Latvia in Europe - Opportunities and Challenges

University of Helsinki · 25.04.2006 00:00 - 00:00

Ladies and gentlemen,

I am pleased to be here again at the University of Helsinki, and I am honored to open the EU-Presidency Series organized by the Finnish Institute of International Affairs. When I was last here in 2002, I spoke about the history of the Baltic Sea region, and outlined my vision of the region’s future. I spoke about Latvia’s two main foreign policy priorities, which were accession to the European Union and to the NATO Alliance.

Now, four years later, these priorities have been realized. And now, just a few days before Latvia celebrates the second anniversary of its accession to the EU, is perhaps an appropriate time to analyze the situation we have reached today.

Regarding the ties between Latvia and Finland, there is no doubt that they have become closer than ever before. Our relations have always been excellent, but now, as members of the European Union, we have obtained an unprecedented opportunity to strengthen them still further.

Statistics show that an increasing number of Finns are making weekend trips to Latvia. In fact, the Finnish presence in Latvia is visible in many places. I would even venture to say that being a Finn in Latvia is not very difficult. You can travel to Latvia by Finnair, do your banking at Nordea, go shopping at Stockmann’s, and buy gasoline for your car at Neste service stations. We are pleased that Finland is one of the most important investors in Latvia. Finland’s leading companies have contributed greatly to Latvia’s development by bringing modern technologies, expertise, and an advanced business culture into Latvia.

I have no doubt that the Finnish economic presence in my country has helped Latvia to attain the healthy economic growth rates it is now experiencing. Last year we enjoyed the highest economic growth rate in the entire European Union, at 10.2 percent. However, this growth has also been accompanied by an inflation rate that has surpassed 6 percent during the past two years. Latvia will have to do all it can to reduce inflation to the 3 percent mark, which is the Maastricht criterion for joining the euro zone. If not, my country may have to delay its plans to implement the euro in 2008.

Another issue we face is the departure of tens of thousands of Latvians to Ireland, the United Kingdom, and other EU countries that have opened up their labor markets to the new member states. This drain on our labor force is due to the fact that wages in Latvia are generally lower than in the more prosperous EU countries. Fortunately, the majority of those who currently work abroad have expressed a wish to return to Latvia at some point and we can only hope that eventually they will do so. The experience and skills that they acquire abroad could make a valuable contribution to Latvia’s economy. Latvia must also come to terms with the fact that its steady rates of growth have not produced an equal increase in income for all of its population. The gap between different levels of income is increasing and the percentage of low-income inhabitants still remains relatively high.

Due to the demographic makeup of our population, in which slightly less than 60 % speak Latvian as their native tongue, the focus of Latvia’s integration policy has been on integrating different ethnic groups within the country. This policy has on the whole been successful, but we are also aware that more attention must be paid to regional development if we are to achieve our goal of a truly united and harmonious civil society. In this respect we look to EU funds as an important instrument for reducing regional disparities. Similarly, the provision of EU funding has ensured the improvement of our transport infrastructure and our environmental protection measures. It has also stimulated our business environment, and has opened up new perspectives for our scientists, who are actively taking part in joint EU research programmes.

Ladies and gentlemen,
Full membership in the EU is also providing Latvia with the opportunity to shape the future of the organization, side by side with Finland and the other member states. As Finland once again assumes the presidency of the European Union in July of this year, it will be taking on a leading role in helping the EU to move ahead with a number of matters of great importance for our future.

Although the Constitutional Treaty has been rejected by French and Dutch voters, we believe that it is important to achieve three main goals that are set forth in the Treaty. One is to simplify the functioning of European Union and make it more comprehensible to its citizens, the second is to increase the effectiveness of the EU, and the third is to strengthen democracy, transparency and subsidiarity within the organization.

Latvia’s parliament has already expressed its approval of the Treaty by ratifying it, and I understand that the parliament of Finland is also considering the possibility of ratifying the treaty before Finland’s EU Presidency begins. The agreed reflection period about the treaty should be used to stimulate a broad and open debate about the European Union in each Member State.

During the latter half of the 20th century, the EU implemented various policies that ensured peace and prosperity for the continent. Among these were the free movement of goods and capital, a common EU external trade tariff and measures to restrict monopoly situations. Notwithstanding these positive achievements, the EU will have to undertake a number of significant measures if it is to remain competitive in this new age of globalization. One of these would be a sufficiently liberal services directive, which is something of particular importance to newer EU members like Latvia.

The EU also needs to take some possibly painful steps to increase its global competitiveness. Insufficiently flexible labour markets, along with a complex regulatory environment and taxes that are too high, are driving companies out of the EU’s older member states. The result in some countries is high unemployment, stifled economic growth, strained social support and health care systems, and rising dissatisfaction among the EU’s citizens. The recent protests in France that we have seen on television are a visible sign of this discontent. That is why the EU’s older member states will have to display a greater degree of commitment to the implementation of a whole series of urgently needed reforms. But as you have noticed, reforms are not always popular. Indeed, it can be very difficult to convince populations that they truly are necessary.

I am convinced that the EU would benefit if its member states renewed their commitment to developing a knowledge-based economy. For many countries this would require seriously increased investments in education, research, innovation and infrastructure. In this regard, Finland can certainly serve as a role model and a convincing success story.

