Sunday, September 30, 2007

The end of the government is on the threshold

Apathy and outright disgust about the present political elite is widespread. Public radio and TV stations, liberal media and now also Neatkarīgā Rīta Avīze (a paper controlled by the maire of Ventspils, who actually sits under the house arrest) lament the work of Latvian PM and his government. Minister of Municipal Affairs Mr Aigars Štokenbergs predicts in todays Latvijas Avīze (, that at the end of the year the inflation in Latvia might reach 15% annual rate. While taken to the court session former member of the presidential security guards Edgars Gulbis fell out of the police car right into the river Daugava. The story with Mr Edgars Gulbis seems not just ludicrous, but scary, because the police is either cynical or simply emulating best practices of the Soviet militia. The minister of Interior resolutely announced that Mr Edgars Gulbis was not tortured and dismissed all allegations of Mr Gulbis lawyer as stupid and announced that Latvian police is at the top of its tasks. In the same press conference (!) the PM is painting a grim picture of international ring of gangsters that run the country - thus, Aigars Kalvītis, are you the ringleader or simply incomptetent non-entity?

In the meantime, when Lattelecom is being privatised there is court process versus prime minister Andris Šķēle in the Latvia vs. Kempmayer Ltd. just about to be open. Also Anti-Corruption agency (KNAB) is about to finish to uncover the affair that helped the governing Peoples Party (TP) to steal October 2006 elections. Prior elections last year, TP breached the campaign rules of the elctoral law by former prime minister Šķēle "donating" Ls300 000 to third parties that lauded TP in major TV channels for a month prior the election. KNAB has announced that its findings and also the ruling of the Supreme Court of Latvia as of December 6, 2006 indicate, that TP should probably repay this money and fine (totaling half a million latvian lats) into state treasury, and that would eventually bancrupt TP. That, was the major reason why PM hastily suspended Mr Aleksejs Loskutovs from his duties. Because Mr Loskutovs still goes to work we may find the major fallout between the government and KNAB, Prosecutors office and/or the head of the Supreme Court any day soon. The PM simply plays hard ball, because he understands, that he has lost all the legitimacy (exemplified by disastrous ratings with circa -28 points), thus trying to ensure legal protection of the governing elite also popularily dubbed the governing gang of Latvia. President is of no help here either, because upon his return from the UN General Assembly opening session his answer to the media was, that he has learned about the situation in domestic affairs from media only, and most probably would convene the State Security Council session on October 3.

So, while the world economy is waiting for the effects of the US subprime market on the rest of the US economy and Latvian economy is overheated Latvian member of the parliament, Mr Viktors Ščerbatihs managed to win the gold medal in the super heavyweight class power lifting championships in Bangkok. Also the freshly elected speaker of the parliament Gundars Daudze still had to serve his shift in the Ventspils Hospital as anesteziologist. Accidentally both MP's are members of the Union of Farmers & Greens, who's sponsor is sitting under house arrest. No, I have nothing against Mr Ščerbatihs winning the gold and the speaker of the parliament still managing his shifts in the hospital. But then the PM should not be surprised about the ineffetiveness of the parliament, and the public that laments governing gang should think about the party programs and not only how well the person looks in TV adds before they go to the election booths.

New Era (JL) party is ready to demand resignation of the PM today (Monday, October 1). I am afraid that PM is too weak to accept that he has lost all his credibility. Even the member of governing elite the Fatherland Union has demanded special meeting with the PM, because the coalition agreement assigns the post of the Minister of Economics to the Fatherland Union (TB/LNNK). The PM, however, has not found time to meet the TB/LNNK candidate Einārs Cilinskis due to his busy work schedule, although he actually met him in the public radio station. There is the feeling in the air of something to unravel soon, because there is not a single thinking person in Latvia who could trust the gvernment of incumbent prime minister. The price hikes of electricity, gas an oil shall have their effect at the end of October. The budget for the 2008 is being prepared with 0,51% surplus instead of the 2% that experts had advised the government.

