While Latvia is still fighting to save its economy, prevent further deterioration in living standards and ensure equitable distribution of European and International Monetary Fund loans, recent political focus has been mostly on international affairs. For the Baltic states significant issues of the past and present were closely aligned.

Considerable world attention has been paid to the 70th anniversary of the Molotov-Ribbentrop pact (Aug. 23), to the associated 70th anniversary of the beginning of World War II (Sept. 1) and, of more general concern, to an increasing closeness between Germany and Russia that brings eerie reminders of 1939.

The Molotov-Ribbentrop Pact, the vehicle by which Germany and the Soviet Union paved the way for the beginning of the Second World War, has always been an issue of the greatest importance to the Baltic states. In its secret protocol, the deal between Adolf Hitler and Joseph Stalin split up Eastern Europe into spheres of influence. It allowed Hitler to march unopposed into Poland and allowed the Soviets to do the same in the eastern part of Poland a few weeks later. Annexation of the Baltic states and Bessarabia (present-day Moldova) followed. The annexation of Finland was only prevented by the Finns’ astonishingly brave Winter War with the Soviet Union.

The pact and its consequences continue to affect Eastern Europe and beyond. The existence of the pact was strenuously denied by the Soviet Union, whose officials regarded it as Western propaganda. During the last years of the Soviet Union and its false dawn of political change, the pact in 1989 was acknowledged and condemned by the Congress of People’s Deputies. But since the coming of Vladimir Putin’s regime, there has been an astonishing rehabilitation of the pact. The pact is increasingly promoted by Russia as a wise strategic move by the Soviet Union in response to the West’s failure to contain Hitler through the appeasing Munich agreement. Moreover, the Kremlin released new archival documents purporting to show the West was hoping for a war between the Soviet Union and Germany so that the it would not have to soil its hands.

Allied to this have been repeated and continuing assertions that the Baltic states voluntarily joined the Soviet Union in 1940—and denials of occupation. Significantly, Aug. 23 was also the 20th anniversary of the Baltic Way—the world’s longest (in kilometres) political demonstration when, still under the Soviet Union in 1989, people joined hands from Vilnius to Tallinn, via Rīga, to demonstrate against the occupation.

Recent years have seen increasingly tense relations between Poland and Russia, and the commemoration of the beginning of World War II brought these issue to a head once more. An impressive ceremony in Gdansk, where World War II started in 1939, brought together many world leaders. But while Poles stressed the harm that had come to Poland and the rest of Europe through Nazi and Soviet actions, Russian responses were ominous, refusing to accept responsibility for Poland’s fate, and attacking those who would “rewrite history.” This time there was also a new slant on another Soviet atrocity: the murder of thousands of captured Polish officers after the defeat of Poland by the Soviet army at Katyn. Stretching historical credulity, Russia now claims that this incident, while regrettable, was an understandable Soviet retaliation to the way Soviet prisoners of war had been treated by Poland in its independence battles in 1918-20!

These Russian arguments have been condemned by many in Poland and the Baltic states, as well as by former Latvian journalist Frank Gordon, who has long warned of the unremitting desire of Russia to regain control over this territory. Equally critical have been a number of European writers, for example Pavel Felgenhauer of the Eurasia Daily Monitor, who argues that “in Soviet times the Kremlin adamantly denied the existence of a secret Molotov-Ribbentrop protocol. Today, the protocol is also praised, since the Kremlin clearly wishes to re-enact it.”

Re-enact the pact? While this sounds fantastic, we must pay attention to a very contemporary issue: the growing closeness between Germany and Russia, now developing into an important economic and potentially strategic partnership. The keys here are energy and the poorly performing economies of both Germany and Russia. For several years now Russia has been able to gain increasing influence in Europe through its importance in energy supply—particularly natural gas. Russia now supplies Germany with more than two-thirds of its gas needs plus oil, as Germany has reduced its own dependence on coal power. Former German Chancellor Gerhard Schröder has been prominent in advancing Russian interests both economically and politically: the Nord Stream project (chaired by Schröder) intends to build a gas pipeline under the Baltic Sea from Russia to Germany, bypassing the present supply routes through the Ukraine and Poland, both countries that have recently had tense relations with Moscow. Politically, Schröder has been a continual apologist for recent Russian actions whether in Georgia or elsewhere.

Germany’s insistence on its own energy security is now very much at odds with a European Union desire to forge a common energy policy and diversify energy supplies. Even more worrying is that Germany’s economic malaise has found some saviours in Russian oligarchs and government-backed entrepreneurs, who are taking stakes in troubled German industries, and a hope that close links with Moscow will favour Germany in selling heavy industrial and transport goods to Russia and investing in Russian infrastructure. Such moves would also give Putin and Russian President Dmitry Medvedev some sorely needed economic gains.

Historically, Germany and Russia have dominated Eastern Europe since the late 19th Century, and the present-day financial (and energy) crisis seems to have delivered an unexpected set of factors to re-establish this joint dominance.

Things to watch for

While most eyes were turned to Molotov-Ribbentrop and to Poland, some recent internal events in Latvia also claimed attention even in normally politically soporific August.

Latvia was finally able to achieve agreement with the IMF over its deficit and start receiving funds to stabilise the economy. Yet this success has not stopped leaders of coalition partner People’s Party (Tautas partija) from continually sniping at government actions—even those actions they had formally agreed to. Such actions are clearly positioning by this once dominant but now poorly rated party for the next Saeima (Parliament) elections just 13 months away, and introduce an unwelcome instability into Latvia’s government.

Meanwhile, the newly elected Rīga City Council continues to strengthen its ties with—Russia, who else?

These developments deserve close watching.