Following the Germany capitulation, and the capitulation of the German Army Group Courland on 9 May 1945, the entire territory of Latvia came under the control of the Soviet Union which lasted until the restoration of independence on 4 May 1990. In modern Latvian historiography this period is referred to as the repeat Soviet occupation. It is also recognized as such in the USA and Western Europe, although Russia opposes this treatment. After the repeat invasion of the Soviet Army, several thousand Latvians started an armed resistance against the occupation power. National partisan fights lasted until 1956.
The administrative and territorial transformation of Latvia started immediately after the end of the war; in its course it was adapted to the system existing in the USSR, and village councils were formed instead of parishes and districts instead of counties. Peasants were forced to join collective farms. The Latvian Communist Party played a major role in all spheres, and power in it was concentrated, according to the principle of democratic centralism, in the higher authority: the Central Committee (LCP CC). Its independence was limited too, however; the most important decisions were adopted by functionaries of the Central Committee of the Soviet Union Communist Party in Moscow, in fact by the Politburo of the Communist Party of the Soviet Union.
The Soviet regime started massive repressions immediately after the war, which continued in later years as well. 42,133 people were deported from Latvia to Siberia in the March 1949 deportations. According to estimates by various experts, the total number of the Latvian population repressed politically by the Soviet regime from 1940 till 1953 is estimated to be in the range of 140,000 to 190,000 people, or even more, up to 240 000.
A centralised planning system, based on centralised five-year plans broken down into annual plans, the performance of which was mandatory, was introduced in the field of economy.
These plans made use of many of the advantages offered by Latvia: presence of a developed infrastructure, a broad industrial base existing since the 19th century, conveniently located ports, availability of skilled workforce. Therefore the Soviet plans for Latvia provided for an accelerated industrial development. A large part of specialists and experts in various fields was, however, lost in political repression during the first year of Soviet occupation, during the years of the war, and in the continued repression after the war. In order to avoid repression, some of them went in exile to the Western countries. For this reason and also due to the small natural population growth in Latvia, the local labour force and specialists were inadequate in their numbers for the ambitious industrial development plans. In order to replace them and to further develop the economy, the leadership of the USSR and the local leadership too contributed to a massive influx of labour force from other Soviet republics, especially from Russia and Belorussia. Obedient to Moscow, Government of the Latvian Socialist Republic invited and even recruited labour force purposefully, especially after subduing counteraction from national communists (Edvards Berklavs, Pauls Dzerve, Voldemars Kalpins, Indrikis Pinksis, Vilis Krumins etc.) in the late fifties.
Moscow functionaries did not trust the locals and strictly controlled and limited their opportunities of promotion to higher positions in the state administration or economy. Russians or Latvians from Russian who had become partly Russified were appointed to the leading positions. Even Janis Kalnberzins, First Secretary of the LCP CC of the Latvian Soviet Socialist Republic (LSSR), who was faithful to Moscow, admitted in 1953 that most people in the leading positions in the LSSR spoke no Latvian and were poorly familiar with the local conditions.
Explicit interethnic tensions or conflicts throughout the entire period of the USSR were relatively rare but only because they were tempered down by the repressive system.
In implementing the policy of industrialization and agricultural collectivization adopted by the USSR, the national economy of Latvia developed rather successfully, although controversially in comparison to other Soviet republics, till the end of the 1960s; however, the gap between Latvia and the West remained, especially in terms of the quality of development of Latvia (environmental protection, quality of life, etc.).
In the 1970s and particularly in the 1980s the signs of economic stagnation began to manifest themselves more and more clearly, however; the shortage of raw materials, interdisciplinary production, and finished products, including consumer goods, in economic circulation increased, the living standards of the population decreased. Despite the economic and social problems, and the growing discontent of the population, the leadership of the Soviet Union and thus also the leadership of the Latvian SSR and other Soviet republics hesitated to embark on reform.
Partial reforms were launched, however, when a new generation of Soviet ideologists and politicians, headed by Mikhail Gorbachev, came to power. The nature of these reforms was reflected by concepts such as Glasnost (Openness in Russian) and Perestroika (Rebuilding in Russia). Different views exist on the economic nature of these reforms: that these reforms were not aimed at the principal replacement of the socialist system of a state-planned economy; that they were the seeds of capitalism in the Soviet economy, in particular by increasing the autonomy of companies and permitting the emergence of private business companies (‘cooperatives’).