Annexation of Latvia by the USSR
On 17 June 1940 military forces of the Soviet Union entered the territory of Latvia on the basis of provisions laid down by the secret protocols to the Molotov-Ribbentrop Pact. The Soviet Union had thus infringed on the international agreements signed with Latvia, including the Latvian-Russian Peace Treaty of 1920 and the Latvian-Russian Non-Aggression Pact of 1932. Today political discussions are held between Latvia (together with the other Baltic States) and Russia on the legal interpretation of these facts.
A few days later, on 20 June, a pro-Soviet puppet government led by Professor Augusts Kirhensteins was formed according to requirements by the USSR. One of the first acts of this government was the prohibition and liquidation of any public and political organizations which had existed until then. Just a few communist organizations were left unaffected.
The election of the so-called People’s Saeima was held on 14 and 15 July according to a decision adopted in Moscow on 4 July. The Working People’s Block, set up by the authorities, was the only candidate allowed to participate in the election. The course of the election was controlled by Andrei Vyshinsky, an envoy from Moscow. Atis Kenins tried to submit an alternative list of the Democratic Block for the election of the People’s Saeima; he was arrested and tried for organising right-wing parties during the Saeima election, agitation, and collection of citizen signatures according to Section 58-14,10 of the Criminal Code of the Russian Socialist Federative Soviet Republic. On 5 August the meeting of the USSR Supreme Council in Moscow formally granted the ‘request’ by a delegation of the Latvian People’s Saeima to accept Latvia ‘in the brotherly family of nations of the USSR’.
The Soviet authorities launched an extensive campaign of terror even before Latvia was incorporated into the USSR. Many members of the elite of the Latvian society, including K. Ulmanis, were arrested, interrogated and deported to Russia.
Many former ministers of the Latvian government – Ludvigs Adamovics, Julijs Auskaps, Hugo Celmins, Vilis Gulbis, Janis Kaulins, Gotfrids Milbergs, Margers Skujenieks and others – were executed. An extensive deportation was carried out on 14 June 1941 when more than 15,000 Latvian citizens were deported from Latvia, mostly to the Eastern regions of Russia.  The national economy crisis got more intense within a few months. Rationing of goods was introduced already on 23 July, on 25 November the Soviet rouble was put into circulation instead of the Latvian lat at the rate of 1: 1, although shortly before the Soviet invasion the exchange rate was 1 lat = 10 roubles.  Industrial enterprises too were transformed according to the Soviet model: socialist emulation was replaced by competition and profit as the primary motivational tool. An agrarian reform – redistribution of land in favour of the landless and small landholders – was also introduced. The liquidation of farms and forced collectivization, i.e. the transition to a system of collective farms, started only after the war.
The Nazi Occupation
World War II in Latvia started on 22 June 1941 when the German military aviation carried out air strikes on the towns of Liepaja and Ventspils. Occupation of the entire territory of Latvia by the German army was completed on July 8. The Third Reich created a branched
governance structure for the administration of the conquered territories. At the head of the structure was the Reich Ministry for the Occupied Eastern Territories (Reichministerium für die besetzten Ostgebiete in German) lead by the Reichsleiter Alfred Rosenberg. Latvia, along with the other Baltic States, Belarus and the Eastern part of Poland, was included in one of the departments of this Ministry – the Reich Commissariat for Ostland (Reichskommissar Ostland in German), managed by the Reich Commissar Hinrich Lohse. The occupied countries were given the status of General Districts (Generalbezirk in German). Under this scheme, Latvia was now in a General District under the rule of the General Commissar Otto-Heinrich Drechsler. The Latvian General Region was divided into smaller units – the county commissariats, which were further divided into districts and parishes. The German administration and repressive authorities determined virtually all matters relevant to life in Latvia although involvement of the local population of Latvia was permitted at the lower levels of the structure of civil administration.
In early 1943, as the situation escalated on the front, a Latvian Volunteer SS Legion was formed; contrary to its name, the troops were conscripted. The mobilization was facilitated by the Soviet repressions against the population before the war. General Rudolfs Bangerskis was appointed as Inspector General of the Legion. He was not authorised to give direct orders to the legion; this was the prerogative of the German commanders.
During the German occupation, a broad repressive system was established in Latvia which was expanded from the first days of the occupation. A key role in this was played by the German Security Police and the Security Service. The creation of a system of ghettos, concentration camps and prisons was started. Latvian citizens, Jews who had lived in the country for many centuries, were exterminated almost completely. Latvian units too took part in these crimes, the largest of which was the so-called Arajs Team.
In terms of economic policy Germany was interested in exploiting the occupied lands to the maximum, particularly in respect of the countries close to the front lines, with a view to providing for the needs of the warring armies as cheaply and efficiently as possible. Latvia was exploited, too. The Germans did not therefore think about preventing the consequences of the Soviet expropriation and nationalization at the start of the occupation. On the contrary, any property seized in Latvia was regarded as the Reich’s spoils of war and was used in the interests of the Reich’s military objectives. Consequently, it is difficult to talk about the development of the Latvian economy during the German occupation. It was only later, on seeing that state property was managed inefficiently, that the Germans decided to privatise a part of small enterprises. With the Red Army approaching in 1944, the Germans took many valuable pieces of equipment out of Latvia; whatever equipment could not be taken out, was blown up.
A Memorandum of the Latvian Central Council was signed by 189 prominent citizens on 17 March 1944, asking for the restoration of the sovereignty of the Republic of Latvia.  As the events on the front started developing adversely for Germany, in order to recruit as many soldiers for the German army from the local population as possible and to raise their fighting spirit, the Reich’s leadership started promising some autonomy for Latvia after the war. The first step taken in this direction was the convention of the Latvian National Board in Potsdam on 20 February 1945 where the Latvian National Committee (LNC), headed by the Inspector General of the Legion Rudolfs Bangerskis, was elected. The practical role of the LNC was limited mainly to the provision of assistance to the refugees; the Reich’s leadership had actually never thought about restoring the Latvian independence seriously.