RIGA - The increasing possibility of an inter-Cabinet clash over economic strategy reached a peak last week, as top ministers expressed starkly different opinions on the nation's airline and railway companies.
Economy Minister Krisjanis Karins was quoted as saying he was against selling the state's 53 percent stake in airBaltic and restructuring Latvijas Dzelzcels (Latvian Railway), both of which are initiatives belonging to Transport Minister Ainars Slesers.
Karins told the Baltic News Service that the government should not sell its interest in airBaltic, the national airline, until a stable air service develops.
"We may see the day when there's established competition and a stable market, so the state will no longer have to hold shares in an airline. This day has not come yet," he said.
Karins did not rule out the possibility of selling its majority stake in airBaltic after Riga International Airport reaches the necessary level of development and is earning a profit at lower rates.
"Our airport is still growing. Forecasts are optimistic, and we trust that they will come true, but these are still only forecasts," he said. "Therefore I do not support the sale of airBaltic shares yet."
Though members of the same Cabinet, Karins and Slesers are seen as political rivals, since New Era, a right-wing party to which Karins belongs, has been a strong critic of Latvia's First Party, a centrist faction that Slesers helped found several years ago. New Era was particularly displeased when Latvia's First Party increased its ranks in Parliament a year ago by bringing on five defectors from a left-wing party.
Slesers said that the Transport Ministry was considering the sale of airBaltic, though it remained unclear whether the government should sell all or part of the shares and at what price. The current operator of airBaltic, Scandinavian Airlines (SAS), which owns 47 percent of the company, recently said it would like to exercise its pre-emptive right and buy shares from the state.
AirBaltic is one of Latvia's fastest growing companies. In 2004 it carried 589,300 passengers, up 75 percent year-on-year. CEO Bertold Flick recently said that the company would shoot for 1 million passengers this year.
Regarding restructuring of the nation's rail company, Karins said the state should not split up Latvian Railway as Slesers recently suggested.
"I don't see any arguments or reasons why we should be doing this. Our country has a small territory. We don't have countless complicated railway lines 's they are in limited number and with a very clear flow. I don't support privatization of railway in Latvia," he said.
Slesers recently announced his ministry's idea to split Latvian Railway into three separate, state-owned units 's cargo, passenger and infrastructure. He said he had ordered company management to develop a restructuring plan within one month.
Karins, however, argued that there was a sufficient number of negative examples in the world against Latvia's railway privatization.
"I support introduction of competition, but I don't support the state selling what it owns. Our country is too small, and in such a case passenger transportation could halt completely. That would be very bad, because I believe we should work exactly in the opposite direction. There are examples showing that passenger transportation can be revived even nowadays by improving and investing additional resources in railway development," said Karins.
