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COUNTRY PROFILES


PROFILE

Country Profile

Area: 64,589 sq km
Population: 2.2m (2011)
Capital City: Riga (pop: 706 000 (2010))
People: 59.5% Latvian, 27.4% Russian, 13.1% other (2011)
Languages: Latvian (state language), Russian
Religion(s): Lutheran, Catholicism, Russian Orthodox
Currency: Lat
Major political parties: Governing coalition: Unity, Zatlers Reform Party , National Alliance All for Latvia- For Fatherland and Freedom/LNNK.
Government: Parliamentary Democracy
President: Mr Andris Bērzinš (elected July 2011)
Prime Minister: Valdis Dombrovskis (since March 2009)
Foreign Minister: Edgars Rinkēvičs
Membership of numerous interational groupings/ organisations including: Council of the Baltic Sea States (CBSS), Council of Europe (COE), Euro-Atlantic Partnership Council (EAPC), European Bank of Reconstruction and Development (EBRD), European Union (EU), Food and Agriculture Organisation of the United Nations (FAO), International Atomic Energy Agency (IAEA), International Bank for Reconstruction and Development, ICAO, ICFTU, ICRM, IDA, IFC, IFRCS, International Labour Organisation (ILO), International Monetary Fund (IMF), International Maritime Organisation (IMO), Interpol, IOC, NATO, Organisation for Co-operation and Security in Europe (OSCE), Partnership for Peace (PfP), United Nations (UN), WEU (associate partner), World Health Organisation (WHO), WIPO, WMO, World Trade Organisation (WTO)

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ECONOMY

Basic Economic Facts

Source: Latvian Statistical Bureau and Eurostat
GDP: £15.3bn (2010)
GDP per capita: £6857 (2010)
Annual Growth: - 5% (2quarter of 2011)
Average monthly salary: £565.40
Consumer Price Inflation (yoy): 4.6% (September 2011)
Average Wage Inflation: 5.5% (yoy, 3rd quarter 2011)
Unemployment: 14.4% (3st quarter of 2011)
Major Industries: timber, metalworking industry, textiles, transit, food processing
Major trading partners: Estonia, Lithuania, Russia, Sweden, Germany, the UK
Further information about Latvia's economy can be found at:
UK Trade & Investment Country Profile: Latvia (http://www.uktradeinvest.gov.uk/ukti/latvia) .

Following Latvia’s accession to the EU in 2004, Latvia enjoyed a period of record-breaking growth: annual real GDP peaked at 12.2% in 2006, and all the more impressive wage increases hit 19.9% in 2007. But domestic demand grew excessively, especially private consumption and real estate investment, fuelled by cheap credit. The economy developed dangerous imbalances that were exacerbated by the global financial crisis. GDP growth turned negative in 2008 and the 18% contraction in 2009 was Europe's highest. In December 2008, the Latvian Government secured a 7.5 billion EUR loan from IMF/EU and began measures to stabilise the economy, including structural reforms. In first quarter 2010, after exports and industrial production picked up, GDP recorded its first quarter-on-quarter growth in nearly two years. Despite a large fiscal deficit, Latvia aims, through co-operation with the IMF-led programme, to achieve the Maastricht criteria and join the euro-zone in 2014. Latvia finishes the IMF-led loan programme in end 2011, and the Bank of Latvia forecast for 2011 GDP growth is about 4%.

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HISTORY

Recent History

Latvia first gained independence in 1918. In 1940-41 it was occupied by the Soviet Union under the provisions of the 1939 Molotov-Ribbentrop Pact with Nazi Germany, by Nazi Germany from 1941-1944, and again by the Soviet Union from 1944-91.

The more tolerant political atmosphere in the Soviet Union under Gorbachev in the late 1980s allowed pro-independence and reform groups to come to the fore. Independence was proclaimed in May 1990, but it was not until the attempted Moscow coup on 19 August 1991 allowed Yeltsin and his followers to come to power that Latvia approved the constitutional law and fully proclaimed itself an independent country once again. This announcement was made on 21 August, and Iceland became the first country to officially recognise the re-independence on 23 August.

Under the Nazi occupation the significant Jewish community was practically wiped out; under the Soviet occupation thousands of Latvians were deported to Siberian camps, executed or forced into exile. Society and industry were modelled along Soviet lines and absolute power rested with a Communist regime under Moscow's control. Deportations and an influx of Russians into Latvia during the Soviet period have resulted in a situation in which native Latvian speakers comprise only 59% of the population. As of July 2010, 15% of Latvian residents do not have citizenship (source: www.pmlp.gov.lv): the majority of these people are Russian-speaking. By the 1998 citizenship law (ratified by a referendum) they have the right to apply for citizenship, but must pay a fee and demonstrate their loyalty to the state by passing a Latvian language and history exam. The rate of naturalisation has increased in recent years, possibly partly encouraged by Latvia’s membership of the EU. In 1996 the number of non-citizens stood at 670,478, representing 27.15% (source www.csb.gov.lv) of the country’s population, having now dropped to 335,918 people, which represents 15% of the population (source: www.pmlp.gov.lv (http://www.pmlp.gov.lv) ).

