Minister of Industry Laszlo Pal resigned and was replaced by Imre Dunai, one of Pal's deputie

1

by members of incumbent parties who represent at least two- thirds of the members of Parliament. The last rule requires that theliSP assent to any decision of chc Committee. In addition, the amendment allows the Committee to hold closcd-door ses¬sions. Committee standing orders generally require open com-mittee meetings. Tire amendment also gives the Constitutional Committee the authority to amend its standing orders on its own initiative.The resolution calls for the Committee to make an effort to introduce to the House the principles of the new Constitution by December 31.

Minister of Industry Laszlo Pal resigned and was replaced by Imre Dunai, one of Pal's deputies. The reason for his resigna¬tion was thac the former minister’s privatization policy concern¬ing the energy industry was rejected by the majority of the cabi¬net on June 29 (although by only a very slim majority, voting in an eight to seven ratio). The issue at stake was the proportion of the energy industry which would continue under state owner¬ship after die privatization period in 1995. The minister, and those who remained in the minority in the cabinet, did not want to keep the majority of property in state hands. Acoording to the derision of the cabinet, che second period of privatization in the energy industry is expected to take place in 1997, when the rcmainingportions owned by the state will be sold.

Minister of Finance Andris Picbalgs submitted his resignation to Parliament on May 19, for his part in the failure of the country’s largest commercial bank, Banka Baltiia, and the ensuing budget crisis, which resulted in a 70 million he ($134 million) deficit. President Maris Gailis at first refused to accept Picbalgs’s resignation, arguing that the coun¬try's financial situation would only deteriorate further if lead¬ership were transferred. Though budgetary shortfalls arc not a new phenomenon in Latvia (in April the deficit had already reached 43 million lats), the bank failure plunged the govern¬ment even further into die red.

Despite President Gailis’s attempts to keep Piebalgs in office, the Saeima (Parliament) confirmed Indra Samite as the new finance minister on May 25 by a vote of 57 to one, with / eight abstentions. Under her direction, the Bank of Latvia then purchased 100 percent of the failed bank’s shares. In its effort to stabilize the banking system, observers have estimat¬ed that the state will have to spend between 80 and 147 mil¬lion lats. Consequently, even after a year of decreasing inter¬est rates, devaluation of the lat seems inevitable.

The failure of Banka BaJtija served as a painful lesson to the government not to postpone legislation regulating banking and financial enterprises. Following the bank failure, rumors spread that other banks, too, were tottering, further aggravat¬ing the financial crisis. Depositors were dumfounded to learn that the bank’s guarantee to insure their deposits was not legal¬ly binding. Despite the urgency to pass new banking laws, con- (licting political agendas slowed the legislative process. On July

18, the Saeima was willing to let the summer session end with¬out having passed the three government-sponsored banking bills, and chose to focus instead on electoral campaigning. The Latvia’s Way (LW) government interceded by passing tire laws itself, citing Art 81 of the Constitution which allows the cabinet to issue regulations between parliamentary sessions.

The new laws pertained to bank supervision, commercial banking, and compensation for losses incurred by bank failure.

Focusing on tire October elections, on May 26, the Saeima approved, after its second reading, the electoral law proposed by LW. The bill remained basically unchanged from its origi¬nal form. (Sec EECR, Latvia Update,Vol. 4, No. 2, Spring 1995.) It included tire controversial stipulation that only regis¬tered political parties can present candidate lists for parliamen¬tary elections. In the past, Latvian authorities have squelched aspirations of certain political organizations (namely the com¬munists) to hold public office by labeling them as antistate groups and not allowing them to register as political parties.

Currently, Parliament contains no leftist party representa-tives. Three left-wing parries hope to change this situation in the forthcoming elections. The Association of Free Trade Unions (AFTU), the Latvian Socialist Democratic Workers Party (LSDWP). and the Latvian Democratic Labor Party (LDLP) signed a coalition agreement on April 12 intending to submit a single party list for October. Party leaders stressed that the)' arc not communists or radicals and, if elected, intend to work with¬in die framework of die present system based on social demo¬cratic principles. A month later, two other parties joined die coalition, the Latvian Party for Protection of Deceived People and the Social Democratic Women’s Party. The coalition will campaign under the banner of “Work and Fairness”

The forthcoming elections have conjured up yet another new party formation. On May 2, the Democratic Party (DP) united with Saimnieks. The new party will campaign on a ^ fairly conservative platform, supporting the amendment to the Constitution proposed by the Farmers’ Union (FU). On May 26, the Political Association of Economists (PAE) announced that it will withdraw from its current coalition agreement with the ruling LW and join the DP-Saimnieks ticket in the next elections.

The FU initiative to amend the 1922 Satversme (Constitution) has received considerable support since the party' began to collect signatures in April. The amendment under discussion would install a popularly elected president (affecting Art. 35), institute a constitutional court, extend the presidential and parliamentary terms from three to four years (Art 10), and allow deputies to be recalled (Art 14). (See EECR, Latvia Update, Vol. 4, No. 2, Spring 1995.)

Though the new electoral law disqualifies former KGB agents and collaborators from running for public office, the Saeima has not yet decided to open the archives of the for-mer Soviet secret police (KGB). Members of FU, PAE, and the Popular Concord Party (PCP) oppose unlimited public access to the archives, though they do not necessarily agree  on how to deal with former KGB agents. Proposals range from holding a “Nurnbcrg-2,” to publishing names of cur- - rent politicians who once served in the KGB, to destroying Q the whole archive, since the information contained in it would presumably be used for blackmail. MPs arc likely to stall legislation on the issue until the results of parliamentary elections are known.