Open letter
To the Prime Minister of the Republic of Latvia, Evika Siliņa
To the Minister of Finance of the Republic of Latvia, Arvils Ašeradens
To the Minister of Economics of the Republic of Latvia, Viktors Valainis
To the Minister of Agriculture of the Republic of Latvia, Armands Krauze
To the Minister of Smart Administration and Regional Development of the Republic of Latvia, Inga Bērziņa
More than six months have passed since the forestry sector's protest, during which the government promised to strike a balance between environmental and economic interests, reduce the burden of red tape and introduce fair compensation for forest owners whose properties are subject to felling bans. There has been some progress, but the government has not taken any decisions, and this poses a serious threat to the forestry sector and its future investment. The state budget is also at risk — the Minister of Finance has described it as "very tightly stretched", while experts are already calling it optimistic. That means insufficient funding for defence, healthcare and education.
An informative report has been adopted on reforming the compensation system for forest owners whose properties are subject to felling bans, but the government's decision on fair compensation and the allocation of actual funding has been put off until September next year.
Amendments have been drafted and agreed that would restore the arrangements in place before the legal provision reducing the diameter threshold for final felling was struck down by the Constitutional Court, but when the government will decide on them is anyone's guess.
The situation is similar with setting the maximum permissible felling volume for the next five-year period: the draft order is ready and the main compromises have been reached, yet these too are not being considered by the government. At the same time, the law "On the Medium-Term Budget Framework" has already factored in dividends from the management of state-owned forests.
It could be said that local businesses have grown used to this and continue to invest tens and hundreds of millions of euros even amid the uncertainty. However, investment in the high value-added production of the future, on which Latvia's wood industry is currently focused, is financed by European financial institutions, which assess investment risks rigorously. Uncertainty over the availability of resources, caused by delayed decisions, is one such risk.
What is more, the economic breakthrough touted by the government as the remedy for Latvia's lagging behind also depends on foreign investment. The Estonian Fibenol project has attracted considerable attention, with investors weighing investments of hundreds of millions of euros in processing birch pulpwood to produce wood chemistry products. Such a project would benefit not only the economy but would also help Latvia meet its climate targets. As industry professionals, we can say with full responsibility that investment on this scale will not happen without clarity about the availability of raw material — clarity that timely decisions would provide. It also means no new jobs created and no new taxes paid.
One might agree that climate targets can be met by shutting down the economy altogether. They can be met even faster by encouraging Latvia's population to emigrate to countries where jobs are being created rather than lost. But that is certainly not our goal! Latvia's defence needs, the well-being of society and efforts to mitigate the negative effects of climate change all require enormous investment, which can only come from economic activity.
Nor can we compare conditions in Latvia with the situation in the densely populated industrial countries of the European Union, which have done significant harm to their natural assets and biodiversity. In Latvia the opposite is true. Whereas before the Second World War forests covered 26% of Latvia's territory, that figure has now risen to 53%. Biodiversity in Latvia's forests is likewise not under threat, particularly in comparison with the wealthy countries of Western Europe. It follows that environmental protection solutions in Latvia call for an approach tailored specifically to Latvia rather than an "average European" one. This, of course, does not sit well with the view held by certain NGOs — recipients of EU funding — that Latvia, which is hardly a heavily industrialised country, should be deindustrialised altogether.
Bureaucracy matters when it comes to taking well-considered decisions, but bureaucracy as a legitimised means of avoiding decisions is a fatal diagnosis — especially for the national economy and the investment climate. We therefore ask, on behalf of our members, that decisions be taken with full responsibility, in the understanding that they must be not only sound and balanced between economic development and environmental protection, but also timely.
Yours sincerely
Latvian Forest Owners' Association, Chairman of the Board A. Muižnieks
Agricultural Organisations Cooperation Council, Chairman of the Board G. Gūtmanis
Zemnieku saeima, Chairman of the Board J. Lazdiņš
Latvian Forest Industry Federation, Vice-President K. Klauss