Latvians Face Massive Price Hikes As Country Implements Reforms
TOMORROW, newly independent Latvia begins its long-anticipated leap into the economic unknown.The government is raising the price of coal by a factor of nine. Oil will go up by six times. Natural gas will go up 1.5 times. Central heating for apartments and hot water will also be more expensive, but as yet the new rate is unspecified. All prices are to be freed by the end of November. As compensation, salaries will go up by a factor of five tomorrow, but residents are skeptical this raise will ease the pain. Although the heat was turned on in most apartment buildings on Oct. 15, some still have no heat or hot water. "It's crunch time for Latvia," says a Western diplomat. In a reference to the sugar that is sold only through ration coupons, the newspaper Rigas Bals commented last week on the price rises: "Sugar will hardly sweeten our bitter life." The pain of market reform is being compounded by pressures from "big brother" next door, the Russian Republic, which has not delivered gasoline to the country since early September. Some gas is trickling in through private acquisition from other republics, but officially, no gasoline is being sold to private people. Russia also demands payment between 50 percent and 100 percent higher than German prices for commodities such as gasoline, natural gas, and meat. For gasoline, Russia demands 60 percent more than German prices. "This is mainly tied to the citizenship laws," says the diplomat, who suggests that this is Russian President Boris Yeltsin's way of pressuring the Latvians to agree to easy terms for Latvian citizenship. Some 34 percent of Latvia's 2.7 million people are Russian, and only 21 percent of them speak Latvian, so tough language requirements for citizenship could create a wave of Russian refugees from Latvia. "Yeltsin is playing to win," says the diplomat. "He's using all means, fair and foul, to pressure these guys." "This country [Latvia] is facing a very scary time right now. If it continues, there won't be heat in the apartments this winter. It may even become as bad as Romania in 1985 - no light, no heat."