Well, its long known that governing gang in Latvia thinks about short term interest of the gangsta members and not the long term interests of the country as a whole. Appearance of Aigars Štokenbergs in all the media channels today make me reckon, that he is prepared as a savior of the sinking coalition. Thus, the end of the government is right on the threshold, and hopefully disagreements of the existing coalition shall also foster snap elections, because TP stole October 2006 elections after all. Lets wait now, whether there shall be some more ludicrous anouncements of the governing gang about rings of international gangsters encircling Latvia or Mr Soros financiers networks, or the government shall simply step down?

Tuesday, September 25, 2007

Coming of an end

I am bck in Riga and busy lecturing. In the meantime there is serious infighting among members of Latvian political elite. The economy is over-heated and among the leaders of Latvian executive I do not see comprehensive plan to manage balanced development of the society. EU Commissioner of Regional Politics Danuta Hybner is visiting Latvia where she signed the memorandum on funds to be received in Latvia from the EU regional funds for 2008-2013. The commissioner had a nice visit to the Latvian version of Potyomkin village - the Laima candy factory. Latvian state is one of the worst in using the EU funds due to the bureaucratic obstacles and coruption it fosters. The fact that the ever-burgeoning class of administrators was partially reigned in by the latest decision of the government to have salary caps for the next fiscal year ir laudable. Such decision is only smoke creen however, because in the situation with hemorreagging human resources the top administrators are simply hyper rich. Today's Dienas Bizness has devoted most of its editorial page to the wages and rich perks Latvian top civil servants receive. According to the information there are such strange phenomena, that the head of the PM's bureau as well as the head of the president's bureau chief receive bigger salaries than their bosses (is it coincidence that both gentelmen were members of Communist Youth Organization?). There is a nice brake down of all the top-notch administrators and their perks, thus, those of you willing to have a comparison with dministrators in your own countres I suggest you visit the folowing website (

Yesterday, the government had negotiations with the Teacher's trade union while more that two hundred teachers from all over Latvia had their demonstration in front of the Council of Ministers. The latest news from the Council is that teachers cannot expect payrise. Doctors are in similar situation and the 25% rise in electricity and gas from October 2007 would not make life of teachers, doctors, policemen and firefighters easier. In the meantime the PM has woken up and temporarily suspended the head of the anti-coruption agency (KNAB), Mr Aleksejs Loskutovs. This delayed affair (PM was informed about minor problems in using publi funds already in May 2007) and sudden suspesion of Mr Loskutovs employment, that surprised even the Head of the State Audit Bureau, Ms Ingūna Sudraba, looks absolutely ludicrous. The fact is that KNAB was planning to publish their first results about investigation of illegal election campaign financing, illegal payments of incumbent prsident Valdis Zatlers, and deals of the prime minister Andris Šķēle. It is long known that former prime minister was supporting his People's Party with 300 000Ls, he supported incumbent president and also he is also accused in the Latvia vs. Kempmayer Ltd. court case.

Goverment is busy preparing the 2008 budget and apparently the surplus is planned only around 0,5% (experts advised to have it around 2%). The growth of economy (11,3%) in combination with the real growth of wages (32%), inflation (10,2%), current account deficit (23,5% in the second quarter of 2007) and outpuring workforce are still alarming. The real estate bubble has caused also tremendous increase of the rate of Latvia's external borrowing. To look into the Bank of Latvia webpage ( one may notice that Latvia's external debt has increased from 6 939 445 000Ls to 15 582 377 000Ls from April 2004 to February 2007!

Rumours of the fall of the existing government are getting louder. The fact is that the existing PM is spineless and absolutely not up to his task. Global economy requires small, smart and mobile executive, but in Latvia we have large, bloated gang of mediocre folks. People's Party is trying to come out as a winner out of this situation, but the ills of serving special interests are too heavy and I am afraid that simply remodelling the government would not be enough. Not only government, but also the existing parliament should go and give a fresh start today, while the economic crisis is just behind the corner.

