Bulldozing through the Latvian capital

  • 2009-10-22

Ainars Slesers earned the nickname "the human bulldozer" during a controversial stint as Latvia's minister of transport from 2004 to 2009. He does not appear to have changed his combative style in his new role as deputy mayor of Riga. The Baltic Times' Philip Birzulis spoke to Slesers about his plans for the city and ethical issues surrounding his career.

In your campaign for the Riga City Council elections, you promised municipal employees 800 lats (1,140 euros) wages and jobs for everyone. Was it realistic or honest to make these promises given the economic situation?

I haven't backed away from my goals and we will achieve them. I have promised to create at least 50,000 jobs over four years, and I think this will be achieved or even exceeded. But if anyone expects that Slesers will implement a four-year program in the first 100 days 's I've never promised that.

How will you do this over four years?

It's very simple. The recession means that Latvia gains not only negative, but also positive things. I don't want to speak abut the negative things that everyone talks about, I want to talk about the positive things. Firstly, before the crisis we became uncompetitive, we had a labor shortage, people didn't have a positive attitude toward their jobs, they wanted to be paid a lot for doing little work, productivity was quite low, construction workers often changed work because rival contractors offered them more money. There were many cases where project managers arrived on site and saw that the workers were gone, because a competitor had lured them away, or the project manager would arrive on site and the workers would demand that their wages be doubled, and if the answer was no, they threatened to leave. This was the situation in which Latvia had ended up. Therefore, during the current crisis, we have to assess the possibilities and see where we can earn money. How we can attract business from other countries, find new niches, utilize the fact that we are cheaper today, that we are capable of working harder than the Scandinavians or Germans.

What are these niches?

Let's talk very specifically. AirBaltic has been awarded the title "airline of the year" in Europe. Number one. Unfortunately, the press doesn't write much about this. A lot of the media aren't interested anymore in good news, they seem to want to only report the bad news. How has [airBaltic's performance] happened? Through a clear strategy of making Riga the most important airport in this region. As a result, the Estonian and Lithuania aviation business is facing bankruptcy, while we are enjoying ten percent growth. The market is expanding, and Riga airport has become the biggest in the Baltics. It's an airport that serves Scandinavians, Germans, Italians, Russians and other nationalities. This is one example of how it is possible to create many jobs, previously only about 1,000 people worked at the airport, while now there are over 5,000. How will this benefit Latvia? We will develop the tourism sector. We will attract tourists from neighboring countries, Estonia and Lithuania and the Nordic countries, Germany, the CIS, Russia, Belarus and so on. We calculate that next year we will see a record number of tourists in Riga.

Why do you think this will happen?

Because we will work systematically to attract tourists.

How are we going to attract Scandinavian tourists to Riga?

I know the Scandinavians very well, because I lived there for many years. Scandinavia is very expensive, and they have to be given the opportunity to come here shopping. We will ensure there are direct air and ferry links.

But those things already exist.

There will be more. We will advertise more. Today, many people transit through Riga rather than making Riga their destination. We'll offer packages 's flights, accommodation. Some of them want to go to the opera or a concert, others want to go shopping, we will offer Riga as a place full of opportunities. We will invest money in advertising, which unfortunately Riga and Latvia have not done before. You can't sell a good product without advertising it. Therefore, a 1 million lats budget this year, a 5 million lats budget next year, with a concrete objective of creating 10,000 jobs in Riga, in hotels, restaurants, cafes, bars, taxis, hairdressers, museums and so on. On the one hand, this sector creates many unskilled jobs, but these can be created fast. This is just one area where by working in a focused way we will achieve results already next year.

Five million lats is a lot to spend on advertising, especially, if I understand correctly, it is mostly being spent on one Internet site 's Riga Live.

No, it's a very small amount of money, because by advertising the country we are competing with the UK, France, Spain, Italy, and if we advertise in the international media, the size of the country is irrelevant 's the costs are the same. Therefore, these costs will be greater for us because we are a small country, they will be greater per capita. But in this case we are looking not at the size of Latvia, but the size of Riga. Riga is one of the biggest cities in this region. We will advertise Riga, not the country as a whole. And we will attract Norwegians, Swedes, Finns, Russians, Germans and so on.

