Calling code +371
1 Latvia is de jure continuous with its declaration November 18, 1918.
Latvia ( /ˈlætviə/ (help·info); Latvian: Latvija), officially the Republic of Latvia (Latvian: Latvijas Republika) is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia (343 km), to the south by Lithuania (588 km), to the east by the Russian Federation (276 km), and to the southeast by Belarus (141 km). Across the Baltic Sea to the west lies Sweden. The territory of Latvia covers 64,589 km2 (24,938 sq mi) and it has a temperate seasonal climate.
The Latvians are Baltic people culturally related to the Estonians and Lithuanians, with the Latvian language having many similarities with Lithuanian, but not with the Estonian language (a Finno-Ugric language). Today the Latvian and Lithuanian languages are the only surviving members of the Baltic languages of the Indo-European family. The modern name of Latvia is thought to originate from the ancient Latvian name Latvji, which, like the name of Lithuania, may have originated from the river named Latuva. The country is also the home of a large Russian minority of whom many are non-citizens.
Latvia is a unitary parliamentary republic and is divided into 118 municipalities (109 counties and 9 cities). The capital and largest city is Riga. With a population of 2.23 million Latvia is one of the least-populous members of the European Union, and its population has declined 14.9% since 1991,. Latvia has been a member of the United Nations since September 17, 1991; of the European Union since May 1, 2004 and of the NATO since March 29, 2004.
Latvia regained independence in 1991. Following years of economic stagnation in the early 1990s, Latvia posted Europe-leading GDP growth figures during the 1998–2006 time period. In the global financial crisis of 2008–2010 Latvia was the hardest hit of the European Union member states, with a GDP decline of 26.54% in that period.[ Its per capita GDP is 49% of the EU average in 2009, making it the third poorest member-state. In 2009, Latvia underwent a tempestuous change of government, and political instability has plagued is recovery.
Around the beginning of the third millennium BC (3000 BC) the proto-Baltic ancestors of the Latvian people settled on the eastern coast of the Baltic Sea. The Balts established trade routes to Rome and Byzantium, trading local amber for precious metals. By 900 AD, four distinct Baltic tribes inhabited Latvia: Curonians, Latgalians, Selonians, Semigallians (in Latvian: kurši, latgaļi, sēļi and zemgaļi), as well as the Livonians (lībieši) speaking a Finno-Ugric language.
The Medieval period
Although the local people had had contact with the outside world for centuries, they were more fully integrated into European society in the 12th century. The first missionaries, sent by the Pope, sailed up the Daugava River in the late 12th century, seeking converts. The local people, however, did not convert to Christianity as readily as hoped. German crusaders were sent into Latvia to convert the pagan population by force of arms.
At the beginning of the 13th century large parts of today's Latvia were conquered by Germans. Together with Southern Estonia these conquered areas formed the crusader state which became known as Terra Mariana or Livonia. In 1282 Riga, and later the cities of Cēsis, Limbaži, Koknese and Valmiera, were included in the Hanseatic League. From this time, Riga became an important point of east-west trading. Riga, the centre of the eastern Baltic region, formed close cultural contacts with Western Europe.
The Reformation period
The 16th, 17th, and 18th centuries were a time of great change for the inhabitants of Latvia, including the reformation, the collapse of the Livonian state, and the time when the Latvian territory was carved up among foreign powers.
After the Livonian War (1558–1583), Livonia (Latvia) fell under Polish and Lithuanian rule. The southern part of Estonia and the northern part of Latvia were ceded to the Grand Duchy of Lithuania and formed into the Ducatus Ultradunensis (Pārdaugavas hercogiste). Gotthard Kettler, the last Master of the Order of Livonia, formed the Duchy of Courland and Semigallia. Though the duchy was a vassal state to Poland, it retained a considerable degree of autonomy and experienced a golden age in the 17th century. Latgalia, the easternmost region of Latvia, became a part of the Polish district of Inflanty.
The 17th and early 18th centuries saw a struggle between Polish–Lithuanian Commonwealth, Sweden and Russia for supremacy in the eastern Baltic. After the Polish–Swedish War (1600–1611) northern Livonia (including Vidzeme) came under Swedish rule. Fighting continued sporadically between Sweden and Poland until the Truce of Altmark in 1629. In Latvia, the Swedish period is remembered as labie zviedru laiki or "the good Swedish times," when serfdom was eased, a network of schools was established for the peasantry, and the power of the regional barons was diminished.
