The Other Europe Past glories
When Latvian President Vaira Vike-Freiberga visited Warsaw last week, during talks with President Aleksander Kwaśniewski the two heads of state agreed that a demilitarising action in Iraq "is necessary for global safety." This common stance is yet another act of defiance from the two EU candidates against the infamous statement by French President Jacques Chirac, which has been condemned by Latvian government officials and the media alike.
The Latvian Press Review recently wrote: "The statements of Chirac received broader coverage than the meeting of Latvian president Vaira Vike-Freiberga with US President George W. Bush. The newspaper Neatkariga Rita Avize published an editorial under the title "What are we fighting for, dear relatives?" which stressed that Latvia is caught in the middle of a political struggle between western Europe and the US. The newspaper reminded its readers that the US offered help to Latvians in their attempt to re-establish the country's independence, and therefore the Latvian stance on Iraq of supporting the US, was logical. Latvian columnist Viktors Avotins went on to comment, "Shouldn't Latvian politicians finally define EU and NATO as a means, not a goal of Latvia? Latvia cannot hope that NATO will become an instrument it can play on. But Latvia can hope that NATO will be an orchestra where it can play."
But Latvia seems to be suffering the fate of a small underestimated country on two fronts, as its relations with Russia are far from rosy. This was recently demonstrated by a battle for the oil port of Vindava. Two years ago the Vindava oil terminal in southern Latvia was the largest port for the transfer of Russian oil meant for export. But by mid-2002 transfers had fallen by 20.5% from the 14.9 million tonnes of Russian oil that passed through the pipes only a year earlier. Initially, the decrease was blamed on the opening of a Russian oil port in Primorsk near St. Petersburg, but it has recently surfaced that Russian state monopolist Transneft has decided to use part of its income to buy out the Latvian government's controlling stake in the Vindava terminal. However, the Latvian government is not easily bullied, and foreign minister Sandra Kalniete turned to the European Commission for help in solving a problem she believes could be threatening the energy sector in the Baltics and, eventually, in the EU. Meanwhile, the owners are looking for a new terminal operator and Kalniete suggested the state might step in.
Polish-Latvian relations have always been somewhat simpler and have only started developing more dynamically in the past decade. Rościsław Karpiński, commercial attaché to the Polish embassy in Riga, sees a lot of potential for business relations between the two economies, but believes that most of the trade activity weight is carried by Polish entrepreneurs.
Polish businesses, large and small, have already realised the potential of the Baltic region and have decided to go beyond the tried-and-tested territory of Lithuania. From among other recognisable names, the Polish division of Henkel exports many of its cleaning products to Latvia, while Toruń-based hygiene products manufacturer Bella has gained a significant position in the childcare products market. But the most visible of our trademarks on the Latvian market can be seen driving down the streets of the country's capital Riga and the city of Daugavpils every day. Solaris, the bus and coach producer from Bolechowo near Poznań, has sold its buses to the two cities. The five-year contract the company signed in 2001 with the Riga authorities asks for an annual delivery of an average of 30 buses. Solaris has already delivered 148 buses to Riga in a contract worth €33 million, beating off MAN, Mercedes and Volvo. It has also delivered 30 vehicles to Daugavpils for a sum its representatives said was "close to €8 million."
"We won against seven other competitors, most likely because of the combination of good value at a relatively low price," said Jerzy Serwiński, director of the export department at Solaris Bus & Coach.
As stipulated by what has been the company's biggest foreign deal in its history, this year Solaris is scheduled to deliver another 31 buses to the city of Riga.
The string of successes, however, is also accompanied by some failures. Spice producer Kamis backed out of the region due to excessive distribution costs. Mostostal Baltia, a paving stone producer, quit Latvia and was eventually bought out by its local partner. On the brighter side, thanks to a free trade agreement between the two countries, all customs duties on commercial products have been lifted; a helpful decision since even the Polish-Lithuanian Chamber of Commerce and Eastern Markets (PLIG) admits that Latvians are formalists when it comes to paperwork and customs procedures, a view that Karpiński concurs with.
"We've had so many problems with people bringing their products to expos here that have not gone through proper customs' clearance," he said. "When the Latvian customs discovered that during the expo, the entrepreneurs had to pay additional sums for on-the-spot clearance. Nowadays, I just place a warning on our Internet site."
