Subj: Latvian Mailer and AOL Chat Reminder for Sunday, September 10th
Date: 2000.09.09
From: Sturgalve@aol.com
File: D:\+www.latvians.com\Postcards\Antikvariats\1890s-Riga.jpg (64116 bytes)
DL Time (32000 bps): < 1 minute

Sveiki!

Somehow, things always get more hectic when fall arrives... so we'll get right to it.

In the news:

• EU Expansion chief makes some perturbing comments
• 2001 Latvia deficit reduction likely to be short of target
• The Baltic States provide financial incentives to Olympic medal winners
• Estonia urges joint Baltic effort to sue Russia for Soviet damages
• Women world leaders gather at the UN Summit in New York
• EU support rising in Latvia as farmers point to competitors' subsidies

On a regional note:

• The Russian Central Bank is about to issue new money, again

We didn't have time to hunt down any new Latvian links this week... but you might try http://www.all.lv (all links Latvian) to hunt for yourself this week!

This week's picture is a trip back to 1890's Riga.

Remember, mailer or not, Lat Chat spontaneously appears every Sunday on AOL starting around 9:00/9:30pm Eastern time, lasting until 11:00/11:30pm. AOL'ers can follow this link: Town Square - Latvian chat. And thanks to you participating on the Latvian message board as well: Click here: LATVIA (both on AOL only).

Ar visu labu,

IN ACCORDANCE WITH AOL'S MAIL POLICY and good manners, please let Silvija (sturgalve@aol.com) know if you wish to be deleted from our mailing list. Past mailers are archived at latvians.com. Your comments and suggestions are always welcome.

    EVIAN, France (AP) — Guenther Verheugen, the European Union commissioner overseeing sensitive expansion talks with a dozen nations, stunned EU members over the weekend by saying Germany should hold a referendum on the EU's push eastward.
    Verheugen's comments in the daily Sueddeutsche Zeitung Saturday appeared to violate a policy that EU executives shun politics in their home countries and defend the interests of all EU nationals.
    In the newspaper interview, Verheugen said that Chancellor Gerhard Schroeder should ask Germans how they feel about the Union's expansion plans. Germany must not "decide over the heads of the people (but hear) the valid fears of their citizens" about an influx of cheap labor and rising crime, he said.
    A recent EU survey found that for 68 percent of Germans feel the EU's expansion is not a priority.
    Verheugen was criticized by Hubert Vedrine and Joschka Fischer, the French and German foreign ministers attending a ministerial meeting here.
    On Saturday, European Commission President Romano Prodi asked Verheugen for an explanation. Verheugen said he made "his comments only in the context of the debate in Germany," said EU spokesman Gunnar Wiegand.
    The EU began talks in 1998 with Hungary, Poland, the Czech Republic, Estonia, Slovenia and Cyprus. This year, Bulgaria, Romania, Latvia, Lithuania, Slovakia and Malta were added to the list. Turkey is also a candidate, but entry talks are not expected to open for several years.
    The negotiations are complex, with economic aspects of the candidates – such as agriculture, trade and social polices, industrial standards and norms, transparent banking rules and so on — expected to become compatible with those in the EU.

    RIGA, Sept 4 (Reuters) — Latvian Finance Minister Gundars Berzins said on Monday the government would break its promise to limit next year's fiscal deficit to one percent of gross domestic product (GDP) in 2001, saying two percent was more likely.
    "We have not been able to reduce the deficit, from what was 3.9 percent in 1999, as fast as we wanted to," Berzins told Radio Latvia in a live interview.
    "This (two percent deficit in 2001) is a step forward, but not as big as we would have liked," he added.
    Latvia pledged in a memorandum with the International Monetary Fund to rein in its deficit after worries over a gap that ballooned last year from a slight 1998 surplus left the lat currency dredging the bottom of its trading band for months.
    Latvia promised to limit the 2000 deficit to two percent of GDP and the 2001 deficit to about one percent.
    The one percent 2001 pledge is also enshrined in the government's programme. Prime Minister Andris Berzins as recently as July 6 said he would "do everything to fulfil this promise."
    The Finance Ministry will submit the draft 2001 budget to the cabinet on September 4 after coordinating expenditure and revenue targets with the branch ministries.
The 2000 fiscal deficit limit has also recently become doubtful, with officials suggesting it may be near three percent of GDP, especially given the government's aversion to tax hikes.
    "A large part of the total expenditure is made up of social payments, which are difficult to reduce and no increases in taxes — already high as they are — are planned," Finance Minister Berzins said on Monday.
    However, analysts said they doubted a larger than expected deficit would rattle the local currency market as the government had already shown that it can get access to funds.
    "The thing is they can finance it through international borrowings, which are fairly cheap right now," said Martins Jaunarajs, short-term liquidity manager at Hansabanka.
    "For example, Latvian five-year euro bonds are yielding about 70 basis points above LIBOR," he said.
    Analysts also doubted there would be any immediate effect on Latvia's illiquid domestic debt market.