Speaking of tourism. You mentioned attracting people to come to Riga for opera and other cultural attractions. When tourists arrive in Old Riga, they encounter striptease clubs and bars where they get ripped off. Do you think there should be striptease clubs in Old Riga?

We are working hard on this issue. I've personally taken part in raids on many nightclubs, and we have stated clearly that we will close down these clubs if they don't change their activities. Some of them have already closed down, some are changing their activities, and those that don't we will over time close down, and the system will change. Because I personally don't believe there should be striptease clubs in the center of Riga, especially Old Riga. With regard to tourists, we can divide them into a number of categories. There are people who visit cultural and historical sites, and Riga is such a place. In 2014, Riga will be a European Cultural Capital. We will start advertising already now to attract more international attention. But we know there is also a large category of tourists who travel a lot 's pensioners from Western countries. They've worked all their lives, saved money, and they go traveling several times a year. We'll work towards attracting these groups of pensioners who travel around various countries of the world.

But will the striptease clubs be closed down 's yes or no? So these pensioners don't have to encounter them.

The aim is to not have striptease clubs in central Riga.

That's the aim, but what's the concrete policy?

You see, there are laws. We are a law abiding country. Laws have to be passed regulating where something may or may not be located. Striptease clubs could be allowed in some special areas, but there shouldn't be striptease clubs in what appears to be a cafe where someone goes in to get a cup of coffee. Those types of clubs should not be in Riga, and we will do everything to ensure that those kinds of clubs cease to exist.

Mr. Slesers, political scientists argue that having good government means preventing conflicts of interest. Do you agree that parliamentarians and ministers should avoid having conflicts of interest?

Of course.

You have been accused many times of having interest conflicts, that you appoint your friends to responsible positions in state-owned enterprises.

It would be very strange if I appointed people I don't know. Of course I appoint people who come from my party, if a person is involved in politics then he must accept political responsibility at various levels, including running state-owned enterprises.

Is loyalty toward yourself and the party more important than the person's competence in the relevant field?

No, competence is extremely important. Most of the people who have been appointed have been competent, there have been a few exceptions because you can never tell precisely how competent a person is before they have started work. Everyone is given a trial period of 100 days. But I am convinced that if a person in politics wants to achieve certain policy goals, then he must gather loyal, trustworthy and professional people around him.

Regarding professional people. There was a well-publicized case when you were minister of transport where you appointed your chauffeur's son to the board of the railway enterprise "Pasazieru vilciens," with a monthly salary of 3,500 lats. Was this person a professional?

What does your father do for a living?

Since you've asked, he's a civil engineer.

Then why are you a journalist and not a civil engineer?

I don't understand what that has to do with anything.

Because a chauffeur's son doesn't have to be a chauffeur. If he has a higher education, he's a professional person, he has the right to hold any position he likes. And in this case, you can become a minister despite the fact that your father is not a minister. That's my opinion. What should those children do whose parents have died, who are orphans? Should they be derelicts on the street? No.So this is a case of charity towards this person?

No, this is not charity. But I do support many people, and I don't pay attention to who their parents are.

Do you consider that the state-owned enterprises that were under your control as transport minister were run efficiently? Latvia Post lost millions. Riga Airport lost millions. Do you consider that your appointed people have worked competently?

What newspaper do you work for?

The Baltic Times.

