RIGA - Just over a year ago the first minister of Wales, Rhodri Morgan, visited Latvia. Eight months later, as a direct result of his visit, he and Latvian Economy Minister Juris Lujans signed a wide-ranging memorandum of understanding between Wales and Latvia. Since then, three Welsh delegations have visited Latvia to begin its implemention, the latest step being a trade mission that took place Sept. 27 - 28. Business moves fast in the EU, even among distant members.
The memorandum is not a political alliance. Wales, as part of the United Kingdom, gets its foreign policy from London, so formal relations take place under the U.K. banner. But in the field of culture the stage is set for fruitful collaboration. Wales and Latvia are both famed for their choral traditions, music festivals and struggles to save their language. Since the signing of the memorandum, moves have been made to invite Welsh writers to the Baltic Book Fair and Latvian musicians to Wales and to strengthen links between the Latvian and Welsh national operas, film academies and museums.
Still, it is in economics that the memorandum promises most. The similarities between Wales and Latvia are striking. Latvia's populaton is 2.4 million, Wales' 2.9 million. Both were once powerhouses of heavy industry. Both are hoping to reorganize with EU help. The value of Welsh exports between July 2003 and June 2004 was 7.4 billion pounds (11 billion euros), compared with Latvia's total of 1.8 billion lats (2.6 billion).
But while the Welsh total rose by 5.2 percent, Latvian exports rose by almost 20 percent. If those figures hold, Latvia will overtake Wales in 11 years. This may seem optimistic, but it does, at least, put Latvia and Wales in the same arena.
Both partners have much to offer. Wales has decades of experience in urban and rural regeneration, encouraging hi-tech industry and in using EU funds.
Three Latvian mayors will soon visit Wales with the help of the British Council to examine the possibilities of cooperation in these areas, and Welsh business-development specialists have already targeted Latvia as a future market for their skills.
Latvia, meanwhile, has strengths of its own. As Andris Ozols, deputy director of the Latvian International Development Agency, says, "Latvia is a transport and logistics hub linked to both East and West, with excellent sea transport connections, a skilled and cost-effective labour force, and an educational system adapted to Western standards, generating new specialists in almost all fields."
Welsh businessmen agree. Bill Fyffe, chief executive of Log Cabin Living, a company producing pine cabins for British and European markets, says, "The standard of product they make here is excellent. We've already sold our first cabin built in Latvia and assembled in Wales, and we've had enquiries about several more."
Paul Rogers, managing director of Baltik Export, which facilitates links between Latvian manufacturers and UK clients, agrees: "The standard of engineering here is as good as anywhere in the West, and the cost base makes it a very attractive partner."
Another visitor highlighted the quality of Latvian advertising and web design. Latvia's need is to increase the value-added component of its exports. The Welsh visitors' comments could not be more heartening.
But here's the rub: Baltic Web expertise is already well-known in the U.K.: it's Estonian. Baltic furniture is also familiar - and it's Lithuanian. According to Jose Constantino, leader of the Welsh trade delegation, "Lithuania already supplies furniture to major stores across the U.K. under its own brand. This is the way Latvia needs to go."
Ozols agrees. "A time is coming when competition across the EU will be even harder," he says. "Then branding will be among the key issues. We should concentrate on our own."
The message is clear: if Latvia is to survive in the cut-throat world of EU competition, it needs to establish its brand now. To some extent, this is LIDA's responsibility. The agency is currently assessing Latvian interest in a trade mission to Wales. It has already agreed to a short-term staff exchange with the Welsh Development Agency and is sending two extra full-time staff members to the LIDA London office in October. If this doesn't sound like much, Ozols points out, "LIDA doesn't have offices in the USA or Japan yet, so for us this is a real sign of commitment."
But where the WDA and Wales Trade International combined employ over 1,200 staff, LIDA has 140, including overseas staff, drivers and cleaners. They are unlikely to storm Cardiff alone.
Nor should they. The days of the command economy are over. The buzzwords of the modern market are innovation and enterprise. Ultimately, the memorundum of understanding between Wales and Latvia is neither a political alliance nor an economic pact. It's an open door - one that anyone interested can step through. Welsh business is already lining up to enter. On its side, LIDA has provided the signposts. Whether Latvian business will follow them depends on the initiative of Latvian businessmen. So, ultimately, does Latvia's survival in the EU.