LATVIA IN REVIEW
July 26 – August 1, 2011 Issue 30
CONTENTS
Latvia's Civic Union and New Era Parties Vote to Participate in Foundation of Unity Party About 1,700 people Have Expressed Wish to Join Latvia's Newly-Founded ZRP Party
President Bērziņš to Draft Legislation Defining Criteria for Selection of Ministers
Parties Represented in Current Parliament Promise Clarity about Candidates This Week
Procedure Established for President’s Convening of Saeima Meetings
Bank of Latvia Economist: Retail Posts a Rapid Rise in June Latvian Unemployment Down to 12.3% Fourteen Latvian Banks Report Growth of Deposits in First Half of 2011 European Commission Approves Cohesion Fund Development Project for Rīga Airport
Private Investments Could Help in Developing Rīga and Jūrmala as Tourist Destinations
Latvian State Secretary Participates in Informal Meeting of Ministers for European Affairs Cabinet Approves Latvia’s Initial Negotiating Position Over EU 2014-2020 Multiannual Budget President Bērziņš Presents Letters of Accreditation to New Latvian Ambassador to Spain
Ministry of Culture Announces Idea Competition for New Creative Quarter in Rīga Unique Exhibit of Sand Sculptures Continues on AB Dambis in Rīga
Rīga’s 810 Anniversary to Be Celebrated in August with Events Throughout the Latvian Capital
Labadaba 2011 Festival, in the Līgatne District, Showcases the Best of Latvian Music Latvian National Opera Features Special Summer Calendar of Performances in August
Economist: “Same Old Saeima?” Financial Times: “Crucial Times for Investors in Latvia” L’Express: “La Lettonie lutte difficilement contre la corruption” Economist: “Two Just Men: Two Sober Men Try to Calm Latvia’s Febrile Politics” Dezeen magazine: “House in Mārupe by Open AD”
Government
Latvia's Civic Union, New Era Parties Vote to Participate in Foundation of Unity Party
At a party congress on July 30, Latvia's Civic Union party voted to participate in the foundation of the Unity party, Civic Union reported in a statement on its website. According to Civic Union‟s website, two members of the party – Romāns Tillers and Jānis Mārtiņš Skuja – announced at the meeting that they were withdrawing from the party. The Unity party, set to be founded later this month, will result from the merger of three existing parties: New Era, Civic Union, and Society for a Different Politics (SCP). SCP has already decided to participate in the foundation of the Unity party, while the New Era party voted to join the Unity party during its congress on July 31, according to a statement on
the New Era party‟s website.
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Solvita Āboltiņa, chairwomen of both the Unity bloc and New Era, and speaker of the dissolved parliament, addressed the New Era meeting on July 31. “The founding of Unity as a consolidated party is a sign and assertion that we continue to grow politically by setting up a new, strong, and broadly inclusive political party, a party that would be able to foster industrial production in Latvia and provide a fertile economic environment for competitive and creative businesses," Āboltiņa said at her party‟s congress. “Thanks to the general mood of the public we can not only move towards more honest and transparent politics more boldly and successfully, but also continue our efforts aimed at ensuring more efficient state administration for Latvia's growth.”
About 1,700 People Have Expressed Wish to Join Latvia's Newly-Founded ZRP Party
About 1,700 people have expressed a wish to join Latvia‟s Zatlers Reform Pary (ZRP),
established by ex-president Valdis Zatlers on July 23, said the party's representative Sarma Freiberga during a ZRP meeting in Liepaja, BNS reported. According to BNS, Freiberga said the party receives many applications every day from people who want to join the party. Zatlers told BNS that the party has set a goal to attract about 7,000 members in three years. “Of course, emotions now are high, many people are applying, they wish to do something and we appreciate it. In a short time we need to meet all potential members and decide on their acceptance to the party. On the party's foundation day more people than necessary for foundation of the party came and we did not reject anyone,” Zatlers told BNS. He also told BNS that not only Latvians but also non-Latvians wish to join the party. “We are open to all people because we do not see Latvia's development in another way. If we keep on distrusting each other, the country's development will be very slow. It is not what we
wish to see,” said Zatlers.
According to BNS, ZRP will announce its candidate for prime minister after its congress to adopt the party‟s program, on August 13.
