CONTENT PREVIEW
Country Risk

Broad post-election coalition likely to elevate Latvian government instability risks and obstruct swift legislative approvals

10 October 2018
Leader of Harmony Nils Usakovs (R) and leaders of the New Conservative party (L) are seen on pre-election posters in Riga, Latvia on 3 October 2018. Source: ILMARS ZNOTINS/AFP/Getty Images

Key Points

  • The next government is likely to include up to five parties, posing an elevated risk to its stability, while protracting the adoption of legislation related to healthcare, education and taxation.
  • Other policy priorities are likely to include improving the country's anti-money laundering framework and strengthening the banking sector.
  • Latvia is likely to maintain its strong pro-NATO and pro-EU orientation and keep its defence spending at 2% of GDP.

Event

Latvia held a parliamentary election on 6 October, resulting in the centre-left opposition Social Democratic Party "Harmony" (Sociāldemokrātiskā Partija "Saskaņa": SDPS) winning 23 of the 100 parliamentary seats. Due to its pro-Russian stance, Harmony is likely to remain in opposition, with the next government maintaining a pro-NATO and pro-EU policy course.

Seven parties entered the parliament as opposed to six in the current legislature. Harmony is generally supported by the country's ethnic Russian minority, which makes up around 25% of the population. The party, led by ethnic-Russian mayor Nils Ušakovs, won most of the votes in the last elections in 2011 and 2014, but was left outside the ruling coalition, above all due to its co-operation agreement with Russian President Vladimir Putin's United Russia party. Harmony terminated the co-operation with United Russia in 2017 and attracted prominent figures from outside the party, such as former economy minister Vjaceslavs Dombrovskis, ahead of the election. However, it seems that this was not enough to resonate with voters outside Harmony's core constituency, with the party losing one seat after the vote.

The parties To Whom Belongs the State? (Kam pieder valsts: KPV LV), established in 2016 by actor and radio host Artus Kaimiņš, and New Conservative Party (Jaunā konservatīvā partija: JKP), founded in 2014, became the second and third most popular parties respectively, both securing 16 parliamentary seats. KPV LV and JKP based their pre-election campaigns on opposition to political corruption.

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