Grand Palace Hotel, December 3, 2004
Every once in a while, I find it useful to remind myself that Latvians and the other Balts are the striking exceptions in the former Soviet spacethe only “success stories.” We have had a stark reminder the past two weeks as we watch the events unfold in Ukraine with uncanny resemblance to the Barricade Days in Latvia.
Over the last three years we have watched the slow, backward fall of the Russian post-communist experiment, once so promising, decline into some sort of “managed economy” and “directed democracy.”
A recent analysis of press freedoms in the former Soviet Union by the Committee to Protect Journalists in New York has determined that only the Baltic states of Estonia, Latvia and Lithuania cultivated an independent media. The remaining 12 nations have found ways to thwart, control or even kill journalists who dare to investigate the powerful.
So, Latvia is an inspiring model for CIS countries – Georgian President Saakashvili, for example, told Latvians during his October 14 visit to Riga that Latvia’s achievement in the last years was worthy of admiration, and Georgia was ready to learn from Latvia’s experience.
Let me look at Latvia-U.S. relations from the perspective of the main subjects that have occupied us at Raina Boulevard over the last three years – security policy, integration of Latvia’s society, historical issues, law enforcement, banking, the American presence in Latvia, and our trade and investment flows. I will try to move quickly and leave time for your comments and questions.
When I came to Latvia three years ago, my principal task was to be sure that Latvia did as much as possible to earn an invitation to NATO. It was not in my gift to award the invitation, but my mission had the clear duty to prevent anyone foreclosing that option from NATO. Closure of the OSCE mission to Latvia was a key early move.
A second and continuing objective was to secure Latvian support in the war against terror, in Operation Enduring Freedom and Operation Iraqi Freedom. We are grateful for that support, which stems from a principled belief that, having regained its own freedom, Latvian had an obligation to stop tyranny early.
Integration of Latvia’s Many Residents
There is still work to be done. Ethnicity and citizenship continue to occupy a central place in political debates here. While this discussion is a sign of democracy in action, I look forward to the day when Latvia’s political leaders can turn their full attention to the future, and leave legacies of the past to the historians.
But, the private sector has a role and a responsibility in fostering this development. I challenge you, and your managers, and your companies to encourage your non-citizen employees to naturalize and become committed, vested members of Latvian society. Provide time off or financial assistance for learning Latvian; offer preparation courses for the naturalization exam; put the application forms and information on the job site; reward employees who become citizens. Some of you already do this–Jerry Wirth, Evgeniy Gombergs, Sol Bukingolts, for example. Their companies are stronger for this small investment.
Latvia has also done a lot in the last three years to recognize, to confront, and to educate about one of this country’s harshest legacies: the Holocaust. We can never allow anti-Semitism to return, and we can only prevent it if we understand the role that Latvian Nazi supporters played in killing Latvia’s Jews. Latvia this year joined the International Task Force on Holocaust Education, Remembrance and Research, and was the first Baltic country to sign an agreement with the United States Committee for the Preservation of America’s Heritage Abroad (USCPAHA) to assist in protecting Jewish cultural monuments that suffered during the ravages of the Holocaust.
And, Latvia agreed to join us in an ambitious curriculum development project that will modernize, redefine, and make more honest the way Latvian schools teach their students about the Holocaust. This is the most far-reaching and intellectually honest educational effort in the Baltics.
I remember being surprised three years ago when I spoke to the American Chamber of Commerce for the first time, how many questions I got about corruption, the work of FICL, and the not-yet-established KNAB. Monty Akesson was especially persistent!
In the time I’ve been here, we’ve seen some dramatic progress in professionalizing the SAB; the KNAB today is a functioning law enforcement institution; and Latvia’s borders have grown more secure as well-trained professionals work hand-in-hand with international partners to interdict illegal weapons transfers and illicit goods.
Of course, there is still more work to do. The United States recognizes the strategic importance of Latvia’s position as the European Union’s easternmost border, and we are helping Latvia meet the responsibility that this position carries. This summer, for example, we delivered a million and a half dollar piece of equipment to the Customs for scanning trucks at the border. Unfortunately, we have not seen the results we anticipated.