President Bērziņš to Draft Legislation Defining Criteria for Selection of Ministers
Latvian President Andris Bērziņš has instructed his advisors to draft a legislative initiative that would clearly define the criteria for candidates for prime minister as well as other ministerial posts, he said in an interview with the weekly magazine Ir, BNS reported. When asked what criteria he is going to apply when selecting the next head of government, Bērziņš told Ir that he had asked his legal advisor to look at the current situation. The conclusion
had been that there were “several voids caused by vague legal definitions” regarding the process
for selecting the prime minister and ministerial candidates. Therefore, the Latvian president has asked his office to draft the legislative initiative prescribing the requirements for candidates for prime minister. At least part of those requirements should also apply to ministers, Bērziņš told Ir, BNS reported. President Bērziņš pointed out in the interview with Ir that, otherwise, ministerial candidates
emerged overnight and there was little information about their background. “This is wrong,”
Bērziņš said. “Let them [the political parties] scrutinize those whom they are going to nominate.” Even though there is little time left, and the proposed legislative initiative might not be adopted by the time the new Latvian parliament takes office, Bērziņš told Ir that he would take into account the proposed criteria when nominating the new prime minister. According to Bērziņš, the future criteria for the candidate for prime minister and other ministerial officers would be very similar to those currently applied in selection of candidates to the Latvian president, BNS reported. According to BNS, when asked in the interview whether he thought Aivars Lembergs, the longstanding mayor of Ventspils and an influential member of the currently ruling Greens and
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Farmers Union (ZZS) – which had nominated him as the party‟s candidate for prime minister regardless of the fact that Lembergs is standing trial on a number of serious charges including corruption and embezzlement – met the criterion of having an “impeccable reputation,” Bērziņš answered that he would request from law enforcement authorities information on all candidates. “Whether one has impeccable reputation is determined based on findings by competent authorities,” Bērziņš told Ir. “I am not in a position to know whether the [top Latvian national
security agency] Constitution Protection Bureau finds the given person‟s reputation impeccable or not,” he said.
In the interview, Bērziņš pointed out that the current law even failed to state whether a former officer of the Soviet secret service KGB was eligible for the prime minister‟s post or not, BNS reported, but the new provisions would establish predictability and transparency in the selection of the entire Cabinet.
Parties Represented in Current Parliament Promise Clarity about Candidates This Week
The political parties represented in the current Latvian parliament have promised that this week there will be more clarity about their candidates for the early general elections, BNS reported. The newly-founded Zatlers Reform Party (ZRP) is still working on its candidate lists in all
electoral districts, and would not make them public until the party‟s congress on August 13, ZRP
representative Daiga Holma told BNS, adding that the party would also nominate a candidate for prime minister. According to BNS, Harmony Center is the only party represented in the current Latvian parliament which has already completed its candidate lists for the early general elections. The lists are to be approved by the party‟s board this week, on August 3. All 29 representatives of Harmony Center in the current parliament will be running in the elections again, BNS reported. Harmony Center has said that the party will have two candidates for prime minister: Rīga City
Mayor Nils Ušakovs and parliamentary faction head Jānis Urbanovičs.
BNS also reported that ruling center-right party Greens and Farmers Union (ZZS) plans to approve its candidates this week for the early general elections. Indriķis Putniņš, a board member of the Latvian Farmers Union, which is one of the parties that make up the ZZS bloc, told BNS that no major changes were likely among the candidates in the elections, but the final decision about the candidate premier had not been adopted yet. Kārlis Šadurskis, a representative of the ruling center-right Unity bloc, told BNS that the final decision about the lists of candidates for his party would be adopted after the congress on August 6, when the current three-member Unity bloc is expected to be transformed into a single political party of the same name. According to BNS, Unity‟s candidate for prime minister will be approved at the congress on August 6, and the candidate will probably be Valdis Dombrovskis, head of the current Latvian government. According to BNS, the opposition nationalist conservative party National Alliance plans to approve its candidate lists around August 10. While the No. 1 candidates in each electoral district are going to remain the same, there will be some changes regarding the No. 2 and No. 3 candidates on the lists, National Alliance representative Imants Parādnieks told BNS, adding that
some newcomers to the politics would appear on the party‟s lists as well. Latvia‟s First Party/Latvia‟s Way (LPP/LC) party will make the decisions about its candidates in
the early elections and candidate for prime minister at its congress on August 5, the party‟s board member Juris Radzevičs told BNS. The central election authority will be accepting the lists of candidates for the early general elections – to be held in Latvia on September 17, 2011 – through August 18.