Then you should be better informed. With regard to the airport, thanks to my actions today we have taken over the Baltic market. There are 70 flights from Riga to various countries, as opposed to Lithuania where bankruptcy proceedings have started. If I hadn't done what I did, if we had bowed before the Scandinavians, before SAS, who wanted to only move our passengers through Copenhagen and Stockholm, today we would be in the same situation as Tallinn and Vilnius airports. Because I clearly stated that we would compete not just with the Estonians and Lithuanians but also with the Scandinavians, we turned Riga into an international aviation center. Today the airport and airBaltic are developing successfully. The fact that this required investments was logical. I am proud of what has happened in the aviation business. And the fact that airBaltic has been named "airline of the year" in Europe, beating out Lufthansa, British Airways, KLM and others is proof of how farsighted my policies have been. With regard to Latvia Post, I can say I have made mistakes in connection with this enterprise. I put too much trust in the previous management. They said that had a plan and everything was developing successfully, as a result we found that unfortunately the enterprise was unable to adapt to the new market situation as wages and costs rose. Costs exceeded revenue. But I had a clear plan for developing a post office bank on the basis of the post office. It appears that the current heads of the ministry and the government don't want to support this plan, which I consider to be a mistake. My aim was to retain as many branches as possible by creating a new business within the branches, a financial business, but today it seems they won't be saving branches as Slesers wanted but will simply close them. And I have never supported such a policy and wouldn't support it if I was the minister today. One sector that I can really be proud of is the transit sector, where we managed to significantly increase turnover via the railways, through our ports, attracting new cargoes, and strengthening Latvia's position as a transit country.

You take the credit for all that?

The credit goes to the ministry for developing this strategy and closely cooperating with the ports, with private entrepreneurs. That's not just my achievement, it's the achievement of the whole sector. Often problems crop up if a ministry follows the wrong policies, if it creates rules that lead to unfair competition. I've been accused of creating unfair competition conditions in the aviation sector. But I will say this 's airBaltic only received permission to fly to Frankfurt this year, because until 2009 Frankfurt airport did not allow our airline to fly there, giving exclusive rights to Lufthansa. So we have to think about where we fight for our national interests, and where we are in effect lobbying foreign enterprises that don't work in Latvia's interest. Like SAS, it's in Lufthansa's interests to collect as many passengers from Riga and take them to Frankfurt airport.

Why are the interests of airBaltic automatically Latvia's interests? It's a company with private capital. Wouldn't it be more in Latvia's interests to encourage competition so that many international airlines wouldn't have stopped flying to Riga? So there would be more competition?

Everyone seems to have forgotten that before I attracted Ryanair, we had peculiar conditions. We had a handful of big airlines who charged 1,000 or 1,500 euros for a flight to London or Frankfurt. Those were the real prices, and if someone has forgotten I'd like to remind them. And I also didn't start off by specially supporting airBaltic. I came into conflict with the management of SAS because I went to Ireland to meet Michael Leary about attracting Ryanair to Riga. And I did this. Initially many said that I was trying to destroy airBaltic, but I created the conditions where, with Ryanair coming in, airBaltic changed its policies, and they started to compete. So in the end it was healthy competition. Those airlines which just wanted to skim the cream off Latvia by charging high prices, they have decided now not to compete with airBaltic and Ryanair. Ryanair flies from about six British cities to Riga. Why didn't British Airways do that? Why does Lufthansa only fly from Frankfurt and not other German cities? The answer is simple 's they're not interested in Riga airport. They're not interested in Latvia's economy. They only want to make money by sending passengers through their own airports. We didn't want to support this, so the situation developed where today thanks to airBaltic and Ryanair our airport is developing successfully. Without airlines, without ferry lines like Tallink 's which I also brought to Riga 's Latvia and Riga would be like a house without a door.

Aren't your relations with airBaltic President Bert Flick a little too close? He's closely involved with the tourism promotion campaign, he runs the firm Baltic Taxi which has close ties with the council. Isn't this a classic case of having conflicts of interest?

I was transport minister for five years, and I have close relations with all of the people I've worked with! Including Mr. Flick. Mr. Flick is one of the best company managers in Latvia, during the crisis he has made his airline the best airline in Europe. That just shows that he's the right person in the right place. With regard to the airport, we could have stayed at a level of 700,000 passengers a year, instead now we have over 4 million. Only the elite could fly, politicians and rich businessmen. The little people 's pensioners, children 's couldn't travel the world. And tourists wouldn't come here. Now the prices are very fair, and we can not only fight for the right of Latvians to fly abroad, we can attract tourists to come here.

