Latvia - A Success Story of Growth and Transformation

Excellencies,

Professors and students,

Ladies and gentlemen,

I am very pleased to address you here today at the Armando Alvares Penteado Foundation. It is a particular pleasure for me to return to a university setting, having devoted 34 years of my life to academic studies at the University of Montreal. Some of you already know a great deal about Latvia, while others may know very little about my small but dynamic European country, whose population of only 2.3 million is comparable with that of Uruguay, although territorially Latvia is almost three times smaller than Uruguay but larger than Belgium, for example.

It is said that some things are seen better from afar. Therefore Sao Paolu, which is located some 11 000 kilometres from Latvia's capital city of Riga, seems a fitting place as any to look at the 16 years of regained independence, of democratic change and economic transformation that Latvia has experienced.

Region and history

As many of you are aware, Latvia is part of the Baltic Sea Region, which is home to a variety of countries that have experienced diverse paths of development. The people of Latvia, together with their neighbours from around the Baltic Sea - Estonia, Finland, Sweden, Denmark, Norway, Germany, Poland and Lithuania - have been heavily influenced by a code of ethics based on the principles of thrift, discipline and hard work. Even though in various times of history they have experienced hardship, tyrany and bloodshed. 

Many of the Latvians who arrived in Brazil some 100 years ago, established themselves successfully in this country thanks to these qualities. I had the pleasure to meet their descendants yesterday in Nova Odessa and they were sharing with me their family history. More than 20 000 Brazilians are of Latvian origin and form one of the largest Latvian communities outside of Latvia.

Latvia, like a number of its neighbours on the eastern shores of the Baltic Sea, shares a history of invasion by aggressors from both the West and the East, the North and the South. We also share a strong spirit that has permitted us to maintain our languages and cultures during centuries of domination by foreign rulers. At the end of the First World War, Latvia succeeded in establishing its independence along with Finland, Estonia, Lithuania, and Poland. In the years before the Second World War, Latvia enjoyed standards of living that were comparable to those of the most prosperous Western European democracies.

In 1939, Nazi Germany and the Soviet Union signed the Molotov-Ribbentrop Pact, the pact between Stalin and Hitler, partners those days, which led to the outbreak of the most devastating war that Europe has ever known. The Molotov-Ribbentrop Pact also led to the Soviet occupation and illegal annexation of the three Baltic countries a few months later, in 1940.

The Nazi Germans then arrived in 1941, killing tens of thousands of Latvians and nearly annihilating my country's thriving Jewish community. Following the defeat of the Nazis in 1945, the Soviets carried out a new wave of repression, terror, and mass deportations in all three Baltic States. This was a deliberate policy of Stalinist regime. Latvia, Estonia and Lithuania were forcibly annexed into the USSR, thus disappearing from the political map of Europe de facto, but never de iure. Brazil never officially recognized this illegal occupation, and for this the people of Latvia remain grateful to this day.

By the time the Cold War set in, Europe was divided into two hostile camps. The Baltic Sea turned into a barrier that separated the West from the East, the rich from the poor, and the free from the oppressed. For decades, Latvia was incorporated into the monolithic, centralized economy of the USSR. Any voice of democratic dissent was silenced by the repressive machinery of the KGB. Any public expression was strongly controlled with censorship, any step or comment that was breaking the official line was punished. However, the centralized planning system was so unmotivating for the individual, that it could not be sustained in the longer period. A lengthy period of economic and political stagnation was embodied by empty and dusty shops and empty political promises. The joke was that "we will build socialism tomorrow". Like in the "Alice in Wonderland" - we had a cake yesterday, we will have it tomorrow, but never today.

During the 1970s, peaceful dissident movements spread throughout the former Soviet bloc. There was a Solidarnostj movement in Poland. Many of them were initially repressed, but they eventually grew in force and spearheaded the downfall of communist regimes in one captive nation after another. In Latvia, Estonia and Lithuania, a peaceful movement called the Singing Revolution succeeded in achieving the rebirth of our countries after 50 years of foreign occupation and mercifully little bloodshed.

Political and economic transition 

Excellencies,

Ladies and gentlemen,

The renewal of our independence in 1991 signalled the beginning of a new era. Many things had to be changed quickly and all at the same time. For fifty years, our people had had no experience of democracy and no experience of a free market. Generations had grown up under Soviet totalitarianism. There was no conception of supply and demand, the idea itself of selling things on profit was seen as a crime in the USSR.

Yet within a very short time, Latvia successfully completed the transition from a captive nation under totalitarian, one-party rule to a pluralistic parliamentary democracy with active civic participation. Belonging to the party was a dual thing as, from one side, in soviet times you could have some privileges being part of it, but, on the other hand, people saw it as oppressive instrument and word itself has got a negative connotation. So, I think, even having already experienced all the reforms after the regained independence, we are still in the learning process of what party system means. In less than 16 years we have developed a dynamic and growing economy, we have joined the United Nations, the European Union and the NATO alliance, and we are transmitting our reform experience to other countries that started their change at the same time as we did, but are implementing it at a slower pace.

To me, all this has been nothing short of a miracle. Nevertheless, while we were fortunate in regaining our independence without significant bloodshed, our inhabitants paid a heavy price for their freedom. During the first years that followed the renewal of Latvia's independence, my country's economic output experienced a tremendous reduction, leading to a dramatic drop in people's purchasing power and the erosion of social safety nets. The whole idea by Soviets was to make that kind of economical network of republics composing the USSR that not a one republic could live on its own, they all were economically dependant. By 1995, Latvia's GDP per capita had fallen by almost one half (43%) and employment had decreased by a quarter. On top of that, Latvia experienced two major banking crises during the 1990s that slowed down our economic growth. The annual rate of inflation soared to 951% in 1992, before the Bank of Latvia brought it under control by reintroducing Latvia's pre-war currency, the lat, which has been strong and stable since that time, but I have to say that we will join the euro zone in few years time. We also had to find new markets for our products and reorient nearly all of our foreign trade, which we managed to do successfully, as over ¾ of our foreign trade is now conducted with the other member countries of the European Union. Just after the regaining of our independence we had ¾ of our economy with former USSR, but it changed, especially after 1998 year`s crisis in Russia when our business people reoriented their markets to other countries.

