Staying cool in Latvia's hottest seat

  • 2009-09-10
  • By Philip Birzulis

RIGA - Under ordinary circumstances, the office of prime minister is keenly sought by politicians. But in today's Latvia, few would like to be in the shoes of Valdis Dombrovskis.
Dombrovskis assumed the post in March of this year in the midst of Latvia's worst crisis since independence. GDP was contracting at double-digit rates, public finances were in a mess, and the price of lifesaving international help was sweeping spending cuts.

"When I took on this job it was clear that the situation was very serious and unpopular decisions would have to be taken, and this was also the reason why the previous coalition had quit. But the job had to be done," Dombrovskis said in an exclusive interview with The Baltic Times on September 4. "The decisions are difficult both practically and emotionally, and of course it has an impact on me. When I can, I try to relax, and my favorite way to do this is to spend time alone in nature, away from the hustle and bustle."

This low-key style sets the bespectacled former physicist apart from his back-slapping predecessors. But a dull but steady hand is probably what the country needs right now. While taking some comfort in recent banking, retail spending and export statistics that indicate that the decline is at least slowing, the prime minister admits that the recovery will start in late 2010 at the earliest. Recent protests in the town of Bauska against the closure of a local hospital may indicate growing restiveness amongst a population which has, up to now, stoically accepted wage and service cutbacks. For many people, unemployment benefit entitlements will expire in the fall, just as winter heating bills increase the cost of living.

Dombrovskis says the government is doing what it can to ease the pain. Funds have been found to ensure that people get at least some minimum payments, and subsidies have been earmarked for municipal governments, which handle much of the welfare system. At the same time, painful but overdue reforms of key sectors continue. For example, falls in pupil numbers due to demographic changes are being met by school amalgamations and closures. The government is involved in the nuts-and-bolts of reordering the nationwide school bus system to get everyone to class.

Worryingly, the disunity that is a hallmark of Latvian politics has not abated in these trying times, and there is ongoing friction between the five coalition parties. Andris Skele, a former prime minister widely regarded as the biggest beast in the People's Party, a faction which dominated government before the crisis, recently made public statements urging the devaluation of the lats. Supporting the currency is the bedrock of government and central bank policy. This is backtracking on a People's Party commitment made in June to stop raising the devaluation issue, and reflects inconsistency by this party on a range of issues, such as tax reform, according to Dombrovskis.

However, Dombrovskis denied that the coalition is coming unstuck.
 "I won't enter into any speculations about the coalition, because the People's Party has not expressed a wish to leave the government. I call on them to work constructively on issues that are currently important to the country and to not play petty political games," he said.

There are other signs that Latvia's chaotic politics may be maturing into a more manageable form. On August 24, three reformist parties 's Dombrovskis' own New Era, the Civic Union and Society for Different Politics 's announced that they would be running a joint ticket in the Parliamentary elections to be held in October 2010. This may avoid a repeat of municipal elections earlier this year, where fragmentation prevented some parties from crossing the five percent barrier needed for representation, handing victory to well-organized populists.

Dombrovskis also indicated that the government has learned the need to prevent damaging foreign policy feuds. On September 16, the European Parliament is expected to vote on giving Jose Manuel Borroso a second term as European Commission President. Each EU member state will then nominate a candidate to serve as an EC commissioner. Back in 2004, the first time Latvia had such an opportunity, one nominee was withdrawn due to domestic squabbling and another was embarrassed into stepping down over ethical issues. Fortunately, the eventual successful nominee, Andris Piebalgs, has earned much respect for his handling of the key energy portfolio. Dombrovskis recently announced his backing for Piebalgs' renewed candidacy, and said that no objections have been raised by his coalition partners on this matter.

Ultimately, though, he says that if stability is to be ensured, the Latvian electorate must grow up, too.
"In five years, I see Latvia having overcome the economic crisis and growing again. And I want to see it avoiding the mistakes of the past, related to fiscal irresponsibility by the government and excessive property speculation in the economy," he said. "I'd also like to see a decline in the power of money and the oligarchs in politics, but that depends a lot on the voters. Voters have to stop voting for parties or candidates as if they were brands of washing powder or some other consumer product."