LATVIA: COURT RULING SUSPENDS DEVELOPMENT OF RIGA

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000056 SIPDIS SIPDIS E.O. 12958: DECL: 01/30/2018 TAGS: ECON KCOR KJUS EWWT SENV LG SUBJECT: LATVIA: COURT RULING SUSPENDS DEVELOPMENT OF RIGA FREEPORT Classified By: Ambassador Catherine Todd Bailey for Reason 1.4(d). ¶1. (U) Summary. The Constitutional Court of Latvia ruled on 17 January that part of the Riga territorial plan that deals with changes in the Freeport of Riga territory does not comply with the Constitution because several environmental impact procedures had not been followed correctly. The court ruled that the previous version of the Riga territorial plan, (already expired at the end of 2005),would be applicable to the Freeport of Riga territory for the time being. This suspends several large development plans and adversely affects a number of prominent businessmen in Latvia; it also shows that the Latvian judiciary is capable of ruling in favor of the law and against some of Latvia's most powerful business interests. End Summary. ¶2. (U) The Constitutional Court opened the case in May of 2007 after the Riga City Council proposed to alter the territory of the port in order to develop several unused port areas - the Krievu, Kundzinsala and Mangalsala islands. In its ruling on January 17, the Constitutional Court found that several procedures had not been observed while developing the territorial plan--and that an assessment of the environmental impact of the plan had been done incorrectly (for example, forms were submitted with incomplete information). According to the ruling, the Riga city government unlawfully tasked the Riga Freeport to correct faults in the environmental impact assessment after the territorial plan had already been approved. At the same time, an assessment of the plan's impact on the European protected nature areas (Natura 2000) was never executed, and the Riga city government never received a statement from the State Inspection for Heritage Protection (SIHP); according to the ruling by the Constitutional Court such a statement from the SIHP was required. ¶3. (U) As a result of the ruling, the territories of Krievu sala, Kundzinsala, Daugavgriva and Spilve will, for the time being, retain the status of nature base territory instead of production territory--as per the previous Riga Development plan. Therefore, all projects not in agreement with the previous plan in these territories must be halted. According to the Riga city government, work on a new territory plan of Riga Freeport could take two years or more to accomplish--especially to carry out the necessary environmental impact studies. In the meantime, all construction permits, projects, agreements and other documents concerning these areas (that are not in accord with the previous plan) will have to be canceled. ¶4. (C) Laila Jurcena of the Constitutional Court told emboff that this ruling will not halt activity indefinitely. The main concern was not that the area be developed, but that appropriate procedure be followed. Jurcena stated that the city government acted beyond its responsibility in issuing permits in the first place and now they have to start the process over and do it correctly. She noted that, "Some people are just used to doing what they want." (Comment: Jurcena made no specific reference to Latvian oligarchs Ainars Slessers (current Transportation Minister) or Andris Skele, but it is known that these two are involved in developments at the port. End comment.) ¶5. (C) Roberts Putnis, chairman of the NGO corruption watchdog Delna, stated that the delay of this development has hurt some people financially. He said the total project is worth approximately 600 million dollars. Putnis added that those investigating the situation were made aware of its sensitivity--though he did not elaborate by whom or to what extent. Krisjanis Peters, Chairman of the Board of Riga International Airport and a close confidant of Slessers, also told emboff that the ruling "puts a significant barrier to current development plans" and "put a hurt on some big people's personal gain." ¶6. (U) The Court's ruling will cause major problems for the development of a large-scale container terminal project in Kundzinsala, where the company Nacionalais Konteineru Terminalis (National Container Terminal) has plans to build a container terminal with capacity of 2 million Twenty Foot Equivalent Units (TEUs) to handle freights from East Asia and Russia. First Quantam Assets, a Russian container company registered in Cyprus, owns 50% of the company; the other 50% is indirectly owned by well-known entrepreneur Ivars Millers, vice president of Skonto Buve (a large Latvian construction company). The ruling may also mean that the Riga Freeport will not receive the EU Cohesion funds already allotted to it. ¶7. (C) Comment: It is notable that the constitutional court took a stand for the rule of law in a case that directly impacted some of Latvia's most powerful businessmen. RIGA 00000056 002 OF 002 Minister Slessers has openly criticized the ruling. Throughout 2007, Embassy Riga pushed hard for transparency at Riga Freeport and a general bolstering of the rule of law in Latvia. This ruling shows that in some cases the judicial system is capable of making decisions that follow the law rather than the business interests of some of Latvia's elite. End Comment. BAILEY