As a result of these dramatic economic changes, many people, and particularly elderly pensioners, initially found it difficult to make ends meet. Fortunately, the situation in Latvia has improved considerably during the past decade. Since 2000 my country's economy has grown at a rapid rate and last year it grew by almost 12% (11.9%). Currently Latvia is enjoying the fastest economic growth in the European Union and one of the fastest GDP growth rates in the world. As a result, the difference in incomes between Latvia and Western Europe is steadily decreasing. The positive changes in my country are plain to see at every step, and people's lives are improving, although we still face the challenge of implementing new forms of sustainable State assistance to help those most in need. When Soviet Union collapsed it left with empty pension funds. We had to build all the system from zero paying pensions from our yearly state budget. It was not an easy task, but now the situation is improving as I mentioned earlier.

Today, Latvia's transformation to a liberal market economy can be considered a success story. Though our economical adjustments are still continuing. Latvia's economy is growing so rapidly that it now faces a prospect that few would have imagined a decade ago - overheating. That is why the Latvian government has implemented an economic stabilization plan to ensure that Latvia's rapid growth can continue at a sustainable rate. I have no doubt that in the coming years, my country will attain the higher levels of development enjoyed by its more prosperous Western European neighbours. We have good examples to study, for example, Ireland.

Ladies and gentlemen,

Despite the hardship that hit many Latvians in the early 1990s, the support of the Latvian people for the difficult reforms that we implemented remained strong throughout. We were richly rewarded for our efforts in 2004, when we acceded to the European Union and to the NATO alliance. We wished to join these two organisations first and foremost because we share the same fundamental values as the rest of Europe, and with Brazil as well for that matter. We believe in the ideals of freedom, democracy, the rule of law, the respect for human rights, solidarity, tolerance and mutual respect.

With NATO membership, we have assured our security in a way we never had before. Over the past eight centuries, Latvia has had a very sad history of invasion and occupation by foreign powers. Like Sweden, Latvia adopted a policy of neutrality after the First World War and hoped to remain outside of any conflicts. It worked for Sweden because of its geographic location, but it did not work for Latvia for the same reason. Our accession to NATO, as well as the EU, has further strengthened our stability and provided a sound basis for our future development. Last year Riga, Latvia's capital city, hosted the NATO Summit of Heads of State and Government. This was an event of great significance for my country, which had been erased from the map of Europe for so long before. Even in the school maps of our neighbour Sweden during our occupation there were no Baltic states on them. Today, of course, that situation has changed.

Excellencies,

Ladies and gentlemen,

Upon recovering its independence in 1991, Latvia faced the challenge of integrating those people who had moved to the country during the Soviet occupation. Latvia's demographic structure had changed dramatically under the Soviet regime, which brought in a massive influx of non-Latvian migrant workers to Latvia, after deporting tens of thousands of Latvians to Siberia in the 1940s.

With the help of the USA and the President Clinton Soviet Union troops left Latvia but many civilians remained behind. 

Our integration policy has been taking place in co-operation with a number of international human rights organisations, which has helped to ensure that Latvian legislation fully conforms to international standards. 3 days after I was elected I had to argue with the Parliament regarding the State language law and I sent it back to the deputies to ask to look at it once again to adjust it to the international standards. Today, anyone who wishes to acquire Latvian citizenship can do so upon completion of simple and straightforward naturalization requirements. More than half (56,1%) of Latvia's ethnic Russians are now Latvian citizens.

Excellencies,

Ladies and gentlemen,

I would like to conclude this address with a reflection on Latvia's relations with Brazil. After Latvia regained its independence in 1991, the relations between our two countries were re-established in a climate of friendship and understanding, despite the vast geographic distance that separates our two nations. The large Latvian community living in this beautiful Latin American country has played in important role in strengthening the cordial ties between Brazil and Latvia. The European Union is Brazil's largest trade, investment and cooperation partner and Latvia's membership in the EU provides a good basis for further expanding the economic relations between our two countries. 

As the fifth largest country in the world, both in territory and in population, Brazil has an important role to play in world affairs. Brazil has been an active member of the international community and Latvia has fully supported the proposals that Brazil, Germany and India have put forth for reforming the UN Security Council and for rendering it more representative of the current situation in the world. Both Brazil and Latvia are concerned at the fact that despite the immense efforts that have been invested in the reform of the UN over the past years, only limited progress has been achieved. The disappointing start of the Human Rights Council shows a dangerous precedent, where well-intentioned changes have not brought greater unity among the UN member States. The world and its most disadvantaged need a United Nations that is strong and credible and capable of effective action.

Our countries must all work together to strengthen the UN. Only through a concerted effort based on consensus and cooperation will we be able to address such global concerns as warfare, terrorism and international crime, environmental degradation, poverty and disease. And only through a concerted effort will we be able to assure true peace, prosperity and happiness to our nations and to our people. We still have a long road ahead of us, but I am convinced that in the end we will succeed in our efforts.

I have no illusions of the human nature at its worse, but I do have great hopes for human nature at its best. You are the young generations that has every opportunity open for you, a great chance to make this world a better place to live. I am convinced you will do that.