Central Europe Review - Latvian News Review

	Vol 1, No 13 20 September 1999

C E N T R A L E U R O P E A N N E W S:
News Review for Latvia

All the important news from Latvia since 11 September 1999.

Mel Huang

Latvian President Vaira Vike-Freiberga travelled to the Yalta Summit in Ukraine. As did many others, she focused on regional co-operation during her presentation.

During the trip, President Vike-Freiberga also met with Slovak President Rudolf Schuster and Georgian President Eduard Shevardnadze. Vike-Freiberga discussed the upcoming European Commission opinions, which both Slovakia and Latvia hopes will bring them to the negotiating table with the EU. In the meeting between Vike-Freiberga and Shevardnadze, the pair discussed bilateral ties and Latvian support for Georgia's bid to join the WTO.

Despite rejection by the Saeima Economics Committee, the Foreign Affairs Committee passed the Latvia-Lithuania Maritime Border Treaty and sent it to the full Saeima for ratification. The process may be difficult, as various lobbies - environmental, fishing, nationalist - are against the Treaty. Fishermen have threatened to blockade ports if the measure is passed.

The recent British spy case came to Latvia, when it was revealed that the "grandmother spy" Melita Norwood's father was Latvian. Aleksandrs Zirnis was named by the Times as one of the leading Communists in Britain during the early part of this century. It was also revealed that KGB whistle-blower Vassili Mitrokhin defected in 1992 via the British Embassy in Riga.

There was further confusion in the attempt to privatise the Latvian Shipping Company. Allegations of bribery, a vote at the Latvian Privatisation Agency's council that has been deemed illegal, and a conflict of interest are among the problems affecting the sell-off of one of the world's biggest shipping fleets. The dispute over the fleet's privatisation is one main reason for the ongoing feud between Prime Minister Andris Skele and Economics Minister Vladimirs Makarovs. Though the price of the offering and privatisation conditions have been agreed upon by the groups, the entire plan remains in limbo.

Power company Latvenergo is in a mess of its own over insurance for its employees. When it was revealed in a local business daily that LVL (Latvian lats) 3 million would be going abroad for the payments, government officials brought the situation to a halt. Investigations are continuing, but even insurance regulators say nothing is dodgy in this case.

Without the proceeds from that sale, the state opted for a quick fix in a bond issue. The government plans to issue bonds worth EUR 75 million in October to cover that budget gap - raising Latvia's external debt yet again. Finance Minister Edmunds Krastins said that the quick timing would complete the bond issue before the disruption that Y2K is expected to cause in the global financial sector.

Adding to privatisation woes, the Latvian Privatisation Agency's council rejected a plan to sell off shares of Latvijas Gaze (Latvian Gas) at the Riga bourse in an IPO. This is another setback from the supposedly "pro-privatisation" government of Prime Minister Andris Skele. Latvijas Gaze is one of the utilities that remains frustratingly in state hands despite calls to privatise.

In perhaps the final privatisation headache of the week, the Social Democratic Workers' Party has been waging a campaign against the whole privatisation concept - especially for large infrastructure and utilities companies, such as Latvijas Gaze, Latvenergo and the Latvian Shipping Company. Though the party's parliamentary motions and bills were shot down, its members are now using the dreaded word: referendum.

Ilmars Lesinskis was named as head of Latvia's Navy. Lesinskis is currently the head of the joint Baltic naval fleet, BALTRON.

Over 2000 angry workers of the Tolaram Fibres factory in the eastern city of Daugavpils marched through the streets in protest. The workers were protesting owed wages and the state of the company. Meanwhile, action to declare the company insolvent continues. The management is attempting to restructure debts and save the company. Several Riga sites, such as a branch of Unibanka, were also picketed for freezing funds for payment of wages. Some 2500 people work at Tolaram Fibres, which, according to representatives of the workers, is equal to a quarter of the city's workforce.

S&P raised its Riga ratings from BBB- to BBB.

The IMF predicts a 1 per cent GDP increase in Latvia for this year, rising to 4 per cent for 2000.

About 1000 students picketed the Saeima building, protesting against low funding for education. The protest was joined by MP Vaira Paegle of the People's Party. Later, Prime Minister Andris Skele (also of the People's Party) joined and talked with the protestors and actually led them on a march to the Ministry of Education...

All the parties have signed the agreement on rehabilitation of the failed Rigas Komercbanka (Riga Commercial Bank). A re-opening is scheduled for later this month, though some fear a bank run would be the first public response to the re-opening a bank that has been closed since March.

Justice Minister Valdis Birkavs travelled to Finland to work out various programmes of co-operation and sign a co-operations agreement with Finnish Justice Minister Johanes Koskinen. Birkavs said three areas of assistance from Finland are key: training of judges, computerisation of the court system and a better court management system.

Later, Swedish Justice Minister Laila Freivalde visited Latvia to meet with Birkavs and discuss bilateral co-operation in justice and home affairs. Freivalde also met with President Vike-Freiberga and Interior Minister Mareks Seglins.

Unemployment dropped a little to 9.8 per cent at the end of August, down by 0.1 per cent from the previous month.

Several tax changes for the coming year were outlined by the government, such as the increase in beer excise. However, petrol tax will remain the same.

After one week, campaigners for a referendum on changes to the pensions law are coming up short. The referendum petition gathered only 9 per cent of the necessary signatures, far less than expected.

However, polls indicate that a whopping 82 per cent of respondents do not support an increase in retirement age. But that is akin to asking if one supports higher taxes.