the Latvian society dislikes strong powerful woman in office. But, Āboltiņa did not surrender. Jānis Junkurs the member of the Reform Party separatists, rather quiet and mysterious young man, now turned to Unity to run in elections. With his self funded election campaign he gained more points than the Grey Cardinal with Red hair and made in to parliament above here. But he was absent from the public scene after the election. Then on the day when the  new parliament was called he announced his resignation from the parliament. In such matter according to election laws the Solvita Āboltiņa replaced him. Leaving no comment the Junkurs left the scene and founded new company in Hong Kong.   Many obviously pointed that he was forced to give his seat to Āboltiņa. She soon took the seat of the National Security Parliamentary Commission showing that foxes never give up.

The National Alliance gained extra seats in the elections. Known as champions in conservative ideology they were known as champions in justice corruption. Of course nothing is proven. Only that both of their ministers for Justice and Regional Affairs were rejected to receive state secrets. So were taken out of game. Still Nationals secured the control over justice after the elections, and also gained the most valuable parliamentary speaker  seat that was taken by Ināra Mūrniece.

The Green Farmers – alliance between Latvian Farmers Union and the Green Party and the Ventspils city party of Aivars Lembergs benefited the most from the Dombrovskis downfall. Their main opponents the Reform Party had went into collapse. The Green Farmers returned to coalition and secured their old sectors – agriculture and welfare and also conquered the strategically vital ministry of defense and ministry of economy. The later was taken by chess champion Daiga Reiznience-Ozola.

The Harmony party failed this year. Despite winning the election by percent, they did not gain enough seats to form coalition. Nor they were asked to because of the  Ukrainian conflict. Their potential allies – For Latvia With Heart only gained 7 seats. More interesting was the new Regional Party elected member Artuss Kaimiņš. Outspoken, aggressive, often rude actor, he owned videoblog that was aired on radio for some time, where he interviewed his guest in the most bombastic way now entered politics. His main flagship was the Maxima disaster investigation on parliamentary level  and exposure of the corruption and injustice. After few months he was denounced for his drunk fight in rock cafe.  Its remains to be seen if he will evolve into Latvian Alexander Zhirinovsky.

Latvia so far rather successfully survived the national currency Lats transition to Euro. The patriotic nostalgia of the old beutiful currency soon was washed away by the war in Ukraine, as it was more important to be part of the strong global currency. The Russian propaganda tales  of the Eurozone collapse now is dwindled away by the real collapse of the Russian ruble. Now our neighbor Lithuania will enter Eurozone on 2015 making Baltic states under single currency.

Latvia – challenges for the 2015

Latvia will become the presiding nation of the EU. The EU presidency during these turbulent times will be crucial. In both of state security and international prestige. Russia openly harassed Lithuania during its presidency this year. Informational war and military threats are potential danger. Latvia has been exposed to the Russian propaganda for years and it will grow even more. Great concern is if Russia is planning more than informational warfare but a hybrid warfare using gaps in our security. Such actions can be dangerous for both Russia and Latvia as we are the NATO member. Another danger is looming in our neighboring country Belarus. For 20 years this country has been ruled by authoritarian president Alexander Lukashenko whose semi-socialist economy is depended on Russia. As the ruble in Russia went into decay the over inflated Belarusian ruble took a hit. Lukashenko is looking to avoid maidan in Belarus, by balancing between    Moscow and Europe and his people. Same as Yanukovych the Lukashenko maneuvers will end at one point leaving country in danger of either revolution or the Russian incursion. Since Belarus is our neighboring country that also should be considered as the fourth Baltic State, any major disturbance especially if its involves EU and Russia will be the prime interest for Latvia, Lithuania and Poland. Certainly the Belarus could be potential hotspot and game changer on 2015.

  The economical development is at constant caution. Latvia seemingly recovered from the economic crisis on the end 2013. We entered Euro, the remnant of the 2013 crisis the Citadele bank – the former Parex Bank that state had to nationalize was sold to foreign investors this November. The economical and energy dependence on hostile Russia must be limit if not cut all together. Russian economy is collapsing because of the western sanctions and the falling oil prices. Greater economical ties and cooperation must be established with Ukraine and Belarus. Russian economic sanctions are likely to increase on Latvia during 2015. On 2015 Latvia will be on the front of the international rivalry between the West and the Moscow octopus. The 2015 will be the year of the Goat. Goat is symbol of smartness, independence and wealth. Yet Goat is also the symbol of the Devils face. The Goat year previously was 1919 and 1991 the two very crucial years for Latvia. Lets be smart and independent and also courageous on year 2015 and reach new milestone and achievements.

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Latvia 2013 The Year of Struggles

Another year is coming to an end and as always I will gather all what was important in Latvia during the 2013. The year 2012 was labeled by me as the year of quarrels, now in 2013 these quarrels have become a full time struggles. Struggles between various political forces and forces within the society have resulted in many calamities like the burning of the Riga Castle, the Zolitūte disaster and the breakdown of the Valdis Dombrovskis government. The results of these struggles are yet to be foreseen for next year as they are still unfolding in full strength. This was truly the year of Snake as the unpridicatbaly of the Snake was the eminent within the events of Latvia and elsewhere.

Municipal elections with a record low turnout

Municipal elections took place on June 1 a very hot summer day. Was this the reason for such a low participation of voters – 686 097 or 45,85% of all eligible voters? More possibly it was a political passivity within the towns and rural areas, the lack of new voters because of emigration. In such almost in every major city there were no big surprises. Cities such as Ventspils, Liepāja, Jēkabpils kept their mayors who had been in office for some 20 years. There were major changes in Daugavpils. The old leadership by Žanna Kulakova was voted out, as she made a poor move by joining the declining Reform Party and was caught up in corruption scandals. She was replaced by old time mayor of Daugavpils Jānis Lāčplēsis from the Unity. However, the most votes were acquired by the Harmony Center party. While securing stable win within the center of Latgalian region – Rēzekne, Harmony Center still is unable to take a clear lead over the second largest city of Latvia with the mayor Russian speaking population. Also the resort town of Jūrmala, favored by Russian millionaires, with one of the most unstable municipality with more than 4 mayors in four years, finally got a “stable” municipality with “just” five parties and Gatis Truksnis as the mayor. Despite his flamboyant arrogance and attempts of making a cult of personality he managed to secure leadership of the resort city. Harmony Center was unable to seize power in the major parts of Latvia, but one point of the Latvian map became their stronghold – the city of Riga, also known as the capital of Latvia.

Riga Municipality – a state within the state with a Tzar Nil Ushakov

When the young journalist Nil Ushakov from First Baltic Channel entered the politics he was portrayed as the new political hope of the pro-Russian parties. Seemingly good intellect, perfect Latvian knowledge skills and magnetic personality were what convinced many to elect him into parliament in 2006. However, the work in the  opposition was boring for him and so on the 2009 he was placed as a first runner for the Riga municipal elections. With the help of the massive election campaign, using the 9th May celebrations, assisted by the advisers from the Russian Embassy, he secured a first great victory for the Harmony Center. He however had to share his power with Ainārs Šlesers an experienced businessman and a political gambler. By leaving the New Era party and the Civic Union who later united in Unity party, Ushakov and Šļeser had a stable dual leadership. Some said that Ushakov will be just a puppet in the Šlesers hands. But, on 2010 Šļesers made another gamble to gain entry into the new parliament that proved to be a political disaster for his party. The Vice Mayor Šlesers was replaced with his party member Andris Ameriks an experienced politician. Ushakov now gained a upper hand in all the deals within Riga and started to rule as sole Tzar of the city with Ameriks as his faithful First Advisor.

The power changed the actions and the personality of the Nil Ushakov. After the failure of his party in 2011, when it failed to enter the coalition despite gaining the most votes, he made a crucial step by supporting the two language referendum initiated by the Russian nationalist radicals. He now alienated himself from the leading Latvian parties and set path to long run hostile opposition in the Harmony Center. With Harmony Center in hapless opposition within the parliament, Ushakov made Riga as a fortress that disobeys the central government. While Dombrovskis government desperately pursued the austerity policy looking to lower the state budget deficit, Ushakovs made populist moves like giving free public transport for pensioners and school students. A multi million flower pavilion with no toilets and screeching doors, enormous andministarive resource spending on boosting on political advertising. Also dark cases such as assault on freelance journalist Leonīds Jākabsons who uncovered Ushakov association with the Russian Embassy. There is no proof of Ushakov has been involved in this crime against Jākabons, but the cynical tweet by Ushakovs – “I have an alibi!” at the time of the assault showed the face of the Tzar of Riga.

