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Latvia
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Latvians have resided in their present geographical area for more than 2,000 years. Their closest ethnic relatives are the ancient Prussians, the Galinds, the Jatvings, and the Lithuanians. Only the Lithuanians have avoided extinction. All the other peoples were conquered or assimilated by their neighbors, demonstrating one of the realities of history--the ebb and flow of the creation and disappearance of nations. This aspect of history has been taken to heart by Latvians, who regularly use their experience of extinction as a tocsin of potential danger to the survival of their own group. Ironically, Latvians themselves have been in the position of having assimilated another group. The first settlers in the territory of Latvia were Livonians, or "Libiesi." Whereas the Latvians originated from the Indo-European family, the Livonians were akin to the Estonians and the Finns and formed a part of the Finno-Ugric complex of nations. The Livonians were once heavily concentrated in the northern part of Latvia's present-day provinces of Kurzeme and Vidzeme, but today only about 100 individuals retain their ancient language. Livonians have also contributed to the development of a prominent Latvian dialect.
Until about 1300, the Latvian people lived within half a dozen or so independent and culturally distinct kingdoms.This lack of unity hastened their conquest by German-led crusaders, who brought with them more efficient weaponry, war experience, and technology, including stone and mortar fortifications. During the next 600 years, various parts of the territory of Latvia were taken over by a succession of foreign regimes, including those of Denmark, Prussia, the Polish-Lithuanian Commonwealth, Sweden, and Russia. In this maelstrom of changing rulers, the descendants of the German conquerors were able to maintain their autonomy and their title to feudal estates by adapting to new circumstances and by offering loyalty to whoever was the dominant power. These Baltic barons formed the bulk of the upper classes and set the tone of the Baltic establishment. Although their dominance over the Latvian serfs has often been justifiably criticized, their profound impact on Latvian cultural and social development can be observed even to this day.
Besides the Baltic barons and other Germans, the greatest impact on the formation of the Latvian nation came from Russia, the giant neighbor that began the conquest of Latvia in 1710 under Peter I (the Great) (r. 1682-1725) and completed the process eighty-five years later. For more than 200 years, Latvians had a unique mixture of elites. The German nobility was dominant in economic, cultural, social, and local political life, and the Russian bureaucracy was in charge of higher politics and administration. Some Latvians aspiring to higher status tried to emulate the Germans, but other Latvians thought that salvation was to be found with the Russians. Indeed, a large part of the Latvian intelligentsia was inspired by alumni of the higher educational institutes of St. Petersburg. Several prominent intellectual leaders agitated for the migration of Latvians to the interior of Russia, where free land was available. Some Latvians adopted the Orthodox faith, Russia's predominant religion.
During the second half of the nineteenth century, Latvians experienced a resurgence of national consciousness. There was an intense development of Latvian culture and a new stress on the need for protecting this culture against the inroads of both Germanization and Russification. A new Latvian-oriented elite appeared and began to press for a larger input by Latvians in the determination of their own local affairs. This period is known as the first Latvian awakening.
The favorable geographical position of Latvia alongside the Baltic Sea and on the outer frontier of a vast, mostly landlocked Russian Empire provided the impetus for an extremely rapid economic development of the region. The most rapid growth occurred between 1880 and World War I. Riga became the third largest port in the Russian Empire; in 1913 its port had a larger trade turnover than St. Petersburg's. Many huge factories were constructed, attracting great masses of new workers from the Latvian countryside and from the interior of Russia.
Working-class discontent and the spread of Marxism created a volatile situation in Latvia. This radicalism was exacerbated by the shooting of seventy peaceful demonstrators in Riga in January 1905. Massive strikes by workers and the uprising of peasants with the attendant burning of feudal manor houses resulted in a very vindictive reaction by authorities, who shot some 3,000 people and sent many into exile in Siberia. Others managed to flee abroad. In 1905 almost all segments of Latvian society were united in their anger against the Russian authorities and the German barons.
This legacy of 1905, together with the disruption of World War I, when half the Latvian population was forced to evacuate ahead of the invading Germans, created propitious conditions for the growth of Marxism and especially its radical variant, Bolshevism. Of the votes for the All-Russian Constitutional Assembly from Latvians in the Russian-controlled northeastern part of Latvia, the Bolsheviks received a majority (71.9 percent). By contrast, in the entire empire less than a quarter voted for the Bolsheviks.
This infatuation with Bolshevism suffered a severe jolt, and support plummeted dramatically, during the half-year of Bolshevik rule of Latvia, which ended in May 1919. Nevertheless, a significant contingent of Latvian Red Riflemen fled to Russia, where they formed an important part of the leadership and infrastructure of the Red Army. Many Latvians also became prominent in the top hierarchy of the first Soviet political police, known as the Cheka (see Glossary), and the Russian Communist Party (Bolshevik). Their days of glory were cut short by the mass executions initiated by Joseph V. Stalin in the 1930s.
Latvian independence was proclaimed on November 18, 1918, but its real advent came only in 1920 after the cessation of hostilities between pro- and anti-Bolshevik forces and the withdrawal of all foreign armies from Latvian territory. The peace treaty signed with Soviet Russia on August 11, 1920, was a critical step. As stated in Article 2 of this treaty, "Russia unreservedly recognizes the independence and sovereignty of the Latvian State and voluntarily and forever renounces all sovereign rights over the Latvian people and territory." Latvia became a member of the League of Nations in 1921.
Latvia's ensuing period of independence lasted for twenty years and has become embedded in the Latvian consciousness as a golden era of progress and achievement, now referred to as the second awakening. The period of independence was characterized by both economic viability and political instability. The Latvian currency, the lats, became relatively stable. Farming and exports flourished. Inflation was low. Welfare provisions were generous. Foreign debt was minimal. One of the more important indexes of economic achievement was the volume of gold--10.6 tons--that the Latvian government placed for safekeeping in the United States, Britain, France, and Switzerland.This period is also important in understanding a significant thread of present-day Latvian political culture. The state intervened as a direct economic actor in many areas, including heavy industry, building materials, electricity, tobacco, brewing, confectionery, textiles, insurance, and food processing. The government also made a conscious attempt to provide stability and, even more important, to help expand Latvian control of the economy.
Until 1934 Latvia had a system of democracy similar to that in Weimar Germany (1919-33). The use of proportional elections and the absence of any dominant party encouraged participation by more than forty different political parties. The 1931 parliament (Saeima) had representatives from twenty-seven parties. It is not surprising, then, that Latvia had eighteen different parliamentary governments with new combinations of coalition partners in fewer than fourteen years. The evident political instability and the threat of a coup d'état from both the left and the right encouraged Karlis Ulmanis, a centrist, to take the reins of power into his own hands in May 1934. Ulmanis had been one of the founders of independent Latvia and had also been prime minister several times. His acknowledged experience and the public's general disgust with politicking assured little protest against the "setting aside" of Latvia's constitution.
Ulmanis was a populist ruler who did not countenance opposition. He banned all parties and many press organs. It is important to note, however, that not a single person was executed during this period, although several hundred activists from the left and right were incarcerated for brief periods of time. Ulmanis tried to maintain a neutral stance between the Soviet Union and Nazi Germany, but his best efforts failed when these two totalitarian systems connived to carve out spheres of dominance in the heart of Europe.
Ulmanis was deported by the Soviet authorities and died in captivity in Russia in 1942, but his legacy remains alive in Latvia. Today, Ulmanis is a powerful symbol of selfless dedication to Latvia, and his memory is honored even by organizations with high concentrations of former communists. These groups realize that the once-vilified dictator has tremendous appeal among Latvians, especially in rural areas, and that their association with Ulmanis can provide long-term political dividends. At the same time, the historical experience of such a dictatorship, even if beneficial in some respects, has been used in debates as a warning against a repetition of dictatorial rule.
The fate of Latvia and the other Baltic republics was sealed on August 23, 1939, when the foreign ministers of the Soviet Union and Nazi Germany, Vyacheslav Molotov and Joachim von Ribbentrop, respectively, signed a secret protocol giving Estonia and Latvia to the Soviet Union and Lithuania to Germany. Within five weeks, however, Lithuania was added to the Soviet roster of potential possessions in exchange for other territories and sizable sums of gold.
The Nazi-Soviet Nonaggression Pact (also known as the Molotov-Ribbentrop Pact) was not acknowledged by the Soviet Union until it was forced to do so, fifty years later, by the Baltic delegation to the Congress of People's Deputies (see Glossary) in Moscow in 1989. The pact was seen by Latvian and other Baltic independence supporters as the Achilles' heel of the carefully constructed myth by Moscow propagandists of how the Baltic countries had joyfully embraced the Soviet Union and had voted to become new Soviet republics. Indeed, the Latvian dissident group known as Helsinki '86 had organized demonstrations on August 23, 1987, to underscore the secret pact's existence. These demonstrations had reverberated throughout the world and had put Soviet leader Mikhail S. Gorbachev's regime on the defensive.
For the Baltic countries, the half-century following the 1939 pact was a particularly tragic time. During that period, hundreds of thousands of people perished, and much effort was expended to obliterate the memory of independence.
On October 5, 1939, soon after the Nazi-Soviet Nonagression Pact was signed, the Soviet Union coerced Latvia into signing the Pact of Defense and Mutual Assistance. It then forced Latvia to accept occupation by 30,000 Soviet troops. Similar treaties were imposed on Estonia and Lithuania, whose forces also were vastly outnumbered by Soviet forces. (The Baltic states' northern neighbor, Finland, refused to accept such a demand, however, and, after it was attacked on November 30, 1939, valiantly fought the Red Army in what became known as the Winter War. The Soviet Union was expelled from the League of Nations for this unprovoked attack on Finland.)
Stalin made his next move in the Baltics when world attention was riveted on the imminent surrender of France to the Nazis in June 1940. An ultimatum was sent to each one of the Baltic countries demanding replacement of their existing governments by those capable of ensuring the proper fulfillment of the previously signed pacts of mutual assistance. Moscow also demanded the free entry of unlimited troops to secure strategic centers. With no hope of external support, all three countries capitulated to these demands.
The new Soviet troops moved into Latvia, together with a special emissary, Andrey Vyshinskiy, who was entrusted with the details of mobilizing enthusiastic mass support for the Sovietization of Latvia. Vyshinskiy had learned political choreography well when he staged the infamous Moscow show trials against the theoretician Nikolay I. Bukharin and other enemies of Stalin.