Several important cultural changes occurred during this time. Under Swedish and largely German rule, western Latvia adopted Lutheranism as its main religion. The ancient tribes of the Couronians, Semigallians, Selonians, Livs and northern Latgallians assimilated to form the Latvian people, speaking one Latvian language. Meanwhile, largely isolated from the rest of Latvia, southern Latgallians adopted Catholicism under Polish/Jesuit influence. The native dialect remained distinct, although it acquired many Polish and Russian loanwords.
Latvia in the Russian Empire
The Capitulation of Estonia and Livonia in 1710 and the Treaty of Nystad, ending the Great Northern War in 1721, gave Vidzeme to Russia (it became part of the Riga Governorate). The Latgale region remained part of the Polish–Lithuanian Commonwealth as Inflanty Voivodeship until 1772, when it was incorporated to Russia. The Duchy of Courland and Semigallia became an autonomous Russian province (the Courland Governorate) in 1795, bringing all of what is now Latvia into the Russian Empire. All three Baltic provinces preserved local laws, the local official language and their own parliament, the Landtag.
During the Great Northern War (1700–1721), the Baltic area was once again the scene of great devastation, with Peter's scorched-earth policy, famine, and plague being responsible for the catastrophic loss of human life: as much as 40% of the population in Latvian lands were killed. In 1710, the plague reached Riga, where it was active until 1711 and claimed the lives of about half the population.
The promises Peter the Great made to the Baltic German nobility at the fall of Riga in 1710, confirmed by the Treaty of Nystad and known as "the Capitulations", largely reversed the Swedish reforms. The 18th century was one of the hardest for the peasantry, who were virtually treated as chattels and had no rights or education. Peasants were obliged to work on feudal lords' lands as many as six days per week, leaving one day to look after their own farms. As a solution to their problems, many of the peasants turned to alcohol, which the local barons willingly provided, hoping to addict and exploit the peasantry for further economic gain. These times were known as "Šķidrās Maizes laiki" or the days of liquid bread.
The emancipation of the serfs took place in Courland in 1817 and in Vidzeme in 1819. In practice however, the emancipation was actually advantageous to the landowners and nobility. This was because it dispossessed the peasants of their land without compensation, forcing them to return to work at the estates "of their own free will".
During the 19th century, the social structure changed dramatically. A class of independent farmers established itself after reforms allowed the peasants to repurchase their land, but many landless peasants persisted. There also developed a growing urban proletariat and an increasingly influential Latvian bourgeoisie. The Young Latvian (Latvian: Jaunlatvieši) movement laid the groundwork for nationalism from the middle of the century, many of its leaders looking to the Slavophiles for support against the prevailing German-dominated social order. The rise in use of Latvian language in literature and society became known as the First National Awakening. Russification began in Latgale after the Polish led the January Uprising in 1863: this spread to the rest of what is now Latvia by the 1880s. The Young Latvians were largely eclipsed by the New Current, a broad leftist social and political movement, in the 1890s. Popular discontent exploded in the 1905 Russian Revolution, which took a nationalist character in the Baltic provinces.
Declaration of Independence
“Poland & The New Baltic States” map from a British atlas in 1920, showing still-undefined borders in the situation after the treaties of Brest and Versailles and before the Peace of Riga.
World War I devastated the territory of would-be Latvia, along with other western parts of the Russian Empire. Demands for self-determination were at first confined to autonomy, but the Russian 1917 Revolution, treaty with Germany at Brest-Litovsk, and allied armistice with Germany on November 11, 1918 created a power vacuum. People's Council of Latvia proclaimed independence of the new country in Riga on November 18, 1918, Kārlis Ulmanis becoming the head of the provisional government.
The War of Independence that followed was part of a general chaotic period of civil and new border wars in Eastern Europe. By the spring of 1919, there were actually three governments — Ulmanis' government; the Soviet Latvian government led by Pēteris Stučka, whose forces, supported by the Red Army, occupied almost all of the country; and the Baltic German government of United Baltic Duchy headed by Andrievs Niedra and supported by the Baltische Landeswehr and the German Freikorps unit Iron Division.
Estonian and Latvian forces defeated the Germans at the Battle of Wenden in June 1919, and a massive attack by predominantly German force – the West Russian Volunteer Army – under Pavel Bermondt-Avalov was repelled in November. Eastern Latvia was cleared of Red Army forces by Latvian and Polish troops in early 1920.