With all this on 2013 municipal elections the coalition parties should have to devise a way to topple him from his throne. Instead all was done to allow Ushakov to gain victory more easy. Instead of making a united election list each party went on their own. The Unity first runner was Sarmīte Ēlerte a notable figure from the times of Third Awakening, former editor of the newspaper Diena and former Minister of Culture. She however picked up a poor election strategy by centering on the nationalist slogans, “If we loose Riga, we loose Latvia!” a slogan more preferred by the National Alliance. National Alliance took advantage of this and made Baiba Broka as the first runner a jurist, working in the Ministry of Justice. A charming, calm but also a cunning woman Broka instead of emotional nationalist slogans put forward argumented social policy and in the end National Alliance won more seats than Unity. However, Ushakov’s Harmony Center unified list with Ameriks new party Honor to Serve Riga gained 54% of votes and secured the fortress of Riga.

Ushakovs now a comfortable leader with two cats living in his cabinet to show his good side made two poor choices. First an attempt to make a special Riga resident card for people registered in Riga. People with such cards would have a cheaper public transport prices, while others registered in other parts of Latvia would have to pay more. A wave of protest soon followed against such segregation of the people of Riga. After all many people who live in other towns have a daily work in Riga, or those who live in Riga, but have declared address in other municipalities. Despite governmental disapproval, protest campaigns Ushakovs went against all odds, even by openly bypassing the law issued these Riga Citizen Cards. On December 18 the Riga Town Council issued a budget deficit of 35 million Lats. Obviously a Riga Card was a vain attempt to fix the deficit issue. Free public transport for elders and school children is not exactly free, but funded by Riga tax payers. Another mistake by Ushakov was an erratic response to Zolitūde disaster. First showing sings of strong leadership and responsibility, after the resigning of Dombrovskis, Ushakovs showed an erratic behavior of calling the Dombrovskis resignation as the act of populism and aggressively denied any calls of resignation for himself. In the end Ushakov just showed that he is just another Eastern type politician who sees the resignation as a sign of personal weakness and taking responsibility as a sign of humiliation. Just like Vladimir Putin in Russia whose party United Russia has signed a cooperation agreement.

The fight within the coalition that lead to collapse of the Dombrovskis government

Already in 2011 after the emergency elections were over the new Dombrovskis government were seen as short lived by some. There were simply too many different parties with different aims. Unity party kept their Prime Minister seat, the Chairman of the Parliament, Finance, Defense and tried to lead the coalition. The Zatlers Reform Party already loosing six elected members in the first of parliament working day was badly traumatized. The leader Valdis Zatlers soon lost his control over the party because of his illness. So the party was simply renamed to the Reform Party. But, the reforms pushed by the ambitious Minister of Education Roberts Ķīlis that met a strong resistance right from the start finally ended when he resigned April on behalf of his poor health. Later he was caught in making drunk driving which resulted in a car crash. His replacement Vjačelavs Dombrovskis is more known for his scandalous press secretary Anna Kononova who previously worked for Ushakovs. Another Reformist Edmunds Sprūdžs also faced his defeat against the oligarch mayor of Ventspils Aivars Lembergs in vain attempts of removing him. He resigned and later left the party as the new leadership was now looking to work with the Lembergs Green Farmers. The Minister of Foreign Affairs, Edmunds Rinkēvičš, Minister of Economy Daniels Pavļuts and the Minister of Interior Rihards Kozlovskis had better results, but since the Reform Party ratings are below 5% the Reformist struggle started by Valdis Zatlers has suffered a mayor defeat.

Meanwhile the third coalition partner the National Alliance was playing a partisan warfare against the Dombrovskis. Constantly threatening the bring down the government if their demands are not met, they never came close to actually do it. Fight against the residence permits in return of investments for non EU citizens, resulted only in partial victory. The Minister of Culture Žanete Jaunzeme Grende a business lady tried to instore order over the Latvian National Opera. Despite Latvian Opera artists being famous all over the world, the Opera had financial problems. Jaunzeme Grende decided that the only way to save the opera was the change Opera leadership. But, the longtime director of the opera was wealthy Andrejs Žagars, with too many connections with National Alliance rivals and vast support base of the artistic society. In the end Valdis Dombrovskis dissatisfied with the Opera scandal dismissed Žanete Jaunzeme Grende sparking anger from the National Alliance. However, Dombrovskis also decided not to cancel the removal of Žagars. In such he shot two rabbits with one shot. Opera was then taken over by famous composer Zigmārs Liepiņš known for his conservative views and connections with the National Alliance. A pyrric victory for the National Alliance.

The NA defended Žanete Jaunzeme Grende in the most aggressive way, but in this same way they wanted to remove their own minister of Justice Jānis Bordāns by excluding him from his party and asking him to resign. The official reason was his affiliation  with the Democratic Patriots an offshoot movement from NA. However, the real reason was the Bordāns desire to reform the insolvency process. Many of the NA leaders including the General Secretary Aigars Lūsis where an experienced insolvency administers boosting the party profit. Bordāns soon became involved in conflict with the NA jurist clan lead by Gaidis Bērziņš his predecessor. In the result he was excluded, despite his desire to continue working with the NA. But, NA could simply fire Bordāns from his office and replace him with Baiba Broka. Valdis Dombrovskis could only fire his ministers and he decided to keep Bordāns as the Minister of Justice. Confused NA declared the coalition agreement no longer in effect. Despite such calls, the coalition continued to work and even managed to issue a state budget for 2014. The coalition was like breaking building with unstable foundations and one great trigger was needed to destroy it completely- and that was the disaster of Zolitūde.

Latvia 2013 A year of disasters

When Latvia is mentioned on the first page of any international news page? A) Election event, B) major sports victory, C) a major disaster. Sadly enough on 2013 C) variant was the most frequent. The first event was in March during the Good Friday on March 30 223 under ice fisherman became stranded on the ice cap that was washed away from the coast. Navy ships and army helicopters were involved to get them back on the land. Fishing on frozen ice is a tradition in Latvia for decades, and every year at least 2 fisherman is lost because of unstable ice. But, when they start to fish on the ice of the frozen sea the trouble begins. Rūdolfs Blaumanis already at the end of the 19th century wrote a novel called “In the Shadow of Death” of ice stranded fisherman in the open sea. This shows how long Latvia had dealt with this issue. For news agencies like CNN this might had been amusing, but for Latvia nothing unusual and rather shameful.

The frosty winter took away 23 lives of Latvian citizens. But the hot summer was not only hot in temperature, but also in the flames that destroyed the Castle of Riga. The Medieval Castle surviving many wars, renovations had never caught a fire in his history. But on the night of June 20, when the repair workers had gone away the castle roof erupted in massive flames. The Castle again had renovation works, the Presidential residence was moved to the House of Blackheads in the main Old City Square. But, the Museum of Arts, and the Museum of National History were still working there. The whole night of June 20-21 was spent in the heroic struggle of extinguishing the flames. In the end the museum collections survived, but they will be moved to other places next year. The Presidential block however suffered the most.

The November 18 the Latvian Independence day seemed very happy and full of patriotism. Most could not imagine the calamity that took place on the late evening of November 21. A roof over crowded Maxima supermarket collapsed burying many people under the ruins. Safety services again tried to rescue people from the rubble of blocks, 3 firefighters were lost in the process. 54 people died resulting the biggest disaster in the Latvian history.

The rescue works were not over as the struggle to find the responsible begun. One blamed the Re&Re company that was responsible for the building, others blamed Maxima shopping chain because it continue to work while there was buildups of artificial garden on the roof. And also for making evacuation because of alarms that for some reason went off an hour before the roof collapsed. The Maxima response was a communications disaster when its arrogant and cynical Latvian Maxima director Gintars Jasinskis made comments that angered the whole Latvian society resulting boycott of the Maxima shopping chain. Jasinskis was later fired.

As Ushakovs and Dombroviskis was unwilling to take political responsibility that is where the President of Latvia Andris Bērziņš came in. In his first speech after the disaster he called the event as “murder” and called for political shakeup. And then he realized his words with actions. A week after Valdis Dombrovskis the longest serving Prime Minister resigned after a long conversation with the president.