A so-called "people's government" was assembled, and elections were held to help legitimate the changes in the eyes of the world. Only the communist slate of candidates was allowed on the ballot, and the improbable result of 97.6 percent in favor--with a more than 90 percent turnout--was never found to be credible by any of the Western governments. For the purposes of Soviet strategy and mythmaking, however, they sufficed. On July 21, 1940, the newly elected delegates proclaimed the Latvian Soviet Socialist Republic and voted to petition the Soviet Union to allow Latvia to join as a constituent republic. Not surprisingly, their wishes were granted. The process of Sovietizing Latvia was interrupted, however, when Stalin's ally and co-conspirator attacked the Soviet Union on June 22, 1941. One week before the Nazi attack, the Soviet regime had arrested and deported to Siberia, in sealed cattle cars, about 15,000 of the former Latvian elite, as well as suspected anticommunists, including 5,154 women and 3,225 children. In all, during the first year of occupation, Latvia lost 35,000 people to deportations or executions. Most deportees died in Siberia.
The equally brutal Nazi occupation lasted until May 8, 1945. Latvia's Jews and Gypsies were particularly subjected to mass annihilation, and only a small number of each group survived this holocaust. The Nazis had no intention of liberating Latvia or providing renewed independence. Even the bulk of nationalized property was not returned. They did, however, draft young men into the armed forces--an illegal move in occupied territories, according to international law. These young people fought against the Red Army in two divisions, suffering high casualties.
With the advance of the Red Army into Latvia, about 200,000 Latvian refugees fled in panic to the West. Many lost their lives in the Baltic Sea, and others were bombed, together with their horse-drawn wagons. A sizable group was captured and turned back to await punishment for their "disloyalty." About 150,000 refugees from Latvia settled in the West, where many of them continued a half-century-long struggle against the occupation of their homeland.
The reestablishment of Soviet control in the mid-1940s was not welcomed. Many Latvians joined the guerrilla movement, which fought the occupying power for close to a decade. To break this resistance and also to force peasants into collective farms, new deportations to Siberia, involving more than 40,000 people (10,590 of them children under sixteen years of age), were completed on March 25, 1949. This date was to become a focal point of demonstrations in 1988.
The leading positions in postwar Latvia's political, economic, and cultural life were filled by Russians or Russified Latvians, known as latovichi , who had spent much or all of their lives in the Soviet Union. Political power was concentrated in the Communist Party of Latvia (CPL), which numbered no more than 5,000 in 1945. The rapid growth of industry attracted migrant workers, primarily from Russia, further facilitating the processes of Russification and Sovietization. Net immigration from 1951 to 1989 has been estimated at more than 400,000.
After Stalin's death in 1953, conditions for greater local autonomy improved. In Latvia, beginning in 1957, a group of national communists under the leadership of Eduards Berklavs, deputy premier of the Latvian Council of Ministers, began a serious program of Latvianization. He and his supporters passed regulations restricting immigration, requested that party and government functionaries know the Latvian language, and planned to limit the growth of industry requiring large inputs of labor. Increased funding was planned for local requirements, such as agricultural machines, urban and rural housing, schools, hospitals, and social centers, rather than for Moscow-planned "truly grandiose projects."
These programs were not well received in Moscow, and a purge of about 2,000 national communists was initiated in July 1959. Many of the most gifted individuals in Latvia lost their positions and had to endure continuous harassment.
Berklavs himself was exiled from Latvia and expelled from the CPL. Later, upon returning to Latvia, he was one of the leaders of the Latvian underground opposition and coauthored a 1974 letter with seventeen Latvian communists, detailing the pace of Russification in Latvia. In 1988 Berklavs became one of the key founders of the Latvian National Independence Movement (Latvijas Nacionala neatkaribas kustiba--LNNK), and as an elected deputy in the Latvian parliament he vigorously defended Latvian interests.
After the purge of the national communists, Latvia experienced a particularly vindictive and staunchly pro-Moscow leadership. Under the iron fist of hard-liner Arvids Pelse (CPL first secretary, 1959-66), who later became a member of the Political Bureau (Politburo) of the Central Committee of the Communist Party of the Soviet Union (CPSU), Latvia suffered many restrictions and petty harassments in all fields of national culture and social development. Sovietization and Russification programs were of an intensity and dimension not found in either Estonia or Lithuania. Pelse was replaced by Augusts Voss (CPL first secretary, 1966-84), who was equally insensitive to Latvian demands. With the advent of a new period of glasnost (see Glossary) and national awakening, Voss was transferred to Moscow to preside over the Supreme Soviet's Council of Nationalities and was replaced by Boris Pugo, a former chief of Latvia's Committee for State Security (Komitet gosudarstvennoy bezopasnosti--KGB). Pugo, who served as CPL first secretary until 1988, subsequently gained prominence as a partici-pant in the abortive Soviet coup of August 1991.
The national awakening came about in large measure as a result of Gorbachev's loosening of the reins of repression and his public stress on truth and freedom of expression. When open demonstrations started in 1987, Latvians were no longer lacking in social cohesion. The purpose of these "calendar" demonstrations was to publicly commemorate the events of June 13-14, 1941 (the mass deportations of Latvians to the Soviet Union); August 23, 1939 (the signing of the Nazi-Soviet Nonaggression Pact); and November 18, 1918 (the proclamation of Latvian independence). During the several years leading up to the first demonstrations by Helsinki '86 on June 14, 1987, several groups had labored with missionary zeal to inspire Latvians to work for a number of social and political causes.
One group that organized in 1976 committed itself to the revival of folk culture and, in spite of harassment, succeeded in rekindling interest in Latvian traditions and in awakening pride in being Latvian. Parallel to the folk culture group, another movement focused on the repair of old churches and monuments and the protection of the environment. The founder of this movement, the Environmental Protection Club (EPC), acknowledged that its primary goal was to raise the consciousness of the general public. Indeed, the EPC became the organization within which many individuals opposed to various aspects of Sovietization and Russification could unite. Under the seemingly nonpolitical umbrella of the EPC, they could organize far more radical bodies, such as the Latvian National Independence Movement.
A dynamic group of young theologians within Latvia's moribund Evangelical Lutheran Church also began a campaign to reactivate their congregations and the structure of the church itself. The Rebirth and Renewal (Atdzimsana un Atjaunosana) group did not have many members, but its activism and confrontation with communist party officials and policies energized people within the growing religious communities as well as in the wider society. Indeed, several individuals from this group served as catalysts for the creation of the Popular Front of Latvia (Latvijas Tautas Fronte--LTF).
The mobilization of a larger constituency of Latvians occurred as a result of the successful campaign to stop the construction of a hydroelectric dam on the Daugava River in 1987. The initiator of this campaign, journalist Dainis Ivans, was later elected the first president of the LTF.
The "calendar" demonstrations, led by Helsinki '86 during 1987, electrified the Latvian population. Most people expected the authorities to mete out swift and ruthless retribution. When they did not, even more people joined in. In 1988 this grassroots protest was joined by the Latvian intelligentsia, whose demands for decentralization and democratization were forcefully articulated at the June 1-2 plenum of the Latvian Writers Union. Several months later, the idea of a popular front was brought to fruition, with a formal first congress organized on October 8-9, 1988.
The LTF had more than 100,000 dues-paying members and chapters in almost every locality in Latvia. These members slowly took the initiative in politics and became a de facto second government, pushing the Latvian Supreme Soviet to adopt a declaration of sovereignty and economic independence in July 1989. They also helped elect a majority of their approved candidates for the all-union Congress of People's Deputies in the spring of 1989; for the municipal local elections in December of that year; and for the critical parliamentary elections of March-April 1990. Slightly more than two-thirds of the delegates in the new parliament, now known as the Supreme Council, voted in favor of a transition to a democratic and independent Latvia on May 4, 1990. This process was marred by several instances of Soviet aggression, most notably in January 1991, when five people were killed during an attack on the Latvian Ministry of Interior in Riga by units of the Soviet Ministry of Internal Affairs Special Forces Detachment (Otryad militsii osobogo naznacheniya--OMON), commonly known as the Black Berets. The transition turned out to be much briefer than anyone could have expected, however, because of the failed Soviet coup of August 1991. Latvia declared independence on August 21, 1991. Soon thereafter, the Soviet Union recognized Latvia's independence, and once again Latvia was able to join the world community of nations.
Latvia is traditionally seen as a tiny country. In terms of its population of about 2.6 million, it deserves this designation. Geographically, however, Latvia encompasses 64,589 square kilometers, a size surpassing that of better-known European states such as Belgium, the Netherlands, Switzerland, and Denmark. Seen from the air, Latvia is an extension of the East European Plain. Its flat terrain differs little from that of its surrounding neighbors. Latvia's only distinct border is the Baltic Sea coast, which extends for 531 kilometers. Its neighbors include Estonia on the north (267 kilometers of common border), Lithuania on the south (453 kilometers), Belarus on the southeast (141 kilometers), and Russia on the east (217 kilometers). Prior to World War II, Latvia bordered eastern Poland, but as a result of boundary changes by the Soviet Union, this territory was attached to Belorussia. Also, in 1944 Russia annexed the northeastern border district of Latvia, known as Abrene, including the town of Pytalovo.
The physiography of Latvia and its neighboring areas was formed, to a large degree, during the Quartenary period and the Pleistocene ice age, when soil and debris were pushed by glaciers into mounds and hills. Undulating plains cover 75 percent of Latvia's territory and provide the main areas for farming; 25 percent of the territory lies in uplands of moderate-sized hills. About 27 percent of the total territory is cultivable, with the central Zemgale Plain south of Riga being the most fertile and profitable. The three main upland areas--in the provinces of Kurzeme (western Latvia), Vidzeme (central Latvia), and Latgale (eastern Latvia)--provide a picturesque pattern of fields interspersed with forests and numerous lakes and rivers. In this area, the extensive glacial moraines, eskers, and drumlins have limited the profitability of agriculture by fragmenting fields and presenting serious erosion problems.
About 10 percent of Latvian territory consists of peat bogs, swamps, and marshes, some of which are covered by stunted forest growth. Forests are the outstanding feature of Latvia, claiming 42 percent of the territory. Lumber and wood products are among the country's most important exports. Two-thirds of the forests consist of Scotch pine or Norway spruce. Latvian forests differ from those of North America primarily because of their relatively brush-free understory. The forest floor, however, is far from a biological desert, as is often the case in tree plantations. Indeed, one of the most widespread pastimes of the population is picking blueberries, mushrooms, cranberries, and other bounties of the natural environment.
Few of the forests are fully mature because of previous overcutting and also because of several violent storms during the 1960s, which snapped or uprooted millions of trees. As a consequence, most of the wood today is derived from thinning and improvement cuts, forming 50 percent of the annual total growth increment of 8 million cubic meters of wood.
For a long time, wood has been a basic source of energy. The utilization of wood as fuel has increased dramatically in the 1990s, even in cities, because of the numbing price hikes on other forms of energy. Local wood is also an important resource for the pulp and paper industry and for specialized plywood and furniture manufacturers. A great concern today is the unregulated cutting of timber for the foreign market. Prices paid by European wood buyers are phenomenally high by local standards, and there is much pressure to utilize this opportunity for cash accumulation, even without legal permits. By 1992 the problem had become so serious that Latvian forestry officials were given the right to carry firearms.