There's been a well-publicized affair lately involving a souvenir shop about 100 meters from the council building where we're sitting now. The owner, a small businessman, claims that Riga City Council Municipal Police officers have harassed and fined him for all sorts of trivial offences. Do you believe that small and medium sized enterprises can work successfully in Riga?

We're working to improve the system, which is still not satisfactory. We have to reduce the bureaucracy for receiving all sorts of licenses and permits, so you don't have to walk around and get all kinds of papers signed for basic things. I think we have to do everything possible to simplify things for small and medium enterprises, and at the same time we have to work towards encouraging serious local and foreign investors to come to Riga.

Can you say more specifically how the bureaucracy should be reduced?

We're working on a system whereby a person wouldn't even have to come to the council to get these permits. They could do it online through e-government, thereby getting all these permits quickly and simply.

Earlier you mentioned fighting against the Scandinavians. You have publicly blamed Scandinavian banks for Latvia's present problems.

The Scandinavians were too greedy, they only fought for their market share, they wanted to maximize their profits by giving out loans left and right and when the bubble has burst they want to lay all the blame on our government. This is unacceptable. When the world economy collapsed in America, Lehman Brothers and other companies went down, many national governments decided to support banks by guaranteeing deposits. And when the Scandinavian governments did this, a lot of money started flowing from local banks to Scandinavian banks. The Scandinavians want us to resolve all of these problems.

But these are our problems 's it's our country.

If they operate here, they also have to pay for these problems. They have to write off their losses. Not all the losses, but a large part. The profits they have made must be written off as losses for projects that cannot be recouped, and they have to start lending again.

But if they have to write off losses, they might lose interest in lending to anyone here.

Believe me, in this world a niche never remains empty for long. If one bank doesn't give loans, another will. That's the free market. The problem is that we don't have any strong local banks. Parex is no longer a player. And so over 70 percent of our banks are controlled by Scandinavians, and this is a problem. They don't want to finance Latvia's economy. And we can jump up and down all we want, but nothing is going to change. So we have to think about establishing at least one strong local bank, to ensure businesses in Latvia have access to credit. It is my firm belief that in these times we must not permit Scandinavians and other foreigners to fully take over many businesses. I have been very closely connected with Scandinavians, and so I don't want to blame all Scandinavians. I have very good Scandinavian friends, and I've worked in business in Scandinavia. But the policies of Scandinavian banks have been very greedy and very wrong. They took us hostage, because when the question was there as to whether or not to rein in this business, one of the arguments was 's and so it seemed to me - that the Scandinavians, who have centuries of experience as independent countries and in business, knew what they were doing. But it turned out that their activities here were only about making a quick profit. And so if we have made mistakes, and they have made mistakes, it's important to minimize our mistakes in future.

But for many years you were a minister in Mr. Kalvitis' government, whose mottoes were "put the gas pedal to the floor" and "enjoy the years of plenty," a government which neither cut spending nor made reforms. You were a member of that government. And now you want to pass all of the blame for that government's decisions onto the Scandinavian banks?

I accept co-responsibility insofar as I can. But our country has only been in existence for not quite 20 years. The fact that we have reestablished independence, those are just words. In reality our country has been around for less than 20 years. The independence that existed before World War II, that's history. Those people who lived in that independent country are very old, and they are no longer in government or business. The people who today are active in business and politics and elsewhere have spent the greater part of their lives as Soviet citizens. Including me 's I'm 39 years old, I spent 20 years of my life as a Soviet citizen and I've lived for 19 years in an independent country. That's reality, and for that reason we didn't have much experience. On the other hand, only he who does nothing makes no mistakes. I have also made mistakes. At the same time, I've done many excellent things. And at every election, the overall rating of my work is positive. At every election I receive more support from the voters. I don't expect to receive support of the greater part of Latvian society. I'm supported by those people who understand that Slesers is one of the few politicians who not only talks, but also acts. There are many talkers, but unfortunately few doers.

