Saeima fiddles while Latvia burns

  • 2013-10-31
  • By Viesturs Janis Drupa

FOR RENT: With statistics showing 500.000 people have left Latvia, Saeima needs to act with development policies to reverse this exodus.

RIGA - Much has been in the news media recently about the economic recovery that Latvia has made after the 2008 world financial crisis hit. Latvia took stringent measures to cope with the financial crisis and now is ready to enter into the European Union’s monetary eurozone as its 18th member with the euro in 2014. Latvia’s economic recovery has been praised by many economists as an example to other countries still recovering from the financial crises, to emulate. It was and is still a great accomplishment for the nation and can largely be attributed to Valdis Dombrovskis, who was elected prime minister in 2009. It was under his leadership that the Saeima (Parliament) took strict financial measures and cut government spending, in order to resolve the crisis in Latvia.

In spite of this remarkable achievement, though, I have my reservations with Saeima and its future endeavors to preserve and protect the Latvian nation. I’m concerned about what has taken place in Latvia since Soviet occupation ended over twenty years ago and its plans now for the future. Since independence, Latvia became a member of the European Union, joined NATO, privatized many businesses and the economy has prospered, yet, at what expense? Over the years, some 500,000 Latvians, a fifth of the total population, have left the country to get work in other European states. Many of those people will probably not return, and that’s a huge hit on the tax base. The road system is still a mess. Currently, about 80 percent of roads in Latvia are still unpaved and the other 20 percent are in constant need of repair. The railway system is still antiquated and barely meets the needs of the population and business. My business friends in Latvia constantly complain about the bureaucratic regulations nightmare that faces them daily. The legal system is also antiquated, unresponsive and very difficult to use. Corruption is still very prevalent in both business and government.

All of these concerns and more are not just my concerns, but the local population’s as well. Saeima could change and/or alleviate some of these problems, yet they have chosen not to. To understand why not, you have to take a closer look at government operations in Latvia and how it affects the lives of its citizens and commerce. You have the Saeima; the national governing body; the little city states, as I refer to them, of Riga and Ventspils; the rural folks, and of course, the oligarchs. Each one of them plays a role to some extent as to what happens in Latvian politics.

The deputies elected to the Saeima don’t really represent any special region or population. You vote for the party, of which there are many, and the party selects who they want as Saeima deputies. Riga, the capital city, is also home to the Saeima - which relies on Riga for its operational support. Because the majority of Saeima’s deputies live around Riga, the city and its environs are well kept. It’s no wonder then that Riga has continuous celebrations of one sort or another year round. Ventspils is an important seaport and is largely semi-independent due to its powerful long time mayor. The rural population in the smaller cities and farm communities are often forgotten when it comes to sharing the wealth. The oligarchs are millionaire businessmen and exert great pressure on government through extensive and often hidden business networks. Some oligarchs have been Saeima deputies while still controlling their economic empires. Once in the Saeima, you are also above the law. Some deputies that have been investigated for corruption or other charges have not been prosecuted because of their immunity. Saeima could stop some of these abuses by changing some laws and regulations, and then take strong enforcement action.

Through immigration, Latvia lost over 500,000 citizens from their tax base, so the government now needs to find more efficient ways to tax those who are left. To accomplish just that, the government is building a huge tax revenue office complex - Soviet style in its grandness - in Riga to consolidate all revenue offices in Latvia. The building itself is so huge and expensive that it makes all other buildings in Riga look miniscule. Building such a huge new building in Riga, when so many older empty office buildings exist in the capital, is questionable considering that half a million people are no longer in the tax system.

Where will the money to pay for this expensive building come from? The current tax base is smaller and the past economic crisis only hardened the rural populations who have no taxpaying jobs. The rural citizens exist in an economy on spot cash, small local home businesses, or barter. Even Riga is getting in the act by trying to raise more money through their transit system. Riga citizens will pay less, while everyone else will be paying more. The ones that will be paying more are the rural citizens that come to Riga, and they are the poor ones. Without Saeima intervention, does that set the precedent for other cities in Latvia to follow?