Not all forests are productive. Many areas, especially abandoned, formerly private farms, have become overgrown with low-value alders and other scrub trees. With the return of private farming, these areas are once again being reclaimed for agriculture. In the process, however, there is a danger that these areas, which are ideal for wildlife, will become threatened. The decades-long neglect of extensive areas of marginal farmland was a boon for the establishment of unique ecological conditions favorable for the survival of animal species rarely found in other parts of Europe. According to a World Wildlife Fund study in 1992, Latvia has unusual populations of black storks, small eagles, otters, beaver, lynx, and wolves. There are also great concentrations of deer (86,000), wild boar (32,000), elk (25,000), moose (13,000), and fox (13,000). Many Latvians today are planning to exploit this resource by catering to foreign hunters.
The variegated and rapidly changing physiography of glacial moraines and lowlands has also allowed temperate flora, such as oaks, to grow within a few hundred meters of northern flora, such as bog cotton and cloudberries. This variety and the rapid change in natural ecosystems are among the unique features of the republic.
The Soviet system left behind another windfall for naturalists. The Latvian western seacoast was a carefully guarded border region. Almost all houses near the sea were razed or evacuated. As a result, about 300 kilometers of undeveloped seashore are graced only by forests of pine and spruce and ecologically unique sand dunes. The temptation for fast profit, however, may foster violation of laws that clearly forbid any construction within one kilometer of the sea. Unless the government takes vigorous action, one of the last remaining wild shorelines in Europe may become just a memory.
The seashore adjoining the population centers around Riga was a major focus of tourism during the Soviet era. Jurmala, with its many sanatoriums and tourist accommodations, its tall pines, sandy beaches, and antique architecture, is now experiencing a wrenching readjustment. East European tourists can no longer afford to come here, and Western tourists have not yet discovered the area and its relatively low prices. West Europeans may be loath to come, however, because excessive pollution has closed Jurmala beaches to swimming since 1988. Moreover, facilities and accommodations adequate for Soviet tastes fall far short of minimal standards expected in the West.
Latvia has an abundant network of rivers, contributing to the visual beauty and the economy of the country. The largest river is the Daugava, which has been an important route for several thousand years. It has been used by local tribes as well as by Vikings, Russians, and other Europeans for trade, war, and conquest. With a total length of 1,020 kilometers, the Daugava (or Zapadnaya Dvina in its upper reaches) originates in the Valday Hills in Russia's Tver' Oblast, meanders through northern Belarus, and then winds through Latvia for 370 kilometers before emptying into the Gulf of Riga. It is about 200 meters wide when it enters Latvia, increasing to between 650 and 750 meters at Riga and to 1.5 kilometers at its mouth.
The river carries an average annual flow of twenty-one cubic kilometers. Its total descent within Latvia of ninety-eight meters has made it an attractive source of hydroelectric power production. The first hydroelectric station, at Kegums, was built during Latvia's independence period. The second dam, at Plavinas, aroused an unusual wave of protest in 1958. Most Latvians opposed the flooding of historical sites and a particularly scenic gorge with rare plants and natural features, such as the Staburags, a cliff comparable in cultural significance to the Lorelei in Germany. The construction of the dam was endorsed in 1959, however, after the purge of relatively liberal and nationally oriented leaders under Berklavs and their replacement by Moscow-oriented, ideologically conservative cadres led by Pelse. The third dam, just above Riga, did not provoke much protest because of the seeming hopelessness of the cause. The proposed fourth dam, at the town of Daugavpils on the Daugava River, became the rallying point for protest in 1986-87 by hundreds of thousands of Latvians. This dam was not constructed, in spite of the vast expenditures already poured into the project.
Smaller rivers include the Lielupe, in central Latvia, with an average annual flow of 3.6 cubic kilometers; the Venta, in the west, with 2.9 cubic kilometers; the Gauja, in the northeast, with 2.5 cubic kilometers; and the Aiviekste, in the east, with 2.1 cubic kilometers. Very little hydroelectric power is generated by their waters, although planners are now thinking of reactivating some of the abandoned older dams and turbines. The Gauja is one of Latvia's most attractive, relatively clean rivers and has an adjoining large national park along both of its banks as one of its notable features. Its cold waters attract trout and salmon, and its sandstone cliff and forest setting are increasingly a magnet for tourists interested in the environment.
More than 60 percent of the annual water volume of Latvia's six largest rivers comes from neighboring countries, mainly from Belarus and Lithuania. These adjoining resources create obvious needs for cooperation, especially in pollution control. The dangers from a lack of cooperation were brought home to Latvians in November 1990, when a polymer complex in Navapolatsk, Belarus, accidentally spilled 128 tons of cyanide derivatives into the Daugava River with no warning to downstream users in Latvia. Only the presence of numerous dead fish alerted Latvian inhabitants to the danger.
Latvia's northern location matches Labrador's latitude. In the summer, daylight hours are much longer and in the winter much shorter than in New York City, for example. In December it is still pitch dark at 9:00 A.M., and daylight disappears before 4:00 P.M. This light deprivation may be an important ingredient in deciphering certain aspects of Latvian collective behavior. It may account for the general exuberance and joie de vivre in spring and summer, and the relative taciturnity and melancholy the rest of the year. The climate is far different from that of Labrador, however, because of the effect of the Gulf Stream flowing across the Atlantic Ocean from Mexico. Average temperatures in winter are reasonably mild, ranging in January from -2.8°C in Liepaja, on the western coast, to -6.6°C in the southeastern town of Daugavpils. July temperatures range from 16.7°C in Liepaja to 17.6°C in Daugavpils. Latvia's proximity to the sea brings high levels of humidity and precipitation, with average annual precipitation of 566 millimeters in Riga. There, an average of 180 days per year have precipitation, forty-four days have fog, and only seventy-two days are sunny. Continuous snow cover lasts eighty-two days, and the frost-free period lasts 177 days.
This precipitation has helped provide the abundant water for Latvia's many rivers and lakes, but it has created many problems as well. A large part of agricultural land requires drainage. Much money has been spent for amelioration projects involving the installation of drainage pipes, the straightening and deepening of natural streams, the digging of drainage ditches, and the construction of polder dams. During the 1960s and 1970s, drainage work absorbed about one-third of all agricultural investments in Latvia. Although accounting for only one-third of 1 percent of the territory, Latvia was responsible for 11 percent of all artificially drained land in the Soviet Union.
An additional problem associated with precipitation is the difficulty of early mechanized sowing and harvesting because of waterlogged fields. Heavy precipitation occurs, especially during harvest time in August and September, requiring heavy investment outlays in grain-drying structures and ventilation systems. In 1992, ironically, Latvia experienced the driest summer in recorded weather history, but unusually heavy rains in the preceding spring kept crop damage below the extent expected. The moist climate has been a major factor orienting Latvian agriculture toward animal husbandry and dairying. Even most of the field crops, such as barley, oats, and potatoes, are grown for animal feed.
Latvia cannot claim valuable natural resources. Nevertheless, the abundant presence of such materials as limestone for cement (6 billion cubic meters), gypsum (165 million cubic meters), high-quality clay (375 million cubic meters), dolomite (615 million cubic meters), peat (480 million tons), and construction materials, including gravel and sand, satisfy local needs. Fish from the Baltic Sea is another potential export resource export. Amber, million-year-old chunks of petrified pine pitch, is often found on the beaches of the Baltic Sea and is in high demand for jewelry. It has also had a symbolic impact on the country, which is often called Dzimtarzeme, or Amberland. The future may hold potentially more valuable resources if oil fields are discovered in Latvian territorial waters, as some geologists have predicted.
Latvia's population has been multiethnic for centuries. In 1897 the first official census in this area indicated that Latvians formed 68.3 percent of the total population of 1.93 million; Russians accounted for 12.0 percent, Jews for 7.4 percent, Germans for 6.2 percent, and Poles for 3.4 percent. The remainder were Lithuanians, Estonians, Gypsies, and various other nationalities.
World War I and the emergence of an independent Latvia led to shifts in ethnic composition. By 1935, when the total population was about 1.9 million, the proportion of Latvians had increased to 77.0 percent of the population, and the percentages for all other groups had decreased. In spite of heavy war casualties and the exodus of many Latvians to Russia, in absolute terms the number of Latvians had grown by 155,000 from 1897 to 1935, marking the highest historical level of Latvian presence in the republic. Other groups, however, declined, mostly as a result of emigration. The largest change occurred among Germans (from 121,000 to 62,100) and Jews (from 142,000 to 93,400). During World War II, most Germans in Latvia were forced by Adolf Hitler's government to leave for Germany as a result of the expected occupation of Latvia by Stalin's troops. The Jews suffered the greatest tragedy, however, when between 70,000 and 80,000 of them were executed by the Nazi occupation forces between 1941 and 1944. Latvians also suffered population losses during this period as a result of deportations, executions, and the flight of refugees to the West. By 1959 there were 169,100 fewer Latvians in absolute terms than in 1935, in spite of the accumulated natural increase of twenty-four years and the return of many Latvians from other parts of the Soviet Union after 1945.
The balance of ethnic groups in 1959 reflected the vagaries of war and the interests of the occupying power. The Latvian share of the population had decreased to 62.0 percent, but that of the Russians had jumped from 8.8 percent to 26.6 percent. The other Slavic groups--Belorussians, Ukrainians, and Poles--together accounted for 7.2 percent, and the Jews formed 1.7 percent. Indeed, one of the greatest concerns Latvians had during the almost half-century under Soviet rule was the immigration of hundreds of non-Latvians, which drastically changed the ethnic complexion of the republic. Even more, with each successive census Latvians saw their share of the population diminish, from 56.8 percent in 1970 to 54.0 percent in 1979 and to 52.0 percent in 1989. With each year, a net average of 11,000 to 15,000 non-Latvian settlers came to the republic, and such migration accounted for close to 60 percent of the annual population growth. The newcomers were generally younger, and hence their higher rates of natural increase helped to diminish the Latvian proportion even more.
The threat of becoming a minority in their own land was one of the most important elements animating the forces of political rebirth. There was a widespread feeling that once Latvians lost their majority status, they would be on the road to extinction. During the period of the national awakening in the late 1980s, this sentiment produced a pervasive mood of intense anxiety, perhaps best expressed by the popular slogan "Now or Never." It also came across very bluntly in "The Latvian Nation and the Genocide of Immigration," the title of a paper prepared by an official of the Popular Front of Latvia in 1990. By then, largely as a result of the great influx of new settlers encouraged by Soviet authorities, Latvians were a minority in six of the largest cities in Latvia. Even in the capital city of Riga, Latvians had shrunk to only about a third of the population. Thus, they were forced to adapt to a Russian-speaking majority, with all of its attendant cultural and social patterns. There was not a single city district in Riga where Latvians could hope to transact business using only Latvian. This predominantly Russian atmosphere has proved difficult to change, in spite of the formal declaration of Latvian independence and the passing of several Latvianization laws.
