Latvian govt talks start after Russian party wins vote
* Parties to start coalition talks
* Ex-president and current PM aim to form core of new govt
* Russian minority hopes for say in administration
By Nerijus Adomaitis and Patrick Lannin
RIGA, Sept 18 (Reuters) - Latvian politicians begin talks on forming a new government on Sunday, after a party backed by the large Russian minority won most votes in a snap election that broke the power of business "oligarchs".
In second place was a new party formed by the ex-president, who forced the vote in a corruption row less than a year after the last election. Along with the third-placed party of current Prime Minister Valdis Dombrovskis, it aims to form the core of a new coalition.
Russian minority party Harmony Centre, winning an election for the first time in the ethnically-split Baltic nation, said it should not be left out of the new administration.
"I am convinced that Latvian politicians ... will be able to form a coalition where the interests of all voters are represented," Harmony Centre leader Nils Usakov, 35, said on LNT commercial television.
The president is responsible for nominating the prime minister. He has said he will only do that after Sept. 28, when he returns from a trip to the United States, giving the parties time to come to an agreement on a coalition.
Results from 909 of 1,027 polling districts showed Harmony Centre, which has portrayed itself as the sole centre-left option, on 29.5 percent of the vote.
About a third of the 2.2 million population are Russian speakers and just over half of them have the right to vote.
The party of former president Valdis Zatlers, whose decision to dissolve parliament forced the election, was on 20.4 percent and Dombrovskis's Unity had 18 percent.
LNT television said Harmony was set to win 32 seats, up from 29 in the October 2010 election, Zatlers's party 22 seats and Unity 19. That would give the likely Zatlers and Dombrovskis alliance 41 seats in the 100-seat parliament.
Analysts have said Dombrovskis and Zatlers could turn to a nationalist party to form a majority. The initial results showed the nationalist party would almost double its vote to about 13 percent.
The country has been split roughly along ethnic lines since the fall of the Soviet Union, but Harmony aimed to attract ethnic Latvian voters in the aftermath of a deep economic crisis.
Dombrovskis, who backs further fiscal austerity and wants to take Latvia into the euro zone in 2014, said on LNT that he would start a first round of talks with the Zatlers party on Sunday as his first preference.
Harmony and other Latvian parties differ over historical questions such as whether the country's 50 years under Soviet rule was an "occupation".
Usakov was quoted by Latvian media as saying at a conference on Friday that Latvia had been occupied.
On LNT, he said he was not "allergic" to the word occupation, but did not want people to be labelled as "occupiers", a word some ethnic Latvians use for Russian-speakers who arrived in their country during Soviet rule.
Harmony has been dogged by suspicions of Russian influence due to its ties with the United Russia Party of Prime Minister Vladimir Putin. Its economic policy of more social spending and delaying euro adoption is also at odds with those of the main parties.
Zatlers triggered the election by ordering the dissolution of parliament after lawmakers refused to give permission for prosecutors to search a flat owned by a businessman who is a member of parliament and widely labelled an "oligarch".
Opponents say the MP and two others have used their wealth to influence politics and favour their business interests. The men have denied any wrongdoing.
Latvians overwhelmingly backed Zatlers' decision in a July referendum. By then Zatlers had failed to be re-elected as president by parliament, and he formed his own party.
Two of the three "oligarchs" are set to lose their places in parliament, the vote showed, while a farmers' party spearheaded by the third would have its representation cut to about 13 seats from 22, according to the LNT estimate.
Dombrovskis, 40, led Latvia through a package of public sector pay cuts, which saw some salaries reduced by 50 percent, and higher taxes after a 2008 crisis forced the country to take a 7.5 billion-euro international bailout. His Unity party won the last election in October 2010 with 33 seats.
Dombrovskis says his policies have restored international confidence in Latvia and brought about a recovery from an 18 percent drop in economic output in 2009. (Editing by Andrew Roche)
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