Andris Bērziņš now turned everything into even greater confusion by his inability to pick up a new candidate. The Unity put forward Artis Pabriks the Minister of Defense, but since Bērziņš disliked the strong anti-Putinist Russia stance by Pabriks he was turned down. Bērziņš then added even more confusion by asking to make people elected president, with full powers over all controlling state offices like the Bank of Latvia, The Anti-Corruption Bureau, Constitutional Defense Service ect. A president with such functions will be almost Vladimir Putin in Russia. After that some even asked about the mental state of the aged president. As Bērziņš is continuing to play games by not calling an exact candidate for the Prime Minister; it makes a question – are his actions dictated by the foolishness or a rafinate political cause. After all Bērziņš was from the Green Farmers party, the party of Aivars Lembergs is looking for revenge after the dismissal of the parliament in 2011. Or an old time Communist Party official is looking for a slick way to allow the Harmony Center in the coalition. The answer for this question will reveal on next year.

The next year may be labeled as the year of changes. The new Euro currency, the parliamentary elections and many other things that will happen along the way. There were many positive things of 2013. The Song and Dance Festival, many achievements of our sportsmen and international cultural achievements. Latvia became more closer to Catalonia by its Prime Minister acknowledging their legitimate struggle for independence. A connection that must kept within the next year as Catalonia will hold a concluding referendum next year. The Dalai Lama visit was inspiring for many.

Next year is the year of the Wodden Horse for it may be a good omen fast victories, unexpected adventure, and surprising romance. It is an excellent year for travel, and the more far away and off the beaten path the better. However, as the Trojan Horse was made from the wood we must let to make 2014 go off that way. Let’s work, act and pray to make the year 2014 as the year of our personal and mutual victories!

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Modern day Latvia

Latvian Government lead by Māris Gailis on 1995

Latvian Government lead by Māris Gailis on 1995

It’s a bit too early to write a history of the last twenty years of the independent Latvia. Many things that happened and happening right now needs a greater period of time to objectively understand them. Only now Latvian historians are starting to understand the period of the Soviet occupation that was not so long time ago. And me who spent most of youth in the 90ies and 2000ies are not the one to fully describe this time.

Latvia began its second period of independence on a rocky road. The transformation from Communism to Capitalism was a painful experience for many. The difference between Latvia and Russia that Latvia actually had an experience of capitalist economy. So it was Latvian will to restore the former glory of pre-war Latvia.

To enter the free market economy many things had to be sacrificed. Most of the Soviet industry including VEF and Radiotehnika went bankrupt leaving thousand of unemployed people.  There were many reasons for this – 1) the Soviet industry was only made for the Soviet market that broke down completely 2) large part of the civil industry was actually secretly used by the Soviet army 3) Latvian government made an insufficient privatization program that allowed many to do schemes and ruin the enterprises that could be saved. Similar problems happened in the countryside where long hated collective farms were disbanded. However, the new local landowners could not accumulate all of the cultivated lands. In both cases the new private owners of factories and farmland lacked recourses to develop them. Lack of money and working force was the reason why so many things made during the Soviet times went to waste. The new Latvian government could make a pragmatic slow transition to free trade market like Slovenia. However, the newly elected Saeima was again caught up in endless multi-party struggle. A banal reason for the failures of the 90ies was simply the incompetence of the ruling people and will to gain easy money.

Until the new elections in 1993, the official government was the Higher Council of the Latvian Republic a relict from the Soviet past. The leading Prime Minister Ivars Godmanis started a wave of reforms and was best remembered for his portable stoves he introduced for houses without no central heating. The time of 1991 to 1993 was the time of the great lack of recourses and rather chaotic privatization.

Latvian politicians did not learn from the past experiences of the too many political parties. In 1993 the Saeima was elected again since 1931. The Latvian Popular Front that led the independence movement had broken into many movements. It did not even make it to Saeima.  Instead the ex members of the communist party and new born politicians formed a “Club-21”. It was a political interest group that formed a new mass party called “Latvian Way”. It was a right wing centrist party that scored 36 seats in the parliament. The Latvian National Independence Movement (LNIM) scored 15 seats, “Harmony of Latvia, Rebirth and Economy” won 13 seats, Latvian Farmers Union 12 seats, The Russian minority party “Equality” 7 seats, For Fatherland and Freedom 6 seats and Latvian Christian Democrat Union (LCDU) 5 seats. 15 other parties did not gain a single seat.

The fragmented parliament opened the way for the governmental instability that was present before the war. Two short lived Latvian Way governments by Valdis Birkavs and Māris Gailis failed to meet the expectations of the people. Māris Gails ended his reign in 1995 when the country was caught in its first major bank crisis. The Banka Baltija was a large holder of deposits that collapsed because of the scams of their owners. In result large number of people lost their money and the government was unable to return it. For many years the people responsible for the bank collapse was not sentenced showing the impotence of the Latvian juridical system.

The elections of the 6th Saeima on 1995 was even more frustrating. It was the rise of the populism caused by the economic crisis. The Democratic Party Saimnieks (Landlord) gained a 18 seat lead by Ziedonis Čevers, a Minister of Interior during the Godmanis government. Latvian Way scored 17 seats. The Party lead by eccentric German national Joachim Zigerist won 16 seats. Fatherland and Freedom 14 seats, LNIM and Green Party union – 8 seats, Latvian Union Party -8 seats, LFU, LCDU and Latgalian Democratic party-8 seats, Peoples Harmony Party-6 seats and the Latvian Socialist Party -5 seats. That was the apogee of the political instability. No one was able to form a stable government. Then the president of Latvia Guntis Ulmanis elected in 1994 a relative of Kārlis Ulmanis step in proposed and independent candidate – successful non party businessman Andris Šķēle. He managed to lead the country from 1995 to 1997 with two cabinets. During this time certain stability was reached and people started to lose faith in populist parties.

 Latvian people came across on a very sad reality. First: many leaders of the independence movement had lost it’s place in Latvian politics right after the restoration. Instead the political arena was taken by the new born businessman, functionaries of the ex communist party and people who had no connection with the struggle for independence. Second: Latvia inherited heavy burden from the Soviet past – the Soviet immigrants. They did not want to leave and Latvia was unable to force them. The ex Soviet forces now the Army of the Russian Federation was still in Latvia until the full withdrawal in 1994. In so the attempts of decolonization could cause similar bloodshed as in Moldavia and Caucasus. The first instance of the Citizenship law made in 1994 was very strict granting citizenship people born before 1940 and their descendants. That left a large part of the Soviet immigrants. This made Russia to start a constant campaign against Latvia who accused her of discrimination of the Russian speakers. The citizenship law had been improved many times allowing people to naturalize more easily. Until this day some 326 735  people are still without proper passport. The process of naturalization has slowed down because many have chosen the Russian citizenship instead and those remaining are simply unable to pass the language laws. Others want automatic citizenship.

These two problems also the economic failures because of it made many protest groups. The ones who resent the current political system and strive for more national authoritarian government, others who want to revise back to communism. And the third part of people who oppose the government by simply leaving for another country.

The most important decision made by the early leaders was the goal to join the European Union and NATO. It was a door to both economic and political stability and most external security from Russia. The path to integration was hard as Latvia had to fill many obligations, but it was a logical step. Knowing the pre-war experience when Latvia was mostly on its own the membership of the EU and NATO who were seemingly strong at that time was a right move.

The elections of 1997 was a victory for the new Andris Šķēle party known as the Peoples Party (PP). Second came the Fatherland and Freedom, third Latvian Way. Russian Peoples Harmony Center, Latvian Farmers Union, and Latvian Social Democrats the New Party lead by emerging businessman Ainārs Šlesers. This was the landmark election as it sets a new order of the parties that was lasting for many years. The top political leaders – Andris Šķēle, Ainārs Šlesers and the major of Ventspils Aivars Lembergs who supported the LFU became the main political players. Later they were called oligarchs, the A team and was associated with corruption and state forgery. Aside from them the old timer nationalists gathered around The Fatherland and Freedom. In theory they believed in the ideals of the independence movement, but in practice they were caught up in the corrupt political games. The other side growing stronger over the years was the Russian party lists that were born out of remnants of the Interfront movement and new generation of the Russian speaking politicians. As the most Latvian parties except the Social Democrats was right wing, these Russian speaker parties posed as leftist. As the amount of naturalized soviet immigrants rose up this political fraction became stronger to the level until this day. And not without the help from Moscow.