    VILNIUS, Lithuania (AP) — Three former Soviet Baltic republics are offering cash bonuses to athletes who win medals in Sydney.
    Latvia will pay $165,000, $50,000 and $30,000 for gold, silver and bronze. Lithuania will pay $400,000, $200,000 and $150,000.
    Estonia's Olympic committee will pay $65,000, $45,000 and $30,000 to its medal winners.

    TALLINN, Sept 5 (Reuters) — Estonia's top ruling party said on Tuesday the three Baltic states should make a joint appeal to Russia to compensate them for losses caused by the 50-year Soviet occupation.
    The Soviet Union annexed Latvia, Lithuania and Estonia in 1940 and occupied them until 1991.
    The West never recognised their incorporation into the Soviet Union, but Russia, the Soviet Union's legal successor, has never acknowledged the occupation.
    On Tuesday, Estonian Prime Minister Mart Laar's Pro Patria party said it would propose to the Baltic Assembly interparliamentary body later this year that the three countries make a coordinated effort to claim compensation.
    "We decided that our delegate to the Baltic Assembly's next session will put forward a declaration ...that the Baltic states establish how large damages from the period of the occupation should be," Pro Patria board member Sirje Kiin told Reuters.
    "Then we would suggest to Russia that we open discussions over payment of those damages."
    Pro Patria's proposal includes asking Russia to acknowledge the Soviet occupation, she added.
    So far only Lithuania has taken concrete action aimed at achieving compensation. Its parliament approved a law in June obliging the government to bill Russia for the occupation, in a claim that could run into the billions of dollars.
    Baltic leaders in the past have said they thought Russia was unlikely ever to make any compensation.
    Latvian President Vaira Vike-Freiberga said in June that her country should make a list and publish a book of the damages done during the occupation as a historical record, even though the prospects of receiving compensation were slim.
    "Russia has not acknowledged the occupation of Latvia, that's why it is doubtful that it would acknowledge the damages," Vike-Freiberga was quoted as saying in June in the newspaper Diena.

    UNITED NATIONS (AP) — If a meeting of women leaders had been held 100 years ago, Queen Victoria would have sat "in solitary splendor."
    Today, she would have found 10 colleagues. Not much of an improvement, but it's a start, New Zealand Prime Minister Helen Clark said Tuesday at a meeting of women leaders at the U.N. Millennium Summit.
    Clark and the presidents of Latvia and Finland met in New York with other women in leadership roles, including U.S. Secretary of State Madeleine Albright, to discuss issues affecting women and girls as part of the U.N. Millennium Summit.
    "The fact that we had a meeting of women world leaders at all attests to the progress that we've accomplished since 1900 when Queen Victoria would have had to be here in solitary splendor," said Latvian President Vaira Vike-Freiberga.
    "On the other hand, if we reflect on the fact that half the world's population are women, the number of women ... obviously indicates that we have a very long way to go," she said.
    Twenty-nine women have led their countries or governments in the last 100 years. The number seemed small Tuesday at the United Nations, where Tuvalu became the 189th country admitted to the world body.
    Tuesday's meeting was sponsored by the Council of Women World Leaders, an elite club whose leader feels something is missing — an American.
    "America is a pretty macho place. It would send a big message to the world if the United States had a woman president," said Kim Campbell, who served as Canada's prime minister in 1993. Campbell now heads the Council of Women World Leaders, part of the John F. Kennedy School of Government at Harvard University.
    On Tuesday, dozens of women in international leadership roles discussed ways to increase peacekeeping and peacemaking roles for women, improving girls' education, and tackling violence against women.
    Former Irish Prime Minister Mary Robinson, who is the U.N. High Commissioner for Human Rights, said women leaders bring "a different set of priorities" to leadership roles and the world must strive to bring an equal balance of views to the decision-making table.
    At a news conference, several women discussed the pitfalls of gender and the long distances still to go.
    "Women think that if they are not assertive and strong they won't be seen as good leaders. We need to reprogram expectations," Campbell said.
    New Zealanders have done so, Clark said.
    "We recently announced that our next governor-general will be a woman, our prime minister is a woman, the leader of the opposition is a woman, the cabinet secretary is a woman, the chief justice is a woman."
    To chuckles, she added, "However, we are not satisfied."