Even in the countryside of certain regions, Latvians are under cultural and linguistic stress from their unilingual neighbors. The most multinational area outside of cities can be found in the province of Latgale in the southeastern part of Latvia. There the Daugavpils district (excluding the city) in 1989 was 35.9 percent Latvian, Kraslava district 43.1 percent, Rezekne district (excluding the city) 53.3 percent, and Ludza district 53.4 percent. For several decades, Latvians in these districts were forced to attend Russian-language schools because of the dearth or absence of Latvian schools. Not surprisingly, during the Soviet period there was a process of assimilation to the Russian-language group. With the advent of independence, Latgale has become a focal point for official and unofficial programs of Latvianization, which include the opening of new Latvian schools, the printing of new Latvian local newspapers, and the opening of a Latvian television station for Latgalians. A major thrust in Latvianization is also provided by the resurgent Roman Catholic Church and its clergy.
Most Latvians themselves are not aware that by 1989 they had become a minority of the population in the usually most active age-group of twenty to forty-four. In the age category of thirty-five to thirty-nine, Latvians were down to 43.0 percent of the total. The period spanning the years from the late teens to middle age usually provides the most important pool of people for innovation and entrepreneurship. The relatively low Latvian demographic presence in this group could partly account for the much smaller visibility of Latvians in the privatization and business entrepreneurship process within the republic.
<>Population Changes since Independence
In 1994, according to official estimates, Latvia had a population of 2,565,854 people. This figure was smaller than for the 1989 census (2,666,567), reflecting a fundamental change in the demography of Latvia. The population in the republic decreased for the first time since 1945, except in 1949 when more than 40,000 Latvians were deported. Between January 1989 and January 1994, the total decrease was more than 100,000.
Two important factors have contributed to this change. During 1991, 1992, and 1993, the natural increase was negative; in other words, more people died than were born. The moving variable has been the number of births. In 1991 the total number born was only 34,633, which was 8.7 percent less than in the previous year and 18 percent less than in 1987. The number of deaths remained about constant. For the first time since 1946, more deaths than births occurred in 1991--by a margin of 116. This gap increased significantly in 1992, when 3,851 more deaths than births were recorded. The death rate increased from 13.5 per 1,000 in 1992 to 16.3 per 1,000 in 1994, and the birth rate fell from 12.9 per 1,000 in 1992 to 9.5 per 1,000 in 1994. The postponement by many families of procreation is not surprising in view of the economic traumas suffered by most people and the general political and economic uncertainties prevailing in the country.
An even more important factor at work in the overall decrease of population has been the net out-migration of mostly nonindigenous individuals. The principal factors affecting the direction of migration included Latvia's declaration of independence and its laws checking uncontrolled immigration into the country. Independence brought a shift in political power to the Latvian group. Many individuals who could not adjust to living in a newly "foreign" country or who did not want to accommodate the new Latvian language requirements in certain categories of employment decided to leave.
A sociological poll published in November 1992 indicated that 55 percent of non-Latvians would not move east (that is, to other parts of the former Soviet Union) even if they were offered a job and living accommodations; 19 percent expressed a willingness to do so (3 percent only temporarily); and 26 percent said they did not know whether they would move. Only about 205,000 non-Latvians out of 1.3 million living in Latvia were willing to leave permanently if offered jobs and roofs over their heads. Aside from economic considerations, this surprisingly strong attachment to Latvia by non-Latvian ethnic groups is attributable to the fact that many of them were born in Latvia and have had little if any contact with their forebears' geographical areas of origin. According to the 1989 census, of the non-Latvian ethnic groups in the country, about 66 percent of Poles, 55 percent of Russians, 53 percent of Jews, 36 percent of Lithuanians, 31 percent of Belorussians, and 19 percent of Ukrainians had been born in Latvia.
In spite of Latvians' fears of becoming a minority and in spite of the strains caused by Russification and language inequities, a relatively high proportion of Latvians have married members of other ethnic groups. Some 30 percent of marriages involving Latvians were of mixed nationality in 1988 (although only 17 percent of all marrying Latvians in 1988 entered into mixed marriages). This rate of intermarriage was one of the highest of any titular nationality in the republics of the Soviet Union. Comparable rates were found in Belorussia (34.6 percent) and Ukraine (35.6 percent); a much lower rate was found in Estonia (16.1 percent). The marriage statistics of 1991 do not indicate any significant changes in this respect, with just under 18 percent of all Latvians marrying members of other ethnic groups.
Latvia has an extremely high divorce rate, but there is no adequate explanation for it. In 1991 Latvia registered 22,337 weddings and 11,070 divorces, for a divorce rate of 49.6 percent. Among various ethnic groups, these rates vary: Latvian males, 39.1 percent, and females, 39.9 percent; Lithuanian males, 52.7 percent, and females, 45.0 percent; Polish males, 43.7 percent, and females, 54.5 percent; Russian males, 60.2 percent, and females, 58.3 percent; Belarusian males, 58.8 percent, and females, 61.0 percent; Ukrainian males, 64.4 percent, and females, 65.2 percent; Jewish males, 67.6 percent, and females, 65.9 percent; and males of other ethnic groups, 64.8 percent, and females, 70.0 percent. During the first nine months of 1992, as compared with the same period in 1991, marriages decreased by 10 percent, but divorces increased by 24 percent. For every 1,000 marriages, there were 683 divorces.
Perhaps the instability of marriage accounts for the relatively high percentage of births outside of marriage. In 1989 in Latvia, 15.9 percent of infants were born to women who were not married. In Lithuania the comparative rate was 6.5 percent, but in Estonia the rate was 25.2 percent. In the Soviet Union as a whole in 1988, the rate was 10.2 percent.
Latvia was one of the most urbanized republics of the former Soviet Union, reaching an urbanization rate of 71 percent in 1990. Subsequently, the rate of urbanization decreased and was estimated to be 69.5 percent in 1992. Part of the reason for the decline no doubt can be found in the out-migration of non-Latvians to other republics. It seems probable, as well, that a slight shift back to rural areas occurred as a result of the start-up of some 50,000 private farms.
The rapid economic changes of the early 1990s have brought about an employment reorientation by various ethnic groups. The division of labor between Latvians and non-Latvians that prevailed in 1987, the most recent year for which such data are available, offers a general indication of where the groups work. The Latvian share was above average in culture and art (74.6 percent), agriculture (69.5 percent), public education (58.8 percent), communications (56.7 percent), administration (56.4 percent), credit and state insurance (55.1 percent), and health care and social security (53.5 percent). Latvians were significantly underrepresented in heavy industry (36.3 percent), light industry (33.6 percent), machine building (31.0 percent), the chemical industry (30.1 percent), railroad transport (26.5 percent), and water transport (11.5 percent). The work categories facing the greatest threat of unemployment are those with the fewest Latvians. This may create future strains and possible confrontations between Latvians and non-Latvians if solutions are not found.
In the long run, however, higher education might be an important variable in advancement and adjustment to new economic situations. In 1989 only ninety-six out of 1,000 Latvians completed higher education, compared with 115 out of 1,000 for the entire population. The most educated were Jews, with a rate of 407 per 1,000 completing higher education, followed by Ukrainians with 163 and Russians with 143. Belorussians, Poles, and Lithuanians had a rate below that of the Latvians. One of the key variables accounting for this spread in educational achievements is rural-urban location. Jews and Russians are much more urban than Latvians or Poles. It is difficult to compete in entrance examinations after attending schools in rural areas where there are regular official interruptions in the fall for harvesting and in the spring for planting. Distances and poor transportation networks provide another obstacle to completing secondary school. Most institutions of higher learning are located in Riga. Unless one has relatives or friends there, it is difficult to find living accommodations. Student residences can cater to only a small proportion of applicants.
One of the unique aspects of the Latvian education system was the introduction during the 1960s of schools with two languages of instruction, Latvian and Russian, in which each group held classes in its own language. About a third of all schoolchildren went to these schools, and the others attended the purely Latvian or Russian schools. Extracurricular activities and parent-teacher events were expected to be held together, and almost inevitably they were conducted in Russian because of the imbalance in language knowledge. These schools did not foster interethnic friendship, as originally hoped, and they were being phased out in post-Soviet Latvia. In the 1993-94 school year, sixty-nine out of 574 such primary schools remained.
All children, from about the age of six, must complete nine years of primary schooling, which may be followed by three years of secondary education or one to six years in technical, vocational, or art schools. In the 1993-94 school year, a total of 76,619 students were enrolled in primary schools, 242,677 in secondary schools, 27,881 in vocational schools, 19,476 in special secondary institutions, and 7,211 in special schools for the physically and mentally handicapped. There were eighteen universities and other institutions of higher education, with 36,428 students. The literacy rate approached 100 percent.
One of the innovations introduced with independence was the reestablishment of schools or programs for other ethnic groups. Before the Soviet occupation in 1940, Latvia had more than 300 state-supported schools offering instruction for different ethnic groups: 144 Russian, sixty Jewish, sixteen Polish, thirteen Lithuanian, four Estonian, one Belorussian, and eighty-five with several languages of instruction. All of these except the Russian schools were closed after 1945. After 1990 various ethnic groups were offered the opportunity of again maintaining schools in their own language of instruction, and by the 1993-94 school year some 210 schools were in operation: more than 200 Russian, four Polish, one Estonian, one Lithuanian, one Ukrainian, and one Jewish. Latvia had the first Jewish secondary school in the entire Soviet Union. It should be noted that most of the non-Latvian groups had largely assimilated with the Russians, and many of their members did not speak their native tongue.
In the early 1990s, the health care system that Latvia inherited from the Soviet regime had yet to meet Western standards. It continued to be hampered by shortages of basic medical supplies, including disposable needles, anesthetics, and antibiotics. In 1992 there were some 176 hospitals, with 130 beds per 10,000 inhabitants--more than in Estonia and Lithuania--but they were old, lacked modern facilities, and were concentrated in urban areas. The number of physicians, forty-one per 10,000 inhabitants, was high by international standards, but there were too few nurses and other paramedical personnel.
