An exclusive interview of the Senior editor of Pirmais Biznesa radio (First Business Radio) in Riga, Latvia Aris Jansons
-- How strong is the current influence of the Russian economic sanctions on businesses in Latvia?
Those are vegetable and fruit growers who suffer most, followed by dairy industry. At the same time, talking about the economic crisis symptoms in Latvia stemming from the Russian response to the Western sanctions would be an exaggeration. However, it does not mean that the government should not think of how to help Latvian entrepreneurs. They have already signalled about the wariness of Russians as regards our goods which are even not yet included in the list of Moscow’s countersanctions.
Currently it looks like the main risks for the manufacturers of Latvian food, textile and pharmaceutical products are likely associated not so much with the fears of Russia's import restrictions than with the deterioration in the economic situation of the neighbor and its national currency fluctuations, which reduce opportunities for its citizens to buy foreign products. The current situation makes Russia to boost exports; it has contributed to improvement of the Latvian ports' performance. Cargo turnover in this year's first six months increased by 5.5%, compared to the corresponding period of 2013.
Ugis Magonis, CEO of Latvijas Dzelzcels (Latvian Railroad), alleged that due to the developments in Ukraine the company had suffered losses of about half a million tons of cargo out of 55 million tons they transport every year. If the Russian Railways Company was included in the EU sanction list, it would become more complicated to work, though the cargo would not stop immediately. By the way, it was Latvia which saw to it that the Kremlin boss's friend, the head of Russian Railways would not be recorded in the list of the recent EU sanctions.
A few days ago, Latvia’s ruling coalition has discussed the influence of Russian sanctions on milk processing sector. Currently the drop of prices is only 7%, however, it is expected to grow up significantly. The government has adopted a decision to allocate certain funding to compensate the price difference.
The positive thing is that finally many producers have felt inclined for the reorientation to new markets. The opportunities do exist, but it takes time to adapt to those markets. As clear as day that conquering new markets is not a matter of one month. It would be harder for pharmaceutical industry than many others, in particular, due to long paperwork procedures. For once, the government’s efforts to search for new markets and to assist Latvian farmers came in good time. In their turn, dairy farmers of Lithuania and Estonia admitted during the meeting in Riga that their respective governments had been much more inactive.
-- Escalation of confrontation between the West and Russia is persisting. What points of interest can be underlined from the held International Conference on Foreign and Security Policy in Riga?
Frankly speaking, I did not manage to attend the Riga Conference 2014 in person due to my tense schedule at the broadcasting studio and I used an opportunity to watch it online. The remarks made by Russian analyst Andrey Illarionov, a former advisor to Vladimir Putin turned critic, in which he described the military aggression plans which the Russian ruling elite have on their brain stuck deeply in my memory. I believe that everyone should listen to the person who had been standing close to those who cherish such intentions. It is also important, Illarionov said, the West must not only update its strategy but redefine the nature of aggression given the growing importance of ‘information, disinformation, and propaganda’ in the conflict.
-- When should we expect the real deployment of NATO military bases in Latvia?
If I would say ‘never’, some people would call me traitor and pro-Russian, however, it is most likely that in the foreseeable future, there will be no facility in Latvia that we understand as a genuine NATO military base. The result of upcoming elections would give us much clearer vision. The officials reiterate Latvia already possesses NATO bases in the sense that Latvia is a member state of the Alliance and the soldiers and equipment of the block’s armed forces have been training and holding war games here, and a few hundred soldiers of our partners would stay in Latvia on a rotational basis. Latvian authorities do not want to make the big neighbor’s blood boil with additional military bases in general and the NATO bases in particular. One takes into consideration that Moscow regularly underscores that by it enlargement, NATO has allegedly pledged to not deploy its bases in the former Eastern block countries. In fact, Latvia’s official position is identical to that of the Alliance, as NATO insists it still abstains from putting permanent bases in Eastern and Central Europe.
-- How does Latvia manages to reduce its energy dependence from Russia?
Latvia has confined itself to mere words about future intentions in this sphere when compared to neighboring Lithuania and Estonia. It is undeniable truth that everything depends on the decision-makers here. Have a look, who are the bosses of Latvia’s energy, oil and gas sectors. I am struck by reliance of these people solely on Russian energy, oil and gas. The simple explanation is that it is advantageous for their private business or their decisions have been governed by their ‘old ties’.
Although this issue is the most sensitive immediately after the military subject, this is the area where the Baltic troika has not been able to implement their mutual solidarity, which the three small nations were internationally famous for still two decades ago. The hopes that were pinned to the three Baltic States' common benefits jointly building a nuclear power plant (NPP) in Lithuania, have gone along with Lithuania's failure to create own NPP's strategic investor. The NPP's vision is clouded in fog. Though, Lithuania has taken the most care for its energy supply. Estonia has been satisfied with its shale oil options. As regards Latvia's situation, it does not change even after the opening of the Klaipėda liquefied natural gas terminal in neighboring Lithuania. Although formally, the Lithuanian gas has been already stored in the Incukalns repository in Latvia, it’s technically impossible to deliver gas from Lithuania to Latvia, because of the lack of the respective legal base. This summer, finally an agreement was reached on Polish-Lithuanian natural gas project, but it is intended to be completed by 2019 at best. It is the only project which is considered a realistic and economically advantageous one to break Latvia's dependence on a sole supplier. As yet lobbyists have been dictating the country’s power sector agreements making Latvia a Russia-addicted energy island till the cows come home.
-- To your mind, what are the successes of Riga’s foreign policy in such regions as South Caucasus and Central Asia?
Latvia has been enterprising in the promotion of security and stability in the South Caucasus, in particular, in Georgia; Latvia is represented in the EU monitoring mission in Georgia (EUMM). Latvia vigorously joined a number of EU projects in Georgia, providing support to the public administration, local government and health system reforms, aiding to democratic and civil society development. Latvia is recognized in Georgia as its true friend and enjoys a high reputation there, which solidified during the war between Georgia and Russia when Latvia sided Georgia.
Latvian politicians argue that the visits of Latvian President Andris Berzins and delegations to Central Asia have been contributing to opening the European Union’s (EU) doors to wider economic, cultural and human relations with this region. Otherwise, the EU risk losing any influence in this part of the world forever, they say. There were questions whether it had been making sense to spend time and resources building relationship with the region’s poorest country, Tajikistan. Reproof of ‘flirting’ with the rulers of Uzbekistan and Turkmenistan has been reflected in Latvian media. Officials respond to the criticism saying it is important to bring the region closer to Europe and envisage they will succeed in bringing EU investment and financial instruments to the region. Latvian party particularly stresses the transit corridor perspective, as well as provision of logistics to commodity goods transported to Europe. Cargo from Central Asia and China can flow to Scandinavia through Latvia which should seriously work on the European-Asian connection corridor. Uzbek migrant workers have been working in Latvia, we buy cotton and help to transport it through our sea-ports, Latvian pharmaceutical company Grindex has opened its representation office in Tashkent. Central Asian countries do not belong to the most important trade partners of Latvia, but we have a positive trade balance with the region.
Latvia has been looking forward to its forthcoming EU presidency (2015) and sees its role in Central Asia as a promoter of the EU's trade, economic and investment efforts in the region. However, it seems that for the time being the main benefit is the greater visibility and increasing international respect to Latvia worldwide.