A freely elected Constituent assembly was convened on May 1, 1920 and adopted a liberal constitution, the Satversme, in February 1922. This was partly suspended by Ulmanis after his coup in 1934, but reaffirmed in 1990. Since then, it has been amended and is the constitution still in use in Latvia today. With most of Latvia's industrial base evacuated to the interior of Russia in 1915, radical land reform was the central political question for the young state. In 1897, 61.2% of the rural population had been landless; by 1936, that percentage had been reduced to 18%.
The extent of cultivated land surpassed the pre-war level already in 1923. Innovation and rising productivity led to rapid growth of economy, but it soon suffered the effects of the Great Depression. Latvia showed signs of economic recovery and the electorate had steadily moved toward the centre during the parliamentary period. Ulmanis staged a bloodless coup on May 15, 1934, establishing a nationalist dictatorship that lasted until 1940. After 1934, Ulmanis established government corporations to buy up private firms with the aim of "Latvianising" the economy. By 1940, Latvia's economy under Ulmanis ranked second in Europe.
Latvia in World War II
See also: Soviet occupation of Latvia in 1940, Occupation of Latvia by Nazi Germany, The Holocaust in Latvia, Latvian partisans, and Latvian resistance movement
"TWO WORLDS": Anti-Sovietism propaganda board, Latvia, Summer, 1941.
Early in the morning of August 24, 1939, the Soviet Union and Nazi Germany signed a 10-year non-aggression pact, called the Molotov–Ribbentrop Pact. The pact contained a secret protocol, revealed only after Germany's defeat in 1945, according to which the states of Northern and Eastern Europe were divided into German and Soviet "spheres of influence". In the North, Latvia, Finland and Estonia were assigned to the Soviet sphere. Thereafter, Germany and the Soviet union invaded their respective portions of Poland.
Most of the Baltic Germans left Latvia by agreement between Ulmanis' government and Nazi Germany after the conclusion of the Molotov-Ribbentrop Pact. In total 50,000 Baltic Germans left by the deadline of December 1939, with 1,600 remaining to conclude business and 13,000 choosing to remain in Latvia. Most of those who remained subsequently left for Germany in the Summer of 1939, when a second resettlement scheme was agreed. On October 5, 1939, Latvia was forced to accept a "mutual assistance" pact with the Soviet Union, granting the Soviets the right to station between 25,000 and 30,000 troops on Latvian territory.
On June 16, 1940, Vyacheslav Molotov presented the Latvian representative in Moscow with an ultimatum accusing Latvia of violations of that pact. When international attention was focused on the German invasion of France, Soviet NKVD troops raided border posts in Latvia, Lithuania and Estonia. State administrators were liquidated and replaced by Soviet cadres, in which 34,250 Latvians were deported or killed. Elections were held with single pro-Soviet candidates listed for many positions, with resulting peoples assembly immediately requested admission into the USSR, which was granted by the Soviet Union. Latvia, then a puppet government, was headed by Augusts Kirhenšteins. Latvia was incorporated into the Soviet Union on August 5, 1940 as The Latvian Soviet Socialist Republic.
The Soviets dealt harshly with their opponents – prior to the German invasion, in less than a year, at least 27,586 persons were arrested; most were deported, and about 945 persons were shot. While under German occupation, Latvia was administered as part of Reichskommissariat Ostland. Latvian paramilitary and Auxiliary Police units established by occupation authority participated in the Holocaust as well. More than 200,000 Latvian citizens died during World War II, including approximately 75,000 Latvian Jews murdered during the Nazi occupation. Latvian soldiers fought on both sides of the conflict, including in the Latvian Legion of the Waffen-SS, most of them conscripted by the occupying Nazi and Soviet authorities. Refusal to join the occupying army resulted in imprisonment, threats to relatives, or even death.
Main articles: Occupation of Latvia by Soviet Union 1944–1945, Latvian Soviet Socialist Republic, and Stalinism
In 1944 when the Soviet military advances reached the area heavy fighting took place in Latvia between German and Soviet troops which ended with another German defeat. During the course of the war, both occupying forces conscripted Latvians into their armies, in this way increasing the loss of the nation's "live resources". In 1944, part of the Latvian territory once more came under Soviet control. The Soviets immediately began to reinstate the Soviet system. After the German surrender it became clear that Soviet forces were there to stay, and Latvian national partisans, soon to be joined by German collaborators, began their fight against another occupier – the Soviet Union.
Anywhere from 120,000 to as many as 300,000 Latvians took refuge from the Soviet army by fleeing to Germany and Sweden. Most sources count 200,000 to 250,000 refugees leaving Latvia, with perhaps as many as 80,000 to 100,000 of them recaptured by the Soviets or, during few months immediately after the end of war, returned by the West. The Soviets reoccupied the country in 1944–1945, and further mass deportations followed as the country was forcibly collectivised and Sovieticised.
