Nov 23
AleksEconomy, The Godmanis government
RIGA – Strong winds and heavy snow plagued Latvia today, as winter announced its arrival. White powder covered streets, the wind blew the snow across fields. City fathers are preparing for a flood. We, in Iļģuciems, do not have hot water, but still have electricity. For now.
While it would be premature to talk about the political winter here, the cold biting wind of police state has ripped through the country this week. On Saturday, the newspapers splashed the issue of the freedom of speech across the front pages. The image of Krišjānis Barons with his mouth shut (pictured above), looking at readers of Latvijas Avīze from a 100-lat bill, is a powerful one. After the two-day arrest of a Ventspils economist, the state police also launched a criminal investigation against a musician, following stupid remarks he had made at a concert.
Too often lecturers, economists, or musicians, aren’t the only ones speaking foolish things on economy. Veiko Spolītis offered an outstanding overview of official pronouncements by Latvian politicians and international organizations regarding the current economic slump here.
But I couldn’t help but dig through statements regarding possible devaluation of the national currency in the past. Perhaps, the State Police will give them a call and invite for a chat.
Edward Lucas writing for the Economist on Oct, 18, 2007:
Latvia is in the worst situation. Year-on-year inflation in September was a whopping 11.4%; the current-account deficit over a fifth of GDP. Bank lending, much of it in foreign currencies, has soared, creating a property bubble in the capital, Riga. Overheating has hurt competitiveness. To some the national currency, the lat, looks like the likeliest casualty.
Latvia’s position was not helped when Jürgen Stark, a board member of the European Central Bank, said earlier this month that ex-communist countries wanting to join the euro zone faced “substantial challenges”, banker-speak for “forget it”; Lorenzo Bini Smaghi, another ECB board member, publicly questioned the ability of these countries to keep inflation under control while maintaining fixed exchange rates, a stance that means adopting what is de facto the euro zone’s monetary policy.
Lars Christensen in an interview to the International Herald Tribune, on Nov, 12, 2007:
“I can’t say for sure that I want Latvia to devalue – it’s tough decision,” said Lars Christensen, an analyst with Danske Bank in Copenhagen and a leading voice of gloom in Baltic economics. “But I sure can say that it’s pretty clear the ECB wants Latvia to devalue. It’s hard to see it any other way.”
Bjorn Wahlroos, CEO of Sampros in an interview to Sweden’s Affars Varlden on Oct. 28, 2008.
What is your view of the Baltic countries’ economies in general?
- They have an unreliable mode of a single cause. They all have overvalued currencies, to varying degrees. For those of us who have lived through 1991 in Finland is a trip to the Baltics a déjà vu. It is totally absurd that people think it is useful for anyone to maintain an over-valued currency. It is the surest way to stifle all economic activity in those countries, they lose their overall competitiveness abroad, with the domestic cost is higher than it should be.
Gundars Bērziņš of the People’s Party, the former finance minister, ahead of the summer Constitutional referendum:
“In a case of the positive outcome of the referendum the risks of devaluation will significantly increase. I think that within 18 months, plus six months, the devaluation of lat by 20 – 25 percent may become inevitable.”
Republished in the Latvijas Avīze on Nov. 22, 2008.
Nov 21
AleksEconomy, The Godmanis government
RIGA – With the economy on everyone’s mind, a regional newspaper Ventas Balss decided to gather a group of experts to chat about future economic prospects of this country of ours.
On October 2, the newspaper published selected excerpts from the discussion with prominent leaders in the community including Ventspils mayor Aivars Lembergs and a lecturer at the Ventspils University Dmitrijs Smirnovs (the link in Latvian).
In the context of the economic development and worries about the future of the middle class, who borrowed and now are unable to pay back their loans, Smirnovs said, “The only thing that I can recommend is: first of all, do not save money in banks; second of all, do not save money in lats because right now it is very dangerous.”