Will you be a candidate for next year's Parliamentary elections?

I won't be a candidate for Parliament, but the fact that I have a big chance of becoming the prime minister of the next government 's that I can confirm.

So you have ambitions to be the next prime minister?

Yes, I think so.

Are you thinking of forming a joint list with Harmony Center?

I think the best thing would be if Latvia's First Party and Harmony Center gained a majority after the next elections, and these parties could form the next government.

You are the smallest party in the current council, you have 12 seats out of 60…

Hang on! What is New Era then? They only have eight deputies! You've made a mistake!

You're right, I was mistaken. Do you think you will get a bigger mandate in the Parliamentary elections?

Of course. I think the Riga City Council is a great place from which to prepare for the next parliamentary elections. By showing how we create jobs and attract investment, we will gain a lot of support from voters. We've only discussed a few things here. I have concrete plans for creating many jobs. For example, the Northwest Corridor, a public-private partnership which will not be a burden on taxpayers. We will attract private financing, risk capital, and according to calculations made by foreign experts, the corridor will be 27 km long, it will reduce congestion in Riga, divert heavy transport from the city center to the ring road, and it will enable motorists to cross Riga at 90 km an hour. There won't be any traffic lights, three lanes each way. The total project costs will be 1.5 billion euros. I am planning to attract these investments from international companies, and if we implement this project it could create up to 40,000 jobs, not just in Riga but in Latvia as a whole.

On what terms would foreign investors be prepared to invest billions in Riga's infrastructure?

We are currently working on a number of options together with foreign consultants, and in the near future we will inform the public about what the precise model will be. Various countries have toll roads so this corridor will be associated with the introduction of charges, which we will introduce to reduce congestion in the city and make such an ambitious project a reality. It will be an international-level project and the world's biggest companies will fight to be a part of it. But the best thing is that we will create jobs for Liepajas Metalurgs to supply reinforcement bars, there will be work for Cemex and other cement producers, and there will be jobs for builders, drivers, and service providers. It's a giant project, and we could start it in 2012 at the earliest, because documents have to be formulated, and plans have to be drawn up. All this will take time. But my aim would be to start work in 2012, and if construction begins in 2012, then a project with 40,000 jobs would be a great boost to our economy.

In the meantime, revenues for the city of Riga have fallen by 20 percent. Is this really the time to be talking about such ambitious projects 's shouldn't we sort out the city and national finances first?

I have a question for you 's what is the biggest source of financing for the city budget? Personal income tax! So the more jobs there are in Riga, the more taxes we will collect. A simple formula. The more business activity there is, the greater the amount of budget revenue. Today I'm talking about many projects 's the Northwest Corridor, multi-story car parks, rebuilding the Central Market, building a new bus station 's that will all be private projects with no connection to the city budget. These projects will generate revenues for the city's needs.

Do you realize that if Swedbank leaves Latvia there will be such a catastrophic loss of confidence…

Why are you worried about Swedbank? Let them leave! How will they leave? You can move from this office to another office. How is Swedbank going to leave this country?

They've recently said that if, for example, laws on creditors are changed, they will leave.

If the government decides to nationalize everything like the communists did, then of course they will simply flee the country. If the country doesn't radically change the rules for doing business, notwithstanding any difficulties, no serious bank will leave.

You expect Swedbank to cover all losses in connection with the crisis.

Hang on, they have to write off the losses they have incurred. That's the important thing. And now they've started doing this, by the way. This year they've started doing it. There have been foreign press reports that Swedbank might merge with Nordea Bank. That could happen realistically. But I don't have to analyze Swedbank's strategy. We have SEB Bank, we have Nordea, we have DnB Nord which the Norwegians and Germans own. So if one bank leaves, others will take its place. But there's another problem. I want Latvia and Riga to have at least one large, Latvian bank, which we could control and which would have a real impact on economic development. That's the main thing. If Swedbank isn't here, our economy won't be any different.