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Country Commercial Guides FY 2000: Latvia Report prepared by U.S. Embassy Riga, released July 1999 Note*

CHAPTER III. Political Environment

According to the Latvian Constitution from 1992, the Government consists of the Cabinet of Ministers led by the Prime Minister. The parliament (Saeima) has 100 representatives elected for a three-year period. The last election was held in 1998.

The year 1999 was marked by continued stability and strengthening of Latvia's democratic institutions. On June 17, the parliament elected a new state president, Canadian-Latvian Vaira Vike-Freiberga. She is Latvia's second president since independence and the first woman president in Central Eastern Europe. Further political change occurred in July when the government headed by Prime Minister Valdis Kristopans resigned. The present government headed by Andris Skele of the People's Party came into office on July 16. It is composed of Latvia's three large center-right parties and is stressing continuity in domestic and foreign policies. Skele has served twice previously as Prime Minister and is known as a pragmatic, strongly pro-business leader.

The Latvian government's policies reflect a broad public consensus in support of economic reform, democracy and the rule of law, and the integration of Latvia into Euro-Atlantic institutions, particularly the EU and NATO. In keeping with these aspirations, Latvia is modifying almost every sphere of its legislation to accord with EU requirements and is working to strengthen its regulatory and judicial institutions. Latvia's judiciary is an independent branch of government, but it is still weak and insufficiently trained, and organized crime and corruption are significant problems.

During 1999, Latvia made substantial progress in advancing the integration of its approximately 700,000 (largely Russian-speaking) non-citizens. The most difficult political issue of the year was the government's effort to revise the language law to promote the use of the Latvian language. The parliament passed a new law on July 8, which the OSCE, the EU, Russia and the US criticized as not meeting international criteria for protecting private institutions against government intrusion. The new President sent the bill back to Parliament to respond to the criticism and it is presently being reworked. Another difficult political issue deals with the atrocities that occurred in Latvia during the Holocaust and the Soviet occupation. The former President Ulmanis sponsored the establishment of a Historical Commission to look into and document that period.

Latvia has made great progress during 1999 toward its goal of EU accession as negotiations will begin in early 2000. Latvia's relations with the U.S. also grew during the year. Instruments of ratification of the mutual legal assistance treaty were exchanged in October and a treaty on Avoidance of Double Taxation was ratified by both countries. In contrast, Latvia's relations with Russia have continued to be difficult. The Russian government has refused to restart the Latvian-Russian intergovernmental commission or to sign a border agreement. Moreover, Russia has implemented restrictive transport, customs and banking regulations that target trade and financial transactions with Latvia.