CER | Latvia: The year 2000 in review

Politics, Privatization and Pedophilia
The year in review for Latvia
Daria Kulagina

The Year 2000 brought Latvians a new prime minister and a new prosecutor general, its first Olympic gold and first acts of public terrorism after regaining independence, a few good international business deals and as many stalled privatization projects. Politics were dirty and the public grew impatient with corruption, but nobody contested any election results or the legitimacy of the government.

In foreign affairs, Latvia almost caught up to the front-runners in the EU accession process, continued some nice intra-Baltic competition for better notes from the West and was subject to continuous attacks of Russian rhetoric.

The politics of rivalry

The political year was marked by a bitter rivalry between Prime Minister Andris Šķēle and his archenemy, Aivars Lembergs, mayor of Ventspils and doyen of the oil transit business in Latvia. Šķēle, known for his abrasive style of governance, had to fight on three fronts—pedophilia accusations against him, privatization and management of his own wealth.

He did not succeed. Tensions with a coalition partner—the nationalist For Fatherland and Freedom—in the wake of the opposition's smear campaign linking him to pedophilia cases and on the background of his hardly successful attempts to explain to the public sources of his own fortune led to his resignation in April.

Šķēle, who as the most popular politician led his People's Party to a victory in the 1998 elections, now has a stable position as the least popular Latvian politician in opinion polls.

President Vaira Vīķe-Freiberga remained the most admired public figure. She focused on polishing Latvia's image abroad and on moral causes in domestic political life. She is one of the very few personalities in Latvian politics who is able to connect to the public and represent Latvia abroad as a truly European country.

The rating of the second most popular public figure, central bank Governor Einars Repše, reflects the macroeconomic success story and the stability of the Latvian currency (the lats). Repše, however, was among the most ardent critics of the ruling coalition's loosening of fiscal policy.

Latvia did not meet the 2000 budget deficit targets stipulated by the International Monetary Fund and adopted a similar deficit for 2001. The budget debate illustrated some of Latvia's dilemmas, as it integrates into the EU and NATO. While NATO aspirations require significant defense modernization, EU is more concerned about strengthening administrative capacity and improving the judicial system. The balancing between different priorities has not been easy, especially this year.

And in the courts

The year 2000 was quite messy for the Latvian judicial system. Controversially lenient sentences were handed down in serious cases, and prosecutors failed to obtain convictions or even extended detentions in high-profile crimes.

In the infamous "pedophilia scandal," former Soviet KGB officer Jānis Ādamsons (an opposition member of Parliament) linked members of the government to child molestation cases. The scandal contributed to the resignation of Prosecutor General Jānis Skrastiņš and to the fall of the government.

The investigation of real pedophiles was not too expeditious or effective, however. The prosecutors were slow to charge accused Nazi war criminals. Court decisions on crimes against humanity during the Soviet occupation first sparked protests from Moscow and then were unexpectedly overturned by the Supreme Court. President Vīķe-Freiberga felt it necessary to protest publicly strange sentences given to offenders who belonged to a "new nomenklatura" as well as the inactivity of law enforcement agencies in protecting the rights of minors and "small people."

Corruption remained an issue this past year. Quite unfavorable international ratings and research of corruption levels in Latvia reinvigorated the debate on how to curb corruption. Prime Minister Andris Bērziņš decided to launch a high-profile public awareness campaign. At the same time, no significant corruption case was brought before courts, while the special interests of business groups are widely assumed to dominate the agenda of political parties and institutions.

More transparent than thou

To demonstrate ultimate transparency (and gain some points in the municipal election campaign), Latvian Finance Minister Gundārs Bērziņš put a 24-hour webcam in his office. It was broadcast live on his People's Party website, which generated a record number of visitors and received attention from international media.

Latvians made progress in coming to terms with their nation's role in the Holocaust. Konrāds Kalējs, accused and followed by international Nazi-hunters, was finally charged by Latvian prosecutors of committing war crimes. It allowed a request for his extradition from Australia, his current country of residence and citizenship.