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Procedure Established for President’s Convening of Saeima Meetings
An agreement has been reached on a common understanding and approach toward the application of constitutional requirements and parliamentary rules of order, so as to ensure a clear procedure for reviewing draft laws in the time period between the referendum on the dissolution of Saeima and the election of a new Saeima. The agreement was reached by the Presidential Chancery, the Saeima, and the government, so as to coordinate the processes that relate to this issue. The procedure whereby the work of the Saeima will be organized has been agreed by all three of the aforementioned levels of governance. President Andris Bērziņš is calling on members of parliament to work constructively under the framework to which the Constitution speaks in reference to a dissolved Saeima. Issues on the parliamentary agenda will be listed not mechanically, but rather after a full evaluation, requests for additional information, consultations, and meetings. If the Cabinet of Ministers and the Saeima prepare issues and documents that can be reviewed, Saeima meetings will usually be convened on Thursdays at 9:00 a.m. Depending on the number of issues at hand, Saeima meetings may be held less often than once per week. The agreement also speaks to the consideration of very urgent issues. Presidential control will be maintained in such instances, and draft laws declared to be urgent will not be considered on second reading during the same parliamentary meeting where that decision has been taken. At the same time, however, urgent meetings of the Saeima will be held at different times if the Prime Minister makes such a request and the President agrees. A prerequisite for each draft law to be considered will be an annotation, even if the law does not require it under normal procedure. Any decision that will have an effect on the national budget will require a review by the finance minister. The Presidential Chancery will pay particular attention to draft laws against which the Justice Ministry and/or the Legal Office of the Saeima have justified objections. Agreement among parliamentary factions on various issues will also be of critical importance.
The President will place those issues on the Saeima‟s agenda which have been submitted by 5:00
p.m. on Thursday or, by a special decision by the Saeima Presidium, by 1:00 p.m. on Friday.
President Bērziņš will be able to put together the Saeima agenda even if he is abroad. When the
President is traveling, his duties are carried out by the speaker of the Saeima, but she will not be allowed to convene Saeima meetings. Because the Saeima has been dissolved and has no constitutional right to demand that it be allowed to continue its work actively, the basis for parliamentary meetings will only be a decision by the President. The Constitution does not allow the President to intervene in the internal affairs of the Saeima, which means that parliamentary committees and subcommittees will continue their work. The Saeima Presidium will also continue its work, but it will not be allowed to convene Saeima meetings. The President also will not be obliged to convene a Saeima meeting at the initiative of MPs (under normal procedure the Presidium is obliged to do so if at least one-third of MPs demand that a meeting be convened). When it comes to issues concerning constitutional amendments, citizenship issues, and the
parliamentary rules of order, President Bērziņš will seek the views of the Commission on
Constitutional Law before placing them on the agenda. The plan is to renew the commission‟s operations in the near future. In the area of constitutional amendments, moreover, the President feels that fragmentary and frequent amendments are not permissible, because that would diminish the authority of the document in future. The President admits that there is a need for constitutional amendments, not least in terms of the legal immunity of MPs; but insofar as it is possible, constitutional amendments should be merged into a single draft law.
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Economics
Bank of Latvia Economist: Retail Posts a Rapid Rise in June
Despite the tropical climate in the last few weeks, the retail statistics in Latvia have seemed more associated with downhill skiing over boulders, replete with sharp turns and high jumps, wrote Bank of Latvia economist Agnese Bičevska. The sales volumes are rising and falling, yet, in contrast to a ski run that ends at the bottom of the hill, the overall trend in retail development points upward, she reported on the website Macroeconomics.lv. According to Bičevska, the statistics of the last few months support this growth trend. “Growth in trade was observed as early as May, but in June it continued with a rather sharp upward leap – 3.3% month-on-month. The annual growth has thus also increased to 5.4%. The second quarter has likewise concluded „in the black,‟ with turnover increasing 2.7% quarter-on-quarter and 1.6% year-on-year. A rapid increase has been retained in automobile sales, which are not included in retail turnover data. A 4.5% growth month-on-month and 57.5% annual growth were recorded in June.” Bičevska writes that this upward dynamic is determined by several factors. “The increase in consumption is fostered by the gradual rise in employment, as the segment of the population with steady income and a greater sense of security regarding the future expands, which often signals greater expenditure,” she reported. “Sales volumes and structure are affected also by postponed consumption, i.e. the spending of previously accumulated savings, particularly when purchasing durable goods. A rise in the average salary has also been observed lately, yet any improvement in purchasing power is limited by the inflation resulting from tax raises and the rising global prices (especially food).” In the conclusion to her commentary piece in Macroeconomics.lv, Bičevska reports that the July confidence indicators published by the European Commission point to a drop of 2.0 points in the retail trade confidence indicator, whereas the population confidence indicator shows a slight improvement of 0.3 points. Bičevska concludes: “Even though the changes in confidence indicators in Latvia have been more positive than in other European countries, both the confidence cyclones coming from Southern Europe and the United States and the domestic political developments will persist as a backdrop of uncertainty and continue to affect consumer behaviour and decisions. The bumpy run of retail trade development will thus probably retain its up-and-down quality also in the coming months, and the May-June high upward leap will be followed by a drop or two.”