At a time when most of the modern world was experiencing rapid strides in the extension of average life span, the Soviet Union and Latvia were going backward. Between 1965 and 1990, the male life span in Latvia decreased 2.4 years, from 66.6 to 64.2 years. For females, there was a decrease between 1965 and 1979 from 74.4 to 73.9 years, but the average life span rose to 74.6 by 1990. In comparison, in 1989 the average life expectancy in the Soviet Union was 64.6 for males and 74.0 years for females. Overall, Latvia then ranked eighth among the Soviet republics. For males, however, Latvia was eleventh, ahead of three Soviet Central Asian republics and Russia. Among females, Latvia did better, sharing fourth ranking with Ukraine.
According to the calculations of a Latvian demographer in 1938-39, Latvia was about thirteen years ahead of the Soviet Union in life expectancy. No doubt, an important role in lessening the average life span statistics was played by the massive in-migration of people after 1945 from mostly rural and poverty-stricken parts of the Soviet Union. Even in 1988-89, within Latvia there was a difference of 0.8 year between Latvian and Russian life expectancy. Standardized rates that account for urban and rural differences show that Latvians live 1.7 years longer than Russians.
Perhaps no other index of the role of Sovietization is as indicative as the gap in life expectancy between Latvia and Finland, the Baltic states' northern neighbor. In 1988 Finland registered life span rates of 70.7 years for males and 78.7 for females, which were 6.5 and 4.1 years higher than the respective rates in Latvia. By 1994 life expectancy in Latvia had increased only marginally: 64.4 years for males and 74.8 years for females, compared with Finland's rates of 72.1 years for males and 79.9 years for females. During the 1930s, Latvia's rates had been higher than those in Finland and on a par with those of Austria, Belgium, France, and Scotland.
The infant mortality rate rose to 17.4 deaths per 1,000 live births in 1992, after a steady decline beginning in 1970 and an estimated eleven deaths per 1,000 live births in 1988. Its rate was higher than that of Estonia and Lithuania and almost three times the rate of infant mortality in Finland. In 1994 there were 16.3 deaths per 1,000 population in Latvia. The primary causes of infant deaths in Latvia are perinatal diseases; congenital anomalies; infectious, parasitic, or intestinal diseases; respiratory diseases; and accidents and poisonings. Environmental factors and alcoholism and drug abuse also contribute to infant mortality.
Latvia outpaced most of the other republics in the Soviet Union in deaths from accidents, poisonings, and traumas. In 1989 some 16 percent of males and 5.6 percent of females died from these causes. The suicide rate of 25.9 per 100,000 in 1990, or a total of 695, was more than twice that of the United States. In 1992 the number of suicides increased to 883. Other major causes of death include cancer, respiratory conditions, and such stress-related afflictions as heart disease and stroke. Although drug addiction and acquired immune deficiency syndrome (AIDS) are on the increase, their incidences are not yet close to those in many Western countries.
Traffic deaths in 1990 reached a rate of 43.5 per 100,000 population, or a total of 1,167. There were 245 homicides in 1990, a rate of 9.1 per 100,000. This increase represented a dramatic jump from 1988, when the rate was 5.8, and from 1985, when it was 5.2. The greater availability of weapons has been one cause. More important, Riga and other cities have been targeted by mafia-style criminal gangs intent on carving up and stabilizing their areas of operation against other gangs. Still another cause is the decrease in the efficiency of law enforcement organs because of low pay, rapid turnover of cadres, lack of gasoline for automobiles, and language problems. The rise in criminal activity has increased Latvians' stress, interfered with their enjoyment of life, and impaired their well-being, health, and physical survival.
Another important ingredient affecting the survival of people in Latvia includes dangerous life-styles and substance abuse. Alcohol consumption rose from an average per capita rate of 1.9 liters per year in the 1920-34 period to 11.7 liters per year in 1985. This sixfold increase in alcohol consumption has had deleterious effects in many other areas of life and health and is one of the main causes of traffic deaths, drownings, fires, and crime.
Most Latvian males are inveterate smokers. A study of six cities in the mid-1980s discovered that 63 percent of men were active smokers, 13 percent had quit, and only 24 percent had never smoked. Smoking takes a particularly heavy toll in Latvia because the allowable tar content in cigarettes is high (three times as great as in Finland), most of the cheaper brands do not have a filter, and most men prefer to inhale deeply. There is a high incidence of illnesses related to smoking and environmental pollution, such as emphysema, lung cancer, bronchial asthma, and bronchitis.
Another habit dangerous to health is the preference for fatty diets and minimal attention to exercise. The economic hardships of recent years appear to have decreased the number of grossly overweight people. This may be one of the few unintended benefits of the reconstruction period.
The total number of pension recipients in Latvia grew from 603,600 in 1990 to 657,700 in 1993. Old-age pensions accounted for the largest number of awards (500,300), followed by disability pensions (104,200) and survivor's pensions (26,300). Old-age pensions remained very low, ranging from LVL15 to LVL23.5 (for value of the lats--see Glossary) per month, depending on the number of years of work.
In 1935, before Latvia's occupation, official statistics indicated a fairly broad spectrum of religious traditions. Evangelical Lutheranism was the single most widespread creed, claiming the attachment of 55.2 percent of the population and 68.3 percent of ethnic Latvians. Roman Catholicism was the second most popular choice, preferred by 24.5 percent of the population and 26.4 percent of ethnic Latvians. Because it was especially entrenched in the economically less-developed southeastern province of Latgale (70 percent in this region) and was commonly seen as being regional rather than national, Roman Catholicism's impact on the secular world of politics and culture appeared muted in comparison with that of Lutheranism. The Orthodox Church of Latvia had a following of 9 percent of the population, with its greatest concentration among Russians and other Slavs but with 33 percent of its support also coming from ethnic Latvians. Old Believers (see Glossary), constituting 5.5 percent of the population, are a unique Russian fundamentalist sect whose forebears had fled persecution from the tsarist empire in the seventeenth century and had found refuge in then Swedish- and Polish-controlled Latvia. About 5 percent of Latvia's citizens were Jewish. The rest of the pre-World War II population was scattered among an array of Protestant denominations.
World War II and a half-century of Soviet occupation and persecution of believers fundamentally changed the religious spectrum. The Evangelical Lutheran Church, with an estimated 600,000 members in 1956, was affected most adversely. An internal document of March 18, 1987, spoke of an active membership that had shrunk to only 25,000. By 1994 religious congregations in Latvia numbered 819, of which 291 were Lutheran, 192 Roman Catholic, 100 Orthodox, fifty-six Old Believer, seventy Baptist, forty-nine Pentecostal, thirty-three Seventh-Day Adventist, five Jewish, three Methodist, and two Reformed.
Part of the explanation of the diminished status of Latvia's Lutheran Church is to be found in its relative weakness as an institution, unable to withstand the pressures of occupation as robustly as the Roman Catholic Church. For centuries Latvian attachment to Lutheranism was rather tepid, in part because this religion had been brought by the Baltic barons and German-speaking clergy. During Latvia's earlier independence period (1920-40), efforts were made to Latvianize this church. Original Latvian hymns were composed, Latvian clergy became predominant, and the New Testament was translated into modern Latvian. During the tribulations of World War II, Latvians intensified their religiosity, but at the same time the Lutheran Church suffered serious losses. Many of the most religious and talented individuals and clergy fled as refugees to the West or were deported to Siberia. A large number of church buildings were demolished by war action.
The Roman Catholic Church had a much closer historical bonding with its flock. During the period of national revival through the latter part of the nineteenth century in Latgale, the clergy were among the leaders of enlightenment and an important bastion against Russification. They nurtured and were themselves members of the Latgalian intelligentsia. During the years of communist occupation, the greater commitment demanded by the Roman Catholic Church helped maintain a higher degree of solidarity against atheist incursions. For the church, the practice of confession was a useful method for monitoring the mood of the population and for organizing initiatives to counter or prevent serious cleavages or even surreptitious activities by the communist leadership. Direct guidance from Rome offered some protection against the manipulation of clergy by state functionaries. Finally, the population of Latgale did not have the same opportunity to flee from Latvia because it was cut off earlier from access to the seacoast by the Red Army. Roman Catholic clergy, who were unmarried, were also more inclined to remain with their religious charges, whereas Lutheran clergy had to take into account the safety of their families.
Most Latvian Jews were annihilated by the Nazis during World War II. After the war, a certain number of Jews from other parts of the Soviet Union settled in Latvia. Many of them had already endured antireligious campaigns under Stalin, and there were many obstacles placed in the way of reviving Jewish religious activity. Most former Latvian synagogues were confiscated by the state for other uses, and nowhere in the entire Soviet Union did there exist any centers for rabbinical education. After Latvia's independence in 1991, there was a resurgence of interest in religious affairs. Five Jewish congregations served the growth in demand for services.
The statistics for 1991 point to an interesting pattern (see table 21, Appendix). At that time, far more people were baptized than married in church. Part of the explanation can be found in the requirement by some religions, including Lutheranism, that people must be first baptized and confirmed before having a religious wedding. Another possible explanation for this phenomenon is that the communist state was quite successful in sowing doubts about religion among the young and the middle-aged. Many, especially former members of the Komsomol and the communist party, feel uncomfortable in their personal relationship with the church but also have a desire to open more options for their offspring. Indeed, it is a common phenomenon to see nonreligious parents sending their children to Sunday school for the sake of "character building." In the process, however, some of the parents have become tied to a church and have joined the congregation.
During communist rule, every effort was made to curtail the influence of religion. All potential avenues of contact with the population were cut off. Schools, media, books, and workplaces were all off-limits to religious organizations. Even charity work was forbidden. Indeed, the family itself was not at liberty to guide children into active church work until the age of eighteen. Thus, no Sunday schools, religious choirs, or camps were open to young people. Religious publications, with a few exceptions, were limited to yearbooks and song sheets for Sunday services. Regular churchgoers were subject to various pressures, including harassment at work and comradely visits by local atheists. Anyone with career ambitions had to forgo visible links with religion. The state successfully preempted the most important church ceremonies of baptism, confirmation, weddings, and funerals by secular ceremonies. In 1986 the Lutheran Church registered 1,290 baptisms, 212 confirmations, 142 marriages, and 605 funerals--a fraction of the activity that was to occur in 1991. Evidently, a revolution in the status of the church occurred within that brief period.
Starting with 1987, the Lutheran Church experienced a revival pioneered by a group of young, rebellious, and very well-educated clergy who formed the organization Rebirth and Renewal (Atdzimsana un Atjaunosana). There were confrontations with communist authorities and with the ossified hierarchy of the Lutheran Church itself, which had become somnolent and very accommodating to the demands of secular powers. With the advent of political plurality, the Lutheran Church was able to expand its role and its activities. Church buildings were refurbished, demolished churches were renewed, Sunday schools were opened, religious education was provided in day schools, and the media reported sermons and religious discussions. For several years after the liberalization of church activities, religion became extremely fashionable. Part of this boom, as acknowledged by the Lutheran clergy, was a rebellion against authorities that coincided with the general political effervescence.
