Archive for the ‘The Godmanis government’ Category

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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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Special Penguins


2009
03.04

Posted in Revolutions, Society, The Godmanis government | 1 Comment »

RIGA – Being unable to impact their government, Latvians turn to humor to relieve their economic tensions.

The cult classic became the interview of the finance minister Atis Slakteris to Bloomberg TV as the small Baltic nation’s economy turned from Europe’s economic hero to below zero.

Asked about what happened to the Latvian economy, Slakteris answered in a heavily-accented English, “Nasing spešal.”

The phrase entered folklore after the most popular political TV program “Nothing Personal” broadcast unedited bits of the interview, showing the 1980 graduate of the Latvian agriculture university making long pauses and searching for right English words.

The interview became a symbol of the political ineptitude that drove more than 10,000 people to the Dome Square in the Latvian capital on January 13. The rally then turned into a cobble-throwing riot around
the finance ministry. A protester held a sign that read, “Nasing Spesal – Penguin Revolution,” a reference to another political faux pas.

In his traditional New Year’s Eve address, Prime Minister Ivars Godmanis likened Latvians to penguins who huddle together to protect their own in the time of severe winter storm.

“In the next two years, Latvian economy will weather such a winter storm and those humane qualities like trust, compassion, empathy and goodness will be as important as ever,” Godmanis said, urging Latvians to “be with the government.”

As a poor choice of words, penguins peacefully proceeded into Latvia’s political vernacular, becoming an unofficial name of a group that seeks responsible governance from public officials.

They use their blog “Nasing Spešal,”named after the finance minister’s phrase to propagate their views.

When the domestic demand dwindles and the economy plummets the sharpest here than in any other EU nation, businesses turn to “nothing special” as a way to lure in customers. Two companies sell T-shirts with an image of Latvia’s finance minister and his quotes.

A restaurant on Dzirnavu iela offers a nothing-special menu in a form of an image of a crumbled paper with blue-inked revisions and amendments to simple entrees.

While Americans watch comedy shows that make fun of politicians, Latvians, having no such outlet, express themselves on a T-shirt.

In an apparent jab at Slakteris, Latvia’s President Valdis Zatlers on January 14 used the ability to speak foreign languages as one criteria for Godmanis to introduce “new faces” in order to restore the public trust.

While the Japanese finance minister was forced to resign over slurred speech during the G8 press conference, Latvians are still waiting for changes in the government that never seem to come soon enough. They resort to humor to help their own helplessness.

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Ardievu, Ivar!


2009
03.03

Posted in The Godmanis government | Comments Off


RIGA – The 90-minute press conference at the Cabinet of Ministers on Monday started with a search for a laptop and a projector. From there, it went downhill. In a tiny press conference room on the third floor of the government building, journalists – pens in hands – packed three rows of chairs. Everyone seem to be interested what will be said. The press release announced the outgoing Prime Minister Ivars Godmanis and finance minister Atis Slakteris plan to inform the public about the ongoing talks with the International Monetary Fund.

And informed they did.

Most of the press conference, Godmanis – wearing his glasses on his forehead – showed charts and graphs regarding the state budget. Here is the budget deficit if we don’t consider raising social support. And here is the budget deficit, if we do. Here is the list of the government revenue raked in through the increased value-added tax. And here this is where we want the revenue to be.

In the end, it felt more like a slide presentation on public finances than an attempt to communicate with journalists and public. The Godmanis government – so unpopular among the people – collapsed almost two weeks ago because of this seeming inability to explain complex matters in a clear concise language to a farmer somewhere near Valmiera. Godmanis failed to meet people where they were.

It’s not that he hasn’t tried. One can admire Godmanis’ stamina. His face was on television; his voice was on the radio from 7 a.m. to 11 p.m. He gave many interviews. But, as one local journalist put it, “It’s the question of content, not the time.” His frowny face served as a testament of bad situation in this country that are bound to get only worse. So as part of his New Year’s resolution, Godmanis promised to smile more in public. And like most resolutions, it lasted for about week.

The goal of the Monday’s press conference remains a mystery. It seemed the two men wanted to make sure the country knows that Valdis Dombrovskis, the PM-designate, is wrong – the country is not on the verge of bankruptcy and the budget cuts that Dombrovskis proposes won’t accomplish a thing. Slakteris seemed angry or frustrated that he won’t be in the next government when he refused to say what the old government would cut from the budget.

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Working Weekend for Crumbling Coalition


2009
02.02

Posted in Parliament, Politics, The Godmanis government | Comments Off

thoughtful_godmanisRIGA -”Weekends are for resting and that’s what I intend to do,” the former speaker of the parliament Indulis Emsis once told journalists who wanted to know his reaction to the president’s actions back in 2007. Back then, on one April Saturday, President Vaira Vike-Freiberga stopped a legislation from coming into force, triggering a referendum.