Link to full text: http://www.macroeconomics.lv/retail-posts-rapid-rise-june
Latvian Unemployment Down to 12.3%
By the beginning of August 2011, unemployment in Latvia dropped 0.2 percentage points from early July, to 12.3 percent of the economically active population, the State Employment Agency told BNS. According to information provided to BNS, the lowest unemployment rate, 9 percent, was reported in the Rīga region. The western Latvian region of Kurzeme followed with a 12.8 percent unemployment rate, the central Latvian region of Zemgale with 13.2 percent, the northeastern region of Vidzeme with 13.7 percent and the eastern region of Latgale with 20.4 percent, BNS reported. The capital city of Rīga showed the lowest jobless rate (8.5 %) among Latvia's large towns, BNS reported, while the highest jobless rate (18.1 %) was reported in the eastern Latvian town of Rezekne. BNS had previously reported that at the beginning of July, Latvian unemployment reached 12.5 percent of the working-age population.
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Fourteen Latvian Banks Report Growth of Deposits in First Half of 2011
Deposits placed with Latvian banks totaled 10.941 billion lats (EUR 15.6 billion) at the end of June 2011, which is a growth by 1.5 percent, or 169.826 million lats from late 2010, with 14 banks reporting growth in deposits, according to information from the Latvian Commercial Banks Association reported by BNS. According to BNS, Latvia's Swedbank still led other Latvian banks with a market share of 14.4 percent after the first half of 2011 (15 % in late 2010). Deposits at Swedbank in Latvia decreased by 5.2 percent, or 86.547 million lats (EUR 123.14 million), in the first six months to 1.576 billion lats (EUR 2.24 billion) at the end of June, BNS reported. BNS reported that ABLV Bank (formerly Aizkraukles Banka) saw its deposits expand by 6.3 percent, or 79.769 million lats (EUR 113.50 million), to 1.343 billion lats (EUR 1.91 billion). The bank's market share grew from 11.4 percent in late 2010 to 12.3 percent at the end of June 2011. Citadele Bank ranked third deposits with 1.057 billion lats (EUR 1.503 billion) at the end of June, and its market share was 8.4 percent (10.4 % in late 2010), reported BNS. Deposits at Citadele declined by 8.4 percent, or 97.273 million lats (EUR 138.4 million), from the end of 2010. BNS also reported that SEB Banka in late June had attracted 1.007 billion lats (EUR 1.432 billion) in deposits, down 4.3 percent or 44.775 million lats (EUR 63.709 million) from late 2010, and its market share declined from 9.5 percent to 9.2 percent over the first half of this year. According to BNS, in the first six months of this year deposits also increased at Rietumu Banka (0.7 %), Norvik Banka (1.1 %), DnB NORD Banka (2.6 %), the Latvian branch of Nordea Bank Finland (2.5 %), Latvijas Hipoteku un Zemes Banka (Latvian Mortgage and Land Bank) (4.2 %), PrivatBank (0.7 %), Regionālā Investīciju Banka (17.1 %), the Latvian branch of Danske Bank (60 %), Baltic International Bank (13.9 %), Baltikums Bank (formerly commercial bank Baltikums) (43.6 %), the Latvian branch of Bigbank (2.4 times), Latvijas Pasta Banka (40.6 %), and the Latvian branch of Snoras bank (46.9 %). Meanwhile, BNS reported, deposits decreased at Latvijas Krajbanka (Latvian Savings Bank) (1.9 %), LTB Bank (26.4 %), UniCredit Bank (23 %), Trasta Komercbanka (0.6 %), GE Money Bank (36.8 %), SMP Bank (4.6 %), and the Latvian branch of Svenska Handelsbanken (28.9 %). According to BNS, the new market player – the Latvian branch of Eesti Krediitpank – ranked 21st in terms of deposits (55.361 million lats, or EUR 78.77 million) among thirty banks operating in Latvia. The Latvian branch of Allied Irish Banks, Latvijas Biznesa Banka, and the Rīga branch of Skandinaviska Enskilda Banken had not attracted any deposits by the end of June this year, BNS reported. The association's data does not include information on the bailed out Parex Bank and the Latvian branch of Scania Finans Aktiebolag.
European Commission Approves Cohesion Fund Development Project for Rīga Airport
The European Commission has approved a Cohesion Fund project for developing infrastructure at Rīga International Airport, which would cost a total of 66.945 million lats (EUR 95.25 million), the Latvian Transport Ministry reported to BNS.
The ministry‟s spokeswoman, Ilze Eida, told BNS that the purpose of the project was to ensure
safe and efficient air-transport infrastructure adequate to the growing amounts of business. Transport Minister Uldis Augulis said that implementation of the project for developing the
infrastructure at Rīga airport would increase the airport‟s capacity and competitiveness in the
European aviation market, BNS reported. The Transport Ministry told BNS that the infrastructure development project included replacement of asphalt on the runway, upgrading of the lighting system to enable airplanes to take off and land in bad weather, construction of two de-icing platforms, renovation of the drainage system, and other improvements. According to BNS, Rīga International Airport has already started implementing the project as of February 15, 2011, when it signed an agreement with the general partnership NAMS/COWI