The Roman Catholic Church also went through a process of renewal, but its changes were not as marked because it had been able to maintain a strong presence in the population even under the most adverse conditions. Thus, in 1985 the Roman Catholics performed 5,167 baptisms, about five times as many as the Lutherans. In 1991 the Roman Catholics performed 10,661 baptisms, more than double the number in 1985. Among the Roman Catholics baptized in 1991, only 40 percent had been born in families in which the parents had married in church.
A major change in the geography of the Roman Catholic Church also presented problems. Whereas in 1935 more than 70 percent of Roman Catholics resided in the southeastern province of Latgale, by 1990 only 42 percent lived there. Thus, many Roman Catholics lived throughout Latvia, where often no churches of their creed existed. There has been much ecumenical goodwill, and the more numerous Lutheran churches are being used by Roman Catholics and by other religious groups. Administratively, the Roman Catholic Church comprises the Archdiocese of Riga and the Diocese of Liepaja.
Latvia's Roman Catholic Church received a great moral boost in February 1983 when Bishop Julijans Vaivods was made a cardinal. This was the first such appointment in the history of Latvia and the first within the Soviet Union. No doubt part of the willingness of the communist party to accommodate the Roman Catholic Church in this way was the fact that Vaivods was eighty-seven years old in 1983. Yet, he confounded the communists by living until May 1990, thus providing more than seven years of leadership.
Vaivods, who studied theology in St. Petersburg and was an eyewitness to the Bolshevik Revolution, was also an extremely able tactician. His efforts on behalf of the Roman Catholic Church in the Soviet Union are a classic case of stubborn, low-key, but effective opposition to party pressure. The Soviet regime had decided to allow Roman Catholic congregations outside Latvia and Lithuania to die by not allowing them new clergy. Almost daily, delegations of Roman Catholic faithful from various parts of the Soviet Union came to Vaivods during the 1960s pleading for help. He sent Latvian priests to Leningrad (St. Petersburg), Tallinn, and other cities, in spite of local shortages. When pressed by the delegations to allow their own people to enroll in Latvia's Roman Catholic seminary, Vaivods made it clear that the obstacle was not the church but rather state authorities who had given him instructions to claim that the seminary was too small. Under pressure, the authorities relented and allowed a trickle of seminarians from outside Latvia, but as punishment they took away almost half of the seminary's rooms. The church skimped and struggled but did not change its policy. By 1978 the expropriated space was returned, and three years later permission was granted for the construction of a new seminary. Thereafter, seminarian numbers increased rapidly from eighteen in 1980 to 107 in 1989. Most of the students were non-Latvians slated for service in other areas of the Soviet Union.
Latvian Lutherans also provided help to their brethren in other Soviet republics. Lutheran clergy were trained in Latvia for Lithuania. More important, Bishop Haralds Kalnins single-handedly took care of scattered German Lutherans outside the Baltic region. Besides ministering and preaching, he was empowered to ordain religious workers and to settle questions of theological education. In one six-day trip to Kazakhstan in 1976, the bishop held seven services in which 400 people received Holy Communion, twenty children were christened, thirty-five youths were confirmed, and ten couples were married. He was able to carry this load in spite of his advanced age.
The pre-World War II independent Orthodox Church of Latvia was subordinated to the Moscow Patriarchate after the war, and its new clergy were trained in seminaries in Russia. It remained a major religious organization in Latvia because of the heavy influx of Russians and other Orthodox Slavs after the war. Only in 1992 did the Orthodox Church of Latvia become administratively independent once again. Its cathedral in the center of Riga had been transformed by the communists into a planetarium with an adjoining coffee shop popularly dubbed "In God's Ear." The cathedral is now being restored to its original architecture and purpose.
With the advent of independence, several other changes were introduced as well. Potential Lutheran pastors could now receive their training through the Faculty of Theology, which is affiliated with the University of Latvia. The Roman Catholics acquired a modern new seminary, but they had problems recruiting able scholars and teachers as well as students. Most Roman Catholic seminarians from outside Latvia have returned to their respective republics, and new seminarians are being trained locally. The new freedoms have allowed many other religious groups to proselytize and recruit members. Under conditions of economic and political uncertainty, their efforts are bearing fruit. Such denominations as the Baptists, Pentecostals, and Seventh-Day Adventists have made significant inroads. Charismatic movements, animists, Hare Krishna, and the Salvation Army have all attempted to fill a void in Latvia's spiritual life. Undoubtedly, there is great interest among Latvians in spiritual matters, but it is difficult to know how much of it is genuine and how much reflects the ebb and flow of fashion and will be replaced by other trends.
The Latvian language, like Lithuanian, belongs to the Baltic branch of the Indo-European family of languages. Latvian is an inflective language, written in the Latin script and influenced syntactically by German. The oldest known examples of written Latvian are from catechisms published in 1585. Because of the heavy influx of ethnic Russians and other Slavs after World War II, nearly one-half of the country's population does not speak Latvian (see table 22, Appendix). Most ethnic Latvians speak Russian, however, and many also know German (see table 23, Appendix).
Latvian culture is strongly influenced by folklore and by the people's attachment to their land. Christian rituals often are intermingled with ancient customs, and pagan geometric symbols remain evident in the applied arts. Ancient folksongs, or dainas , that were first collected and published in the mid-nineteenth century, most notably by Krisjanis Barons, are a cultural treasure. In 1888 the great epic poem Lacplesis (Bear Slayer) by Andrejs Pumpurs was published, marking the dawn of modern Latvian literature. Janis Rainis (1865-1929) usually tops the list of Latvia's greatest writers. One of the most prominent figures in Latvian literature today is the poet Imants Ziedonis, who also has established a fund to promote the development of Latvian culture.
Latvia has a number of theaters (mostly in Riga), an opera, a symphony orchestra, and a permanent circus. Riga's Dome Cathedral houses one of the largest and most famous organs in the world. The works of many prominent Latvian artists are displayed at the National Fine Arts Museum and at the many art galleries in Riga. Other museums include the Museum of History and Navigation and the Museum of Natural History. There are 168 public libraries in the capital. Books and periodicals are published in Latvian and in other languages.
The Latvian economy, much like that of other former Soviet republics in the 1990s, is going through an extremely difficult period of adjustment and rapid change. Hence, all statistics and assessments are subject to dramatic change.
For Latvia and the other two Baltic republics, the period of development between 1920 and 1940 is regarded as a guide and a morale booster. Latvians know how wrenching the sudden changes were after World War I. Russia had removed almost all factory equipment, railroad rolling stock, raw materials, bank savings, and valuables to the interior. Almost none of these assets were returned. With the victory of Stalin and the sealing of the Soviet Union to the outside world, Latvia had to change its entire pattern of trade and resource buying. In other words, the Russian market, which had been the basis of the manufacturing industry, was no longer accessible. Moreover, the war had left deep demographic wounds and incalculable material damage. In six years of continuous war, with front lines changing from year to year and even month to month, more than one-quarter of all farm buildings had been devastated; most farm animals had been requisitioned for army supplies; and the land had been lacerated by trenches, barbed wire, and artillery craters. Even trees retained the legacy of war; Latvian timber was dangerous for sawmills because of the heavy concentration of bullets and shrapnel.
Independent Latvia received no foreign aid for rebuilding. On the contrary, it had to squeeze the low incomes of its population to repay war debts incurred by the troops fighting for Latvian independence. In spite of all these obstacles, the economic record of the twenty years is truly impressive. Latvia successfully effected agrarian reform and provided land for hundreds of thousands of the dispossessed. Many of these farmsteads pooled their resources through an extensive system of cooperatives that provided loans, marketing boards, and export credits. The currency was stabilized, inflation was low, unemployment was much better than in West European countries even during the Great Depression years, and foreign debt was not excessive. Perhaps the most objective index of Latvia's economic status is evident from the 10.6 tons of gold that it placed in foreign banks before the invasion of the Red Army. Most Latvians who remember the period consider it a golden era. Many of its successful economic approaches are being raised in debates today.
The half-century of Soviet occupation started with the expropriation without compensation of almost all private property by the state. Within a few years, farms, which had not been nationalized immediately, were forced into collectives in the wake of the deportation of more than 40,000 mostly rural inhabitants in 1949. For many decades, in the struggle between rationality and ideological conformity, or between the so-called "expert" and "red," the latter consideration usually prevailed.
Between 1957 and 1959, a group of Latvian communist functionaries under Eduards Berklavs tried to reorient Latvia toward industries requiring less labor and fewer imports of raw materials. At this time, Pauls Dzerve, an economist and an academician, raised the idea of republican self-accounting and sovereignty. The purges of 1959 replaced these experimenters, and Latvia continued in the race to become the most industrialized republic in the Soviet Union, with a production profile that was almost wholly determined in Moscow. Latvia lost its ability to make economic decisions and to choose optimum directions for local needs. A broad-based division of labor, as seen by Moscow central planners, became the determining guide for production. This division of labor was highly extolled by the Soviet leadership of Latvia. For example, Augusts Voss, first secretary of the Communist Party of Latvia (CPL), summarized this common theme in 1978: "Today, nobody in the whole world, not even our opponents or enemies, can assert that the separate nations of our land working in isolation could have achieved such significant gains in economic and cultural development in the past few decades. The pooling of efforts is a powerful factor in increased development." The extolling of the virtues of a Soviet-style economy included an entire refrain of "self-evident truths," which were aimed at reinforcing the desire of Latvians not just to accept their participation in the division of labor within the Soviet Union but also to support it with enthusiasm.
People in the West often underestimated the effectiveness of the Soviet propaganda machine. The media reinforced the popular images of the decadent and crumbling capitalist economies by portraying scenes of poverty, bag ladies, racial tensions, armies of the unemployed, and luxury dwellings in contrast to slums. The discovery by Russians, and especially by their elites, of the much more nuanced realities of the outer world were important incentives for change and even abandonment of communism. Before that discovery, though, the barrage of propaganda had considerable effect in Latvia. But other factors tended to mitigate or counter its impact. One of these was the collective memory of Latvia's economic achievements during its period of independence. Another was the credible information about the outside world that Latvians received from their many relatives abroad, who began to visit their homeland in the 1960s. Twenty years later, many visitors from Latvia, often going to stay with relatives in the West, were able to see firsthand the life-styles in capitalist countries. During this period of awakening, the argument was clearly made and understood: if Latvia had remained independent, its standard of living would have been similar to that of the Baltic states' northern neighbor, Finland, a standard that was obviously significantly higher than that of Latvia.
By the late 1980s, the virtues of a division of labor within the Soviet Union were no longer articulated even by the CPL leadership. Together with the communist leaders in the other Baltic republics, the CPL leaders desired to distance themselves from a relationship that they were beginning to see as exploitative. Thus, on July 27, 1989, Latvia passed a law on economic sovereignty that was somewhat nebulous but whose direction was clear--away from the centralizing embrace of Moscow.