The Friday evening’s announcement by the People’s Party – the largest party in the coalition – transformed the relaxing weekend into a working weekend for the failing but still-ruling coalition.

Reminiscent of Emsis were the words of the leader of the Fatherlanders in the parliament this Saturday. “Common sense tells you that whatever it is, dear friends, but we don’t have to talk about the government’s demise on Saturday and Sunday,” said Maris Grinblats.

But with the ship sinking, the gloves came off this weekend.

The blame game for the economic and political disaster has spilled from the Internet sites and TV screens. Anticipating the forthcoming snap elections, the Green Farmers threatend to pull out of the coalition, if the government today doesn’t fulfil the farmers demands for subsidies and loan guarantees. And it no longer mattered that Martins Roze from the Green Farmers has been working as a minister of agriculture since 2002, failing to meet the farmers demands way before the current coalition became the guarantor of stability.

The punchline to the weekend of bickering gave the Prime Minister Ivars Godmanis who appeared on TV last night. I expected Godmanis resign. But instead, he blamed everyone in his coalition for fleeing from responsibility for tough decisions the unpopular coaltion had to make in the last several months.

Like little kids, they care more about their own warm seats than their own country and their own people. I don’t care at all for such patriotism from the parties of the ethnic Latvians that combine this ruling coalition. In that patriotism and fearmongering, you can wrap yourself in the Latvian flag when it is beneficial for your political future. But once the times get tough, they feel leaving people behind, just to make sure they can find their warm places once the election hit. None of the ruling coalition can run on its record. They have nothing to show for themselves, except for rising unemployment and depleting wages.

Soon, they will be blaming Russia – for economic mistakes, for transit downturn, for cold air the country sent to us this weekend.

For the first time, though, it was refreshing to hear Godmanis offering some criticism to the coalition partners, including his fellow chairman the minister of transport, Ainars Slesers.

Cutting wages and laying people off are never popular. They are especially unpopular when it’s done by the government that discredited itself in the eyes of the population.

For now, the government is continuing its work. The decision on the farmer subsidies may break the coaltion even today. On Wednesday – if the government lasts this long – Godmanis faces the vote of no-confidence in the parliament. Following a busy weekend, the political elite faces a busy week ahead.

Image of Ivars Godmanis before the TV broadcast taken from diena.lv

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The 7.5 billion euro crisis of credibility


2009
01.29

Posted in Beyond Latvia, Economy, Revolutions, The Godmanis government | 2 Comments »

RIGA – You can’t help but compare Iceland with Latvia. There are shades of similarities between the two countries – social unrest, a government lacking in credibility. To quote an excellent Edward Hugh article: “The problem is that Latvia, apart from the internal credit boom, and the consequent housing bust and real economy contraction which follows (and which all three Baltic states “enjoyed” actually stands out from its Baltic peers in that it also became something of an offshore financial centre during the boom years. That is to say, there are shades of the Iceland or UK problem in the Latvian situation.”

The International Monetary Fund in its report issued four days before the unrest – their mission was leaving Latvia on the day of the riots – stated that a key to its program success is the wide political support. (PDF file)

Clear medium-term objectives, strong political leadership and mobilization of public support will be key. Consolidations tend to be more successful when perceived by markets and the population at large as durable and sustainable. In many European countries in the 1990s, consolidations were justified by the objective of the Euro adoption, which is also the case for Latvia. On the other hand, most consolidations tend to be led by new governments and under a broad consensus. Latvia’s Parliamentary elections in 2010 represent a risk.

Clearly, the Penguin Revolution and the subsequent ultimatum by the President to the parliament adds risks to the program. Success of this program depends on wide public support which this government doesn’t have.

The IMF required a wide parliamentary support before it agreed to the loan. This is why the Prime Minister Ivars Godmanis urged the parliament to adopt wide-range of painful cuts and raise taxes at the end of last year, asking opposition parties to come on board for the country’s sake. The January 13 protests and following riots turned it all around. And, I think Godmanis realizes that. He blames the opposition parties for staging a rally. And, I suspect, it is why he didn’t want to be seen along with an opposition leader Aigars Štokenbergs in televised public debates three weeks ago.

In traditional European parliamentary democracies by and large a wide parliamentary support equal a wide support of the population. However, in Latvia, it just means an approval of a certain elite clique that stands behind political forces represented in the 100-member incredible Saeima. The parliament isn’t popular, but according to Godmanis it’s the strongest in Europe. His center-right government, however, is the least popular government in Europe, with popularity of 10 percent. It raises risks to the IMF program.

