Latvia

THE EASTERN EUROPEAN nation of Latvia was conquered by Poland in the mid-16th century. Latvia was occupied by Sweden from 1629 to 1721. For almost 200 years thereafter, Latvia was dominated by Russia. A brief period of independence took place after the Russian Revolution, but by 1940, Latvia had been incorporated into the Soviet Union. During the German occupation of World War II, some 70,000 Latvian Jews were massacred. Latvia again declared independence in 1991 after the collapse of the Soviet Union. Because of the tensions between the Latvian majority (57.7 percent) and the Russian minority (29.6 percent), the government initially limited citizenship to native Latvians and foreigners who had been in the country before 1940. Latvia was subsequently forced to liberalize citizenship laws in order to become a member of the North Atlantic Treaty Organization (NATO). Latvia joined the European Union in 2004.

During the transition to a market economy, Latvia found it necessary to practice economic austerity. As trade dependency on Russia decreased, ties with Western nations increased. Most banks and real-estate holdings are now privatized in Latvia, but the state has maintained control over large enterprises. Services dominate the Latvian economy, employing 60 percent of the labor force. One-fourth of the population is involved in industry, and 15 percent are engaged in agriculture. There has been some concern in recent years about the possibility of Latvian banks taking part in illegal activities. If this is the case, the discovery could damage the financial sector and play havoc with the 7.6 percent growth rate that Latvia is experiencing. Unemployment in 2005 stood at 8.8 percent.

With a per capita annual income of $11,500, Latvia is an upper-middle-income nation, but it is also severely indebted. Latvians suffer from the “feminization of poverty,” in which women and their dependent children become the group that is most vulnerable to poverty. Other groups that have a tendency to be poor are households with three or more children, the elderly, and those who live in rural areas.

In 2003, government data revealed that 39 percent of children lived in the poorest 20 percent of Latvian households. Because women make less than men throughout their lives, pensions for elderly women are lower than those of men, and thus they are more likely to be poor. Government data show that around 45 percent of rural Latvians are poor.

Latvia does not have an official poverty line, but social assistance bases aid on whether or not an individual can afford to buy basic items identified in the Minimum Crisis Basket. This poverty line works out to roughly $3 a day, and 19.4 percent of the population are poor when using this criterion. Approximately 28 percent [Page 628]of the population survive on less than $4 a day, and six percent of them are undernourished. Inequality is further demonstrated by the fact that the poorest 20 percent of Latvians share 7.6 percent of available resources, while the richest 20 percent claim 40.3 percent. Latvia is ranked 32.4 on the Gini Index of Human Inequality.

...