RIGA - Prime Minister Aigars Kalvitis sparked a lively debate in the business and law enforcement community last week after he told a local paper there was a risk that foreigners, particularly Russians, could "buy out" Latvia and that the government would establish an agency to analyze investment trends in the country.
Kalvitis told the daily Diena that the agency would assess various threats that Latvia might suffer if the economy were "to become easily influenced from abroad through fully legal methods."
"We have all kinds of security agencies, but we have no information whatsoever on what's happening in our economy in regards to foreign investments. There are various offshore [companies] that invest, and these include both local people, and it cannot be ruled out, also Russia's people," he said.
The fear is, in Kalvitis' opinion, that Russia will try to exert pressure on tiny Latvia by flooding the country with money. "Among big and influential Russian businessmen, there is talk that Latvia must be fought against with economic methods - by simply buying us out," he said.
The country must be prepared for the threat, warned the prime minister, a member of the People's Party. "We do not have any serious information in this area. We only hear that someone has bought a building in Old Riga, another in Jurmala, but these, I think, are only the little blossoms we see. We will try to set up an economic analysis service in the nearest future in order to prevent the threat. Nothing like this has been done at all till now," he said.
Reaction to the idea among Russians and Latvia's minority community was critical, with most observers saying that the government would best spend its time and energy creating the ideal environment for investment rather than studying its ultimate origin. Russian Ambassador to Latvia Viktor Kalyuzhny said the concept of an agency investigating foreign investments was a mistake. The government should work toward improving the business environment rather than spying on businesses, he told reporters on Dec. 13.
The ambassador said that if the agency were to carry out any kind of investigation then restrictions and imprisonment were likely to follow. "This is a misunderstanding, which we hope will soon be solved," he said. "Imagine if Russia were to set up any such agency."
In Kalyuzhny's words, "Russia has no imperialistic ambitions in regards to Latvia," only the will to develop Russian and Latvian business cooperation. "I believe that business has no nationality. We must work toward getting Russian business roots in Latvia and Latvian business roots in Russia," he said.
Kalvitis admitted that no one could confirm any supposed plan to buy out Latvia, but he was determined to get to the bottom of the situation. "I think we'll set up an agency in order to determine who exactly are our true investors," he said.
Asked whether such an issue should be handled by the Constitution Protection Bureau, Kalvitis replied, "It's unheard of that they have prepared any report like this. Possibly [the new agency] could be set up as part of the Constitution Protection Bureau as a separate department. We don't necessarily have to set up a new institution."
Regardless, the issue of investment is pertinent, as last week the government announced that foreign direct investment amounted to 311.2 million lats (449 million euros) during the first 10 months of 2004, twice what it was during the same period last year. In October alone FDI was 54.3 million lats, up 31.7 million lats on the same period last year, the Bank of Latvia reported.
Of investments made in Latvia from January to October, 123 million lats comprised reinvested profit, which is 2.1 times (or 65 million lats) more than in the same period last year.
