All About Latvia

Riga – Unlike the last week’s protest, today’s gathering was pathetically weak and looked more like Geriatric Central with some young nuts thrown in. Around 200 people this morning stood outside the parliament in the Old City.

Pensioners demanded higher pensions, while some young lads and lasses showed their creativity by protesting with buckets on their heads. Someone was calling for free education.

The gathered gang booed the ruling coalition members as they tried to cross the street between their offices and the parliament building. Their whistles and screams also came in full force whenever the Interior Minister Ivars Godmanis turned up. Godmanis smiled in return. The group jeered the Fatherlander Janis Dobelis with shouts, “Traitor.” He apparently took it as a good sign because he gave his thumb up and walked across as a victor rather than a traitor. When controversial Einars Repse showed his face, the crowd’s reaction was mixed: whistles with cheers.

The events featured all characteristics of a old feeble mob.

The parliament is about to adopt the next year’s budget securing the 1 per cent surplus, which the opposition says doesn’t go far enough to cool down the overheating Latvian economy. They demand more spending cuts to the budget. The people who cheered for the opposition demand higher wages from the next year’s budget, not realizing the contradiction.

However, the string of events of the last few days brings up a philosophical question of the rule of democracy.

Is it a democracy when elected officials explain their decisions and bear responsibility for their decisions to the electorate? Or is it when governing elites cast votes based purely on the rule of majority, on public opinion?

Here in Latvia, most people think democracy is the rule of the majority. Majority people didn’t want the gay pride parade taking place in the Latvian capital this summer, yet it took place anyway. Some woman wondered out loud back then why the government let them do it.

Public opinion – while all good and necessary for democracy – is too instable and irrational to base important decisions of the state. It’s a mob rule. The majority wants this one hour and something completely different the next. Mobs are seldom rational and logical in their demands. And it is the minority that often requires the state’s protection.

Bringing it back to the parliament: Should a member of parliament vote what his constituents want him to do or what his conscience tells him would be in the best interests of his district?

Many people, including the opposition party Jaunais Laiks, three years ago opposed Aleksejs Loskutovs for the appointment as the anti-corruption czar. Today, many people and Jaunais Laiks want him to stay.

The ruling People’s Party has greased up its public relations machine to convince the people that the government’s decision to suspend Loskutovs was right. At first, it was the gross negligence in bookkeeping, which turned out to be a smaller problem compared to other ministries. Then, it was the inability of the prime minister to work together with Loskutovs. Both times, the arguments didn’t stick.

The People’s Party has a proven track record that indeed the public opinion can be swayed through a strong public relations campaign, which is how now-embattled Prime Minister Aigars Kalvitis survived last year’s elections.

Addressing the parliament yesterday before the no-confidence vote, Kalvitis said popularity isn’t important to him as his principles. And I couldn’t agree more. However, the problem with his decision to suspend Loskutovs is not its popularity. It’s not about gaining some points in the next public opinion’s survey. It is about circumventing the rule of law. It’s about going beyond the law. And Kalvitis failed to convince not only the people – which is important – but also the prosecutor general’s office that his decision was in accordance with the law.

The Kalvitis government has pushed the envelope, relying on its public relation campaign and apathy from the general public. And soon it may pay the price.

RIGA – This is the beginning of the end of one of the most durable governments in the modern Latvian history.

Signs of cracks continue to persist.

Last week, unions gathered more than 3,000 of their members before the parliament building to demand their wishes be heard as the parliament was about to debate the next year’s budget.

This morning, in spite of the less than 24 hours notice on a weekday, in the cold, wet weather, more than 5,000 people gathered at the Saeima building, singing songs, holding signs.

They demanded the resignation of this government. They called on the president to dismiss the parliament. They wanted blood of the prime minister Aigars Kalvitis and the transport minister Ainars Slesers.

“Stop stealing,” they shouted. “Stop lying.”

People flooded the street outside the parliament building, spilling into the nearby streets. That’s how much they have grown weary of lies.

The umbrellaed crowd didn’t resemble an angry mob. Quite the opposite. People of different ages wanted to have their voices heard because they have been feeling ignored for so long.

And for the first time in the last few months, I’ve felt that the real power was not inside the parliament building.

It was outside on the street.

Foreigners here observed that to make Latvians come out in such large numbers, you have to really piss them off.

And people are pissed.

When the government played political intrigues in the run-up to presidential elections and people protested outside the parliament and their calls fell on deaf ears, the people patiently took that in.

When the government have ignored signs of overheating economy from the Latvian Central Bank, international credit agencies and local macroeconomic experts, the people patiently took that in.

When the government decided to deal with the Loskutovs factor, attempting to circumvent the law regulating the anti-corruption agency that have been successfully fighting corruption, they’re pissed and they want blood.

Once a guarantor of stability, the four-party ruling coalition have been showing some significant cracks.

The People’s Party — an ironic name for a party that is anything but people’s — leadership are awaiting for Kalvitis to return from his trip to Portugal late tomorrow night.