Tenets of liberal or conservative right wing policy have ben tainted all thse years in Latvia. All this dilution of the ideological purity was performed due to the wish of governing elite to save their parliamentary seats. The coming crisis might finally bring some purity in ideological actions of parties and thus reform the ever-burgeoning class of state administrators. Now the question is, when exactly the coming of an end would start to unravel?

Monday, September 24, 2007

New speaker of the Saeima elected and KNAB head temporarily suspended from his office

I am on my customary autumn Talsinki voyage again. Had to manage administrative issues in the alma mater, and also went to the lecture delivered by Stephen Krasner in the Finnish Foreign Policy Institute. While I am in Helsinki there was election process going on in the Latvian parliament (Saeima), and rather unexpectedly PM suspended duties of the head of the anti-corruption agency (KNAB), Mr Aleksejs Loskutovs.

Majority (52) of Latvian MP´s in the 100 seat parliament elected its new speker today, after the previous holder of this post (whilst having criminal charges against him) resigned from this position last Friday. Gundars Daudze (Fraction of the Union of Greens and Farmers-ZZS) in addition to the slight support of the coalition parties got 36 NAYS from opposition. There were opposition candidates proposed both from New Era and Reconciliation parties, but both candidatures did not receive any tangible support. Governing coalition is still effective, and regardless of the fact that ZZS proposed prime ministerial candidate is sitting under house arrest, and that former speaker of the parliament is accused in goving false statements to the judiciary, the rubberstamping parliament very much reflect the governance style of the Latvian executive.

It is total disregard to the public opinion that reflects decline of coalition support from the December 2006 45%, to the September 2007 scanty 27% (Latvijas Fakti). Actually, the support of the governing coalition has dipped below the 31% of support for the opposition parties. Such 4 % difference is rather insignificat, however, and more alarming is the number (42%) of undecided voters. This trend is reflected also in Eurobarometer data for quite many years in a row and puts actually Latvia in the same league with Romania and Bulgaria.

I hope that there are advisors of the governing coalition who actually follow these numbers, because otherwise the situation Latvian might get out of the control. The fact that somone in the government follows these numbers is announcement, that later this year there shall be overhaul of the Latvian government. Such overhaul was rumoured already since May 2007. The budget for the 2008 fiscal year shall be accepted in the Saeima and, thus shortly after Independence Day (November 18) new government could be formed, good!

Some of you might be interested who is Mr Gundars Daudze? He is anesteziologist from Ventspils. It creates a rather interesting precedent in Latvian politics, because right at this moment the president, the speaker of the parliamanet, and also Maire of Riga are all doctors. Whilst talking about Mr Daudze, he is not even member of the ZZS, but the pocket party of the Maire of Ventspils, `Latvijai un Ventspilij` that is part of the ZZS fraction in the parliament and run under ZZS name in latest parliamentary elections. The style of governance of the Ventspils maire very much resembles the paternalistic juggling of Godfather, thus there was no dissent allowed in the maire´s pocket party. Mr Daudze was a member of the party board and I am not convinced that the new speaker of the parliament is able to distance himself from Aivars Lembergs.

Most probably also members of the governing coalition understood that and did not want to argue with the ZZS members about such a trivial issue due to the more serious matters at hand - the economy. If new government is in making for the end of this year, then days of Mr Daudze in the office are already limited.

The decision of Aigars Kalvitis to suspend duties of Aleksejs Loskutovs was unexpected. It was long known that there were no amicable relations between those two gentelmen. The decision to suspend his work while prosecutors offfice would research his record in spending public money in his office seems baloney however. I somehow guess that the Kempmayer vs. Latvia court case, resignation of the former speaker of the parliament, and extremely bad state of Latvian economy are intimately interconnected and possibly could lead us to the snap elections. To answer this question I got to go to Riga see the latest party and government ratings and also hear news from prosecutors office. I have an hour left till my ferry leaves, thus I must finish here, and shall update as soon there will be some information out there.