On March 25, 1949, 43,000 rural residents ("kulaks") and Latvian patriots ("nationalists") were deported to Siberia in a sweeping repressive Operation Priboi in all three Baltic states, which was carefully planned and approved in Moscow already on January 29, 1949. Between 136,000 and 190,000 Latvians, depending on the sources, were imprisoned, repressed or deported to Soviet concentration camps (the Gulag) in the post war years, from 1945 to 1952. Some managed to escape arrest and joined the partisans.
In the post-war period, Latvia was forced to adopt Soviet farming methods and the economic infrastructure developed in the 1920s and 1930s was eradicated. Rural areas were forced into collectivisation. An extensive programme to impose bilingualism was initiated in Latvia, limiting the use of Latvian language in favor of Russian. All of the minority schools (Jewish, Polish, Belorussian, Estonian, Lithuanian) were closed down leaving only two languages of instructions in the schools- Latvian and Russian. An influx of labourers, administrators, military personnel and their dependents from Russia and other Soviet republics started. By 1959 about 400,000 persons arrived from other Soviet republics and the ethnic Latvian population had fallen to 62%.
During the Khrushchev Thaw, attempts by national communists led by Eduards Berklavs to gain a degree of autonomy for the republic and protect the rapidly deteriorating position of the Latvian language were not successful.
Because Latvia had still maintained a well-developed infrastructure and educated specialists it was decided in Moscow that some of the Soviet Union's most advanced manufacturing factories were to be based in Latvia. New industry was created in Latvia, including a major machinery factory RAF in Jelgava, electrotechnical factories in Riga, chemical factories in Daugavpils, Valmiera and Olaine, as well as some food and oil processing plants. However, there were not enough people to operate the newly built factories. In order to expand industrial production, Russian workers were transferred into the country, noticeably decreasing the proportion of ethnic Latvians.
Restoration of independence
In the second half of 1980s Soviet leader Mikhail Gorbachev started to introduce political and economic reforms in the Soviet Union, called glasnost and Perestroika. In the summer of 1987 the first large demonstrations were held in Riga at the Freedom Monument- a symbol of independence. In the summer of 1988 a national movement, coalescing in the Popular Front of Latvia, was opposed by the Interfront. The Latvian SSR, along with the other Baltic Republics was allowed greater autonomy, and in 1988 the old pre-war Flag of Latvia was allowed to be used, replacing the Soviet Latvian flag as the official flag in 1990.
In 1989, the Supreme Soviet of the USSR adopted a resolution on the "Occupation of the Baltic states", in which it declared that the occupation was "not in accordance with law," and not the "will of the Soviet people". Pro-independence Popular Front of Latvia candidates gained a two-thirds majority in the Supreme Council in the March 1990 democratic elections. On May 4, 1990, the Supreme Soviet of the Latvian SSR adopted the Declaration On the Restoration of Independence of the Republic of Latvia, Latvian SSR was renamed Republic of Latvia.
However, the central power in Moscow continued to regard Latvia as Soviet republic in 1990–1991. In January 1991, Soviet political and military forces tried unsuccessfully to overthrow the Republic of Latvia authorities by occupying the central publishing house in Riga and establishing a Committee of National Salvation to usurp governmental functions. During the transitional period Moscow maintained many central Soviet state authorities in Latvia.
Barricade in Riga to prevent the Soviet Army from reaching the Latvian Parliament, July 1991.
In spite of this, seventy-three percent of all Latvian residents confirmed their strong support for independence on March 3, 1991, in a nonbinding advisory referendum. A large number of ethnic Russians also voted for the proposition. The Popular Front of Latvia had advocated that all permanent residents be eligible for Latvian citizenship. However, universal citizenship for all permanent residents was not adopted subsequently; not all those who had voted in support of independence received citizenship in the new Latvian state and became non-citizens. (The majority of non-citizens have since become naturalized citizens.) The Republic of Latvia declared the end of the transitional period and restored full independence on August 21, 1991 in the aftermath of the failed Soviet coup attempt.
The Saeima, Latvia's parliament, was again elected in 1993, and Russia completed its military withdrawal in 1994. The major goals of Latvia in the 1990s, to join NATO and the European Union, were achieved in 2004.