The Fatherlander candidate for the economic minister had unexpectedly withdrawn his candidacy.

Visvaldis Lacis, a respected member of the Greens, a former Latvian Legioner, said that for the first time he had left pressure from his party leadership to vote a certain way.

In the end though, people need to be heard. As Peteris points out, “Let the people be heard — the only way to slay the cynicism and nihilism that infects every level of Latvian society is to get the political élite to listen.”

RIGA – About 5,000 people gathered on Thursday morning outside the parliament building to demand the resignation of the Aigars Kalvitis government. Will the government listen?

This is somewhat bizarre.

When Latvia boasts the second highest inflation in the European Union; when real estate prices are gradually slipping down; when rumors of the currency devaluation have been circulating since this spring and continue to persist; when the country’s current-account deficit is at a critical stage, the Wall Street Journal comes up with this:

Baltics Are Fertile Ground for Private Equity

The Baltic countries of Lithuania, Latvia and Estonia are revving up their economies — and emerging as new hunting grounds for private-equity firms looking to make deals.

All three former Soviet republics joined the European Union in 2004 and have experienced a consumption boom that has driven a surge in economic growth. Estonia and Latvia were the two fastest-growing economies in the EU last year — Estonia’s gross domestic product grew 11.4%, while Latvia’s economy surged 11.9%.

But that strong growth has fueled inflation and driven current-account deficits to record highs. The environment demands caution from private equity and fund managers as they go about choosing their deals.

“The most likely scenario is a soft landing, although we are concerned about Latvia and the risk of psychological contagion in the other markets,” says Marcus Svedberg, chief economist at Nordic fund manager East Capital.

Here’s a bit of a different picture:

Bini Smaghi has it right, the key question for the EU 10 countries is how to maintain the levels of “catch up” growth which would enable them to close the gap in living standards which exists between East and West, and how to do it, so to say, when they don’t have the raw material (in terms of labour supply) to hand to aid them in this.

Thus in many ways the European Central Bank might be thought to be increasingly giving the impression they would not be displeased if the Baltic nations and Bulgaria drop their exchange-rate pegs because they contribute to increasing economic imbalances, according to a research note from Danske Bank (PDF):

“It seems that the ECB is suggesting what would have been unthinkable a year ago: that it is time to change the exchange- rate policies in the CEE countries with exchange-rate pegs,”

It could just be that Latvia is on the verge of a political crisis.

On Sept. 25, Latvian Prime Minister Aigars Kalvitis decided to suspend the head of the anti-corruption bureau chief Aleksejs Loskutovs (pictured) under dodgy pretext – for the financial misappropriation, revealed in a June audit.

Allegedly several thousands of lats have been misappropriated in the bureau, however the State Auditor repeatedly said that the audit found no significant violations – no more or less than in any other government ministry – that would justify the Kalvitis’ decision.

The government formed a seven-member legally-dubious commission to investigate Loskutovs.

Led by the prosecuting attorney general, the commission consisted of six party hacks. No one has known whether the commission can make a decision unanimously or by a simple majority.

In its report, the commission presented its findings and left the final decision on the lap of the Kalvitis government, making that decision unanimously.

At the same time as the US Ambassador to Latvia admonished Latvians to fight for democracy and common values, the Latvian government decided to ask the parliament to dismiss Loskutovs based on the commission report.

After the decision, the commission member Dzintars Jaundzeikars said: “The harshest violation is that Loskutovs doesn’t follow the law, but walks around embassies and discredit the country.”

However, the prosecuting attorney Janis Maizitis told media that Loskutovs should remain in his office.

The charges against Loskutovs mounted by the time the evening news rolled out. The party leaders who three years ago elevated Loskutovs to his post, then claimed he misappropriated funds, now add a bonus charge that he is impossible to work with.

They say Loskutovs had disobeyed the Kalvitis decision for suspension and have been showing up for work. Loskutovs said that by law, only parliament or the prosecuting attorney can suspend him. The law was written in such a way to prevent politicians from messing around in the work of the anti-corruption bureau created to oversee them.

The government failed to convince the people that it was doing the right thing because the government have become so arrogant and self-assured, in part because it holds the majority in the Parliament and it has become fearless.

For now, the decision rests in the hands of 100 members of parliament who may be debating the Loskutovs factor on Thursday. Of the four-party coalition, only two parties – the Fatherlanders and the Greens – have questionable discipline to adhere to the party line, whether they have enough votes to defeat the measure remains to be seen.

Out of 58 coalition votes, the Greens hold 18 votes and the Fatherlanders hold 8. The Fatherlanders who had not been happy with the coalition so far may break ranks. If so, it will take 8 MPs to kill it.

Oct. 11 (Bloomberg) — Russian President Vladimir Putin urged the European Union to crack down on the “glorification of Nazis” in Estonia and Latvia, two former Soviet republics that joined the bloc in 2004.

