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.

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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