Thursday, July 29, 2010

Whether geography matters in the Baltic constructed ’’world’’?

There are politicians in the Baltic States (3B) who persistently tend to emphasize the unique geographical position of their represented states. Thus the politicians continue to mislead themselves and broad swathes of society, because particularly since the end of the Cold War traditional relations between states, strategies of the military, and international trade policy has witnessed significant transformations.

Within the European Union 3B could be geographically unique indeed, because their size and relative weakness of interest groups should allow 3B to give up anachronistic vestiges of the nation state statecraft and be stellar examples of small but well governed economies. While Estonia has earned laudatory achievements due to its own merits Lithuania and Latvia still grapple with old fashioned premises of nation state governance. It is perhaps symptomatic that you barely hear from Estonian mainstream politicians mythical notions of historic destiny in matters of governance, because for a small, efficient and open economy it is essential to achieve results with available resources.

During the early 1990’s 3B experienced advantage of relatively abundant and cheap labor. Ever since early 1990’s underinvestment in education sector and rapid rise of comparative welfare determines now the future of 3B economies. The only factor of comparative advantage is its relatively free and pristine land. Those scholars and politicians who anachronistically follow geopolitical dictum and speak about the advantage of geographical position of 3B forget that geostrategic position foremost needs human infrastructure. To put it differently geography matters only with sustainable taxable income and here development of human resources has utmost importance.

Baltic ice free harbours connected by pipeline or railroad do not offer much value without population unable to sustain such primary infrastructure from their taxes. Today one may easily continue to be Estonian in Tahiti whilst watching the Estonian Broadcasting Corporation emissions via satellite and ordering his favourite merchandise or services via internet. Technologies and in the World Trade Organization embedded international trade flows are producing truly global economy. It changes old paradigms and brakes material borders. However, it is harder to break mental borders which were constructed into people’s minds through formal education system. Education systems are traditionally conservative, and what really distinguishes well developing and declining economies today are education systems that are able to reform. Ability to reemphasize countries’ prerogatives of foreign trade, upgrade governance, and invest in education as bedrock of viable democracy determines countries’ position in international pecking order. To measure just few international indexes (World Economic Forum, Pisa, UNPA e-government a.o.) it becomes apparent that Latvia continuously falls in terms of its development not only behind Estonia, but now also behind Lithuania and Poland.

3B are ideally positioned to learn from historic examples around them. Finland and West Germany as vanquished countries came out of the war as modernizers leaving anachronistic belief in geographical dictum behind them. At the same time it was the USSR before and now Russia which continues to construct the language of 19.century imperialism and under invests in its human and material infrastructure. Learning from other’s mistakes rather from one’s own distinguishes smart collectivities from not so smart ones. It would be advisable for 3B populations to wake up from wrong myths about ’’special geographical position’’ of their states, ’’bottomless Eastern market’’ or naive assumptions about their countries comparative advantages as ’’the real crossroads between the East and West’’. The 3B are tiny and depopulating, thus geography still matters when one must choose ones strategic partners.

Lithuanian Polish relations are exemplary as well as the Estonian – Finnish relations are institutionally flourishing today. Estonian, Latvian and Lithuanian unity with the Baltic Assembly regular sessions and specialized cooperation between particular branches of government looks good, but in reality the 3B cooperation is an elitist endavour without substantial interdependence.
The traditional promoter of the Baltic cooperation is unable to project Latvian soft power even domestically because of governance system being in shambles. Since avoidance of insolvency now Latvia 2.0 needs paradigmatic change of cooperation with its neighbors. Unfortunately Latvia has wasted nineteen years and its external space of maneuvering is limited. Latvian government must continue cooperation with its Baltic neighbors in economic and energy policies. Politically, however, Latvian political class must decide whether they want to develop embedded relations on axis with Scandinavian countries, Poland or Moscow. The infantile policy of oligarchic parties falsely claiming that Latvia is securely embedded in Western security structure and thus free to cooperate and trade with everyone in the East, North, South and West is wrong. Latvian oligarchic groups are thus poorly educated that they have not even learned the old maxim: ’’you cannot serve two kings at the same time’’. It is time for Latvian politicians to wake up from self inflicted and smug dream world, assess the dynamically transforming external environment and decide which path of development they want to emulate. Estonia is reassessing its economic relations with Russia as Lithuania does, but it goes through the transparent process of strengthening the domestic governing capacity and rule of law. Without Latvia 2.0 being implemented the outdated geographical dictum could eventually materialize, but it would not offer Latvia even a chance for a spot on ‘the crossroads between the East and West’’, but simply assign it to the proxy role of transit depot for Eastern hydrocarbon barons...

P.S. Originally this article appeared in the Baltic Times July 1, 2010 issue.

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