Friday, September 21, 2007

Unable to give up his power, why? (updated)

Latvian Prosecutor's office started criminal investigation about the speaker of the parliament, Indulis Emsis for giving false statements to the judiciary, today. Tomorrow Latvian president Valdis Zatlers is planning to depart to New York for the annual oppening of the UN's general assembly. In case president Zatlers would leave Latvian soil tomorrow, according to the constitution the speaker of the parliament would become the highest authority of the republic. Because the second highest authority tonight is facing the situation of criminal investigation we face moral dilemma of having "almost a criminal'' as the head of the state. For that reason probably the State Security Council would be convened, and imagine for what reason...because the incumbent speaker of the parliament is unable to resign do to the reasons known only to him (his own asnwer to journalist's question was, "that he does not know how to do that").

President and PM have reiterated throughout the week that the speaker should finally make up his mind. Today most parliamentary fractions have repeated such plea but speaker has answered that he would speak only through his lawyer. There is rule of law in Latvia, but holders of political office in Latvia mostly forget that prosecutor's office would dot present criminal charges against highest officials of the state without real evidence at hand. It was prosecutor's office who announced that they have received another batch of evidence from foreign sources (sic. Washington or Brussels), and probably that is the explanantion for the swift move of the Prosecutor's office.

Also former chief of the PM bureau Mr Jurgis Liepnieks was presented embezzlement charges in Kempmayer vs. Latvia case.

What would one conclude here, in the situation when Latvian TV journalists wait in the house of the parliament for the speaker to come out with clear announcement about his decision? It is a continuation of changes in Latvian politics and gradual transformation from traditional to rational legal authority. The traditional governance style of the 1990's or so called traditional rule of Lembergs & Skele is getting over, such transition was never taking place smoothly, thus we might expect some additional changes in the Latvian political landscape. Transition from traditional to rational legal authority also explains inability of Indulis Emsis to resign. Simply his party "patron", the acting maire of Ventspils, is literally holding speakers balls in his hands. Thus the speaker probably has resorted to Mr Lemberg's wishes, and is simply unable to utter his own judgement without permission of the patron. Another explanantion could be the fact that Mr Emsis truly believes the conspiracy theories that his party boss and other shabby advisors have been teeling him about Soros networks of international jewry. In this case I feel really sorry for him, because it shows how shallow is the thinking pattern of the average Latvian MP... But what could we expect further on from here?

Fall of the present government was predicted, but to predict extraordinary elections would be too premature now, when prosecutors office has not come up with additional "news":) The dissatisfaction of the general public is omnipresent and latest polls show that government's ratings are at the lowest ebb. The ""Sword of Damocles"" has finally fallen, and to those who do not constantly read my blog these were words of former president Madam Vike -Freiberga in her farawell speach to the parliament this June. One thing is sure, that if the post-Soviet nomenklatura does not want to change in evolutionary way, then they have to be pushed with the help of post-modern revolution - active involvement of civil society and Western partners. Lets wait for more news, because Latvian TV crew waiteth in the Saeima for the speaker to finally act!

P.S. Its 21:18 CET and LTV just announced that the Speaker of the parliament just resigned and gave up his parliamentary mandate, hurrah!!! What a nice present, and here we cant avoid symbolism, for the patron of the already former speaker of the parliament in his 54'th birthday under house arrest. Also, shame on you Prime Minister! Just two days ago you announced that in the list of Lembergs stipend receivers thare is NOT a single member of the present parliament! What shall we think of your integrity again?

Lets wait now for future readjustments in existing coalition and possible replacement of existing coalition partners with new ones. In case prosecutors office would come up with more stipend receivers next week, the fall of the government is probable even prior budget being accepted for the 2008 fiscal year and the "Lembergate" might be followed with snap elections. Why? Peoples Party has her core electorate and the unpopularity of PM is well balanced with good showing of Aigars Stokenbergs and Artis Pabriks ratings. The Greens & Farmers are desperate without their patron who sits under house arrest, the Reconciliation Centre would steal votes from First Party (their ratings are just horrible) and New Era party has not regrouped itself after last elections. It means that Peoples Party could come out of snap elections even stronger than before. Lets wait till latest news on party ratings and ones from prosecutors office , it is getting interesting indeed!

