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Sunday 22.01.2017 | Name days: Austris
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Economic Diary of Latvia. Good times have ended in transit sector – time to work again

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week turned out rich with events – massive, notable and unexpected. Transport Minister Uldis Augulis brought back from Belarus two agreements on cooperation in transit industry. KNAB arrested the Mayor of Jurmala and multiple entrepreneurs on suspicion of corruption. The Rail Baltica project suddenly became one and a half billion euros more expensive.

This week, Latvian Transport Minister Uldis Augulis returned from his trip to Belarus, where he tried to improve international cooperation in the field of transit. He returned with good news. Two agreements were signed. The first provides for closer cooperation in the establishment of the transit tariff, provision of services and marketing. The second agreement provides for more effective exchange of electronic documents to ensure faster cargo transports.

Edvins Berzins, head of LDz, accompanied the minister on his visit to Belarus. He welcomed the two agreements, calling the formation of a single tariff for Latia-Belarus transit corridor an exceptional accomplishment.

Vladimir Morozov, head of Belarus railway, noted that the two countries were transit competitors in the past. Now, he said, they actively develop their mutual cooperation. Augulis added that the ‘good times’ for the transit industry have come to an end. This is why, he added, it is important for all sides to work together in order to attract new cargoes.

Officials had also discussed the project for electrification of railway lines in Latvia and Belarus. Berzins believes it will benefit cargo transports from an economic viewpoint.

Electrification of Latvia’s railway network and modernization of the existing network will be the largest investment project for Latvia’s railway in history. Approximately 249.8 km of railway lines are already electrified in Latvia, which is a low index in the EU. According to estimates from LDz, electrification of Latvia’s railway corridor would cost EUR 1.5 billion.

While Latvian officials were busy establishing relations in Belarus, President of Tatarstan Rustam Minnikhanov was visiting Latvia. He met with Latvia’s president, prime minister and economy minister during his visit. The two sides discussed ways of strengthening relations in the field of economy, tourism and culture.

In especially large amounts

Meanwhile, earth has been shaking under Latvia in the field of interior affairs. Over the course of a single week, authorities detained the Mayor of Jurmala Gatis Truksnis, businessmen Julijs Krumins and Joren Raitums. The latter was doing business with Krumins’ family. According to unofficial information, he had also cooperated with To Latvia from the Heart as a financial consultant. Authorities also performed a search in the office of that party. On top of that, Judge Aija Ornine of Riga Kurzeme District Court has been dismissed from her post. She is now a suspect in a criminal process related to Krumins. Truksnis, Krumins and Raitums are also suspects. All of them are suspected of being involved in illegal financing of political parties.

Truksnis does not face restriction to fulfil his duty in Jurmala City Council. On top of that, even if he put on trial, the law does not restrict him from taking part in municipal elections.

All of these people do not seem to have anything in common at first glance. Upon closer inspection, however, it becomes clear all of them are in the same boat.

According to information from Firmas.lv, Raitums, for example, was the sole owner of MC Turaida Property before 2012. Later ownership was passed on to Krumins’ daughter Maija Cernavska. In July 2014, Latvijas Radio reported that Cernavska’s owned MC Turaida Property had acquired property in an exclusive location in Jurmala for a suspiciously low price. The location coincided with the same location, where Krumins family is busy developing a hotel complex. In addition, the day Jurmala City Council deputies made the decision to alienate this piece of land, Kurmins donated EUR 15,000 to the Union of Greens and Farmers.

At the time, Truksnis did not question the low price of real estate offered by BDO. As for the coincidence with his generous donation and the decision, he said knows nothing of it.

Neatkarīgā newspaper added colours by reporting that millionaire Julijs Krumins is suspected of illegally financing Inguna Sudraba’s party To Latvia from the Heart in 2014 and UGF in March-April 2016. The newspaper notes that it is highly possible that the party’s representative in the Saeima Roman Mezeckis, who was originally elected to Jurmala City Council from UGF is next on the line. He was also responsible for the organization of the election campaign of MEP Iveta Grigule. Krumins had taken part in financing this campaign, as well as UGF’s election campaign in Jurmala.

Across Europe with a breeze

While this drama was going on in the country, RB Rail – the jointly owned Baltic railway company – was reporting its results. The agreement on the model for Rail Baltica project’s realization was due to be signed on 30 September. Unfortunately, the process was delayed allegedly due to technical problems. The signing of the document continued this week. In the end, eight out of nine institutions of Baltic States participating in the project signed the agreement. The only one remaining is Lithuania’s Lietuvos gelezinkeliai. This was reported at a press-conference by chairperson of RB Rail Baiba Rubesa. She also reported that the total costs of Rail Baltica’s realization could reach EUR 5 billion. As the outline of the project becomes clearer, it also turns out that the project’s costs in all three Baltic States will exceed the previously estimated EUR 3.68 billion.

Rail Baltica is a railway project that is planned to connect Tallinn, Riga, Kaunas, Warsaw and Berlin (possibly even Venice), improving transport connectivity between Central and Eastern Europe. Aside from that, it is also planned to build an underground railway tunnel between Tallinn and Helsinki. This will help connect Finland and part of Scandinavia with Western Europe.

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