Allegoric painting showing Andris Šķēle as the new God of the Latvian politics

Allegoric painting showing Andris Šķēle as the new God of the Latvian politics

Andris Šķēle won elections, but lost the Prime Minister seat. The nationalist Guntars Krasts became PM, but was replaced by Latvian Way Vilis Krištopāns on 1999. Andris Šķēle finally took back the PM seat in 1999, but May 2000 lost it to New Way Andris Bērziņš (not to confused with the current President of Latvia).

The elections of 2002 brought new political faction in the Latvian politics. The president of the Bank of Latvia Einars Repše decided to stand against the oligarch parties. His new party The New Era achieved 26 seats, Peoples Party 20 seats, Latvian Farmers Union 12, the Ainars Šlesers Latvian First Party – 10 seats, Fatherland and Freedom 7 seats. The Russian party “For Human Rights in United Latvia won 25 seats marking first great success of the Russian fraction. The old timers Latvian Way was voted out of the parliament.

Einārs Repše became the PM and issued ambitious reforms and austerity policy. During his reign, Latvia finally joined the EU. The referendum results was 67,5% for and 32,5% against. Some say since the treaty for joining was signed before the referendum, it had no real effect. However, Norway had signed the treaty for joining EU twice and twice it was rejected by the Norwegian people. And Norway never became the member of the EU. Latvia officially joined the EU on May 1 2004.

In the same year on April 2004 Latvia joined NATO. Latvian National Armed forces were finally found eligible for such organization. Latvia had taken part in the peacekeeping missions in Bosnia and Herzegovina and Kosovo. Consequently Latvian Armed Forces joined the peacekeeping missions in Afghanistan, Iraq and Mali.

NATO summit in Riga 2006 Vaira Vīļķe Freiberga in the middle

NATO summit in Riga 2006
Vaira Vīļķe Freiberga in the middle

From 1999 the new President of Latvia was Professor Vaira Vīķe Freiberga an exile Latvian from Canada. With her great intellectual skills and charisma she gained much respect and admiration in the Western world. Her efforts boosted the joining the EU and NATO. Her tough stance on justice and corruption also made many politicians worried.

Repše did not manage to hold until the official joining in both EU and NATO. He was forced to resign after inter-coalition conflict. The leader of the Green Farmers Party in union with Latvian Farmers Party Indulis Emsis took power. He however made a minority government since the New Era party was against him. On December 2004 his coalition member Aigars Kalvītis from Peoples Party deposed him by voting against the state budget. In a conspiracy a period of oligarch influenced politics followed. Aigars Kalvītis took the PM office, three A – Team parties PP, LFU/GP and Latvian First Party made the monopoly of power for years.

The entry into the united European market opened doors to many goods and many evils. Latvia was overblown with foreign investments; Swedish banking took over most of the local bank sector. Latvia received EU funding. Areas such as education and road building benefited. Soon it also became the source of corruption to gain EU funds for scam projects.

The evils were the completely opened European workforce. Latvians slowly started to travel to places as Ireland, the UK and Germany for better paid work. Latvia reached the EU levels in prices, but not in pays. Another old problem that came from EU was the “servant syndrome”. The servant attitude to foreign powers was inherited from the times of serfdom and became pathologic during the Soviet occupation, when local communists were the most zealous of all to meet the Moscow demands. In the same way the Latvian bureaucracy was eager to meet every EU obligation and recommendation. Sometimes such diligence was disastrous as in example of ridiculous restrictions in the fishing industry that was struggling for years. And also the completely incompetent full liquidation of the Latvian sugar industry. However, it was not 100% strict order from Brussels to destroy all the sugar companies. The owners had a choice either to limit their production and make adjustments or sell their companies. They choose the easy way and sell the companies for large sums of money. Estonia, Lithuania and Poland on the contrary had many times defied the EU demands, interpreted them on their own and used the EU as practically they can get.

The modern Riga skyline - The Swedbank headquarters. Symbol of the so called fat years

The modern Riga skyline – The Swedbank headquarters. Symbol of the so called fat years

The 2006 election was the victory for right wing A team parties. Peoples Party and Latvian First Party used holes in the election law to make a large scale election campaign funded by third party organizations. The massive deception using notable personalities who praised the ruling candidates resulted that in the first time after the regaining of the independence, the ruling parties received a mandate to rule further. The 2006 was also the first election for the Russian party block The Harmony Center.

Aigars Kalvītis took the PM seat again. The economics were booming, real estate market and bank credit business flourished. Kalvītis made an infamous New Year speech where he declared “If no foolishness be done, then we are awaited by seven rich years, fat years if we remember the story about the Joseph!” He promised that Latvia will achieve the European levels of prosperity and Latvians will not work in foreign lands, but be the masters of own land.

The ruling coalition tried to achieve this with little interference in the free market. Swedish banks and local as well encouraged people to take loans for their new homes as the real state market was doing well. From 2006 to 2008 an illusion of prosperity came to many. The austerity was in the past, as Ainars Šlesers declared “It’s time to push the gas pedal!”

However, already in 2003 the British historian Niall Ferguson predicted that the real estate bubble in US will someday burst starting the global economic crisis. As the time went by more people in Latvia also warned of the impending burst of the Latvian economic bubble. People such as the president of the Bank of Latvia Ilmārs Rimšēvičs were ignored by the government. An eminent problem became the inflation that the government was unable to tackle.

However, it was not the faulty economic policies that lead to downfall of Kalvītis. It was an arrogant abuse of power. First such abuse was done in 2007. Vaira Vīķe Freiberga finished her second term in office. Kalvītis felt resentment after she blocked the provisions in the security law. So he needed a loyal president. And in the secret meeting in the Riga city zoo, a famous surgeon Valdis Zatlers was chosen as the right candidate. The fact that a man with no political background was put forward for the highest office of the state was seen as arrogance of the ruling parties by many. The Russian party Harmony Center placed their candidate – Aivars Endziņš – the Chairman of the Constitutional Court, but Zatlers was elected sparking great resentment.

Then Kalvītis went further and tried to remove the head of Anti-Corruption Bureau Aleksejs Loskutovs who was inconvenient for him. However, Loskutovs saw this as an illegitimate act and seek legal action. He was supported by massive protests and people went against Kalvītis corrupt arrogant government. After 3 years of rule Kalvītis resigned on December 2007.

The mass movement against the Kalvītis government was nicknamed the "Umbrella revolution" because of the bad weather that made protesters to bring their umbrellas

The mass movement against the Kalvītis government was nicknamed the “Umbrella revolution” because of the bad weather that made protesters to bring their umbrellas

The Ivars Godmanis came back as PM. He was a long time member of the Latvian Way party and took part in the Saeima. After the Latvian Way went decay and joined with the Latvian First Party Godmanis continued to work in politics as the Minister of the Interior affairs.

Godmanis started good; however he excluded the New Era party from his government that was the instrumental of so called “Umbrella Revolution” that achieved the downfall of Kalvītis. Latvia marked the 90 year anniversary on November. But the long predicted global economic crisis started in the US in August and later reached the EU. At autumn the Latvian locally owned bank the Parex went bankrupt. Godmanis took the step and went to bailout. The bank was nationalized. Again there were certain elements of unlawful activities and two former owners of the bank are in court.

Soon it became apparent that because of the burst of the real estate bubble and inability to cover all the costs the Latvian state budget is in real danger. Kalvītis declared that he has achieved the only surplus state budget in history. Now it turned out that Latvia may be heading for default. Godmanis was forced to ask for International Monetary Fund support. Whole Europe and especially Sweden were desperate to save Latvian economy.

On January 13 2009 the anger about the crisis erupted in full scale riots in the streets of the Old Riga. Valdis Zatlers issued a tough warning on Godmanis to make political changes or risk the dissolving the parliament. Godmanis survived however on March 2009 national resentment and mistrust by the president forced him to step down. Finally the New Era party had a chance to revenge on the oligarch parties. Aivars Lembergs had been already infamous about his corruption charges that lead him to temporary arrest and removal of the major powers of the Venstpils city. However, he has kept his major seat until this day and still holds great influence despite the charges. Andris Šķēle had already left the active politics in 2003 and lead the Peoples Party from behind. Ainārs Šļesers was in active politics. All three parties experienced the great downfall of the voters support. So they were not ready to take responsibility. The new PM from the New Era party Valdis Dombrovskis said: “Other parties had thrown the power upon our feet!” Contrary to eccentric Einars Repše, arrogant Kalvītis and erratic Godmanis, Dombrovskis is cool and well balanced man who could keep calm in most serious situations. Under his guidance Latvia went trough hard austerity reforms that made many unemployed and cut pensions. Latvian Education system and health care suffered greatly.