Riga, like the other Latvian cities, relies on government heating fuel for residential heating. Most residential buildings in Riga, as well as Latvia, have central heating systems. Individual apartments have no control over their own heating. As long as you pay your bill there is no problem and you get heat in winter. Those that don’t pay also get heat. The problem is that because someone doesn’t pay in your block, you may have to wait longer to finally get some heat, no matter how cold it gets. There are no rules or regulations to enforce payment, so the government has to take more money from those who paid. Where are the standards and enforcement regulations?

Riga and Ventspils are the two major harbors for commerce in Latvia and the government gets their share of the taxes from their use. Both harbors have organizations set up under government guidance for their particular harbor usage and tax. The problem is that the organizations are so complex that there exists a lack of transparency to find out who the true owners are, where all the income goes and what is reported for taxes. There is a large disparity in tax revenue by both agencies. Where is the enforcement from Saeima?

AirBaltic is now fully owned by the government. That wasn’t always the case, but after some management and questionable ownership problems, Saeima took ownership. The airline now has been taken to court over some questionable financial dealings in the past. The government’s airline ownership is proving to be a white elephant, and not manageable by the government. My sources at the airline say that the financial mess will only result in further problems, or even insolvency. Why is the Saeima in the airline business?

Latvia is in the European Union now, yet the only international railway lines go to St. Petersburg, Moscow and Minsk. After more than twenty years of renewed independence, we still don’t have any rail lines going to Tallinn, Vilnius, nor even to our major seaport in Ventspils. In 1939, Latvia had 3,350 km of rail. We now have 2,239 km of rail and not enough rail coverage to our rural population and cities.

After independence in 1918, Latvian trains covered all of the Baltics, and went direct to Berlin and onwards. Latvia’s future is to the West, not East. What is Saeima doing to correct this?
Commerce is the lifeblood of any nation, and one way that you can tell how well a nation is doing is by looking at their roadway system. Latvia has 73,000 kilometers of roadway, of which 80 percent are unpaved. Only 20 percent are paved, and are in constant repair. Take, for example, the heavily traveled road from Cesis to Madona. Years ago, construction was started with European Union support to improve the roadway. Construction started and then stopped less than halfway. The unfinished road is probably the worst road now in the Baltics. Not far away, another roadway project from Ergli to Riga was finished. The only problem is that on the finished road there is minimal traffic. It makes me wonder where Saeima’s priorities are. Saeima deputies living in Riga seem to have no clue as to what lies outside in the rural areas.

Lastly, we have the Latvian oligarchs and their influence in government affairs. The Latvian media has in the past addressed the oligarchs and their influence in politics. The three oligarchs most often mentioned are millionaires Aivars Lembergs, Andris Skele, and Ainars Slesers. Lembergs is the current mayor of Ventspils and has been mayor there since 1988. He has been investigated for possible improper financial dealings in his business holdings in Ventspils, Europe and other Latvian areas. Legal proceedings for some business ventures are still pending against him in England. He was relieved of his mayoral post by the government agency that oversees local governments. Instead of Lembergs leaving, the head of that government agency was relieved and nothing more was heard about it.

Skele and Slesers were both once Saeima deputies and they both were linked to various possible financial wrongdoings. KNAB, the government agency that investigates criminal wrongdoing tried investigating their business dealings, but nothing was ever proven. As Saeima deputy, Slesers invoked immunity from investigation. The magazine The Economist on May 11, 2000 expressed the oligarch influence in Latvian politics best when it wrote: “private and business interests have too strong a grip on Latvian politics. It is their rivalries that upset governments.”

These are my thoughts and feelings why I believe that the Saeima is not doing enough to prevent Latvia from self destruction through corruption and poor understanding of the nation’s wants and needs. There are many well-meaning, competent individuals in Saeima that are doing their best to govern the nation, and Prime Minister Dombrovskis is to be commended for his vision and leadership.

I ask the deputies to take a hard look at Latvia’s past and then look to the future. They need to spend more time outside Riga and see with their own eyes what is out there. We are a part of Europe and have been since the Hanseatic League.
Saeima needs to seriously look at changing or revising current laws and be seriously concerned with their enforcement. If they can do that, they will then show the Latvian citizen they don’t stand for corruption at any level of government and that their job is, and always will be, to serve its citizens and this nation.