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Meet the Fighter for the Little Guy


2010
07.28

Posted in Politics | 1 Comment »

RIGA – The Harmony Centre, a collective of political parties, continues to be the most popular political bloc in the Latvia. According to the most recent polls, almost 20 percent of Latvia’s citizens support the Harmony Center (SC). The crew includes the former communist leader – who sought to overthrow the new-born independent Latvian government 20 years ago (now a member of the European Parliament) – people (the very last paragraph of the link) who call the 1940 Stalin’s electoral farce “free and fair” elections, which then led to the surrender of Latvia’s independence to Moscow. This crew naturally enjoys support among mostly Russian-speaking population. And it is within reach of power come the october contest.

It just needs a gentle push to reach into the despair of ethnic Latvians, who naturally are more on the left side of the political spectrum (after all, the Social Democrats were the dominant party of the interwar democratic republic – up until the 1934 coup).

Maybe gambling on that, the SC had declared itself the New Left. It has dubbed itself a political movement that stands on the economic platform, pushing Latvia towards an egalitarian society, a society where the wealth is more or less equally spread among different layers of society. It aims to be the party of the little guy. A Little. Latvian. Guy.

Funded by the SC is a think-tank group called Reform Task Force Latvia. It hired Western economists, like Michael Hudson, to speak about the evils of the international lenders – who currently pay for Latvia’s budget deficit – and the philosophy of “neoliberalism” that has been poisoning this country for the last 20 years. “Economic policy deployed since independence has failed to implement policies guided by the classical economic tradition that created prosperity in the Transatlantic region and East Asia,” its Web site hails. “Instead, Latvia’s independence coincided with the ascendency of the now proven failure of neoliberal economic policy that accelerated its underdevelopment.”

What looks great on paper doesn’t transform well into reality. The SC supported amendments to the banking regulations, which would have slowed down the splitting up of the Parex bank, a requirement from the European Commission. According to the CEO of Parex, Nils Melngailis, it would have left the taxpayers, including the little guys, on the hook. They would have to pay the Parex owners an interest, which amounts to as much as 4.6 million lats ($9 million) a year.

The bill died. The SC turned to the Constitutional Court yesterday to see if the financial regulation is constitutional, in an attempt to fight for the guys who pay their bills.

Fighter for the little guy, they’re not.

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2010
06.02

Posted in Economy, Politics, The Dombrovskis government | 5 Comments »

RIGA –  Every once in a while, it’s good to return from hiatus to point out the stupidities of the pre-election life in Latvia. Things in Latvia are so bad that even a fake letter from the head of the IMF Dominique Strauss-Kahn appears as a result of the work of some amateur and incompetent goon, who perhaps serves the people interested in instability head of the elections.  It was reported that the head of the IMF allegedly urged Latvian authorities to move towards “the mini-devaluation” in the letter that appears to be an answer to someone in “the Republic of Latvia.” The letter, which you can see here, had no proper letterhead and subtle grammatical errors.

“We are confident,” the letter said, “that in the long run a[sic] timely decision on this matter will certainly be satisfying to all sides. I would appreciate an [sic] immediate information about progress in your discussions about the widening of the fluctuation band of the Latvian currency against EUR. It will improve the basis for our following in-depth negotiations.”

The letter’s concluding paragraph says, “I am certain that only working in the spirit of mutual understanding and cooperation we can fasten[sic] the overcoming of the crisis in your country.”

Articles, such as a and the, have never been popular among non-native speakers from Latvia. Just read this blog.

Coincidentally, the People’s Party re-discovered the former guarantor of stability and former prime minister Aigars Kalvītis, who was probably stuck in the closet somewhere until the better times would come. He admitted some of mistakes while he was in the office. Kalvītis said the government should have devalued the currency, widened the  corridor to plus/minus 15 percent to help the country get out of the crisis. I can’t say whether it was right or wrong to keep the currency peg, but it appears to be rather interesting that he came out with it at the same time as the letter began circulating suggesting the very same thing.

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0+0=?


2010
04.23

Posted in Parliament, Politics | Comments Off

RIGA – Fearing their impotence after the October elections, two political heavyweights have announced this week they were consolidating forces. The former Prime Minsiter, Andris Šķēle and the Prime Minister Wanna-Be Ainārs Šlesers are going to be on a single ticket. The new bloc, temporary nicknamed (A+Š)2 will counterweight the Dombrovskis’ Unity movement.