On 2009 historical turnout was reached in the Riga Municipal elections. The Harmony Center together with the Latvian First Party secured wins in Town council. Nils Ušakovs became the first Russian major of Riga. On 2010 The Harmony Center was wowing to win the Saeima elections and enter the parliament. Since the Harmony Center was union of many Russian parties, the Latvian parties also decided to gather forces. The outcome was rather strange: Unity was formed from New Era Party, Civic Union that actually broke away from New Era and also Fatherland and Freedom, and breakaway party Society for Different Policy that from dissenters of the Peoples Party. Two nationalist parties – the old Fatherland and Freedom/LNIM and new All For Latvia!, Joined to form a National Alliance. And two failed oligarchic parties – the Peoples Party and Latvian First Party/Latvian Way joined in For Good Latvia Block. 3 Latvian party unions against one strong Russian party union, plus the Green Farmers block lead by Aivars Lembergs. Harmony Center declared that are they firmly sure that they would win the elections. However the Unity managed to score 33 seats, Harmony Center – 29, Green Farmers – 22, For Good Latvia – 8 seats and National Union – 8 seats. Unity and Green Farmers formed a two party coalition that proved to be unholy union. Unity politicians and Dombrovskis himself soon found that the coalition work is heavily influenced by Lembergs, who was still in court (and still is). The relations between those two parties became volatile, but nobody was ready to finish them, because there was no real alternative.

Then one of the most decisive moments took place. President Valdis Zatlers looked for support for re-elections. During his four years in office he tried to wash away the reputation of oligarch elected president. He was no longer respected by the Peoples Party that went decay, Green Farmers also sought to remove him. The Unity was reluctant but openly declared support for his re-election. As the re-elections were heading close an unprecedented event occurred in the Saeima. Ainars Šlesrers received as a search order from the corruption bureau.  However, his deputy immunity required a parliament vote to allow the search and persecution. Saeima voted against. The vote was secret, but it was obvious that the oligarch parties and the Harmony Center voted against. Valdis Zatlers used this as a pretext to fulfill his long desire to dismiss Saeima. On May 28 in historical speech Zatlers issued an Order Nr.2 to issue the referendum to dismiss Saeima. He explained that the oligarchic rule is enough and it’s time to elect new parliament that defends justice.

The reaction from the ruling coalition and the parliament was not overly positive. To revenge on Zatlers, the dismissed parliament proposed new candidate Andris Bērziņš from the Green Farmers fraction. He started as the chief of the executive Soviet of Valmiera, later joined Latvian Peoples Front and voted for the restoration of the independence. He achieved great wealth by working as the chief of the Unibank and Latvanergo. He is the wealthiest retired person in Latvia. As Zatlers was still candidate for presidency he was voted against and Andris Bērziņs became the new president. Seen as stooge by the dismissed Saeima Bērziņs was booed by the angry crowd and still has not attained significant support.

Zatlers however did not back down. After the absolute majority voted for the dismissal of the Saeima, he founded a new party. Zatlers Reform Party was the mixture of the members of the old presidential administration, careerists and idealists. However, Zatlers failed to gather popular intellectuals in his party. The election of the 2011 was another turning point. Harmony Center won the elections, Zatlers Party came in second, Unity third, the National Alliance and Green Farmers also made it.

Harmony Center was unable to form the government themselves. They even lacked proper candidates for the Minister posts. The overall standpoint was not to allow Harmony Center into the government. But, then Zatlers came out with an imprudent proposal to form the government with the Harmony Center. In the time of one day the national hero turned into national traitor. It is possible that during his visit to Moscow where he met Russian leaders Putin and Medvedev, Zatlers had privately promised to support Harmony Center entry into the government. To put a more misery to his action Zatlers even said that his decision can only be changed with tanks, sparking memories of June 17 1940. After large opposition from National Alliance and Unity and protests within his own party, Zatlers withdraw his decision. A new government lead by Valdis Dombrovskis, a third time in office was formed. A “Justice Coalition” made of Unity, Zatlers Reform Party and the National Alliance were formed.

The initial battle against the oligarchs had been won, Andris Šķēle and Ainars Šlesers was voted out of the parliament. Ainars Lembergs Green Farmers had been placed into deep opposition.

But, a new national battle was called by the Russian national radicals and the Harmony Center. An ex national Bolshevik Vladimirs Lindermans and his henchmen managed to gather petitions for Russian as the second national language. After it was officially supported by Nils Ušakovs the major of Riga and the leader of the Harmony Center the referendum had to happen. On February 2012 more than 80% of people turned down the two state language solution. But, the radicals had achieved to spark an ethnic confrontation. Similar referendums took part in Ukraine and the Russian occupied territories of Georgia.

The Russian influence of Latvia has been growing steadily over the years. If the Latvian government had given citizenship to all soviet immigrants in 1994 the ethic confrontation had begun earlier. It’s doubtful that the new citizens would support the Latvian right wing parties. The majority of the naturalized citizens vote for the Russian parties anyway. If the ethnic confrontation on the parliamentary level had already occurred after 1994 Latvia would have a harder time to join the EU and NATO. However, because of the help of the Russian soft power and local unwise Latvian politicians the ethnic confrontation steadily formed. Latvian media are filled with Russian radio and TV. The local Russian press is one sided, their cable and satellite TV is filled with Russian retranslated TV sparking Putinist propaganda. Russia has installed many so called “compatriot NGO’s” who supports Russians outside Russia. Russian Foreign intelligence has proven connections with many parties including Latvian. Latvia is one of the weak spots on the EU and NATO map who is prone to even greater intrusion from Moscow.

Book by Dombrovskis and economist Anders Aslund explaining the Latvian crisis policies

Book by Dombrovskis and economist Anders Aslund explaining the Latvian crisis policies

On 2012 -2013 Latvian government declared that the recession has been ended and new growth has been begun. The International Monetary Fund mission ended in 2013. The heavy austerity policies, tax raise and pension cuts that averted state bankruptcy, but made many unemployed and boosted the immigration was called “a success story”. After all the relative recovery and growth was reached. To justify his long years in office and his policy Valdis Dombrovskis pushed for Latvian entry into the Eurozone. This was achieved in 2013 and on January 2014 Latvia will change Lats to Euros. This was done regardless of the opposition and skepticism, Dombrovskis managed to escape from referendums and stiff parliamentary opposition. We will see how good will be this step in Latvian future, but it will be beginning of the New Era.

The true Latvian success story is not made by the government, but by our people. Our talented opera singers, movie directors, actors and sportsman who have brought positive outlook about Latvia. Creativity, willpower and physical strength used for wise and just means are what can bring Latvia forward.

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Lats – The Latvian National Currency

The famous Five Lats silver coin from 1931

The famous Five Lats silver coin from 1931

Today June 5 Latvia made important historical step- the European Commission and European Central Bank have approved Latvian entry into the Eurozone. Latvia will join the Euro club in 2014 and replace its historical national currency the Lats (LVL) For years Lats was the symbol of the Latvian national sovereignty. It was also one of the most beautiful European currencies. It will be no wonder if in following decades Latvian coins will become the hit among the collectors. This article is about this currency and its history.

When the Republic of Latvia was proclaimed in 1918, it had no national currency. It was a currency chaos Russian Czarist rubles and German Ostmarks were all used at the same time. The first Latvian national currency was the Latvian Ruble that was supposed as the provisional currency until peace and economical stability was to be reached. The law establishing Lats as the national currency was approved in 1924. The law was made after long discussions. The Finance Minister Ringolds Kalniņš (Kalning) desired to remove state treasury notes and use the state gold fund to issue golden Lats. His plan was influenced by banker Izidor Friedman who advised to fill the state treasury with gold. However, the parliament turned down their plans as the Latvian golden reserves were too low and extra golden import was required to make golden Lats. Kalnings was forced to resign. On November 14, the parliament voted to keep state treasury notes and introduced the dual currency system. The Ministry of Finances was responsible for the state treasury notes while the Bank of Latvia emitted the paper currency. There was 10, 20, 25,50, 100 and 500 paper banknotes. And 1,2 and 5 silver Lats. 1, 2 and 5 Santims were made from bronze and 10, 20, 50 Santims were made from nickel. The name Santīms came from French word centime. Centime was used in France and is still used in many of its former colonies.