    RIGA, Sept 6 (Reuters) — Latvian support for European Union (EU) membership has risen in recent months but remains below the majority backing seen a year ago, an opinion poll released on Wednesday showed.
    A survey conducted in August showed that 44.5 percent of respondents would vote to join the EU if a referendum were held today, private polling firm SKDS said.
    That was a rise from 39.7 percent in SKDS's last poll in May but a drop from 53.3 percent in an August 1999 survey.
    Latvia's EU Integration Bureau said the rise in support for EU membership was due to stronger backing from farmers who had previously seen the bloc in a largely negative light because of what they say are its unfairly subsidised farm exports.
    "Attitudes among those employed in agriculture have become increasingly positive (towrds EU membership) because of information work by local media but also to a certain extent because of a successful farmers' strike," the Bureau's Eduards Kusners told a news conference.
    Latvian farmers blocked border crossings in July in protest against what they said was the government's failure to keep an agreement on levels of support for the sector. The strikers won small concessions from the government.
    Kusners did not give a reason for the drop in EU support since the same period last year.
    The SKDS poll showed the number of Latvians against joining the EU fell to 32.4 percent in August from 37 percent in May. Around 23 percent were undecided, unchanged from the May poll.
    Latvia started detailed membership talks with the EU in February but is not expected to join until 2005 at the earliest.

    MOSCOW (Dow Jones) — Every few years, the Russian authorities come up with a banknote reform. But unlike previous note changes, one due next year is likely to go smoothly, reflecting greater economic stability.
    The Russian central bank will introduce a new 1,000 ruble ($1=RUB27.71) banknote from next year. The introduction is likely to proceed with little fanfare or even notice. That makes it somewhat remarkable in Russia's checkered history of banknote reform.
    In a country known best to outsiders for its tragedies, previous banknote reforms have turned the savings of millions of people into scrap paper. Perhaps for this reason Russia is the largest holder, outside the U.S., of the roughly $500 billion in cash dollars currently in circulation.
    Now rampant inflation and runaway money printing presses are thought to be a thing of the past in a Russia currently enjoying an inflation rate of just 18.8% a year and near-record central bank reserves. The argument that Russia needs the convenience of a RUB1,000 banknote worth barely $35 is hard to refute in a country where the most common savings instrument is the $100 bill.
    Circumstances conspire to make the new banknote seem a good and harmless idea, yet the urge to judge according to past performance is hard to ignore.
    Today no Russian or Soviet notes printed before 1997 are legal tender (though the numismatists among us will want to remember the small exception of Transdnestria, a Slavic enclave in the former Soviet republic of Moldova).
    In 1998, the central bank brought in a slew of new banknotes and coins when it knocked three zeros off the ruble, turning RUB8,000, for example, into RUB8. That "dedenomination," as the central bank called it, ended up costing citizens little because the monetary authorities gave people a full year to turn in their notes and imposed no upper limit on the conversion.
    While this was the only banknote reform in memory that didn't hurt Ivan Ivanovich, it did presage another monetary disaster, the August 1998 financial blowout which wiped out two thirds of the ruble's value against the dollar in a matter of weeks.
    One banknote reform that still brings a shudder to small traders is the 1991 reform conducted by then-Prime Minister Valentin Pavlov, who canceled RUB50 and RUB100 banknotes and replaced them with new issues in a bid to balance the country's deficit of consumer goods with a shortage of money.
    Trouble was, citizens were given just a few days to hand in their cash and they faced strict limits on how much they were allowed to exchange. A public outcry, made possible by Soviet leader Mikhail Gorbachev's policy of glasnost, led to an easing of those restrictions.
    Within months of the Soviet collapse, Russia's central bank was learning on the job how to run monetary policy, introducing a RUB10,000 banknote that was 100 times bigger than the biggest note of a year earlier. In the main, it was faced with the problem of sharing a currency, the ruble, with 14 other former Soviet republics, some of which were rapidly introducing their own currency and dumping rubles where they could.
    Soviet rubles from Estonia, for example, ended up in Chechnya, helping to finance and arm that republic's own bid for independence.
    The chaos in Russian monetary policy was compounded by the government's freeing of most retail prices and the central bank's printing of new ruble notes.
    The Yeltsin regime returned to Pavlov's methods to bring order to monetary policy. In late July 1993 it gave citizens just two weeks to hand in their money, allowing them to exchange a maximum of just RUB35,000 - then worth about $34.
    Officials explained the tight deadline as necessary to hold back a flood of rubles from other former Soviet republics.
    Will January's new banknotes bring a new round of chaos? Probably not, because Russia currently enjoys relative price stability. But remember: in the Russian language just one letter separates the word exchange — obmen — from the word for fraud — obman.

Central bank website: http://www.cbr.ru
By John Ryan, Dow Jones Newswires; 7095-974-8055; john.ryan@dowjones.com
Copyright 2000 Dow Jones & Co., Inc. All rights reserved.

Silvija received several antique postcards as a gift on our recent vacation. This one is a photo of Riga in the 1890's. See if the astute among you who have visited Riga can recognize the spot!