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Yearbook 1996

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.

1996 Latvia

According to, 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 politics.

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.

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