Furthermore, the EU needs to reduce its reliance on fossil fuels and its excessive dependency on large, single suppliers such as Russia. We will therefore need to agree on a common EU Energy Policy, and to do so as rapidly as possible.

Regarding the future size of the Union, Latvia is in favor of its further enlargement. Bulgaria and Romania will join the EU in the nearest future. Croatia and Turkey have started accession negotiations, and the Western Balkan countries are set to follow suit. The experience of previous enlargements and our own has shown that EU integration can work wonders to ensure peace, stability and co-operation among diverse nations. Clearly, any country that does accede to the Union must scrupulously fulfill all the Copenhagen criteria. It must have a functioning democracy, abide by the rule of law and respect human rights.

Recently, questions have arisen as to the capacity of the Union to absorb new members. That will depend, in part, on how successful we are in reforming the EU’s institutions to make them more manageable. Yet if the Union wants to remain credible to its prospective members, it should not make them hostage to temporary difficulties in its own midst. Expressing doubts about enlargement as such without providing clear and rational plans for the future will certainly not help those countries ready and willing to push forward with much needed reforms.

The European Union is aware that it needs to build special relations with its neighboring countries. That is why the EU has formulated a European Neighborhood Policy, which Latvia actively supports. Latvia perceives the EU’s Neighborhood Policy as an additional opportunity to foster freedom, democracy and the rule of law in neighboring regions. The former President of Finland Urho Kekkonen is known to have said that one does not obtain security by building a fence, but rather by opening the gates. I take this to mean today, that the EU must not shut itself off from its neighbors and that the EU must not become a new dividing line between the rich and the poor, and between the free and the oppressed.

The democratic processes that we have lately observed in Georgia and Ukraine are inspiring, and Latvia has made it a priority to support these countries, as well as Moldova. Latvia is also one of three EU countries that border Belarus, which seems to vying for the title of the last dictatorship in Europe. We are glad that the EU arrived at a quick and coherent response to the official results of the recent presidential election results in Belarus, which are deemed by Western observers to have been anything but free and fair. The restrictive measures we have taken against Belarus’ top leadership are an effective method of protest that does not harm the population of the country. In the long-term, Latvia believes that the EU should continue all endeavors to strengthen civil society in Belarus, including the country’s non-governmental organizations. The people of Belarus should know that the EU’s policies are not directed against them, but against their autocratic leadership.

Latvia is pleased with Finland’s intention to single out cooperation with Russia as one of the priorities of its EU presidency. Latvia believes that the EU must establish a coherent and united position regarding Russia, a position that is based on Russia’s adherence to democratic principles, to its implementation of the rule of law and to its respect for human rights. Bilateral agreements between individual member states and Russia must not be based solely on economic interests and energy needs. They must also take into account the common interests of the EU as a whole. This would be the right way to promote Russia’s democratic development, which is particularly important for Latvia and Finland as neighboring countries of Russia.

Ladies and gentlemen,
Latvia strongly supports Findland’s wish to strengthen the European security and defense dimension during its EU presidency. Each and every one of our countries is faced with such global security threats as terrorism, illegal immigration, organized crime, the proliferation of weapons of mass destruction and the outbreak of regional conflicts. These can only be addressed through interaction and cooperation.

Because of the global nature of the threats we are faced with, Latvia continues to view Europe’s transatlantic partnership with the United States and Canada as crucial for maintaining European security. For Latvia, the honor of hosting the next NATO summit in November of this year is of tremendous symbolic significance. It will highlight the successful transition of Latvia and her neighboring countries from former captive nations under communist rule to vibrant European democracies.

There are other global challenges, such as poverty, disease and environmental degradation, that no one country can deal with on its own. Latvia and Finland realize this and are active partners within the framework of the United Nations. Finland has built up an impressive record of international co-operation through the UN ever since joining it in 1955. You have been especially active in the fields of peacekeeping, gender equality, environmental protection, and development. Finland, like Latvia, has provided a judge to the International Criminal Court. In the second half of 2006, Finland will take on the leading role for European Union activities at the UN, at a very crucial time for the implementation of its reforms. We are confident that under the Finnish presidency, the European Union will continue to consolidate its pivotal role in promoting UN reform.

Latvia is also working actively to promote the reform of the UN. I, personally, have been involved in this effort as one of the five Special Envoys of the Secretary General on UN reform. Despite of the undeniable difficulties in reaching consensus, significant progress has been achieved. The Human Rights Council, established by the General Assembly, will hopefully be an improvement on the previous Human Rights Commission. The Peace Building Committee should soon start to play an important role in achieving lasting peace in areas of continued strife and armed conflict. And, last but not least, let us hope that the Security Council can be successfully reformed in order to make it more representative of the current world situation.

Ladies and gentlemen,
In this era of increasing globalization, our societies are becoming increasingly interdependent. As small European countries with similar interests and goals, Latvia and Finland understand the need for working together in international forums to strengthen their common agendas. Whatever the challenges that we have to face, I have no doubt that during the Finnish presidency of the EU, we will grow closer to overcoming them and achieving our goals.