Yesterday, it was reported that the state police arrested “a journalist” for the attempt to destabilize the financial situation in Latvia. The journalist turned out to be none other than Mr. Smirnovs, according to the Russian-language newspaper Telegraf (the link is in Russian).
Rumors about devaluation have exposed the distrust of the jittery public to government officials – from the Prime Minister Ivars Godmanis to the head of the Latvian central bank Ilmars Rimsevics. In 2007, rumors also persisted. Someone sent out SMS messages warning of possible devaluation, causing public officials to calm down the public. In the weekend before the Independence Day, the government decided to nationalize the largest locally owned bank in the Baltics, and some had said the four-day holiday weekend serves as a perfect opportunity to change an economic or fiscal policy. During the holiday weekend, old people queued up at local currency exchange bureaus to change their lats to euros, depleting the currency reserves in some exchange offices.
The nervous public is feeling edgy and willing to listen to any information from anyone else other than the government. It feels as if we’re returning to the turbulent 1990s with weak financial system, blind faith in rumors over official information. This is why it would be prudent for the authorities to explain to the public their plan of action when it comes to economy in a clear and coherent fashion, so that people like my grandmother – who is clueless about the world economic crisis – would understand and stop worrying. Instead, the government chooses to send people to jail for questioning the stability of the currency or the financial system of this country. They are willing to curb freedom of speech and freedom of expression in order to keep the lid on the rumor mill. Instead of reassuring the public, the government adds more fuel to the fire of suspicion and distrust. Tell us how you plan to save the economy, how you plan to restore jobs, and rebuild confidence of the people, then, perhaps, people would not be in rush to say good bye to their hard-earned lats and exchange them for euros.
Nov 20
AleksThe Godmanis government
RIGA – “Is this true, Mr. Minister, that you already had received a rejection letter from the IMF,” asked a reporter at a press conference today.
“God save us,” exclaimed Atis Slakteris in the presence of journalists after the government’s decision to seek loan from the EU and IMF.
“If you had been following articles in the friendly press, such as Latvijas Avize, you would have known that –”
At that point, I drifted off and began picturing a surprisingly short former-vet-turned-minister-of-finance Slakteris dressed in a contamination suit, reading the leading Latvian-language newspaper Diena. If only the truth could be dangerous, Slakteris would want to protect his self.
His comments didn’t make any sense. We’d already separated friendly local press from unfriendly local press based purely on the language of a publication. The Russian press is disloyal; the Latvian press is loyal – or at least so I thought. But why would a high-ranking public official imply that the Latvian flagship daily Diena – founded in 1990 on a principles of Western-type journalism – is so unfriendly?
Since the government announced the partial nationalization of the largest bank in the Baltics, Parex, I had to attend a few press conference where Slakteris was the main course on the menu. On Nov. 8, when the government made the late-night announcement about Parex, Slakteris behaved rather strangely. He looked insanely nervous and attempted to refuse to answer any questions from the same Diena reporter. Unfortunately, only the unfriendly press had questions. In the end, the minister sought shelter inside the Green Hall where the pesky reporter followed him.
Sure, going to the IMF for a loan is humiliating for the country that claimed that Western economists do not understand the specificy of our little kingdom, sandwiched between Estonia and Lithuania. But at the same time,
Loyalty in Latvia, it seems, means non-questioning the authority. Anyone who questions a policy, a decision, a direction of the country may be considered a disloyal citizen. Certainly when thousands of people spilled into the streets during — though disappointing for me — the Umbrella Revolution last October, they didn’t seem disloyal or unfriendly. However, eaves dropping on the conversations between members of parliament inside the building one would think they are – they attempted to challenge the ruling elite.
It would be an easy way our to brush the disdain for “unfriendly” press to the years of the Soviet occupation, to the Soviet mentality, but the more one listens to high-ranking officials, the more one thinks that it is a deeply rooted ethnic Latvian trait.