To me, it is clearly a marriage of convenience. Šlesers needs a rural vote to gain seats in the 100-member unicameral parliament. He did fairly well in Rīga last year in the municipal elections, but his party – which attracts both Latvian and Russian votes – has no network outside large cities. Šķēle needs to keep his political project, known as the People’s Party, afloat in spite of the abysmal ratings.

I couldn’t help but compare this duo to the Putin-Medvedev tandem. The two leaders could hand-pick one to be the prime minister after the election, and next year – when President Zatlers comes up for a vote in parliament – vote into the Rīga Castle another leader. Their supporters often say publicly that Latvia is in need of a strong leader; it is in need of a Great Leader. Latvia needs its own Putin, they say.

“Latvia’s most significant problem until now was a lack of personalities,” Ēriks Stendenieks was quoted by Diena. “Andris Šķēle and Ainārs Šlesers – however controversial they would not be – in synergy can give more than lukewarm people. Those who can predict the future events further than two weeks ahead are either fools or charlatans.

Speaking to journalists in the parliament, Šlesers was as verbose as usual, chiding journalists for asking difficult questions. Often seemingly contradicting himself.

“You don’t have to talk about the past,” he said. “You have to talk about the future.” At the same time, he pointed to experience of his party members, like Andris Bērziņš, who had served as the prime minister in the 2000s.

Surely, Šlesers wouldn’t want to talk about the past. The man penned the now infamous editorial in Diena back in 2004, urging to push the pedal to the metal. The pro-Šlesers movement with the cynical name “For a Better Latvia” recently pledged to raise an average salary in the country to € 3,000, which some economists called it practically impossible (the text is behind registration). It would lead the country to the worse overheating as the so-called “fat years” of boom. It would mean that “the economy should grow equally fast and the annual growth rate of GDP would thus have to be 16.3%”

“As I understand the organization would like to see Latvia develop into the best small economy in Europe. It is a laudable goal but rings very hollow with these ‘pie in the sky’ “projections”. Getting the numbers right would be a good start. “

As the fruits of their past labor have now become a reality, the newly formed union faces a tough sell to the undecided voters. So, instead, they’re offering pie in the sky, feeding the electorate with empty promises.

The election season is upon us.

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Anniversary Crashed Down


2010
04.21

Posted in History, The Dombrovskis government | 1 Comment »

RIGA – Most things in Latvia seem to occur randomly and often unexpectedly. Take, for example, last week’s failed re-election of the prosecutor general Jānis Maizītis, whose term in office expires on May 11. The political establishment had said they pulled their support behind the only candidate for the prosecutor general. On TV hours before the vote, political leaders one by one said they would vote to re-elect Maizītis, who has been serving his two five-year terms as the prosecutor general since 2000.

Instead, they pulled “Et, tu, Brute?”

It came as a surprise to Maizītis himself, who, following the vote, issued a thinly-veiled threat to make reveal dirt on a few members of parliament. It could serve as a ticking time bomb ahead of the October election.

So, in Latvia, one can never be sure of a political game’s outcome. Words often don’t mean anything. In spite of the progress made so far, risks to the IMF-led three-year loan program remain very much real. Even though one opposition party offered its support to the government, the risks to the stability of the minority government of Valdis Dombrovskis remain high.

It would take a fortune-teller to predict how it will ends. But in case of Latvia, even if you thought one can make a reasonable expectation that a certain event may occur, it still comes as a surprise, forcing Latvia to perpetually react to events rather than prepare for them.

For example, in 13 days, Latvia will be celebrating the 20th anniversary of the restoration of its independence from the Soviet Union. The government plans a series of events celebrating the event as the democracy in today’s Latvia has surpassed our first democratic experiment before the Second World War.

The anniversary of the restoration of independence came as surprise to two young Latvian girls on the street. Seeing streets adorned with national colors, the girls became confused.

“What’s the date today?”

“April 21″

“What are we celebrating?”

I helped them out.

“Ah, sorry. We live in ignorance,” they said.

Apparently, so did the government. The anniversary came as a surprise to the cash-strapped Latvia plans to spend (the link is in Latvian) almost 240,000 lats (US$480,000) on the festivities from the fund for “the unforeseen events” in the state budget. Or a rainy day fund. Any one with a calendar could point to May 4 and tell you that it is the anniversary of the restoration of Latvia’s independence (This video of the Singing Revolution is here). But apparently, the public officials couldn’t account for it in within their existing budgets.

Better yet, the fund has become the cash cow for ministries. Last year, the government even paid out salaries from the fund. Out of original 16.4 million lats earmarked for the fund this year, the government has already spent 9.95 million lats. And it’s only April.

