LIEPAJA - One of the strange things about Latvia is that it is effectively a one-city country and as such, lacks a regional tourist destination to rival Riga. Daugavpils - Latvia's second largest city - has virtually nothing that might appeal to the average attention-deficient tourist, and while Ventspils' pristinely paved roads may be a source of pride to some, the place is seriously lacking in charisma.
Which brings us to Liepaja. Located some 220 kilometers southwest of Riga, Liepaja is Latvia's third largest city with a population of around 87,000 people. But this strangely sprawling urban mass is quite unlike anywhere else in the country, and it's starting to take on a very impressive shape of its own.
Liepaja was effectively a closed city during Soviet times because of the so-secret-that-it-doesn't-even-exist naval base in Karosta. Even locals weren't allowed into the area without special permission, despite the fact that Karosta takes up almost a third of the city's total land mass.
Nowadays it's a fascinating ghost-town-of-a-place. The decrepit tenement blocks are gradually being pulled down by the council, and the many beautiful naval buildings built during the reign of Czar Nicholas II are in an advanced state of decay.
But Karosta, like so much else in Liepaja, is slowly but surely being regenerated in a concerted drive by the municipality to develop the city into a modern, multifunctional environment equally capable of supporting industry, culture and tourism.
"Liepaja has a lot of experience in large scale projects," Gunars Ansins, head of the Liepaja City Council development department, which was set up two years ago to help integrate the many ongoing projects in the city, explains. "We have the know-how. We're also in a very healthy condition financially, which puts us in a good position to apply for EU structural funds."
Ansins says the city hopes to get tens of millions of euros - some 10 percent of Latvia's total allocation - in structural funds to help it achieve its aims.
However, Liepaja is certainly more adept at finding various ways to generate income than many of its municipal counterparts. Ansins estimates that the city generates some 3 million euros annually just through its participation in the Prototype Carbon Fund, through which it can sell off its carbon emission quotas to over-polluting nations.
Another key element of the city's economic development strategy is the Liepaja Special Economic Zone, which was established in 1997 and includes the city's biggest employers, such as Liepajas Metalurgs and the lingerie manufacturer Lauma. The LSEZ offers huge tax breaks to the 30 companies that are a part of it, such as an 80 percent discount on corporate income tax and an 80 percent - 100 percent discount on real estate tax.
The zone is clearly making a huge impact on the city's coffers. In 2003, Liepaja generated some 89.2 million euros through industrial output, 59.2 percent of which came from LSEZ member companies. The city fought hard to keep the zone during EU accession talks, and much to the relief of local businessmen it will be allowed to remain until 2017.
But Liepaja has long been an established center of industry. Its strategic geographical position alone was probably enough to ensure that it would attract considerable investment. Yet it still has a long way to go in developing its potential as a tourist destination, according to Liepaja Tourism Commission director Vilnus Vitkovskis.
"Palanga was always a spa town," Vitkovskis says. "But Liepaja was a military city in Soviet times. The city wasn't even on the map." As that may be, the statistics are certainly encouraging. The number of tourists coming to the city has risen enormously, from 51,000 in 1997 to some 607,000 in 2002.
It's almost impossible to say how much the tourism industry is really worth to Liepaja, but if each overnight visitor spends roughly 30 lats (45 euros), as Vitkovskis suggests, then tourist revenues would be one of the city's main sources of income.
The city certainly has a lot to offer as a tourist destination. The Old Town embodies the very best of Latvia and has a number of art nouveau buildings that most European capitals would be proud to call their own. It has a glittering white beach and the best choice of entertainment activities away from Riga.
Negotiations to build a Baltic Sea Park are also underway between the Liepaja City Council and a conglomerate of Danish businessmen. If all goes ahead as planned, the aquapark would be the largest in the Baltics.
"The Baltic Sea Park will be a great boost to our tourism industry," Vitkovskis says. "It will create some 1,500 jobs. It's only at the technical design stage at the moment, but it's planned to be ready by 2006."
The park is planned to be built on 26 hectares of land just three kilometers away from the city center and will doubtless have a hugely beneficial impact on the city.
An especially blustery place, Liepaja comes as a breath of fresh air in its attempt to redefine itself by combining conservation and business with industry and culture. A few years down the line, it's a likely bet that Rigans will be moving to Liepaja looking for a better life.