Latvia Country Brief

Introduction/overview

Latvia, one of the three Baltic States, covers an area of 64,589 square kilometres, slightly smaller than Tasmania. Latvia's population is 2.3 million and has fallen by 11 per cent since re-gaining independence due to emigration and a falling birth rate. The capital of Latvia is Riga.

Political overview

Latvia re-gained its independence from the Soviet Union in August 1991. Under the Constitution, the President is elected by members of the unicameral Parliament (Saeima) for a four year term and has limited powers. The President appoints the Prime Minister, approves the Cabinet and may return legislation to the Saeima. The Saeima has 100 members, who are elected democratically.

Latvian President Dr Valdis Zatlers was sworn into office on 8 July 2007. Dr Zatlers, graduated from the Riga Medical Institute and from 1994 was head of the Hospital of Traumatology and Orthopaedics in Riga.

In the October 2006 election, the ruling coalition (People's Party (TP), the Union of Greens and Farmers (ZZS), First Party – Latvia’s Way (LPP-LC)) won a slim majority of one parliamentary seat but chose to consolidate their majority by inviting the nationalistic Union for Fatherland and Freedom (TB/LNNK) to join the coalition. The coalition government stepped down on 5 December 2007, following large scale protests over Prime Minister Kalvitis’ decision to suspend the Chief of Latvia’s Anti-Corruption Bureau. A new four-party coalition government lead by Prime Minister Mr Ivars Godmanis (LPP-LC) took office on 20 December 2007. The new coalition Government consists of the same four parties as the previous Kalvitis Government: the Latvian First/Latvian Way bloc (LPP/LC), the People’s Party, the Greens and Farmers’ Union (ZZS) and the Union for Fatherland and Freedom (TB/LNNK). Mr Maris Riekstins retained the post of Minister of Foreign Affairs. The next election is due October 2010.

Latvia was invited to join the EU and NATO at the end of 2002 and completed the reforms necessary to comply with membership requirements. The referendum to join the EU was supported by 73 per cent of voters. Latvia joined NATO on 2 April and the EU on 1 May 2004..

Economic overview

GDP growth is forecast to be 3.6 per cent in 2008 down from 10.2 per cent in 2007. Inflation for 2008 is forecast to be 15.3 per cent and unemployment was at 5.7 per cent in 2007.

Latvia has attracted significant inflows of foreign direct investment since regaining independence, with Denmark being the biggest investor. In 2006 the net inflow of FDI was around US$6.6bn, accounting for approximately 35 per cent of GDP.

Bilateral relationship

Australia recognised Latvia's re-gaining of independence on 27 August 1991. Australians of full and part Latvian descent number around 30,000, but the Latvian-born community, most of whom arrived in Australia in the 1940s, is small and ageing (around 6,600 people, average age 72.8 in 2001).

There have been high level visits in both directions. A Parliamentary delegation led by Senator Grant Chapman visited Latvia in September 2003. Former South Australian Lt Governor Bruno Krumins visited Latvia in August 2001 for Riga's 800th anniversary commemorations and met with the President and Foreign Minister. Lt Governor Krumins visited Latvia again in 2003.

Latvian visitors to Australia have included: a parliamentary delegation led by the Speaker, Mr Indulis Emsis in August 2007; the State Secretary of the Ministry of Foreign Affairs, Mr Normans Penke, in 2006; a Latvian parliamentary delegation led by the former Speaker, Mr Alfreds Cepanis, in 1996; and the former Latvian Minister for Foreign Affairs, Mr Georgs Andrejevs, in 1993.

The Australian Ambassador in Stockholm is accredited to Latvia. Australia has an Honorary Consul in Riga. The Latvian Ambassador based in London has non-resident accreditation to Australia. Latvia is represented in Australia by Honorary Consuls in Victoria, South Australia and New South Wales.

Bilateral economic and trade relationship

Two-way trade between Australia and Latvia was A$16.8 million in 2007. Australia exported A$12.5 million worth of goods to Latvia in 2007, primarily alcoholic beverages, vehicle parts and rubber tyres. Imports from Latvia totalled A$4.3 million in 2007 and included rubber tyres, metal containers and printing machinery.

Latvia may increasingly present opportunities for providers of Australian education services. Enrolment in higher education institutions in Latvia has almost doubled since re-gaining independence to over 100,000 students.