At the Embassy, we regard “draining the swamp” of crime, corruption and cheating as not only important in reducing vulnerabilities in the War on Terror, but also as best thing we can do to further Latvia’s economic development.
To this end, we are working with the Prosecutor General’s Office and the Ministry of Justice to develop and adopt a new criminal code. It will, we believe, strengthen the hand of law enforcement and the prosecutors.
As representatives of American business in Latvia, you, too, share a responsibility to help in this fight for Latvia’s reputation. It’s not enough to employ clean business practices yourselves, but you too must report incidents of corruption to the authorities, and you must let us do our job in helping you. In a very few cases where the embassy has had specific knowledge of corrupt activities, we have succeeded in prompting legal action, and I promise you that the American Embassy in Riga will always work for American businesses combating corruption.
Latvia faces a decision – clean up and regulate the banking industry here so that it is a respected member of the Western banking community, or become known as a Cayman Islands kind of place where criminals launder their money. The good news is that Latvia is moving toward adopting minimal measures such as a cash import reporting requirement and asset seizure regulations. I’m also pleased that Latvia’s banking regulators are stepping up their efforts to put out of business the boutique banks that service organized crime groups.
This is still one of the few places in Europe where a visa applicant will get an appointment in 24 to 48 hours, and we have earned a reputation for treating our customers – successful or unsuccessful – with (kindness and) consideration. We need to ensure that the visa application process is transparent and efficient. And, while I wish we did not see so many unqualified applicants, the one thing we cannot do is put America’s security at risk by lowering our standards.
While I am on this subject let me suggest that we should work to promote educational and cultural exchange opportunities in the United States. There is good work done by the Vitols Foundation, Gaston Lacombe’s U.S. Educational Foundation, and many generous Latvians and Americans. The time is ripe to begin work on a scholarship program to enable talented young Latvians to study and learn in the United States.
Now, before I take your comments and questions, let me add a word on business.
When I arrived three years ago, I vowed to do my best to increase trade and investment between the United States and Latvia. It’s a daunting challenge: our countries are 4000 miles apart, the Latvian market is small by U.S. standards, and other competitors from Europe got here early.
There are some things in our favor, however. First of all, we’ve got that darned dollar down to a reasonable price – you can buy two Jeep Cherokees today for the price of one Porsche Cayenne. (And the Jeeps aren’t stolen nearly so fast.) But Latvia has a fast growing economy, the quality seal of EU membership, an expanding middle class, and a key location in the middle of a market of 150 million people.
So it’s no surprise that we have lots of indications that trade and investment are growing. First of all there are the figures – a satisfying 26 percent increase in exports to America and a 34 percent increase in American imports. We are pleased about the new 50 million dollar investment by AmCham member Jeld-Wen in Aizkraukle, as well as the fact that Air Baltic’s surprising growth is, in part, made possible by the world’s most efficient, comfortable aircraft, the Boeing 737.
But the jewel in the crown is Wachovia’s 65 million dollar market securitization of Latvian mortgages that the Baltic American Enterprise Fund has just arranged. The sparkle in the jewel is that Moody’s Investor Services rates these securities as AA, a first for any mortgage-backed security in the Baltics.
I am especially proud that my embassy, together with President Vike-Freiberga, brought 50 of America’s top women CEO’s and entrepreneurs together with fifty counterparts from the Baltic region for a business summit last September. When we added it up, the people in the room at the AmCham lunch represented over 108 billion dollars in annual revenues!
As I prepare to leave Latvia, I have just one last thing to do (besides Sunday’s Christmas Tree Lighting Ceremony). That is a project that my embassy proposed to the State Department and to our counterparts in Lithuania and Estonia — a Baltic equity investment and trade presentation to American investors and corporations in London on December 8. President Vike-Freiberga and Economy Minister Karinš will join me and three distinguished American Chamber of Commerce members in this project.
And that brings me to my final point. I am especially pleased with the way the American Chamber of Commerce is growing and maturing. People listen to what this organization says. Latvia’s leaders speak at your luncheons, because they know this forum counts.
We at the embassy cooperate with the AmCham because it multiplies our reach and our impact. We should all applaud your President and board members for the hard work they do.
It has been a pleasure for me to serve as your ex officio Honorary Chairman.