Since regaining independence, Latvia has joined the EU and NATO and works closely with other Baltic Sea states, seeing cooperation as a means for progress and prosperity.

Riga is the largest city in the Baltics and a popular tourist destination, with an enviable old town boasting art nouveau architecture amongst many other admirable buildings.

Longer Historical Perspective

BBC News Country Timeline: Latvia (http://news.bbc.co.uk/hi/english/world/europe/country_profiles/newsid_1106000/1106666.stm)

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INTERNATIONAL RELATIONS

Latvia's Relations with the UK

The UK has historically strong links with Latvia. Latvia’s struggle for independence in 1918 was assisted by the Royal Navy (supported by the French navy). The UK never recognised de jure Latvia’s annexation into the Soviet Union in 1940, and recognised the re-independence along with the rest of the EU partners on 27 August 1991. Diplomatic relations between the UK and Latvia were restored in early September 1991 and the British Embassy re-opened in Riga in October of the same year in the building it had occupied prior to Soviet occupation. The UK gave development assistance to Latvia on the run up to EU membership and has provided considerable training for Latvia’s military forces prior to NATO membership and via NATO initiatives in more recent years. The UK and Latvia often have a similar stance on EU and NATO agendas and the current UK and Latvian governments enjoy a cooperative and friendly relationship.

Cultural Relations with the UK

The British Council has an office in Riga which has an active programme of events, follow this link to the British Council in Latvia website. (http://British Council in Latvia website.) Latvia has signed a memorandum of understanding to promote culture and education with the Welsh Assembly, who also conduct an active programme of events.

Recent Visits

Inward

-- Valdis Dombrovskis (Prime Minister) for UK Nordic-Baltic Summit in 2011

Maris Riekstins (Foreign Minister) October 2008

-- Edgars Zalans (Minister of Regional Development and Local Government) in July 2008

-- Aigars Stokenbergs (Finance Minister) in July 2006

-- President Vaira Vike-Freiberga in July 2006

President Vike-Freiberga in May 2004

-- Sandra Kalniete (Foreign Minister) in July 2003

Andris Berzins (Prime Minister) in March 2002

-- Indulis Berzins (Foreign Minister) in January 2002

Outward

-- UK’s Special Envoy on Energy and Climate Change Rear Admiral Neil Morisetti in August 2011

-- Lord Greville Janner of Braunstone QC in May 2008

-- John Mann MP (Parliamnetary Committee Against Antisemitism) in December 2007

-- Mr Tony Blair (Prime Minister) for the NATO Summit, Riga in November 2006

-- Mr Rhodri Morgan (Welsh first Minister) in October 2006

-- Margaret Beckett (Minister for Foreign Affairs) in October 2006

-- State Visit by HMQ Elizabeth II and Duke of Edinburgh in October 2006

-- Douglas Alexander (Minister for Europe) in June 2005

-- Dr Stephen Ladyman (Transport Minister) in June 2005

-- Ivor Caplin (then Defence Minister) in January 2005

-- All-Party Arts and Heritage Group in September 2004

-- Alderman Robert Finch, Lord Mayor of London, in June 2004

-- Gerry Sutcliffe (then Trade Minister) in May 2004

-- Mr Rhodri Morgan (Welsh First Minister) in September 2003

-- Lord Irvine of Lairg (then Lord Chancellor) in May 2003

-- Denis MacShane (then Minister for Europe) in March 2003

-- Baroness Blackstone (then Culture Minister) in February 2003

-- Mr Hoon (then Defence Secretary) in February 2002

-- HRH the Prince of Wales in 2001

-- Mr Spellar (then Minister for the Armed Forces) in 2000

Latvia's Relations with Neighbours

Latvia maintains close ties with Estonian and Lithuania, cooperating in many regional political and defence initiatives. Latvia also has good and increasingly close cooperation with Nordic neighbours and is an active participant in regional fora.

Latvian-Russian relations continue to be complicated by questions concerning the rights of the ethnic Russian minority in Latvia. Russian allegations of systematic violation of the human rights of ethnic Russian people in Latvia have been declared unfounded by UN, OSCE and Council of Europe experts, as well as human rights organisations in Latvia. Also difficult issues in the relationship with Russia are the language and education laws introduced to see a progressive transfer to a predominantly Latvian language. The High Commissioner for National Minorities has affirmed that these laws are in line with international norms, but language remains a sensitive issue with pro-Russian political parties preferring to see Russian adopted as a second official language. Relations with Russia have however improved in recent years, particularly after the signing, in 2007, of a border agreement, initially stalled by historical land issues.