The shift toward Latvian control of the economy can be seen from the changes in jurisdiction between 1987 and 1990. Although the percentage of the Latvian economy controlled exclusively by Moscow remained about the same (37 percent), the share of the economy controlled jointly declined from 46 to 21 percent, and the share exclusively under Latvia's jurisdiction increased from 17 to 42 percent during this period.
The Soviet division of labor entailed, in the Latvian case, significant imports of raw materials, energy, and workers, as well as exports of finished products. Exports as a proportion of the gross national product (GNP) accounted for 50 percent in 1988, a level similar to that of ten of the other republics but not Russia, which had only a 15 percent export dependency. After the disintegration of the Soviet Union, rising energy prices and the lifting of price controls on many Latvian goods often made them too expensive for the markets of the former Soviet Union, but the technological inferiority of these goods limited their marketability in the West.
During the postwar era, industry supplanted agriculture as the foremost economic sector. By 1990 industry accounted for almost 43 percent of the gross domestic product (GDP--see Glossary) and for more than 30 percent of the labor force (see table 24, Appendix). Aggressive industrialization and forced relocation of labor, particularly in the 1950s and 1960s, reduced agriculture's share of the labor force from 66 percent in 1930 to about 16 percent in 1990. Agriculture accounted for 20 percent of GDP in 1990; transportation and communications, about 8 percent; construction, less than 6 percent; and trade, services, and other branches, about 20 percent.
In 1990, 38.9 percent of all industrial personnel in Latvia were employed by the engineering industry (including machine building and electronics) and 17 percent by the textile industry. Other important industries included food (12.7 percent), wood and paper (9.6 percent), chemicals (5.7 percent), and building materials (4.6 percent). Latvia, the most industrialized Baltic state, accounted for all electric and diesel trains produced in the Soviet Union, more than one-half of the telephones, and more than 20 percent of the automatic telephone exchanges, refrigeration systems, and buses.
Because of its deficiency in natural resources, Latvia relies heavily on imports of fuels, electric power, and industrial raw materials. Energy is generated domestically by three hydroelectric power plants on the Daugava River, which have a total capacity of 1,500 megawatts, and by two thermal power plants near Riga, which have a total capacity of 500 megawatts (see fig. 9). In 1991 about 43 percent of total electricity consumed was imported from neighboring states. The country's natural resources are primarily raw construction materials, including dolomite, limestone, clay, gravel, and sand.
In 1990 Latvia had 2,567,000 hectares of agricultural land, 32 percent less than in 1935. More than 1 million hectares of agricultural land, much of it abandoned, were converted to forest under Soviet rule. Of its nearly 1.7 million hectares of arable land, about one-half was used for growing fodder crops, more than 40 percent for grain, 5 percent for potatoes, and approximately 2 percent for flax and sugar beets together.
The Soviet authorities socialized agriculture, permitting only small private plots and animal holdings on the vast state and collective farms. By 1991, when Latvia regained its independence, a network of more than 400 collective farms, with an average size of almost 6,000 hectares, and more than 200 state farms, averaging about 7,300 hectares in size, had been created. Private household plots, despite their small size (0.5 hectare, maximum), played a significant role in the agricultural sector by supplementing the output of the notoriously inefficient state and collective farms. In 1991 some 87 percent of all sheep and goats were held on private plots, as were approximately 33 percent of dairy cows and more than 25 percent of cattle.
Under Soviet rule, Latvia became a major supplier of meat and dairy products to the Soviet Union. From 1940 to 1990, livestock production nearly doubled; by contrast, crop cultivation increased by only 14 percent, despite major investments in soil drainage and fertilization projects. In 1990 Latvia exported 10 percent of its meat and 20 percent of its dairy products to other Soviet republics, in return for which it obtained agricultural equipment, fuel, feed grains, and fertilizer. As the centralized Soviet system collapsed, however, a shortage of feed and the rising costs of farm equipment took a toll. From 1990 to 1991, the number of animals on state and collective farms in Latvia fell by up to 23 percent. Consequently, the output of meat, milk products, and eggs from these farms declined by 6 to 7 percent (see table 25, Appendix).
Transportation is a relatively small but important branch of Latvia's economy. The infrastructure is geared heavily toward foreign trade, which is conducted mainly by rail and water. Roads are used for most domestic freight transport.
In 1992 Latvia had 2,406 kilometers of railroads, of which 270 kilometers were electrified. The railroads carried 31.8 million tons of freight and 83.1 million passengers. Most railcars are old, with some having been in service for twenty or more years. Train service is available to Moscow, St. Petersburg, and Warsaw.
Of the 64,693 kilometers of public roads, 7,036 kilometers were highways or national roads and 13,502 kilometers were secondary or regional roads in 1994. Latvia had a fleet of 60,454 trucks and 11,604 buses; private passenger automobiles numbered 367,475. Many, if not most, trucks were more than ten years old. Despite the growing number of automobiles, commuters continued to rely mainly on trains and buses, each of which accounted for 5 billion to 6 billion passenger-kilometers per year in the early 1990s. Bus service was provided between Riga and Warsaw.
Latvia's location on the Baltic Sea has provided the country with one of its major economic moneymakers for the future. The three large seaports of Riga, Ventspils, and Liepaja are particularly promising for future trade because they can be used during all seasons and because a dense network of railroads and roads links them with many of the landlocked regions of neighboring countries (see fig. 10). For many years, Riga was the end point for Japanese container traffic originating in the Russian Far East, primarily the port of Nakhodka. This traffic was mostly unidirectional from east to west. With the expected opening up of Japan to incoming world trade, however, European exporters may find that Riga is the best route for their containers bound for Japan or even China.
Ventspils is the end terminal for a Volga Urals crude oil pipeline built in 1968. Its port has the capacity to service three large ocean tankers simultaneously. The American Occidental Petroleum Company constructed an industrial chemical complex there providing for the processing and export of raw materials coming from Russia and Belarus.
The port of Liepaja has not yet been involved in major economic activity because until May 1992 it was still in the hands of the Russian armed forces. The port, which ranks as one of the Baltic Sea's deepest, was restricted for many decades because of its military orientation. Much capital investment will be required to adapt this port for commercial use. With careful development, Liepaja could become an active commercial port. A dozen or so smaller ports that have been used mainly for fishing vessels could also be exploited for the distribution of commercial products.
Riga, Ventspils, and Liepaja together handled about 27.2 million tons of cargo in 1993. That year 16.3 million tons of petroleum exports from Russia passed through Ventspils, one of the former Soviet Union's most important ports. Grain imports account for most of the freight turnover at the port of Riga, also a Baltic terminus of the petroleum pipeline network of the former Soviet Union. Liepaja, a former Soviet naval port, became a trade port in the early 1990s. Also during this period, steps were taken to privatize the Latvian Shipping Company, formally separated from the former Soviet Union's Ministry of the Maritime Fleet. The Maras Line, a joint venture with British interests, began to operate between Riga and Western Europe. Latvia's fleet consisted of ninety-six ships, totaling nearly 1.2 million deadweight tons: fourteen cargo, twenty-seven refrigerated cargo, two container, nine roll-on/roll-off, and forty-four oil tanker vessels.
The country's main airport is in Riga. Latvian Airlines, the national carrier, provides service to Copenhagen, Düsseldorf, Frankfurt, Helsinki, Kiev, Minsk, Moscow, St. Petersburg, and Stockholm. Baltic International Airlines, a joint Latvian-United States company, operates flights to Frankfurt and London. Service to <"http://worldfacts.us/Norway-Oslo.htm">Oslo, Berlin, and Amsterdam is offered by Riga Airlines Express, a joint venture between two Latvian joint-stock companies and a Swiss enterprise. Other carriers include Finnair, Lufthansa, SAS (Scandinavian Airlines), LOT (Polish Airlines), and Estonian Air.
The country's telecommunications network is undergoing reconstruction as a result of the privatization of the telecommunications system in 1993 and the sale of a 49 percent share to a British-Finnish telecommunications consortium in 1994. A new international automatic telephone exchange was installed in Riga, and improved telephone and telegraph services became available at standard international rates. The long-term development plan of Lattelcom, the privatized telecommunications company, calls for the creation of a fully digitized network by the year 2012. In 1992 Lattelcom had about 700,000 telephone subscribers, over half of whom were in Riga. Unmet demand because of a shortage of lines was officially 190,000. The unofficial figure, that of potential customers not on the waiting list, was believed to be much larger. There were an estimated 1.4 million radio receivers and 1.1 million television receivers in use in 1992. By early 1995, Latvia had more than twenty-five radio stations and thirty television broadcasting companies. Radio programs are broadcast in Russian, Ukrainian, Estonian, Lithuanian, German, Hebrew, and other foreign languages.
In the early 1990s, Latvia succeeded only partially in reorienting foreign trade to the West. Russia continued to be its main trading partner, accounting for nearly 30 percent of the country's exports and more than 33 percent of its imports in 1993 and for about 28 percent of its exports and nearly 24 percent of its imports in 1994. Overall, more than 45 percent of Latvia's exports were destined for the former Soviet republics (mainly Russia, Ukraine, and Belarus), and about 38 percent of its imports came from the former Soviet Union in 1993. Among Western countries, the Netherlands received the largest volume of Latvia's exports (8.2 percent), followed by Germany (6.6 percent) and Sweden (6.5 percent). The primary sources of imports from the West were Germany (11.6 percent) and Sweden (6.2 percent).
The main import was oil, followed by natural gas, machinery, electric power, and automobiles. Oil products, wood and timber, food products, metals, and buses were the main exports (or, in the case of oil products and metals, reexports). In 1994, according to Western estimates, Latvia's foreign trade deficit was LVL141.1 million, about three times higher than that in 1993. The balance of trade deteriorated in 1994, particularly because the strength of the lats made Latvia's exports too expensive.
A total of about US$73 million in humanitarian aid was received in 1992. (Reliable estimates of total aid flows in 1993 were unavailable.) In 1993 Latvia received aid in the amount of ECU18 million (for value of the European currency unit--see Glossary) from the European Union (see Glossary) through its Poland/Hungary Aid for Restructuring of Economies (PHARE) program. Of a US$45 million import rehabilitation loan from the World Bank (see Glossary), about US$21 million had been used in 1993. In 1994 the European Investment Bank (EIB) granted loans of US$6.4 million for financing small- and medium-sized companies. For this purpose Latvia also received a US$10 million loan from Taiwan. In addition, Latvia obtained a US$100 million joint financing credit from the European Bank for Reconstruction and Development (EBRD) and the Export-Import Bank of Japan.