Language and citizenship laws have been opposed by many Russophones, although a majority have now become citizens. (Citizenship was not automatically extended to former Soviet citizens who settled during the Soviet occupation or to their subsequent offspring. Children born to non-nationals after the reestablishment of independence are automatically entitled to citizenship.) The government denationalised private property confiscated by the Soviet rule, returning it or compensating the owners for it, and privatised most state-owned industries, reintroducing the prewar currency. Albeit having experienced a difficult transition to a liberal economy and its re-orientation toward Western Europe, its economy had one of the highest growth rates until the 2008–2010 Latvian financial crisis.
Government and politics
Main articles: Politics of Latvia, Parliament of Latvia, and Government of Latvia
The 100-seat unicameral Latvian parliament, the Saeima, is elected by direct popular vote every four years. The president is elected by the Saeima in a separate election, also held every four years. The president appoints a prime minister who, together with his cabinet, forms the executive branch of the government, which has to receive a confidence vote by the Saeima. This system also existed before World War II. Highest civil servants are sixteen Secretaries of State.
Main article: Foreign relations of Latvia
Membership in the EU and NATO were major policy goals during the 1990s. In a nation-wide referendum on September 20, 2003, 66.9% of those taking part voted in favour of joining the European Union. Latvia became a member of the European Union on May 1, 2004. Latvia has been a NATO member since March 29, 2004.
The Treaty delimiting the boundary with Russia was signed and ratified in 2007. Under the treaty the Abrene district passed to Russia; talks over maritime boundary disputes with Lithuania are ongoing (the primary concern is oil exploration rights).
Latvian Land Forces troops
Main article: Military of Latvia
Latvia's defense concept is based upon the Swedish-Finnish model of a rapid response force composed of a mobilization base and a small group of career professionals. The armed forces consists of mobile riflemen, an air force, and a navy. Latvia cooperates with Estonia and Lithuania in the joint infantry battalion BALTBAT and naval squadron BALTRON which are available for peacekeeping operations.
As of March 29, 2004, Latvia officially joined NATO. Currently, NATO is involved in the patrolling and protection of the Latvian air space as the Latvian army does not have the means to do so effectively. For this goal a rotating force of four NATO fighters, which comes from different nations and switches at two or three month intervals, is based in Lithuania to cover all three Baltic states (see Baltic Air Policing).
Main article: Administrative divisions of Latvia
See also: List of cities in Latvia, Planning regions of Latvia, and Historical regions of Latvia
Administrative divisions of Latvia
Since 2009 Latvia has one-level municipalities – 9 republican cities (Latvian: republikas pilsētas) (Daugavpils, Jēkabpils, Jelgava, Jūrmala, Liepāja, Rēzekne, Riga, Valmiera, Ventspils) and 109 municipalities (Latvian: novadi). There are four historical and cultural regions in Latvia - Courland, Latgalia, Vidzeme, Zemgale. Their borders usually are not explicit definite and in several sources may vary. To promote balanced development of all regions, in 2009 five planning regions of Latvia (Latvian: plānošanas reģioni) were created:
Regions Largest city Area Population – (per km²)
Riga Region Riga 10,132 km² 706,000 – (108.3/km²)
Kurzeme Region Liepāja 13,596 km² 301,621 – (22.1/km²)
Latgale Region Daugavpils 14,549 km² 343,646 – (23.5/km²)
Zemgale Region Jelgava 10,733 km² 281,928 – (26.1/km²)
Vidzeme Region Valmiera 15,246 km² 235,576 – (15.4/km²)
Latvia Riga 64,256 km² 2,248,000 – (34.9/km²)
Main article: Geography of Latvia
Map of Latvia showing cities.
View from atop the tower of Gaizinkalns.
Located on the eastern shore of the Baltic Sea, Latvia lies on the East European Plain. However, in vegetation is much different than the rest of the plain and shares many similarities with the boreal biome. It consists of fertile, low-lying plains, largely covered by forest, mostly pines, the highest point being the Gaiziņkalns at 311.6 m (1,022 ft).
Phytogeographically, Latvia is shared between the Central European and Northern European provinces of the Circumboreal Region within the Boreal Kingdom. According to the WWF, the territory of Latvia belongs to the ecoregion of Sarmatic mixed forests. The major rivers include the Daugava River, the Lielupe, the Gauja, the Venta, and the Salaca. An inlet of the Baltic Sea, the shallow Gulf of Riga is situated in the northwest of the country. Latvia's coastline extends for 531 kilometres.
Common species of wildlife in Latvia include deer, wild boar, moose, lynx, bear, fox, beaver and wolves. Non-marine molluscs of Latvia include 159 species.