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Another challenge for Dombrovskis


2010
03.22

Posted in The Dombrovskis government | 7 Comments »

Prime Minister Valdis Dombrovskis speaks the media. Photo courtesy of Valsts Kanceleja.

RIGA – Speaking recently at a press conference on the eve of the first anniversary in office, Prime Minister Valdis Dombrovskis said the power “fell at his feet” after the political parties in the previous coalition avoided taking leadership of this country in the middle of the worst economic disaster of the last 20 years. He picked up the baton, doing what needed to be done – however unpopular it was – explaining to the public why his government has had to make tough choices that don’t win elections.

If one is to believe the polls, his tenure as the prime minister so far has been a successful one – people generally have the impression that Dombrovskis, 38, is trying to do the right thing for his country. According to a poll by GFK, 41 percent of the public support Dombrovskis, a high degree of popularity for the prime minister amidst lack of credibility to the government and the most severe economic crisis since Latvia broke free from the Soviet Union in 1991.

Today as four ministers from the leading and bleeding People’s Party submitted their letters of resignation, it created another golden opportunity for Dombrovskis to show his skills for compromise and creativity in search of a political consensus, ahead of the October election. A crisis fosters creativity. For the first time in Latvia’s modern history, political creativity and the government’s ability to negotiate with opposition and seek consensus will be important in the coming six months.

And it began at the end of last week, when Dombrovskis met with the motley crew, known as the Harmony Centre. The Dombrovskis’ coalition is planning a meet with Šleserites from Latvia’s First/Latvia’s Way this week. He’s also meeting with the pro-Russian PCTVL, trying to round up support for the government’s initiatives that would not jeopardize the 7.5 billion euro program. In one sense, the future of this country depends on him.

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VAT through flowers


2010
03.09

Posted in Parliament, Politics, The Dombrovskis government | 15 Comments »

RIGA – A proposal to cut the value-added tax for the tourism industry has been wobbling through the parliament. In spite of the objections by the party of Prime Minister Valdis Dombrovskis and contrary to the recommendations of the International Monetary Fund, the proposal was sent to the parliament for a vote. The opposition party, Latvia’s Way/Latvia’s First (LPP/LC) and the government heavyweight – though largely impotent – People’s Party (TP) laid their hands to move the proposal out of the committee, implying a closer cooperation between the two parties, representing the views of their respective founders.

Speaking to the press after the Monday coalition meeting, a high-ranking TP member Armands Vents Krauklis said that the lenders were not speaking in “a form of an ultimatum,” but that “through flowers” said that lowering VAT “would not be the best solution.” As conspiracy theories suggest, some Latvian officials expect an ultimatum from the international lenders because it is the only way to move forward.

The vote also raises questions about the stability of the government and the coalition’s commitment to the painful IMF-EU funded program, which foresees a combination of budget cuts and tax hikes in the amount of up 900 million lats. While it is a wide known fact that this current government is largely a marriage of convenience, it appears the People’s Party is playing for both teams. On one hand, it is one of the five parties in the coalition. On the other hand, it voted down against the prime minister in a crucial vote for the IMF-EU program to continue. It is no wonder that the Union of Farmers and Greens, aka the Green Peasants, had asked to meet Dombrovskis this afternoon to discuss the issue.

The supporters say that the move to cut the VAT from the current 21 percent to 10 percent for the tourism industry would stimulate the economy which is in the deepest recession since Latvia broke free from the Soviet Union almost 20 years ago. The estimates by the ministry of the economy show that cutting VAT would create 2,000 new work places, a drop in the bucket in the country where every fifth Latvian is officially unemployed. And it remains to be seen if the VAT cut would not affect the budget deficit.

It also raises questions: why tourism? What would prevent other industries, such as farming, dairy, food industries, to line up outside the parliament, demanding that the VAT be lowered for them also? Why not lower VAT for medicine? Education? Freelance journalists? Or why not lower the VAT across the board, assuming the government can raise revenue by taxing luxuries to bridge the yawning budget deficit down to 6 percent in 2011?

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Slesers Jab


2010
02.18

Posted in Economy, Parliament | Comments Off

RIGA – As far as local politics is concerned, the most interesting bit from the IMF announcement on disbursement of more than €200 million to the cash-strapped Latvia was this (emphasis mine):

Rigorous execution of the 2010 budget is the first step, and this entails refraining from tax cuts or spending increases, saving any windfall revenues, and using the spending flexibility allowed under the program to ensure a robust safety net for the most vulnerable.

