CER | Latvia: Shipping fleet still for sale

Shipping company still on offer

The Latvian Privatization Agency (LPA) came up with new proposals to sell the state's 68 percent stake in Latvian Shipping Company (LASCO) after the fourth attempt to privatize it failed on 27 April, causing worry in the government and new political squabbles.

Following the advice of Dutch consultant BDO New Market, the LPA suggested that the government revive the stalled sale of LASCO by extending the payment deadline for the two current bidders, who failed to pay the required pre-auction security deposit of USD five million (LVL 3.1 million) by the 27 April deadline.

If the government approves this approach, the agency will set a new two week deadline for both short-listed candidates to pay the security deposit. The agency also suggested a second approach, which would include working out new, looser sell-off rules, as well as giving up the plan of attracting a strategic investor.

The cabinet is expected to rule on the proposals on 8 May. Prime Minister Andris Bērziņš earlier said both options—to proceed with the sell-off but with amendments to current rules or to keep the firm in state hands after the current price had turned out to be too high—remain open.

LPA said, however, that if the government opts not to sell LASCO, its aging fleet would suffer significantly.

Meanwhile, Latvian Economy Minister Aigars Kalvītis survived his second confidence vote of this year, initiated by the opposition Social Democrats, who are accusing him of unlawful acts in the LASCO privatization process.

The World Bank has threatened to withhold USD ten million (LVL 15.87 million),a portion of the second payment of a structural reforms loan, should the country fail to push through the sale of LASCO, as Latvia would be in violation of a loan condition that it hasten privatization.

Russia protests National Bolsheviks' sentence

Latvian-Russian tensions increased last week when a Latvian court sentenced three Russian ultra-nationalists, who threatened to blow up a Riga church tower, to imprisonment last week.

Sergey Solovyev, 28, and Maxim Zhurkin, 23, received 15-year sentences after being convicted of terrorism, while a third defendant, Dmitry Gafarov, 17, was sentenced to only five years because of his young age. The three members of the Russian National Bolshevik Party had barricaded themselves in St Peter's church in the center of Riga last November, demanding that Latvia improve its treatment of the Russian-speaking minority, scrap plans for NATO membership, and halt genocide trials against Stalin-era security agents.

The Russian Foreign Ministry said the sentences amounted to "demonstrative cruelty" and exposed inconsistency and "primitive Russophobia."

"Calling what these people did terrorism is going way over the top," Dmitriy Rogozin, chairman of the Russian State Duma International Committee, told radio Ekho Moskvy. "This can only serve as an extreme irritant in relations between Russia and Latvia," he said.

Meanwhile, the Latvian Foreign Ministry handed a protest note to Russia after its embassy building in Moscow was daubed with paint last week. Vandals have repeatedly attacked Latvian consulates in Pskov and St Petersburg, as well as its Moscow embassy, during 2000 and 2001.

Social Democrats draft new constitution

The Latvian Social Democratic Workers Party (LSDSP) intends to push for a new Latvian Constitution that would change the pattern of presidential elections.

Authored by LSDSP Chairman Juris Bojārs, the project suggests that voters from one-mandate electoral districts should elect the president, as opposed to the current practice of electing the president in the Saeima.

Social Democrats will continue working on the new version, which could also include responsibilities and rights of the prime minister, as well as the responsibilities of local governments. The party plans to submit the draft to the Saeima by the end of the year and push for a referendum in January 2002.

Representatives of the ruling coalition, which doesn't support the amendments, called Bojārs' initiative a populist move to secure support for LSDSP in the 2002 national elections.

Army initiation investigated after recruit's death

An investigation into the death of a soldier of the army's special task force revealed violent initiation ceremonies and had many MPs calling for the resignation of the National Armed Forces Commander Raimonds Graube.

The controversy flared up this week following reports of the death of a soldier who had been subjected to a brutal initiation ritual. A subsequent investigation discovered that at least 20 men in the Special Duty Forces had been similarly physically abused.

Graube, who has taken full responsibility and is ready to step down, will now report to Defense Minister Ģirts Valdis Kristovskis what has been done to improve the safety of conscripts. Kristovskis will then discuss possible action with high-ranking government officials, as well as report to the National Security Council and Saeima, which is to decide Graube's future.

Social Democrats, President win popularity poll

The Social Democrats, who saw their ratings fall sharply in April, still managed to retain the greatest support of voters, according to the pollsters SKDS. The Social Democrats received the support of 17 percent of voters, while the People's Party followed with 10.6 percent and For the Fatherland and Freedom-LNNK with 10.3 percent. Latvia's Way had the support of 8.7 percent, and the leftist union For Human Rights in a United Latvia garnered 7.1 percent.

President Vaira Vīķe-Freiberga remained the most popular politician in the country in April. Bank of Latvia President Einārs Repše remained number two, while the parliamentary speaker, Jānis Straume, rose to third place. New Riga Mayor Gundars Bojārs improved his rating, climbing from eighth to fourth place.

And in other news...

In his meeting with Justice Minister Ingrīda Labucka, Russian Culture Minister Mikhail Shvydkoy praised Latvian efforts to integrate other nationalities into Latvian society. He said the Russian and Latvian media are giving overly negative coverage of the issue.
Latvian Culture Minister Karīna Pētersone and Russian Culture Minister Mikhail Shvydkoy signed a cooperation agreement between the two ministries through 2003.
Latvia should allow non-citizens to take part in local elections, Walter Schwimmer, Secretary-General of the Council of Europe, said at the Local Democracy at the Dawn of the 21st Century conference held in Riga.
Four million cigarettes in 20,000 cartons were confiscated at the customs point in Liepāja. This is the largest cargo of smuggled cigarettes captured thus far.
Latvia's economic activity index, measured in comparative prices, rose 6.8 percent year-on-year in March, according to the Finance Ministry. The year-on-year index growth in March of 2000 was 4.9 percent. The ministry also said that the economic activity index for the first quarter of 2001 grew by 8.3 percent.
Latvian Gas, on 2 May, stated that its first quarter natural gas sales rose 11.4 percent year-on-year to 572.8 million cubic meters.

Ieva Raubiško, 5 May 2001

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