The Latvian climate is humid, continental and temperate owing to the maritime influence of the Baltic Sea. Summers are warm, and the weather in spring and autumn fairly mild; however, the winters can be extreme due to the northern location. Precipitation is common throughout the year with the heaviest rainfall in July. During severe spells of winter weather, Latvia is dominated by cold winds from the interior of Russia, and severe snowfalls are very common.
Latvia's national trees, bird, flower and insect
Latvia's national trees are oak (Quercus robur), Latvian: ozols, and linden (Tilia cordata), Latvian: liepa. Oaks and Lindens are considered the national trees of Latvia. The oak and the linden tree are characteristic elements of the Latvian landscape. Both trees are still widely used for medical purposes. Medicinal infusions are made of linden blossoms as well as oak bark. Latvian dainas (folk songs) often reflect ethical and moral concepts of earlier times. Amongst other trees, these folk songs most often mention the oak and linden tree. In traditional Latvian folk beliefs and folklore the linden tree is looked upon as a female symbol, but the oak – a male symbol. The nation's reverence for these trees, which in earlier times were considered sacred, can be witnessed, for example, in a landscape where, in the middle of a cultivated field there still remains a lone large, sacred oak or linden tree.
The White Wagtail is the national bird of Latvia.
Latvia's national bird is the White Wagtail (Motacilla alba), Latvian: baltā cielava. This slender and graceful bird is found in Latvia from April till October. The White Wagtail can usually be seen running briskly along the ground, wagging its tail up and down. This bird typically nests in the rafters and eaves of buildings, woodpiles, stone piles, and birdhouses. During the winter it migrates to Southern Europe and North Africa. The White Wagtail was affirmed the national bird of Latvia in 1960 by the International Bird Protection Council.
Latvia's national flower is the oxeye daisy (Leucanthemum vulgare also known as Chrysanthemum leucanthemum), Latvian: pīpene. In Latvian conditions, the common or wild daisy blossoms from June till September. Daisies are a very popular flower and are often used in flower arrangements or given as gifts.
Latvia's national insect is the Two-spot ladybird (Adalia bipunctata), Latvian: mārīte. The two-spot ladybird is familiar as a useful insect that protects plants from parasites. Although rather slow by nature, it can defend itself well. Due to its appearance and behaviour it is widely known and liked throughout Latvia. The insect's Latvian name – marite – is a synonym for the ancient Latvian goddess Mara, who embodies the power of the earth. The two-spot ladybird was designated the national insect of Latvia by the Entomological Society of Latvia.
Main article: Economy of Latvia
A high rise building
Latvia is a member of the World Trade Organization (1999) and the European Union (2004).
Since the year 2000 Latvia has had one of the highest (GDP) growth rates in Europe. However, the chiefly consumption-driven growth in Latvia resulted in the collapse of the Latvian GDP in late 2008 and early 2009, exacerbated by the global economic crisis and shortage of credit. Latvian economy fell 18% in the first three months of 2009, the biggest fall in the European Union. According to Eurostat data, Latvian PPS GDP per capita stood at 56 per cent of the EU average in 2008.
Real GDP growth in Latvia 1996–2006.
This latest scenario has proven the earlier assumptions that the fast growing economy was heading for implosion of the economic bubble, because it was driven mainly by growth of domestic consumption, financed by a serious increase of private debt, as well as a negative foreign trade balance. The prices of real estate, which were at some points appreciating at approximately 5% a month, were long perceived to be too high for the economy, which mainly produces low-value goods and raw materials. Since 2001, Latvia's chief export has been domestic livestock.
Latvia plans to introduce the Euro as the country's currency but, due to the inflation being above EMU's guidelines, the government's official target is now January 1, 2012. However in October 2007, with inflation above 11%, the head of the National Bank of Latvia suggested that 2013 may be a more realistic date.
Privatization in Latvia is almost complete. Virtually all of the previously state-owned small and medium companies have been successfully privatized, leaving only a small number of politically sensitive large state companies. Latvian privatization efforts have led to the development of a dynamic and prosperous private sector, which accounted for nearly 68% of GDP in 2000.
Foreign investment in Latvia is still modest compared with the levels in north-central Europe. A law expanding the scope for selling land, including to foreigners, was passed in 1997. Representing 10.2% of Latvia's total foreign direct investment, American companies invested $127 million in 1999. In the same year, the United States exported $58.2 million of goods and services to Latvia and imported $87.9 million. Eager to join Western economic institutions like the World Trade Organization, OECD, and the European Union, Latvia signed a Europe Agreement with the EU in 1995—with a 4-year transition period. Latvia and the United States have signed treaties on investment, trade, and intellectual property protection and avoidance of double taxation.