Latvian banknotes had national motives. The women in folk costumes, national heroes like Krišjānis Valdemārs and Jānis Čakste. The Five Lats silver coins featuring the profile of Latvian women in folk costumes were the most famous of those times. Nicknamed Milda – it became a symbol of the independent Latvia. During the Soviet occupation the 5 Lats silver coins were kept as treasures a symbolic reminder of the past.  On 1939 the Authoritarian leader Kārlis Ulmanis desired to make silver coins with his portrait. The sketch was made and despite coming war British coin mint received orders to issue them. The Soviet occupation halted this, however a prototype of this five Lats coin with Kārlis Ulmanis on it was made.

Latvian 25 Lats banknote

Latvian 25 Lats banknote

The Soviet occupation ended the life of Lats. After full annexation Lats was replaced with the Soviet ruble. Latvian Lats were kept by families as memorabilia. Others gathered them and sold them to collectors. After the regain of independence these old Latvian Lats became even more valuable.

Already in 1988 first calls of restoring the Lats were made. An art competition was made for new Lats design while official currency was still the Soviet Ruble. On July 31 1990 the Supreme Council of the Republic of Latvia (still unrecognized by Moscow) issued law for making the currency system for Latvia. Discussions about the new Lats  lasted all 1900, while Latvia was not still fully sovereign. Latvia was still pretty much dependent on the Soviet Currency. After full independence on August 1991 Latvia again used the old scheme. Before Lats the Latvian ruble was used as the interim currency. People nicknamed them repšiki after the president of the Bank of Latvia – Einārs Repše.

On 1993 Lats again returned in peoples wallets. 5, 10, 20,50, 100, 500 Lat banknotes were issued. Five Lat banknote features oak the Latvian national tree, 10 Lats shows the view of the river Daugava, 20 Lats has the Latvian national housing. 50 Lats has sailing ship and the 100 Lats features Krišijānis Barons the Latvian intellectual worker. 500 Lats features the famous Milda from historic five Lats silver coins. 1 and 2 Lats are coins. 1 Lats coin has salmon on it. Interestingly the 1 Lats with Salmon is very similar to the Icelandic 1 krona that also has fish on it. For years the Bank of Latvia has released many special coins dedicated to national events or sightings. Collecting these coins are the national sport for the collectors. Latvian special coins have won many international prices.

Special Lats celebrating the beginning of the 21th century

Special Lats celebrating the beginning of the 21th century

In 2004 Latvia joined the European Union. Latvian government set path to fulfill the Mastricht criteria to join the Eurozone. It was a long road thwarted by economic crisis however on 2012 Latvian government finally voted for joining the Eurozone. Despite the general distrust on the Euro and political campaigns made by many groups on both political wings, at January 1 2014 Lats will be replaced by the Euro. This time this historic decision is based on the general will of the Latvian people as the majority of the Latvian citizens voted for joining the EU. Estonia had already joined the Eurozone on 2012 and Lithuania will probably do it in 2015. As historian I will not go into speculations about the future of the Eurozone and its positive or negative effect on the Latvian economy, however Latvia had do to this sooner or later. The joining Euroze is a question of geopolitical importance. Even Poland with their Zloty will do it someday and its the historic responsibility of the Latvian government to carry out this transition successfully on the behalf of the Latvian people.

The Future Latvian Euro coin

The Future Latvian Euro coin

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Latvian Finances and Economy 1920-1940

From 1920 to 1940 Latvia was one of the leading exporters of butter, beckon and other goods across Europe

From 1920 to 1940 Latvia was one of the leading exporters of butter, beckon and other goods across Europe

World War I did a great damage to all territory of Latvia. The War of Freedom was no less damaging and true peace only came to Latvia at August 11 1920 after peace agreement with Soviet Russia. Now Latvians had the chance of rebuilding what was lost and make whole new sovereign economy for the benefit of the Latvian people.

One of the first issues was the lack of the national currency. German Marks, Ostmarks (German currency for occupied Eastern regions during WWI), Ostrubles, Czar Rubles, Kerensky Rubles were used in same time sparking currency chaos. On March 27 1919, the Provisional Government issued directions in exchange rates. One Latvian Ruble equals 1 Ostruble, 2 German Marks, 1,5 Czar Rubles. The main source of income for the government was money emission that helped to cover the war costs and administration fees. From 18 November 1918 to 1 April 1920 37,9 millions of paper money were emitted. On 18 March 1920 the Latvian Ruble was declared single official currency in Latvia.

However, inflation was on the rise, the price of rye bread rose from 2,25-2,40 rubles 10,8-12,0 rubles. Government issued more directions to stabilize the ruble, also the preparations for establishment of new stable national currency Lats followed. On 3 August 1922 1 Latvian Lats equaled 50 Latvian Rubles, and Lats was fixed according Swiss Frank rate. On 1 November the Bank of Latvia was established. It also had commercial service rights. At 1929 there were three state banks (Bank of Latvia, State Land Bank and Latvian Mortgage Bank) and 19 private commercial banks.

Latvian governmental budget during the first years of independence had debts, until 1922/1923 for the first time had surplus that was kept until 1929/1930. The main source of income was taxes, state monopolies and gain from state enterprises. The main priorities were state security, education and capital investments. Two main state monopolies were flax and ethanol. Largest state enterprises were the bank, postal service and railroad service.

The Agricultural reform drastically changed the economic situation in the country. Before the war 53% of land belonged to 2% of landowners mostly Baltic Germans. Latvian government decided to change that by making special State Land Fund that gathered 61% of land, 45% of it agricultural. Previous landowners were stripped of their large possessions. This radical move changed the Latvian countryside in small farm economies. 54, 243 new farms were made.

New Farm building in Latvia

New Farm building in Latvia

Latvians put large efforts in agriculture. During the first years after the war Latvians had to import crops, because of low harvest and the fact that most new farms were more effective in cattle production. Also the crop prices in global market fell down as the butter prices rose up. Because of this exports of butter, beckon and eggs reached great heights. The butter industry was one of the most progressive and until 1932 one-third of all export. Latvia also exported flax and timber to whole Europe.

Before the war, Latvia was one of the main industrial centers of the Russian Empire. After German invasion, large part of equipment, even workers was evacuated to Russia and the new Bolshevik government was not wiling to give it back. After the war Latvian industry worked mostly for inland needs. Latvian government had to subsidize the struggling industry for many years. However, the foreign capital from Germany, Great Britain, Soviet Union and others helped to get back on the track.

On 1929 Latvian export rose up by 10 times, however import was still larger than export. The main importer was Germany; the main source of export was Great Britain. After trade agreement with Soviet Union in 1927 export with that country started to rise up. With other neighbors – Estonia, Lithuania and Poland the import was greater than export.

Latvian export goods ready for shipping

Latvian export goods ready for shipping

The Great Depression reached Latvia on 1930. Crisis begun with drop of wholesale prices, the drop of prices for Latvian export goods and the breakdown of Latvian state gold reserves and foreign currency reserves. On 1931 the Bank of Latvia stopped issuing credits. Many companies went bankrupt. Banks took the first hit. Latvian banks suffered from German bank troubles making them impossible to settle with their depositors. After Great Britain devaluated their currency and canceled the golden standard the Bank of Latvia lost 2,1 million Lats. Latvia unlike Estonia kept the golden standard and issued many regulations to cancel unrestricted exchange to gold or foreign currency.

 Latvia had to sign clearing agreements with France, Great Britain and Germany to ease export costs during the crisis. The Nazi rise in power on 1933 caused economic disruption between Germany and Latvia as social democrats and Jews issued a boycott of German goods. Germany answered by halting butter exports causing great financial losses. Latvian government had to back down and make the boycotting stop. Also the export with the Soviet Union weakened as the export orders from the Soviet state ended. Almost all transit now went to Germany.

As the grocery product prices since 1927 begun to drop, the traditional Latvian exports brought smaller revenues. Government tried to lower import and raise export. Grocery import was halted, as foreign crops could be replaced with homegrown ones. With exception in 1937 because of dry summer, crop import was halted along with sugar import. Latvia could fully sustain itself with its own grocery production.

Industry suffered great losses, foreign capital went away and purchasing capacity dropped. As the trade agreement with the Soviet Union ended in 1932 many large industrial companies suffered losses. However, the worst of the crisis ended in 1933 and on 1934 during last months before the coup Latvian economy was again in the upswing. The government debt had dropped from its highest point 24, 2 million Ls 1931/1932 to 7,8 million Ls in 1933/1935.