Wednesday, September 19, 2007

Remodeling or collapse of Latvian government?

On Tuesday Latvian PM convened best economists, representatives from the employers confederation as well as trade union reps. for the emergency session at the Council of Ministers. The double digit inflation (10,1%), current account deficit (27,8%), GDP growth (11.4%), zero productivity in combination with average 30% increase in annual real wages, and outpouring workforce show that Latvian economy is out of balance. Such state of business gradually reflects also in downgraded credit rating by most of the international pundits (Moodys, Bloomberg, Danske Bank, Fitch a.o.). For more information see at ( Estonian economy is also overheated and Estonian credit ratings also were downgraded (, but Estonian inflation rate is half of the Latvian one, Estonian budget runs healthy surplus (circa 1% of the annual GDP) for many years in the row while Latvia for the first time plans to have budget surplus this year (estimated to be 0,41% of the annual GDP, that is lower that 1% proposed by experts). Estonian current account was reigned in around 20% and exodus of Estonian workforce is not comparable with the Latvian one. Thus much about the comparison between two neighboring countries who re-started their sovereign lifestyle in 1991. Why are there such differences in economic performance between two countries?

Answer is hidden in the sphere of political culture. While Estonian leadership in the early 1990's mostly represented the graduates from faculty of humanities those were and still are technocrats who govern Latvia. Such difference is best reflected in the intial decisions two governments made. While Mart Laar & Co emulated best practices of Reyganomics, those were Latvian technocrats arguing about the best economic model for their small country and trying to satisfy thus many different interest groups. The mandatory tax reporting system introduced in Estonia in 1991-1992 is still something Latvia aspires to achieve in January 2008. Alas it would become possible, if one trusts words of the incumbent PM.

Latvian PM, Aigars Kalvitis announced on Tuesday evening Latvian TV First programme news, and reiterated that yesterday in an interview to the most media channels, that Latvia shall face dire economic consequences if government would not immediately cut expanding expenses of the government. Basically PM announced that wages of MP' s and all the civil servants are planned to be frozen, because "the international economy faces tectonic tremours". While having said that, PM gave a signal to doctors, teachers and other members of state sector, that they should stop expecting wage increseas that government had promised to their trade unions prior the summer. As a consequence, we should expect doctors and teachers going on strike.

Economists, liberal media and bloggers were warning about the conspicuous consumption of the state sector and recless governance style of the governing coalition already in late 2006. Now the 2007 autumn sets in, and very soon common folks shall see effects of increased rate on excise tax on electricity, gas and petrol (the EU directive governments cannot overrule). Inflation expectations override Latvian public, and without drastic measures in downsizing the size of government it is impossible to achieve normalization of the Latvian economy.

Minister of economics is crucially needed now, after Jurijs Strods (TB/LNNK) resigned due to personal reasons, but PM answered that he would think about such a need after government would agree on the budget for the 2008 fiscal year (probably till the first week of October). It has caused rumours about cracks in the governing coalition and replacement of the conservative Fatherland Union (TB/LNNK) with the leftist Reconciliation Centre party (SC). The leader of the SC, Jānis Urbanovičs denied such possiblity and in his interview to the public radio (, where he announced, that: " the mess in the economy should be solved by the government who created it, and thus the People' s Party (PP) must pay for their arrogant governance style". Some pundits speculate that PM is actually tired of the continuous haggling within the coalition. His happy face and physical outlook does not show signs of tiredness, although in the first half of the year he was constantly caught by paparazzis sleeping in different venues. Therefore, columnists in and argue that he wants to actually secure the position of the Economics Minister (that is the position he started his political career from, prior getting to the PM position thanks to the grace of the former PM Andris Skele) for himself, and thus allowing the head of the PM' s bureau Mr Maris Riekstins to become the new prime minister.

