Latvia

Latvia's Prime Minister Valdis Dombrovskis has said that the government must make some critical decisions in the coming months which we believe could increase tensions with neighbouring Baltic countries. A key issue regards proposals for the location of a liquefied natural gas terminal in the region, which has been handed over to the EU for a decision after the three Baltic countries could not come to an agreement. However, Domborvskis's statement that Latvia may pursue smaller LNG terminals if Latvia is not chosen by the EU could provoke neighbouring Lithuania or Estonia. We reiterate our view that 2012 looks set to be an interesting year in the Baltic region politically and do not rule out the potential for tensions to rise within and between the Baltics and Russia.

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