According to Latvian ambassador to Russia, Edgars Skuja, Moscow’s friendlier behavior is palpable: Latvian president Valdis Zalters received a warm reception on his December Moscow visit.
Zalters points to two reasons for this. The Russian-Latvian border agreement was signed and ratified in 2007 and this has lead to a continuation of their inter-governmental commission tasked with furthering an ongoing dialogue. (A similar Russian-Estonian border agreement was signed and ratified by Estonia, but rejected by Russia for an introductory add-on unilaterally inserted by the Estonian parliament.)
Secondly Skuja emphasizes economic co-operation. In fact the vice-president of the Latvian bank Rietuma Banka, which is active in Russian and in which the bank’s internal day-to-day operations are conducted in the Russian language, states that the warm reception accorded president Zalters simply underscores the fact that political relations have finally caught up with business relations.
Moscow political scientist Mihhail Smolini explains that of the three Baltic countries, the Latvians currently enjoy the best ties with Moscow, due to the Latvians putting the most emphasis on improved commercial relations to help them exit the recession.
Some trade statistics tell the story: In 2000 Latvian exports to Russia totalled $78 million US; in 2010 the total was $948 million US. Imports from Russia in 2000 totalled $370 million US; in 2010 this rose to $1153 million US. Russia ranks third for exports from Latvia and second for imports from Latvia. (In comparison, for Estonia, Russia ranks third for exports and fifth for imports.) Lithuania ranks first in both categories for Latvia. In direct foreign investments, Russia ranked sixth for Latvia. By the end of 2010 nearly 2500 joint Russian-Latvian enterprises were active in Latvia. It’s interesting to note that in 2010 Latvia issued 64,600 visas for Russian visitors while Estonia issued 70,000, a 27% increase from 2009.
Some observers have noted the effect of legislation that became law in July of 2010, whereby foreigners and their family members can obtain permanent residency status by investing in Latvia. This status allows the individual visa-free travel in the Schengen group of European countries.
The scheme is straight forward: Deposit for at least five years, 300,000 euros in a Latvian bank; or invest in real estate – a minimum of 143,000 euros in Riga or its environs, 72,000 elsewhere; or invest 36,000 euros as base capital in a Latvian firm. After obtaining residency status, one has to visit Latvia only once a year. Last year 159 investors, with family members (mostly from Russia) took advantage of this program which brought nearly $50 million US into Latvian coffers.
Inguna Ukenabele, of the Balticx News Services Riga office states that the seemingly friendlier approach eminating from Moscow might not necessarily be based on a rise in mutual economic interests. She attributes it to Moscow’s aim of gaining visa-free access to the European Union. By solidifying relations with a potential supporter of that goal, Russia will be one vote closer to its target. Latvian economist Talis Linkaits is skeptical about the Latvian emmigration scheme’s benefits. “No country can attract serious investors by selling European Union residency permits. In addition, financial transactions must be monitored for national security reasons to eliminate possible money laundering.”
In spite of the predictions of a new amicable, pragmatic approach to the Baltic countries, Moscow had no qualms in again condemning the recent annual march in Riga by Latvian veterans who fought in German uniforms during WWII. They labeled it unaceptable, an attempt to rewrite history. The Latvian foreign ministery did not take the bait. Apparently Russia’s friendlier tonality might be evident at presidential receptions but does not extend to all outstanding issues.
Are improved Latvian-Russian relations based on increased trade and investment?