Main article: 2008–2010 Latvian financial crisis
The Latvian economy entered a phase of fiscal contraction during the second half of 2008 after an extended period of credit-based speculation and unrealistic inflation of real estate values. The national account deficit for 2007, for example, represented more than 22% of the GDP for the year while inflation was running at 10%.
Latvia's unemployment rate rose sharply in this period from a low of 5.4% in November 2007 to over 22%. In April 2010 Latvia had the highest unemployment rate in the EU, at 22.5%, ahead of Spain which had 19.7%.
Paul Krugman, the Nobel Laureate in economics for 2008, wrote in his New York Times Op-Ed column for December 15, 2008:
"The most acute problems are on Europe’s periphery, where many smaller economies are experiencing crises strongly reminiscent of past crises in Latin America and Asia: Latvia is the new Argentina " 
However by 2010 commentators noted signs of stabilisation in the Latvian economy. Rating agency Standard & Poor's raised its outlook on Latvia's debt from negative to stable. Latvia's current account, which had been in deficit by 27% in late 2006 was in surplus in February 2010. Kenneth Orchard, senior analyst at Moody's investors service argued that:
"The strengthening regional economy is supporting Latvian production and exports, while the sharp swing in the current account balance suggests that the country’s ‘internal devaluation’ is working." 
Main articles: Transportation in Latvia and National Roads in Latvia
The transport sector is around 14% of GDP. Transit between Russia and the West is large.
Key ports are in Riga, Ventspils, and Liepāja. Most transit traffic uses these and half the cargo is crude oil and oil products.
Riga International Airport is the largest airport with 3.7 million passengers in 2008.
Main article: Demographics of Latvia
Ethnic and cultural diversity
Main articles: Latvian people, Latvian Russians, Latvian Germans, Latvian Jews, Latgalians (modern), and Livonians
Latvia's population has been multiethnic for centuries, though the demographics shifted dramatically in the twentieth century due to the World Wars, the emigration and removal of Baltic Germans, the Holocaust, and occupation by the Soviet Union. According to the Russian Empire Census of 1897, the Latvians formed 68.3% of the total population of 1.93 million; Russians accounted for 12%, Jews for 7.4%, Germans for 6.2%, and Poles for 3.4%.
Latvians and Livonians, the indigenous peoples of Latvia, now form about 59.42% of the population; 27,52% of the inhabitants are Russians , Belorussians 3.56%, Ukrainians 2.46% , Poles 2.32%, Lithuanians 1.33%, Jews 0.43%, Roma people 0.38%, Germans 0.2, Estonians 0.11% and others 1.94. Approximately 56% of the ethnic Russians living in Latvia are citizens of Latvia.
In some large cities, e.g. Riga, Daugavpils and Rēzekne, Russians and other minorities outnumber Latvians. Minorities from other countries such as Belarus, Ukraine, Poland, Lithuania, etc., also live in Latvia. The share of ethnic Latvians had fallen from 77% (1,467,035) in 1935 to 52% (1,387,757) in 1989. In 2005 there were even fewer Latvians than in 1989, though their share of the population was larger — 1,357,099 (60.% of the inhabitants).
The official language of Latvia is Latvian, which belongs to the Baltic language group of the Indo-European language family. Another notable language of Latvia is the nearly extinct Livonian language of the Baltic-Finnic subbranch of the Uralic language family, which enjoys protection by law; Latgalian — a dialect of Latvian — is also protected by Latvian law as a historical variation of the Latvian language. Russian which was widely spoken during the Soviet period, and also during the Russian Imperial period is by far the most widely used minority language and is also understood by virtually all Latvians who started their education during the Soviet period.
Main article: Religion in Latvia
The largest religion is Christianity. About 7% of the population attends religious services regularly. The largest groups in 2006 are:
Roman Catholic – 500,000
Evangelical Lutheran Church of Latvia – 450,000
Latvian Orthodox – 350,000
According to the most recent Eurobarometer Poll 2005, 37% of Latvian citizens responded that "they believe there is a god", whereas 49% answered that "they believe there is some sort of spirit or life force" and 10% that "they do not believe there is any sort of spirit, god, or life force". Lutheranism was much stronger before the Soviet occupation, when it was a majority religion, but since then Lutheranism in all the Baltic states has declined to a much greater extent than Roman Catholicism has. . The country's Orthodox Christians belong to the Latvian Orthodox Church, a semi-autonomous body within the Russian Orthodox Church. In 2006, there were 9,743 Jews and 182 Muslims living in Latvia.
