Latvian President Guntis Ulmanis and his country's worries about Russia
What do you see as Latvia's major achievements since independence from
the Soviet Union in 1991?
In terms of domestic policy - the establishment of an independent state
which has already seen two free and democratic parliamentary elections.
We have also created a civil and harmonious society by restoring Latvian
citizenship and passing the Citizenship Law in accordance with European
standards. Finally, we have begun economic re-integration into free
markets and into the European Union by becoming an Associate Member in
In terms of foreign policy - after 50 years of separation from the
processes of international policy, we have endeavoured to restore
Latvia's legitimate place in the world. This process is absolutely
reasonable and necessary. Latvia has become a member of many important
international institutions, among them the UN, the Council of Europe and
Latvia's transition to democracy and the free market has been relatively
smooth compared with that in other post-Soviet states. How do you explain this?
Latvia's price liberalisation and economic reforms have been quicker and
smoother than those in other post-Soviet states - it took us three
years. However, reform of the pension, health and education systems has
been slower because it seemed initially that the old system, with some
cosmetic adjustments, would suffice. We therefore lost time and created
social tensions. Latvia's new government is paying particular attention
to creating order in the economic system. I believe that this year we
shall see the first positive results of these efforts, enabling Latvia
to meet all the requirements for becoming a fully-fledged member of the
European Union in the near future.
The socio-economic effects of free-market reforms have increased support
for left-wing parties. Do you see this support posing a threat to the
There are few left-wing parties in the classical sense in Latvia.
Rather, we have several populist parties and lobbies, which could indeed
have a negative impact on the reform process. However, this is not a
substantial threat: in the run-up to parliamentary elections in autumn
1995, none of these parties openly declared a return to socialism or
communism. I believe that the Latvian political system is undergoing
changes that will eventually lead to the creation of the classical
divisions between rightist, centrist and leftist parties.
Relations with Russia have been problematic in the past. Do you believe
that, with the nationalist surge in Russia, relations can improve in the
We are keen to expand trade and economic co-operation on a mutually
advantageous basis. Certainly, recent Russian rhetoric does not make it
easier to develop dialogue. The creation of a legal basis for bilateral
co-operation, embracing all spheres of co-operation, is the foundation
for Latvia's foreign policy. It should be remembered that
Latvian/Russian relations are being developed in accordance with
international law and are aimed at preserving stable, neighbourly
relations and developing them in accordance with the European spirit and
the status of Latvia as an associate member of the EU.
What effect will the outcome of Russia's presidential elections have on
I would like to confirm Latvia's interest in the consolidation of
democracy and the further implementation of economic reform in Russia. A
democratic, stable and predictable Russia is a decisive prerogative, not
only for the development of normal Latvia-Russian relations but also for
the stability of the continent.
Latvia is attempting to strengthen ties with the West. How successful
have these efforts been? What remains to be done?
Relations with the West are stable and close, and we are confident that
they will deepen. Bilateral trade has grown and Latvia is increasingly
serving as a bridge between the East and the West.
Our goal is to make this process irrevocable. We view Latvia's
integration into the European and transatlantic economic and security
structures as the way to achieve this. Latvia participates actively in
the Partnership for Peace programme and views itself as an integral part
of future models of European security; within the next few years our
foreign policy will take these issues as priorities. This will require a
permanent political and diplomatic dialogue with all the involved
What makes Latvia attractive to foreign investors?
We are advantageously located to act as a bridge between the
Commonwealth of Independent States and the rest of the world, western
Europe in particular. Our infrastructure is developing, though we need
further modernisation so that it can become a strategic asset. We have a
qualified labour force, with a variety of the skills needed for a market
economy (languages, management experience, accounting and marketing).
Latvia also has a stable currency exchange regime, which is a
prerequisite for the development of the export market, and low taxes.
The banking sector has seen particular growth in recent years. Why?
Indeed. This is because Latvia has had a fully liberal exchange rate
mechanism and finance regime since 1991. There are no restrictions,
either for the import or export of currency. These factors, together
with our location and cultural environment, provide favourable
conditions; we are in the process of further developing the banking
sector with efforts to consolidate the security of the industry.
What are the main obstacles to foreign business in Latvia?
The following issues need to be addressed in order to overcome the
barriers and problems facing foreign investors. We must improve our
customs performance. More concretely, we must avoid involving other
organisations, apart from the State Revenue Service, in customs matters.
We must simplify the procedure and provide a unified system for cases
where exemption from VAT or customs tax are envisaged. Also, we must
simplify and accelerate the development of our real estate market,
particularly in terms of registration procedures.
Where do you see Latvia at the end of the century?
I see Latvia as a free, sovereign state with a stable legislative basis
which conforms with the needs of the Latvian people and the EU.
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