The coup in 15 May 1934 was not caused by economic reasons rather political. However, Kārlis Ulmanis made significant changes in economic system making it more centralized. He issued a corporate chamber system forming four chambers: Trade and industry chamber, Agricultural chamber, Craftsman chamber and the Chamber of Labor. Such model of economical control was popular among many European authoritarian countries. The example for all was Fascist controlled Italy.

Authoritarian government made a great deal by fixing the crucial farmers debt problem. Agricultural auctions were canceled, debt rates for farmers were lowered and payback period was extended. New law allowed state corporative revision commission to change of fire members of the corporate boards. With that the state granted itself more power to control largest enterprises.

The new economy by Kārlis Ulmanis was based on protectionism and state enterprises. A new state owned Latvian Credit Bank was formed to make credit reorganization. State took over many private companies like vehicle factory “Vairogs”. Until March 1939 there were 38 state enterprises. Latvian industry started to recover. Textile, food, metal and machine industry begun to flourish. State owned industrial company VEF produced radios, telephones, MINOX cameras and even airplanes. “Vairogs” released first private cars based on Ford models.

The presence of foreign capital significantly dropped, however the construction of the first hydroelectric station at Ķegumi involved large investments from Sweden.

On 1936 Lats was fixed to British Pounds causing partial devaluation of Lats. Devaluation caused inflation and other troubles; however at 1936 the Latvian export gross total rose up fast and import went down. The export balance was positive and things were looking up good in the late thirties. However, an influx of agricultural foreign workers in later years started to become a problem. Because of the lack of native workers, people from Lithuania and Poland came to work in Latvia. It caused social and political problems and fully emerged after Nazi-Soviet invasion in Poland.

The great advancement of the Latvian economy was stopped in 1939. As WWII started Latvia declared full neutrality. Government issued regulations in trading Latvian recourses and prohibited Latvian ships from sailing under foreign flag. Lats was removed from the British Pound rate.

As Germany blocked the access to the Baltic Sea, Latvian traders were unable to send their productions elsewhere but Germany. All major ties with Great Britain were cut. On 5 October 1939 Latvia was forced to sign Mutual Assistance agreement with Soviet Union. Few days later both sides signed trade agreement allowing Latvia to export more to the east. The secret protocols of the Molotov – Ribbentrop pact included Latvia into Soviet sphere of interest. Similar agreement was later signed with Germany then a Soviet ally.

On 17 June 1940 Latvia was occupied by the Soviet Union and annexed in 5 August 1940. The sovereignty of Latvian finance and economy was canceled. Germany viewed this with anger, because they needed Latvian exports. Germany and Soviet Union both had different understanding over meaning of the “sphere of interest”, and Germans did not expect the occupation and annexation of their trade partner. That was one of the reasons that lead to German –Soviet conflict.

Latvia managed to recover from WWI damage and reached growth in trade and industry. For many years Latvian state budget was balanced with surplus. However, the Great Depression did a great strain on Latvian economy. But, Latvia managed to recover from the crisis and again reached growth at 1934 just before the coup. The coup by Karlis Ulmanis did not end the crisis as it was mostly ended before him. His policy only changed the economical system not the positive course of Latvian economy. Kārlis Ulmanis semi-centralized economy was successful for some time until the hardships of WWII brought end to it. Soviet occupation, German invasion and war ultimately destroyed many achievements of independent Latvia. The complicated story of Latvian soviet economy is to be told in future.

Latvian produced private cars

Latvian produced private cars

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Latvia 2012 The Year of Quarrels

As every year comes to conclusion this site gathers all the important events that happened in Latvia. Last time I called the year 2011 as the year of Troubles as the emergency elections, bankruptcy of bank Latvijas Krājbanka and national ethnic issues were truly troublesome for Latvia. This year will be called the year of quarrels because of the various issues in political fields that often sparked quarrels between politicians and the various groups of the society. This was the year of reform attempts that faced great contra-reaction from those who opposed the changes for legitimate or illegitimate reasons, many of the government cabinet ministers were asked to resign in almost regular basis by various groups of society. Also the inner instability within the government coalition is clearly visible although the government still works and most of the ministers except one still keeps his seats. This was an interesting year full of discussions and actions and the main events and themes will be outlined here.

The two state language referendum fails and issues about other possible referendums continues.  

The necessary 180 000 petitions for initiation for making Russian as the second state official referendum was gathered at the end of the last year by Russian nationalist radical organization “For Native Language” led by Vladimirs Lindermans the ex national Bolshevik. It may be that the referendum would not take place if the Major of Riga Nils Ušakovs would not join the campaign along with other members of pro-Russian leftist party the Harmony Center. Although both sides denies it the Harmony Center and the Linderman party has secretive ties together. Linderman and his radical members saw the referendum as their kick-start for their political career. In 2013 a municipal elections will take place and Linderman hopes to enter the elections in some municipalities with significant Russian population.

The referendum itself took place in 18 February. 70,66% of the voters or 1 091 757 citizens of Latvia. 74,80% said decisive no to two state languages, 24,88% said yes and Latvian as the sole national language was kept secure by the majority of people. The great voter activity was achieved by calls from all Latvian parties to take part in the referendum and say “no” to show the strong position of the Latvian people. On the other side of the front those who voted “yes” wanted to show their dissatisfaction with the current Latvian government and their national position.

The example of what could be achieved by such referendum did not went unnoticed by other Russian political groups. The political party “For Equal Rights in United Latvia” that has lost last two elections initiated the referendum to give citizenship to all non-citizens of Latvia. This sensitive issue was raised by them to resurrect popularity of the forgotten party. There are still about 15% of Latvian people who are non citizens that live in Latvia. Most of them are Russian speakers the ones that entered Latvia during the Soviet times as immigrants. By the citizenship law made in 1995 these people who had no legal nexus with prewar independent Latvia was not eligible for citizenship as they or their ancestors did not resided in Latvia before 1940. The Soviet citizenship was not taken into account as the Latvia was occupied by the Soviet Union. However, during the last 20 years the legislation allowed most of the non citizens go trough the naturalization process to acquire the Latvian citizenship. But, some of them did not because of lack of language skills or strict stance against naturalization. One part of them acquired Russia citizenship that was more easier for them and maybe more suitable.

The lawmakers saw great danger in using referendums as tools for making political instability and national ethnic troubles and rushed to change the referendum law to make the petition gap larger than 10 000 sign-ins. As always the legislation process was slowed down by the opposition parties and various groups and experts. The first version accepted by Saeima (parliament) was turned down by the president of Latvia Andris Bērziņs. At last the law was passed in November that now required 30 000 sing-ins in the first step and then after 2015 there will be only one step with 154 000 sing-ins. Before that the first step required 10 000 sing-ins and then 150 000 sing-ins. Opposition and liberal political groups said that this makes initiating new referendum impossible and the opposition parties are threatening of gathering sing-ins for referendum against the new referendum law.

But, the gatherers for citizenship free giving referendum achieved their goal and gathered 10 000 sing-ins for the first step. But the lawmakers saw their project for the changes in the Satversme (constitution) as unconstitutional and against the principles of the state. This was approved by various law experts and now the pressure on Central Election Commission was to not approve the referendum project for the next sing-in step. And after month of thinking in November the Central Election Commission for the first time decided to turn down the referendum project for the next sing-in step. Some political commentators saw this as threat to democracy while Russia again spread out the news about “ethnic discrimination in Latvia”. While the all the attempts of preventing destabilizing referendums may really hurt democracy the history shows that in most cases the referendums in Latvia were mostly based on national issues even before WWII and really made divisions and instability within society.

But the Russian radicals along with Vladimir Linderman continued to be active players in politics. The Linderman’s newest project is the Autonomy of Latgalia (Latgale) region from Latvia. Since Latgalia had the highest percent for support for Russian language he thinks that its rightful that Latgalia deserves autonomy. He however did took account of Latvian Latgalians who may not think so. Because of these actions his office and apartment was raided by the Security Police. Security Police also has noted that his party is illegal since he did not made all the steps to fully register his party but because of gaps in laws the society and party registry cannot cancel his party existence and Linderman still presses ahead and hopes to gain success in 2013 municipal elections even though he is not a  Latvian citizen.

The fight between parties within coalition 

The emergency elections in 2011 was won by Harmony Center but it stayed in opposition and because of support for two state referendum it may stay there until next elections. The Green Farmers Union has bad relations with Unity and the Reform Party that categorically dismiss any cooperation with it is also locked up in the opposition. With that that the centrist Unity, liberal Reform Party (ex Zatler’s Reform Party) and national conservative National Alliance along with six non party members the “Olšteins six” has great chance to lead the country for three more years with the leadership of Valdis Dombrovskis who was lead the state since 2009.

