Monday, August 13, 2007

Local municipalities and administrative reform in Latvia

The summer heat is at its equinox in the Baltic States these days with daily temperatures hoovering over +30C. Traditionally dormant vacation season is gradually coming to an end in Latvia due to its overheated economy. Fomer Minister of Finance and present Latvian MEP Valdis Dombrovskis (JL) admitted that Latvian economy is over - heated in his interview to the Latvian Public Radio this morning, concluding that governments anti-inflation plan does not function properly.

While Latvian economy must face new challenges Latvian liberal media has been focusing on disagreements within the governing Peoples Party (PP). Present Minister of Municipal affairs, Mr Aigars Štokenbergs caused controversy due to his open disagreement with the traditional governance style within the PP. Mr Štokenbergs openly announced that the secretive style of governance that is preferred by the founder of the PP, Andris Šķēle dissonates with the Latvian political achievements and challenges of the early 21th century. For today, at least openly diagreements between heavy weights within the PP calmed down, but the positive news is that the stagnant governance style within the PP is considered as a problem.

In the meantime the administrative reform of local municipalities after lengthy nine years is approaching its end, finally! While Estonian and Lithuanian administrative reforms of municipalities were performed swiftly during the 1990's it was Latvia that dragged on with the reforms a way too long. Political disagreements between the Latvian political parties were the major cause for the delay, but also the Council of Municipalities and particularly the role of its long standing head Mr Jaunsleinis is not without a blame either. Now, when Latvian municipalities are literally hemoreaghing empty either to Riga metropolitan area or straight to Ireland and the UK, politicians prabably realized that they are loosing their voters.

Today there are 527 local municipalities and that is a direct left-over from the centralized Soviet rule. The reason why the number of municipalities doubled after Soviet occupation during the 1940's was the CPSU's simultaneous wish to sovietize the Baltic republics and cleand countryside from partisans (so called Forest brothers). Therefore the Soviet leadership in Moscow inflated the number of local administrative units and implanted CPSU trusted members to administer them. Thus, Latvia lives with this Soviet heritage throughout the post-independence period with some municipalities having just over 1000 inhabitants. Such local municipalities (in unitary Latvian state they do not have tax authority rights) are neither able to upgrade their run-down infrastructure, access to the EU social cohesion funds, nor prevent entrepreneurial people for leaving for better grounds. The massive exodus of population from Latvian countryside started in the early 21st century, and there is still no offical data about the exact number that have left the country. Latvian embassies in Dublin and London estimate that there are about 35 000 Latvian citizens working in both countries respectively. Some unofficial figures run as high as estimating 120 000 Latvian citizens working in the Western Europe. Ironically none of the Latvian ministries monitored outpouring workforce because up to the very late the major problem was massive unemployment. Now, suddenly when borders with the rest of the EU economic space became open Latvian officials realized that they must brake out of the institutional path dependency syndrome, and face the real facts. And the real figures are freightening - the economy is out of balance, there is acute shortage of workforce and infation is spiralling.

In the middle of an economy galloping the end of administrative reform would cut the number of municipalities four times. Cutting the administrative expenses would allow to cut costs and balance the budget, and it is still not known whether there would be 88 or 127 municipal districts (novadi) in Latvia from February 2009, just prior the municipal elections in Latvia? Whatever the new number will be, it is good that the reform is finally approaching its end. The fact that government has listened reccommendations from the European Council of Regions and increased the number of the locally elected representatives is an encouraging sign as well.

For example, I can see it from the Salaspils municipality that in the town of 23 000 inhabitants we have just 13 members of the council, while in Estonia the Rae Municipalty (about 10 000 inhabitants) has 20 of them. The proportional number (having the number of representative proportional to the number of inhabitants not electors) of local representatives is important, because it would not allow former officials to form easy majority oligarchic cliques as it is for example in municipality of Salaspils. Just imagine that in the Salaspils council with thirteen members incumbent maire requires just seven members for a simple majority. In the situation with the local entrepreneurs being considerably small and thus local economy very much dependent on bread earners from from schools, kindergardens, municipal administration or other municipal utilities enterprises has created the circle of direct dependencies on the incumbent maire. In such situation mostly heads of such institutions are becoming members of the council, and they usually do not want to antagonize their relations with the incumbent rulers, because their welfare, or sometimes their very survival (in case they are approaching the pension age), depends on good relations with the head of local municipality. Such stagnant rule of local municipalities was carrying on throughout the post-independence perion in Latvia. Hopefully in September the government could finally put an end to the system that directly endorses depopulation of Latvia.

P.S. Those of you willing to read more about the rationale of the administrative reform could access 2007-2013 Latvian Development Plan webpage ( ), where you may find the downloadable (pdf) English version of it.

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