An ambush for the government over Latvian Immigration Law

On the 27th of September newspapers reported that the government of Latvia had comitted it's self to make a decision on quotas for the acquisition of residence permits by means of real estate. This discussion on a possible change to immigration law in Latvia began after the national party united with members of the Visu Latvijai! (All for Latvia) and Tēvzemei un brīvībai/LNNK (For the motherland and freedom/LLNK) political parties. These parties had voiced strong protests over the perceived situation with immigrants in Latvia. The National party chose the perfect time to raise the issue, right before the next budget approval vote so that the other parties and the people of Latvia would have to get involved with the discussion, and to ensure that a resolution to the problem could not be avoided.

No government shutdown for the Latvians

Although the government did not support what the national party wanted, their opposition had to take second place to higher priority amendments to the budget. The question of residence permits by means of investment in real estate was a trivial issue when seen in context of the government agenda, and there seemed to be no compromise to be found, however almost everyone in the government of Latvia had similar ideas regarding the possibility of introducting additional requirements for residence permits in the form of needed investment in support of Latvian families, included into immigration law.

As noted, the national party wanted to change the law to stop immigration to Latvia by individuals obtaining residence permits through real estate, before 2014, and instead focus efforts on assistance for Latvian families and care for new mothers. The leading party, Vienotība (Unity) disagreed with the national party's plan to stop the residence permit program, but instead proposed to double the amount of investment required for the real estate program, put in force a quota system, in addition to introducing a special donation fund. For completeness it is worth mentioning that Reformu Partija (Party of reforms), another party involved in the discussions, proposed stopping the real estate residence permit program altogether, but doing this over the longer term so that businesses and real estate companies can prepare for the changes and hence would not feel the hit in terms of the sudden loss of customers and investment. They proposed year was 2015, but this was flexible.

Not just about Politics

On the 30th of September, Latvian pop philosopher Māris Zanders said, Residence permits are not a problem for only the politicians. By that he meant that all these discussions were pointless, and that having such a program for real estate residency in Latvian immigration law, carried with it the real possibility to create a new housing bubble which, history in Latvia has shown to be a dangerous thing - for the country, for locals and even for the immigrants. It's hard to predict events, but even the thought of a possible bubble brings back very difficult memories to the minds of most Latvians.

Zanders continued by stating that during the period of world economic crisis after 2008, far more people left Latvia than came - which removes any concern about overpopulation or crowding. Additionally most of these immigrants actually create employment - they are not taking jobs away from Latvians and instead adding to the local economy. A More serious question is whether Latvia is will, on the global scale, be a producer and export nation, or merely a consumer.

Migration in Latvia

The following table shows That immigration quotas could be a lot higher than a thousand, and even, closer to 12 thousand.

YearImmigrationEmmigrationNet migration
20077 51715 463-7 946
20084 67827 045-22 367
20093 73138 208-34 477
20104 01139 651-35 640
201110 23430 311-20 077
201213 30325 163-11 860

Searching for the best solution

On the 4th of October, Ilmārs Latkovskis, a deputy in the Latvian parliment and member of the newly united Visu Latvijai! (All for Latvia) - Tēvzemei un brīvībai/LNNK (For the motherland and freedom/LLNK) political party, was quoted in the news as saying that the best solution for the future was to instantly end the residence permit program completely. And then only re-introduce it once all the problems and disagreements had been resolved. He also noted that pre-budget talks were the perfect time for the national party to bring up the issue. His thoughts were that a temporary freeze on the real estate residency program, until suitable amendments could be made to the immigration laws of Latvia at the begining of 2014, would not cause any harm, because residence permit related real estate sales had already surpassed all hopes for 2013. A press release from the Office of Citizenship and Migration Affairs, which was widely reported on the 7th of October, Stated that if there had been a quota of 1000 residence permits per year available for the purchase of real estate, this quota would already have been full in 2013 as early as August. The same press release also introduced a new idea - the possibility to create a 25 000 Euro per-investor investment fund which could be set up to benefit local Latvian families.

Immigration Law and the Budget - The discussion widens

On the 9th of October discussions in the press heated up, to the point that even the Latvian Security Police commented on the issue. They stated that the Security Police of Latvia closely monitors the issuance of residence permits and sees a future threat for the Latvian economy if residence permits continue in the current manner, because the increase in foreign capital could make several directly-involved industries (such as real estate) in Latvia unstable, in addition to the dangers associated with that fact that the money being invested in Latvia could be from an unknown origin.

The Latvian Security Police also stated that, while right now they have needed equipment and resources to do the needed background checks on immigrants and to verify the legitimacy of their residence permits, if immigration continues to increase at the current rate, they could begin to see a need for an increased budget. While the Security Police were worrying about security, the Ministry of Economics proposed the introduction of a quota of 1000 residence permits. On that very same day, the government made plans to hold an emergency meeting on the 10th of October to propose a quota of 800 for 2014 and the national party seemed inclined to agree with this proposal, even though they themselves had favoured banning the residence permit based on investment in Latvia altogether. They are perhaps pacified by the fact that a proposal to further reduce the quota by 150 or 175 per year is still on the table.

Despite the proposal from the Ministry of Economics that quotas be set at 1000, the national party argued that the quota on residence permits could not be more than 750. Rumours seemed to indicate that the amendments to the immigraion law in Latvia could include a quota of 700 investments in real estate of at least 250 000 Euros and a further 100 permits for investments in real estate of at least 500 000 Euros, and that these quotas combined would be reduced by 175 each year up until 2016 when it would be reviewed again - or another alternative that the quotas would be reduced by 175 in 2015 and 2016 leaving them intact for 2014.

The final result

On the 10th of October 2013 a decision was made that was close to the national party's wishes, although no one is happy with the result. Prime minister Valdis Dombrovskis stated that it is pity that his colleagues had not listened to the wishes of business owners, who want to maintain the economic stimulus brought by this program, but he added that the budget decision was far more important and that is the reason he agreed to a compromise with the national party.

The Compromise means that the new Latvian immigration law sets a quota of 700 residence permits in Latvia based on the purchase of real estate over 150 000 Euros and an additional quota of 100 permits for purchases over half a million Euros. In the next two years it is thought that the quotas are to be decreased by 175 and afterward to conduct a fully review of the program. Additionally every individual receiving a residence permit based on real estate will have to donate 25 000 Euros toward an Economic Development Fund which will mainly support small and medium sized businesses, as well assisting young families to buy a home. While nobody is happy with the result, the compromise has been accepted by all the parties involved.