According to PLIG representatives, Latvia, with 2.3 million inhabitants, is more attractive to Polish investors than the neighbouring leader in the region - Estonia, as Latvian partners can assist entrepreneurs in launching their products on the Russian market as well. But as far as fears and reservations are concerned, it seems that there is still quite a lot of work to do in terms of information and trade support. Many potential investors complain about the lack of sufficient materials promoting each country and also of materials providing information about tax systems, required certificates and customs' tariffs.
Most Polish investors seem to fear they will not receive payment from their Latvian partners, a problem that according to PLIG can easily be solved by well structured contracts, something that is not as commonplace as it ought to be. The problem could additionally be facilitated, according to the organisation, if a Polish bank were to open a branch in Latvia. A spokeswoman from Kredyt Bank, which has already opened offices in Vilnius and Kaliningrad, said the bank is not currently planning on expanding into other countries.
While Polish companies are taking somewhat tentative steps on the Latvian market, Latvian companies are more reluctant to enter our market. Although we have a favourable trade balance with Latvia with Polish exports at €262 million, Latvian exports to Poland come to a mere €35 million, with timber topping the list. Karpiński believes that the small number of Latvian companies on our market can be explained by the fact that Latvians still believe that anything that comes from a former Soviet satellite will not be well manufactured and the local partners will be unreliable. Perhaps that is why many of our products in Latvia are sold as goods from another country. For instance, Polish shoes are sold under an Italian brand.
In order to increase the volume of exports and imports, PLIG suggests reintroducing a direct train link between the two countries and opening a ferry service. In the light of very minor improvements on the Polish side of the Via Baltica, improvements in other forms of transport would greatly improve bilateral trade relations. With the development of Via Baltica, which will soon become one of the EU's major thoroughfares, and a possible reintroduction of a direct train link between the two countries, freight services and tourist transport between the two countries ought to improve dramatically.
As for the position of a small underestimated state, perhaps those who rush to criticise Latvia for speaking its mind should be reminded of the country's imperialist past. In the 16th century, following the Livonian War which was begun by the state of Moscow in an attempt to gain access to the Baltic Sea, Livonia was divided between Sweden and Poland-Lithuania. In the 17th century the Duchy of Kurzeme, a semi-independent state that actually paid tribute to Poland, became so successful that for a short while it held prosperous colonies in Africa in Gambia and on the Caribbean island of Tobago, where people with Latvian or Latvian sounding names can still be found today. And did you know that they even thought of colonising Australia?
The Latvian Press Review recently wrote: "The statements of Chirac received broader coverage than the meeting of Latvian president Vaira Vike-Freiberga with US President George W. Bush. The newspaper Neatkariga Rita Avize published an editorial under the title "What are we fighting for, dear relatives?" which stressed that Latvia is caught in the middle of a political struggle between western Europe and the US. The newspaper reminded its readers that the US offered help to Latvians in their attempt to re-establish the country's independence, and therefore the Latvian stance on Iraq of supporting the US, was logical. Latvian columnist Viktors Avotins went on to comment, "Shouldn't Latvian politicians finally define EU and NATO as a means, not a goal of Latvia? Latvia cannot hope that NATO will become an instrument it can play on. But Latvia can hope that NATO will be an orchestra where it can play."
But Latvia seems to be suffering the fate of a small underestimated country on two fronts, as its relations with Russia are far from rosy. This was recently demonstrated by a battle for the oil port of Vindava. Two years ago the Vindava oil terminal in southern Latvia was the largest port for the transfer of Russian oil meant for export. But by mid-2002 transfers had fallen by 20.5% from the 14.9 million tonnes of Russian oil that passed through the pipes only a year earlier. Initially, the decrease was blamed on the opening of a Russian oil port in Primorsk near St. Petersburg, but it has recently surfaced that Russian state monopolist Transneft has decided to use part of its income to buy out the Latvian government's controlling stake in the Vindava terminal. However, the Latvian government is not easily bullied, and foreign minister Sandra Kalniete turned to the European Commission for help in solving a problem she believes could be threatening the energy sector in the Baltics and, eventually, in the EU. Meanwhile, the owners are looking for a new terminal operator and Kalniete suggested the state might step in.
Polish-Latvian relations have always been somewhat simpler and have only started developing more dynamically in the past decade. Rościsław Karpiński, commercial attaché to the Polish embassy in Riga, sees a lot of potential for business relations between the two economies, but believes that most of the trade activity weight is carried by Polish entrepreneurs.
