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Vol 2, No 29
4 September 2000
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News from Latvia
All the important news since 25 August 2000
Daria Kulagina


Politics and economics

Latvian Prime Minister Andris Bērziņš met with International Monetary Fund (IMF) officials to discuss the possibility of the government not meeting its 2000 fiscal deficit target. Under an earlier agreement with the IMF, the government had committed itself to keeping the deficit within two percent of GDP. However, the latest press reports claim the budget deficit could come close to three percent of GDP, as revenue collection fell short and additional spending has been approved by the government. Earlier this month, Finance Minister Gundars Bērziņš admitted that expenditures were pressuring finances, as a result of which the budget gap target might not be met. The IMF mission stressed the need to balance Latvia's social budget to a level that would reduce its impact on the fiscal deficit, the cabinet press office said in a statement.

FBI experts joined Latvian police in their investigation of the 17 August 2000 double bombing of the popular Centrs department store in downtown Rīga. The FBI is assisting in analyzing videotape materials recorded in the store prior to the blasts. No arrests have yet been made in the incident, which killed a 53-year-old woman and injured at least 34 other people. No one has yet claimed responsibility. Police, however, are reportedly pursuing four different explanations for the bombing: organized crime, an act of terrorism, competition with the RIMI chain of stores (to which the Centrs belongs) or an unrelated criminal act. Director of the FBI Louis J Freeh is scheduled to visit the Baltic states later this month.


Foreign affairs

High-level officials from the Nordic and Baltic states met to discuss EU enlargement. The prime ministers of Iceland, Norway, Sweden, Finland, Denmark, Latvia, Lithuania and Estonia held talks in Pärnu, Estonia, with a parallel meeting of the eight foreign ministers in the Danish town of Middelfart. Regional cooperation, the forthcoming Danish referendum on EU membership and European security policy were also among the topics discussed. The foreign ministers decided that, in the future, the group will no longer be called "5+3," opting to call it the group of "8" Nordic-Baltic countries. This way, the summits will be not perceived as being between two groups of countries, but rather as meetings of eight equal members of a single family, according to the ministers.

The Baltic states of Estonia, Latvia and Lithuania look set to join both the European Union and NATO soon, EU foreign policy chief Javier Solana said. "I am sure that both processes will end happily soon," former NATO secretary-general Solana told a news conference, after a two-day meeting of Nordic and Baltic foreign ministers. Solana did not, however, give a timetable of how soon he expected the Baltic countries would be admitted into EU and NATO folds.

Organization for Security and Cooperation in Europe (OSCE) High Commissioner for National Minorities Max van der Stoel has no fundamental objections to the language regulations, which were adopted by the Latvian government and came into effect this week. The Commissioner regards them as basically compatible with the language law and Latvia's international obligations, his office said in a statement. Russia, in turn, accused Latvia of trying to assimilate its Russian population and the West of "silently tolerating Latvia's discriminatory policy against national minorities."



Skandinaviska Enskilda Banken (SEB), the Nordic region's fifth-largest bank, offered to buy three leading Baltic banks to boost its market share and become the biggest foreign investor in the region. The Swedish bank said it wants to boost its ownership stake from its current 43 percent to 100 percent in Latvia's Latvijas Unibanka, as well as in Lithuania's Vilniaus Bankas and Estonia's Eesti Ühispank. The total value of the transaction would be about SEK (Swedish krona) two billion (USD 215,019,314).

Analysts say SEB's new investments alone bode well for the capital markets of the three Baltic countries, which were hit by the 1998 Russian financial crisis. "This [SEB] investment is a strong vote of confidence in the three Baltic economies, and it should add positive sentiment for the capital markets of the three countries," Gunnar Tersman, an analyst with Sweden's Handelsbanken, told Reuters.

Apollo, the Internet provider unit of Latvian fixed-line monopoly Lattelekom, launched a service and information portal at www.apollo.lv. Lattelekom's strategic investor is Finland's Sonera. The Apollo portal offers standard services, such as a search engine, free e-mail, news, with e-commerce and Russian and English versions to be made available later this year.



French movie star Catherine Deneuve together with other Oscar-winners, such as Russian actor and director Nikita Mikhalkov and Austrian-born actor Maximilian Schell, attended the Baltijas Perle (Baltic Pearl) festival in Rīga. Deneuve acted as the honorary president of Baltijas Perle, an international festival of film actors, held every year in the Latvian capital. Schell, however, had to leave Rīga abruptly on a chartered plane to Germany to seek medical treatment, after being hospitalized with acute inflammation of the pancreas. The international jury, led by actor Klaus Maria Brandauer, gave the festival's main prize to German actress Nadja Uhl for her performance in Die Stille nach dem Schuss (Rita's Legends).


And in other news...

A quick-thinking bank teller in Daugavpils got the best of a would-be bank robber by slipping him a bundle of fake bills. When a man armed with a pistol entered a Baltijas Tranzītu Banka on Monday and demanded money, the female teller handed him a weighted sack designed to look and feel like a bag of bank notes.

Moscow authorities are considering replacing the burnt Ostankino transmitters with a military antenna withdrawn from Skrunda—the last Russian military outpost in the Baltics until 1998. Russian newspaper Kommersant quoted sources in the Russian Defense Ministry as saying that Skrunda's antenna could be installed at the highest point of Moscow, the Lenin (Vorobievy) Hills near Moscow University, if they could find it. Sources said that after withdrawal, it was moved "somewhere near St Petersburg," and its exact location is not known by the Russian Ministry of Defense. "You must understand that, according to papers, it is in some warehouse, but who knows where it really is...," said one annonymouse official.

Exchange Rates
As of 1 September 2000
Currency Latvian
1 US dollar 0.61
1 British pound 0.88
1 German mark 0.28
1 euro 0.54


Daria Kulagina, 1 September 2000

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