President Vīķe-Freiberga led a number of high-profile public events to remember Holocaust victims and to educate the public of some uncomfortable truths about Latvian participation in the murders. Vīķe-Freiberga spoke of her country's national shame in ignoring its culpability in the Holocaust. "It is our eternal sorrow and our eternal shame that some of the events [of the Holocaust] took place on Latvian soil and with the collaboration of some of our fellow citizens," she said at a teachers' conference.

Bombings in a Riga department store and actions by the Russian "National Bolsheviks" were Latvia's first serious encounter with public terrorism. The visit of FBI Director Louis Freeh highlighted the importance of international cooperation in investigating and preventing terrorist activities.

Doing business

The Scandinavians continued to expand in all business sectors in Latvia. Most notable were acquisitions of the mobile phone network Baltcom GSM by Sweden's Netcom (a USD 280 million deal) and the buyout by Skandinaviska Enskilda Banken (SEB) of shares of the largest Latvian bank, Unibanka.

Finnish and Swedish investors progressed in setting the stage for building a huge pulp mill (a USD one billion project) in 2002/2003. A leading Latvian software development company, SWH Technologies, joined San Francisco-based IT services group Exigen, symbolizing some modern trends in Latvian business.

Even the Ventspils oil transit group has declared interest in diversifying its business away from the Russia-dependent transit business. Former prime minister Andris Šķēle continued the sale of his assets in food processing companies—reportedly to get out of debt and to invest in the development of information technology enterprises.

Large-scale privatization caused one government to fall. The sale of the generating units of state-owned electric utility Latvenergo to a foreign strategic investor was effectively stopped by a de facto alliance of leftist opposition and local oligarchs, who themselves plan to profit from managing Latvenergo's business. A visit by US Energy Secretary Bill Richardson, who strongly advised that Latvenergo be privatized, did not help much in this respect.

Business as usual

In foreign policy, it was business as usual. The government officially started accession negotiations with the EU and, by the end of the year, could claim to have more or less "caught up" with the front-runners.

On the NATO front, Latvia, together with the other eight aspirant countries who met in May in Vilnius, committed to solidarity and cooperation in preparation for membership. But Lithuania's claim to be better prepared and positioning to be possibly the first among the Baltic states to be invited to join the Alliance created some tension and cast doubt on "Baltic unity."

In many respects, Latvia seems to be the only remaining "Baltic state." Estonian Foreign Minister Toomas Hendrik Ilves speaks of the "post-Communist Nordic country, Estonia," while Lithuania stresses their common history and destiny with Poland and other Central European nations. But Latvia this year assumed the Presidency of the Council of Europe, its first large international diplomatic management opportunity.

Unprecedented NATO-Baltic naval exercises were held in the Gulf of Riga. NATO's Standing Naval Force Atlantic and the joint Baltic naval squadron, BALTRON, participated. It was the first time ever that ships of the Standing Naval Force Atlantic, "an immediately available reaction force," have passed into formerly Soviet-controlled Baltic waters.

After the adoption of legal regulations for on the use of the Latvian language, Latvia finally got a "stamp of approval" from the Organization of Security and Cooperation in Europe (OSCE). Although the pace of naturalization of non-Latvians increased significantly in 2000, Latvia's Western partners remained somewhat concerned about the pace of social integration in general. The Latvian government did not seem to pay too much attention to speeding up integration.

Russia continued its policy of high rhetoric against Latvia. Symbolically enough, former president Boris Yeltsin, advised by Vladimir Putin's government, declined to accept the Tristar Order, the highest award bestowed by Latvia. While President Vīķe-Freiberga was quite tough in her public statements about Russia, politicians used every opportunity to publicize some perceived positive changes in Moscow's attitude towards Latvia and claim personal credit for that. An ambivalent relationship continues.

It was a successful year for Latvian sports. In the second round of the World Ice Hockey Championships, Latvia overcame enormous odds in St Petersburg and defeated the Russian national team 3:2. All of Latvia celebrated, and the hockey players nearly became national heroes. In Sydney, Igors Vihrovs became the first Latvian national to win an Olympic gold medal after Latvia regained independence in 1991, with his spectacular performance in gymnastics.

Another source of national pride was pop-singer Renars Kaupers and his band Prāta Vētra (Brainstorm), which came in number three in the annual Eurovision song contest.

Daria Kulagina, 11 December 2000

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