Its location, along with its membership in North Atlantic Treaty Organisation and the European Union, places Latvia on the front line of increasingly tense relations between Moscow and the West.
The pro-Russia party, Harmony, on Saturday remained the biggest with 20 per cent, due to its support from Russian-speakers, but will find it hard to get in government as parties that oppose it because of its Moscow ties won enough votes.
Other parties contesting Saturday's election included the liberal For Development/For! party; the populist KPV party led by Artuss Kaimins, an actor-turned-lawmaker; and the New Conservative Party, which has a strong anti-corruption platform.
The current ruling coalition of Union of Greens and Farmers, the National Alliance and Unity together got 29.2 percent, meaning they would have to find at least one other coalition member to form a majority government.
Latvians, fed up with corruption and weak democracy in the Baltic country of 2 million, punished the ruling three-party coalition, which lost nearly half of its votes, mostly to two newcomers.
The vote was tarnished by a hacker attack on the Draugiem.lv social network, second in popularity only to Facebook in the Baltic state, which displayed a pro-Russian message.
The results indicate that there could be weeks of negotiations to form a new government in the European Union and North Atlantic Treaty Organisation member state, which after 50 years of Soviet occupation gained independence in 1991.
Latvians headed to the polls on Saturday in a parliamentary election in which the rise of a populist party could reshape the political landscape and open the door for the Baltic country's long shunned pro-Russia party.
Unity, now rebranded as New Unity, might not even meet the five-percent threshold required to make it into parliament.
"Harmony was, is and will become Latvia's most important party", the party's prime ministerial candidate, Vjaceslavs Dombrovskis said on television.
Harmony has not ruled out working with any party and has said KPVs voters will have to be respected.
In the past, parties have formed pacts to keep Harmony out of government. The main opponents of "Consent" - centrist party KPV - scored 14.1%, and their voices right NPC gave 13.6% of the electorate. The party could win at 15 seats or more. Of the exit polls should be published shortly after, while the official results will come Sunday.