Regardless of the rumours cracks in the governing coalition become more visible every day. Yesterday it was proven also by the head of the Union of Greens and Farmers (ZZS) Mr Augusts Brigmanis, when he resolutely announced in the Panorama TV evening news, "that he would not sacrifize his ministers and speaker of the parliement for the sake of some PP member making his political career". Aye, Latvian political theatre is the same cynical playfield. Positions of pre-pension age politicians are deemed to be extremely dear, and it causes them to act most of the time irrationally.

Just look on the speaker of the parliament Indulis Emsis. His statements and undecisiveness is not only legendary, but it is increasingly turning out to be a sad joke for the Republic of Latvia. The commission for investigating problems in the Latvian legal system after publishing the "Home made Adjudication" was set up by the Saeima, and the commission is going to be led by the populist maveric Juris Dobelis (TB/LNNK). Even members of governing coalition, including incumbent PM, question rationale of such commission which simply creates a taskforce for spending more taxpayers monies, nonetheless the same members of governing coalition approved such commission:-) Prosecutors Office probably waits to see the final numbers for the 2008 fiscal year budget. So, after receiving final numbers for their operating expenses for the next fiscal year, Latvian public could finally expect the long waited news about stipend receivers of the maire of Ventspils, and whether former PM Andris Šķēle is going to stand trial in the digitilization affair (Kempmayer Ltd. vs. Latvia)? Experts and academics are waiting for the news, ratings of the government are extremely low, and PM is not sure of himself, and economic downturn on top of it.

Thus, would it be simply remodelling or collapse of the Latvian government? I would argue that it would be a collapse, because existing members of the coalition never wanted to play according to the previously agreed rules and disagreements are just too large among them (disagreement between ZZS & PP on adminisitrative reform of local munipalities, PP and LPP disagreements about the rate of property tax, PP & TB/LNNK diagreements about the minister of economics etc.). When reality for the burgeoning class of civil servants shall set in about their salaries being frozen, it would finally end the bubble of "seven fat years". Also striking doctors and teachers would make the careless style of governing coalition unbearable.

Thus it is hard for Mr Kalvitis to juggle like he had been before. Merits were never considered as essential for the job performance in the Latvian government, but ohh boy, knowledgable governance is thus needed now. Shortly, you can not solve present problems in Latvian economy with half measures (as it was with the half baked anti-inflationary plan). The PM has no qualities of leadership and his retinue is just ludicrous. Government bases its performance on very dangerous and naive assumption, that even if the Latvian economy would sunk due to their inactivity or lack of knowledge, the EU would save Latvia somehow. There is no such precedent in the short EU history, thus would rescuing Latvia by Brussels administration create a precedent?

Monday, September 17, 2007

Autumn is approaching

The time has flown by rather quickly and the changes in the personal life as well as ongoing duties at the university did not allow to add any new blog entries. It is a beautiful sunshine outside today, and we had a guest lecturer from Telaviv University, Prof. Eyal Zisser at the RSU . The reception would follow later today and discussions about the gloomy prospects of the Middle East, especially considering today's unequivocal announcement of the French Foreign Minister, would be rich indeed.

In the meantime Latvian political culture does not add anything substantial in this post-vacation time. Latvian PM just returned from his vacation, and to be honest, the time while the Minister of Regional Affairs, Aigars Štokenbergs was the acting PM the government in Latvia finally regained its coherence. The reform of the local municipalities administrative system has finally come to an end, and the government is ready to give up its Minister of Economics. Rumours about possible replacement of an incumbent Minister of Economics came to fruitition today. Jurijs Strods (TB/LNNK) announced that he quits his job due to concerns about his family life. OK, whatever excuses he brings the fact was that the minister was not up to his duties. It is a tricky business to retain ministerial position in a coalition government, and even more so in the cynical playfield of Latvian politics. Nevertheless, even civil servants at the ministry (and about seven graduates of the RSU work now at the Ministry of Economics) have uttered me, that the parting minister simply could not digest the collective governance style at the ministry.