I wonder if Mr. Budget-Deficit-Does-Not-Matter heard that.

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Divided We Fall


2009
08.25

Posted in Economy, The Dombrovskis government, The Godmanis government | 1 Comment »

Historic photograph of the Baltic way taken near the border between Latvia and Lithuania

Historic photograph of the Baltic way taken near the border between Latvia and Lithuania

RIGA – When Estonia, Latvia, and Lithuania celebrated the 20th anniversary of the Baltic Way, I couldn’t help but think about the puzzle that is the Baltic mentality.

Looking at sheer numbers, Latvia should have had a revolution a long time ago. The economy is expected to contract by the record-breaking 18 percent this year. The unemployment has reached 17 percent in the second three-month period. The only positive factor – the inflation – dropped to 2.5 percent last month from 17 percent last May. In hopes of getting a lifesaving loan from the international lenders, the government was forced to slash spending, lay off workers, close hospitals, schools, cut the police. It is performing the kind of tasks that does not make one Mr. Popular or get you re-elected. If this were France or Greece, thousands of angry people would have stormed palaces, rolled over vehicles, set anyone working for the government aflame.

Yet, it’s all quiet on the Baltic front. People go to their summer houses, eat barbecues, farm their their kitchen gardens, go fishing, go about their business. They appear to be disconnected from the slasher-government and apathetic. Of course, there was the January riot when several hundred people, angry at the government, hurled rocks and turned over police cars in the protest. Yet, that was under the previous government whose anthem of ineptitude and incompetence can be summed up in the phrase “Nasing Spešal“.

Whether the unemployed and bitter Latvians are capable to huddle together and withstand the cold and – very likely – expensive winter remains to be seen. However, judging by the few summer protests – against the closure of the Riga First Hospital, for example – it seems people in general feel distant from the government and apathetic about their future. Everyone cares about his or her own little corner of the universe, his own little fiefdom – nevermind the whole country.

The First City Hospital employees protested the closure of their hospital, fearing they would lose their jobs. Yet, no one protested against low quality and considerably high cost of health care in this country. We protest against closure of our schools, but we don’t demand schools produce smart, capable young people that are able to move this country forward.

We’re capable to be united against a foreign enemy, but we’re incapable of uniting for the sake of our country. The unity that fostered the Baltic independence 20 years ago has dissipated – not only among Estonia, Latvia, and Lithuania, but also among Latvians themselves. We lack vision and unity where we should take our country into the future, even though the current crisis provides many opportunities for sweeping and necessary reforms. Divided among ourselves, we’re bound to fall and be left behind as the backwater of the European Union.

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It’s personality, stupid


2009
05.08

Posted in Elections 2009, Politics | 1 Comment »

Dear Leader

The rocket. The young friendly Russian who speaks fluent Latvian. The Soviet-educated former corruption fighter.

These people are on the menu for the local elections less than a month away. The June 6 contest is about personalities more than about party platforms or programs. A giant Ainars Šlesers overlooks fast-moving crowds near the central train station in Rīga (as pictured above). Seeing the party ad from afar invokes warm images of The Dear Leader who would take care of his people at a time of the most severe economic crisis even before you can get close enough to read the money quote: “I won’t teach you how to save, I will help you make money.”

Šlesers stays true to his slogan. Since 2004, the state budget has not run a single surplus, spending more than it was raking in. The finance ministry’s data shows a 1.0 percent deficit in 2004, 0.8 percent deficit in 2005, 0.5 percent deficit in 2006, 1.3 percent deficit in 2007. Šlesers was not in charge of the state coffers, but his 2004 editorial certainly set the tone for spending, which brought Latvia on the verge of financial collapse.

“The Latvia’s First Party is not afraid to say that the deficit-free budget is not the end in itself,” he said. “The budget ought to serve the development of the country, not as an answer to the World Bank.(…) We are not afraid to take on a risk to say that in the Latvian situation one should quit warning about some kind of economic overheating, we ought to push the pedal to the metal.”

We know how that turned out. But now, Šlesers is trying to use the same principle to win this elections. And it seems to be working. The popularity of the Latvia’s First Party has more than doubled in April compared to the month earlier. Almost every fourth citizen in Rīga is willing to vote for Šlesers as the mayor of Riga, according to a survey published this morning.

And yet, voters don’t get to elect the mayor. Mayor gets elected by the city council. And a party that wins most seats on the city council gets to order the tune.

For the most part though, individual personalities are driving the vote in this election.

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