Sep 01
AleksPolitics, Society, The Godmanis government, Uncategorized education, holidays, life in Latvia
RIGA – It is perhaps one of the very few remaining Soviet holidays in Latvia. September 1 marks the Knowledge Day, the beginning of the Europe’s shortest academic year for more than 200,000 students in Latvia. Instituted in 1984 by the Supreme Soviet of the Soviet Union, the Knowledge Day withstood the wind of change, Latvia’s drive for independence and its desire to shed Soviet heritage.
Students do little studying on September 1. Celebrations of the start of the academic year – official and otherwise – fill the cold Monday in the Latvian capital. Spiffed up students carry flowers to their teachers. Police and ambulances are out in full force. As a Diena commentator Laila Pakalniņa put it this morning, drunken students compete with the British boozers in the Old Town.
Statistically, 20 per cent of 13- and 14-year-olds use alcohol at least once a week. By the time they reach 17-18, almost half of students use alcohol, according to Pakalniņa comments. Alcohol industry seems to be the least impacted by the economic downturn.
But back to the drunk orgy, or Knowledge Day. In the Soviet days when I went to school, teachers were obligated to present the so-called the lesson of peace. A propaganda material that tells children that the Soviet Union was the bulwark of peace, in spite of the fact that its troops occupied Afghanistan at the time.
Nowadays, September 1 appears to be free of the Soviet propaganda. The concerns for peaceful coexistence gave way to concerns for Baltic brain drain. And worry about low salaries for teachers replaced fight for victory of the communist theory in the world.
And yet, times may change, but some things remain the same. Principals and teachers still get to know their students. Moms and dads still stand proud as their 6- or 7-year-old starts the first grade for the first time. And that is no doubt worth to celebrate. Even with a tad bit of alcohol for grownups.
Photo above taken from diena.lv
Aug 07
AleksHistory, Parliament, Politics, President, The Godmanis government
RIGA – I went to listen to the president speak yesterday at the Saeima and I almost fell asleep. If leaders are supposed to be inspirational, Latvia’s President Valdis Zatlers was not. It is best to listen to his speech before you go to bed.
But the speech was good. Zatlers called on members of parliament to heed to call of the electorate (yeah, right!), following the Saturday’s political circus, or to put it the boringly, the Referendum on the Constitutional Amendments. More than 600,000 allegedly apathetic Latvians for a moment set a keg of beer aside and went to the polls to tell the government what they thought of it.
The government told them they were wrong and it knew better.
The zoo-elected president, Zatlers now has another chance to earn some political capital that may even carry him into the second term. The silver-haired doctor has a chance to heal the nation. To fix political crisis in our little kingdom, Zatlers can dissolve the parliament and, I believe, he would keep his job in a national referendum. The question is how long it will take him to make that decision.
The president appeared to give the parliament until Christmas to decide on constitutional amendments drafted by a group of legal experts that do indeed give voters a right to call snap elections but with harsher restrictions so not to destabilize the country.
Stability has been a token of dictatorship though and I find it very interesting that we find ourselves in a similar situation as back in May 1934, on the eve of the Murder of Democracy when Latvia’s Prime Minister Karlis Ulmanis dissolved the parliament and became a de facto dictator. A day before his coup d’etat, the parliament voted in second reading on amendments to allow voters a right to dissolve the assembly. The bill never went to the third reading as the parliament was dissolved under the pretext of re-writing the constitution.
Chances of a benevelent dictator stepping out of the shadows in the modern-day Latvia is unlikely. What is likely, however, is the continual denial of those in power that people just don’t know any better until it is too late. Add a good dose of the economic crisis and you’ve got a good political and economic climate for a revolution.
Jul 01
AleksParliament, Politics, The Godmanis government
RIGA – I’d lost all motivation to write about Latvia. This site – launched a way to stay in touch with my homeland when I was in the US – turned into a testament of Latvian pessimism.
