MUNICIPAL MADNESS

Mar 26, 2008

Earlier this month a Latvian minister, like a bolt out of the blue, announced that he would petition the Cabinet to sack the entire City Council in Kekava, a town just south of Riga. It was one of those rare power-moves in Baltic politics, when someone demonstrates courage and a willingness to take the heat for a controversial decision. Regional Affairs Minister Edgars Zalans, who just three months ago was a leading candidate for prime minister and at the center of a media tempest, said that the Kekava council was guilty of "systematic breaches that continued for years." Zalans, a former small-town mayor, said that numerous building permits worth some 100 million euros had been issued illegally over several years, while his press secretary was quoted as saying that council members changed the terms of usage of 194 structures and permitted construction on 88 land plots.

In other words, Kekava's been a regulatory free-for-all. As with Lithuania's Curonian Spit, canceling projects already approved can be a costly affair since developers can take the municipality to court. One solid claim can bankrupt an entire town or district. For these reasons, the government gave its preliminary support to Zalans' initiative on March 25, though a final decision is expected later in the week.
It is fortuitous that the Kekava case is taking place while the government is considering sweeping administrative reform for the entire country. The internal map of Latvia is essentially being redrawn, and much is at stake. More importantly, the reform is long overdue. Currently there are some 553 administrative regions in Latvia, a country of 2.3 million. (For the record, that breaks down to 35 districts, 26 regions, 53 towns, seven cities and 432 rural municipalities). This is, of course, as inefficient as it is ludicrous. Not surprisingly, Latvia, which still adheres to the two-tiered system of governance (local and regional), is way behind its neighbors. Both Estonia and Lithuania abrogated the two-tier system in the 1990s and merged smaller municipalities. So now Estonia has 227 municipalities (far too many) and Lithuania 60. Here the Lithuanians are way ahead of their Baltic brethren.

For years Latvia has known it needed regional reform but nothing was done. In 2001 the government approved a model of 102 municipal authorities over alternatives calling for 33 and 167. In 2006 the government adopted the "167-project," but this was dumped when Aivars Stokenbergs took up the post of regional minister and said the country could do with far fewer local authorities. Finally, in September 2007 the government approved a new map that divides Latvia into 96 municipalities and nine cities.

But that government soon collapsed, and the new government, though consisting of the same faces, is split over how to proceed. The Greens and Farmers Union, a real grass-roots political party, has threatened to pull out of the coalition if its partners proceed with the reform. The opposition, not surprisingly, supports the idea of a less fractured Latvia, and will likely support the bill. But what administrative reform is really about, of course, is money. As former PM Andris Skele said in an interview this week to a local paper, regional reform has gone on too long and the state's losses are in the hundreds of millions of lats. And Skele, let's not forget, knows a thing or two about government inefficiency; he helped write a couple chapters.

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