Polish businesses, large and small, have already realised the potential of the Baltic region and have decided to go beyond the tried-and-tested territory of Lithuania. From among other recognisable names, the Polish division of Henkel exports many of its cleaning products to Latvia, while Toruń-based hygiene products manufacturer Bella has gained a significant position in the childcare products market. But the most visible of our trademarks on the Latvian market can be seen driving down the streets of the country's capital Riga and the city of Daugavpils every day. Solaris, the bus and coach producer from Bolechowo near Poznań, has sold its buses to the two cities. The five-year contract the company signed in 2001 with the Riga authorities asks for an annual delivery of an average of 30 buses. Solaris has already delivered 148 buses to Riga in a contract worth €33 million, beating off MAN, Mercedes and Volvo. It has also delivered 30 vehicles to Daugavpils for a sum its representatives said was "close to €8 million."
"We won against seven other competitors, most likely because of the combination of good value at a relatively low price," said Jerzy Serwiński, director of the export department at Solaris Bus & Coach.
As stipulated by what has been the company's biggest foreign deal in its history, this year Solaris is scheduled to deliver another 31 buses to the city of Riga.
The string of successes, however, is also accompanied by some failures. Spice producer Kamis backed out of the region due to excessive distribution costs. Mostostal Baltia, a paving stone producer, quit Latvia and was eventually bought out by its local partner. On the brighter side, thanks to a free trade agreement between the two countries, all customs duties on commercial products have been lifted; a helpful decision since even the Polish-Lithuanian Chamber of Commerce and Eastern Markets (PLIG) admits that Latvians are formalists when it comes to paperwork and customs procedures, a view that Karpiński concurs with.
"We've had so many problems with people bringing their products to expos here that have not gone through proper customs' clearance," he said. "When the Latvian customs discovered that during the expo, the entrepreneurs had to pay additional sums for on-the-spot clearance. Nowadays, I just place a warning on our Internet site."
According to PLIG representatives, Latvia, with 2.3 million inhabitants, is more attractive to Polish investors than the neighbouring leader in the region - Estonia, as Latvian partners can assist entrepreneurs in launching their products on the Russian market as well. But as far as fears and reservations are concerned, it seems that there is still quite a lot of work to do in terms of information and trade support. Many potential investors complain about the lack of sufficient materials promoting each country and also of materials providing information about tax systems, required certificates and customs' tariffs.
Most Polish investors seem to fear they will not receive payment from their Latvian partners, a problem that according to PLIG can easily be solved by well structured contracts, something that is not as commonplace as it ought to be. The problem could additionally be facilitated, according to the organisation, if a Polish bank were to open a branch in Latvia. A spokeswoman from Kredyt Bank, which has already opened offices in Vilnius and Kaliningrad, said the bank is not currently planning on expanding into other countries.
While Polish companies are taking somewhat tentative steps on the Latvian market, Latvian companies are more reluctant to enter our market. Although we have a favourable trade balance with Latvia with Polish exports at €262 million, Latvian exports to Poland come to a mere €35 million, with timber topping the list. Karpiński believes that the small number of Latvian companies on our market can be explained by the fact that Latvians still believe that anything that comes from a former Soviet satellite will not be well manufactured and the local partners will be unreliable. Perhaps that is why many of our products in Latvia are sold as goods from another country. For instance, Polish shoes are sold under an Italian brand.
In order to increase the volume of exports and imports, PLIG suggests reintroducing a direct train link between the two countries and opening a ferry service. In the light of very minor improvements on the Polish side of the Via Baltica, improvements in other forms of transport would greatly improve bilateral trade relations. With the development of Via Baltica, which will soon become one of the EU's major thoroughfares, and a possible reintroduction of a direct train link between the two countries, freight services and tourist transport between the two countries ought to improve dramatically.
As for the position of a small underestimated state, perhaps those who rush to criticise Latvia for speaking its mind should be reminded of the country's imperialist past. In the 16th century, following the Livonian War which was begun by the state of Moscow in an attempt to gain access to the Baltic Sea, Livonia was divided between Sweden and Poland-Lithuania. In the 17th century the Duchy of Kurzeme, a semi-independent state that actually paid tribute to Poland, became so successful that for a short while it held prosperous colonies in Africa in Gambia and on the Caribbean island of Tobago, where people with Latvian or Latvian sounding names can still be found today. And did you know that they even thought of colonising Australia?
