Monday, February 25, 2008

Prime Minister and spring brake

Throughout January Ivars Goodmanis was working hard and it was speculated that his overbearing energy and lack of knowledge to delegate powers to other cabinet members would burn him out prematurely. The rumors about his workaholic leadership style date back to the early 1990’s and probably he has learned to delegate his powers after all, although I doubt it. The major cause to cast doubts on his ability to learn such technique is the fact that the incumbent PM took a week long vacation yesterday. It means that from yesterday the Transport Supremo who is also known with the nickname “kick boxer” shall execute PM duties in Latvia this week. I don’t think that Mr. Godmanis is burned out immediately, but it seems that he takes the governing tasks too seriously without really consulting the wide range of experts about real causes of the sorry state of business in Latvia Ltd. Probably he did not have a real X-mas brake either. Thus, I would speculate that after passing the 100 day, and now also the government action program, he feels as accomplished something tangible and is probably skiing somewhere in the Alps.

P.S. For those of you reading in Estonian I wrote a piece in Postimees.






“Transport Supremo” and Mr. Goodman (from left to right)

Already in July 2007 (look into the July 18 blog entry) the incumbent PM advertised his ideas about the future economic development in “Latvijas Avīze”. In February 8 the Latvian Bureau of Statistics came with the news that Latvian annual inflation has reached not only the highest rate (15,7%) in the post-independence period but it is also the highest in the EU. This news does not surprise anyone in the Latvia anymore, because the whole 2007 were spent in almost firemen readiness to extinguish nests of the overheating Latvian economy. The civil society put a pressure on the government throughout 2007, and already ex-PM Aigars Kalvītis had to resign due to incompetence and lack of trust in December 5, 2007. Hurried government negotiations just prior X-mas [that created associations that governing elite was craving simply for restful holiday season] finished with 97% of the Kalvitis government ministers ending up in the government of Ivars Godmanis.
With the same government ministers and MP’s it is not really possible to achieve those strategic goals that the incumbent PM himself, the acting PM and other members of the governing elite have pronounced. Ivars Godmanis was actually the first PM in Latvia who publicly announced that the model of Nordic welfare society and innovative economy is the strategic goal for Latvia to emulate. Many parliamentarians and government members in their scanty interviews also express similar ideas, but that is all rubbish because of three major reasons. First, to have the Nordic model as the government strategy it should also be reflected in the existing party programmers, which is simply not there yet. Second, personal experience of members of the present political elite about the Nordic model comes from trips to the Nordic capitals that was translated to them via official translators, it means that they have not really lived and experienced the lifestyle in democratic western society. Here Transport Supremo or Minister of Transport is a “noble exception” due to his studies in Norwegian folk-high school, but rather ironically his statements and also governance style reveal that he does not preach the Nordic model but the post-Soviet extreme form of neoliberalism instead. And finally one must also add the institutional governance culture in Latvia, which is simply path dependent and traditional. Here is the time to paraphrase the quote of the former Prime Minister of Russia, Mr. Victor Chernomyrdin, who once reflecting on new political parties in Russia ominously concluded that at the end ''they(parties) would be following the same line of the CPSU”. Rather similarly in Latvia it means that even if there are novel western ideas, they are transformed in the highest corridors of Latvian administration to such an extent, that they turn out to be no better than shaby post-soviet restrictive regulations.
In such an environment I do not expect substantial changes in Latvia in upcoming months to come. The international credit market crunch due to the US sub prime market collapse will leave impact on all world free trade regime economies. It will hit particularly hard fiscally irresponsible ones. Latvia with its antiquated tax code and utterly irresponsible almost 25% current account deficit is particularly vulnerable here. In addition to that the government has agreed with the local Public Regulator Office to rise electricity and gas rates up to 50%, and that will only increase the spiraling inflation in Latvia, unless the ongoing corruption scandals in Riga City Council do not overheat the dormant Latvian public.

Concluding remarks


Any Latvian prime minister’s tasks at present conditions are simply too big. I do not envy Prime Minister Godmanis, but he should realize that he also was a part of the existing governing elite all those years. It means that in case he reckons that he could outsmart the minigarchic families I believe he is naive. The corruptive cancer has left its cells in all levels of Latvian governance system due to the unforgivable delayed reforms, and the lack of control over public finances.

What need is there for Latvian president, speaker of the parliament, and the Maire of Riga being members of doctors guild if the public health system is on the brink of collapse due to unwillingness to reform the medical system that was created for the centrally planned industrial society?

What need is there after University of Latvia as the major centre of excellence, if the majority of the governing elite represented so far the Latvian Agricultural University (Ministers of Defense and Health included), and the Ministry of Education continues to rhyme under the tune of path dependency. The latter ministry is actually ill famous for believing that Latvia is among the most successful countries implementing norms and principles of the Bologna Declaration into Latvian education system. What is the need for European quality and efficiency norms transplanted without democratic VALUES of the political and administrative elite in Latvia???

Without values that form institutional culture, Latvian state shall continue to have high fluidity of civil servants fresh from universities, and thus churn out post-Soviet milieu of centralized and ineffective public administration. How to change that, one may wonder????

Very simple, there is a need for political elite to stop endemic corruption by changing antiquated tax code, political party finance mechanism, and finally by implementing the mandatory income declaration system without customary delays.

For such transformative events to happen there is a need after renewed pressure from the civil society. Implosion of TB/LNNK and shake up of the New Era parties attest about uneasiness of members of governing elite about their future. The new Centrist party of Messrs Štokenbergs and Pabriks should be founded in March. Conservative Democratic party of Mr Kristovskis and Mme Kalniete is formed as well. It means that transfiguration of the political playground takes place and it is good news now, prior price hikes on electricity and gas, and increasıng number of corrupt members of the present Latvian elite becoming public.

P.S. Those of you reading Estonian here is a piece I wrote for Postimees.

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