Latvia. In 1996, L. became a year of some stabilization
after the turbulent 1995, with its banking crisis, GDP fall
and prolonged government formation following an election
that produced a very fragmented result.
Countryaah.com, President Guntis Ulmanis was re-elected in June for a
second and final three-year term. He is reasonably generally
considered to have held his office well and to be a
stabilizing factor in the otherwise often chaotic Latvian
The six-party government under Prime Minister Andris
Skele survived and got a lot done, despite the occasional
difficult internal teardown. Particularly, it stormed within
the Democratic Party Husbonden (Democratic Party Saimnieks,
DPS), the largest party in parliament. A power struggle in
the party summit meant that the real couple Aivars Kreituss
and Ilga Kreituse left the party and in connection with this
were dismissed from their positions as finance minister and
president of saeiman. New President became Alfred's Cepanis.
Party leader Ziedonis Cevers also left the government. He
thus appeared to be Prime Minister Skele who wanted to
abolish his Vice Prime Minister post in his quest to make
the government apparatus more efficient.
The economy stabilized somewhat during the year. The
inflation rate continued to decline, as did the interest
rates on the government debt. But growth was insignificant.
The trade balance remains negative, poverty is widespread
and social unrest and impatience are significant. One step
that can be significant in attracting foreign investment is
the decision on a balanced state budget for 1997. At the end
of the year, successes were noted in the fight against the
extensive smuggling traffic with not least alcohol.
In foreign policy, the approach to the EU continued. The
dispute with Estonia over the fishing limits in the Gulf of
Riga was resolved, following Swedish mediation. On the other
hand, the contradictions with Lithuania regarding the
boundary between the economic zones of both countries in the
Baltic Sea, with their oil deposits, remain. Negotiations
with the Russian Federation on a border treaty are on a low.