FILING A FLIGHT PLAN

Feb 10, 2000

The news from OECD's latest regional economic assessment is positive but brings to mind a grim analogy. What the Organization for Economic Cooperation and Development said is while Estonia, Latvia and Lithuania are throttling ahead toward the desired European integration and economic reforms, the three need to mind the stabilizers of economic growth: the lateral development of political and economic institutions, the lack of which could tip any one of the three states into a dive.

We know from news reports the sorrowful, immutable consequences of stabilizer failure in an air crash and a near miss on the west coast of the United States. Pilots tell us that when the horizontal stabilizer on the tail of an airplane comes apart or unports, no human is strong enough to pull the craft out of a dive. Even before the airplane goes into a dive, an addition of fuel or discharge of passengers or a correction can change the center of gravity, fatally changing the aerodynamics applied to the faulty juncture or assembly.

So it could happen with an emerging economy, say analysts at OECD. The strong fuel of economic reforms will not push markets forward without the horizontal stability or fiscal discipline provided by political reforms.

Lateral development of institutions assumes a strong, well-trained ground crew: transparency, defenses against exogenous political and economic factors and the master mechanics of tax collection, open tenders and constructive privatization to the ablest and strongest bidders.

This is the good news. Such an economic system is not only necessary but achievable with straight-thinking, straight forward determination. According to the OECD report, the Baltics are making progress.

When these systems check out and administrative obstacles have been squared away, the Balts can chart flight plans to accommodate vectors like the Williams deal, the privatization of Latvian Shipping and Estonian energy deals. They can proactively plot a course keeping the exigencies of the flight plan in mind. The economies can navigate a westward or eastward course as they determine and evaluate whether the desire for glamorous European destinations is leading us off course to risks without immediate or long-term benefits.

OECD is saying that with sound political institutions, taking an overworked "for instance," Lithuania could better choose its hazards in averting economic crisis: submit to threats of Russia's Lukoil or choose the more costly alternative with American oiler Williams International.

In plotting courses it is incumbent on Baltic governments to have viable equipment for the sake of those riding along, the "passengers" in the below-subsistence-class seats who have yet to realize benefits of the new ships of state.

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