[LINK] "Is Latvia’s Door to Europe Closing for Russians, Central Asians?"

[rfmcdonald]

Eurasianet.org's Justin Burke writes at length about how Latvia is trying to cut down on a program that gives residency permits to investors, as part of its ongoing effort to try to come to terms with its Russian links.. The matter is potentially fraught, involving as it does Latvia's integration into the European Union and its relationship with the former Soviet Union (i.e. Russia), issues of migration and cultural identity, and the viability of Latvia's economic model. (The country has gone to significant lengths to avoid even the fear that the Latvian financial sector might undergo a Cyprus-style meltdown, especially now that it is in the Eurozone.)

Now that Latvia has joined the euro zone, legislators in Riga can return to the delicate issue of residency permits for foreign nationals. Lenient rules have allowed thousands of über-rich Russians, Chinese and Central Asians to use Latvia as a backdoor to Europe. Critics want to tighten legal loopholes, while defenders warn that too much tinkering could have economic consequences.

Since 2010, foreigners have been able to obtain Latvian residency under comparatively easy financial conditions. For example, foreigners who purchase real estate worth between 70,000 and 140,000 euros (roughly $96,000-$191,000), depending on the location of the property, can obtain Latvian residency. Once in possession of a residency permit, foreigners are eligible for a Schengen visa, enabling holders to travel freely to most EU states.

Since the residency program’s inception, more than 7,000 foreigners have obtained Latvian residency via real estate purchases or other investments. The overwhelming majority are Russians, mostly from Moscow. But hundreds of Kazakhstanis, Ukrainians, Uzbeks and Chinese have also taken advantage of the loophole. In addition, dozens of Kyrgyz and Azerbaijani citizens have become “real estate” residents in Latvia.

Nationalist politicians oppose the loopholes, arguing that big-spending foreigners are pricing Latvian citizens out of desirable residential areas, in particular Riga’s Old Town and the seaside resort of Jurmala. Opponents also contend that the program has had only a minimal economic benefit because many foreigners who purchase homes in Latvia don’t spend much time or money in the country.

On January 1, Latvia became the 18th EU member state to adopt the euro as its currency. In connection with the euro-zone accession process, nationalist MPs engineered the adoption of amendments last October designed to restrict real-estate-residency, including capping the number of eligible foreigners at 800 annually. Legislators also raised the minimum real estate investment to 150,000 euros.

President Andris Berzins, however, declined to sign the amendments into law, voicing opposition to a separate provision that would have allowed foreigners simply to purchase temporary residency, valid for up to five years, for 50,000 euros. The bill was returned to parliament for further consideration. MPs are expected to discuss revisions in late January.

Proponents of the current framework, in particular those working in Latvia’s real estate sector, have cautioned against making drastic changes. Yegeniya Markova, a managing director at Nira Fonds, a real estate firm with offices in Riga and St. Petersburg, claimed that the influx of foreign buyers is a significant catalyst of economic activity, especially in the construction sector.