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Latvia - 2006 Election

Latvia is a parliamentary republic with legislative authority exercised by a unicameral parliament (Saeima), elected for a term of four years. The prime minister is nominated by the president, who is elected by the Saeima, also for a four-year term. In the 2006 parliamentary elections, the highest number of seats was won by the Peoples Party, with 23 out of 100 seats, which went on to form the government together with three other parties. That government resigned in April 2007. Since 2008, the countrys severe economic crisis has dominated political debate. Demonstrations in Riga in January 2009, prompted by the difficult economic situation, were followed by a political crisis and the formation of a new government the following month; Valdis Dombrovskis of the New Era party became prime minister. In March 2010, the Peoples Party withdrew from the government.

Latvian domestic politics were alive and vibrant from the September/October 2006 attempts to remove anti-corruption chief Loskutovs, through the two largest rallies since the restoration of independence, to the resignation of PM Kalvitis, every day seemed to bring news, and politics was the main topic of discussion. There was a sense that a change was coming to Latvian politics -- that people were deciding that they were tired of only being heard from at elections and that they expected a government that did a better job of actually representing the people. But this enthusiasm was short lived. After the burst of activity in the fall, Latvians returned to their default position on politics -- "it doesn't affect me and there is little I can do to change it anyway." Politics here remains relatively immature and the continued drops in interest and involvement are especially unhealthy in a developing democracy.

Latvia entered the 2006 Saeima (parliament) election race with a minority government led by Prime Minister Aigars Kalvitis (People's Party) that included the center-right People's Party, centrist Greens and Farmers Union and conservative First Party. A combination of voter apathy, lack of any defining issues, and absence of any new political force meant that Latvia's 2006 elections would result in a fragmented parliament in which at least three parties would be needed to set up a viable majority coalition. Unlike in all previous post-Soviet elections in Latvia, no brand-new political force capable of winning the plurality of Saeima seats has appeared. As a result, all major center-right and centrist parties in the Saeima and/or the government coalition were competing for votes of the same jaded electorate. The coalition government, led by Prime Minister Aigars Kalvitis was re-elected on 07 October 2006. Those election results marked the first time that an incumbent administration won re-election in the history of independent Latvia.

Since the relatively dramatic events of fall 2006 that brought down the Kalvitis government, the Latvian domestic political scene was full of sound and fury but signifying little in terms of action. There was a lot happening and much noise, but it was hard to see that any of it was making a difference beyond the small circle of political elite. The Godmanis government, despite having an ambitious plan on paper, remained a low energy, low results administration.

Latvia President Vaira Vike-Freiberga's force of personality made the presidency far more important that its constitutionally-defined role. She stood up to the parties to demand more accountability and reductions in corruption, she has vetoed laws that she felt were designed only to score cheap political points, but most importantly, she has been the primary architect and spokesperson for Latvian foreign policy for much of her eight years in office. She encouraged an insular population to look outward and take an interest in the struggles for democracy and freedom around the world. While politicians would never criticize the very popular president publicly -- it would be political suicide -- they privately grumble that she was too independent and has expanded the role of her office far more than was ever intended.

In July 2007, the Saeima elected Valdis Zatlers, another candidate with no political affiliation, to the presidency. An orthopedic surgeon by trade, Zatlers was the director of the Latvian Traumatology and Orthopedics Center until his election and had no prior political experience. His start was clouded by charges that he had accepted supplemental payments for medical services on which he did not pay taxes. Zatlers complied with investigations which in the end concluded he had committed no breaches of law.

The coalition government, led by Prime Minister Aigars Kalvitis, was made up of four parties, all predominantly ethnic Latvian and all calling themselves center-right. In addition to Kalvitis' People's Party (TP, 22 seats), there are the Greens and Farmers (ZZS, 17 seats), First Party/Latvia's Way (LPP/LC, 10 seats) and For Fatherland and Freedom (TB/LNNK, 6 seats). On 07 December 2007, Prime Minister Kalvitis resigned after his government came under intense criticism for attempting to dismiss the head of the anti-corruption bureau. President Zatlers nominated veteran politician Ivars Godmanis to form a new government. Godmanis' governing coalition consisted of the same four center-right parties that made up the previous government.

The underlying problem in Latvia was that there was alienation of the public from the political leaders and that parties did not have the trust of average people. There was a new generation coming up in Latvia, not defined by age but by experience. Now the western-educated and more outward looking generation was ready to assume political power, but had to contend with the influence of the "three backseat drivers" in Latvian politics ( former PM Andris Skele, Ventspils mayor Aivars Lembergs, and Transport Minister Ainars Slesers). To some these individuals' control over key economic assets in Latvia held back the country's development. The generation change in Latvia could bring about a new political alignment in Latvia, one in which ethnic issues would be less defining, but outlook and perspective would be determinative.

On December 23, 2008, the International Monetary Fund approved a $2.35 billion rescue loan for Latvia. The loan was part of a $10.5 billion bailout that included additional funding from the European Commission (EC), World Bank, and the Scandinavian countries. The IMF funds were intended to "stem the loss of bank deposits and international reserves and to take fiscal measures to limit the widening of the budget deficit."

The key obstacle to prioritizing budget cuts between ministries was Latvia's coalition government structure. In putting together a ruling coalition, the political parties agree on a division of the ministries between coalition partners, and then defend the ministries they control and compete for budget funds. As no party was willing to admit that the activities of one of their ministries are less essential to the country, the only politically-palatable way to impose budget cuts has been to make across-the-board reductions. Until the political parties are willing to share burdens in a strategic manner, no prioritizing of cuts was possible.

On January 13, 2009, the worsening economic crisis sparked an unprecedented riot when, after a political rally to protest government actions on the economy, hundreds of disgruntled citizens took to the streets of Riga, with a smaller group smashing police cars and windows. An estimated 10,000 persons gathered in Dome Square in central Riga for a peaceful rally to protest the country's worsening economic situation and express dissatisfaction over government corruption and mismanagement. The rally turned violent after most protesters had left, and a crowd of several hundred persons threw stones at government buildings and smashed police vehicles and windows. Police used mace and truncheons to disperse them. According to the police, more than 30 persons were injured in the riot, including three police officers who were seriously wounded. Police detained approximately 120 protesters, many of whom were reportedly intoxicated. On February 20, Prime Minister Godmanis resigned amidst growing public distrust and tension over Latvia's economic decline.

On 26 February 2009, President Zatlers nominated European Parliament member and former Finance Minister Valdis Dombrovskis (New Era) to be Prime Minister. Dombrovskis took office on March 13, 2009, when the Saeima approved his cabinet. His coalition was made up of five center-right parties; three of the previous four coalition partners, plus New Era and Civic Union. After assuming office, Dombrovskis announced that the country was "on the verge of bankruptcy" and that major budget cuts would have to be made to secure financial stability. Accordingly, Latvia implemented $1 billion in budget cuts in 2009 and committed to making another $1 billion in cuts in 2010. Latvia concluded an agreement and signed a new Latter of Intent (LOI) with the International Monetary Fund (IMF) on 27 July 2009 following weeks of tense and politically sensitive negotiations. The deal will allow Latvia to access the second tranche of its aid package (US$285 million).





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