In the meantime there are ministers of Education, Welfare, as well as, the speaker of the parliament, who's ratings have sunk extra low. The problem of these persons is that they do not know how to resign with dignity. Listening to the public opinion is a novel task for most of post-Soviet political elite in Latvia. It happens so that all previosly mentioned public figures represent the union of Greens & Farmers (ZZS). It is the political party that was sponsored by the still acting (!) maire of Ventspils. Those of you who follow my blog entries probably remember that the maire of Ventspils was arrested on money laundering and embezzlement charges, and that he is still sitting under house arrest and waiting for his trial.

The speaker of the parliament has come up with a row of conflicting and outright stupid prouncements. Two weeks ago he announced that he wants to step down from his post and stopped his planned foreign visits. While I was in Istanbul he managed to revoke his earlier statement, and is now waiting till prosecutor's office shall come out with news concerning his involvement in bribing or Lembergs stipend receivers case. Ridiculous as it sounds, but both PM and the president of the republic have stated that it is up to the speaker himself to decide his future moves. Thus, the rest of the society shall eagerly wait now till members of the political nomenklatura shall scheme out what shall be the best face saving strategy for the ZZS party.

Face saving or not, but the ZZS ministers of Welfare and Education are rather big stains on the more or less virgin carpet of the ZZS. The Reģi trategy last winter did not affect the Minister Dagnija Staķe. Experts clearly stated that the ministry follows the Soviet tradition of very centrallized system of social welfare, and the minister has no wish to have her vision of implementing the best practices of Scandinaviaan countries that Estonia emulates for example, because she simply lacks the vision, unfortunately... The minister of Education is in no better position. The good news from Madam Rivža, however, is her recognition of the problematic Council of Science. She has agreed to implement the practice of involving external experts in the committee who would actually decide, which scientific research is credible enough to receive EU money and which not. Good, something positive in this field and less old boys network influence at least:)

Last, but no least, Latvian annual inflation has spiralled to the two digit 10.5%, and which makes Latvia to have the highes inflation in the EU (twice as big as in Estonia and Lithuania). Continuous rings of warning bells have FINALLY had their effect, and today even prime minister considers situation in the Latvian economy as serious. The problem is that even if PM considers the problem as serious there is not a slightest hint, that the ever burgeoning size of public servants must be cut and principles of meritocracy introduced. Until there is no such system envisaged, the prospect of the very heavy landing of the Latvian economy is still on agenda. In the meantime, government has an option to simply privatize state owned shares in the Lattelecom company, and make the books look good. However, how long the government shall be able to lie to itelf that the whole Latvian governance mechanism is not simply built for satisfaction of short-term needs of particular groups? Balancing different coalition partners against each other and having the smoke screen of continuous number crunching before the public is the strategy that goes well with the economy galloping at 11% annual growth, but what shall the helmsman of the delapidated Ms Latvia do, when the external pressure of international money markets shall start its real effect??

Wednesday, September 5, 2007

Its sunny September day

End is good, all is good! Just finished lecturing first year students, packed my papers, collected unfinished paperwork and trying to quickly drop a line into the blog. I am on the way to the RIX international, to fly to Istanbul. The day is so nice after a constantly gray sky that reigned here for a week, that I just do not have anything else to add.

Latvian politicial sphere stays where it is, and Administrative reform of local municipalities after 10 years of calvary was finally accepted in the government! Finally, it still needs to be approved in the rubber-stamp parliament. So far so good! It is absolutely unscientific, but whenever I have left Latvia lately, there has been something rather extraordinary going on (Maire of Ventspils arrested, Speaker of the Parliament suspected to be in the list of Lemberg's stipend receivers). Shall se, what news will come this time? Anyway, enjoy the rest of the week friends and acquitances, and I shall celebrate my birthday upon return back in Riga this Sunday:)