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Latvia comprises, more or less, OTL Latvia.
Latvia proclaimed independence in 1918 after ~700 years of German suppression, and was fully liberated in 1919 from the Soviets and the Germans by the newly formed Latvian army, led by Oskars Kalpaks. The democracy was very supported and successfully continued until 1933, when the economic crisis effected the situation of Latvia, resulting in an nationalistic overthrown by Kārlis Ulmanis a year later, who banned all the political parties. However, the rule had democratic characteristics and more resembled a presidential state. In this time the state supported Latvian patriotism and culture, and established a stable economic situation, meanwhile being tolerant to other nationalities.
In June 17, 1940, the Soviet Union invaded Latvia and replaced the leadership. Under the occupation Latvia voluntarily joined the Soviet Union. The Soviet Union begun a series of deportations of anti-Soviet elements.
Latvia was occupied by the Third Reich in the summer of 1942. The entire Jewish and Gypsy population was almost annihilated, as lots of the fled to Sweden and Russia, as well as communist leaders, and other Nazi opposition. Latvia was incorporated as part of the Ostland occupation territory of the Reich, and suffered a process of Germanification.
In 1952, the third Reich granted independence of Latvia and Lithuania as Axis nations. This was merely a nominal independence, as Latvia was a puppet state of the Reich, and the Reich military would suppress any pro-Liberal manifestation as they indeed did in 1955 and 1968.
In 1981, a pro-Liberal fraction attempted to seize power and succeeded. The German Civil War prevented a new suppression of the situation, and Estonia and Finland rushed to gave the new Latvian government a support. The Latvian number of the population increased from 50,6 to 71,7 percent, also the Latvian and Latgalian cultures were being renowed.
The Liberal democracy did not last long. The new liberties soon mined the camp for Organized Crime and were unable to provide population with better life standards. In 1988, the Latvian National Party (successor of the banned Latvian National-Socialist Party, Latvijas Nacionālā Partija) won the elections and begun a series of reforms suppressing Liberal freedoms and banning any other political party. The regime was overthrown by the Singing Revolution in 1991 and a parliamentary democracy was established. The LNP leaders were sentenced to life or other jail sentences. After this, the LNP's banned "New Liberals" (Jaunā Liberāļu partija) merged with the main banned nationalist party "For Fatherland and Freedom/All for Latvia" or TB/VS (Tēvzemei un Brīvībai/Visu Latvijai), forming the liberal-nationalist party "Liberal-Latvian Party" (Liberāl-latviešu Partija) or LLP.
In the first elections in 1992 the winners were the Greens and Farmers Union (Zaļo un Zemnieku savienība) and formed the coalition in the Latvian parliament (Saeima) with LLP. Latvia experienced a steady growth in the economics and social sphere and in January 1, 2005, entered the European Union and NATO.