But it seems that Reform Party and especially the National Alliance dislikes the bossy attitude by the Unity. The latter has made many sabotaging and blackmailing attempts on Unity. The first one by them was the resignation by the Minister of Justice Gaidis Bērziņš over issues of returning the Jewish property. For years the Latvian Jewish community has asked to return or at least compensate the lost property of various Jewish organizations after the WWII. Bearing the fact that these organizations were many and their property very valuable the various Latvian governments were unable to met the Jewish demands. The government of Aigars Kalvītis was ready to pay large compensations but then changed their minds. But, the national minister Gaidis Bērziņš who first firmly declined any chances of looking at this issue again, then resigned after he was asked by Prime Minister to consider it after-all he resigned because of “discrepancy of opinions” between Ministry of Justice and the Prime Minister and National Alliance and the Unity. It’s a question if this move was dictated by antisemitism, or just inter rivalry between nationalists and Unity. Others however note that Gaidis Bērziņš had secret ties with oligarch Aivars Lembergs and was caught up in corruption therefore he used the Jewish question as the way to hide his true issues with the law. Other reason was simply the fears by the nationalist party to lose its hardline voters.  Whatever was the true reason this made a strain on Latvian-Jewish relations.

But that was not enough from the nationalists and they turned to blackmail. At the October in time of new budget approval the National Alliance threatened not to vote for the new budget if significant amount of money would not be allocated for the demographic policies that truly require attention. If the budget is not approved the government must resign. After load quarrels and  political bargain National Alliance achieved at least half of their demands bringing new financial improvements for the new parents.

However, the National Alliance had another antic in mind. Ahead of approving decision of joining the Eurozone in 2014  five members of the national fraction declared that they are not sure about voting for joining Eurozone. For two weeks a rest of coalition attempted to convince nationalists to make up their minds to vote for Euro. If they would vote against the chance to enter Eurozone in 2014 will be missed and Latvia will not fulfill the obligations to EU. The Nationalists decided that this antic is too dangerous and decided to vote for Eurozone. The hardline nationalists and ultra-patriots now saw National Alliance as traitors and their gamble backfired against themselves.

The reforms and counter-reforms

When ex-president Valdis Zatlers called emergency elections he said that new swift reforms needs to take place. In so he formed his own Reform Party. And after entering coalition the Reform Party gained power of Ministry of Education, Ministry of Economics, Ministry of Regional Affairs and Environmental Protection and the Ministry of Foreign Affairs. While Foreign Minister Edgars Rinkēvičs and the Minister of Economics Daniels Pavļuts were mostly praised, the Minister of Education Roberts Ķīlis and the Regional Minister Edmunds Sprūdžs met most stiff opposition to their reforms.

Roberts Ķīlis is a social anthropologist with education in Cambridge University. With his pro western outlook and admiration to western education system he had ambition to completely reorganize the Latvian education. He has many ideas like extending the learning semesters, replacing text books and workbooks with tablet PC for every schoolchildren. But for Academic Education he has even more ideas: removing study budget places completely and replace them with vouchers and force students to take credits compulsory. Closing many higher education facilities like Universities and colleges because they are inefficient and make one University that is in Europe top 10. While on ideal basis these ideas seem great in practical basis they are draconian. The whole educational system that is based on Latvian limited resources cannot adopt to such reforms altogether as the most of the personnel of the educational system are not ready for such changes. Therefore,  most of Higher education facilities called Ķīlis to resign as Ķīlis backfired calling them treacherous stagnates. His campaign against the Higher Education will bring more bad than good as many youngsters seeing this will choose to go to abroad to get Higher education. In the end the stiff quarrels between Ķīlis and education representatives ended with health problems and surgery for Ķīlis. He however stays defiant and promises to return after the recovery. But, now even the Prime Minister Valdis Dombrovskis has doubts in him.

The Regional minister Edmunds Sprūdžs has no Higher Education yet, but great plans and ambitions. One his ideas that came trough but faced great stiffness from the municipalities was to scale down the size of the deputy seats in Town municipalities. Other his great struggle for he is known is the fight against the oligarch Aivars Lembergs the major of rich port town Ventspils. Because of his corruption charges he has no full rights of authority as the major. But the prosecutors thought that he still uses his major title to affect the courts. So Edmunds Sprūdžs decided to discharge Lembergs from his major duties. Despite the fact he already was in fact discharged by the prosecutors.  But Lembergs called this decree illegitimate and still went to work as majors office as usual and went to court to appeal against the sentence. With the elections drawing again in 2013 Lembergs has great chance to become major again because of vast support from citizens of Ventspils despite all the corruption charges. And with that the eternal fight against Lembergs will start once again.

Ķīlis and Sprūdžs are political amateurs with great plans, but with lack of experience. But these two ladies from Unity party has big political experience but still a great opposition. The Health Minister Ingrīda Circene has always used iron fist policies during his previous terms as a Health Minister and she is using them again now. She was asked to resign because of inability to raise pays for doctors and making new provisions for family doctor qualifications. She also came out with strict provision that those who only pays taxes are eligible for state paid healthcare. In situation were many are not able do that it would sound draconian.

The Minister of Welfare Ilze Viņķele from Unity is also a iron lady who has many great ideas but very straight assertive way of communication that many would dislike. When she was interviewed in Latvian Playboy magazine she was asked why the pensions for people who worked in Soviet times are much lover than they earned back then. Her explanation shocked the Latvian Pensioner Federation and she was asked to resign. Before that she was attacked by conservative organizations about support  for children’s book that promoted gender change. Viņķele is called as the next possible replacement for Valdis Dombrovskis as she has already lead few government meetings in the absence of Dombrovskis but her strong language may scare away the weak hearten  voters.

The photo Radar saga

The last notable point for quarrels was the photo radars. The photo radars are seen as the important tool for road safety and minimizing  the traffic accidents. They are in Estonia, Lithuania and Poland and the rest of Europe and so logically the Latvia needed them too.

But, as in many similar events in Latvia the way how the photo radars were introduced brought them to their failure and removal. In neighboring countries the photo radars are set up and maintained by state police. But, in Latvia because of lack of money the photo radars were set up and maintained by private firm “Vitronic”. The problem was that the contract between Vitronic and police allowed Vitronic to take half of the money earned from speed fines. Of course the private company was interested not in preventing the speed limit breaking, but to gain as much of money from it. So the dreadful green boxes were placed   along all the streets of Riga, often disguised and because they were portable their location always changed. The contract required to make stationary radars but the company was slow to that also no radars were placed outside Riga. The great resentment from drivers was big, the radars were vandalized, others put home made signs to warn drivers of the hidden radars. In the end the contract with great expense was broken and radars disappeared from the streets before Christmas.

Prospects for the next year

The main event in 2013 will be the state-wide municipal elections. The main battleground will be Riga, were Latvian right-wing parties will be battling to oust the pro-Russian Major Nils Ušakovs along with his Harmony Center party. For years the young ex-journalist Nils Ušakovs has become powerful, arrogant and eccentric ruler of the main city. His city government works as caviar socialdemocrats, who spends a lot of money on popular decisions like free tickets for pensioners and school students while shunning the frugal state government. Despite the large spending and placing the party members in public city enterprises Riga has still many problems and the city government has sunken into corruption.  But, because of Russian speaker majority that adores Ušakovs the right-wing parties will have to show a stiff fight to mobilize against Ušakovs.

The next great issue will be the economic recovery and the drive to Euro. The opposition against the Euro in Latvia is great and often irrational, so the forces who will call for referendum to join Eurozone will be strong. Although Latvia technically already agreed to join Eurozone in 2003 when voting for EU membership, many people don’t understand this. If such actions will be taken the joining the Eurozone will be canceled and Latvia EU membership will be doubted in general. Some big country across the Eastern border will probably like this.

And off coarse as the reform process has not yet finished if not even went few steps further the quarrels between ministers and the representatives will continue. The year 2012 was the year of Great Fire Dragoon so no wonder this year was quite stormy all over the year. The next year is year of Snake so lets look out for treachery and intrigues judging by whats to expected they may be many of those. But also the Mayan calendar ended in 21 December bringing new Earth time cycle, the beginnings and  endings are always difficult, but whats to come in between should be worth to work for.

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