The global financial crisis claimed its first EU victim as Latvia’s government resigned last Friday. Prime Minister Ivars Godmanis submitted his resignation to the president after the two largest parties in the ruling four-party coalition demanded that he go. President Valdis Zatlers said his country may even need snap elections to restore political order.

Latvia has been hit hard by the financial crisis. On January 13 it experienced its worst protest since the fall of the ussr. What began as a peaceful protest of around 10,000 disgruntled citizens turned violent as the main demonstration drew to a close. Hundreds of rioters marched on the parliament building. Some even tried to storm it before being repelled by riot-control police.

Once the police gained control of the parliament area, the rioters rampaged through the streets, digging up cobble stones from the streets and using them to smash shop and office windows. They broke the windows of the Finance Ministry, overturned a police van, looted stores and attacked the police with Molotov cocktails.

Many Latvians are worried about their future. Their economy shrank by 10.5 percent in 2008, and it is expected to shrink by another 12 percent this year.

Social unrest caused by the credit crisis is certainly a trend to watch. A whole swath of right-wing parties took power in the wake of economic collapse and unrest in the 1929 Depression.

Eastern Europe is especially vulnerable. Other countries are in a similar state to Latvia. As their economies fall, their governments may be forced to look to the European Union, and especially Germany, for help.

For more information, see our article “Did the Holy Roman Empire Plan the Greek Crisis?”