Latvia - below the radar screen

Email a Friend

All fields are compulsory

Your name:
Your email:

To include more than one recipient, please separate each email address with a semi-colon ';'

Recipient email(s):

Email yourself a copy?
Comments:

Add Your Comment

All comments are subject to editorial review.
All fields are compulsory

Your name:
Your email:
(will not appear)

You may email your comment to a friend
To include more than one recipient, please separate each email address with a semi-colon ';'

Recipient email(s):

Publish your name?
Receive email notification of new comments posted by other users?
Email yourself a copy?

Comments:

I have read and agree to the Terms and Conditions







Riga: Swedish culture, a Russian past, and a European future?

Latvia is small. Latvia is very small. Latvia is so tiny, in fact, that you may have trouble getting a price for the Latvian Eurobond or Hansabank, the largest bank in the Baltics and number one equity issue on the Riga stock exchange. If you ring up the London switchboard of any mega-global-super bank claiming to make a market in everything from options on timber futures to weather derivatives for Lesotho, and then ask for the Latvian desk, after a few minutes on hold you'll wind up speaking to PR. And then explaining where Latvia is located.
The size issue has pushed Latvia well below the radar screens of most major foreign direct investors, other than for names like the ubiquitous McDonald's and Coca-Cola. The country has also failed to attract the attention of fund managers and, the occasional debt issue or GDR aside, is only of exceedingly thin interest to the dealmakers of the investment-banking world.
To compound matters further, Latvia will not be pigeon-holed, unlike Poland, which is huge, already a member of NATO, has its man in the Vatican, millions of ethnic cousins in New York, Chicago and Washington, and is considered an adjacent suburb of Germany. And it is at the doorstep of full EU membership. Latvia wants to be like Poland - clearly defined, easy to understand, with waves of foreign dosh - but it has a problem. Investors who cannot easily understand a country or company tend to ignore it.
The government, and the tiny upwardly-mobile class of 20- and 30-something entrepreneurs, point out that Latvia, from a historical, cultural and macroeconomic perspective, is rightfully a part of Scandinavia. In front of this select group of people, the phrase "former Soviet republic" should be decisively expunged from your vocabulary. The relics of Latvia's Soviet past are as studiously ignored as those of when German feudal lords ruled the land in the Middle Ages, or indeed when Russia swallowed up much of the country from the eighteenth century until the end of World War I. Almost all the buildings in Riga's old town look Scandinavian. The people look Scandinavian. Even the uninspired herring-intensive heavy cuisine at Riga's few made-for-tourists theme restaurants could have come straight from downtown Stockholm.

The business visitor might be tempted to judge Latvia on the strength of a casual walk through the city of Riga. In the old town is a cobblestone pavement stretching 200 metres from US sandwich chain Subway, past the Pepsi Forum Disco, where Riga's few big spenders and visiting Russian bizinezzmen can drop their bankroll. This stretch is so heavily EuroDisneyized that one international business magazine, whose researchers merely walked up and down this stretch, ranked Riga as one of Europe's 10 most expensive cities.
The walk ends at the Freedom Monument, built to honour those brave patriots who fought against occupation. Whether this means occupation by the Nazis or occupation from the Russians is hard to say.
About half the population of Latvia speaks Russian - not an official state language - and see the collapse of the Russian empire and elimination of the old reliable Soviet system as one of the greatest tragedies in recorded human history. This bulk of the population, many of whom are former Soviet military and security personnel, refuse to learn the official language and have only marginal interest in obtaining Latvian citizenship. For them, their old red passports bearing the distinct CCCP lettering are still a proud possession.
When you step outside the old town and cross the Akmens Bridge over the heavily polluted Daugava River, the long-missed Soviet Union really does return from the past. The grimy Soviet industrial suburb of ancient cliché applies here just as it does to some factory town in rural Moldavia reeling after the collapse of the local steel mill.
The rural regions of the country, which may be of no interest to any foreigner as they hold less than half the population and contribute just a drop in the bucket to GDP, look poor and neglected. Apart from the flag, the postage stamps, and the currency, the lat - which has admirably held value rock solid since independence because of a currency board arrangement - most of Latvia outside of Riga looks and feels a whole lot like Russia.
If the Scandinavian argument does not bite, then the next best pitch might be the moving towards EU line. Latvia, along with its two Baltic neighbours, Estonia and Lithuania, is within a decade of joining the Valhalla of EU membership. Government ministers, leading businessmen and even university students probably have a better grasp of the acquis communautaire and past proceedings of EU summits than many Eurocrats themselves. In fact, after yet another banking mega-merger led to the entire London-based east European sales desk at one house getting the heave-ho, the sales director decided to become a full-time "Independent Baltics Financial Investment Consultant". Now, after more than two years of negative personal cash flow , he is rumoured to be back flogging his CV - and trying to explain this convergence story all over again.
The problem is that Latvia doesn't exactly fit the "junior potential member of the EU-Scandinavian club" pigeonhole and yet is well above the "struggling ex-Soviet Republic" swamp of stagnation. It is just too small for any one to bother to figure it out. But in what other country can you just walk into the finance ministry, ask to speak to the finance minister, see his personal assistant and soon find yourself sitting down with his excellency for a burger and a beer. And all without a bodyguard or machine gun in sight. Take the short drive to the seaside resort-suburb of Jurmula, brave a walk along the shore in the biting cold of a spring day, and you may even bump into the president herself who lives in the modest white-walled compound just on the beach.
A psychology professor who emigrated to Canada as a child, she will hard-sell any listener on the EU-Scandinavian story in any of the five languages she speaks fluently - none of which happens to be Russian. A pity: it would make her the perfect person to resolve the country's identity crisis.

No. 6: If you don’t give it to me you’ll only lend it to someone else and look where that got us

Liquid Real Estate Awards

Latvia - below the radar screen

Email a Friend

Add Your Comment

Other flipside stories

Top 10 financial definitions that are funnier since the credit crunch

Top 10 reasons to tell your boss you deserve a bonus this year

SEC Opens Door For ETFs Of ETFs

Private banking and wealth management survey 2008: The benchmark annual survey of the wealth management industry

Gulf states: Less noise from leveraged wealth funds

Why Hank Paulson has failed as Treasury secretary

Middle East real estate debate: Middle East real estate holds its own in unsteady global markets

Plans Look To The New Frontier

Country risk September 2008: Money talks in a world of risk

Largest banks in EMEA and Trends in EMEA Banking – Moody's Investors Service

World's largest banks 2007 - Global bank rankings: Top 20 global (free to access)

If you’re not green you’re a gorgon

Top 10 reasons to tell your boss you deserve a bonus this year

Is this as good as it gets?

Latest Issue