Latvia's Relations with the International Community

European Union

Latvia joined the European Union on 1 May 2004, following a referendum that showed 67% support for EU membership. Latvia’s Andris Piebalgs is the EU Commissioner for Development

NATO

Latvia joined NATO in April 2004. Latvian soldiers have participated in peacekeeping missions in several countries including Bosnia, Kosovo and Iraq and make a significant and important troop contribution in Afghanistan. They have maintained their commitments in Afghanistan despite the harsh economic climate that the country has been exposed to. Latvia hosted the NATO summit in Riga in November 2006, and the NATO Parliamentary Assembly in May 2010.

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GEOGRAPHY

The country is flat and forested, with some rolling terrain in the south-east where many lakes lie. The highest point in Latvia is Gaizinkalns (312 m) in the south-east. The 1030 km River Daugava enters the Baltic Sea in Riga Bay.

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TRADE AND INVESTMENT

In 2010 Latvia’s biggest trading partners were Lithuania, Russia, Germany, Estonia, Poland and Sweden. The UK was Latvia's 8th largest export partner and the 15st largest import partner in 2009. The statistics for the first 3 months of 2011 compared to the same period in 2010 indicate that the trade relationship between the UK and Latvia has significantly strengthened in 2011. According to the HM Revenue & Customs year-to-year data, export (trade in goods) from the UK to Latvia increased by 77% (January-March); UK imports (trade in goods) from Latvia have also increased in the same period of 2011 if compared to 2010.

In 2010 the largest groups of commodities imported from the UK to Latvia were machinery and mechanical appliances and electrical equipment (27% of the total UK export to Latvia) followed by textiles and textiles articles (15%), chemicals and allied industries (14%), and metal industry products (10%). Latvias export to the UK mainly contains wood and articles of wood (69% of total import from Latvia) as well as base metals and articles of base metals (6%%) and textiles (4%). The service trade between both countries is mostly with transport, communications and tourism services.

For more information on general figures and trade opportunities, visit the UK Trade & Investment Country Profile: Latvia (http://www.uktradeinvest.gov.uk/ukti/latvia) . Latvia also has an active British Chamber of Commerce, for more information visit the BCCL website (http://www.bccl.lv/) .

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POLITICS

Recent Political Developments

Outgoing president Valdis Zatlers proposed a referendum, which dismissed the Latvian parliament Saeima due to links with oligarchs in spring 2011. As a result an extraordinary election was held on 17 September 2011. Results of the elections to the 100-member Saeima were as follows: Harmony Centre 31 seats; Zatlers Reform Party 22; Unity 20; National Alliance 14; Greens and Farmers 13.

A new government was approved on 25 October 2011 with Valdis Dombrovskis staying as PM. The new coalition comprises Dombrovskis' centre-right Unity, the centrist ZRP and the nationalist National Alliance, as well as six independent MPs. The coalition controls 56 seats.

The Pro-Russian "Harmony Centre" was nominal winner of the election, but they were not included in the coalition. Turnout for the election was a solid 63%.

The previous elections were held on 2 October 2010. Despite presiding over a series of tough austerity measures in 2009 and 2010, the Unity grouping, led by Prime Minister Dombrovskis, polled first. Valdis Dombrovskis came to power in February 2009 when the previous government collapsed following the economic crisis. His government implemented tough austerity measures, with GDP falling by 18% in 2009 and unemployment reaching 20%. He campaigned on the need to stay the course and comply with the terms of the IMF/EC agreement.

In June 1993 Latvia's first post-independence parliamentary elections resulted in the formation of a minority centre-right nationalist coalition government committed to free market reform. Centre-right governments have been the norm since then.

Electoral System and Elections

The 100-seat Saiema (parliament) is identical to the legislature, which existed before the Second World War. Deputies (MPs) are elected for a four-year term.

Presidential Elections

The President is currently elected by parliamentarians for a four-year term and can hold office for no more than two consecutive terms. Any Latvian citizen enjoying full rights over the age of forty may be elected. People holding dual citizenship cannot stand. In July 2011 Andris Bērziņs was elected Latvia’s new President, taking over from Valdis Zatlers. Before Zatlers the long-standing incumbent President Vaira Vike-Freiberga, had been in office for the maximum two term period.

Parliamentary Elections

On 17 September 2011 Latvia held elections for the eleventh Saeima (Parliament). The allocation of seats in the Saeima is as follows:

Party Name, Seats
Harmony Centre 31
Zatlers’ Reform Party 22
Unity 20
National Alliance 14
Greens and Farmers 13

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Last Updated: December 2011

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