Although three previous attempts to fire Naglis since 1994 have resulted in government collapses, political commentator Karlis Streips predicted that having given Naglis the boot, the government is likely to survive in the run-up to next autumn's national election.
"This marks a real schism among the partners in the governing coalition, which is not very healthy, but the government will be extremely careful not to collapse," said Streips.
Kalvitis' spokeswoman Evita Timofejeva said privatization "would continue according to plan." Kalvitis will choose a successor to Naglis within two weeks, she said. The agency's deputy director, Viktors Sadinovs, is tipped by many for the top post.
In Streips' view procedural violations are not the reason for Naglis' dismissal. "This is an attempt to wrest control of the privatization process from the Latvia's Way party of Prime Minister Andris Berzins at a time when a number of lucrative privatizations are still pending," he said.
Officials point out that the majority of enterprises owned by the state in the Soviet era are already in private hands. But in terms of the value of those enterprises, the proportion privatized is only about half.
Shares in the 100 percent state-owned Latvian Shipping Company, the partly state-owned oil terminal Ventspils Nafta, the fixed-line telecommunications monopoly Lattelekom and the savings bank Latvijas Krajbanka still represent attractive investments which could earn the state around 150 million lats ($241.93 million). Two partners in the ruling coalition, the People's Party and the Fatherland and Freedom Party, voted for Naglis' dismissal, while ministers from his own party, Latvia's Way, voted against it.
Kalvitis blamed Naglis for not keeping him informed about legal fees relating to proceedings against Latvia by Finland's Sonera-owned Tilts Communications, which is a co-owner of Lattelekom. Tilts Communications is demanding compensation because the government curtailed Lattelekom's monopoly status in order that it comply with European Union competition requirements.Naglis was earlier stripped of his right to authorize payments over 15,000 lats pending an investigation which showed he had acted in accordance with the law. "Trust in Naglis has been lost," Kalvitis told reporters after the vote.
A day before the vote however Kalvitis told journalists Naglis' imminent dismissal was not related to the question of legal fees. "Naglis' time is simply over," he said.
Naglis denied being at fault and said his dismissal was politically motivated. "I feel like today is my last day at work," said Naglis, who has to leave by Dec. 14.
"The privatization of large enterprises in Latvia has always been over- politicized but Naglis' resistance to political pressure could at least be relied upon," said Arnolds Laksa, president of Latvijas Krajbanka, which is 32 percent state owned. He expressed doubt that a new agency head would be able to resist pressure from "politically private" interests.
Latvijas Krajbanka, the country's fifth largest bank, has for years been suspended between two mutually hostile groups of shareholders - on the one hand, transit companies based in the port of Ventspils, which are supported by Fatherland and Freedom, and on the other, shareholders controlled by People's Party leader Andris Skele.
Some argue that Naglis' dismissal is the first concrete sign of a reconciliation between these two groups, rumors of which have been circulating for some months.