The Latvian economy began to falter in 1991 and took a nosedive in 1992. Industrial production declined by 31 percent in 1993, a relative improvement compared with the previous year's decline of 35 percent. Especially hard hit was the engineering industry, which was not able to sell most of its production. By January 1994, the official unemployment rate had reached a high of 5.9 percent. (The actual rate of unemployment, including the long-term unemployed, approached 14 percent.)
International trade also plummeted. Most of the trade with the former Soviet republics is conducted using world prices. One of the key areas of change is in the price of energy, which increased seventy-five times between 1990 and 1992. The average prices of imports in these two years increased forty-five times, whereas prices of exports increased only about thirty-three times. With such price hikes and the general economic chaos prevailing in the whole post-Soviet region, exports in the 1990-92 period decreased by 44 percent, imports by 59 percent, and energy imports by 52 percent. Despite moderate improvement in 1993, Latvia continued to face the challenge of modernizing its production equipment and improving the quality and qualifications of its work force. To do that, it needed international credit and investment. Foreign investment, estimated to be about US$130 million in November 1993, was still small, mainly because of political uncertainty. The greatest influx of foreign investment was from Germany (US$31 million), followed by the United States, Sweden, Russia, Switzerland, and Austria.
There is, nonetheless, evidence of considerable progress in economic reform. In 1991 most, or 88.2 percent, of Latvian exports went to the former Soviet Union, and 3.2 percent went to Western countries. One year later, more than 20 percent of exports went to the West. In 1993 West European countries accounted for about 25 percent of Latvia's exports and 17 percent of its imports. Moreover, there has been a positive shift in the distribution of economic sectors, away from industry and toward services. By 1994 the services sector accounted for more than 50 percent of Latvia's GDP; industry, about 22 percent; and agriculture, 15 percent. Another major achievement has been in the stabilization of the Latvian currency. Latvia used the Russian ruble as legal tender until May 7, 1992, when it introduced the Latvian ruble as a coequal currency. On July 20, it made the Latvian ruble the sole official mode of payment. On March 5, 1993, the new Latvian currency, the lats, was introduced to be used with the Latvian ruble. The lats became the sole legal tender in October 1993. The Bank of Latvia has scrupulously followed the directions of the International Monetary Fund (IMF--see Glossary) by restricting the printing of money and credits. By strictly controlling the money supply, it was able to wrestle inflation down to 2.6 percent in December 1992 and to keep it at an average of less than 3 percent a month through December 1993. The annual inflation rate was reduced from more than 958 percent in 1992 to 35 percent in 1993 and 28 percent in 1994.
In Latvia, as in Russia, managers of state-owned production plants pressed the government through early 1992 to increase credits, but failed. The strength of the Latvian currency has contributed to price increases, making it difficult to export Latvian products to the former Soviet Union. Exporters called for a devaluation of the currency and a lowering of interest rates. Despite low inflation and a strong currency, annual interest rates exceeded 100 percent, making it difficult for enterprises to obtain loans.
It is indicative of the struggles waged by different sectors of the economy, state structures, and other institutions that the 1993 state budget was introduced and accepted only in February 1993. At almost 29 percent, the biggest item in the projected budget was pensions. Unpaid taxes and unanticipated expenditures on pensions and other social benefits that year contributed to a deficit of LVL54 to LVL55 million (3.2 percent of GDP). To raise additional revenue, the value-added tax (VAT--see Glossary) was increased from 12 percent to 18 percent in November. In December the government also began to issue short-term promissory notes. The budget crisis abated in 1994, with an estimated deficit of LVL36.7 million (1.6 percent of estimated GDP). According to the Economist Intelligence Unit, with a projected revenue of LVL476 million and expenditures of LVL516 million the 1995 budget would run a deficit of about LVL40 million (1.5 percent of estimated GDP).
One of the most difficult aspects of economic reform in Latvia is the process of privatization. By the end of 1992, only six out of the more than 2,000 state-run enterprises had been privatized. Of the 703 enterprises slated for privatization in 1993, only nineteen had been privatized by mid-October. An agency charged with the privatization of enterprises was not established until November 1993. By January 1994, about thirty state-owned firms had been sold. It had been widely assumed that Latvia would be one of the leaders in privatization because of its experience with a market economy as an independent state from 1920 to 1940 and because of a latent antipathy to communism. Many factors have hindered the privatization process, however.
Until the early 1990s, no major initiatives in this realm could be made because of unclear jurisdiction. As early as 1990, Moscow had prepared a privatization plan for Latvia, which assigned 51 percent of the shares of industries to their workers, with the remainder to be divided between Latvia and the rest of the Soviet Union. Such a move was vetoed by Latvia. One of the primary reasons for the slow pace of privatization was the attempt to honor the claims of previous owners or their descendants. The right to make such claims was extended to the end of 1993. By January 1, 1993, there had been 14,958 requests for buildings, of which only 2,614 had been reviewed. In addition, more than 10,000 apartments had been denationalized, and more than 50,000 claims to city land had been received. A number of owners have been reluctant to make early claims because they would be liable for large costs, especially in buildings with high tax, heating, lighting, and repair bills. Meanwhile, rents have been strictly controlled, and tenants cannot be evicted for seven years unless an equivalent apartment is provided elsewhere.
Potential private owners reclaiming their rightful properties face other obstacles as well. There are legal confrontations between previous owners and a variety of squatters or other claimants. Before independence, many properties were leased or sold to cooperatives. Property law in Latvia has a curious clause that allows so-called "jurisdictional persons" to keep their contracts or properties if the acquisitions were made out of ignorance or "goodwill." In most of these cases, the former owner is then granted compensation by the state, which is usually a small fraction of the worth of a property.
An important psychological aspect of privatization is that many Latvian citizens are afraid of selling off Latvia for a pittance. On the one hand, a belief widely held by leftists--former communists--is that the IMF is trying to wreck the Latvian economy in order to lower purchase prices for foreign firms. On the other hand, rightists charge that the old managers are sabotaging production to lower the value of firms and allow themselves and their Moscow-based mafia allies to once again dominate the Latvian economy. Of particular note is the widespread belief among ethnic Latvians that the main beneficiaries of privatization will be non-Latvians. There is a common perception that about 80 percent of private economic activity is in the hands of other ethnic groups. In private interviews, many reasons are given for this economic breakdown: other groups are more active and willing to take risks; they have better contacts in the old party nomenklatura (see Glossary); they have more links with organized crime; they live mostly in cities where the economic action is; and business has not traditionally been highly regarded in Latvian culture. The predominantly Latvian state bureaucracy, which can affect the rate of privatization, is afraid of losing its power and the concomitant benefits involved in the control of industries.
As in other formerly socialist states, there has been an innate difficulty in estimating the value of industries or buildings. An auction could help overcome this problem, but other considerations, such as job retention and the ability of different bidders to compete in future markets, have become important. In effect, only 9.5 percent of the 295 privatization sales held in Latvia by January 1, 1993, had been accomplished through auction. Most of the privatization undertakings were bids to lease commercial sales establishments for up to five years. In most cases, the leasing of commercial sales establishments requires that the newly private entrepreneurs continue the same line of business as before. Even this kind of relatively mundane transaction was plagued by jurisdictional squabbles. For example, in the lease of the Minsk, one of the largest department stores in Riga, it was discovered after the contract had been signed that the city district that organized the lease had no right to do so because the Minsk is actually under the jurisdiction of the city of Riga. This case illustrates just one problem such initiatives can engender. There were also public charges about favoritism, the involvement of family members of the Cabinet of Ministers, the undervaluation of existing stock, and so on.
A few foreign investors had started up new firms or enterprises, but initial investments were cautiously small--in most cases well below US$1 million. In 1992, for example, total capital investments involving United States enterprises amounted to less than US$13 million. The many problems slowing down foreign investment include the limited title to land (at best a ninety-nine-year lease); the unreliability of contracts with government representatives or ministries, which can be broken; the expectation in some instances of favors or bribes by government contracting or signing parties; the presence of organized crime and, in some localities, its demands for protection money; the widely reported stealing and pillaging of private property; and the variable quality of workers. Other problems involve communications difficulties, a dearth of adequate housing for Western staff, the deficit in knowledge of foreign business language, the lack of Western-trained management, and even the question of safety in the streets. These problems are also reflected in other former Soviet republics. Latvia appears to be tackling them with vigor and determination, however, and major improvements in the investment climate have already been achieved.
Until 1993 one of the key variables blocking a resurgence in economic activity was the erratic and unstable local banking and financing system. More than forty banks in Latvia had an average capitalization of less than US$1 million. Interest rates varied considerably, and services had yet to meet Western standards. The Bank of Latvia, which is the country's central bank, operated forty-eight branches and a specialized foreign branch.
Although much remains to be done, some progress has been made in reforming the financial sector, particularly in privatizing commercial operations. Twenty-one former branches of the Bank of Latvia were merged in 1993 to establish the Universal Bank of Latvia, the privatization of which was to be completed in 1995. The Latvian Savings Bank also was to be restructured and privatized by the end of 1995. As the central bank, the Bank of Latvia assumed a supervisory role, guiding and monitoring the country's banks. To facilitate payments, many banks have joined the Society of Worldwide Interbank Telecommunication (SWIFT), the international fund transfer system, and some have begun to offer credit cards, cash advances, and other services.
Progress toward privatization has been made in agriculture as well. By January 1, 1993, some 50,200 farmsteads encompassing 21 percent of farmland had been given over to individual ownership. By late 1993, the number of private farms had grown to 57,510, compared with 3,931 at the end of 1989 (see table 26, Appendix). At the same time, another 99,400 families were assigned private plots averaging 4.4 hectares, which provided a significant buttress to their economic survival. The major thrust for this privatization came from the program of denationalization, which returned farms and land to former owners or their relatives. Aspects of this privatization could cause problems in the future, however. Although imbued with idealistic expectations, the new farmers have little equipment and inadequate housing for themselves and their animals. Also, many of them have never farmed before. Their farms are usually small, averaging seventeen hectares each. Not all collective farms were dismembered, but where they did split up, the leadership of these farms was able in many instances to buy out equipment and animals at preinflation prices. This apparent unfairness has left a legacy of bitterness.
In November 1992, a law providing vouchers for privatization was passed. The law came into effect on May 1, 1993, and the distribution of vouchers began in September. The law provides for the distribution of vouchers according to one's length of residence in Latvia, with one year worth one voucher, or about US$42. Other factors are also taken into account. For example, those who can lay claim to Latvian citizenship prior to the Soviet occupation in June 1940 and their progeny are entitled to an additional fifteen vouchers as compensation for so-called "ancestral investments." Refugees who left Latvia because of World War II may also obtain one voucher for each year lived in Latvia before December 31, 1944. Those forcibly deported from Latvia in the past receive a differentiated number for each year of confinement in