There are more than 600 Latvian neopagans, Dievturi (The Godskeepers), whose religion is based on Latvian mythology. About 40% of the total population is not affiliated with a specific religion.
Main article: Education in Latvia
See also: List of universities in Latvia
Riga Technical University is the oldest university in Latvia, having been established on October 14, 1862, back in time also known as Riga Polytechnical Institute, and is located in Riga. Daugavpils University is the second largest university. Latvia closed 131 schools between 2006 and 2010, which is a 12.9% decline, and in the same period enrollment in educational institutions has fallen by over 54,000 people, a 10.3% decline. Another well known university in Latvia is LLU(Latvias lauksaimniecibas universitate)(Latvian university of Agriculture). It is located in Jelgava.
Latvian healthcare system is a universal program, largely funded through government taxation. It is consistently ranked as one of the worst health care systems in Europe, and the developed world. This is because waiting time for treatment remains excessive, there are significant shortcomings in the sector of pharmacy – residents often do not have access to the latest medicines, and the pharmaceutical sector in Latvia lags behind.
Corruption is widespread in the Latvian healthcare system, though it has improved somewhat since the early 1990s. It has been noted that government janitors have higher salaries than nurses, and factory laborers can earn more than some doctors in Latvia. This results in brain drain, mostly to other (western) EU nations, and health care corruption. It is not uncommon for Latvians to bribe doctors in order to treat them. Most notably, the current president of Latvia, Valdis Zatlers, was suspected of taking bribes from his patients, while he was a doctor in Riga, and was investigated multiple times by the Corruption Prevention and Combating Bureau (KNAB), as well as Transparency International. It must be noted, that it is common in Latvia to tip doctors and nurses after treatment, especially, when patients know, that tips are one of few reasons to keep working in this industry.
As of 2007, there are approximately 10,000 (0.8%) inhabitants of Latvia who are living with HIV/AIDS. Average life expectancy at birth is 72.7 years, second lowest in the European Union. There were 59 Hospitals in Latvia in 2009, down from 94 in 2007, and 121 in 2006. Ivars Eglitis, the former Health minister of Latvia, estimated that by 2013 only 24 hospitals would still be in operation in Latvia. There were 32,376 individual instances of clinically reported alcoholism in 2008, in Latvia, or 1.44% of the population. There were several further addictions to other substances. Latvia had a suicide rate of 24.5 per 100,000 citizens in 2005, thus making it the 7th highest rate in the world. This rate has declined from the 1995 rate of 40.7 per 100,000.
Culture and arts
Main article: Culture of Latvia
Latvian country scenery in Sabile.
Traditional Latvian folklore, especially the dance of the folk songs date back well over a thousand years. More than 1.2 million texts and 30,000 melodies of folk songs have been identified.
Between the thirteenth and nineteenth century, Baltic Germans, many of whom were originally of non-German ancestry but had been assimilated into German culture, formed the upper class. They developed distinct cultural heritage, characterised by both Latvian and German influences. It has survived in German Baltic families to this day, in spite of their dispersal to Germany, the USA, Canada and other countries in the early 20th century. However, most indigenous Latvians did not participate in this particular cultural life. Thus, the mostly peasant local pagan heritage was preserved, partly merging with Christian traditions, for example in one of the most popular celebrations today which is Jāņi, a pagan celebration of the summer solstice, celebrated on the feast day of St. John the Baptist.
Caraway cheese is traditionally served on the Latvian festival Jāņi.
In the nineteenth century Latvian nationalist movements emerged promoting Latvian culture and encouraging Latvians to take part in cultural activities. The nineteenth century and beginning of the twentieth century is often regarded as a classical era of Latvian culture. Posters show the influence of other European cultures, for example, works of artists such as the Baltic-German artist Bernhard Borchert and the French Raoul Dufy. With the onset of World War II, many Latvian artists and other members of the cultural elite fled the country yet continued to produce their work, largely for a Latvian émigré audience.
After incorporation into the Soviet Union, Latvian artists and writers were forced to follow the Socialist realism style of art. During the Soviet era, music became increasingly popular, with the most popular being songs from the 1980s. At this time, songs often made fun of the characteristics of Soviet life and were concerned about preserving Latvian identity. This aroused popular protests against the USSR and also gave rise to an increasing popularity of poetry. Since independence, theatre, scenography, choir music and classical music have become the most notable branches of Latvian culture