The last few weeks have seen an intensification of political activity in Latvia after President Valdis Zatlers proposed dismissing the Saeima, leading to the July 23 referendum on this question.

Since that time we have seen:

• Zatlers not being appointed to a second term as president. In his stead the parliament voted in Andris Bērziņš.
• Zatlers deciding he will form his own political party, Zatlers’ Reform Party (Zatlera reformu partija).
• One of the older parties in the Saeima, the People’s Party (Tautas partija) voting to disband.
• Intense jockeying in the governing centre party Unity (Vienotība) to regain popularity after Zatlers declined an invitation to join it.

Zatlers’ term in office concluded July 7, with increasingly political tones in his last pronouncements and activities. He repeatedly declared that politics in Latvia should not be run in the interests of the few, but should be based on transparency and honesty. Confronting the oligarchs will be a major theme of his campaign. With universal agreement that the referendum will approve the dismissal of the Saeima, the campaigning has already begun for the next election likely in September.

There had been much speculation over whether Zatlers would form his own party or take up the invitation to join Unity. It seems there were two factors that convinced him to go with his own party. First, his decision to begin the process of dismissing the Saeima has been hugely popular in Latvia, and he needed to ride this wave of popularity and support. Secondly, however, is the perception of Unity that it precisely lacks unity, that it has had to make too many compromised decisions as the leading party of the government coalition, and that for Zatlers to hitch his fortunes to that party may be to limit his influence rather than to maximise it.

It should be said that in political terms Zatlers’ move is a considerable gamble. One outcome of the election could well be that the Moscow-oriented Harmony Centre (Saskaņas centrs) could emerge as the largest party (it is the second-largest in the present Saeima after Unity). If it is able to build a coalition with the Union of Greens and Farmers (Zaļo un Zemnieku savienība), an opportunistic party that is at the centre of all coalition deals, we could have a Harmony Centre-Green and Farmers majority, and an prime minister from Harmony Centre. This would be enormously satisfying to Moscow but a danger to Latvia.

However, one other outcome, likely more desired by Zatlers, may be that his Reform Party, together with Unity and the National Alliance/All for Latvia! (Nacionālā apvienība/Visu Latvijai!) could gain the 50-plus mandates in the 100-member Saeima.

In his program, Zatlers has not ruled out an alliance even with the Harmony Centre, but he sets a precondition: Harmony Centre must recognise that Latvia was occupied by the Soviet Union, a point of seeming obsucre historical semantics, but a vital core value for all Latvian parties, and one that Harmony Centre has continually evaded.

Meanwhile, Unity has suffered from its own lack of unity, as well as from a continual attack on its policies of austerity and the shenannegins of its coaltion partner, the Union of Greens and Farmers. First, Unity has always been a coalition itself of three groupings that has struggled to give an impression of unity on major issues, with two factions in particular intense disagreement over policy directions and the question of whether an alliance with Harmony Centre should be ever thought of. Second, the austerity measures of cutting budgets, lowering wages and raising taxes—to satisfy the demands of the International Monetary Fund and other lenders—has caused widespread disillusionment. This comes ironically at the very point where the economy seems finally to be turning around, and where even more bizarrely Latvia and the other Baltic states are being used as examples of how countries can get out of the global financial crisis, while seemingly richer countries such as Greece cannot.

Also wounding for Unity has been the constantly undermining by its coalition partner. The most galling example of this was the election to president of Andris Bērziņš, who is a Union of Greens and Farmers member, a banker and one of the fat cats of the Latvian establishment. In interviews Bērziņš cannot even admit there is any oligarch influence in Latvian politics, yet he is a close friend of them all.

Nevertheless, the reality of a looming election has made politicians behave in public. All parties agreed to dismiss the head of the Corruption Prevention and Combating Bureau (Korupcijas novēršanas un apkarošanas birojs) Normunds Vilnītis, a man clearly out of his depth in the position. The Saeima also agreed to stronger measures to ensure competence in the Latvian language in professional occupations, a clear sign of Harmony Centre (which usually supports a stronger role for Russian in public affairs) not wanting to rock the boat and scaring off Latvian voters who may vote for it. Such stances will likely not survive the election.

One party that may not survive the election is For a Good Latvia! (Par labu Latviju!, or PLL). Part of PLL, the long-standing People’s Party, has just decided to disband, perhaps encouraged by a looming conclusion to a long legal process to bring it to account for overspending at past Saeima elections. The People’s Party was the leading party of the previous Saeima when it was seen as largely responsible for Latvia’s troubles in the global financial crisis. For the first time, there is a feeling that the oligarchs’ ability to manipulate public opinion is being challenged, and a returned Saeima with the PLL removed would be a significant step forward in the slow crawl to democracy.

Much remains unknown as the various factions and parties position themselves for the post-referendum scramble to the elections. Zatlers’ initiative in dismissing the Saeima has been seen as a splendid move. It remains to be seen if Zatlers’ involvement in the messier side of politics away from the presidential chair will be just as productive.