Recent political events make it really difficult – down right impossible – to predict this country’s future. Cynicism of politicians toward those whom they are supposed to serve, lack of strong political leadership on all levels, jeopardize Latvia’s future as a European nation where democratic principles are upheld. I want to believe that this country will eventually manage to pull itself out of the Soviet swamp where it still seemed to have stuck, even after 18 years of independence. But I don’t hold much hope.
Watching history being made in the parliament on Sunday left a bad aftertaste for me. Not for me as a journalist, but as a citizen. The Saeima made three wrong decisions in one day. The competence was punished and the incompetence was rewarded. It was painful to watch how politicians justified why the Latvian Horse Minister Vinets Veldre should keep his job even though he has been obviously incompetent. Or how the ruling coalition tried to make the case to fire the head of the anti-corruption agency Aleksejs Loskutovs, failing to communicate a clear reason for the rush of his firing. It was even more painful to eavesdrop on MPs conversations during lunch talking about Loskutovs and several hundred people, who gathered outside to support him, with such a disdain.
Undoubtedly, the June 29 parliamentary session will enter history books as another sign that this country is at the crossroads. The question stands whether it will mark a day when politicians continue to be unaccountable for their actions, or a day when people start pay close attention and demand their public servants walk the line.
The next test will be the August 2 referendum, when Latvians decide for what they care more – their country or their summer holidays. For holiday-loving Latvians, it’ll be a tough choice to make. The referendum itself to allow people to dissolve the parliament is a scary one. A positive outcome could thwart the country into an era of constant signature-gathering referenda, stalling its progress. However given political elite’s cynicism, one has little choice but to support the measure.
May 04
AleksHistory, Politics, Soviet Past, The Godmanis government democracy, Economy, Politics
RIGA – Today marks the rebirth of the independent Latvia. Eighteen years ago the Supreme Soviet of the Latvian Soviet Socialist Republic adopted a resolution restoring the Baltic nation’s independence after 50 years of Soviet occupation.
For some Latvians, the last 18 years have been disappointing.
Husbands leave their wives and children to make a living picking mushrooms in Ireland. Pensioners continue to struggle to get by on trifling pennies as they watch prices rise. Perception of government corruption continues to persist from almost every corner of the state apparatus. And most importantly, people feel left out of the important decision-making.
Latvia’s independence movement in late 1980s became known as the Third Atmoda, the Awakening. People were filled with hope for the rebirth of the nation, treasuring each moment of that freedom. After years of oppression and tyranny, ethnic Latvians were finally getting their country back. Certainly, no one woke up on May 5, 1990, realizing that they were living in a different country. The change came gradually – one by one.
The resolution established the basic principles that were to guide this country domestically and internationally.
The courageous move on the part of the de facto parliament back in 1990 could not have taken place in today’s Latvia. The current members of the Saeima in the ruling coalition are discipled to vote as their bosses – in Riga, not in Moscow – tell them, creating an atmosphere of political cynicism and public distrust. In 2007 Latvians celebrated the Fourth of May heading into a referendum on the confusing, revoked national security laws. It legally failed because voters tended their summer homes.
This year, the Fourth of May arrives at the time when two grass-root campaigns are before discontented Latvian public. As the International Monetary Fund observers said this week, the public trust in the current government is low.
Within weeks the parliament is set to consider a legislation – initiated by the Latvian Labor Unions – to give the voters the power to dissolve the parliament and call early elections. On the other hand, a group called “Society for different politics” (Sabiedrība citai politikai -SCP), led by former minister of economy Aigars Štokenbergs and former foreign minister Artis Pabriks, is urging people to sign up an initiative to amend the pensions laws. The signature drive concludes May 15. They already forced the government to raise pensions once in April, then another raises are coming up in June and October.
Regardless whether these two initiatives get approved or rejected, they have already sent a strong message to the cynical government. Will it listen? – that’s another question.
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