Latvia country brief

Introduction

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 1991 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. The next presidential elections will be held in May 2011.

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 led by Prime Minister Mr Ivars Godmanis (LPP-LC) took office on 20 December 2007, consisting of the same four parties as the previous Kalvitis Government: the LPP/LC, TP, ZZS and TB/LNNK. Prime Minister Godmanis resigned on 20 February 2009 against a background of a mounting economic crisis and internal conflicts within the coalition. President Zatlers invited the leader of the centre-right New Era Party, Valdis Dombrovskis, to form a new government, which took office on 12 March. In addition to the New Era Party, the new coalition government consists of the centre-right New Era Party, TP, ZZS, the Civic Union and TB/LNNK. The next parliamentary elections are due in 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

The global financial crisis has hit the Latvian economy extremely hard. After years of double-digit growth, mainly funded by external borrowing by the country’s banks, the lack of further readily available credit has brought the economy to a halt. GDP fell by 4.6 per cent in 2008, and is expected to fall by 18 per cent in 2009. The unemployment rate at the end of June 2009 was 11.5 per cent and the annual average for 2009 is estimated to be around 15.8 per cent. The IMF is predicting unemployment to reach a high of 18 per cent in 2010.

On 23 December 2008 the IMF approved a 27-month Stand-By Arrangement for Latvia to support the country’s efforts to stabilise the economy. The IMF package is part of a coordinated international effort which will give Latvia access to loans totalling €7.5 billion (AU$15.4 billion) – equivalent to almost one-third of Latvia’s GDP. Public anger over the government’s handling of the economic crisis, and the painful austerity measures required by the IMF package, erupted in unprecedented popular protests in January that led to the downfall of the Godmanis government in February 2009.

In November 2009, in consultation with the IMF and the European Union, the Dombrovskis Government tabled a budget in Parliament designed to cut the country’s 2010 budget deficit and thereby meet the demands of foreign lenders.

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. 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 merchandise trade between Australia and Latvia was A$13.9 million in 2008. Australia exported A$10.6 million worth of goods to Latvia in 2008, primarily alcoholic beverages and vehicle parts and accessories. Imports from Latvia totalled A$3.4 million in 2008 and included metal containers and furniture, mattresses and cushions.

Last updated: 25 November 2009