Baltic States Boom, Thanks to EU

People typically think of Latvia's capital Riga as a grey, run-down place with beggars at every street corner. But, they couldn't be more wrong. Today's Riga in fact is a lively, vibrant city with exclusive shops, markets and restaurants.

It has a beautiful historic city center which many call the Art Nouveau capital of the world. Fourteen years after Latvia's independence and one year after the country joined the EU, the sad eastern European atmosphere has disappeared from the city, said former Foreign Minister Sandra Kalniete.

"Yes it's true, the grey haze has lifted," she said. "If you look at the faces of the Latvian people, they are not reserved and depressed anymore. People look at you openly and directly, they walk tall."

"The grey atmosphere in the streets and institutions has also disappeared," she added. "It feels as if something is in the air just because Latvia has finally returned to Europe. The Baltic countries have gone a long and difficult way since their independence in 1991. They had to get rid of the Soviet stamp which they had to bear for 50 years."

Not all is well in the countryside

Riga of course is not Latvia -- the beautiful appearance of the capital does not mirror the situation in the countryside.

Just like Estonia and Lithuania, Latvia is still confronted with many challenges, such as the huge gap between poor and rich, unemployment, poverty, alcohol abuse and HIV/Aids. And even though the reform process of the EU newcomers is impressive, there are structural problems which are not easy to solve, said political scientist Vyautas Radzvilas from Lithuania.

"I would go so far as to say that in Lithuania -- just like in many other eastern European reform countries -- members of the old communist elite have re-positioned themselves," he said. "You'll find shady entrepreneurs misusing tax money for their businesses. The profits are then invested to corrupt politicians and buy their protection."

Estonia the front-runner

Of the three Baltic states, Estonia has witnessed the biggest economic boom. By offering foreign investors low corporate tax rates and a well educated workforce the country now hopes for more investments and qualified production. Adapting to the new situation, however, is still difficult for the older generation: Many people above fifty don't believe in the free market -- or democracy.

On the other hand young people -- like 23-year-old student Ylie who is selling almonds at the market place in Estonia's capital Tallinn, feel at home in Europe.

"We can travel everywhere, we can study everywhere," he said. "The world stands open, it is great to be able to decide freely."