A new turn in Latvian-Russian relations

by Olga Pavuk

Latvian Investment and Development Agency (LIDA) opened a representation office in Moscow this February. For the first time in the history of Latvian-Russian relations, an official body was launched to strengthen trade and economic ties between the two countries. 

Photo: LIDA

Apart from Russia, LIDA also has offices in Germany (Hamburg and Hahn), Sweden, the United Kingdom, France and Kazakhstan. All representation offices have a common goal of increasing competitive ability of Latvian businesses in the world and to bring investments to Latvia, although LIDA's methods are different: from consulting Latvian and foreign companies on entering a new market, to working in specific business environment, with various potential partners, etc.

The BC asked the head of LIDA's representation in Russia Zigfrids Brencevs some questions:  

BC: What is the purpose of the new office?

ZB: LIDA's representation office in the Russian Federation (Moscow) was set up with the purpose of facilitating the development of principally new contacts between business circles, offering them necessary information. The main objective of the representation office is to increase competitiveness of Latvian business in the world market and to bring investments to the country.

BC: Was there a similar representation office in Russia during Latvia's first independence period in 1918-1940?

ZB: It is the first such office in Russia even though Latvian-Russian trade relations and traditions can be traced for centuries. Therefore the representation office carries special responsibility and should draw on the rich experience of Latvian-Russian trade relations. 

Prominent Latvian personalities like Krisjanis Valdemars* and Karlis Ulmanis** in their time contributed greatly to development of trade with our eastern neighbour. Historical monuments in Riga bear evidence to Russian merchants' presence in Latvia. Famous Kuznetsov's china and porcelain made in Riga and Riga Black Balsam have been known world-wide. Latvia's President Karlis Ulmanis earned first gold for Latvia selling flax to Russia. Products by Latvian radio engineering plant VEF have always been popular with Russians. The first ever cars in independent Russia were built in the Russo-Balt plant in Riga. We can really be proud of these and other achievements in trade relations between the two countries. 

BC: What can attract Russian businessmen to Latvia in the context of the country's accession to the EU?

ZB: A new era has arrived and new opportunities for effective co-operation between Russia and Latvia are cropping up. The Baltic states' accession to the EU brings new challenges for rapprochement, for finding new stimulus in our relations.

 BC: What should be done for economic relations with Russia to develop progressively?

ZB: First of all, one should use the rich experience of trade relations and build new, more civilised relations based on the principles and standards of the international law to the benefit of our nations.   

* Krisjanis Valdemars (1825-1891) was one of ideological fathers of the so-called movement of New Latvians in the late 19th century, seeking to bring out in their fellow countrymen awareness of national identity. He contributed greatly to the development of shipping business in coastal areas of Latvia, Estonia and Russia.

** Karlis Augusts Vilhelms Ulmanis (1877-1942), former president of Latvia (1934-1940), was a professional agronomist educated in Switzerland, Germany and the US. It was under his rule that the Latvian agriculture experienced its "golden age", exporting its bacon, butter and other agriculture produce in huge amounts.

 Zigfrids Brencevs

 Dr. iur. Got his Doctor's Degree in Moscow. Worked as a charge d'affaires at the Latvian Supreme Council, the state trustee at the Latvijas Balzams and, more recently, as arbitration judge at the Riga Court of Arbitration. Lectured on the commercial law issues at the Naval Academy.

Russian investments in the fixed capital of Latvian companies in 2003 increased by a huge 103.4 percent over corresponding figures in 2002, according to Lursoft company which assists the Latvian Business Register. 

Since 1991 about 1,620 companies with Russian capital have been registered in Latvia. US capital is present at 1,544 companies in Latvia, 967 companies have Estonian capital, 899 – German capital, 777 – Lithuanian capital and 533 – Swedish capital.

Total balance of foreign direct investments in the registered fixed capital of Latvian companies at the end of 2003 was 1.17 billion lats. Most of these investments or 163.3 million lats were made by Swedish businessmen; the Americans had invested 129.02 million lats, Danes 125.31 million lats, Russians 91.11 million lats, Germans 89.09 million lats and Norwegians 84.23 million lats.

Danish company Tilts Communications has made the biggest investment in the fixed capital of Latvian companies by investing 71.72 million lats in Lattelekom telephone company. Sweden's Tele2 Aktiebolag has invested in Latvia 50 million lats, Estonia's Hansapank 46 million lats, Norway's Linstow Senterutvikling 38.4 million lats, and Swedish bank Skandinaviska Enskilda Banken 36.62 million lats, Russia's Transnefteprodukt – 36.55 million lats.