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Latvia: Russian Speakers Hold Their Own On The Business Front

Russian speakers make up more than one-third of Latvia's 2.4 million people. The majority of these Russian speakers -- many of whom are ethnic Russians but who also hail from throughout the former Soviet Union -- are noncitizens and take no part in Latvia's political life. At the same time, however, non-Latvians play a significant role in the country's business arena. Some Latvian politicians and media have even complained that Russian speakers have come to dominate Latvia's economic scene. But how accurate is this perception? What are the circumstances pushing Russian speakers into business, and what has contributed to their success?

Prague, 17 May 2002 (RFE/RL) -- A number of Russian speakers in Latvia have had no trouble adapting to new capitalist ways. Non-Latvians are prominent in the Latvian business world -- so much so, in fact, that the Latvian magazine "Klubs," which regularly publishes lists of the country's wealthiest people, reports that nearly half of Latvia's some 100 millionaires are Russian speakers.

Among Latvia's wealthiest Russian speakers are Valery Kargin and Viktor Krasovitsky, chief shareholders in PAREKS, one of the largest and most profitable banks in the Baltic nation. Yevgeny Gomberg, a successful real estate developer, recently made news in Latvia when he bought the first-ever manufactured post card at a London auction. And Chaim Kogan is among the many prominent Russian speakers in Latvia's profitable oil and seaport business.

Such success stories have left many in Latvia with the impression that Russian speakers do well economically in the country.

Nils Muiznieks is the director of the Latvian Center for Human Rights and Ethnic Studies. He says there are several reasons why Russian speakers are particularly successful in business.

One reason, he says, is that most Russian speakers in Latvia opt to live in cities, where business opportunities are always greater than in rural areas. Muiznieks says, "city dwellers are always more flexible and more inclined to take risks than country folks, who are mainly Latvian."

Another reason for Russian speakers' current business success is that many entrepreneurs are former members of the Soviet elite -- something that helped them get their start in business:

"Like everywhere in Eastern Europe, 'nomenklatura' privatization [made up a substantial part of all privatization] and Russian speakers were overrepresented among this [bureaucratic elite], the KGB, the Communist Party."

Not only Russian speakers took advantage of their Soviet-era privileges to succeed in the new capitalist era, however. Igor Pimenov is the director of Latvia's Russian Schools Association. He told RFE/RL that Soviet policy ensured that all nationalities in the Soviet republics -- including Latvians -- were proportionally represented in the Communist Party, the government and the KGB:

"Former Komsomol (Soviet Communist youth organization) activists in Latvia had very good contacts with the Moscow Komsomol nomenklatura. To this day they have good contacts with those former Moscow [Komsomol members] who now work in Moscow commercial banks and are influential in this sector. I would not like to name [these ethnic Latvians who benefited from contacts in Moscow.] But their names are extremely well-known in Latvia."

Pimenov also says that Latvia's strict language laws and citizenship policy pushed many Russian speakers into business. Without citizenship -- which cannot be gained without proven fluency in Latvia -- Russian speakers cannot participate in Latvian politics.

There are currently more than a half-million non-citizens in Latvia -- one-fifth of the country's population. In the past seven years, only some 52,000 non-Latvians have opted for citizenship.

Muiznieks says that of Latvia's current class of millionaires, many who built their wealth in the early 1990s, had professional contacts in Russia that proved a valuable asset. A person, for example, who worked as a manager in an all-Union plant -- that is, a plant managed directly from Moscow -- had close ties to people in similar positions throughout the Soviet Union.

Those contacts proved useful in the early 1990s, when the highest profits were made buying goods and raw materials from Russia at controlled prices and selling them to the West at free-market rates. Most of the people involved in this business in Latvia, Muiznieks says, were Russian speakers.

He says that in the middle of the 1990s, however, the situation changed. Ethnic Latvians consolidated the political power in the country and started supporting Latvian capitalists. "When you have the political power, you can influence the economy as well -- you decide who gets contracts, who sits on the privatization boards," says Muiznieks. At the same time, however, a number of successful Russian-speaking businessmen quickly adapted themselves to the new conditions, receiving Latvian citizenship and learning the Latvian language. Muiznieks says not all Russian speakers have chosen this course, however:

"Yes and no. For example, [Yevgeny] Gomberg recently naturalized and acquired Latvian citizenship. [Valery] Kargin and [Viktor] Krasovitsky received citizenship for their extraordinary contribution to the development of the Latvian economy. A lot of them have citizenship, at least the prominent ones, although there are many who do not and it doesn't affect their work."

Aigars Freimanis is the director of the Latvias Fakti sociological and market research agency. He says it is a myth that Russian-speaking businessmen play a large role in the Latvian business scene. Freimanis says there are no broad statistical data to support the claim of exceptional achievements by Russian speakers. However, he admits that there is no data to reject that notion, and that many Latvians continue to have the perception that Russian speakers are among the country's most successful businessmen. Freimanis says one of the main contributing factors to Russian speakers' success in Latvian business is that business, unlike politics, operates along nonethnic lines. Freimanis says there is no ethnic discrimination in business:

"There are no economic restrictions in economical activities [for non-citizens in Latvia], and nobody prevents [Russian speakers] from doing business."

Freimanis says, however, that the Latvian political elite still shows a certain favoritism toward ethnic Latvian businessmen. Russian-speaking businessmen in Latvia are seen as having too many ties to Russia, something that still holds a negative association for many Latvians.