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Economy at a glance

At the start of World War II, both Latvia and Estonia and Estonia. Latvia and Estonia are global financial crisis of 2008
declared complete neutrality. However, Latvia, who They started to pledge for the restoration of national economically integrated with caused some of the most severe
was cut off by its main economic partners, concluded independence. On August 23, 1989, that marked the the economies of their northern recessions in Europe on the
on October 1939 the Soviet-Latvia Mutual Assistance 50th anniversary of the Molotov-Ribbertrop pact to neighbours, and within the Baltic market. Their GDP felt by
Treaty, along with a new trade agreement in with both the fate of the Baltic nations, Latvians, Estonians and
the Soviet Union and Nazi Germany. Those treaties Lithuanians joined hands in a giant human chain, European Union which they -4,6% for Latvia and -3,6% for
and trade agreements were of no use since the Soviet called the Baltic Way, that stretched 600 kilometres joined in 2004. The two countries Estonia in the year that followed
Union and Nazi Germany had signed in August 1939 are members of the Eurozone, the crisis. In 2009, as the crisis
the Molotov-Ribbentrop Pact, in which they agreed from Tallinn, by Riga to Vilnius. This was a symbolic making the Euro their national swept across Europe, the fall
to divide up the countries situated between them. representation of the united wish of the Baltic States currency. increased, leading Estonian GDP
Latvia, Estonia and Lithuania were indeed falling in for their independence. Estonia proclaimed its inde- to a - fall of 16,2% while Latvian
the Soviet sphere of influence. pendence on the 30th March 1990, followed by Latvia After the 00s, the Baltic GDP reached -19,6%, leading the
on the 4th May States were called the Baltic Baltic countries to experience
1990. Both coun- Tigers as they implemented the deepest recessions in the
The Orzel inci- tries obtained the important economic reforms world.
dent, when a recognition of their and liberalisation, along with
Polish submarine independenc e low-wage and skilled labour In 2010, the economic situation
looked for shel- in August 1991, force, that attracted foreign stabilized, allowing in 2011 the
ter in Tallinn after after unsuccess-
escaping invaded ful attempt of the investment and economic Baltic states to experience one
Poland led the Soviets to reinstat- growth. The Baltic Tigers had of the fastest recovery in the
Soviet Union to the highest growth rates in European Union: Latvia’s GDP
accuse Estonia of ed their authority. Europe between 2000 and 2007, grew by 5,5% while Estonia’s
breaking its neu- with rates of unemployment GDP grew by 8,3.
trality and threat- Newly indepen- under the average EU rates. The
ened the country dent Estonia began
with war, unless negotiating with
provided with the EU in 1998 and
military bases in submitted a refer-
the country. endum in September 2003, when 66% of voters
chose to join the EU. By the end of 1999, the heads
The Estonian government complied in September of the European Union governments invited Latvia
1939. In 1940, elections proclaimed the Estonian to begin the negotiation, regarding its accession to
Soviet Socialist Republic, that was incorporated in the European Union. A referendum held in September
the Soviet Union months later. In June 1940, Latvian 2003 in Latvia gave 67% of voters in favour of the
government was accused of conspiracy against the EU membership. In application of the Athens Treaty,
Soviet Union and threatened on an invasion. The Latvia and Estonia became members of the European
Soviets demanded the government to be replaced and Union on the May 1 2014.
the entrance of an unlimited number of Soviet troops
on Latvian sovereign soil. Knowing the Red Army had It is important to note that Lithuania also became
entered Lithauania the day before, Latvia allowed the a member of the European Union at the same time.
entrance of Soviet Troops, that occupied the coun- Baltic States also joined the United Nation and the
try on June 17. Elections were held shorty later and World Trade Organization, as well as the NATO. In
the results were announced in Moscow, leading a 2011, Estonia became the first ex-Soviet republic
“People’s Assembly” to be elected and declared Latvia to join the Eurozone after receiving approval by the
a Socialist Soviet Republic in July, that was incorporat- European Commission in May 2010. It was followed
ed in the Soviet Union on August 5, 1940. by Latvia in 2014. Today, Latvia and Estonia are both
well integrated in the Western Europe institutions.
21th century: a new freedom for the Baltic countries. On the 1st July 2017, Estonia will take its turn at the
As the liberalization in the communist regime began Presidency of the Council of the European Union.
in the mid-1980s with Mikhail Gorbachev, several
political organization were constituted in both Latvia
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