Archive for March, 2009

Lost in translation


2009
03.10

“Those who want to understand in details understand why Latvia is holding to its position. If simple conclusions are drawn and details are not considered, one may not understand why Latvia was unhappy for its liberation [from the Germans]. What was liberation for some, meant the beginning of the third occupation for others. It is a fight with a windmill as for Don Quixote, but this fight has to be fought,”

– Indulis Berzins, the Latvian ambassador to the UK, on the March 16 march commemorating Waffen SS veterans.

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The Muttsiness Award Nominee


2009
03.10

The TV 3 channel on Sunday reported that Bertold Flick, the head of the Latvia’s own airline airBaltic made more than 300,000 lats last year. That’s about $600,000. The two people on the board made more than Ls 10,000 lats a month. It made people upset largely because, well, people get upset over large salaries here in general. But in this case, the company has finished a year with losses and this is an unheard of salary for the head of an airline on the Baltic market. The journalists made a point that since airBaltic is now a state-owned company, its books are supposed to be open to the public. Better yet, Flick is supposed to file a declaration of income with the tax service.

And the kicker came today. The state revenue service has launched an investigation into who leaked the information. I suppose for the state agency the most troublesome part is not that a head of a state company doesn’t want to disclose how much money he made, but that someone made that information public.

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Russia’s Preemptive Strike


2009
03.09

The city fathers decided today to ban any gathering at the Freedom Monument next Monday, citing fears of further conflicts and riots. At the same time, Russia reacted to the March 16 march more than a week before it was slated to take place.

On March 7, Russian media quoted an anonymous Russian foreign ministry source describing the Legionnaire’s Day commemoration as a “Nazi supporters march” and drew parallels between it and Holocaust denial.

He just never learns


2009
03.05

RIGA – You remember this guy? He is back. According to an article in Ventas Balss Dmitrijs Smirnovs said,

The unemployment level will reach 50 percent in the fall. Many people will leave the country to work as servants. They can shoot me for my forecast. I don’t even know if I’m supposed to be talking about this. For Latvia to survive at the current management levels, it will need $7 billion to $10 billion every year [...] It all will end in default. Bankruptcy. It will be worse than it was in the 1990s.

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2009
03.05

This is why Dombrovskishad a sad face when he walked out of the Riga Castle. This is his dilemma on his mind before Dombrovskis takes office:

If he makes those [budget] cuts, he could have riots on the streets. But if he doesn’t cut, the bailout won’t cover Latvia’s bills and this Baltic republic of just over two million people will go bankrupt.

Special Penguins


2009
03.04

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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Crisis in the Head


2009
03.04

Me: So how is the business going?
The furniture store salesman: You know. They say, the crisis is in our heads.
Me: You think?
silence
Noticing credit stickers around the cash register Me:You sell a lot of stuff on credit?
The furniture store salesman: No, not any more.

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The List


2009
03.04

Veiko Spolītis has the list of ministers in the new government.

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Disunited We Stand


2009
03.03

I suspect the economic crisis will bring the EU closer together – perhaps not in a form of a federal state, but definitely closer to it than it is now. That’s what a crisis does – it is a natural catharsis for change. It either breaks the union or makes it stronger. It has been true for any kind of blocs. The United States live on as a single federal country after the North won in the Civil War and prevented some states from forming another union. The Soviet Union collapsed unable to deal with the economic and geopolitical changes in the world. The League of Nations failed because it couldn’t prevent the Second World War, while the United Nations…. well, that’s a different story.

The point is though that the Union cannot stay the same at a time of adversity. It is a living breathing thing. When a crisis strikes, it must change or die.

Part of the efforts for change have been exactly those countries hurt the most from the crisis. The Baltic states and Bulgaria, the EU members whose currencies are pegged to the euro, have asked the
central bank to amend the so-called Maastricht criteria that guide a nation’s entry into the zone and – frankly – are a bit outdated. And they’re right to demand a change to the rules that have been set up
before the economic slump.

Wolfgang Munchau wrote recently:

“…the smartest answer to the prospect of meltdown is the adoption of the euro as quickly as possible. There is no need to switch over tomorrow. All we need tomorrow is a credible and firm accession
strategy – one for each country – which would include a firm membership date and a conversion rate, backed up by credible policies.

Obviously, this would require the long overdue abandonment of the eurozone’s defunct entry criteria. Of those, the most nonsensical is the reference rate for inflation, calculated as the average of the
lowest three national rates. Soon, this will be a deflation rate. So an aspiring member state would be in the absurd position of having to deflate as a precondition for euro entry.

The inflation criterion is not only insane, it is also in conflict with other parts of European law. Since price stability counts as an important overriding goal of EU economic policy, enforcing a deflation criterion would be a clear breach of this objective. The same goes for the exchange rate criterion. Forcing a country into a two-year sentence of membership of the exchange rate mechanism – in which its currency would fluctuate against the euro in a fixed band – is an open invitation to speculators and would risk further instability. The accession criteria are inconsistent with basic stability rules. They should be declared invalid and certainly not be abused as a bureaucratic hurdle to prevaricate in a dangerous crisis.

If calamity strikes, the EU will pay up. This is laudable, but will probably not solve the problem, especially if the crisis spreads. Granting financial aid without a firm commitment to euro membership would be irresponsible. Euroisation is the way to go.”

The bottom line: you either consolidate or go back into your own little country when a crisis strikes. This is why the French President wanted French cars to be made in France and not in Czech Republic. This is why a movement is strong in several member states that is called a protectionism. The minister of the economy here in Latvia suggested to require large Lithuanian and Scandinavian supermarkets to
have a Made in Latvia shelf where only locally produced products would be placed. Another one suggested to create a chain of the government-owned supermarkets to drive down food prices. And then there’s a movement to ban Lithuanian milk, force Swedish banks to take a serious hit from loans they have handed out here.

But there’s also another movement – the one toward a closer union. That’s the one that says that we’re not just golf partners, but that your golf game depends on my golf game and vice versa. It’s not that
we’re utterly separate, but we’re interdependent. It’s certainly true with banks. Here when the government collapsed two weeks ago, we see the price of a Swedish krona plummet immediately. The two countries are interdependent but have different resources. What Sweden can afford, Latvia cannot. Even now some countries talk about setting up a common bank regulation in the union and that leads to further centralization and a closer union.

Yes, the strength of Europe is in its diversity. But a closer union doesn’t kill that diversity. It makes it stronger.