Old Dog, New Tricks

by Andrew Stuttaford

Here’s an interesting story in the Guardian on what Russia is up to in Latvia. After describing a mysterious disappearance and the somewhat unusual  New Wave “pop festival” held every summer in Jurmala, a rather nice seaside town just outside Riga  (attendance by 007 ought to be mandatory from the sound of it), the writer gets down to the nub of the story:

Some…believe the Kremlin’s agenda in Latvia is to slowly reverse the country’s strategic direction from pro-west to pro-Moscow. This is not as far-fetched as it may seem. Ukraine, Kyrgyzstan and, arguably, Georgia have all recently returned to Russia’s geo-political fold following unsuccessful revolutions. Latvia has the biggest proportion of ethnic Russians of the three post-Soviet Baltic states, accounting for about 25% of Latvia’s population. Some 37% speak Russian as a first language, the highest figure for any EU country [the latter number may be more relevant] . The charming capital Riga is effectively bilingual, with Russian and Latvian spoken on its art nouveau streets. There is also growing evidence the country has become a haven for dubious Russian money.

In a report last week the European commission praised Latvia’s post-2008 economic recovery. But it said the authorities had not done enough to stop Latvia’s banking system being used for “complex economic, financial, money laundering, and tax evasion crimes”.

In recent months wealthy Russians have abandoned Cyprus, which is seeking an EU bailout, and moved their company registrations to Latvia.Half of all money now invested in Latvia – $10bn – comes from non-resident depositors. Most live in Russia and former Soviet republics such as Ukraine, Kazakhstan and Turkmenistan. The US state department has expressed concern that this reliance on outside money creates a “systemic money-laundering risk”.

All of this explains why many ethnic  Latvians are so keen to integrate so deeply within the EU, another big brother, but infinitely more benignly so.

But even that comes with a catch. In some respects EU membership makes the country more of a target, not less:

Boris Karpichkov, a Latvian former KGB agent now based in Britain, said Latvia’s geographical position, bridging Russia and the west, made it an ideal entry point for Russian espionage, smuggling and laundering of criminal proceeds. He said: “Latvia is in the centre of the three Baltic states. Russia’s security services use Latvia like a trampoline, to send their people to Europe and the US.” Russian spies with Latvian passports can travel undetected across the EU, he said.

In contrast with the situation in Estonia, Latvia also has to deal with the presence of a large “Russian” party.

The Guardian notes:

Ethnic Latvians view the party’s rise with concern, seeing it as a proxy for Moscow’s business and political interests. The party has fuelled suspicion by signing a co-operation agreement with Putin’s United Russia party. Moscow, meanwhile, has staged military exercises on Latvia’s border, while the ultra-nationalist Duma MP Vladimir Zhirinovsky has called on Russia to annex the parts of eastern Latvia dominated by ethnic Russians.

The great game continues, updated and less dangerous for now, but once again with an unwilling Latvia finding itself one of the venues. And somehow America seems further and further away. Something about a “reset”, as I recall…

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