When you have an unpopular government cutting wages, raising taxes, its rating will plummet down. And I suspect we haven’t seen the end of the popular unrest. The rock concert was just a prelude to a wider protest. Already, the farmers threaten to block highways and streets in Riga in protest against government policies next Tuesday, if their demands are not met. Providing information to a lot of villages, the national radio broadcaster doesn’t have enough funding to operate, adding to the frustration. People will be laid off with unemployment reaching up to 12 percent, basically double in the matter of months, according to official estimates. Unofficially, of course, it will be much higher.

While the IMF sees an election as a liability because it ushers in an uncertain future, for the people of Latvia an election under new updated election laws appears to be a way out of this crisis of political credibility amidst economic uncertainty.

The parliament speaker Gundars Daudze this morning offered more evidence that we’re heading for snap elections. He said in a TV interview that he sees no possibility to adopt constitutional changes before March 31, the presidential deadline.

The photo above was taken by me during the summer farmer protests against the EU milk quotas

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I have a dream


2009
01.27

Posted in The Godmanis government | Comments Off

RIGA – If Latvia were a civilized country, the government would have long collapsed following the Jan. 13 riots.

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“Nasing Spešal – Penguin Revolution”


2009
01.13

Posted in Parliament, Revolutions, The Godmanis government | 1 Comment »

RĪGA – Shattered glass. Blue paint on the building. Broken plastic bottles. Cobblestones. Ninety-eight detained.

These are the preliminary results of the aftermath of the penguin revolution (when Godmanis told the people in his New Year’s Eve address how penguins deal with severe winter – they huddle together to stay warm – the same way as Latvians ought to do when going through the economic turmoil).

But it started all so peaceful. Around 5 p.m. several hundred people had already flooded the Dom Square in the heart of the capital of Latvia. People of different ages, ethnicity, backgrounds appeared united in their disdain for the ruling coalition, and – more importantly – the culture of political cynicism.

Following the 90-minute event mostly young people moved toward the Saeima building. They tried to get in. Prevented from doing so by the riot police, they began throwing anything that they could lay their hands on – from snowballs to street cobblestones. The first flood windows were shattered.

Commentators undoubtedly will analyze what had taken place – whether the riot was a fruit of public discontent and anger at the ruling clique, or a product of alcohol and intoxication, or, perhaps, a combination of both. One thing for sure, regardless of the protest, the political cynicism lives on. The Interior Minister Mareks Segliņš, who was nowhere to be seen near the riots, sent an SMS to Aigars Štokenbergs, a party leader, who organized the protest, saying “Now you can be proud.”

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A remedy for the hangover


2009
01.13

Posted in Economy, The Godmanis government, Uncategorized | 3 Comments »

RĪGA – The Nordea macroeconomic review (available in PDF)in September put it rightly: “Latvia: the Party is over.” After several years of robust growth, Latvian economy is now in a slump. The economy is expected to shrink by as much as 8 percent this year, resulting in massive unemployment the likes of which we probably haven’t seen since the early 1990s.

Riding the populist wave a head of the local elections this summer, the minister of transport Ainars Šlesers – an apparent candidate for the mayoral seat in Rīga – yesterday proposed a three-year moratorium on allowing banks to go after defaulted borrowers. That means that banks will not be able to use all legal means necessary to get back the money they lend to consumers.

“There has come a time to call to answer the irresponsible behavior which banks have behaved in the recent years,” Šlesers told LNT.

It is an ironic statement coming from a man who appears to be above taking responsibility for his actions. Blaming banks for irresponsible borrowers is as foolish as blaming the sale of alcohol for the rampant alcoholism. The one and only Soviet President Mikhail Gorbachev fought alcoholism exactly the same way Šlesers proposes to fight the severe indebtedness: absolving people from their responsibility for their decisions. When will we learn to make the right choices?

The problem is people who have not been used to credit were exposed to vast possibilities. They took out loans to go on holidays. I heard stories of people taking a cruise to the Mediterranean on credit, buying the latest and greatest in clothes, automobiles, houses on credit. People have been living beyond their means and clearly have to learn the tough lessons of the crisis. It’s something that people teach their kids in the West.

That is not to say that the government should stand idle as voters struggle to make ends meet in an economy where unemployment is projected to reach 11 percent in 2010. Changes in bank regulation certainly are needed and will be coming our way this year. And it seems to me requiring people to take a class on financial management paid for by the bank before they’re granted a loan would educate the public how to manage their finances, and how to live a peaceful life no matter what might come your way. Even if it’s another economic turmoil.

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Sticking to the message


2008
12.05

Posted in Latvia in the EU, Politics, The Godmanis government | 1 Comment »


Notice to the security police: I admit that yesterday I withdrew money from my bank. Please don’t arrest me. I did it to buy milk and bread, and not to destabilize Latvia’s financial system

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