RIGA – I enjoy watching people in the Old Town — they’re so different from other parts of town. It is the only place in Riga where you could find people of various ethnic origins.

So I’m especially fond of people who wear a hammer and a sickle stickers on their clothes as they’re required by law.

They’re local Russians, you see.

It has been an official policy of this government since the dawn of our independence to separate residents into Latvians – the title race that deserves all the benefits of the Latvian state and are the core of this nation – and the non-Latvians.

Oftentimes, however, it is hard to tell who is who, so the government launched a hammer and a sickle sticker program (HSSP) for the non-ethnic Latvians to wear at all times. Those who are seen without the said sticker and upon the request turn out to be non-ethnic Latvians may end up being shot on the spot for the violation of the law.

The HSSP proved to be a success in our small but proud nation.

Non-Latvians live in segregated areas of town and are only allowed to visit the Old City every Monday, Wednesday, and Friday in the early morning hours — just in time of my walk.

Such are the rules in fascist Latvia, where portraits of the founding father of our nation, Adolphus Hitlers, are plastered on every corner. Children in this country learn to read using the text of “Mana Cina“, which has been translated into Latvian. The government thinks it’s good for the morale of the nation because it boosts national pride in the Only Race on Earth That Matters.

Those who disagree are immediately shot.

March 16 – a day we officially commemorate as the beginning of our struggle against the Soviets – is a national holiday that lasts a whole week, known as the Holy Week.

It’s the most celebrated of all holidays.

Tens of thousands of Latvian people march on the banks of the Daugava river every day during this Holy Week, signing praises to the current government.

Traditionally, during the march, some non-Latvians are hanged before a cheering crowd.

We also believe in the managed democracy. You can write anything you want as long as it goes along with the official stand of our great leader.

Those who disagree are immediately shot.

So next time you come to Latvia, you won’t have to hide your swastika and wear it under your clothes. You can wear it proudly for all to see that you belong to the Only Race on Earth That Matters.

VILNIUS – Gas pipelines throughout Europe mostly come from one place, Gazprom.

The Russian energy giant dislikes competition on its own turf because it deals with Russia’s strategic reserves. So the party line goes anyhow. However, it doesn’t mind getting dibs on pieces of energy enterprises throughout Europe.

That’s the company from the country that wants to join the World Trade Organization.

The European Union considers “unbundling” the energy sector in the 27-nation bloc. It is basically the opposite of bundling that Microsoft was involved in in the EU before it received a slap on the wrist and a big fat fine from the Europeans.

Here at the conference some experts — and we know they’re experts because they’re boring and wearing glasses — suggest that “unbundling” doesn’t go far enough.

As one British expert put in a polite British manner, Gazprom has “a certain reputation of having shadowy daughter-companies,” adding “I’m terribly sorry for suggesting it.” Meaning Russians know how to get around the system.

No one probably knows it better than any post-Soviet countries, including the Baltics. Examples are many —

The recent Days of Our Lives saga between PACE and Estonia, Russia’s demand Ukraine pay its bills and the rich history of mutual understanding and cooperation between the Baltics and Russia show that when it comes to energy Russia is a reliable partner.

And again, the wibly-wobbly European bloc is urged to act to protect the Baltics in case Russian supplies supplies dwindle or its political attitude toward the Baltics shifts.

“Among the first countries they’re going to cut [are] the Baltic States, and Georgia. We know this is coming and we know this has already happened. It’s likely to get worse. You cannot leave the Baltic States in such a vulnerable position,” said Alan Riley, a professor at the City Law School in London.

And when all pipelines spear Gazprom, it would make it a long winter ahead for the Baltics.

VILNIUS – I’m in Lithuanian capital getting ready to cover the energy summit held here, where big wigs from all over the vast region known as the post-Soviet space will be chewing over how to -take over Russia- limit their energy dependence on their former overlord.

Options are: invade Russia and share its natural resources, tap into another country’s natural resources hoping it won’t suffer through PMS, build another nuclear power station, sign some documents, exchange commemorative pens and simply have a good time.

Everybody knows this two-day love fest is all about Russia. Hell, even Russia knows this. This is why Russian President and future Prime Minister in one person invited high-ranking bosses of France and the United States to Moscow at the same time as the summit.

Lithuanians aren’t pleased. It smells of intrigues. Russian intrigues nevertheless, all suspiciously smelling of 1939. Once again the fate of the Baltics will be left in the hands of real countries — Russia, France, Germany and the United States.

A reliable partner for some, Russia, the ugly neighbor to the east, gets crabby every so often. Its crabiness is reflected in gas prices it charges. The three small Baltic countries are negotiating with the neighbor and if gas prices rise rapidly, it may harm our economies more so that the Kalvitis government anti-inflation measures.

But right now, early in the morning, all is quiet in Vilnius.

Lithuania, the ugly older twin brother of Latvia, is somehow related to Poland. No one knows how or cares to admit the relation, but everyone knows they’re related. They argue like siblings. And it is those siblings that organized the thorn in the backside of Russia.